Category: Equitablog

The Benefits of Free Trade: Time to Fly My Neoliberal Freak Flag High!: Hoisted from March 2016

Posted on by Brad DeLong

Hoisted from March 2016: The Benefits of Free Trade: Time to Fly My Neoliberal Freak Flag High! http://www.bradford-delong.com/2016/03/the-benefits-of-free-trade-time-to-fly-my-neoliberal-freak-flag-high.html: I think Paul Krugman is wrong today on international trade. For we find him in “plague on both your houses” mode. On the one hand:

Paul Krugman: Trade and Tribulation and A Protectionist Moment?: “Protectionists almost always exaggerate the adverse effects of trade liberalization…

…Globalization is only one of several factors behind rising income inequality, and trade agreements are, in turn, only one factor in globalization. Trade deficits have been an important cause of the decline in U.S. manufacturing employment since 2000, but that decline began much earlier. And even our trade deficits are mainly a result of factors other than trade policy, like a strong dollar buoyed by global capital looking for a safe haven.

And yes, Mr. Sanders is demagoguing the issue…. If Sanders were to make it to the White House, he would find it very hard to do anything much about globalization…. The moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility….

But on the other hand:

That said… the elite case for ever-freer trade, the one that the public hears, is largely a scam…. [The] claims [are] that trade is an engine of job creation, that trade agreements will have big payoffs in terms of economic growth and that they are good for everyone. Yet… the models… used by real experts say… agreements that lead to more trade neither create nor destroy jobs… make countries more efficient and richer, but that the numbers aren’t huge….

False claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict…. A back-of-the-envelope on the gains from hyperglobalization — only part of which can be attributed to policy — that is less than 5 percent of world GDP over a generation…. Furthermore, as Mark Kleiman sagely observes, the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins—but we now have an ideology utterly opposed to such redistribution in full control of one party…. So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don’t know exactly what form it’s taking….

And, Paul summing up:

Why, then, did we ever pursue these agreements?… Foreign policy: Global trade agreements from the 1940s to the 1980s were used to bind democratic nations together during the Cold War, Nafta was used to reward and encourage Mexican reformers, and so on. And anyone ragging on about those past deals, like Mr. Trump or Mr. Sanders, should be asked what, exactly, he proposes doing now.… The most a progressive can responsibly call for, I’d argue, is a standstill on further deals, or at least a presumption that proposed deals are guilty unless proved innocent.

The hard question to deal with here is the Trans-Pacific Partnership…. I consider myself a soft opponent: It’s not the devil’s work, but I really wish President Obama hadn’t gone there…. Politicians should be honest and realistic about trade, rather than taking cheap shots. Striking poses is easy; figuring out what we can and should do is a lot harder. But you know, that’s a would-be president’s job…. [But] he case for more trade agreements—including TPP, which hasn’t happened yet—is very, very weak. And if a progressive makes it to the White House, she should devote no political capital whatsoever to such things.

So I guess it is time to say “I think Paul Krugman is wrong here!” and fly my neoliberal freak flag high…

On the analytics, the standard HOV models do indeed produce gains from trade by sorting production in countries to the industries in which they have comparative advantages. That leads to very large shifts in incomes toward those who owned the factors of production used intensively in the industries of comparative advantage: Big winners and big losers within a nation, with relatively small net gains.

But the map is not the territory.

The model is not the reality.

An older increasing-returns tradition sees productivity depend on the division of labor, the division of labor depends on the extent of the market, and free-trade greatly widens the market. Such factors can plausibly quadruple the net gains from trade over those from HOV models alone, and so create many more winners.

Moreover, looking around the world we see a world in which income differentials across high civilizations were twofold three centuries ago and are tenfold today. The biggest factor in global economics behind the some twentyfold or more explosion of Global North productivity over the past three centuries has been the failure of the rest of the globe to keep pace with the Global North.

And what are the best ways to diffuse Global North technology to the rest of the world?

Free trade: both to maximize economic contact and opportunities for learning and imitation, and to make possible the export-led growth and industrialization strategy that is the royal and indeed the only reliable road to anything like convergence.

