Remember Larry Summers --- a Harvard economist, the youngest full professor in Harvard's 350 year history, who was a former Secretary of Treasury in the Clinton Administration and then, after 2000, the president of Harvard when a furious fracas broke out over his remarks about the "under-representation" of women in the sciences at Harvard and other prominent research-oriented universities.

Last week at the Marginal Revolution, a libertarian site, the subject came up again, and prof bug posted a lengthy commentary on the babel-ridden rumpus.  Earlier today, the same subject came up in a slightly different form at another libertarian site, Carpe Diem . . . where Mark Perry, a professor of economics and business at the University of Michigan, posts daily several highly informative, data-driven commentaries that are without parallel for their empirical illumination --- this, mind you, whether you're a libertarian enthusiast or not.  Prof bug is not.  But he appreciates Perry's daily endeavors and finds that frequently he will change his views thanks to those data-driven charts and comments at Carpe Diem.  Even then when prof bug continues to disagree with Perry's views, he at least knows exactly where and why they disagree . . . a remarkable tribute, I believe, to Perry's laudable work in blog-land, full otherwise (with a tiny slew of exceptions, nothing larger) of opinion-drenched ideological rehashing of this or that topic.

First, Perry's Comments --- Along with His Chart on the Distribution of Male and Female IQ Around the Same Shared Average

Note: Be sure to click on the underlined link.  It will bring up a good illustrative chart.

 "Wall Street Journal -- Girls and boys have roughly the same average scores on state math tests, but boys more often excelled or failed, researchers reported. The fresh research adds to the debate about gender difference in aptitude for mathematics, including efforts to explain the relative scarcity of women among professors of science, math and engineering.
The latest study, in this week's journal Science, examined scores from seven million students who took statewide mathematics tests from grades two through 11 in 10 states between 2005 and 2007.
The researchers, from the University of Wisconsin and the University of California, Berkeley, didn't find a significant overall difference between girls' and boys' scores. But the study also found that boys' scores were more variable than those of girls. More boys scored extremely well -- or extremely poorly -- than girls, who were more likely to earn scores closer to the average for all students. The study found that boys are consistently more variable than girls, in every grade and in every state studied (see crude diagram above - showing distributions where mean intelligence is the same, but the standard deviation of male intelligence is greater than female intelligence).
In Minnesota, for example, 1.85% of white boys in the 11th grade hit the 99th percentile, compared with 0.9% of girls -- meaning there were more than twice as many boys among the top scorers than girls.
MP: And it might just be the case that those students who score in the 99th percentile on standardized tests are the future genius-level scholars in math, science, physics and engineering who are able to succeed and get tenure as professors at extremely competitive universities like Harvard, Yale, MIT, etc. In that case, we would expect an over-representation (under-representation) of men (women) in those positions for reasons that have NOTHING to do with discrimination, and everything to do with genetics and the variability of intelligence."

The Buggy Reply, Mainly Directed at Hopping Annoyed Posters in the Perry Thread

Prefatory Remarks 

Actually what Summers said about women and science and IQ was only one of several hypotheses he set out about the number of female scientists at top universities compared to their male equivalents. And he said nothing new that hasn't been a commonplace in IQ studies for decades now . . . not just in the US or Europe, but across several dozen societies:
To wit, though both male and female IQ on the average is the same, the distribution around the average is far more variable for men than women . . . with, to put it bluntly, far more men than women at both ends of the IQ spectrum. And secondly, again confirmed in numerous studies cross culturally, women tend to score higher than men in verbal skills, and men higher in geometric/math scores.
What's more, dozens among the most prominent female scholars in the genetic, medical, and psychological fields have agreed fully with these scientific results.
Wait Though
Rather than continue this analysis, I will --- hopefully with Mark's permission --- simply post here what I said about this debate just a week ago when the subject arose at Tyler Cowen's Marginal Revolution. It also contains links to those reading this thread who want to be informed about the scientific debate rather than toss around uninformed taunts and belittling charges.

While prof bug has been looking around in google for a good graphic display of the Pareto optimal --- essential before he posts the ready-to-publish commentary that completes the two-part analysis of growing American economic pessimism the last year or so --- he took some time off today to post two lengthy replies at Carpe Diem to a posted commentary left there by Mark Perry, the University of Michigan libertarian economist who runs that praiseoworthy site . . . full of illuminating, data-driven charts. 

