Why Dems are so elite

Why are Democrats so often elites in urban areas?  In 1920, people were separated in social classes more radically than today.  John D. Rockefeller died in 1920 with a wealth of about 5% of the country’s GDP.  Today, the entire Forbes 400 doesn’t add up to 5% of GDP.  And in 1920 2% of people got college degrees. ( Today, it’s 35%.)  The result was that only a thin veneer of people, often with higher IQs, had managed to get through colleges.  But beginning in the post WWI era, significantly more began to attend higher education.  By 1940, 8% of 23-yr-olds had a degree.  Since it takes an IQ of about 115 to be able to handle college material and only about 14% of population has 115 or higher, there are many who struggle and colleges have had to water down curricula. 

            In the 1950s, college costs began to soar.  Ivy League educations, a staple on the East coast, became too costly for many families.  And the colleges began to take more students from all across the USA, often based on high SAT scores and sometimes needing scholarship help. This ‘cognitive competition’ spread.  As the number of grads soared, they became a class of workers who held better jobs. To see how this classism works, ask yourself who your ten closest friends are.  Then ask what kind of education they achieved. If you are college-educated, you probably have a lot of college-educated friends. And vice versa. 

            Now some math.  If one out of three people get a degree, what is the  probability of having 6 out of ten friends with a degree too?  Well, from the general population, it is about one chance in 600 of selecting 10 people at random and having 6 with a college degree.  And it is about one in 6000 of having all ten degreed.  Yet 6 out of 10 is the likeliest answer to this question found among college-educated people who answer this question.  In 1920 this would be rare to the point of strange, because college grads were so few.  But today, the cognitive elite hang out together, far more than random probability predicts.  In the 20s you would have a good chance of meeting someone with a third-grade education who was incredibly smart but didn’t have a chance to go to school.  (This example--my grandfather.) But beginning in the 60s secondary education began to steer higher IQ individuals to seek college.

            And where did they land?  Accountants, engineers, architects, professors, dentists, physicians, mathematicians, and scientists are eight professions that account for most of it.  In 1940 only one in twenty people of the upper 10% of intelligence was one of these.  Today, these 8 occupations employ 25% of all the people in the upper 10% of IQ (>120).  We have become a technological world.  And urban areas employ most of these people.  (Well, I know you can find a CPA in a town of 5000, but we are talking worker distributions.)

            They live in the city but don’t rub elbows with the less-educated very much.  Well-paying jobs, prime neighborhoods, good schools.  They are an elite.  Over against this are the less-educated.  Some struggle in the middle class.  Others are in the ghettos.  As middle class working-class jobs disappear, the cities have become increasingly polarized economically.  The only way to do politics in this mélange is to have something for the rich and something for the poor.  Here’s how Dems solve it. The rich get favors from government (special contracts for large companies would be an example) and the poor get benefits. 

            The Democrat playbook stole a page from Europe’s nobilesse oblige.  These were aristocrats who feared for their safety after France’s Revolution.  The idea was to play a public image of being a benefactor, an egalitarian, a guy with the common touch.  In effect, “Don’t guillotine me!  I’m a Good noble.  Do that guy over there who exploits you.”  We call this a limousine liberal nowadays.  Their exaggerated narrative about caring for the poor is almost laughable (given that they don’t touch those people), but it is popular.  Why?  Because all you have to do to become a liberal is think yourself smarter than everyone else.  YOU should be in charge! Be one of the aristocrats! Be kingmaker! And this strokes the ego of many in the cognitive elite.  Indeed, you can be from the other end of the spectrum and still imagine yourself king of the world and be a liberal too.  Or just dream of an Obamaphone.  Thus the Democrats win a majority of not only the lowest income quintile (70-30%) but also the upper quintile (55-45%). Republicans are the party of the 3 middle class quintiles from $21K to $105K taxable. 

