Month: November 2014

Afternoon Must-Read: Ed Luce: Washington’s Two Foreign Policies

Posted on by Brad DeLong

Ed Luce:
Washington’s two foreign policies:
“It goes without saying that almost any deal…

…would be unacceptable to Benyamin Netanyahu’s Israel. The same applies to Saudi Arabia and other US Gulf allies. The Saudis have been putting it about that Riyadh would start its own nuclear programme if the US struck a deal that fell short of fully dismantling Iran’s…. Not only, it seems, will there be two US foreign policies. But most of America’s Middle East allies will be backing Capitol Hill’s. Can Mr Obama thread a path through this?

The most dramatic example of clashing US foreign policies was after the first world war. President Woodrow Wilson put his authority on the line in Paris to create a League of Nations that the US would lead. His enemies in Congress, led by the patrician Henry Cabot Lodge, had different ideas. They sunk the treaty and with it America’s engagement on the world stage for the next 20 years. An Iran deal would also be faced with Congressional hostility. The big difference is that Mr Wilson pulled out all stops to sell his treaty. It still foundered.

In the words of Vali Nasr, a former Obama official, this president sees an Iran deal as a ‘nice to have’, rather than a ‘must have’. Unless ‘must have’ becomes both the goal of Mr Obama and Congress, a Wilsonian fate awaits.

Note Ed Luce’s last sentence here: “Unless ‘must have’ becomes both the goal of Mr Obama and Congress, a Wilsonian fate awaits.” For critical elements of the Republican Congressional caucus, any deal with Iran is a bad thing because it will undermine the narrative of Obama as Kenyan-Muslim-Socialist which the American people desperately need to hear, to be taught, and to learn. For critical elements of the Democratic Congressional caucus, any deal with Iran endangers Israel–or, perhaps, leaves them vulnerable to being attacked for endangering Israel. And there is no Arthur Vandenberg in the Republican leadership anywhere.

With very high probability, a Wilsonian fate awaits. Full stop.





Hobson’s Choice: (Late) Friday Focus

Posted on by Brad DeLong
Cthulhu Google Search
Paul Krugman:
Inequality and Crises: Scandinavian Skepticism:
“The ongoing question of whether rising inequality makes countries more vulnerable to financial crises…

…or in some other way degrades performance. I’ve been wary… in part because it appeals so much to my general leanings…. I continue to be skeptical, in part because there have been some pretty bad crises with lousy recoveries in countries that don’t have a lot of inequality. Consider, in particular, the post-1990 Swedish slump…. Just one piece of evidence. But I’m still having trouble with this one.

The original argument was John A. Hobson’s, in his 1902 book Imperialism. The poor have to spend their incomes in order to buy their necessities. The middle class have to spend their incomes to buy their necessities and the conveniences they need in order to ensure themselves that they are not among the poor. The rich can spend their incomes or not.

Hence the more unequal distribution of income, the more the potential for slack aggregate demand. With monetary policy constrained by the rules of the game that was the gold standard, Full employment in an unequal society required either unusually optimistic financiers and industrialists or something else. Hobson thought that the “something else” what inevitably be imperialism. Governments that spent to conquer and then forced the conquered colonies to spend buying the exports of the metropolis would tend to stay in power. Governments that did not would either be turned out at the ballot box or by the North Atlantic street.

Nowadays we see other ways out of Hobson’s inequality trap. Monetary policy is not constrained by the gold standard and can, via low present and promised future interest rates, induce financiers and industrialists to spend on long-term investment projects–except to the extent that the euro, the sub 2%/year inflation target, the zero lower bound on short-term safe nominal interest rates, and fears that quantitative easing will somehow cause more “financial instability” than would near-permanent depression combine to create Golden Fetters of the mind as strong as those that bound the believers in the interwar gold standard. Legislatures are now allowed to borrow-and-spend for reasons other than real, created, or Potemkin military necessity. Banking regulators can take powerful steps to shrink risk premia and so encourage the animal spirits of those who are otherwise too fearful to defeat the dark forces of time and ignorance which envelope our future, and invest.

But, in my view at least, it remains a trap. Today as in 1902 the poor have to spend their incomes in order to buy their necessities. Today as in 1902 the middle class have to spend their incomes to buy their necessities and the conveniences they need in order to ensure themselves that they are not among the poor. And today the rich can spend their incomes or not, depending on current and expected future interest rates, the magic wand of the Confidence Fairy, the state of long-term expectation, the level of interest rates, the availability of financial markets to summon the Genie of Risk Tolerance, the Inflation-Expectations Imp, and other factors. The only major difference between now and then is that the spending of the social insurance state imparts, or ought to impart, enormous macroeconomic inertia–serving as an additional sea-anchor for aggregate demand.

