Something people sometimes miss is that for technological improvements to boost overall living standards, the improvements need to come in sectors that constitute a large share of spending. So while the invention of the telescope and related improvements in lens-making in the 17th century were interesting episodes in the history of science, nothing of economic importance really happens until the Industrial Revolution started generating huge productivity improvements in textile manufacturing. The lens sector just lacked economic significance.
The biggest ones on the list are shelter and transportation, so these are the areas in which relatively small improvements would create big gains in living standards. Part of what’s interesting here is that housing and transportation tend to be offsetting. My daily commute takes about 15-20 minutes and costs $0 because I live 0.7 miles from work and walk. But land that’s located near central business districts tends to be very expensive. That could simply mean very tall buildings, but we have a lot of regulatory restrictions on density so instead it means expensive homes. But the “technology” of better public policy could create large improvements here.
Last week, Sens. Carl Levin (D-MI) and Tom Coburn (R-OK) released a major report that claimed “much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market.” The report fingers Goldman Sachs in particular for misleading Senate investigators last year about its business practices leading up to the housing bubble collapse. A few days after the report came out, the New York Times reported a story showing how both the Bush and Obama administration have failed to aggressively investigate and prosecute crimes related to the financial crisis.
On Thursday, I asked former Gov. Tim Pawlenty (R-MN), who is currently exploring a bid for president, if his administration would have been better at bringing accountability to Wall Street. Pawlenty lamented the fact that “many, most, maybe all of the individuals at the firms that contributed to the problem took no haircut, had no consequence, came out of it the other side as successful as they were even before.” After noting that the Dodd-Frank financial reform bill did not address systemic problems at government-backed lenders Freddie Mac and Fanny Mae, Pawlenty said he would have brought justice to the financial industry had he been president in 2008:
PAWLENTY: If I had been president during the financial crisis, then the people who had been involved in the behavior would have at the very least would have suffered some financial consequences and if we ever discovered criminal behavior we certainly would have gone after that aggressively.
The evening I spoke to Pawlenty, he had just concluded a speech to a Republican club in Nashua, New Hampshire. During his remarks, he recalled that a group of bankers had never heard of a “cash bar,” and pointed to that anecdote to contrast the divide between regular Americans and grossly overpaid Wall Street titans.
Pawlenty’s populism distinguishes him from other current and potential GOP contenders for the White House. For instance, Mitt Romney (R-MA) has positioned himself as a staunch defender of Wall Street. During the debate over financial reform legislation, Romney claimed politicians were wrong to “scapegoat” bankers and firms like Goldman Sachs for wrecking the economy.
Neil Sinhababu is not a fan of haggling for cab fare:
The free market system one does see in some places, either as a legally established option or as the way things run de facto because price regulations aren’t enforced, is one where you have to haggle with the taxi driver about the price of going to your destination. I’ve done it in other parts of Thailand, and I hear it’s common in Malaysia. People’s sentiments will vary, but I don’t like this system. Haggling takes time, is unpleasant, and can result in no deal happening because somebody presented an overly ambitious ultimatum when both parties were actually willing to settle for a middle price. It also can lead to visitors who aren’t familiar with the local haggling economy getting ripped off.
The one place I’ve been where haggling for cab rides is the formal system is Stockholm, Sweden where (as is often the case) the Scandinavians combine high taxes with radical free market ideas. It was, as Neil suggests, extremely annoying. But it also made me wonder why more cities don’t do this. After all, the main impact seems to be that tourists get ripped off. But why should city governments care about stopping tourists from getting ripped off? Charging a kind of “ignorance tax” on visitors seems like exactly the kind of thing you’d expect cities to do.
Last Friday, Rep. Trent Franks (R-AZ) assembled a “distinguished panel” for a House Judiciary Committee hearing on “defending marriage,” including vocal opponents of marriage equality, Maggie Gallagher (National Organization for Marriage) and Ed Whelan (Ethics and Public Policy Center). During the hearing, Whelan claimed that President Obama attempted to “sabotage” the Defense of Marriage Act and now this “distinguished” witness is going a step further, calling for Judge Vaughn Walker’s ruling against California’s Proposition 8 to be vacated because Walker is gay. Right Wing Watch‘s Brian has this catch:
Because Walker was deciding how the law in the very jurisdiction in which he lived would directly govern his own individual rights on a matter that a reasonable person would think was very important to Walker personally, it is clear that Walker’s impartiality in [Perry v. Schwarzenegger] “might reasonably be questioned.”
Whelan is referring to Section 455(a) of Title 28 the United States Code, which requires a federal judge “shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.” He argues that because Walker has a same-sex partner with whom he could marry if Prop 8 were overturned, he had a bias to overturn it.
The odious implication of such an argument is that only a member of the predominant group can determine the rights of a minority group—members of the minority group would not be “qualified” to rule. But as Equality Matters noted in response to other conservatives who have made the same argument, claims of Judge Walker’s “bias” also assume that a heterosexual judge would not have a “personal interest” in the outcome of the trial. This is anathema to the primary argument made by defendants of Prop 8: that same-sex marriage would hurt heterosexual marriages.
