Strategic planning

From Chapter 2 of Benjamin Ginsberg, The Fall of the Faculty:

Given the enormous burden of attending meetings, retreates, and conferences, to say nothing of the need to devote at least some attention to their normal college duties, it might seem unlikely that administrators and staffers have time to undertake any other assignments. This perception, however, is false because it ignores a form of administrative activity that can occupy managers and staffers for years at a time. This is, of course, the development and continual revision of the school's strategic plan.

... Today... virtually every college and university in the nation has an elaborate strategic plan. Indeed, whenever a school hires a new president, his or her first priority is usually the crafting of a new strategic plan. In a macabre imitation of Orwell's 1984, all mention of the previous administration's plan, which probably had been introduced with great fanfare only a few years earlier, is instantly erased from all college publications and websites. The college president's first commandment seems to be, "Thou shall have no other plan before mine."

... The growth of planning has a number of origins. University trustees are generally drawn from a business background and are accustomed to corporate plans. Accreditors and government agencies, for their part, are enamored of planning... More generally, though, the growth of planning is closely tied to the expansion of college and university administrations. Their growing administrative and staff resources have given schools the capacity to devote the thousands of person-hours generally required to develop and formulate strategic plans.

... At the same time, the strategic plan serves several important purposes for administrators. First, when they organize a planning process and later trumpet their new strategic plan, senior administrators are signaling to the faculty, to the trustees, and to the general community that they are in charge. The plan is an assertion of leadership and a claim to control university resources and priorities... A second and related purpose served by planning is co-optation. A good deal of evidence suggests that the opportunity to participate in institutional decision-making processes affords many individuals enormous psychic gratification. For this reason, clever administrators see periodic consultation as a means of inducing employees to be more cooperative and to work harder... In a similar vein, the university planning process entails months of committee meetings, discussions, and deliberations during which the views of large segments of the faculty and staff are elicited. For the most part, those involved in the process... tend to buy into the outcome and, more important, tend to develop a more positive perception of the administration's ideas, priorities, and leadership... Still another way in which strategic planning serves administrators' intersets is as a substitute for action... [U]niversity leaders' political dexterity and job-hunting skills are often somewhat stronger than their managerial and administrative capabilities, inevitably leading to disappointment on the campus after they take charge. Indeed, the disparity between their office-seeking savvy and actual leadership ability probably explains why many college and university presidents move frequently from school to school. By the time the campus has become fully aware of their strengths and weaknesses, they have moved on to another college. Thus, for many administrators, eighteen months devoted to strategic planning can create a useful impression of feverish activity and progress and may mask the fact that they are frequently away from campus seeking better positions at other schools.

... The documents promulgated by most colleges and universities... lack a number of these fundamental elements of planning. Their goals tend to be vague and their means left undefined. Often there is no budget based on actual or projected resources. Instead, the plan sets out a number of fund-raising goals. These plans are, for the most part, simply expanded "vision statements." As one college president said at the culmination of a year-long planning process that engaged the energies of faculty, administrators, and staffers, "The plan is not a specific blueprint, but a set of goals the college hopes to meet. The college has not yet determined how the initiatives will be implemented and the plan is subject to change." Obviously what was important here was not the plan but the process.

... Plans are usually forgotten soon after they are promulgated. My university has presented two system-wide strategic plans and one arts and sciences strategic plan in the last fifteen years. No one can remember much about any of these plans but another one is in the works. The plan is not a blueprint for the future. It is, instead, a management tool for the present.

Assessment

Hey, I just came across Gettysburg College's "Assessment Plan for Learning Outcomes," issued in June 2003. There seems to be a plan in place for introducing a "culture of assessment". The report ends with a clarion call for action:

Liberal arts colleges have generally been slow to embrace the shift in focus from teaching to learning, the development of a “climate of evidence” for educational goals and marketing claims, and the implementation of systematic assessment of learning. Gettysburg College has long engaged in various forms of assessment that have often reformed and improved practice in each of the four levels described above. However, it is our intention through this plan to develop a more structured and self-conscious program of learning assessment in all its aspects – goal articulation, regular assessment with appropriate means, and use of results as feedback for our deliberate employment.

Does anyone know what happened to this plan? Did we ever implement its proposals? Is the "conversation" we're having about assessment now, eight years later, an outgrowth of this plan or is it an entirely new conversation? Is there any guarantee that eight years hence we will have acted on the things we're "conversing" about today?