So I figure that, all in all, not 5% but more like 30% of net global prosperity—and considerable reduction in cross-national inequality—is due to globalization. That is a very big number indeed. But, remember, even the 5% number cited by Krugman is a big number and a deal: $4 trillion a year, and perhaps $130 trillion in present value.

As for the TPP, the real trade liberalization parts are small net gains. The economic question is whether the dispute-resolution and intellectual-property protection pieces are net gains. And on that issue I am agnostic leaning negative. The political question is: Since this is a Republican priority, why is Obama supporting it without requiring Republican support for a sensible Democratic priority as a quid pro quo?

That said, let me wholeheartedly endorse what Paul (and Mark) say here:

As Mark Kleiman sagely observes, the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins—but we now have an ideology utterly opposed to such redistribution in full control of one party…. So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don’t know exactly what form it’s taking…

Weekend reading: the “fantasy budget” edition

Posted on by Kavya Vaghul

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

It’s all about the President’s budget this week. Well, almost.

Anticipating the Trump administration’s fiscal year 2018 budget, Greg Leiserson discusses the possibility of double-counting of the benefits of improving the outlook for the federal deficit thanks to fantasy budgeting around policies and plans that have yet to be developed.

Equitable Growth released a new working paper by grantee Ammar Farooq, which takes a close look at the proportion of college-educated workers in occupations that don’t require a college degree. The findings suggest that the share of over-educated workers appears to be U-shaped over the life cycle.

Nick Bunker also writes on the incidence of over-education across a lifetime, noting that Farooq’s paper helps shed light on the fact that the “cruel game of musical chairs” is not just a problem for young people but also for the middle-aged and the elderly.

Getting back to the budget, concerns over enforcing labor standards and worker protections are on the rise as the Trump administration proposed large cuts to the U.S. Department of Labor. Recent structural changes in the labor market—including the rise of the “fissured” workplace, the decline of union density, the lack of synergy between regulatory frameworks and industrial organization, and the rapid growth of technology—make enforcement even more important in this day and age, explains Elisabeth Jacobs.

In the latest installment of Equitable Growth in Conversation, John Schmitt sits down with Sandra Black, the Audre and Bernard Rapoport Centennial Chair in Economics and Public Affairs, professor of economics at The University of Texas at Austin, and former member of President Barack Obama’s Council of Economic Advisors, to talk about transitioning from academia to the policy world and the importance of bridging the gap between the two. Read the full interview transcript here.

The fiscal year 2018 budget put forward a 13 percent spending cut for the U.S. Department of Education and redirecting funding efforts toward school choice. Despite this focus on school choice, the administration has not yet unveiled their tax credit scholar program. Kavya Vaghul unpacks some of the key controversies with these programs.

Links from around the web

Dylan Matthews breaks down the details of the trillions of dollars of cuts in President Donald Trump’s tax plan, calls out the “magical economic assumptions” in the plan, and predicts the possibility of these changes actually taking effect. [vox]

Why has wage growth stagnated over the last three decades? Pedro Nicolaci da Costa explores the question, reflecting on the weak state of the labor market and how investments in workers and wages are low. [business insider]

The American Health Care Act was scored by the U.S. Congressional Budget Office. According to the report, the House-passed legislation would reduce the deficit but render 23 million more people uninsured. Additionally, the CBO score makes clear that the American Health Care Act will help underwrite tax cuts, explains Casey Quinlan. [think progress]

“Inclusive prosperity” in the United States has become increasingly unattainable, writes Richard Florida, though unemployment has decreased and economic output has increased since the Great Recession of 2007-2009. These gains appear to be accruing to certain advantaged groups across race and class in metro areas. [city lab]

In a new report, Lawrence Mishel and Josh Bivens strike down on the argument that increasing automation—the robot apocalypse—leads to inequality and job displacement by reviewing key literature and refocusing attention to the importance of securing full employment. [epi]

Friday figure

Featured in “U.S. over-education and underemployment over the course of a lifetime” and originally from “The U-shape of over-education? Human capital dynamics & occupational mobility over the life cycle”

