The Big Sort
Dr. Gelman writes:
"Sailer's story based on house prices fits in here--in particular, middle and upper-middle-class families moving out of California (or not choosing to move there) because they want more space--and, as I have said, the story makes sense to me--but it doesn't work on its own. It needs to be fit into the larger picture of polarized political parties and ideological voting."
Thanks. There's kind of a chicken-or-egg aspect to determining causality in something like this. I'm more personally attracted to "geographic determinist" explanations rather than political/ideological ones, perhaps only because they are less obvious.Yet, I have to admit, much of the time the more obvious answer is the right one! Thinking about the big picture, however, I find the approach ably outlined by Bill Bishop in The Big Sort intriguing.
It used to be that most people lived wherever they did because of some particular resource that place offered: farmland, a harbor, a mine, etc.. So, back before America became a country largely of office workers, America was made up of more distinctive economic communities, each with their own reason for voting Democratic or Republican. And these had to be patched together into unwieldy national parties that couldn't achieve much ideological purity.
For example, the iron miners of northern Minnesota hated their bosses, the Republican iron mine owners, so it was natural for them to be strongly Democratic. Meanwhile, it was natural for the white farmers of Alabama's cotton belt to be strongly Democratic because their grandfathers had lost the Civil War to the Republican Lincoln. And the stevedores of San Francisco were Democrats (when they weren't Communists) because they had a great natural harbor to exploit if they could maintain enough union solidarity to keep wages high, and so forth and so on.
Political wizards could, somehow or other, make a functioning coalition out of these disparate elements, but the situation didn't allow for all that much ideological polarization between the parties, since each party needed to accommodate a large number of economic special interest groups who had rather different ways of life and, hence, rather different outlooks.
Since then, America has become more homogenized in many ways, in large part because so few people now make their living in place-dependent resource-extraction. There aren't many farmers left in Kansas, coal miners in Kentucky, or dockworkers in San Francisco. Most people work indoors at jobs that more or less could be done anywhere in the country, except that it helps to be near other people in your field if you want to sell them your screenplay or your mortgage-backed security or your technology start-up.
When I moved from suburban Los Angeles to Houston in 1976, it struck me that despite all the strongly held stereotypes about the differences between California and Texas, they were really, in the big picture of things, from the perspective of somebody from another country or another century, quite similar places.
This national homogenization meant that parties weren't as beholden to myriad local special interests. So, they could now afford more to stand for general ideas.
Yet, this large scale suburbanization of America meant that small differences between places loomed larger than before in terms of ideology. For instance, that the San Fernando Valley is ringed by mountains while the suburbs of Houston are not had a subtle but important impact on relative housing prices. The supply of land for further development was sharply limited in the San Fernando Valley after 1975-1980, but not in Greater Houston.
And housing price differences fed into a loop affecting questions such as when can you afford to get married? How many kids can you afford? And can you afford for your wife to stay home with the kids?
Consider the perspectives of a stay-at-home mother and a working mother. If there aren't several other stay-at-home moms on the block, it can feel like a lonely and unsupportive life. Conversely, if stay at home moms are numerous, then the working mothers can feel annoyingly outcompeted at child-rearing by the women with more time on their hands.
So, people who have a strong opinion about how they want to live tend to seek out communities where their way of life is endorsed. Moreover, people who don't have a strong opinion tend to go with the flow of wherever they happen to be living.
One interesting question is whether there will be a stopping point to this sorting process.
I don't know.
Playing white and polite to the audience here at TPM Cafe, Mr. Sailer? Why aren't you saying what you really believe?
April 24, 2009 3:48 AM | Reply | Permalink
PseudoCyAnts,
We are still waiting for a reasoned response and argument from you.
All you do is attack, smear, and quote Steve Sailer.
Your repeated quoting of Steve Sailer leads one to believe that you are an extensive reader and student, of Steve Sailer and VDare.com, and according to your own logic this implies that you are a crazed, disgusting racist that should be hounded off of this site.
April 24, 2009 5:05 AM | Reply | Permalink
How many of "you" are in "there?"
I'm just curious.
April 24, 2009 7:35 AM | Reply | Permalink
While straying from the theme of Red State, Blue State, two comments on Aaron Swartz's "Race, Racists, and Journamilists" thread might be worth reviewing by those enthused by the topic of the three above remarks. The first is by Brian017, here; the second immediately follows.
April 24, 2009 8:24 AM | Reply | Permalink
One wonders... these Sailer-defenders all seem to be new to TPM and don't have any blog entries of their own. Hmm.
April 24, 2009 10:31 AM | Reply | Permalink
What's there to wonder about? Many of the Sailerites, including yours truly, are new to TPM. I had never even heard of this site before Sailer posted in his blog about his participation in this discussion.
April 24, 2009 10:52 AM | Reply | Permalink
Sailerites?
Sailing bravely on a sea of bad science!
April 24, 2009 11:47 AM | Reply | Permalink
PseudoCyants points and sputters at quantitative research I've done on a crucial topic in recent history. He doesn't have any objections to the validity of the facts I've unconvered, just to my mentioning these facts.
I stand accused of publishing HateFacts, HateStats, and HateGraphs (TM Newspeak 2.0) about the causes of the Housing Bubble and the subsequent Mortgage Meltdown, which set off our current financial crisis. In contrast, ignorance is the preferred approach in polite society to one of the most important events of recent times.
It's interesting how Democrats have let Bush's 2002-2004 war on down payments and honest mortgage application documentation disappear down the Memory Hole. This was a fairly sizable Bush Administration initiative aimed at ginning up a Housing Bubble via debauching traditional mortgage credit standards. Bush repeatedly invoked racial equality in access to the American Dream, but of course it also meant that lending standards were lowered for white deadbeats, too.
As I've been pointing out for six months, George W. Bush repeatedly demanded the loosening of mortgage credit standard, such as zero down and zero doc loans, in speeches before and after his October 15, 2002 White House Conference on Minority Homeownership.
http://www.vdare.com/Sailer/080928_rove.htm
Bush used his call to add 5.5 million minority homeowners in the name of closing the racial gap in homeownership rates as politically correct cover for endorsing boiler room operator Angelo Mozilo of Countrywide's modus operandi of debauching mortgage credit standards:
http://isteve.blogspot.com/2009/02/countrywide.html
Bush was sending a message in 2002-2004 to the federal regulators who worked for him to keep their hands off Countrywide and its ilk -- the boiler room boys weren't the sleazebags they might appear to be -- instead, they were fighting the good fight against racist redlining! (And making zillions bundling toxic mortgages and peddling them to Wall Street). Thus, for example, under Clinton, only 7% of first time home buyers in California put zero money down. By 2006, 41% of first time buyers put no money down. Not surprisingly, the default rate on 2006 vintage mortgages in California is already 8.5%.
Bush's Minority Homeownership initiative fit into Karl Rove's Big Picture strategy for a permanent 1896-style realignment by turning Hispanics into Republicans. Besides amnesty, Bush and Rove wanted to make Hispanics into conservative homeowners via lax credit allowing them to buy houses that they couldn't afford under time-tested credit standards.
Thus, minorities got about 55% of all subprime loans from 2004-2007 according to the federal government's Home Purchase Disclosure Act database:
http://isteve.blogspot.com/2009/04/subprime-bubble-in-living-color.html
In California's Inland Empire, the metropolitan area with the most foreclosures, minorities got 79% of the subprime dollars originated in 2006.
The federal government has a huge apparatus to track whether minorities are getting enough mortgage money, but no apparatus to check whether they are paying it back. So, default rates by ethnicity have to be calculated by economists using laborious methods. Two Boston Fed economists recently figured out the default rates by subprime borrowers in all of Massachusetts, and they came out to about twice as high for minorities and for white subprime borrowers.
http://isteve.blogspot.com/2009/01/we-finally-have-first-admittedly-small.html
If true nationally, this would suggest that approaching 2/3rds of the defaulted subprime dollars were on loans to minorities.
My rough estimate is that about 60%, maybe 65% of all money defaulted on subprime loans was defaulted by minorities.
Now, the lesson is that pervasive political correctness -- the rage that emerges when anybody publishes HateFacts, HateStats, and HateGraphs -- makes America suckers for conmen like Angelo Mozilo and Karl Rove, who use calls for "racial equality" to con America in financial debauchery.
April 24, 2009 10:47 AM | Reply | Permalink
I'm a bit disappointed that you backed away from your earlier debunking of the diversity-meltdown thesis. You've certainly proved that Bush & the Boston Fed were foolish to rail against prudent lending, but not that they caused the bad lending itself. It seems to me that that was not a unique event but just another example of a bubble followed by a crash. The most famous example of such an event was Dutch Tulip Mania, and it wasn't diversity or P.C that caused that. We seem to have had a lot of money sloshing around (much of it from Arab or Asian nations with lots of cash and less attractive investment opportunities as home) and housing seemed the most sensible investment (possibly due to capital gains tax structure), so a lot of people were bidding up prices. Lenders weren't pressured into but chomping at the bit to get in the game. Most people (including in the lending business) don't really buy into the Emperor's New Clothes of assuming everybody has equal ability to pay off loans, but market conditions made it appear that anyone who could fog a mirror had expected value. Your selection-theory was quite weak and could simplified to to "Risk-takers that took on high leverage grew larger", which happens in every bubble. Lenders weren't generally trying to meet minimal CRA targets but exceeding them because they thought it profitable, so I don't see much role for regulators.
April 24, 2009 3:14 PM | Reply | Permalink
That bubbles have a lot in common can't be denied; however, each bubble has its own peculiarities.
Sailer has pointed out what he deems to be this one's. No money down, closing fees loaned to the buyer, and teaser rates meant that buyers had no skin in the game and more importantly, nothing to act as a limit on the bidding wars which lead to bubbles.
If a buyer has to put 5% down, then, a $500,000 purchase calls for $25,000 out-of-pocket. And when the bidding war (the "bubble") gets going, another $100,000 means another $5,000. Those who stretched for that $25K won't be able to come up with the additional $5K. Result: no war and no bubble.
In other words buyers were not constrained from engaging in bidding wars, because the increased purchase price they'd be paying only affected their monthly payment and with teaser rates available, not that much.
That's a recipe for a price bubble.
April 24, 2009 8:33 PM | Reply | Permalink
In option terms lenders were selling the buyer a put and a call and charging the buyer nothing for either.*
The price of the home goes down? Walk away. The price goes up. Sell it and rake in the profits (note: the ROI is infinite!). Bubble away!
* The put and call impose a carrying charge (monthly mortgage P&I -- although many had no "P" -- together with taxes and insurance), but this cost was reduced where not eliminated by savings from not having to pay rent.
April 24, 2009 8:47 PM | Reply | Permalink
"Sailer has pointed out what he deems to be this one's. No money down, closing fees loaned to the buyer, and teaser rates meant that buyers had no skin in the game and more importantly, nothing to act as a limit on the bidding wars which lead to bubbles."
Wrong. Sailer states that the cause of this bubble is efforts to lend TO MINORITIES under the terms you listed. This ignores that McMansions that were sprouting like crabgrass in every open tract of land across the great middle of this country, and they weren't being bought by "minorities."
Bush's efforts to include minorities in the rush to home ownership came after the conditions for the bubble were established. Even if Sailer's claims about the numbers of minority defaults holds up under real scrutiny, which I highly doubt, they are only due to the fact that, once the bank's started tightening credit, minority homeowners defaulted in large numbers because of their lower socioeconomic status generally. They in no way caused this bubble.
Sailer is trying to scapegoat minorities for the housing crisis. It's dishonest, it's wrong on the facts, and it's morally reprehensible. Why are you defending him?
April 27, 2009 12:41 AM | Reply | Permalink
I'm not defending Sailer. I'm defending his analysis.
A bubble --and especially, a housing price bubble -- begins at the bottom. There has to be a cohort which buys out the starter and lower cost homes to move the sellers up into your "McMansions" which did indeed, sprout like crabgrass. An example would be the large Baby Boomer cohort which generated the price boom from 1982-1988.
By eliminating any skin the game for first time and lower income homebuyers, George Bush and his various contributors from the mortgage industry produced the house price bubble which resulted in the MBS meltdown.
N.B. That a very large percentage of subprime borrowers were Hispanic or African-American is immaterial.
April 27, 2009 1:35 PM | Reply | Permalink
By the way George's "ownership society" is now the not ownership society.
Easy come, easy go.
April 27, 2009 2:10 PM | Reply | Permalink
"If true nationally, this would suggest that approaching 2/3rds of the defaulted subprime dollars were on loans to minorities.
My rough estimate is that about 60%, maybe 65% of all money defaulted on subprime loans was defaulted by minorities."
That's a pretty big "If," my friend. I think your extrapolation is utter bullshit, and I defy you to support it with something other than a "rough estimate" conveniently pulled from the state with the highest Latino population in the country.
April 27, 2009 12:32 AM | Reply | Permalink
Mr. Sailer is a racist. He is an anti-Semite. He is a homophobe. He is a misogynist. He is anti-immigrant.
He cannot be described as merely a person with bigoted views as his views are so extreme that one of the blogs he writes for, VDare.com, is listed as an online hate group by the Southern Poverty Law Center.
He believes that homosexuality is caused by a "gay germ."
He has been identified by media watchdogs such as Media Matters in America and Fairness and Accuracy In Reporting as being a racist. He is the "founder" of the fake science Human Biodiversity Institute, a fake "think tank" that promotes eugenics. He has been called a racist by right-wing conservatives who found his "views" on the aftermath of Hurricane Katrina the vilest, most indefensible comments made about the disaster.
The most important thing you can know about this man is that he is a racist.
April 24, 2009 11:39 AM | Reply | Permalink
Bring the hysterical woman her smelling salts....Hmmmm.
Probably should add misogynist to the list now, J.
April 24, 2009 11:56 AM | Reply | Permalink
Jade7243, you have accused Sailer of being a racist-antiSemite-homophobe-misogynist-antiimmigrant. The charge is the most important part of the process. As there is no appeal, let us stipulate his guilt.
Still... before being shown the door, Sailer might have made some interesting points in his 10:47am comment. He had some unkind things to say about George Bush, Karl Rove, and Angelo Mozilo. He suggested that perhaps they exploited Hispanics for political reasons. He offered evidence that some of the key events of the current worldwide financial crisis were set in motion by Bush and his strategists and allied crony capitalists.
Even a convicted felon might observe and connect important facts.
I'd be interested to know your opinion about those that Sailer has described.
Is it possible that some of Sailer's ideas more germane to the discussion of Red State, Blue State could also have merit, as author Andrew Gelman seems to believe?
April 24, 2009 12:44 PM | Reply | Permalink
Nope. Because he'll simply use the discussion as an excuse to advance his anti-immigrant agenda. He's already doing so.
April 24, 2009 12:57 PM | Reply | Permalink
E pur se muove.
April 25, 2009 5:17 PM | Reply | Permalink
You hadn't previously identified Sailer as an anti-semite, and didn't provide evidence of it either. He's half-Jewish by birth and once identified as Jewish, but I suppose it's still possible for such a person to be an anti-semite anyway. You just didn't provide evidence. He has highlighted Greg Cochran's pathogenic theory, but I don't believe he came to any definite conclusion about it's accuracy and has also made note of a competing chimera theory. I don't see how any of those theories are more or less homophobic than genetic ones or Freudian frigid/pampering-mothers. The cause of it seems distinct from ones attitude toward the result.
I don't think HBI is a think-tank. I think it's more an email-list, like Ezra Klein's Journolist.
April 24, 2009 3:22 PM | Reply | Permalink
There's some slightly damning guilt by association there, but I dunno - it seems like there's a trace of philistinism at work in indicting someone simply for thinking the wrong thoughts.
I think the best thing about Sailer is he doesn't trade in shopworn cliches. I feel like he's pointing to 'distasteful' facts we don't like to admit - perhaps that Lation citizens aren't all that amped about illegal immigration. He could strike a more politically correct pose, but then he wouldn't be interesting.
April 24, 2009 5:46 PM | Reply | Permalink
"The most important thing you can know about this man is that he is a racist."
That may be so, but it's completely, absolutely irrelevant when responding to facts. So tell us, what do you have to say about the facts presented? Or do you just want to ignore them and tell us how much you hate Sailer for informing people?
April 25, 2009 1:17 AM | Reply | Permalink
Somebody please bring Jade7243 her smelling salts. She's feeling faint due to my being a crimethinker.
April 24, 2009 11:48 AM | Reply | Permalink
Still wonder how you stand behind comments like "Obama is a wigger".
That's just amateur hour for a real scholar, buddy.
April 24, 2009 11:54 AM | Reply | Permalink
Thought so.
April 24, 2009 3:15 PM | Reply | Permalink
Wigger because he was brought up by white people and appears to have made a special effort to be black. Black enough to be seen as a credible black politician.
April 26, 2009 8:22 PM | Reply | Permalink
Jade:
1) What is your definition of "racist"?
2) Do you believe that racism in this country is widespread? Does it contribute to racial disparity? How would life be different if there were no racism in the US?
April 25, 2009 2:47 AM | Reply | Permalink
What makes Sailer's "facts" suspect is that in none of them is the racial descriptor necessarily relevant. See, for example, the Boston Fed data he cites, where the marker is clearly subprime mortgages, but he uses "Hispanic and white" to get his racial description in.
April 25, 2009 11:53 AM | Reply | Permalink
In other words, they're facts, but you just don't like how he describes them.
April 25, 2009 1:22 PM | Reply | Permalink
Just last February, you demonized The Community Reinvestment Act (CRA), as being responsible for the mortgage failures:
Steve Sailer, "The Minority Mortgage Meltdown (contd.): How The Community Reinvestment Act Fits In", VDare, February 01, 2009
Two studies published by Traiger & Hinckley LLP of New York, NY, found the opposite.
Your article mentioned above failed to note these stats. Also, you failed to note statistics prove that minorities were significantly much more likely to be given higher priced loans, and this was a significant reason for mortgage defaults:
Yet you blamed the CRA, in an article with copious hyperlinks, many not even relevant to the topic at hand, and 29% of them self-referencing to either VDare or iSteve blog. So spare us the persecution whines about your being falsely labeled a racist.April 26, 2009 3:29 AM | Reply | Permalink
Yeah PCA very clever, but I'm waiting for you to actually get around to refuting anything Sailer has said.
When you grow up you'll be embarrassed about all this, believe me. Because you quoted Tool and for actually thinking Tool were any good in the first place.
April 26, 2009 8:30 PM | Reply | Permalink
I think he refuted Sailer just fine. You can sit there and say whatever the fuck you want, but like a typical conservative, when faced with facts, all you do is plug up your ears and say "Na Na Na Na Na - I Can't Hear You."
April 27, 2009 12:25 AM | Reply | Permalink
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