So what does this say Republicans should do? First keep stressing liberty as conservatives always have done.  Second, use education choice as a wedge issue in urban areas.  Third, capture the lower middle class vote like Trump has done.  Liberty has to be understood as being free to live your life as you see fit, without government’s heavy hand of Obamacare mandates, enterprise-killing regulations, quenched opportunity.  Education choice is a clever gambit, because of regression to the mean.  If you and your spouse are extremely high IQ, your kids tend to be much more average.  Likewise, mediocre folks sometimes have very gifted children. Think Ben Carson’s mom.  Social stratification in schools is a major problem in large cities and a “way out” is a good solve for the R’s.  Finally, some sort of retraining or incentive to change careers is good for middle America along with better trade deals and the border wall.

Meanwhile it needs to be recognized that the D’s don’t have a lock on the cognitive elites.  Many of the best and brightest want freedom to innovate and be entrepreneurs.  Bread and circuses social policy run by Dems is a loser economically and destroys lives that not just a few low income people notice.  Those D’s who are among the elites have little experience in dealing with the problems of lesser mortals as well.  This means a party of few new ideas, rather like Hillary and Obama.   

Smart things Trump does the media doesn't know

Trump, they say has a very high IQ.  I keep noticing that he does indeed figure things out that the media is stupid about.  When Martha McCallum observed he didn’t get any major legislation done in the first 100 days, he responded that he had signed 28 laws. ( the media can hardly quote any of them.)  Most have to do with changing regulations, something that is huge for businesses, but boring for the commentariat.  Then he said that the R’s (meaning congress) wasn’t ready to govern.  They were used to being loose canons and prima donnas because they were out of power and it didn’t matter what they proposed or how they voted. Obama would veto them.  This is absolutely, positively the truth.  Congressional factions continue to wrangle over Repeal/Replace.  237 egos don’t agree and have to learn to live with half a loaf and play like a team.  That, not the a Caucus, not Paul Ryan, not Trump is to blame—although the pundits seem to love the blame game.  And so we see the tragicomedy of conservative pundits lashing out in anger that nothing is done.  I have news.  Not only are most of the people impatient, so are the Congressmen, the White House and just about everyone in between.  Don’t blame anyone still alive.  The Founders purposely made law-making slow.  Better to have impatience than tyrannies that can run over us in a moment. 

Trump is also playing a game with China.  N. Korea has a dangerous player.   I don’t understand why, if China fears USA bringing in weapons to re-arm S. Korea and Japan, if they fear for free trade and broken commerce with the West, if they fear Kim’s collapse could bring millions of Korean refugees into China, don’t they just go grab that little fat guy by the neck and install a puppet of their choice in his place?  And from behaviors of China after the powwow with Trump, they seem to be jockeying in this direction. If he can get China to defuse Kim, that will be something no other Prez has ever done.  It would also cool down a hot spot and we could attend to Iran or Ukraine or some other problem.  Part of a good war or campaign waged is to deal with one thing at a time and get as far as you can go with diplomacy or threats.

Every Republican likes tax cuts, but if Trump had led his agenda with them, they would show a big negative loss of revenue.  Instead, first pass Obamacare replacement and save $100 B a year.  Then pass a budget with real cuts to discretionary spending and save another $100 B.  Result is that the tax cuts would be somewhat paid for.  And despite Trump’s proposal of tax reform, budget and repeal/replace do seem to be coming first.

Finally the media is hooting that Trump is giving up on his wall.  But ‘wall’ is a euphemism for a secure border which in places is a fence or in an almost impassible area or on some difficult situation involving private land or a tribal reservation, will be a surveillance tower and drones.  But the media thinks they have really caught Trump in a lie about the border.  It is as if Babe Ruth stepped up to the plate and pointed to where he was going to hit a home run.  But then he hit the home run, but to the opposite field.  Fans would be cheering.  The media would be saying cynically that Ruth can’t call it right at all. Guess I'm a fan.   