Watch the highlights from Franks’ “defending marriage” hearing:
In my mind, the way to start getting at the crux of the problem of why higher education costs keep going up is to try to put yourself in the shoes of the President of the University of Miami* in Coral Gables, Florida. Currently you’re ranked 47th on US News and World Report‘s “national universities” rankings. Naturally, you know that this is a highly imperfect methodology. But in a broad general sense you accept the judgment that your school is a lot better than a lot of other schools, but also that there are many better universities in America. Nevertheless in the 2010-2011 academic year, you’re able to charge $37,836 in tuition. That’s more than Princeton ($36,640) and only slightly less than the comparably sized University of Pennsylvania ($40,514).**
Now along comes a clever faculty member who figures out a way to teach a lot of your large introductory courses just as well at a small fraction of the cost. You implement the changes, and now your cost structure is lower. What happens next?
Well what doesn’t happen next is that you cut tuition. Maybe you use the extra money to pay yourself more and to hire more staff. But you probably don’t do that either. If you want to get paid more, you need to deliver results. But results in this case don’t mean cutting tuition. Results mean getting higher in the rankings. And you don’t move up the rankings by getting more cost-effective at educating the kinds of students you’re currently getting at the University of Miami. You move up the rankings, roughly speaking, by increasing the average SAT scores of your freshman class and/or by poaching faculty stars from other schools. To accomplish the latter, you need to spend more money. And to accomplish the former, you need to do two things. One is spending more money on fancier facilities to make more kids want to apply to your school (thus allowing you to be more selective) and the other is through very targeted financial aid to try to bribe some kids with high SAT scores into going to the University of Miami instead of to Princeton. If you do those things, the school will get more selective so your rankings will go up. Alumni will like that, faculty will like that, and your new cohorts of graduates will probably earn more money than your previous ones did and so all things considered your personal earnings will increase.
To change the trend, you need to change that dynamic.
If you look at Freddie de Boer’s ideas about how university administrators could control tuition costs they seem very sensible from a managerial perspective. But from the policy perspective the issue isn’t so much “what are some cost-reducing management practices?” as it is “why don’t university managers want to implement cost-reducing practices?” The answer is that the structure of the system gives them very little incentive to. When Wal-Mart cuts costs, it lowers prices to gain market share and make even more money. When universities cut costs, they plow the savings back into fancier facilities to move up the league tables.
High Water: Aussie inland tsunami labelled 1-in-370 year event
“This is a situation of historic proportions,” said Victoria Koenig, public information officer with the Texas Forest Service, in a phone interview with AccuWeather.com Tuesday. “The fuels are so dry. The winds are astronomical. The behavior of the winds is a perplexing situation. It’s never been like this before.”
Koenig added, “When you put all the ingredients together, you’re getting close to having the ‘perfect fire storm‘.”
That’s Accuweather meteorologist Heather Buchman writing about “a never-before-seen wildfire situation in Texas has led to the scorching of nearly 1 million acres and destruction of hundreds of homes and buildings.
ClimateProgress recently wrote about the record drought hitting Texas, just as the Congressional delegation votes to deny climate change. It was clear in that post the unprecedented drought was setting the stage for a possible devastating wildfire, which, Buchman reports, is just what happened:
Dubbing it a “moral imperative,” the Indiana Senate voted yesterday to prohibit state funding for Planned Parenthood or any organization that provides abortion services. The prohibition was added as an amendment to an extreme anti-abortion bill that would ban abortions after the 20th week of pregnancy and require clinics “to tell women in writing that human life begins when the egg is fertilized, that abortions could increase infertility chances and that a fetus might feel pain at or before 20 weeks.”
While the anti-Planned Parenthood amendment passed 36 to 13, one Republican state senator — Sen. Vaneta Becker — actually noted an all-too-common hypocrisy in Republican anti-choice efforts:
Sen. Vaneta Becker, R-Evansville, said she didn’t understand why legislators would take a step of reducing women’s access to health service at [the same time] the state is cutting funding toward programs for mentally disabled children.
“If we are so concerned about pregnancy before children are born, why are we not as concerned after children are born?” Becker said.
In an interview with ThinkProgress this afternoon, Becker said that a lot of people share her view but are too intimidated by the political climate to voice their opposition. Noting the state and federal laws already banning abortion funding, she said the bill “is an attempt to politicize the issue.” In doing so, Republicans will deny thousands of Hoosier woman access to vital health services, she said. Indeed, Planned Parenthood of Indiana states that 85,000 low-income Hoosiers receive birth control, STD tests, Pap smears and breast exams at 28 health centers across the state. “In many areas that are rural, without these kind of services, women will be stripped of health care,” Becker added.
