Thomas Sowell talks about his new book Economic Facts and Fallacies

welcome to uncommon knowledge I'm Peter Robinson joining me today economist Thomas soul of the Hoover Institution the author of such classics as basic economics and the vision of the anointed by the way the vision of the anointed explains everything it is a truly great book when I call that one a classic I really do mean it author of such classics is the vision of the anointed dr. Sol has most recently published economic facts and fallacies several topics from which we will now be discussing men and women from economic facts and fallacies I'm quoting you to yourself Tom quote it is widely believed that the rise of American women in high-level occupations since the 1960s has been due to anti-discrimination laws and that these in turn have been due to the feminist movement in reality the proportion of women and high-level occupations was greater during the first decades of the 20th century than in the middle of the 20th century and all of this was before the feminist movement explained yes in the first half of the 20th century for example in 1908 the percentage of women in who's who in America was twice where it was in 1950 and verse feels if you look at the women who got PhDs and economics chemistry who got law degrees or other postgraduate degrees those were all higher in the 20s and 30s than they were in the 50s and it was a very simple reason for it women in those days got married later in the early years in the early years like over time the age of marriage and the age of a beginning to have children began to decline and the classic cut up my era was of course the era of the baby boom and that's when women hit and hit a low in their proportion of the postgraduate degrees and in the professions in which those degrees would be used now around 1956 the age of marriage began rising and in 1957 the age of having children rose strangely enough and as that rise continued you saw women rising again and these various professions so that not one of the professions they reached in 1972 the same proportion had had back in 1932 and as the age of marriage kept rising and as the number of children kept falling women went on to higher and higher levels now the people on the other side say the opposite by the simple expedient of not looking as if the world and it began in 1960 they don't they they're they ignore all the rest of that and they say it's all due to the to the feminist movement to any discrimination laws and so forth well you right I'm going to quote you again among the many factors which influence male-female economic differences the most elusive is employer discrimination yes that when you correct for all the various factors such as the number of hours worked the continuous employment versus taking time taking a few years out to have children and so on you take all that into account the difference is between men and women become quite trivial if you look at the academic world or as far back in 1969 women who were never married and when higher incomes than men who had never married they became tenured professor at a higher rate than men who had never married and then later on if you look at the general population if you take the women who are past the childbearing years and who were continuously their incomes were higher than men who would work continuously and so on so the difference is is that not that the employer is paying them differently but they have different characteristics so the central variable and explaining economic differences between men and women is not employer discrimination not the rise of feminism it's that women it's it's it's it's child rearing marriage and child rearing that's a variable as that varies a woman's arrival or participation rate in high level occupations varies with that that I'm going okay now in principle you note family responsibilities could be perfectly evenly divided between fathers and mothers but that isn't the way it has worked in practice quote I'm quoting you again since economic consequences follow from practices rather than principles the asymmetrical division of domestic responsibilities produces male-female differences in income close quote question what are the policy implications of that if we become fixed on eliminating male/female income differences is it the case that the only choice the only route for doing that is to involve the government in redesigning the very nature of the family well my draw am i leaping to a melodramatic conclusion oh yeah and is logically that that's certainly true however not not all domestic responsibilities can be shared equally such as having babies which is not an inconsequential thing since the existence of human race depends on it but what it means is that women make choices that make a lot of sense for them for example the choice of occupations that women tend not to go into occupations in which there's a very high rate of obsolescence I mean if you're a computer and computer engineer and you take five years out to have a child and have a child up to the age where you put him in daycare well my gosh the world has just gone yeah you have to start way way way back on the other hand if you become a librarian you become a teacher other occupations like that then you can take your five years off come back and pick up pretty much where you left off right income facts and fallacies you deal with a number of topics in economic facts and fallacies about fallacies concerning income income inequality and so forth let's take let's take three income stagnation executive pay and social mobility income stagnation you quote disapprovingly this assertion in the Washington Post the incomes the most American households have remained stubbornly flat over the past three decades I say you quote that and then you go on to demolish that wood you demolish it for us please that statement as is made has some semblance of validity and but the problem is you're talking about households rather than about flesh-and-blood human beings one of the real fallacies that runs through a lot of talk about income is confusing statistical categories with actual flesh-and-blood people households are of different sizes they vary over time they vary from one group to another they vary from one income to another so for example there are 39 million people in the bottom 20% of