Regulatory uncertainty

Lawrence Mishel of the EPI debunks the claim that "regulatory uncertainty" rather than lack of aggregate demand is the cause of our slow recovery. Mishel is assisted in his analysis by recent Gettysburg College grad Nick Finio. I'm sure it was Nick's contributions that made this the convincing piece that it is.

We can summarize Mishel and Finio's argument thusly: If companies aren't hiring because they're worried about being strangled by red tape in the future, causing their profits to crumble in front of them, then why are they investing in equipment and software at such a breakneck pace? In fact, why is this the strongest equipment-and-software recovery in recent memory? If companies aren't hiring because of regulatory uncertainty, then why is employment growing at the same pace as it did in the post-1991 recovery and faster than in the post-2001 (the Bush regulation-free recovery)? If demand is adequate but firms are nervous about hiring new employees (maybe because of health reform?), then why aren't they increasing average weekly hours of current employees instead? Finally, if firms aren't hiring because of regulatory uncertainty, then why do they keep saying in surveys that they aren't hiring because of weak sales?

Why indeed?

Every time I read something about Europe I get very depressed.

Ezra Klein interviews Desmond Lachman.

Laurence Kotlikoff: Five ways to end the recession

On Bloomberg's website, Laurence Kotlikoff downplays the likely impact of new fiscal and monetary policy measures and instead offers five low-cost ways of stimulating the economy:

1. Stop paying interest on bank reserves.

2. Get workers to invest in jobs.

3. Compel corporate America to invest.

4. Get prices and wages unstuck.

5. Achieve fiscal sustainability

I don't share his pessimism about fiscal and monetary policy. Passing the American Jobs Act (and adding to the infrastructure component) and another round of quantitative easing on the part of the Fed seem like no brainers to me.

But I like that Kotlikoff is throwing ideas out there, because we definitely need more ideas. There are some interesting ones here, but most are pretty questionable. I don't see how "achieving fiscal sustainability" does any good for the present situation, though of course it is a laudable goal in its own right. Paul Krugman takes Kotlikoff to task for suggesting that reducing wages (#4) would stimulate the economy. Krugman argues that in a liquidity trap, lower wages adds to deflationary pressures and therefore reduces output rather than increasing it. #2 and #3 have a strangely socialist quality that I wouldn't expect from Kotlikoff. Yes, if the government ordered companies to hire more workers (in exchange for workers voluntarily accepting lower wages) and ordered companies to invest, that would do some good. But hire the workers to do what? invest on what? Still, it's worth a shot.

I would expand on Kotlikoff's first suggestion. Lowering the interest paid on reserves from 0.25 to 0.0 (#1) might do a bit of good but probably not a lot. We could go further:

(1) Make the rate on bank reserves negative. This would give banks a strong incentive to lend rather than sit on their reserves. Banks would have to match the charge on reserves by charging customers for checking deposits. Wouldn't everyone withdraw money from banks and stash it under their mattresses? Not if the Fed charged banks for the purchase of currency from reserves. Banks would pass this charge on to customers - yes, you can convert your deposits to cash, but you'll have to pay the same fee we charge you for keeping your money in your checking account. This would provide a strong inducement for people to spend (I imagine there would be a lot of ticked off bank customers however - tough luck).

(2) Bank regulators (Fed, FDIC, Comptroller of the Currency, etc.) could strongly encourage banks to make loans to anyone who would qualify under ordinary credit conditions. Strongly encourage, like force them to do so. Any individual bank would be reluctant to do this by itself because with the economy so bad the credit risk is too great. But if all banks did it together (and if other stimulative policies were pursued) the economy might improve enough that the loans turn out to have been good bets in the first place.

But the point is, it's time to pull out the stops. Brad DeLong tells us that Nouriel Roubini has already called the double dip (by Tweet - can he put that on his CV?). No more dicking around already!

Did supply-side economic policies end the Great Depression?

No, but conservatives have been peddling this theory for a few years now. When I saw Cole and Ohanian's piece in the Wall Street Journal making this argument, I was suspicious. In fact, more than suspicious - based on what I know of Cole and Ohanian's research on the Great Depression and the Wall Street Journal's editorial standards, I was certain that C&O were playing fast and loose with economic data to "prove" that expansionary demand-side policy did not end the Great Depression. In fact, I flagged this paragraph:

But boosting aggregate demand did not end the Great Depression. After the initial stock market crash of 1929 and subsequent economic plunge, a recovery began in the summer of 1932, well before the New Deal. The Federal Reserve Board's Index of Industrial production rose nearly 50% between the Depression's trough of July 1932 and June 1933. This was a period of significant deflation. Inflation began after June 1933, following the demise of the gold standard. Despite higher aggregate demand, industrial production was roughly flat over the following year.