She also noted another glaring flaw in Indiana’s anti-abortion effort. “If our goal is to prevent abortions, we should not be proposing this,” she said. “This piece of legislation will increase abortions.” As Health and Human Services Secretary Kathleen Sebelius pointed out, cutting funding for preventative health increases unintended pregnancies — the leading reason for abortions — and thus increases the number of abortions sought. What this bill will do, said Becker, is “increase sexually transmitted diseases, and the number of women with precancerous conditions that are screened for by Planned Parenthood.”
The extremity of Indiana’s current anti-choice effort was not lost on Becker. In her 24 years in the state house and five years in the Senate, Becker said she has never seen legislation that goes this far.
Which brings me to my idea of the day: A federally funded National University System.
When you have a supply shortage, one solution is to shift the supply curve to the right. Sometimes this is impossible. But in the case of U.S. public universities, it is very doable! Plenty of other countries have national university systems, and these national universities are often very high-quality. Why not us? Why don’t we build a system of high-quality, federally funded national universities to co-exist alongside our already excellent state universities?
That analysis naturally raises the question of why the supply of universities should be so inelastic in the faace of rising demand. I think a potential answer here is that the shortage isn’t so much of “universities” as it is of prestige. You could hire some people with PhDs and throw a few classrooms together pretty easily, but it would be extremely difficult to replicate the decades of history associated with America’s selective colleges and universities. Federal intervention really might make a difference here if it was done in the right way. One way to do this would be to create a National Civil Service Academy modeled on the military service academies. A National Law Enforcement Academy and a National Teacher’s College might also make sense.
To me these are all pretty good ideas, but I don’t think they’re really the fundamental issue. I’ll explain what I do think is fundamental in a followup post.
As the deadline for all U.S. troops to leave Iraq draws nearer (the end of this year), neocons are starting to get a little nervous. Earlier this month, Washington Times editorial page editor Tony Blankley said that it would be a “tragedy” to remove all U.S. troops from Iraq and the pro-Iraq war Washington Post editorial page wrote that the U.S. should try to find a way to “get around” the Status of Forces Agreement President Bush signed in 2008 mandating a U.S. withdrawl by the end of 2011.
But then, Defense Secretary Robert Gates subsequently said on his farewell trip to Iraq that the U.S. is willing to stay there a bit longer if the Iraqis so desire. Gates’s dog whistle brought some neocons out of the woodwork, who are now warning about the consequences of a U.S. withdrawal and calling for tens of thousands of U.S. troops to remain in Iraq indefinitely:
FRED & KIM KAGAN: Nothing requires us to keep massive numbers of American troops in Iraq. Twenty thousand soldiers would be enough for the next several years.That number is smaller than the American military presence in Korea, Japan, and Germany. Nor would those forces be engaged in combat. The 50,000-odd U.S. troops in Iraq today are occupied primarily with peacekeeping, training, supporting the Iraqi Security Forces, and counterterrorism. These are missions Americans would continue to undertake in 2012 and beyond.
MAX BOOT: We don’t need to keep 50,000 troops there, but a continuing presence of 20,000 military personnel, as argued by military analysts Frederick and Kimberly Kagan, would seem to be the minimum necessary to ensure Iraq’s continued progress.
And the neocons seem to have some support in Congress. House Armed Services Committee chairman Buck McKeon (R-CA) said he hopes the Iraqis ask for U.S. troops to say. Watch it:
One important factor the likes of Boot and the Kagans appear to be leaving out is what the Iraqis think. In fact, Kim and Fred Kagan even said as much, “The ball is not in Maliki’s court,” they said, “It is in Obama’s court.” But ultimately it is up to Iraq as to whether American troops have any continued presence after 2011. Is there any evidence they will allow 20,000 U.S. troops to stay in Iraq indefinitely? Unlikely — Gates announced last November that the U.S would stay past 2011 and even since then, from what Gates said this month, the Iraqis have remained mute.
Moreover, as the Washington Post noted today, Iraqi domestic politics will probably stand in the way of any U.S. troop extension:
Since Gates’s visit, [Prime Minister Nouri al-] Maliki has faced renewed pressure from Iranian-backed Shiite cleric Moqtada al-Sadr not to negotiate an extension. Sadr has threatened that his Mahdi Army, which contributed heavily to the bloodiest days of the Iraq war, could be reenergized if U.S. troops don’t leave as planned.
And while it’s unclear what Iraqi officials are saying in private, in public, they seem to understand the unpopularity among Iraqis of U.S. troops staying past the withdrawal deadline. “I think the agreement for the withdrawal of U.S. troops from Iraq ends at the end of 2011,” Iraqi Foreign Minister Hoshyar Zebari told Radio Free Europe recently, who added, “And there are no plans to extend that agreement or to postpone the withdrawal.”
Boot doubles down in a column today on the Commentary website. “Yesterday I wrote about the desirability of keeping troops for years to come in Iraq. All the same arguments apply to Afghanistan.”