Thus I would be astonished of the Hobson argument were not in some sense right. But things can be right without being first-order important. However, the shift of income distribution toward the top over the past 35 years have been so large that I would be astonished if the Hobson argument was not important.

But there is no rule that my visualization of the Cosmic All is correct. There is no law of nature that keeps me from being surprised and astonished.

633 words




Afternoon Must-Read: Lawrence Summers: Companies on Trial

Posted on by Brad DeLong

Lawrence Summers:
Companies on Trial: “Lord Chancellor Edward Thurlow…

corporations have ‘no soul to be damned, no body to kick’…. Garrett’s data and his narrative provide a textured understanding of these trade-offs and many others in dealing with corporate crime…. The current trend towards large fines as the response to corporate wrongdoing seems to promote a somewhat unattractive combination of individual incentives. Managers do not find it personally costly to part with even billions of dollars of their shareholders’ money, especially when fines represent only a small fraction of total market value. Paying with shareholders’ money as the price of protecting themselves is a very attractive trade-off. Enforcement authorities like to either collect large fines or be seen as delivering compensation for those who have been victimised by corporate wrongdoing. So they are all too happy to go along. In the process, punishment of individuals who do wrong or who fail in their managerial duty to monitor the behaviour of their subordinates is short-changed. And deterrence is undermined. There is a broader cultural phenomenon here as well. Relative to other countries such as the UK or Japan, the principle that leaders should resign to take responsibility for failure on their watch even when they did not directly do wrong is less established in the US. This is probably an area where we have something to learn…

Lunchtime Must-Read: Matthew Yglesias: The GOP’s Counterproductive Policy Strategy

Posted on by Brad DeLong

Matthew Yglesias:
The GOP’s political strategy against Obama keeps leading to policies conservatives hate: “Republicans’ strategy has been savvy politics, but it’s forced them…

…repeatedly — to accept worse policy outcomes than they otherwise could have obtained. Alleged presidential overreach is largely a mirror-image of systematic congressional underreach… deliberately choos[ing] to leave obtainable policy concessions on the cutting room floor…. The clearest example of obstructionism leading to policy costs is probably the Affordable Care Act. Democrats had the votes to get this done, but the party was plainly desperate for bipartisan cover. In exchange for votes, Republican members of congress could have gotten tort reform or other policy priorities. But they preferred to keep their fingerprints off the bill, even if that meant a policy outcome they liked less. On climate change, Republican behavior was even more counterproductive…. A similar preference for worse policy outcomes has manifested itself through inaction…. Obama, in other words, was offering a real policy concession (entitlement cuts) in exchange for political cover for tax hikes that were going to happen anyway. But Republicans preferred to keep their fingerprints off any kind of action, even if that meant a policy outcome they liked less. These triple-breakdowns of bipartisanship have made Obama a much less popular and successful-looking president…. But… fFor a party driven by a core commitment to low taxes and welfare state rollback, it’s a bit odd…. [The Republican] Congress is, itself, violating a basic norm of American politics — the norm that says given a choice between a better policy outcome and a worse one, a legislator should choose the better outcome…. If Republicans wanted more conservative-friendly policy outcomes, they could be getting them. But they prefer more Republican-friendly political outcomes…

I think Matt is definitely on to something. Republicans are, right now, temporarily (those of us interested in good policies have to hope), the majority legislative party. Yet they are acting like a fringe party in a proportional-representation system in which their seats depend on satisfying the ideological preferences of a small political minorities rather than the substantive, pragmatic policy preferences of a majority.

Perhaps the most puzzling thing is how few of the policy intellectuals and the technocrats whose substantive policy ideas would be thought likely to have the most traction on the Republican side of the aisle are worried about this or spend any time working on this. The end result of Obama’s presidency Will be national health, spending and taxing, climate, and immigration policies that are much worse from the viewpoint of the substantive policy preferences of most Republicans than could easily have been the case. And the Republicans have traded away this low-hanging fruit for what? Have they raised their long-run chances of partisan political domination? Have they raised the chance of a Republican president come 2017? Have they made Ron Fornier, Chuck Lane, and Clive Crook dislike Barack Obama?