Must-Read: Ben Bernanke: Some reflections on Japanese monetary policy

Posted on by Brad DeLong

Must-Read: This first part reads as though Ben Bernanke is not talking just about the Bank of Japan, but rather about the Federal Reserve as well—or perhaps more about the Federal Reserve. The argument against a 4%/year inflation target—or a price level-path target with catchup—is that there is value in keeping inflation too low to be salient in people’s decisions. But that benefit is uncertain and speculative. The costs of being unable to use monetary policy to offset a negative demand shock are very concrete and real, and very dire indeed:

Ben Bernanke: Some reflections on Japanese monetary policy: “The BOJ shouldn’t stop its determined pursuit of its inflation target… https://www.brookings.edu/blog/ben-bernanke/2017/05/23/some-reflections-on-japanese-monetary-policy/

…Getting inflation and interest rates higher will promote economic stability by increasing the BOJ’s ability to respond to future recessions…. Kuroda’s program of “qualitative and quantitative easing” has had important benefits, including higher inflation and nominal GDP growth and tighter labor markets. Recent changes to the BOJ’s framework will make it more sustainable….

What tools remain if current policies are not enough? The scope for significant further easing by Japanese monetary authorities on their own seems limited, as interest rates are near zero for government bonds even at long maturities and raising inflation expectations—a way to lower real interest rates—has proved difficult. If more stimulus is needed, the most promising direction would be through fiscal and monetary cooperation, in which the BOJ agrees to temporarily raise its inflation target as needed to offset the effects of new fiscal spending or tax cuts on the debt-to-GDP ratio…

Should-Read: Nicholas MacPherson: Joseph Chamberlain sets the Tories a bad example

Posted on by Brad DeLong

Should-Read: Nicholas MacPherson: Joseph Chamberlain sets the Tories a bad example: “On the big national issues of his day, he was on the wrong side of history… https://www.ft.com/content/00a5c60c-3f0a-11e7-82b6-896b95f30f58

…scuppering Gladstone’s attempts to keep the UK together by granting home rule to Ireland… his imperialist vision of a Greater Britain proved to be a fantasy… “imperial preference”….

It fell to Joe’s son, Neville, finally to implement imperial preference in 1932. The policy was of course a failure, contributing to the general contraction of world trade in the 1930s. It was swept away by the move towards multilateral agreements after the second world war. Henry Campbell-Bannerman, Liberal prime minister between 1905 and 1908, and JM Keynes probably provide the most fitting epitaphs to Chamberlain’s career. The former said of him that he used “the foolishness of the fool and the vices of the vicious to overwhelm the sane and wise and sober”. The latter described him as a “fanatical charlatan”. It is a wonder that such a man can continue to have any influence today.

Trump administration 2018 budget swaps heavy cuts to education for focus on school choice

Posted on by Nick Bunker

President Donald Trump’s budget for fiscal year 2018 beginning October 1 and released this past Tuesday contains some potentially bad news for the state of education in the United States. Under the guise of “refocusing” funding priorities, the budget proposes a 13 percent, or $9 billion, cut for the Department of Education. On the chopping block are programs such as public service student loan forgiveness, Supporting Effective Instruction State Grants, and 21st Century Community Learning Centers. Despite these, and other, rollbacks on spending for Kindergarten through 12th grade and higher education, the budget did reflect the Trump administration’s misplaced commitment to advancing one aspect of education—school choice—using mechanisms such as vouchers to help students access schools that best suit their needs.

A more detailed statement released by the Department of Education reveals that approximately $1.4 billion in the education budget will be directed toward expanding investments in public and private school choice options. This includes $1 billion for Furthering Options for Children to Unlock Success grants, which allow students in high-poverty schools to choose to attend other public schools and take their voucher with them. Additionally, it calls for a $250 million increase for programs that award scholarships for low-income children to attend private school and a $167 million increase to expand state efforts on charter schools.

