Archive for May, 2009
Teachers in the Money
A few months ago, I wrote a report that busted two pervasive education myths: that student loan burdens are crushing recent graduates, and that teachers get paid peanuts. In the paper, I itemized first-year public school teacher salaries in districts around the country, and pointed to Bureau of Labor Statistics research showing that teachers work significantly less time for their salaries than do most other professionals. Even accounting for time teachers work beyond their contracted hours — grading papers at home, meeting with students after school, etc. — teachers work on average 18 fewer minutes a day than other professionals. And that figure does not include summer and other vacations — it is only for the contracted school year. Perhaps most important, at least when it comes to earnings, I noted that that free time can be used to pursue additional employment.
After making my point about how much time teachers work for their salaries relative to other professionals, and noting that teachers can make more bucks with the extra time they have available, I pursued the point no further. But a New York Post article today shows just how much overtime pay intrepid public school teachers, at least in New York City, can make.
At the top end, a teacher at the High School of Telecommunication Arts and Technology made $60,000 developing a data analysis system for numerous schools. That brought his total compensation to $141,159 for 2007-08. A teacher at Chelsea Career & Technical Education HS took in $52,001 of OT teaching night classes at another high school, bringing his total earnings to $152,050 (his base salary was $100,049). And the Post offers several other examples.
Now, some people will read this blog entry as an attack on the big earners in NYC and teachers generally. They will be wrong: What these teachers did to earn their extra dollars might have been worth every penny, I don’t know, and they very likely put in much more time than other professionals to earn all their dough. This does, though, just strengthen the almost irrefutable point I made in my report: On an hourly basis, teachers get salaries comparable to other professionals, and the fact that teachers work many fewer hours to get those salaries gives them significant time to earn extra dough. Sometimes, a LOT of extra dough.
If You Like Fannie Mae, You’ll Love Auto Mac
While Bank of America and Citi grabbed most of the attention in the recently released bank “stress tests” one of the biggest capital holes to be filled is that of GMAC, which under the stress test’s relatively light assumptions will need to raise another $11.5 billion in capital.
As one of the smaller of the stressed tested banks, and having almost no trading and counterparty risk — and hence little or no systemic risk, GMAC would hardly seem the candidate for any additional bailout funds. Were GMAC to fold, our financial markets would hardly notice. Who might notice is our auto manufacturers.
Just as easy credit inflated our housing market, it was easy credit — who can forget 0% financing — that lead the auto sales boom of the early 2000′s. Just as many see Fannie and Freddie — along with help from the Federal Reserve — as leading us to a housing recovery, many also see GMAC as being at the heart of any recovery in the auto industry.
Given the state of the auto industry and the increasing level of defaults on auto loans, the safe bet is that GMAC will have a tough time rasing the needed $11.5 billion from non-governmental sources.
Once the government becomes a majority owner of GMAC, its only a matter of time until its focus shifts from re-bulding its financial health to expanding the American Dream of auto-ownership.
Good News! Recession Cuts Trade Deficit in Half!
The latest U.S. trade numbers were released this morning, and the news reports so far have predictably focused on the fact that the U.S. trade deficit in March expanded modestly compared to February.
The real story behind the numbers, however, is that U.S. imports and exports continue to decline. Compared to the month before, U.S. exports of goods fell another $3.0 billion, while imports fell by $1.6 billion.
If we go back a full year, the drop in trade is staggering. Between March of 2008 and March of 2009, U.S. exports of goods and services fell by 17 percent, and imports fell an even steeper 27 percent. As a result, the goods and services deficit is less than half of what it was a year ago.
Critics of trade such as CNN’s Lou Dobbs are always harping that if we could only reduce our dependence on imports, and along with it the trade deficit, Americans would enjoy higher wages and more plentiful jobs.
Well, we’ve managed in the past year to reduce imports by more than a quarter and cut the trade deficit by more than half. Are we feeling any better?
