Political Animal

RICH AND POOR….THE CONSEQUENCES OF

RICH AND POOR….THE CONSEQUENCES OF A MERITOCRACY OF TALENT….Matt Yglesias makes the point today that one of the reasons for growing income inequality in America (and the rest of the developed world) is “assortive mating”: rich people tend to marry other rich people and poor people do likewise. I’m not sure Matt’s algebra has quite the right slant on the problem, but he does point toward a genuine problem with modern society: growing social stratification based on talent.

People have always socialized by income level, but today income level is more and more a function of talent. This seem eminently fair to many people, but ? no doubt by coincidence ? it is promoted as a social ideal most strongly by those who have lots of talent.

But there’s a downside to this as well. Back in, say, the 1930s, poor neighborhoods all had at least a sprinkling of smart, talented people, and these people were often the social glue that held these neighborhoods together. Today that’s no longer true: talent is so thoroughly recruited and rewarded that poor neighborhoods have been completely denuded of talent.

The number of people affected is small in absolute numbers, but the overall effect is nonetheless devastating. A neighborhood that loses its talent loses the people who run the PTA, coach the little league teams, and organize petitions to city hall asking for crosswalks at busy intersections. When those people leave, the neighborhood inevitably sinks into a long, slow decline from which it never recovers.

Solutions? I don’t know if there are any. But while a meritocracy is good for the economy as a whole ? and undeniably good for the meritorious ? it has its drawbacks as well. America’s inner cities, I think, are evidence of that.

SPINNING NORTH KOREA….William Cohen, Secretary

SPINNING NORTH KOREA….William Cohen, Secretary of Defense in the Clinton administration, was interviewed by Lou Dobbs on Moneyline today. What does he think of news that Bush is quietly proposing a bold (yes, bold!) set of aid packages to North Korea if they end their nuclear program? Is he succumbing to blackmail?

Well, Lou, a deal has to be made without the appearance of making a deal.

In other words, Bush is going to do exactly what Clinton did in 1994 but then spin it to within an inch of its life to make it look like it’s anything but that.

And is anyone really fooled by this business of insisting that there’s a difference between North Korea agreeing to give up its nukes before we agree to an aid package vs. giving up its nukes in exchange for an aid package? When the piece of paper eventually gets signed, after all, the agreements are all going to happen at one time.

PERVERSE INCENTIVES UPDATE….The Economist reports

PERVERSE INCENTIVES UPDATE….The Economist reports this week on problems at Home Depot: slowing growth, new competitors, and bad demographics. Apparently Home Depot’s boss, Bob Nardelli, is getting increasingly desperate to fix the problems, and shareholders are worried that he might go too far:

The biggest worry is that, in a last-ditch gamble to justify his pay and past promises, Mr Nardelli may take some really stupid gambles. His contract could reward him more generously if he wrecks the company and is fired than if he settles for slow or no growth. With market saturation approaching, his share options are probably worthless?unless they are repriced much lower. On the other hand, Mr Nardelli would collect a $20m lump sum and tens of millions more in accelerated salary, bonuses, forgiven loans and other goodies if he were fired ?without cause?.

The idiocy of corporate compensation packages never ceases to amaze me, and severance packages top the list of abuses. The only reason to fire a CEO ? other than “for cause” ? is because he’s doing a lousy job. So why would any board agree to pay tens of millions of dollars in severance to a CEO specifically because he’s doing so badly that they have to fire him?

The mind boggles.

THE FUTURE OF MADD?….There’s been

THE FUTURE OF MADD?….There’s been a spate of MADD bashing in the blogosphere lately, so here’s something to add fuel to the fire. In Japan, it turns out, laws against drunk driving have already slid down that slippery slope that everyone is afraid MADD is pursuing here. To wit:

  • One drink is enough to put you over the limit for a drunk driving charge.

  • Fines range up to $4,000 or more.

  • Passengers are usually fined too (presumably for allowing the drunkard to drive).

  • Total fines for an entire vehicle can range up to $8,000, sometimes more in extreme cases.

And it’s not just drinking either:

Struggling restaurant owners may be tempted to move to Chiyoda ward in Tokyo, where another new regulation, banning smoking in the street, has been forcing some desperate smokers into caf?s instead.

Is there a word for something that’s even stricter than “zero tolerance”? Maybe “negative tolerance”? Whatever it is, the Japanese seem to have invented a whole new category here.