The Claim Contestged by Perry: Unprecedented Transfers of US Wealth Abroad to Oil Producing States

In his new commentary, Mark Perry contested the claim of T. Boone Pickens, a billionaire Texas oil guy, who argued that the purchase of foreign oil by the US amounts to the largest transfer of wealth in world history.  Specifically, according to Boone Pickens,

"In 1970, we imported 24% of our oil. Today it's nearly 70% and growing.

"As imports grow and world prices rise, the amount of money we send to foreign nations every year is soaring. At current oil   prices, we will send $700 billion dollars out of the country this year alone - that's four times the annual cost of the Iraq war. Projected over the next 10 years the cost will be $10 trillion - it will be the greatest transfer of wealth in the history of mankind. America uses a lot of oil. Every day 85 million barrels of oil are produced around the world. And 21 million of those are used here in the United States.That's 25% of the world's oil demand. Used by just 4% of the world's population.

"Can't we just produce more oil? World oil production peaked in 2005 . . . "

Perry's Criticism 

Now let's see here. Foreign oil producers like Canada, Saudi Arabia, Mexico (top three countries for U.S. imports) send us their oil, and we send them "green pieces of paper with dead presidents' pictures," aka as USDs. That imported oil helps to fuel our economy, cars and factories, raising our standard of living.

Oil producers in Canada, Saudi Arabia and Mexico now have US dollars, which must be spent back in the U.S. on American goods and services, or invested in the U.S. financial markets, either by the oil producers, or by those who buy the USDs from them.

Importing oil certainly involves a transfer, but it's not a transfer of wealth, it's a market transaction involving the exchange of oil for currency.

If' it IS a transfer of wealth, it seems like we got the better end of the deal: Their valuable natural resources get transferred to the U.S., in exchange for paper currency, which gets spent back here eventually.

In T. Boone Pickens' version, it seems like wealth gets transferred overseas with out any benefit to the U.S. But oil imports, like all trade, involves mutually beneficial exchange. Remember trade is win-win, not win-lose (like T. Boone Pickens suggests), or lose-lose (the way the Soviets supposedly described a market exchange- buyers loses their money, and sellers loses their goods).

Update: One dictionary definition of "wealth" is "an abundance of valuable resources." In that case, wouldn't T. Boone Pickens' "greatest transfer of wealth in the history of mankind" be a transfer of wealth in the form of valuable natural resources (oil) TO the United States, and not a transfer of wealth FROM the United States in the form of paper currency?

The First Set of Buggy Comments

A very stimulating commentary, Mark, and so are the posted replies.

1) Your basic claim is true enough: once the dollars we use to buy oil are owned by foreign governments or firms, either these owners or others to whom they sell the dollars  ---at a reduced nominal exchange rate for the US $ --- will eventually invest them back in the US or use them to buy American exports.

If, though, most are used for investment purposes here, then either American taxpayers or American owners of business firms (say, stockholders) will have to pay interest on those invested dollars to foreigners one way or another. In all these cases, there is a transfer of US wealth in the form of ongoing payments to foreigners.  At a minimum if there are Treasury bonds on which the interest is being paid, US taxes on American citizens will have to go up --- either that, or the US government has to start printing dollars and hence cause corresponding rates of inflation. 

2) There's also another wealth effect, the standard one talked about when a country's exchange rate depreciates. If the foreign owners of the oil-dollars sell them to other foreigners, then that will lead, as noted above, to the decline in the nominal dollar exchange rate. That makes the US as a country less rich in the world.

The offsetting compensation is that we will then export more and import less. As some of your other posts note, US GDP growth is being fueled for the first time since the late 1980s and very early 1990s by our rapidly growing export sales.

3) Then there's a distributional effect of ever higher oil prices, whether the oil is produced here or abroad (unless enough future oil supply reaches the US and other countries enough to cause oil.prices to decline . . . something Boone Pickens, rightly or wrongly, says won't happen.   Quite simply, these ever higher oil prices --- whether or not we're dependent on foreign imports or not --- have and will continue to hit harder on low-wage and average-wage Americans, and they will continue to dislike the changes in their household consumption and the decline in their real wages.