All this said, the Department of Education’s detailed budget leaves out much-anticipated information about the administration’s controversial school choice program—tax credit scholarships. In general, tax credit scholarships, sometimes called “neovouchers,” work by giving individuals, businesses, or both partial to full tax credits for their donations to nonprofit organizations that offer scholarships to private and religious primary and secondary schools. Currently, 17 states operate one or more tax credit scholarship programs, with roughly 250,000 enrollees nationwide. In some states, such as Indiana and Oklahoma, tax credits are slated at 50 cents on the donated dollar, but in several others, such as Alabama, Arizona, Florida, Georgia, Montana, Nevada, and South Carolina, taxpayers can receive up to dollar for dollar tax credits. (See Figure 1.)

Figure 1

While in theory using tax credit scholarships can increase K-through-12 school choice, there are two key problems with these programs.

The most egregious problem, as a matter of tax policy, with tax credit scholarships is that in some states, taypayers can turn a profit on them through a loophole. According to a new report by Carl Davis of the Institute on Taxation and Economic Policy, in the states in which credits equal a dollar on the dollar donated, donors not only get the tax credit but also can claim the charitable federal tax deduction. As a result of this double-dipping, individuals may actually realize a profit on their donation.

The more fundamental problem is that there isn’t much evidence that school choice programs, specifically vouchers, have substantial positive effects on the students they are meant to serve. A review of the literature in 2011 by researchers at the Center on Education Policy at The George Washington University found that school vouchers had no concrete positive impact on students’ educational achievement. A more recent study of the Louisiana Scholarship Program—a voucher program that provides publicly financed scholarships for K-through-12 students to go to private schools—even found negative effects. Scholarship recipients who were performing at the median level prior to entering the program were 13 percentile points lower than their non-scholarship counterparts after two years in the program.

Given these concerns, the Trump administration and the Department of Education should reconsider (or flat-out ditch) their yet-to-be unveiled tax credit scholarship program. But beyond tax credit scholarships and supporting school choice, investing in programs that more reliably shrink educational achievement gaps and improve the quality of publicly funded education can best promote more equitable outcomes for all students.

Must- and Should-Reads: May 25, 2017

Posted on by Brad DeLong

Interesting Reads:

 

Must-Read: Haley Byrd: CBO on Health Care Bill: Sick People Could Face Higher Premiums and Even Be Priced Out of the Market

Posted on by Brad DeLong

Must-Read: Crocodile tears from House Republican Tea Party Caucus Chair Mark Meadows:

Haley Byrd: CBO on Health Care Bill: Sick People Could Face Higher Premiums and Even Be Priced Out of the Market: “Freedom Caucus Chairman Mark Meadows (R-N.C.)… hadn’t read the full report… said he saw it as “good news”… http://ijr.com/2017/05/881482-cbo-health-care-bill-sick-people-face-higher-premiums-even-priced-market/

…Meadows seemed surprised. “Well, that’s not what I read,” Meadows said, putting on his reading glasses and peering at the paragraph on the phone of a nearby reporter. The CBO predicted: “…the waivers in those states would have another effect: Community-rated premiums would rise over time, and people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive non-group health insurance at premiums comparable to those under current law, if they could purchase it at all — despite the additional funding that would be available under H.R. 1628 to help reduce premiums.”…

After reading the paragraph, Meadows told reporters he would go through the CBO analysis more thoroughly and run the numbers, adding he would work to make sure the high-risk pools are properly funded. Meadows, suddenly emotional, choked back tears and said, “Listen, I lost my sister to breast cancer. I lost my dad to lung cancer. If anybody is sensitive to preexisting conditions, it’s me. I’m not going to make a political decision today that affects somebody’s sister or father because I wouldn’t do it to myself”…

Must-Read: Martin Wolf: Conservatism Buries Ronald Reagan and Margaret Thatcher

Posted on by Brad DeLong

Must-Read: Martin Wolf: Conservatism Buries Ronald Reagan and Margaret Thatcher: “Trump… has ended up with “pluto-populism”—policies that benefit plutocrats, justified by populist rhetoric… https://www.ft.com/content/970bbdcc-3f1e-11e7-82b6-896b95f30f58

…slash taxes on the rich, at the expense of the poor…. Confidence in the benefits of free markets, free trade and free movement of people has been lost… more tribal, less global. The devastation caused by the financial crisis of 2007-09 is one explanation. Hostility to immigration is another…. The US and UK have moved into a period marked by suspicion of foreigners and doubts about free markets…. It seems highly likely that this shift will last beyond the personalities now involved. The result is likely to be a different ideological centre of gravity for policy…. [Will]the policies being promoted will assuage the anxiety of those who brought Mr Trump and Mrs May to power[?]…. The opposite is far more likely…. Trump’s… slashing… is likely to be highly damaging to the welfare of many of his supporters. Meanwhile, nothing he does will bring back lost manufacturing and mining jobs. This failure seems sure to make the base angrier….