Lunchtime Must-Read: Richard Milne: Central Banks: Stockholm Syndrome

Posted on by Brad DeLong

Richard Milne: Central banks: Stockholm Syndrome: “When the global financial crisis broke in 2008…

…Sweden’s central bank seemed to be one of the best-equipped to fight it. The Riksbank was led by Stefan Ingves, a former senior official at the International Monetary Fund whose expertise lay in financial crises and how to avoid them. One of its deputy governors was Lars Svensson, an expert on Japan’s long battle against deflation and a top thinker on monetary policy. With these credentials, the two men seemed ideally suited to guide the Riksbank’s policy through the turmoil…. At first, they found common ground as the Riksbank cut interest rates in 2009 to 0.25 per cent, their lowest level since its founding in 1668. But for the next two years, the duo clashed bitterly…. The Riksbank’s decision in 2010 to start raising rates–an idea Mr Svensson firmly opposed – has transformed the Swedish central bank from a small but respected institution to a cautionary tale for central banks worldwide. ‘Sweden has done an experiment the whole world is interested in’, Mr Odendahl says. ‘What should we do when monetary policy should be accommodative but there are financial risks? The Swedish lesson is that tightening policy prematurely isn’t the answer’…

Both at the time and in retrospect, it seems completely unclear just why Ingves thought it was time to tighten interest rates back in 2010. The arguments just seem to make no sense whatever. They still do not.

Things to Read on the Morning of November 22, 2014

Posted on by Brad DeLong

Must- and Shall-Reads:

 

  1. Alice Rivlin: People Who Wanted Market-Driven Health Care Now Have it in the Affordable Care Act: “That all sounds complicated, inconvenient and unfair. What have these ‘socialist Democrats’ done to us? But wait a minute: Isn’t that how markets are supposed to work? The United States never adopted a simple national health plan to cover everyone…. In general, Republicans argued that relying on market forces would give people what they wanted while also putting pressure on the health system to offer more effective care for less money…. In general, Democrats argued that government should set benefits and the prices it would pay, as in a ‘Medicare for all’ program…. They pointed out that markets didn’t work well in health care because consumers didn’t know enough to choose what was best for them…. The compromise was to combine markets with regulation, sometimes called ‘managed competition,’ now called ‘the Affordable Care Act.’… Should believers in market forces try to gut the Affordable Care Act? Heavens, no. They should seize this huge opportunity to prove their case by helping to make the law’s markets work effectively…”

  2. Steven Teles: Restrain Regressive Rent-Seeking: “the great paradox of the last third of a century is that we have actually had an explosion of regulation in this ‘supposedly deregulatory’ era… regulation that has the effect of redistributing, sometimes dramatically, upward…. Intellectual property protections, especially patents and copyright, have been expanded dramatically…. There is an argument that this expansion has actually reduced innovation, there is no doubt that it has allowed existing firms to use the force of law (rather than the market) to enrich themselves…. The same period has seen a transformation of occupational licensing, from a marginal force in our economic organization to one that is increasingly ubiquitous…. Finally, the incredible growth of the financial sector… also finds its source in government-derived rents… ‘too big to fail.’… By allowing a huge securitized housing finance market.. pushing more and more of American retirement savings into actively managed 401ks and IRAs… the government created the greatest pool of rents in the history of mankind…”

  3. Danny Vinik: Peter Schiff: My Inflation Prediction Was Correct. The Stats Are Lying: “Peter Schiff… might… be the person most wrong about America’s economic struggles. In 2009, Schiff not only warned of impending inflation but said it was already upon us…. In the newest issue of Reason, the libertarian magazine, he ‘responds’ to his critics….’It’s hard to ignore the victory chants coming from the White House press room, the minutes of the Federal Reserve’s Open Markets Committee, the talking heads on financial television, and the editorial pages of The New York Times…. Their claims of victory are premature and inaccurate. Inflation is easy to see in our current economy, if you make a genuine attempt to measure it.’ Schiff goes on to cite the Big Mac index… argues that the ‘sandwich, which reflects the average person’s direct experience, may be a more accurate yardstick of inflation.’ This is wrong in so many ways…. If Schiff wants a metric that takes into account prices of everyday items—lettuce, tomato, bread, ground beef, etc.—he should look no further than the consumer price index…. The Massachusetts Institute of Technology has created a separate inflation measure: The Billion Prices Project tracks prices online through massive retailers that have significant market share. The project only further confirms the accuracy of the CPI. It’s hard to think of any theory that has been more clearly disproven over the past six years than the right wing’s inflation paranoia. But the fanatics are not giving up. Is there any evidence at all that would convince Schiff—and his many followers—he’s wrong?