And they will continue, as a result, to be pessimistic about the US economy, with the predictable fall-out on the presidential and Congressional elections this fall . . . and very likely into the future.

4) Then there are slightled foreign and security policy fall-outs if we continue to depend, directly or indirectly, on Middle East oil imports.  (Remember, the world oil market is an integrated one.  It doesn't matter if the US itself imports most of our foreign oil from areas like Nigeria, Mexico, Canada, and Nigeria.)  Two  such fall-oouts are worth underscoring. 

                                             INTRODUCTORY COMMENTS

At an unusually good web site, Carpe Diem --- a libertarian economics blog run by Prof. Mark Perry of the University of Michigan at Flint --- Perry posted one of his markedly valuable charts, something he does daily. Thanks to his praiseworthy and copious use of charts and other forms of data, Perry's posts make his site one of the two or three most informative of all the economic blogs on the Internet.  (In some postscript comments at the end of today's buggy commentary, you'll find a list of a half dozen or so economic blogs that are readable and worth visiting frequently.)

 First Mark Perry's Comments

How the Buggy Replies Will Unfold

Today's buggy commentary, prompted by Mark Perry's chart and his comments on its topic --- American unemployment rates over the last 50 years--- deals with two things: first, the reasons for the noticeable pessimism of the US public, caught in opinion surveys among other things, and whether the pessimism is overdone or largely reality-based (or a mix); and second, how the use of the major criteria for judging both the "fairness" and "efficiency" of a market economy --- Pareto-optimality and Pareto-improvements or -impairments (or gains and losses) --- can help us make sense of the current US public mood. Both sets of buggy comments take issue with the libertarian views of Mark Perry and a couple of other posters, along with a brief criticism of a left-wing poster.

                                         FIRST BUGGY SET OF REPLIES

Another illuminating and very stimulating post, Mark: thank you.

1) To the first anonymous poster, who doubted the figures in your chart: employment rates were calculated differently across the two sides of the Atlantic in several decades after WWII: the Economist always added 1 to 2% unemployment to the West Europeans' rates to bring them into line with the US's (not the opposite!). For several years now, all advanced industrial countries use a standardized procedure recommended by the International Labor Organization, so comparisons across countries are generally sounder.

Introductory Comments

A few days ago, in a popular economic blog run by Brad DeLong --- a good economist historian, but an irresponsible blogger who lacerates everyone he disagrees with and shows an implacable hatred of George W. Bush and not more sympathy for Ronald Reagan --- the sassy, shooting-from-the-hip sourpuss listed six major trends that have marked American history since the start of the Reagan presidency in early 1981.  Some of the list is OK; some of it isn't; and the omissions are blatant.  To remedy these problems, Prof bug will add two neglected trends --- these omissions typical of DeLong's biases , ---and will briefly discuss two screwed-up trends that appear in his list.

DeLong's List

There are, to repeat, a half dozen he singles out. 

1. The end of the Cold War
2. Other winner-take-all factors that have, in combination with education, pushed American income polarization back to Gilded Age levels.
3. The failure of American taxpayers to support their state and local governments in expanding funding for public education--and the impact of reduced public education effort in sharpening the distinction between rich and poor.
4. The computer revolution in productivity growth.
5. The rise of China (and soon, we hope, India) as industrial powers.
6. The extraordinary social liberalization of America--if you had told any Republican in 1980 that 2008 would see (a) a Negro with an Arabic-Swahili name beating a veteran fighter pilot in the presidential polls and (b) gay marriage as the big cultural issue of the day, said Republican would have blown several gaskets. And if you had said that this would have been the result of an "Age of Reagan" said Republican would have melted down completely.

The Buggy Additions and Comments

Here's An Important Trend Ignored by DeLong: No 7, The Sharp Decline in Violent Crime Since the Early 1990s

• Thanks to a combination of far better policing, a drop-off (until recently) of the number of young men (14-25), and far more incarcerations, our cities --- which were dangerous and infested with street crime of all sorts, making civilized life in many of these cities impossible --- the US has become one of the least violent countries in the advanced industrial world. In UN surveys of crime-victims in dozens of countries world-wide, carried out between the late 1980s and the early part of this decade, the US was ranked in roughly the bottom quarter of industrial countries in violent crime. Americans, it also turned out, were the most confident among industrial peoples in going out into public spaces and showed the most confidence in their police.