And entrepreneur looks at sports

Never ask an entrepreneur to truly love sports.  They always see ways to greatly improve the game or change the game.  And why in heck do the people in charge not do this? 

            Baseball has constant battles between umpires who call balls and strikes and the batters and pitchers.  We could easily eliminate this by using electronics to call balls and strikes the way the broadcasters show the strike zone and the ball when it came across the plate.  Wouldn’t this make calls much more indisputable?

            But the sports I really don’t understand are hockey and pro basketball concerning fouls.  Why, in hockey can you come up behind someone and grab both arms and hold him back.  This is called a “check” even though the guy might be say a Pole or a Swede. And it’s legal.  Yes, but totally debilitating for the guy being held. If he were an agile skater, he could  develop a really accurate jackass kick  to the checker’s groin region. “Whoops, sorry.  My foot slipped.” Doing this with a steel skate would really teach the defender never to try this hold-down stuff again.  And maybe he couldn’t have kids ever, just in remembrance.

            Worse yet is the National Butcherball Association’s rules on fouls.  It differs so radically from college, high school, AAU or any other cager venue that it’s almost unrecognizable.  I was watching Rondo get clobbered by the Celtics.  He was just dribbling. A guy jumped on his back, never touched the ball, No foul called but Rondo missed his shot by 4 feet.  The similar strange foul ruling occurred when Westbrook went up for a layup.  The Rocket’s defender tried to block the shot from behind, mostly missed the ball and nearly took Westbrook’s head off.  They showed it again and again on replay, the blithely unconcerned announcers saying it was just a common foul, not a flagrant.  Well, if that’s not a flagrant, what would keep some team from having a couple martial arts experts on the bench for purposes of ruining someone’s career and making it look accidental.  I predict that the dumb-jock NBA will persist in their butcherball, this street ball, until someone really famous gets a career ended.

 This happened in 1920 in major league baseball when Chapman got killed.  Pitchers used to juice balls and rub them with dirt to make the ball hard to see.  In a game at dusk, Chapman couldn’t see the ball in the sun coming at him, got beaned and died the next day of a skull fracture.  Thereafter, baseball suddenly recanted from their love of the rubbed ball used for an entire game.  After that, any slightly dirty ball was discarded, and that is why they use 60 balls per game.  The old balls with fraying seams, called dead balls, suddenly gave way to new, fresh, tightly-wound balls called lively balls. I don’t know what kind of ball you call the skate-kicked hockey guy.

Stuff they don't tell you

There are things they don’t tell you and I sometimes wonder why—but sometimes it is obvious.

1)News tonight is that the OKC jail has a mold problem in the kitchen. TV made it sound like all sorts of bad practice in the jail.  But the real reason is that inmates stay out of trouble if they fix their own food.  More food, fewer fights. But these aren’t clean guys—druggies, robbers, mentally ill.  So they leave a mess and often it is almost impossible to manage by the jail.  Hence the mold.

2) Why are ice cubes in the shape of a D?  In the 1950s when icemakers for home fridges were being tried, they made a lot of shapes.  But the D cube made by one company was far less troublesome for low capacity makers.  Everyone began to use these icemakers and nothing has changed in 60 years.

3) Frustrated gardeners everywhere.”I can’t raise tomatoes anymore where I used to.” “I tried to raise fruit trees but the borers killed them.” Simple solutions.  Tomatoes develop a wilt if raised in the same location every year.  Rotate your crop and only come back to the same place about every 3 years.  Borers are laid by a fly from June 1 to September on the bark.  Then the larva bores under the bark either near the soil line or up a couple feet on the trunk, doing great damage.  Treat with borer spray every 3 weeks over the summer. So why doesn’t everyone in a garden center know this?  Beats me.

4)Why do most renters rent?  They can’t hold a job.  I know this not only by their histories, but also what I see.  Holes in walls and doors abound.  They got mad and pounded a hole in something.  They fight at work too—no faster way to get fired than fighting with the boss. Peter Drucker predicted this in the 60s, noting that so many kids were without parental guidance and we would likely raise a nation of poor workers, self-centered, insecure, uncooperative, when kids were raised by day care.

      Now a little politics.

5) Why did Repeal/Replace fail?  No matter what you thought of the Ryan-Trump-Price bill, it failed, as Rush Limbaugh pointed out, because too many people were successful in labeling it to mean bad things.  VP Pence pleaded that Stage I repealed individual mandates, would save $1T over ten years and give Medicaid entirely to the states.  What’s not to love if you are a conservative, and that’s just stage 1?  But here’s the deal.  If you run for office it’s brutal.  You’ll be called names, lied about, and it takes a tireless campaigner.  Who can endure? Very egotistical people. And so the US Senate in particular is full of prima donnas who insisted that if the bill wasn’t done their way, they’d vote NO.  When a party is minority, it’s okay to rant irreponsibly, but when you are in the majority, you’d better learn to be a team player or you will pass nothing and the public will sour on you.  But I doubt you'll hear this in the media reports.

6) The whole Russiagate thing now looks like a preemptive smoke screen to hide the fact that Trump’s people were under surveillance talking to Russians.  But the media narrative of Hillary losing steam in polls as election day approached due to Russian hacks/disclosures can be disproven by simple statistics.  Real Clear Polics Avg. two weeks out was Hillary +5.2%.  Day before election, +4.8%.  Exit polls day of election, +5%. No poll showed her at +1.8% as the popular vote actually was. What happened? Many people voted intentionally not talking to pollsters. But why didn’t the media point this out immediately?  Because journalists avoid math.  I saw this years ago teaching in college.  They get chills even over addition. 

Is "New Normal" bad economy permanent

In the 30s John Maynard Keynes, Brit economist, created a big following among the big government advocates.  In his attempt to explain the long recession, he suggested that people were too saving.  They needed to spend more.  Spending causes the economy to grow and all we had to do was to get governments to invigorate spending, not saving.  Gov could call for a lot of infrastructure spending, could soak the saving rich so that Gov had more to spend. And Central Banks could lower interest rates until savings made less sense and free-spending happened more.  This was music to the ears of FDR and other pols who loved the justification of their big Gov plans. And the theory ruled econ for 30 years.

            But Keynesianism wasn’t all it was cracked up to be.  Democrats argued that the economy should be kept in a constant state of stimulation with big Gov spending and low interest rates.  Yet we had just as many recessions as ever, not fewer.  And then in the 70s as Keynesianism grew popular worldwide, it resulted in a huge spasm of inflation.  What was needed, said the Monetarist school of thought, was a consistent money supply, not the erratic fluctuations brought about by booms and busts. Thatcher/Reagan proved that to grow an economy, you need to concentrate on freedoms needed by businessmen, and a stable lendable supply of money.   And so, for 30 years, Monetarism ruled.  The idea of central banking was to stabilize both the supply of money, and balance the savings (supply) and investment (demand) by lowering interest when too many people saved.

            Not all Keynesians are social liberals, but you can see the partnership. To a small biz guy like me, the Economic Freedom of Reagan made a lot more common sense.  Then in March 2000, there came a crash that led to recession in 2001.  When the economy gets stressed, all sorts of theories get promoted.  When times improve, we forget most of them. The Keynesians, out of hegemony, had to have an explanation that things were now permanently bad, Secular Stagnation.  Simply put, Secular Stagnation happens when there are too many savers and Central banks can’t lower interest rates enough to balance against the need for investment.  There is chronic economic weakness; low growth, low inflation, low interest rates and constant threat of recession.   Well maybe the population is getting old and all they want is to save, not invest (spend).  Government needs to start a massive spending plan on such things as infrastructure.  Or maybe there has come an era of income inequality when the rich have all the money and free-spending poor don’t.  Gov should start soaking the rich and redistributing the wealth.  See why this appeals to Obama? And why he had that weird way of talking about government spending as “investment”.  The most pessimistic aspect of secular stagnation is that just because times are good, doesn’t indicate economic health.  There may be booms--bubbles of financial excess from time to time--but the chronic weakness returns after a disastrous bust. 

            So, Trump gets a boom.  Will it end the calamitously as the 2007-2009 housing bust? We will soon see.  If the secular stagnation idea is correct, the Fed will soon (after a recession) be stymied with zero interest and  paltry growth (the “new normal”).  But the businessmen like me and Trump think, we can undo much of the regulations and poor policies of Obamacare and taxes.  Free the people and they will achieve. An economy consists of dozens of factors working on each business multiplied by millions of businesses.  Free the businesses and they will make growth.  So will Economic Freedom win the argument or Secular Stagnation?  It won’t be too many years and we’ll know.  My guess is that the conceit of central bankers thinking they control economies leads to stuff like secular stagnation. 

           

Murray's observations of US education

Many of our prescriptions and some of our politics of education is misguided. So says conservative sociologist, Charles Murray. I’ll relate his reasoning over several posts beginning today.  You can test kids for many abilities and most are distinct—musical ability is not related to athletic ability, etc. But 3, mathematical, verbal, and spatial reasoning are somewhat correlated.  Call this “academic ability” and it is the basis for IQ theory. But half the students will be below average and they get frustrated by school. So here’s an achievement test question for 8^th grade.  If you have a company of 90 workers and the next year it has 10% more, how many workers does it have then? Only 62% of 8^th graders can answer the correct ‘99’. Many can calculate the 10%=9 but many don’t realize you have to add this to 90.  Now as teacher, you can teach the test by drilling on this type of question, but there are hundreds of others too.  So what happens are the first 3 blunders of public education.  (1) Politicians and educrats brag that they can make poor students improve markedly.  Sociology disproves this, but this romantic myth pervades education policy. (2) Teachers, expected to provide the miracles of education improvement of poor students, teach the test which they have either seen or have seen like tests many times.  (3) While it is proven that even poor students have an ability to memorize a great deal (it’s the “reasoning” that forms the basis for academic ability) memorization is greatly downplayed in modern education.  Too bad! In order to function in a culture, you have to know a lot of stuff about how things operate—core culture values—what’s a minuteman, a smoke-filled room, how do you make a cheeseburger or change a toilet flapper, and so forth.  Sans memorization, we create a body of students who cannot cope.  Teaching the test only works temporarily and does nothing to really elevate reasoning skills. Educrats who insist they can miraculously transform dullards into geniuses, ask the public to throw money at the problem. Hence more money only helps get better teachers and student scores in countries where dire underspending has been happening.

            Besides romanticizing education, not teaching core cultural knowledge and teaching tests, there are more problems with public ed.  (4) Disruption and lack of discipline hurts all the students in a class and this is the biggest indicator of schools with an F grade.  Bad teachers, no standards, few resources often go with this. In the 50’s the Coleman Report on education found, to the stunned surprise of politicians, that quality of schools did not yield achievement, but family values did.  Pols didn’t listen.  They gave $$$ to poverty area schools under Title I.  Acheivement actually fell!  No Child Left Behind penalized schools which didn’t progress.  No change in student scores. (5) Hence throwing money at the problem doesn’t fix it.  US schools are almost twice as expensive as any others in the world, and kids scores are about #30 in OECD.  Parochial (religious-based) schools spend half what public schools do and get higher test results—even when applied to low-income scholarship students.  But the parochial schools have discipline, memorization, allow teachers more often to teach freely and some other things we’ll cover tomorrow.

