Daily Archives: 30 July 2018

Stop Tiptoeing

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Most Federal Reserve officials agree on the path for interest rates over roughly the next year: proceed with gradual increases until borrowing costs reach a level that neither slows nor spurs growth.

You bet.

The big question, however, is what to do after getting to that so-called neutral setting. The answer will largely depend on how inflation behaves as unemployment falls, and they are poring over recent research for clues.

The Fed should stop agonizing and being namby-pamby.  If it wants a 2% basic inflation rate, the rate it says is consistent with growth neutrality, as its existing goal stands, the Fed should set its benchmark rates at levels historically consistent with that rate of inflation, accept that inflation will fluctuate around that level, and then sit down and be quiet.

Those historically consistent rates are the Goldilocks level—or more accurately, the Goldilocks band.

College Admissions and Diversity

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Harvard is claiming that it needs to select preferentially for race in its admissions in order to achieve its student body diversity goals.

…it has tried alternatives to race-conscious affirmative action to diversify its undergraduate student body, but such efforts would harm both the diversity and academic strength of the class.

This is nonsense.

“Affirmative action” programs, giving preferential treatment as they do (however small the preference is claimed to be) to persons based on their race (and/or sex in most other such programs), are fundamentally racist. More broadly, when there are limited classroom seats (let’s say) discriminating in favor of one group—whether by race or by merit—necessarily discriminates against other groups: those not preferred.

Harvard’s claim that they need race-based affirmative action admissions is at best cynical. Were Harvard serious about improving diversity, they’d be moving to improve the quality of education in K-12 schools so that diversity would fall out of the merit of those graduates and not out of race-based selection. Harvard is silent on its actions in that milieu.