It would be a good thing if the British and Americans recognised that they do not possess all (perhaps even most) of the answers. They might even learn from others. One encouraging thing about Emmanuel Macron, the French president, is that he has noted this for his own country, pointing to the Scandinavian example of dynamic economies with high levels of social protection. If political traditions are to be renewed, it must be done by being open to ideas from others. The Anglo-Americans should dare to follow Mr Macron’s suit.

A Note on Coursera CEO Rick Levin’s Clark Kerr Lecture…

Posted on by Brad DeLong

People are telling me that my headnote to Coursera CEO and ex-Yale President Rick Levin’s Clark Kerr lecture the other night was too cryptic.

So here is a—greatly expanded—version of the question that I asked Rick:

The “government” part of your lecture: right and depressing. The “budgeting” part: 100% right and very impressive.

But the “faculty productivity” part…

With Gutenberg books went from stunningly expensive to cheap enough that every student could have one—indeed, many more than one. And when books became supercheap, the original rationale for the lecture vanished.

The original rationale of the university, after all, was predicated on the overwhelming expense of books. It made sense to get everybody interested together to hear the lecturer read aloud the only copy of the Nicomachean Ethics in western Scotland, and take notes on it. Having monks—or students—copy out books en masse was simply too expensive. Hence the western university. Hence the institution and even the name of the lecture.

And with Gutenberg the lecture became obsolete. Books became cheap. You no longer had to travel to listen to the lecturer read the book aloud. You could, after Gutenberg, after all just as well learn via sustained virtual interaction with the Turing-class instantiation you could construct and run on your wetware—in other words, you could learn by reading your copy of the book, and thinking about it.

Niccolò Machiavelli, living in one of the first post-Gutenberg generations, and thus among the first people to have a personal library, put it this way in his letter to Vettori:

On the coming of evening, I return to my house and enter my study; and at the door I take off the day’s clothing, covered with mud and dust, and put on garments regal and courtly; and reclothed appropriately, I enter the ancient courts of ancient men, where, received by them with affection, I feed on that food which only is mine and which I was born for, where I am not ashamed to speak with them and to ask them the reason for their actions; and they in their kindness answer me; and for four hours of time I do not feel boredom, I forget every trouble, I do not dread poverty, I am not frightened by death; entirely I give myself over to them. And because Dante says it does not produce knowledge when we hear but do not remember, I have noted everything in their conversation which has profited me, and have composed a little work On Princedoms…

On the coming of evening Niccolo Machiavelli enters his personal library. There he talks to his friends–his books, or rather those who wrote the books in his library, or rather those components of their minds that are instantiated in the hardware-and-software combinations of linen, ink, and symbols of Gutenberg Information Technology that is his personal library. They are “ancient men” who receive him “with affection,” and for four hours he “ask[s] them the reason for their actions; and they in their kindness answer me; and… I do not feel boredom, I forget every trouble, I do not dread poverty, I am not frightened by death…”

Remember that Machiavelli lives only two generations after Gutenberg. He is thus one of the very first people in the world to have had a personal library. Before printing, libraries were the exclusive possession of kings, sovereign princes, abbots, masters of the Roman Empire (like Caesar and Cicero). The idea that a mere mortal–a disgraced ex-Assistant for Confidential Affairs to the Republic of Florence–might have a personal library would have been absurd even half a century before Machiavelli. To him, therefore, his personal library is not something he takes for granted, but something new, something he has that his predecessors did not. And so he can see clearly what his personal library does for him.