            (6) Too many kids are told to go to college.  90% are encouraged to attend by high school counselors but only 35% of them will get a degree.  The other 65% will struggle with college and drop out. They should be advised, “Hey, you like to operate equipment?  Do you know a crane operator makes a lot more than a pizza delivery man?” Colleges estimate IQ of 115-120% or about 9-12% of seniors will be able to handle college material. (7)To try to handle the excess, colleges have done grade inflation (easier grades) and steered students to curricula with less rigor in math or verbal skills like social sciences, humanities, and things like recreational science. But there are too many grads and few jobs in these areas. Colleges are saavy.  Employers use a BA or BS as a screen for abilities, so colleges pack ‘em in and charge more. (8)But the lesser grading standards mean the smartest students aren’t getting enough education and are slowed down.  Thus we see widespread statistical illiteracy among the gifted, little history, and almost no liberal arts. (Some things like humanity and humility are so important for a gifted leader, that we MUST think about them.) (9) Both HS and colleges promote self-esteem which promotes a risk-averse, selfish, foolhardy, autonomy. No wonder we have less entrepreneurship. For the first time in 400 years, America has fewer business start-ups than closings. Next post: How to fix it.

            So here’s Murray’s solutions. (1) re-install memorization of core cultural values that are not politically motivated in K-8.  (2) Get rid or education’s romantic myth that they can make a genius out of an average student. (3) provide a stable, disciplined environment that gives all kids a shot at maximum learning. The upshot of these 3 things is that if you aren’t a genius, you can still come out of school having enjoyed it, armed with a lot of know-how, a very good person even if you aren’t Einstein. (4) Teachers should be free to teach and evaluate one another informally with shared ideas. (5) Involve families.  16 hours a day, students aren’t in school, so what are they learning. 4 & 5 are often the two most widely observed factors in highly education-successful countries.  (6) Let the gifted go as fast as they can. (7) Teach the forgotten half how to make a good living—dependable, good attitude, hard workers, cooperative—and enhance career tech programs. (8) School choice.  Competition among schools.  Not one size fits all. (9) Use more certifications (like CPA exams, bar exams, plumbing license exams) instead of degrees.  Murray then notes that private schools have no magical monopoly on this basket of techniques, high-scoring countries are not all alike.  These are just principles found from sociological studies. Yet as I pass this around to the many teachers in my family they agree that Murray is spot-on.

The New China

It is not the same China you grew up knowing.  The communist government decided to give in to capitalist plants in the country in order to modernize.  That has given way to a new middle class that wants individualism, something totally new to Confuscian tradition and Communist party ideals.  Meanwhile Christianity has spread and become a quiet but important minority while income inequality has skyrocketed in the home of socialism. 

            Let’s take it in order.  1.4 billion Chinese with 800 million Han Chinese are rapidly rising, both as a power, especially with a rising middle class, and yet the ruling Communists find themselves in a fix—how to manage this new bourgeois without suppressing their productivity.  The middle class, now 250 million storng don’t trust their government.  They aren’t about to rebel or even ask for the vote, but they gripe, frustrated with corruption, lack of transparency and accountability of the rulers. Since 1990 the blistering pace of economic growth has been the party’s most important source of legitimacy which supports its most important goal, stability.  But the critical citizens have taken to social media en masse.  The question is what happens after the growth peters out.  It surely will because you can sustain 7-10% growth by copying current technology, but when your nation has to create, entrepreneur, invent on its own you are doing well to get 3%.  Hence the pickle that leaders find themselves in.  The party fears its own people. 

            But how the people have changed.  The old tradition of living in an extended family fell flat as soon as the one-child policy was instituted.  Nowadays people are allowed two, but one child means marriage is no longer for the procreation of family.  And with kids getting educated and moving hundreds of miles from home, the elders aren’t taken care of as in the past.  The grandchildren as sparse.  And the educated kids are individualistic.  They want love instead of arranged marriages.  The older generation can’t quite understand this.  There are marriage “fairs” where brides and grooms advertise for a mate.  He advertizes a salary and position and has a mortgage paid.  She advertizes she is beautiful, decent, quiet, and not fat.  Except that the 20-somethings on the ads didn’t write their own ads.  The parents did, in hopes of arranging a nice marriage.  The kids fight this not wanting any arrangements.  Hence the age-old family system is crumbling, except in rural areas.  And, China will get old before it gets rich because of the one-child policy.  Today 12 workers for every retiree.  2050 will be 2.5. Unlike USA which will arrive at about the same ratio, there is little social welfare (kids are expected to take care of parents), no pensions, and savings in Chinese banks pay less than inflation.  The growing individualism of the youth also has brought about a sexual revolution of shacking up.  58M young people live alone. There is a rank shortage of eligible marriagble women since a lot of male sexual selection took place with the one child policy.