I thought, when I get a moment I'm going to look at the data to see if that's right. Because every graph of macroeconomic data during the Great Depression that I've seen - GDP, prices, industrial production, employment - has a distinct "V" shape with the point of the V poking March 1933 when FDR took office. Well, I needn't have spent my valuable time hunting down the data, because Brad DeLong directed me to Paul Krugman who directed me to Mark Thoma who directed me to Uneasy Money who did look at the data, and confirmed that C&O are absolutely 100 percent wrong on this point: industrial production began to rise in summer of 1932 but fell immediately thereafter, so that the sustained increase in IP began only in spring 1933. And prices (at least PPI) were not falling during the period of recovery but rising.

Uneasy Money does acknowledge that C&O were correct in stating that the National Industrial Recovery Act was a monumentally stupid piece of legislation that stopped the recovery in its tracks until the Supreme Court declared it unconstitutional:

Nevertheless, not everything Cole and Ohanian say is wrong. They properly criticize New Deal policies that slowed down the spectacular recovery from April to July 1933 to almost a crawl. What stopped April to July recovery almost in its tracks? The answer is almost certainly that FDR forced his misguided National Industrial Recovery Act through Congress in June, and by July its effects were beginning to be felt. Simultaneously forcing up nominal wages in the face of high unemployment (though unemployment started had falling rapidly when recovery started in April) and cartelizing large swaths of the American economy, the NRA effectively shut down the recovery that was still gaining momentum. As shown in the chart representing industrial production, industrial production resumed its rapid expansion almost immediately after the NIRA was unanimously struck down by the Supreme Court in May 1935. The aborted recovery was a tragedy for the American economy and for the world, but the premature end of (or extended pause in) the recovery tells us nothing about whether an economy can recover from a depression with no increase in aggregate demand.

It's pretty clear to me that what turned the economy around in 1933 was a massive monetary expansion triggered by FDR's decision to devalue the dollar (in effect going off the gold standard), coupled with the expectation that the decision to devalue was just one element of a dramatic change in the macroeconomic policy regime that included more expansionary fiscal policy, banking reform to put an end to stabilize the financial sector, and an overall commitment to do whatever it took to generate recovery rather than being worried about the price of gold, the rate of inflation, balanced budgets, and what have you. Inept policies may have offset some of the recovery and their removal may have helped the situation, but the recovery was due to expansionary demand-side policies.

I suggest that those who want to know how the US economy recovered from the Great Depression read Peter Temin's book Lessons From the Great Depression and Christina Romer's "What Ended the Great Depression?" for starters, and ignore anything that Cole and Ohanian write on the subject.

Gettysburg College in the News

Famous and obscure at the same time! From Gregg Easterbrook:

Obscure College Score of the Week": Susquehanna 56, Gettysburg 55. Scoring to pull within one in the first overtime, Susquehanna went for the deuce and ended a contest that saw an Arena-League-like 16 touchdowns. Gettysburg is averaging 49 points per game, but is only 2-2. Located in Gettysburg, Pa., Gettysburg College started classes on Aug. 29 and on Oct. 21 holds Fall Honors Day for just nine weeks of work.

Best play I've ever seen

I hate to say it but the Chicago Bears pulled off the best play I've ever seen in a professional football game in yesterday's game against the Packers. Fortunately it was nullified by a holding penalty.

http://www.nfl.com/videos/auto/09000d5d8228f7c4/The-punt-return-that-never-was

The administrative university

I just finished reading Benjamin Ginsberg's book, "Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters." Ginsberg, a political scientist at Johns Hopkins University, argues that administrative bloat is threatening the viability and integrity of higher education in the United States. I'll string together some passages from Chapter 1:

"Today, institutions of higher education are mainly controlled by administrators and staffers who make the rules and set more and more of the priorities of academic life... [T]oday's full-time professional administrators tend to view management as an end in and of itself... For many of these career managers, promoting teaching and research is less important than expanding their own administrative domains. Under their supervision, the means have become the end... Every year, hosts of administrators and staffers are added to college and university payrolls, even as schools claim to be battling budget crises that are forcing them to reduce the size of their full-time faculties. As a result, universities are filled with armies of functionaries - the vice presidents, associate vice presidents, assistant vice presidents, provosts, associate provosts, vice provosts, assistant provosts, deans, deanlets, deanlings, each commanding staffers and assistants... [A]dministrators have been able, at most schools, to dispense with faculty involvement in campus management and, thereby to reduce the faculty's influence in university affairs. At some schools, the faculty has already surrendered and is hoping that the Geneva Convention will protect it from water boarding... [T]he question of who controls the university has a direct and immediate impact on institutional quality... Controlled by its faculty, the university is capable of producing not only new knowledge but new visions of society. The university can be a subversive institution in the best sense of that word, showing by its teaching and scholarship that new ways of thinking and acting are possible. Controlled by administrators, on the other hand, the university can never be more than what Stanley Aronowitz has aptly termed a knowledge facotry, offering more or less sophisticated forms of vocational training to meet the needs of other established institutions in the public and private sectors..."

This is a pretty good book - not great, but pretty good. It's light on data, heavy on anecdote (but there are some excellent anecdotes!). What data there is documents the increasing top-heaviness of American colleges and universities since the 1970s and 1980s. For example: from 1985-2005, while the number of student enrollments grew by 56% and faculty grew by 50%, the number of administrators grew by 85% and staff grew by 240%. In 1975 the number of full time equivalent students per FTE faculty member fell from 16 to 15. In the same time period the number of students per administrator fell from 84 to 68 and the number per professional staff fell from 50 to 21.

The anecdotes seem to be drawn from published sources like the Chronicle of Higher Education, the author's personal experiences dealing with the Johns Hopkins bureaucracy, and what I take to be late night gripe sessions between the author and colleagues at other universities. I imagine beer was involved. Sometimes the author adopts an overly sarcastic tone, which adds to one's reading pleasure but subtracts from the scholarly impact of the book. The anecdotes are believable to me, but it would be nice to verify with data whether these episodes are representative of broad trends. Such data probably do not exist - do we know, for example, the frequency with which colleges and universities produce strategic plans, the resources involved in their development, and the extent to which the action plans therein are actually implemented before the next strategic plan is developed? Probably not.

From time to time the author demonizes administrators just a bit (he apologizes in the preface to two administrators at JHU with whom he has a good relationship: "Sarah and Judy - this book is not about you." That's unfortunate. But the book has a powerful theme concerning the logic that drives administrative decisions in higher education. As I was reading it I thought about "Academically Adrift," a similarly flawed but thought-provoking critique of higher education. Gettysburg does not have nearly the same level of crazy in the upper echelons of its administration as the institutions discussed in the book. But the book offers an interesting perspective from which to view a lot of what goes on here, including three recent initiatives concerning assessment, advising, and "internationalization." Without passing any judgment on the merits of these initiatives, they can be seen as the outcome of the unique logic of the administrative university.

I'll post some passages from the book later. In the meantime, everyone should buy it.

Globaloney

At yesterday's faculty meeting someone asked whether there was a better word than "internationalization" to describe the College's (new?) focus on emphasizing international initiatives. I think the word he's looking for is "globaloney." In economics this term was used to characterize grandiose claims about the effects (positive and negative) of globalization. Here I would define it as the tendency to fetishize all things international.

To clarify in advance, I am not opposed to incorporating international issues in our curriculum or students' lives. I am a proud graduate of Georgetown University's School of Foreign Service, so I spent my undergraduate years studying things international, and my experience in college led me to go overseas after graduation and to study (among other things) the economics of developing countries in graduate school. But another thing happened to me in college. A friend of mine asked me to help out at a homeless shelter in DC, so I started doing that. Later I worked at a tutoring program for Cambodian refugees. I got out into the city and became familiar not only with the monuments and museums but the neighborhoods like Dupont Circle, Adams Morgan, and Mount Pleasant. I lived off campus and became a resident-citizen of the Georgetown area. Through those experiences I developed an interest and concern for local issues that I carry with me to this day, transplanted to Gettysburg. And I saw how the community in which I lived was part of the big world that I was studying in the SFS. I connected the local and the global, and that was great.