• The former Swedish ambassador to the UN in New York was so impressed by the vast changes in public safety that occurred in New York city under Rudy Giuliani in the 1990s and on into this decade that he wrote an op-ed in the New York Times nominating Guiliani for the Nobel peace prize.

No. 3 Educational Spending in the US

• This is a nonsensical claim by DeLong. As it happens, in the 17 years between 1990 and 2006, state and local government expenditures on education grew from $324.6 billion to $728 billion in current dollars --- in particular, from $499.9 billion to $728 billion in constant dollars. That's about a 46% real increase.

• Quite apart from the nonsensical claim by DeLong about overall spending, it turns out that the average state in the US devotes only 61.3% of expenditures to classroom activities. The rest go to administrators, transportation, and a handful of support programs. Overall, though, there has been little improvement in the overall performance of American school children and teen-agers in international exams, mainly because the black-white and Hispanic-European American gap remains as big as it ever has (after a limited amount of initial improvement in the 1980s)

No. 4: The Computer Revolution and Increased Rates of Productivity Growth

• DeLong's summary point is way too narrow an interpretation of a much more revolutionary set of radical breakthrough technologies that have transformed the very basic structures of our economy --- to wit, the cutting edge innovations across the board in information-and-communications, not least the Internet. We are still in the first generation of the World Wide Web, which has fueled the huge, non-stop growth of the Internet for both personal use and business commerce. Together, these new ICT innovations --- still working their impact on the US economy, not to mention the global economy as well --- have fostered a revolutionary shift from an industrial, material-based economy toward the use and manipulation of information . . . the basis of the emergent knowledge-based economy.

• Among other spillovers, this shift toward a radically different economy explains in large part the growing income-inequality in the US since the late 1970s, though demographic shifts --- above all, the fact that 70% of all African-American children are born these days to a single mother, with 50% of Hispanic Americans now born illegitimately too.  (A black two-parent family's average income is virtually the same as the average two-parent white family, with an income about $75,000.)  A second demographic change has been the growth of retired people who decide to live more and more on their own, thanks to increases in social security as well as private pension schemes.  (A retired single father, for instance --- who lived on limited social security before the late 1970s and chose to live with his adult children --- would be counted as living in their household and his income would be added to theirs . . . households, not individuals, the basis of income distribution statistics.  For that matter, there are nearly two times as many members of families in the upper 20% quintile than in the bottom 20%, and about three times as many income-earners.)

• A trio of other changes, this time economic, further explain the growth of income inequality.  One is that a knowledge-based economy puts a premium on workers with higher education.  Another, related to these radical ICT technologies, is growing trade with the rest of the world: in effect, as predicted by a well-known theorem of trade theory --- the Samuelson-Stolper theorem --- the US has tended to export more and more capital-intensive goods (material and human capital alike), which further rewards highly educated American workers and holds back or reduces the wages of low-skilled workers.  The final change: the influx since the late 1960s of large numbers of hard-working but poorly educated Hispanic immigrants, legal and illegal alike, which adds to the supply of low-wage workers in general.

• So far, note quickly, the US has alone benefitted in marked ways from these ICT revolutions. Japan hasn't so far. The same is true of the EU. According to a recent study, none of the big European countries yet and to an extent only three or four small ones in North Europe have reaped the benefits of radical breakthroughs in ICT --- information and computer technologies, plus, come to that, cutting edge biotech innovations. http://www.voxeu.org/index.php?q=node/1058

"We find that the revival of European employment growth can help explain why European productivity slowed. But we do not explain why European productivity growth did not accelerate as occurred in the US. US productivity took off after 1995, growing at 0.7 percent faster per year, but in Europe a literal reading of the productivity growth data leads to doubt that the internet revolution ever occurred in Europe. Some of Europe's poor recent performance can be explained by reforms that will enhance growth in the long run, but not all of it. Our findings should lead EU policymakers to think about the two-edged effects of policy reforms on employment and productivity, but they should also worry about how to encourage innovation and the adoption of new technologies."

Here, Finally, Is the Most Important Trend Missed by DeLong, an Implacable Bush W Hater: No 8, Bush's Revolutionary Changes in US Security and Foreign Policies

(i.) 9/11's terrorist attacks: