Sunday, May 29, 2016

Payday Lending

An editorial in today's Des Moines Register opens by saying "Payday lenders gouge the poor."  It goes on to accuse the industry of earning "extraordinary profits" by charging an average interest rate of "nearly 260 percent."  Payday lending is "sinful" and should be eliminated, the editorial says, and "credit unions and banks should do more to provide emergency loans to low-income consumers."

I would love to see the editorial writers attempt to provide short-term emergency loans at lower rates than payday lenders and survive.  Suppose a typical customer needs $100 until next month and agrees to repay $120.  After overhead, cost of capital, and defaults, will profits really be extraordinary?  A default rate of even 10% would be likely to wipe out net profit, but the implied simple annual interest rate is 240%, and the compounded annual rate is 892%.  The cost of capital for the industry is high because of the threat of regulation - in other words, the Register is increasing the cost of payday loans by editorializing in favor of regulation.

Hotels charge hundreds of dollars per night for tiny rooms with no kitchens - this amounts to rent of thousands of dollars per month!  Why isn't this unconscionable gouging?  It is because it costs more to provide short-term rentals than long-term rentals.  Similarly, secured 30 year mortgages are cheaper to provide than unsecured short-term loans.  If credit unions and banks got into the business they would also charge high rates - they don't enter the business because of the risk of being on the wrong side of editorials like these.

In the same edition of the paper on page 2A, the Register advertises the Iowa Lottery - why isn't that gouging the poor?

Poor people need credit.  Borrowing $100 and paying $120 in a month can save a job when a car that is needed to commute breaks.  When the payday loan industry is eliminated, poor people will be worse off.  It is true that some people borrow too much, but the doughnuts our corner bakery sells are also bad for people who consume too many of them.  This fact does not mean that the baker is a bad person or should be put out of business.

Editorial writers do not care about poor people, or they would think through issues more carefully.  Poor people are props and tools in their struggle for social dominance over the wrong kind of white people.  Payday lenders are definitely the wrong kind of white people.

Sunday, May 22, 2016

Report from the Iowa Republican Convention

The Iowa Republican Party held its state convention yesterday in Des Moines, and I was a delegate.  I was interested to see how enthusiastically the party will support the nomination of Donald Trump.

Party leaders and elected officials are now 100% behind Trump.  They believe he has a good chance to win, and more importantly, a better chance of winning than any possible alternative.

The vast majority of delegates have accepted this reality - they will vote for Trump, and they will be part of the party machinery that gets out the vote in November.  I would say that a large minority was enthusiastically behind Trump, while the majority now sees him as an acceptable second choice.  Only a small minority was hostile to Trump, and they were remarkably well-behaved.  There was one minor dispute about rules, and only one attempt to subtly oppose Trump through a platform amendment, which was voted down by a large margin.

Four people ran for two presidential elector positions.  There were three long-time party activists and one open Trump supporter - the two activists with the most party service won, and the Trump supporter received the fewest votes.  More than half of Iowa's delegates to the national convention were selected at the state convention. (the remaining national delegates were selected at district conventions)  The process is very different than at district - a nominating committee chose a slate of delegates and alternates, and there was an up-or-down vote on the slate.  No attempts were made to amend the slate, as happened four years ago when Ron Paul supporters attempted to take over the convention.  As a national alternate delegate I attended the meeting of national delegates after the convention, and there were no signs of dissent from the convention theme, which was preventing Hillary Clinton from becoming president by supporting the nomination of Trump.

Trump's name was not mentioned very often - phases like "taking back the White House" and "our party's nominee" were common.  It seemed to me that party leaders were walking on eggshells, trying to avoid upsetting party loyalists who just two months ago thought their favorite, Ted Cruz, was going to win the nomination.  Interestingly, party leaders never liked Cruz, and Governor Terry Branstad worked against him in the February caucuses.  Branstad was probably the boldest Trump promoter, using his name and the phrase "Make America great again."

Conventions provide a first glimpse of fall campaign strategies.  The two I noticed were Trump's supreme court selections and federal policy on local school bathroom usage.  Trump's court selections were clearly reassuring to conservatives, and the Obama administration gave Republicans a gift last week by directing local school districts to allow transgender students to use bathrooms designated for their new gender identity.

The letter from the administration to schools is remarkable.  When Title IX was passed in 1972, some worried that the law might eventually require single-sex bathrooms, but their fears were put to rest with language in the law and regulations allowing "separate but equal" facilities.  No one at the time could possibly have guessed that 44 years later the federal government would recognize a right to change gender identity and have a choice of which bathroom to use.  According to the letter, "gender transition can happen swiftly," and  gender transition is when "transgender individuals begin asserting the sex that corresponds to their gender identity instead of the sex they were assigned at birth."

In other words, if a boy says he is a girl, he must be given access to the girl's locker room and bathroom.  There is nothing in the letter giving schools any judgement or leeway.

I wouldn't be surprised if 10 years from now school bathrooms and locker rooms are all unisex, perhaps with urinals removed and individual stalls for showers, but we will not be there on November 8, 2016.

