"Red and blue liquids inside graduated test tubes" by Horia Varlan used under a Creative Commons Attribution 2.0 license
Here’s how the academic publishing industry works: Academics do research (frequently supported by public funds) and submit that research to journals, often paying “$600-$2,000 to either the publisher or the academic society that owns the journal” for the privilege of publication. Then journals send the research back out to other academics to be reviewed (typically pro-bono–a 2008 study estimated the worldwide worth of unpaid peer review was £1.9 billion a year), and the (often for-profit) journal publishers sell access to the published research, mostly to the academic institutions who do the majority of basic research.
The system is big business: The largest of the for profit academic publishers, Elsevier, reportedly earned over $1 billion in profits in 2011 with a profit margin around 35 percent and 71 percent of their revenue coming from academic customers like university libraries.
But the rapid inflation of journal subscription prices–the per subscription cost rose by 215% between 1986 and 2003–has left many of those universities struggling to keep up. In a statement last spring, the Harvard Faculty Council called rising costs to maintain access to scholarly works “untenable” and the University of California San Francisco Library spends 85 percent of their collection budget on journal subscriptions, but “[d]espite cancelling the print component of more than 100 journal subscriptions in 2012 to keep up with a budget reduction, [their] costs still increased by 3 percent.”
One of the most persistent myths amongst Republicans and conservatives is the notion that lower income tax rates, especially on the wealthy, are the key to restoring the economy. This morning on Meet the Press, when House Speaker John Boehner (R-OH) once again trotted out this claim, host David Gregory quite rightly responded that “there’s no iron-clad evidence that lowering marginal tax rates is going to lead to economic growth.”
Strikingly, the exchange began with Boehner making the very uncharacteristic — but entirelycorrect — point that “we can’t cut our way to prosperity,” and that we have to restore economic growth. As a way to do that, he cited the Republican plan to cut loopholes out of the tax code, and then use the extra fiscal room created by eliminating those deductions to lower tax rates. Gregory responded by pointing out that tax rate hikes under Presidents Reagan and Clinton corresponded with economic booms:
JOHN BOEHNER: We’ve got to find a way through our tax code to promote more economic growth in our country. We can do this by closing loopholes, bringing the rates down for all Americans, making the tax code fairer — it will promote more economic growth.
DAVID GREGORY: But there’s no iron-clad evidence that lowering marginal tax rates is going to lead to economic growth.
BOEHNER: Oh yes there is. There’s mountains…
GREGORY: Bill Clinton raised taxes. President Reagan raised taxes.
BOEHNER: There’s mountains of evidence that if we bring tax rates down, we will help spur economic growth in our country.
GREGORY: That hasn’t been tried before?
BOEHNER: Uh, yeah. Ronald Reagan. 1981. […]
GREGORY: But he raised taxes as well, and it didn’t hurt the economy, did it?
BOEHNER: Listen, he lowered taxes twice. Both in 1981 and again in the 1986 tax reform. When they lowered rates for all Americans, we had this boom in economic growth. Why? Because we got rid of a lot of the silly deductions, brought the rates down, and it helped promote more economic growth in our country.
In general, periods of high economic growth in America over the 20th Century actually occurred alongside much higher top marginal rates than we have now.
Gregory is even more correct than he realizes. One fact neither man brought up is that the 1981 tax cut occurred in conjunction with one of the biggest single cuts in interest rates the Federal Reserve has ever carried out.
By 1980, inflation had risen to nearly 15 percent. In response, Fed Chairman Paul Volcker raised the Federal Funds rate — which in turn drives interest rates throughout the economy — to an historic high of almost 20 percent. The gambit worked. Inflation has been at near-historic lows ever since, and Volcker cut interest rates back down to under 10 percent. Any economist worth their salt would agree that an interest rate hike of that magnitude will bring on a recession, and that a compoarable cut in interest rates will be a big boost to economic growth. Read more
Senate Minority Leader Mitch McConnell (R-KY) reiterated Sunday that the automatic budget cuts that began taking effect March 1 were “modest” cuts that would keep the United States from turning into the Western European countries that have spent the last four years battling high unemployment and repeat recessions.
“We have a $16 trillion national debt,” McConnell said. “Our debt is as big as our economy. That alone makes us look like a Western European country.”
European unemployment hit a new record last week, and the Eurozone re-entered recession in November. Spain and Greece both have unemployment rates above 25 percent, and even Germany, the continent’s stalwart economy, is now contracting. Those struggles have largely occurred because Europe has attempted to reduce debt and deficit levels too quickly instead of focusing on growing the economy.
The United States took a different path after the Great Recession, choosing stimulus instead, and it has so far fared better than Europe. But it is now pursuing the same austere path Europe chose, with sequestration’s automatic budget cuts threatening to damage the recovery the U.S. has already made. McConnell claimed that “spending has exploded,” but while government spending has helped lead past economic recoveries, it has plateaued in the last four years and largely failed to help this recovery.
The cuts McConnell called “modest” will likely only make that worse. The Congressional Budget Office projects that it will lead to reduced economic growth and 750,000 lost jobs, and other projections show that it may hinder growth enough to prevent actual deficit reduction. But when Crowley asked McConnell to address those projections, he refused, saying only, “We promised the American people we’d do this a year and a half ago.”