households and 64 million in the top 20% so you're talking you're saying yes 24 million additional people do tend to have more money the household thing is really a tip off idea I think whenever I see somebody quoting household income he's trying to make things look bad oh it's as simple as that is all right there's a rule of life yes for example over a period of about 30 years the household income rose by only 6% over those same years per capita income rose by 51 percent because the number of people per household was declining all the while I see I see and when you're comparing income brackets the number of working people in the top 20 percent is some multiple of the number of working people in the bottom 20 percent I see I see I see so this notion that society is a layer cake divided into quintiles is just it's even quintiles is just wrong you can do it by category but that's not doing it by people right okay executive pay one of the most popular I'm quoting you one of the most popular and fallacious explanations of the very high salaries of corporate executives is greed now why is that a fallacious explanation because you could become the greediest person on the war in the world and it would not raise your income by one dime I've tried it actually and it hasn't raised so so that's what's the analytical point of a correct analytical point of departure for examining executive pay then the question is not why they accept this money but why other people are offering it to them right all right and that's a matter of competition now some people argue see that you have these various boards on the corporation who are very generous in handing out the stockholders money to the executives and that's why they get these high salaries right now if you if you wanted to actually test that against anything you'd say all right there are some corporations which are not owned by thousands of stockholders owned by two or three huge financial companies which have highly highly paid analysts to monitor exactly what's going on yes alright so that's where the corporate CEOs get the highest pay of all these people are you know they have billions of all of their own money at stake and and they're not going to be penny wise and pound foolish just try to get someone for the lowest price say the guy is the guy who's going to protect their billions they'll throw him a hundred million and consider it's nothing okay social mobility again this is a passage you quote disapprovingly and it comes from the New York Times so it does does they know how to write a rack in an ocular fashion it does sounds if they just come from interviewing god yes this is what he told them it does sound it does sort of simply sound true quote Merritt has replaced this is talk by social mobility class distinctions and so forth Merritt has replaced the old system of inherited privilege we begin with good news however it's the New York Times so we will end with bad news but Merritt it turns out is at least partly class-based parents with money education and connections cultivate in their children the habits that the meritocracy rewards so even though we've replaced inherited privilege with meritocracy now we discover that merit is inherited now it does sound plausible what's wrong with that as a matter of analysis I can think of a number of Eris's and bimbos who would be at a library to the contrary but I won't go that route first of all people aren't paid for merit they're paid for productivity you know someone who had all kinds of handicaps to overcome you know might have a tremendous amount of merit just to end up as a trained carpenter right and somebody who was born with a silver spoon in his mouth sent to the finest schools that money could buy may have no greater merit and becoming a brain surgeon but that's not point the question is whether the brain surgeons productivity is greater than that of the carpenter so merit is really not not part of it but the other thing is that the question is what are you trying to end up with are you trying to end up with the best qualified people doing the job or not I mean if I have to have brain surgery and I'm told that the guy who's going to perform their brain surgery is the world's that art world's greatest brain surgeon but he was born with a silver spoon in his mouth and had every privilege and might I say no no give me somebody you know who had to fight his way up and who was just barely made the cutoff well suppose suppose I don't know what the New York Times writer had in mind but suppose I argue let's let's let's let's follow the duty of charity and assume that what the New York Times reporter has in mind is a just society maybe that's let's suppose that what they want is a just society and that is simply not useful in an analyzing social mobility no it's not no not during what notion of justice you have if you mean by justice treating everybody alike mm-hmm we can week we can go there if you mean a society in which everyone has equal probabilities not equal opportunities equal probability of succeeding I find that virtually inconceivable there are so many thousands of factors at work that I find it hard to even imagine how all those factors can work out the same for everybody and now what about equal opportunity equal opportunity yes when you see them you can have a society of equal opportunity one kids family sits around at dinner time and talks about sports and the other kid kids family sits around at dinner time and talks about science and they do that for 20 years and now they have an equal opportunity to get into Harvard who do you think is most likely to make it gotcha ok we return from the turn from income facts and fallacies to facts and fallacies let me say that again because I need to get it facts and fallacies concerning the Academy you deal with students and economic finances but I'd like to deal first with faculties first this this kind of overall statement that you make again I'm quoting economic facts and fallacies many people think of nonprofit organizations such as colleges and universities as free of selfish motives and therefore dedicated to the well-being of others including society at large this reminds me of the opening scene in the movie Animal House where the camera pans across the campus and finds the statue of the founder of the campus and goes down to the base where the