What does his personal library do for him? It does this: it enlarges his circle of friends. Especially in disgraced semi-exile–when many he would talk to are afraid to be seen in his company, and where he is afraid to be seen in the company of almost all the rest–the ability to read and reread his personal copies of Publius Ovidius Naso, Petrarch, Dante Alighieri, Titus Livius, Plutarch, and the rest makes them his friends: almost the only people who will receive him with affection, and definitely the only people who will honestly answer his questions about politics and history. And it is important to have such friends, and to pay them proper respect. Hence Machiavelli will not go to them in his clothes-of-the-day–those in which he had managed his farm, haggled over the price of firewood, gambled, and on which he had spilled beer. He will, instead, enter his library only in “garments regal and courtly.”

His library creates for him a true Invisible College inside his own home. Instead of just talking to and learning from those one runs into in the campus hallways, in the lecture halls, and in the lounges, one can, as we say these days, learn via the construction followed by sustained virtual interaction with Turing-class instantiations of minds that we construct and run on our wetware. That is what a book allows you to do. It is far from perfect–Plato, especially, thought it was far from perfect, and tried really hard to write dialogues rather than treatises for powerful reasons. As Plato put into the mouth of Socrates in the [Phaedrus][]:

Thamus replied: O most ingenious Theuth, the parent or inventor of an art is not always the best judge of the utility or inutility of his own inventions to the users of them. And in this instance, you who are the father of letters, from a paternal love of your own children have been led to attribute to them a quality which they cannot have; for this discovery of yours will create forgetfulness in the learners’ souls, because they will not use their memories; they will trust to the external written characters and not remember of themselves. The specific which you have discovered is an aid not to memory, but to reminiscence, and you give your disciples not truth, but only the semblance of truth; they will be hearers of many things and will have learned nothing; they will appear to be omniscient and will generally know nothing; they will be tiresome company, having the show of wisdom without the reality….

I cannot help feeling, Phaedrus, that writing is unfortunately like painting; for the creations of the painter have the attitude of life, and yet if you ask them a question they preserve a solemn silence. And the same may be said of speeches. You would imagine that they had intelligence, but if you want to know anything and put a question to one of them, the speaker always gives one unvarying answer. And when they have been once written down they are tumbled about anywhere among those who may or may not understand them, and know not to whom they should reply, to whom not: and, if they are maltreated or abused, they have no parent to protect them; and they cannot protect or defend themselves…. Is there not another kind of word or speech far better than this, and having far greater power-a son of the same family, but lawfully begotten?… I mean an intelligent word graven in the soul of the learner, which can defend itself, and knows when to speak and when to be silent…

The printed book is far from perfect. The cheap printed book is far from being a panacea. But it did remove what had for four hundred years been the principal raison d’etre of the lecutre.

And yet the lecture not just survived but flourished after Gutenberg. That suggests to me that the successful potential MOOC-takers are a smaller fraction of the population than even those who excel and strongly benefit from our current system of higher education.

Now those who can learn from books can certainly learn from MOOCs. MOOCs are wonderful for me. MOOCs are wonderful for those people who, like us, would attend a Clark Kerr lecture. MOOCs and such–the other offerings of Coursera–are going to be good for Berkeley and for Yale students.

But how broad will their effective audience ultimately be?

Bluntly: the big technological revolution came with the inventing of printing on paper with metal movable type. Yet it did not have a big effect on the structure of universities.

And cf. Mark Thoma, who is making it work very well:

I thought the same about online courses before I did them. But I have changed my mind. I stand in front of a whiteboard and give a regular lecture. Just the same as teaching a class. The one disadvantage is that they can’t ask a question. But I tell them to pause the video, read that section of the book, rewatch the part they aren’t getting a couple of times, search Google, or just think for a moment before taking it off pause.

There are real advantages. The board is never erased too fast (again, they can pause and take notes). My foreign students (our major is approx. 40% Chinese these days) with language barriers get together in a room in the library, project the lecture, and stop and talk about each part as a group. And I think the students who never quite make it to class end up seeing a lot more lectures than they would otherwise (though some binge watch, which isn’t a great way to do it). The courses have also worked well for students who have jobs or other obligations that make scheduling courses difficult. With the video lectures, the course is the same as a traditional course though the online format adds quite a bit of flexibility and a few extra bells and whistles.

