There’s a great piece in the NYT about the challenge facing school districts burdened with a surging number of homeless kids:

Charity is one child in a national surge of homeless schoolchildren that is driven by relentless unemployment and foreclosures. The rise, to more than one million students without stable housing by last spring, has tested budget-battered school districts as they try to carry out their responsibilities — and the federal mandate — to salvage education for children whose lives are filled with insecurity and turmoil.

The instability can be ruinous to schooling, educators say, adding multiple moves and lost class time to the inherent distress of homelessness. And so in accord with federal law, the Buncombe County district, where Charity attends, provides special bus service to shelters, motels, doubled-up houses, trailer parks and RV campgrounds to help children stay in their familiar schools as the families move about.

There’s a lot we could do in the United States to improve the quality of education that kids coming from troubled households receive. But it’s an inherently challenging enterprise, far beyond the task of teaching to kids who have a stable home to reliably return to every night. And there’s also a lot we could be doing to directly cut down on the number of children in poverty.

Since I alluded to Larry Summers’ paper on “ketchup economics” from the mid-eighties earlier today, I may as well quote the funny part:

Ketchup economists reject out of hand much of this research on the ketchup market. They believe that the data used is based on almost meaningless accounting information and are quick to point out that concepts such as costs of production vary across firms and are not accurately measurable in any event. they believe that ketchup transactions prices are the only hard data worth studying. Nonetheless ketchup economists have an impressive research program, focusing on the scope for excess opportunities in the ketchup market. They have shown that two quart bottles of ketchup invariably sell for twice as much as one quart bottles of ketchup except for deviations traceable to transaction costs, and that one cannot get a bargain on ketchup by buying and combining ingredients once one takes account of transaction costs. Nor are there gains to be had from storing ketchup, or mixing together different quality ketchups and selling the resulting product. Indeed, most ketchup economists regard the efficiency of the ketchup market as the best established fact in empirical economics.

I was actually inspired to do some research into the ketchup market and discovered that at my local Safeway, a 20 ounce bottle of Heinz sells for $0.13 an ounce. If you go up to a 32 ounce bottle, the price falls to $0.11 an ounce; meaning in effect your extra 12 ounces cost only $0.77 cents per ounce. Thus, we can use the Efficient Ketchup Markets Hypothesis to back-calculated the exact nature of the transaction costs and so forth that justify these prices volume discounts.

As a number of people pointed out in comments, I missed something very important when talking about a hypothetical John Kerry administration from 2005-2009, his Supreme Court appointments. It seems very likely that such a Kerry administration would have had the opportunity to appoint four Justices—replacements for O’Connor, Rehnquist, Souter, and Stevens. The result would have been a Supreme Court in which there were six justices to the left of Justice Kennedy, rather than the current situation in which Kennedy is the swing vote.

Instead, by replacing Rehnquist and O’Connor with Roberts & Alito, Bush shifted the court significantly to the right and it seems possible that replacing Souter with Sotomayor shifted the court slightly further to the right. This would have been a very important part of the Kerry legacy, especially because the situation in congress would seem to have made major domestic legislation very unlikely. Another point is that President Kerry wouldn’t have put Ben Bernanke in charge of the Federal Reserve, though I’m not sure what the kind of moderate Democrat who would have gotten the job (Larry Summers?) would have done differently.

You should, of course, read Paul Krugman’s article on the state of macroeconomics and its failures during the recent crisis. That said, if I were going to try to compose a master account of the situation, I would want a bit less of an economist-explaining-economics to describe what went wrong intellectually than I would an economist-doing-economics — or perhaps the better discipline would be sociology — to look in more detail at what’s actually going on in the profession qua profession, in which people’s life and work is embedded in institutions and incentives. Something like what Barry Eichengreen offered in April (via Brad DeLong):

For economists in business schools the answer is straightforward. Business schools see themselves as suppliers of inputs to business. Just as General Motors provides its suppliers with specifications for the cold-rolled sheet it needs for fabricating auto bodies, J. P. Morgan makes clear the kind of financial engineers it requires, and business schools deem to provide. In the wake of the 1987 stock-market crash, Morgan’s chairman, Dennis Weatherstone, started calling for a daily “4:15 Report” summarizing how much his firm would lose if tomorrow turned out to be a bad day. His counterparts at other firms then adopted the practice. Soon after, business schools jumped to supply graduates to write those reports. Value at Risk, as that number and the process for calculating it came to be known, quickly gained a place in the business-school curriculum.

And academics, too:

But what of doctoral programs in economics (like the one in which I teach)? The top PhD-granting departments only rarely send their graduates to positions in banking or business—most go on to other universities. But their faculties do not object to the occasional high-paying consulting gig. They don’t mind serving as the entertainment at beachside and ski-slope retreats hosted by investment banks for their important clients.

Generous speaker’s fees were thus available to those prepared to drink the Kool-Aid. Not everyone indulged. But there was nonetheless a subconscious tendency to embrace the arguments of one’s more “successful” colleagues in a discipline where money, in this case earned through speaking engagements and consultancies, is the common denominator of success. [...]

Sociologists may be more familiar than economists with the psychic costs of nonconformity. But because there is a strong external demand for economists’ services, they may experience even-stronger economic incentives than their colleagues in other disciplines to conform to the industry-held view. They can thus incur even-greater costs—economic and also psychic—from falling out of step.

This seems at least as important to me as the intellectual arguments. We know that Larry Summers is not a believer in the efficient markets hypothesis and, indeed, 25 years ago was capable of being quite scathing and funny about the sort of people who would believe in that sort of thing. But when financiers start cutting you earning multi-million dollar paychecks you’re probably going to know how to be polite.

It seems to me that the record high unemployment rate for teenagers is largely a special case of the sharply different unemployment rates according to educational attainment that Atrios pointed out yesterday. The BLS reports the following:

The brunt of the burden of unemployment is being borne by the least-skilled members of the workforce. In part that’s because high-skill occupational categories haven’t been hammered as heavily as construction and manufacturing. But in part it’s just a downshift in the whole labor market: “Half of college graduates under age 25 are in jobs that do not require college degrees, the highest portion in at least 18 years.” In general, teenagers are going to be low on the educational attainment scale and also lacking in impressive job qualifications beyond formal education. It’s perhaps a sign of a more efficient, more flexible economy that we’re getting “better” at shifting recession-related burdens onto the low-skill people who are probably worst-positioned (in terms of savings and social capital) to deal with economic distress.