Saturday, May 14, 2016


One of the things I like about America is that commerce is respectable. Americans are hustlers, salesmen and deal makers.  Even business failures are celebrated, as long as entrepreneurs get back on their feet.

But not everyone agrees.  I keep thinking back to President Obama's reaction to Donald Trump's press conference in March during which Trump displayed his steaks, wine and bottled water.  Mitt Romney had recently mocked Trump for his business failures, and Trump took the opportunity to promote some of his struggling ventures.  Anyone who has owned or worked for a failing business can relate.  Obama's reaction, however, was pure contempt.
Imagine what Trump would say if he actually had a record like this - Huh!  Insteada - insteada - [wide grin, then contemptuous tone] sellin' steaks...sellin' stuff like it was the Home Shoppin' Network.
Obama's words and tone were carefully selected and planned.  When interrupted by applause, he paused, held the thought, and continued so that every word would be heard as he intended.  It was not an impromptu remark; he thought that portraying Trump as a steak salesman would diminish his appeal.  Knowing he was in some danger of appearing haughty, Obama compensated by droppin' g's.

Obama's strategy probably worked with many people who work outside of the private, for-profit sector.  But like most anti-Trump strategies, it might have flopped with many others.  The culture of free enterprise allows some salesmanship, exaggeration, even braggadocio, and there is no shame in sellin' stuff.

Friday, May 6, 2016

Is Trump Really That Bad?

In the play 1776, which I saw last week, the hero John Adams is "obnoxious and disliked."  He was portrayed as a hero because he persevered against establishment opinion and eventually prevailed.

Trump is obnoxious and disliked, no doubt about it.  But so were other effective presidents, such as Adams, Andrew Jackson, and Give 'em Hell Harry - Jackson actually killed someone in a duel.  If there ever was an era of dignified presidents, it ended the year I was born, 1961.  Since then our presidents have had reckless sex lives, humiliated aides by calling them into bathrooms for meetings while urinating into the sink, cussed like a sailor on transcripts that became public, and had extremely intimate details of sexual indiscretions made very public.  Even presidents mostly untouched by scandal were widely considered to be embarrassments - Carter was thought to be a hillbilly, Reagan an unserious movie actor, and Bush II an ignorant cowboy. 

My point is that the republic has survived presidential indignities before, and as the world becomes less formal it could survive a president with Trump's temperament.

Former Republican leaders give temperament as a major reason for rejecting Trump.  George Will says that Trump "lacks manners and grace that should lubricate the nation’s civic life."  The first reason Jeb Bush gives for refusing to support Trump is that he "has not demonstrated that temperament or strength of character."

I am still working on an opinion about Trump in general, but I don't think temperament or manners should be the deciding factor.

Saturday, April 30, 2016

Trump's World

Donald Trump began the "presidential" phase of his campaign this week with a speech on foreign policy.  It was immediately dismissed as a "strange world view" by the New York Times, and subjected to "snickering and scorn" by the foreign policy establishment.

What did he say?  Basically that US foreign policy was a success up to the end of the Cold War, but has been misguided since then.  He identified five weaknesses of current foreign policy:

  1. Our resources are overextended.
    (Who would disagree after 15 years of continuous war?)
  2. Our allies are not paying their fair share.
    (All presidential candidates agree on this)
  3. Our friends are beginning to think they can’t depend on us.
    (e.g. Israel, PolandCzechia, Egypt)
  4. Our rivals no longer respect us.
    (and it is starting to be ridiculous)
  5. America no longer has a clear understanding of our foreign policy goals.
    (For example:

Trump's plan is to be more aggressive against "radical Islam" and China, rebuild the military, oppose trade agreements, and ease tensions with Russia.

Hilary Clinton agrees with much of this.  In a recent debate, she said:
it is important to ask for our NATO allies to pay more of the cost. There is a requirement that they should be doing so, and I believe that needs to be enforced.
Clinton is also hawkish on terrorist groups, and the contributions she receives from defense contractors suggest that she agrees about rebuilding the military.  She opposes trade agreements, is very critical of China, and began her time as Secretary of State with an attempt to ease tensions with Russia.

So why all of the criticism of the speech?  I've tried to remove the fluff and hyperbole from the New York Times editorial and extract the main points.  I think they are as follows:

  1. Trump would negotiate too forcefully.
    "other nations have agendas, too."
  2. His "America First" view contradicts his willingness to use force when needed.
    "He did not bother to square that [America First] with his vow [to use force when needed]"
  3. Opposing nation building contradicts his aim to build regional stability.
    "He condemned 'nation building,' but said he aims to build 'regional stability,' without explaining the difference."
  4. He is vague about how he would rebuild the military.
    "He did not say how he would further build up the military."
  5. He lied about ISIS collecting revenue from Libyan oil.
    "There is zero evidence of that."

#1 is the main point of the editorial.  Trump says that a negotiator must be "willing to walk," but the Times thinks this advice only applies to real estate deals.  Hillary seems to share this view, essentially saying that the US would never pull back from NATO, regardless of how the US is treated.