  4. Walt Mossberg and Kara Swisher: A Note to Re/code Readers: “The biggest change for some of you, however, will be that we have decided to remove the commenting function from the site. We thought about this decision long and hard, since we do value reader opinion. But we concluded that, as social media has continued its robust growth, the bulk of discussion of our stories is increasingly taking place there, making onsite comments less and less used and less and less useful…. We believe that social media is the new arena for commenting, replacing the old onsite approach that dates back many years…”

  5. Jim Tankersley: Big cities are dominating the recovery, leaving the rest of America behind: “This isn’t how the economy typically worked over the last 35 years. Calculations made earlier this year by state economists in Oregon show that big cities tended to grow at rate similar to other areas of the country after a recession. Only the late 1990s were an exception. Until now…. Rural areas without oil or gas reserves have on average only recovered one-fifth to one-quarter of the jobs they lost during the crisis…. It may be that this geographic jobs gap is a permanent feature in an economy increasingly driven by brainpower and innovation, where clustering smart people in relatively small areas appears to boost labor productivity…. ‘Scale and density concentrate economic inputs like skilled people and R&D, intensify interactions, allow for labor market pooling and matching, allow for access to shared infrastructure,’ said Mark Muro, the metro program’s policy director. ‘This a fact of economic life. Place, scale and density matter.’…

  6. David Schleicher: Things Aren’t Going That Well Over There Either: Party Polarization and Election Law in Comparative Perspective by :: SSRN: “One of, if not the, most important change in American political life over the last 30 or so years has been the rise of extreme party polarization. Our two major parties are increasingly ideological distinct and distant from one another, and increasingly willing to abandon long-standing institutional norms and short-term policy compromise in the name of achieving long-run party goals. Efforts to understand why the parties have changed largely have been parochial, largely looking for explanations in American politics, history, media and institutional arrangements. This focus has a logic to it. Politics in most other advanced democracies does not feature the same type of polarization between parties, and therefore the answers for why American politics has gone in this direction seem to lie inward rather than abroad. But it is still a mistake. This short essay argues that a common shift in voter preferences towards more radical and fundamentalist opinion among even a small slice of the electorate can explain polarization in the United States and changes in politics abroad. In many European countries with proportional representation (PR), we have seen the rise of parties so radical that established parties refuse to form coalitions with them. In ‘Westminster’ systems, which due to their use of first-past-the-post vote counting and single-member districts are supposed to tend towards having two parties, we have seen the rise in third-and fourth party voting. Notably, in most Westminster systems, there is little intra-party democracy, leading groups of voters with more radical opinions without the ability to influence mainstream parties, which makes those with radical opinions more willing to waste votes. A plausible story about American political development is that the same voters and interest groups who would form radical parties in PR systems and support spoilers in Westminster systems use intraparty democracy to influence our two-party system and create polarization. Election laws and institutional design shape the way radicalism influences politics. If this is right, several lessons follow. Any effort to understand why American parties have changed must look at factors that are common across many western democracies. Further, the rise of radical parties in PR systems and spoilers in Westminster systems have created governance problems that are of a type with the problems created by our extreme polarization. We should thus be skeptical that there are institutional design reforms that can make American governance work easily in the face of polarization.”

Should Be Aware of:

 

  1. Brian Buetler: Republicans: Obama’s Immigration Action Is Illegal Just … Because: “A few months ago, before President Obama delayed his plan to extend deportation protections to more unauthorized immigrants, a group of conservative opinion journalists—New York Times columnist Ross Douthat, most prominently—weighed in on the idea in unequivocal terms…. Caesarism…. A step into the lawless void. It all sounded incredibly plausible, in no small part because Obama framed his own objective as a response to the fact that Congress hadn’t passed a law he wanted Congress to pass. That Obama also insisted, on multiple occasions, that only Congress could solve the deportation problem, further bolstered the right’s case. But it turns out that the laws on the books actually don’t say what you might think they say. Other presidents have discovered this, too. And since nobody wants to write a ‘maybe I should’ve asked some lawyers first’ mea culpa column, they shifted the debate from the terrain of laws to the murkier terrain of political precedent, norms, and procedure…”