Getting Our Terminology Straight
Dave Hornstein takes Martha Gore to task for describing Barack Obama’s health care reform plan as “nationalized health care.” “Let’s get our terminology straight,” Hornstein argues. “Nationalized or socialized medicine is a health care system that is publicly financed and delivered, such as Great Britain’s National Health Service. That is not part of Obama’s proposal or the Single Payer plan.”
Yes, let’s get our terminology straight. Socialized medicine exists to the extent that government controls medical resources and socializes the costs. What matters is who controls the money. Whether we nominally call doctors or hospitals private or public doesn’t matter. If they’re getting most of their checks from the government, that’s who’s in control.
If government controls the resources, it’s socialized medicine. The government can funnel the money through insurers and keep all the doctors and hospitals private and it would still be socialized medicine. If they have the money, they run the show. Everything else is just window dressing.
For more, see here.
It Begins: White House Unleashes the Health Care Tempest
Monday’s meeting between President Obama and representatives of the health care industry is part of an ongoing process of trying to strike a deal between government and industry over how to reform health care. Notably absent from that equation is the most important party: health care consumers.
Health care reform should be about empowering patients, not about how much increased government control the health care industry is willing to accept.
Moreover, any promised health care savings that came out of yesterday’s meeting are likely to prove illusory in the face of increased government regulation, subsidies and interference that will almost certainly drive up the cost (and decrease the quality) of health care.
A Dialogue on School Choice
The South Carolina legislature is currently considering a tax credit bill intended to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would subsidize tuition for low income families (who owe little in taxes and so couldn’t benefit substantially from the direct tax credit). Charleston minister Rev. Joseph Darby opposes such programs, and I support them. We’ve decided to have this dialogue to explain why. The next installment is here.
Rev. Joe Darby
Opening Comment, Con
My local newspaper, The Charleston Post and Courier, recently affirmed their continuing editorial suggestion that we “give School Tax Credits a Try.” I think that’s a very bad idea.
My wife is a public school teacher — and an excellent one at that. She spends much of her time either shaping young minds or preparing to do so, even supplementing meager supplies at her own expense and using creative means to reach and teach children described as “at risk.” Her school is almost 100% “free lunch,” but her students score well on state tests because she’s a good teacher. Most of her colleagues who labor under difficult circumstances are excellent teachers too. Rather than simply blaming an ominous “public education establishment,” we should note the truth — objective studies show that private education is not always a winner. A 2008 United States Department of Education study of the District of Columbia voucher program found that students in the program generally did no better on reading and math tests after two years than their public school peers.
A mass exodus to private schools will weaken public schools by leaving behind parents who have the least ability to advocate for or assist their children, and remove positive peer role models from struggling students. The major beneficiaries of private school choice in South Carolina will not be poor families, for the tuition tax credits and scholarships proposed will not cover the cost of many good private schools and will leave parents to take up the slack and to provide other things like uniforms, transportation and extracurricular activity fees. The major beneficiaries will be affluent parents who will simply have more disposable income when their share of their children’s tuition is decreased.
Before we give school tax credits a “try” we should first give equitably funded, staffed and equipped public schools a “try,” for many southern states have never done so. Excellence in public education for African-Americans was frowned upon after the Post Civil War period of reconstruction. In Paradoxes of Segregation by R. Scott Baker, Charleston, SC School Superintendent A.B. Rhett touted what was Burke Industrial School in 1939 as a place to “supply cooks, maids and delivery boys.”
His views matched those of the political powers that be when South Carolina’s schools were separate and unequal. The U.S. Supreme Court outlawed segregated schools in 1954, but South Carolina held out until the 1960′s. Our legislatively ordained strategies to maintain segregation included allowing parents to “choose” their children’s public schools and giving state “scholarships” to white parents who sent their children to private schools established to maintain segregation — the same essential strategies in the present quest for school tax credits. Many predominately African-American schools were woefully underfunded, and when whites fled the public schools for private schools, public schools sank into a state of chronic neglect. We can’t label public schools as “failures” when we’ve failed our schools. When we fully and equitably fund, equip and staff all public schools, we can then “try” tuition credits, for parents can then choose between quality public and private schools — although that might be bad for the private school business.
I serve as the pastor of a church in peninsular Charleston, where architectural preservation is serious business. Homes and businesses that have been long abandoned or neglected and are all but falling over aren’t torn down — they’re rebuilt and restored in spite of years of chronic neglect. If we can do that for neglected homes, then we should also acknowledge our past failings and do the same for our public schools instead of simply tearing them apart or abandoning them.
***
The Rev. Darby is senior pastor of the AME Morris Brown Church in Charleston, and First Vice President of the Charleston Branch of the NAACP.
Andrew Coulson
Opening Comment, Pro
On paper, the United States offers its citizens a solemn promise: work hard and you can succeed here — regardless of your race, sex, creed, or family wealth. But there’s a catch. To secure a good job you first need a good education. On paper, we’ve taken care of that, too. Over the past 150 years we’ve built up a monumental system of free state-run schools that aims to ensure every child access to a quality education.
In reality, it’s all lies.
If you’re in the top fifth of wage earners, there’s just a one-in-a-hundred chance that you are functionally illiterate. If you’re in the bottom fifth or have no income at all, the odds are that you cannot understand a newspaper or follow the directions on a pill bottle. Despite the relentless efforts of generations of reformers, America’s system of public schooling has failed in its most essential duty. We are not equipping all children to succeed in private life and participate in public life. America’s meritocratic promise is a lie.
What can we do about it?
There are those who still believe that the existing system can be fixed. Having compared different kinds of school systems from ancient Greece to the modern day, and from the poorest to the richest nations on Earth, I am convinced that that effort is futile. The problems with the status quo are endemic to its design.
Public schooling hasn’t failed so many children for so long because teachers weren’t smart enough, or paid well enough, or because classes were too large, or the federal government played too small a role. It has failed because it lacks the freedoms and incentives that drive progress in every other field. Public school teachers are hamstrung by regulations and are paid based on time served rather than classroom performance. Parents are not free to seek out the public or private educational setting best suited to their children, they are extorted into the state system because of its monopoly on $12,000 per pupil in government funding.
But should we prevent people from trying to fix it? Certainly not. If they think they can bring to public schooling the same incredible progress that other human endeavors have experienced over the past forty years, more power to them.
By the same token, no one who wants what’s best for kids should stand in the way of a program that would give parents educational alternatives today. Our children cannot wait to see if the current generation of public school reformers will somehow succeed where their predecessors failed.
I’m an engineer by training and a geek by nature. I advocate programs like the one under consideration in South Carolina because the evidence overwhelmingly supports them. Scientific studies comparing this kind of free enterprise education system to conventional public schooling favor the free enterprise approach by a margin of 15 to 1.
Others advocate school choice for more personal reasons. DC school voucher recipient Carlos Battle wrote a poem explaining his gratitude and commitment to school choice, and delivered it to the rally here last week in support of that program:
surrender me from the typical stereotype of a
black young man
one who slings rocks, smokes weed, and keeps a
gun at hand
i am a whole different guy
one who reads books and wears a tie
you see, I’m changing the perception of a young
black man
i’m climbing the ladder of success – try and stop
me, try as hard as you can….
Please don’t.
Please don’t stop Carlos or the children who would follow him up that ladder.
***
Andrew Coulson is director of the Cato Institute’s Center for Educational Freedom, and author of Market Education: The Unknown History.
McKiernan’s Out, McChrystal’s In
General David McKiernan, top American commander in Afghanistan, will be replaced by former commander of the Joint Special Operations Command, Lt. Gen. Stanley McChrystal.
According to the New York Times, Department of Defense officials said McKiernan had been removed primarily because “he had brought too conventional an approach to the challenge.”
Does a change at the top signal a shift in tactics? I would hope, but probably not.
In the past couple weeks U.S. air strikes have killed scores of innocent civilians. In response, White House National Security Adviser Gen. James L. Jones said the air strikes would continue.
By the day I’m growing more pessimistic about our ability to effect a better outcome in Afghanistan than what would exist in absence of our efforts. Every measure is taken to limit civilian casualties. But the accidental killing of civilians by U.S. air patrols fuels resentment against the presence of the U.S.-led coalition. The problem I see is simple: the collateral damage unleashed from air strikes make the Taliban appear to be a force against injustice and consequently undermine the very security Western forces are attempting to provide. Ergo, why remain?
In the “more of the same” war in Afghanistan, according to the LA Times, “The Pentagon also is considering a radical shift in deployment cycles, assigning key leaders and planners to Afghanistan for as long as five years.” (emphasis mine)
As my good friend and fellow libertarian Anthony Gregory says about Barack Obama versus George W. Bush: “Same big stick, just more soft-spoken.”
There Are Always Strings Attached…
Following up from my blog entry last week on Rep. Barney Frank’s (D, MA) efforts to reduce restrictions on Americans’ freedom to gamble online, it seems that the prospect of more tax revenue has made some folks see religion.
An article from Texas Insider has details on the political shenanigans needed to get this bill passed, including an associated bill introduced by Rep. Jim McDermott (D, WA) to tax (at a rate of 2%) the deposits into online gambling accounts. Apparently, that could provide up to $43 billion in tax revenue over 10 years. For the children.
Apparently we get our freedoms restored with a side-dish of tax.
As an aside: Note long-term opponent Rep. Bob Goodlatte’s (R, VA) non-sequitur on why allowing the Frank bill to pass is a bad idea:
Apparently, Rep. Frank believes that [Treasury Secretary] Timothy Geithner can do a better job at enforcing our nation’s criminal laws than the Department of Justice, which is scary considering [Geithner’s] track record on complying with the tax code,” he said.
(he is referring to the Frank bill’s proposal to shift responsibility for the licensing and regulation of online gambling companies to the Treasury)
HT: hero of the revolution Radley Balko.
The President’s Misguided Tax Hike on U.S. Companies Competing in World Markets
Bashing big business about “shipping job offshore” may be good politics, but the real-world evidence shows that Obama’s tax hike on American multinationals is spectacularly misguided. I would say it is so bad that it leaves me speechless, but I did manage to pontificate for almost nine minutes in this new video:
One of my goals is to make sure viewers actually understand an issue after watching, so the goal is education rather than just providing soundbites against a particular proposal. As always, feedback is appreciated.
About That Vision Thing…
Does the world need a “shared vision on food and agricultural trade policy”? So says World Trade Organization Director General Pascal Lamy:
Let me start by saying that food and agricultural trade policy does not operate in a vacuum. In other words, no matter how sophisticated our trade policies may be, if domestic policies do not themselves incentivize agriculture, and internalize negative social and environmental externalities, then we will always have a problem.
Here I question what exactly Lamy means by “incentivize”. Does he mean “make sure we get incentives right”, or does he mean “provide positive incentives to agriculture”? The former probably is harmless if it means simply allowing market forces to work, the latter a potential opening for the types of subsidies and price supports that have done so much damage to agricultural trade policy. Ditto with his wish to “internalize negative social and environmental externalities”: on the face of it, this is a fairly inoffensive goal, and a positively noble one if he is referring to, say, the effects on poor farmers abroad stemming from rich country farm subsidies. But I can see all sorts of nefarious social policies flowing from that prescription if it gets into the wrong hands.
Lamy goes on to make sensible points about the effects of tax policy on agriculture, and makes this statement about the importance of free trade for food security:
To my mind, global integration allows us to think of efficiency beyond national boundaries. It allows us to score efficiency gains on a global scale by shifting agricultural production to where it can best take place. As I often say, if a country such as Egypt were to aim for self-sufficiency in agriculture, it would soon need more than one River Nile. Which basically means that global integration must also allow food, feed, and fibre to travel from countries where they are efficiently produced to countries where there is demand.
All necessary, if not sufficient, conditions for global food security, to be sure. But Lamy then turns to exactly what a global vision for agriculture might involve:
I believe that we could all agree on what the basic objectives are that we seek from our agricultural systems. We all want sufficient food, feed, fibre and some even want fuel. We want nutritious food and feed. We want safe food and feed. We want a decent and rising living standard for our farmers. We want food to be available and affordable for the consumer. We want agricultural production systems that are in tune with local culture and customs, and that respect the environment throughout a product’s entire life-cycle.
Hmm. I’m not sure about all that. For one thing, some of those goals seem potentially in conflict. United States sugar policy, for example, has shown us the results when consumers’ desire for “affordable” food conflicts with sugar farmers’ desire for a “decent and rising living standard” (hint: it’s not the consumers who make out like bandits). Similarly, it is at least conceivable that food grown “in tune with local culture and customs” might be more expensive, or make food less abundant, or even less safe. And if those goals can be in conflict within a country’s borders, I shudder to think what such an overburdened agenda could do to the already-struggling global trading system. At the extreme, a call for a “global vision” of agricultural trade policy could see the return of international commodity agreements and other supranational management nightmares of the mid-late 20th century.
On balance, the WTO has been a force for good in freeing agricultural trade. For sure, commodity markets are still very distorted, and the whole mercantilist basis of the WTO must be questioned. But by trying to harness the desire of exporters for more customers to counteract the pressure on governments to protect domestic industries, the WTO has done much good in the world. Pascal Lamy is right to encourage countries to stay on course with the Doha round of trade negotiations. I just hope that encouraging a “global vision” for agriculture, and pointing to vague notions of “social externalities,” doesn’t run against his stated purpose of freeing farm trade.
More on Cato’s work on agricultural trade policy here.
Patching up the Education Monopoly
The Eli and Edythe Broad and Bill and Melinda Gates foundations have sponsored a report, “Smart Options: Investing the Recovery Funds for Student Success,” on how to spend $100 billion of “stimulus money” on improving America’s schools, according to Jay Mathews in The Washington Post. Ideas include national standards, better teacher evaluations, special help for struggling students, and more.
But let’s try a thought experiment. Bill Gates made his money in software. Eli Broad made his money building houses. Imagine a slightly different universe, say one in which Henry Wallace and Al Gore had become president, and we had monopoly providers of both software and housing. How good do you think the software and the housing would be? And if the U.S. Department of Technology and the U.S. Department of Housing announced that they would be spending another $100 billion, what would happen?
It seems clear that the way to improve housing and software in that world would be to open the fields up to competition, or even to privatize them. A government monopoly provider of software would be lucky to have given us Minitel by now. And monopoly provision of housing was tried in much of the world during the 20th century, with poor results. So if we were afflicted with these albatrosses, surely we’d recognize that deregulation, competition, and privatization would produce better results by far.
So then why don’t we realize it when we’re afflicted with a virtual government monopoly on the provision of education? Why are zillions of smart people studying and debating how to improve the performance of a sluggish, stagnant, tax-funded government monopoly? Maybe we shouldn’t be so sure that we’d see the failure of the software or housing monopoly either. Whatever enterprise the government chooses to monopolize — and there’s really nothing inherent or inevitable about which enterprises that will be — will most likely become a massive bureaucratic undertaking, and we will find it difficult to imagine how the enterprise could be privately run.
But Bill and Melinda, Eli and Edythe, Jay, Barack — the evidence on monopoly vs. competitive provision of services is out there. To a great extent it’s the history of the 20th century. Check it out.
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