            The elders remember famines, the kids think high speed trains and pork every day. Government encouraged entrepreneurship and thus many Chinese work at small businesses rather than the state factories as in years past.  Yet the Party is nervous about the rise of so many uncontrollable businesses who march to the own drummer.  In the old days, people knew  by face just about everyone they came in contact with.  Strangers were treated with a degree of caution.  This is indicative of the personal networks everyone had.  But today the personal networks have been shredded as is true in western urban areas.  And just as in New York City, people in Beijing see a mugging and stroll right past it. Hence the Party and Chmn. Li have a campaign on to indoctrinate in socialist core values.  These values are diametrically opposite western values of liberty.

            Thus the people have discovered religion.  Buddhism has exploded in membership but since it is so philosophical and most people just do the rituals and not the serious engagement, the Party tolerates this.  Christianity is another thing altogether.  It has grown for ½ million in 1950 to 100 million today--9% compounded annually.  This growth far outstrips any other country or period of Christianity’s development.  It was 2.9% in the first 3 centuries of Rome. Of course Christianity is a true religion which governs hearts apart from politics.  So the government has cracked down but then tolerates it at other times.  Likewise civic clubs and charities would be able to help the government big time—if only the Party weren’t so nervous about groups of people gathering and thinking of things to do without government consent.  Public morality is increasingly at odds with private.

            Inequality in a communist country might seem an oxymoron.  But like Russia, oligarchs were granted an inside edge with the government resources and if they played it right became billionaires.  China has over 500 billionaires, more than USA.  And they cluster in urban areas, as does the middle class who work in their plants.  Less than 10% of rural youths go to senior high school compared to 70% of urban kids.  Income inequality is measured by the Gini coefficient.  China is .49 while USA is .39 and most European countries are about .3.  Another way to look at this is that the top 10% of earners in China make 21 times as much as the bottom 10%.  USA is 6.

            Which means that with pitiful returns available on savings in China’s banks, those who can do invest abroad.  And as the economy slows down, many in the middle see the system as “rigged.” Some government run investment schemes have turned out to be Ponzi schemes benefitting Party members. Owning property is popular.  Now don’t think of this as we do in the West.  People have long tern leases of government apartments.  Yet these are going up astronomically in places like Shanghai and there is a market in trading properties just as if the people owned them.  85% of city folks “own” their homes. Yet any false move by government in the housing market will cost homeowners enormously and a couple of these have occurred.  So people now question whether their assets are secure.  Chinese have little appetite for political change, but security is tantamount.

            As a result, many people want out.  10M have left China in the past two decades not to return.  A poll showed 57% of Chinese would send their kids overseas to study if only they could afford it.  Government charges $11K just for a passport.  Students who come to Canada and USA often are highly serious.  Their entire family depends on them getting a good enough job to import mom and dad and others.  This has bled China of the best and brightest yet the government knows that many will remain.  Cash flows to international markets too as the wealthy establish companies and domiciles abroad. 

            The repression of expression has increased in the last few years, making a slow burning fuse burn faster.  Mr. Xi’s “Chinese dream” a competitor to the American Dream has proven largely empty.  The American ideal is to be whoever they want to be which conflicts with the tightly scripted social and moral codes of the Chinese Communist Party.  And so at some point, another Tianamen, in some other form is likely.

            This article makes much use of plagiarism of The Economist’s Special Report from July 2016.