There are things that are harder, e.g. labs for econometrics students (which can be done online, e.g. the t-statistic is, the estimate on the fourth iteration of Cochrane Orcutt is with fill in the blanks that are graded automatically), and proofs still have to be submitted and graded by a GTF–can’t figure out how to automate that yet, but other than that the classes pretty much run themselves. They are almost all UO students, and they take the lab in a testing center that is very secure, more so than a classroom, so no worries there (and we have agreements with testing centers at most Universities for distance ed)….

I think I could handle 500 without too much trouble (though the testing center would have to expand). Maybe more with some GTFs (I do it myself now).

I don’t see what I do in a classroom and what I do online as being very much different, so not sure about the ratios. I think anyone who does well in a regular course would also do well in the online version. I think there are some students (language challenged in particular ) who do much better with the online format.

But not all. Maybe we are attuned socially to listening to a storyteller around the fire. Watching a movie at home is not the same as with a group in a theater. Something about the group experience locks you in. You can’t just get up and go to the refrigerator, etc., or be interrupted by a phone call (well, maybe, texting doesn’t seem to be inhibited in class), whatever, somehow being in a group engaged in the same activity locks in attention. There is less drift (though looking at some students in class, maybe not…). I think some students need the group experience, and I don’t know how to duplicate it.

I also use the videos again and again, so I don’t talk about current events as much. But for econometrics it doesn’t matter. For intermediate macro perhaps it does. I could do that by just recording a bit more each quarter, an applications video perhaps, but haven’t done so…

Rick Levin Kerr Lecture Outline: Toward Sustainable Financing of Higher Education

  • Baumol-Bowen Cost Disease
    • Poses a dilemma
      • Government subsidies could mitigate
      • Economizing on other activities could mitigate
      • But solving rather than mitigating requires increasing faculty productivity
  • Decline of government support for higher education
    • Entitlements are to blame—especially health care
  • University capital
    • Financial capital
    • Physical capital
    • Human capital
    • The Yale spending rule
    • Metrics
    • Yale deferred maintenance—failure to do accurate cost accounting for buildings
    • CRC—capital replacement charge: a $54 million endowment alongside a $100 million construction cost, plus program cost endowments, and all this assumes a real rate-of-return on endowment of 5%.
  • Faculty productivity
    • “You will not be surprised to hear from the CEO of Coursera…”
    • MOOCs
    • Blended courses overwhelmingly, damnably difficult
    • Is it effective? Will students pay? Is it consistent with the mission of the university?

Why enforcing U.S. labor standards may be more important than ever

Posted on by Meghan Miller
People look at their respective computer screens during a resume writing class in Dallas, March 2017.

Despite President Donald Trump’s promise “to stand up for the American worker,” his administration has already taken major steps to roll back worker protections. In March, Trump proposed eliminating and the Republican-controlled Congress did eliminate rules discouraging the awarding of federal contracts to companies with a history of stealing their employees’ wages, violating workplace safety standards, and/or illegally discriminating in hiring and pay. The president’s “skinny budget” then proposed a 21 percent cut for the U.S. Department of Labor, and last month, the Office of Management and Budget directed agencies to begin the process of reorganizing, raising concerns that the administration intended to consolidate enforcement and oversight.

The administration’s full budget proposal for fiscal year 2018 only heightens these concerns about worker protections. That’s why it is worth keeping in mind the consequences of budget cuts and consolidation of enforcement responsibilities for workers in the United States. Because of fundamental shifts in the way the U.S. labor market is organized, regulatory oversight is arguably more important now than ever.

Department of Labor agencies such as the Wage and Hour Division, the Occupational Safety and Health Administration, the Mine Safety and Health Administration, and the Office of Federal Contract Compliance Programs all play key roles in enforcing basic employment protections for American workers. The Wage and Hour Division, for example, ensures that employers abide by the Fair Labor Standards Act’s minimum wage, overtime, child labor, and nursing mothers’ break-time provisions, in addition to enforcing the job protections under the Family and Medical Leave Act and other critical labor standards designed to provide protections to workers.