  2. Kevin Drum: Republicans Finally Admit There Is No Benghazi Scandal: “For two years, ever since Mitt Romney screwed up his response to the Benghazi attacks in order to score campaign points, Republicans have been on an endless search for a grand conspiracy theory that explains how it all happened. Intelligence was ignored because it would have been inconvenient to the White House to acknowledge it. Hillary Clinton’s State Department bungled the response to the initial protests in Cairo. Both State and CIA bungled the military response to the attacks themselves. Even so, rescue was still possible, but it was derailed by a stand down order—possibly from President Obama himself. The talking points after the attack were deliberately twisted for political reasons. Dissenters who tried to tell us what really happened were harshly punished. Is any of this true? The House Select Intelligence Committee—controlled by Republicans—has been investigating the Benghazi attacks in minute detail for two years. Today, with the midterm elections safely past, they issued their findings. Their exoneration of the White House was sweeping and nearly absolute…”

  3. Anand Katakana: Immigrants aren’t taking your jobs, they’re making their own: “Mexicans, Indians, Chinese, Koreans and Cubans make up the bulk of migrant entrepreneurs, with 35 percent. But the entrepreneurship rate among Greek, Israeli, Palestinian and Syrian immigrants was higher than other nationalities. Over the last two decades, immigrant owned businesses have made up 30 percent of the growth in the small business economy, a significant chunk given that immigrants only account for 13 percent of the US population. Their businesses also performed better than your average American. Employees within these small companies earned over $55,000 a year over the median earned income of $41,000 a year, according to the Fiscal Policy Institute’s report…. It’s worth noting that there’s not a single city on that chart where the foreign-born share of business owners doesn’t exceed the foreign-born share of the population…”

Morning Must-Read: Alice Rivlin: People Who Wanted Market-Driven Health Care Now Have it in the Affordable Care Act

Posted on by Brad DeLong
Alice Rivlin: People Who Wanted Market-Driven Health Care Now Have it in the Affordable Care Act: “That all sounds complicated, inconvenient and unfair…

…What have these ‘socialist Democrats’ done to us? But wait a minute: Isn’t that how markets are supposed to work? The United States never adopted a simple national health plan to cover everyone…. In general, Republicans argued that relying on market forces would give people what they wanted while also putting pressure on the health system to offer more effective care for less money…. In general, Democrats argued that government should set benefits and the prices it would pay, as in a ‘Medicare for all’ program…. They pointed out that markets didn’t work well in health care because consumers didn’t know enough to choose what was best for them…. The compromise was to combine markets with regulation, sometimes called ‘managed competition,’ now called ‘the Affordable Care Act.’… Should believers in market forces try to gut the Affordable Care Act? Heavens, no. They should seize this huge opportunity to prove their case by helping to make the law’s markets work effectively…

Morning Must-Read: Steve Teles: Restrain Regressive Rent-Seeking

Posted on by Brad DeLong
**Steven Teles**: [Restrain Regressive Rent-Seeking](http://www.cato.org/publications/cato-online-forum/restrain-regressive-rent-seeking): “The great paradox of the last third of a century is that we have actually had…

>…an explosion of regulation in this ‘supposedly deregulatory’ era… regulation that has the effect of redistributing, sometimes dramatically, upward…. Intellectual property protections, especially patents and copyright, have been expanded dramatically…. There is an argument that this expansion has actually reduced innovation, there is no doubt that it has allowed existing firms to use the force of law (rather than the market) to enrich themselves…. The same period has seen a transformation of occupational licensing, from a marginal force in our economic organization to one that is increasingly ubiquitous…. Finally, the incredible growth of the financial sector… also finds its source in government-derived rents… ‘too big to fail.’… By allowing a huge securitized housing finance market.. pushing more and more of American retirement savings into actively managed 401ks and IRAs… the government created the greatest pool of rents in the history of mankind…

Morning Must-Read: Danny Vinik: Peter Schiff: My Inflation Prediction Was Correct. The Stats Are Lying

Posted on by Brad DeLong

Danny Vinik: Peter Schiff: My Inflation Prediction Was Correct. The Stats Are Lying: “Peter Schiff… might… be the person most wrong…