words are inscribed knowledge is good good for all of us that assumption is seldom subjected to empirical tests nor does it survive such tests very well when it is close quote explained well one of the advantages it well one of the one of the things that happens when you have a faculty tenure is that the faculty can run University for its own best interest regardless of what that does to students for one simple thing with the faculty tend to arrange the classes so they will fit into convenient times for them I mean I don't accept myself when I was teaching and the department secretary would say when do you want to have your classes I would say after the morning rush hour before the evening rush hour apparently I wasn't alone so you have all these classes crammed in between 10 a.m. and 2 & 2 p.m. and many students are unable to get the classes they need in the sequence they need in order to graduate on time but the faculty as convenience trumps all that there was what Provost at Stanford was saying of you know last year that you know we have all kinds of empty classrooms most of the time because and then you ever that means you have to build more buildings in order to enter tens of millions of dollars per building that's right to build the capacity just for between 10 and 2 that's right that's right right right right now how not however that you are disdainful of the principle of faculty self-governance which you write is central to the operation of an academic institution but in areas outside their expertise including areas in which there is no such thing as expertise professors can simply indulge their personal prejudices at no cost to themselves what do you mean by expertise and areas in which there is no such thing as expertise well for example and chemistry there's obviously expertise there's no way that even on a small college there's any dean or president can know who ought to be teaching chemistry and what courses are honestly physics math economics etc etc so the only thing that's left to the chemistry department yeah and the physics in American economics and so on but but due to so-called faculty self-governance they also have decision-making power over things and which that was just a matter of personal choice such rotc I don't know why some professor of French literature should be authority on whether or not they should be ROTC on campus all right you write about Great Inflation and faculties what's the connection oh it's much easier on on the professor if he if he has soft soft grades my goodness no one to complain no one to take up his time no one to create an unpleasantness and you know it makes the administration happy it makes the students happy and the professor doesn't care it makes him happy so you give every student an A and nobody even bothers to ask for office hours that's right that's right all right now here's the here's kind of the question your argument here is regards faculty is that endowments tenure the continued giving of us from loyal and largely unquestioning alumni all of these insulate them from what we might otherwise consider market forces the market being the marketplace for education and the the customers would be the tuition paying students right okay and yet as you yourself say you yourself make a large point of this American universities are routinely ranked the best in the world how can this be oh they're the best in the world at what they do and what they do is research okay what you know when I when I when I was a go ahead when I was a tenured back in the remember at UCLA I used to love these discussions when someone was up from the upper out decision to mention he may promote it to ten-year or should he be let go and so on and you'd go around the room oh the man is a terrible teacher he doesn't do this he doesn't go on I listened to all this and in the end they'd vote him tenure and then conversely we had a guy who is really an outstanding teacher and uh when the vote finally came and I must tell you that I was one of those who voted to let him go because although I was convinced that the students would lose by his going that was not a decision in my province my province was to apply the rules set down by the university and by those rules which I heavily weighted toward research he sure he couldn't be kept there and so he's off somewhere else being an excellent teacher to somebody while the UCLA students have to take potluck and so this is appointment did you make that the large research universities tend to be in a certain sense over weighted in reputation when kids are going around looking for undergraduate education yes a other one is to say maybe you ought to look at a small liberal arts school it may not be as famous it may not have a world ranking but that's because they're not doing research in particle physics they may actually have the best Physics Department for teaching 19 absolutely right absolutely in fact the data show that that if you look at the college's who students go on to receive PhDs the most you find all kinds of schools you never heard of outdoing Harvard or Yale a Grinnell for example high higher percentages of people at Harvey Mudd College for years has some multiple of a majority of its students going to get PhDs that's not true at any of the Ivy League's please okay facts and fallacies concerning the Academy we've talked about faculty I'd like to turn to students and academic finances students one of the biggest fallacies I'm quoting you again is that attendance at big-name colleges and universities is virtually essential for reaching the top later in life kill yourself to get into Harvard because that's the Golden Road to the top at Goldman Sachs or General Electric but it's not true though the actual study was done a bit of the CEOs of the top 50 corporations in America only for them had Ivy League degrees or two of them had no degrees at all somewhat so an Ivy League degree is only twice as good as no degree well that's one way of looking at it all right academic finances activists by the way this is quite subversive this one that I'm about to read here academic institutions often make the argument I'm quoting you again that their costs for educating a student are greater than the price they charge is tuition which some take as a sign of the altruism of a non-profit institution but since teaching is one of the joint products of an academic institution along with research and other activities the meaning of such a statement is elusive close quote this is one of the routine statements of higher education in America no matter what we charge you for tuition it's only a small portion of the total cost of giving you an education yes you're saying it's untrue or you're saying it's simply an incoherent statement it's an incoherent statement it's like saying what is the average cost of bacon there is no average cost of bacon bacon is produced jointly with ham pork chops and pig skin there's the cost of the pig and any further division is is meaningless I mean when I worked for AT&T they had a huge book which broke down the cost of a telephone and they showed it to me the first day and I said since there's no such thing as the average cost of a joint product I will never have occasion to open that book and the whole time I was there it's set there and gathered dust you have one mr. congeniality Awards throughout your life now query how is it the case that across the academic scene landscape in this country tuitions have tended to rise it faster than any measure of the cost of living they've risen faster than inflation why is that the case partly it's because the government subsidizes I remember years ago talking to the president of a small college who said to said to me that if we were to keep tuition affordable we would lose millions of dollars in government money every year because the government has a formula and if the tuition is within your range then you don't get the government help but if it's above the range you do well heavens you know the presidents of colleges can do arithmetic and they know that the way to do it is to raise that raise the appendix tuition to unaffordable levels then the government brings in the millions now let me let me let me try an argument to see how persuasive you find it and that is the rising productivity of Labor so that a faculty named the position teacher in English chemistry physics as technology has permitted American labor to become more and more and more and more productive even though the English teacher is doing the same thing that he or she did today that he or she did 20 years ago and 30 years ago in 50 years ago English is actually a good example here because it's relatively unchanging you're teaching Shakespeare today as Shakespeare was taught a long time ago nevertheless as a matter of the marketplace institutions have to pay more to hire that labor that Professor precisely because wage rates throughout the opportunity cost if they don't if they're not an English teacher they could go to work for Intel presumably so the rising wage rates in the economy drive up costs in the Academy that's when I know I know it was pretty good I know one of the one of the things that happens is that over time more and more emphasis is put on research and and for example I started teaching back in nineteen in the 1960s the average teaching load was about 12 semester hours today that's considered back-breaking work that was Cornell when you first no no it was Douglas College like at the Rutgers University ah and that was common now today it's six semester hours you've got to hire twice as many professors to teach the same number of courses and and that's that may be carried on the books as a teaching expense is in fact a research expense because the reason you have to do that is because you expect easy eyes to be grinding out these articles and books ok last comment on academic question on academic cost senator Obama has proposed a $4,000 a year refundable tax credit refundable tuition tax credit for every year of college you like that idea not particularly all right hmm on to I would have met I wouldn't be surprised if tuition didn't go by $4,000 the minute that was enacted all right also there at all right facts and fallacies concerning race the black family quote some of them are courting you again some of the most basic beliefs and assumptions about the back flat black family are demonstrably fallacious including the assumption that current fatherless families so prevalent among contemporary blacks are quote a legacy of slavery close quote explain that one because the proportion of black kids were raised in two-parent families was higher under slavery and four generations thereafter than today that that percent was oh I go back to nineteen thirty or forty they weren't wasn't half the proportion of blacks being raised by single parents as there is today now slavery was the reason why are these generations closer to slavery and even on the slavery itself why were they raising their kids in two-parent families and they're not today okay now well let me again let me try an argument on you and the notion there is that what is a legacy of slavery is somewhat weaker demonstrably weaker of family bonds so that yes the black family is more intact in past decades than it is today so was the white family and as that we get these strange social solvents of the 1960s that seemed to weaken family bonds they weaken bonds among the white families but they devastate family bonds among blacks precisely because they're weaker in the first place and that is the legacy of slavery – what do you make of that one not much the I'm trying hard here yeah well I give you each a fruit it also depends on the level of income that is a you're not going to be able to someone who's in a position to go go on to college you know and has a very good chance of becoming an engineer or something of that sort a girl like that is not not likely to get pregnant and run ruin at all as well as someone who's had a bad time in school who has very poor prospects in the job market and going on welfare is not that biggest sacrifice as compared to whatever the options happen to be similarly with crime by the way right crime well crime let me get give this you set this one up for you again quoting from economic facts and fallacies racial discrimination is frequently listed among the prime root causes of riots and other criminality among blacks but crime among black Americans was declining four years prior to the decade of the 1960's with its landmark civil rights laws and its war on poverty programs if it doesn't if crime is not arising from poverty what's it arising from what happens in the 1960s they stopped punishing criminals