Effective enforcement of basic labor standards is key for functional capitalism. A growing body of research suggests that labor standards improve productivity and economic performance. For instance, wage and work-time regulations can translate into greater worker productivity and lower employee turnover. Safety standards can reduce costly accidents and health care costs. And employment protection—including job-protected family leave—can encourage labor force participation and spur innovation.

Four key structural changes to the U.S. labor market make rigorous “strategic enforcement” of worker protections especially critical.

First, as Boston University economist and former Department of Labor Wage and Hour Division Administrator David Weil demonstates in his recent book, the U.S. labor market has “fissured,” and employer-employee relationships are more complex than ever before. Employers have contracted out, subcontracted, outsourced, and devolved many functions that were once accomplished in-house. Fissuring can occur because a business is motivated to focus on core competencies, but it can also result from a business’s desire to shift labor costs and liabilities to small-business or third-party intermediaries such as temp agencies. Multiple studies document the increasing incidence of employee misclassification—identification of employees as subcontractors—in order to subvert compliance with labor policies ranging from payroll tax, workers’ compensation, and other related taxes. Because most existing workforce regulations assume a straightforward relationship between employer and employee, fissuring creates significant challenges for effective enforcement of existing labor standards.

Second, the decline of union density increases the importance of government enforcement of worker protections. The private-sector union membership rate declined from 16.8 percent in 1983 to 6.7 percent in 2015, the last year for which complete data are available. Unions have typically played a critical role in implementing workforce policies, not only through political leverage but also due to their key role in assisting workers in exercising their statutory rights. A decline in unionization therefore reduces the ability of regulators to oversee the workforce effectively.

Third, America’s New Deal-era regulatory framework is out of sync with current structures of industrial organization. Most of our workforce protection regulations were designed at a time when the typical business entity was a manufacturing company such as General Motors Corp., a large workplace establishment with a stable workforce, expectations for career-long employment, fixed facilities, and clear structures of employment responsibility and liability. The fissuring of the U.S. workplace has changed all of this, but the shifts in industrial organization are due not only to fissuring but also to fundamental shifts in the composition of the U.S. economy. Today, employment is no longer primarily in manufacturing but rather in services such as health care, retail, and other sectors characterized by substantial shares of low-wage, lower-skill workers and a very different set of economic and competitive factors than the manufacturing economy of the 20th century. Production and work is organized very differently in childcare and health care, for instance. These changes now apply to small employers and larger employers alike. The largest private-sector employer in the United States today is Wal-Mart Stores Inc., which is organized very differently from the General Motors of the 1950s.

Finally, technological change is rapidly changing the kinds of jobs available and the organizational design of those jobs, creating a new set of risks of worker abuse that pose real oversight challenges. For instance, an increasing share of work is done at home via computer after the close of normal business hours, rendering the tracking and enforcement of hours regulations increasingly complicated. How should work hours be tracked for an employee of multiple employers that sometimes operate as one entity but sometimes operate as independent entities?

These four fundamental characteristics of the contemporary labor market—a fissured workplace, weak labor unions, new forms of industrial organization in the economy’s dominant sectors, and technological change—come together to make effective, strategic enforcement of labor protections more important than ever before. Workers in the industries with the lowest levels of compliance are the least likely to trigger complaint-driven investigations, making agency-directed investigations all the more important. This is one reason why rumors of a merging of the Department of Labor’s Office of Federal Contract Compliance Programs with the Equal Employment Opportunity Commission has generated significant concern from multiple stakeholders. The OFCCP conducts investigations of federal contractors that primarily are initiated by the agency—rather than complaint-based—to deter discrimination against women, minorities, and veterans, while the EEOC is primarily an individual-complaint-based body designed to uphold civil rights protections.

Much has been made of the current administration’s new policy ideas, budget cuts to existing benefits programs, and rollbacks of regulatory statutes. Yet in light of the character of the contemporary labor market, it is important to remember that nonenforcement of existing law is a fundamental problem for millions of workers in the United States.