…about America’s economic struggles. In 2009, Schiff not only warned of impending inflation but said it was already upon us…. In the newest issue of Reason, the libertarian magazine, he ‘responds’ to his critics….’It’s hard to ignore the victory chants coming from the White House press room, the minutes of the Federal Reserve’s Open Markets Committee, the talking heads on financial television, and the editorial pages of The New York Times…. Their claims of victory are premature and inaccurate. Inflation is easy to see in our current economy, if you make a genuine attempt to measure it.’ Schiff goes on to cite the Big Mac index… argues that the ‘sandwich, which reflects the average person’s direct experience, may be a more accurate yardstick of inflation.’ This is wrong in so many ways…. If Schiff wants a metric that takes into account prices of everyday items—lettuce, tomato, bread, ground beef, etc.—he should look no further than the consumer price index…. The Massachusetts Institute of Technology has created a separate inflation measure: The Billion Prices Project tracks prices online through massive retailers that have significant market share. The project only further confirms the accuracy of the CPI. It’s hard to think of any theory that has been more clearly disproven over the past six years than the right wing’s inflation paranoia. But the fanatics are not giving up. Is there any evidence at all that would convince Schiff—and his many followers—he’s wrong?

The changing dynamics of economic inequality and for-profit universities

Posted on by Bridget Ansel

Last month, the U.S. Department of Education announced their final “program integrity rules” that will govern universities and colleges receiving federal aid, including tuition paid through government grants and loans. The regulations, which will take effect in January 2015, include new “gainful employment” measures intended to asses how many of a school’s graduates find good jobs. Holding schools accountable seems obvious, especially considering the difficulty many young people have finding work. These rules, however, are likely to disqualify about 1,400 educational programs from receiving federal funds — 99 percent of which are programs run by for-profit schools — and are now being challenged in the courts by a trade association of for-profit schools.

How these changes will affect individual students and for-profit institutions is not yet known. That’s why the Washington Center for Equitable Growth awarded one of its 2014 grants to Ryan Sakoda and Shayak Sarkar, both Ph.D. candidates in Economics at Harvard University. Because no national data currently exists to study these kinds of reforms to federal student aid, the two researchers will study California, which in 2011 passed legislation imposing institutional eligibility standards for its state- based student aid. Between 2012 and 2013 the number of schools in California rendered ineligible for state funding rose to 154, impacting about 14,500 students who planned to attend these colleges. Sakoda and Sarkar plan to test whether these changes caused ineligible institutions to lower their tuition prices, change their instructional expenses, or experience changes in the demographic composition of their incoming students.  They also plan to analyze whether and to what extent these policy changes impacted individual students’ choice of educational institutions, or their decision to pursue post-secondary education at all.

For-profit, or propriety institutions, are the fastest growing higher education programs in the country. They market themselves as vocational and career training program for students in the United States, which, unlike other countries such as Germany and the United Kingdom, has no formal apprenticeship program. They also purport to fill an important gap, providing opportunities to underserved students seeking a higher education, especially minority, poor, and older students who might not be admitted to more traditional schools.

Yet research by David Deming, Claudia Goldin, and Lawrence Katz of Harvard University find that for-profit schools leave students with disproportionately high debt and default rates, which results in an increased burden on taxpayers. The reason: many for-profit schools rely on government aid in the form of federal and state student grants and loans for the majority of their revenue. These schools then use the increased funding to  increase their tuition by about 75 percent. The three authors found that, when measured six years after initial enrollment, students earn less than similar peers who attended non-profit or community colleges.

What’s more, according to a report done by the Senate Committee on Health, Education, Labor and Pensions, some of this money flows toward extensive marketing and recruitment, totaling an average of 23 percent of the school’s total budget, versus only 17 percent for actual academic instruction. An undercover federal government audit by the General Accountability Office, the non-partisan research arm of the U.S. Congress, found that many of these schools target marginalized populations and veterans, sometimes using highly aggressive and even fraudulent tactics.

Anyone who’s stayed up late watching TV has seen the commercials: The mother who inspires her children by getting her degree, the middle-aged man starting a new life in healthcare administration after being laid off from his manufacturing job, or the young woman who is able to fulfill her childhood dream of becoming an astronaut after attending a well-known for-profit school. These are inspirational stories, but many for-profit schools do the exact opposite of what they promise. Instead of being a means to improve students’ opportunities and economic security, some produce students with too much debts and too few skills. These students are disproportionately African American and Hispanic students, furthering the persistent racial divide in higher education. Through understanding how for-profit schools respond to regulation, there is an opportunity to expand access to quality education to all who seek it.