I don't think real estate is the only field where effective negotiation requires strength.  France understood this when it withdrew from NATO in the 1960s and extracted concessions when it returned in the 1990s.  Jimmy Carter understood this when he boycotted the 1980 Olympics in Moscow.  The Cold War was won with a 40 year threat to destroy the world.  It seems completely bizarre to me to argue that negotiations with rival world powers should not be backed by anything other than fines and moral exhortation.

#2 is not a coherent criticism.  Trump believes in using force when it would directly benefit the U.S., and does not otherwise.

#3 should not be so difficult for the Times to understand.  Pouring billions of dollars into broken countries is not the only possible strategy for building regional stability.

#4 is true - every presidential candidate in U.S. history is guilty of vagueness in their promises.

On #5, perhaps I am missing something, but there clearly seems to be evidence that ISIS is collecting revenue from oil in Libya.  

The media and the political establishment have become accustomed to ridiculing Donald Trump.  When he ridicules back, pearl clutching ensues.  But the failures of post Cold War foreign policy are obvious to voters, and are legitimate topics of debate.

Saturday, April 23, 2016

Cuba and the Future of Religion

In the streets of Havana, I noticed many men and women dressed all in white.  I was surprised to learn that they were practicing a religion with African origins called Yoruba, Santeria, or Regla de Ocha.  It is the same religion that Eula Biss' mother became obsessed with - I wrote about it here.  New Cuban initiates wear white clothing for a year including white shoes, hats, and umbrellas, in accordance with  Larry Iannaccone's theories of how religions attract contributing members while avoiding free-riders.  Followers of Santeria are said to outnumber Catholics in Cuba by 8 to 1.

Many African slaves sent to Cuba were from the Yoruba region of Nigeria and Benin.  Seeing similarity between the gods of their native religion and the saints of the Catholic religion to which they were forced to convert, they outwardly practiced Catholicism while secretly worshiping their own gods.  Visiting Catholic churches in Havana, we saw several Santeria practitioners.  Cuban political leaders apparently encourage the idea that they are protected by Santeria gods and allow free exercise of the religion.

It is a brilliant strategy - use the infrastructure of an existing religion instead of building from scratch.  There are biological parallels, which raise the question of whether the relationship is parasitic or symbiotic.  Perhaps the Catholic church is essentially finished, and Santeria is using its empty shell, like a hermit crab using the shell of a dead snail.  Or perhaps Santeria is taking members away from the church while using its structure, like mistletoe on a tree.  Or it could be that Santeria is breathing new life into the Catholic church, and they can coexist and share the cost of infrastructure.  The Catholic church apparently does not see the relationship as beneficial - visiting popes have refused to meet with Santeria representatives.

It occurred to me that this religion might be poised to grow rapidly in the United States once the U.S. embargo on Cuba is lifted.  The Catholic Church in the U.S. has considerable infrastructure that could be stealthily appropriated by Santeria adherents.  The African origins of the religion might appeal to both black and white liberal Americans.  The Mariel boatlift in 1980 brought some Santeria adherents to the U.S., and fairly large numbers practice in New York City and Florida.  In Cuba the religion is mostly practiced by black and mixed-race people, but in the U.S. there are more white members. 

Religion is in decline in the U.S., but the religious impulse is innate and difficult to repress for long.  Americans are looking for new ways to worship, and an exotic import from Cuba making use of structures already optimized for worship might take root.

Saturday, April 16, 2016

Race in Cuba

The New York Times reported recently in a story headlined "Cuba Says It Has Solved Racism. Obama Isn’t So Sure," that President Obama's speech in Havana was
 an unusually direct engagement with race, a critical and unresolved issue in Cuban society that the revolution was supposed to have erased.
The story reminded me of a display I saw in the Museum of the Revolution in Havana labeled "Cretin's Corner" that pictures the two president Bushes, Reagan, and Fulgencio Batista, president of Cuba at the time of the revolution.  Batista is reviled in Cuba and routinely criticized outside of Cuba, but it is not often acknowledged that he was black.  He was actually quite light skinned, but at the Museum of the Revolution he is caricatured as having dark skin and thick lips.  Here is a picture I took of it in February:

 Cuban revolutionaries were mostly white, and so are the people in power today.  Cuba was a racially segregated society before 1959, and so the revolutionaries were helped by the fact that Batista was black - many in the white middle and upper classes were not fond of Batista. This may be why they still find it useful to emphasize Batista's race in the Museum of the Revolution.

Race relations in Cuba are difficult for outsiders to understand.  Even basic statistical data are impossible to trust - official numbers show that Cuba is 60% white, while other estimates put the figure as low as 20%.   An editorial in a Cuban newspaper reacted to Obama's speech by asking, "Negro, Are you Dumb?"  The author of the editorial was black.  It was also odd to hear stories of Batista, described as an absolute dictator, being unable as president to enter segregated clubs.

Cuba is a puzzling place.