you know it the chance that a criminal would actually go to jail for violent crime or any crime was much reduced in the 1960s you begin to have all these changes in the law beginning at the Supreme Court which it becomes harder and harder to convict anybody of anything and the sentences were shorter and there were more you know leniency in terms of parole and that kind of stuff and of course wherever you've done that in the world including in Britain for example you see this huge increase I mean Britain was once one of the most law-abiding countries in the world today Britain has a higher crime rate in the United States in but in most category you quote former Senator Edward Brooke and an African American who grew up in the black community in Washington Washington DC during the 1920s and 1930s this is Edward Brooke large areas of Washington DC talking about the black community were truly safe families stayed together neighbors helped one another students were encouraged to study and there were no drugs and no drive-by shootings was Edward Brookes Washington of the 20s and 30s like Tom Sol's Harlem of the late 40s early 50s is that when you all will be there no be they go the 40's from early 40 all right the 40s all right but I've heard you talk about home yes yeah I used to sleep out on a fire escape at Harlem uh that at midnight I stick if I was awake at midnight I would go walking out to the nearest newsstand to get the morning paper to find out what the baseball scores were I'm sure people don't do that today Harlem felt safe yes and what about the schools the schools were a lot better p-people people expected me to meet the same standards that kids on Park Avenue met now that would I was undoubtedly unjust but as a between between that uh injustice and spending the rest of your life paying back for a poor education to begin with I'll go with that injustice all right so what has happened in black America part of what's going on is that crime ceases to be punished you've already mentioned that what else is going on let me excuse me let me put the question the other way around what can be done if anything what can be done to restore to Harlem today or to those same black neighborhoods much of these much of those of the geography is still the same what can be done to make those neighborhoods in Harlem the way they were for you growing up in the 40s or the way they would for Edward Brooke in the 20s and 30s how can black America be restored mainly by fighting against all kinds of entrenched special interests who will not give up a budget edge foot starting with the teachers union you need to be able to fire teachers who aren't teaching you need to be able to have competing schools nowadays because it'll take you forever to be able to fire the teachers so that you how you give them an incentive to start teaching again instead of playing games in schools and the schools as in the colleges it is a lot easier not to teach I mean I'm always amazed at all the activities and projects they have in the schools you know all the while I'm looking at the International comparison the American students are way down at or near the bottom and in these international tests why are we spending so much time you know hugging trees and doing others that stuff like that when our kids can't read so if you had to choose one point one place to begin the restoration of black America would be with education yes all right Tom let me end with we've been talking about economic facts and fallacies let me end with just a couple of open-ended questions to see what's on the mind of Tom soul these days over the last five years the Bush administration has spent eighteen billion dollars on AIDS in Africa and during President Bush's trip to Africa which is concluding as you and I speak today Rockstar and AIDS activist Bob Geldof praised Bush as having done more for Africa than any other American president how does all that strike you I'd have to see what the consequences were nothing is easier than giving out money you get very little resistance the question is what what is the bottom line result has AIDS going down as a result of all this okay Barack Obama has a serious chance polls indicate at the moment an actual likelihood of becoming the first African American president what does that say to you about the United States well it makes it harder for people to keep blaming everything on racism on the other hand I think at a time when Iran may get nuclear weapons which may be passed on to terrorists it is incredible that we should even be playing sort of demographic roulette and this and saying wouldn't it be nice to have the first black president or the first woman president or whatever we need whoever can do that job best because the future the country depends on it interviewing you a couple of years ago fred barnes asked if you felt pessimistic about the future you responded very simply and with distressing speed yes would you like to amend or expand upon that answer yes I feel more pessimistic now that I did then Oh Tom why what's happened in the last two or three years to make you more pessimistic about the future well we can start with uh Barack Obama Hillary Clinton and John McCain you've talked about Barack Obama what's wrong with Hillary Clinton oh how many days yeah take the top two or three oh uh utterly cynical person the whole thing everything that happened during the Clinton administration uh you can see that time and time again ah McCain um he's better than they are which is that modest that's the stoutest praise you can raise that's that that's the highest praise that I can manage alright last question you write no book can cover all the utter nonsense the politicians speak in an election year close quote would you care to name one piece of nonsense that you didn't get the chance to cover in economic facts and fallacies that you consider especially dangerous or annoying the notion of that with that what we cannot afford in terms of medical care is 300 million Americans paying directly we can somehow afford sending the same money through the government and paying for a government bureaucracy on top of all the other costs of medical care dr. thomas sol thank you very much for uncommon knowledge I'm Peter Robinson at the Hoover Institution thanks for joining us

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