So the contact with my community was of great intellectual and moral value for me. But it was kind of coincidental. As far as I know Georgetown did not offer a class in, say, the Politics of the DC City Council, and I probably would not have taken it if it was offered. I could have spent my whole time at Georgetown on campus in campus housing, venturing no further than Wisconsin Avenue on weekend nights and the occasional downtown restaurant or museum. I needed to be pushed, but once I was given a little push a whole world opened up for me.

Some of our students get pushed in the direction of the local every once in awhile. A number of our students do work in the community with the Center for Public Service. Some classes incorporate service learning, some classes have projects that get students out into town or the surrounding area. But most of our students, I'll wager, stay snuggly within the Gettysburg Bubble. We apparently have decided to re-up our emphasis on the international, at least rhetorically. That's fine, as I said I've got nothing against making international connections. But where did this idea come from? Is it connected to a vision of what makes for a good undergraduate education? Specifically, did anyone consider whether it was a good idea to direct resources to "international" initiatives rather than local ones, or other important issues such as diversity or - and I know I'm being radical here - teaching really good classes in a lot of subjects?

And that's the rub. From the information we got at the meeting, it looks like real resources are being spent here. I did not know we had "a full time administrator to lead and coordinate internationalization." I did not know that we had "sponsored research programs [to] bring international researchers to the campus" - is the presumption that the visit of a well-regarded US-based researcher would not get the same priority? I did not know that we thought it was particularly important relative to other objectives to included "specific learning goals related to international and global awareness" in course syllabi. Real resources being spent on this internationalization initiative mean fewer resources on other priorities. That's a fact of life. I think many departments would like to know whether faculty positions that have been denied them could have been funded but for financial commitments we've made to internationalization.

Again, if we've decided that internationalization is really our top priority and we've given careful consideration to how resources devoted there do more good than resources devoted elsewhere, that's fine. But I suspect we've never really had that conversation. I suspect, rather, that we chose to focus on internationalization because it sounds sexy and cool. Saying we offer a "global education" looks good in an admissions brochure. Saying we're going to do a real good job teaching your kids, or make them good citizens of the community they live in, less so. If that's the case, then you call it what you want, I call it globaloney and I say the hell with it.

Inflation

According to the BLS, inflation remained above the Fed's two percent target in August despite the slowing economy. The graph below is the six month average inflation rate for the last two years.



The core inflation rate (blue and purple lines) are the series to focus on. In 2009-10 the economy faced a serious threat of deflation. That threat seems to have disappeared in the last year. The reversal was clearly driven by the increase in food and energy prices in late 2010 to spring 2011; commodity prices have started to moderate, which should lead to lower inflation in coming months.

Still, it's kind of remarkable that inflation could rise at all at a time when the unemployment rate is 9.1 percent. Why have energy and food prices had such a large effect on core inflation? Why have energy and food prices increased so strongly when the world economy is so weak? Two hypotheses:

- Commodity prices are being driven higher by the strong emerging market economies (China especially). This is an adverse terms of trade shock that ordinarily would result in a depreciation of the dollar relative to emerging market currencies. But there's that pesky Chinese policy of fixing the yuan-dollar exchange rate again.

- Commodity prices are being driven higher by speculators. This leads to an uncomfortable question: suppose we have a recession, the Fed responds in traditional form by lowering interest rates, but instead of lower rates being used to finance higher levels of investment all they do is fuel speculation in commodities markets, which drives inflation up? That's yet another mechanism (as if we needed one) that weakens the effects of monetary policy.

Either way, the Fed should not use inflation at slightly above 2 percent as a reason not to fight unemployment. Unemployment is problem number one, and we should be willing to see inflation rise even several percentage points higher than 2 percent if that's what it takes to bring the unemployment rate back to normal.

Going big

That didn’t take long, did it? After months of futile wrangling over the debt ceiling and with incoming economic data and the worsening European debt crisis raising the specter of another slide into recession, policymakers were finally going to turn their attention to job creation. Well, that was last week. This week a group of over 60 business leaders and former government officials released a letter calling on Congress to “go big” on deficit reduction. “We believe,” the letter states, “that a go big approach that goes well beyond the $1.5 trillion deficit reduction goal that the Committee has been charged with and includes major reforms of entitlement programs and the tax code is necessary to bring the debt down to a manageable and sustainable level, improve the long-term fiscal imbalance, reassure markets, and restore Americans’ faith in the political system.” President Obama, for reasons that are crystal clear politically but difficult to fathom in economic terms, has added his voice to the call.

The renewed interest in deficit reduction makes no economic sense. The Congressional Budget Office projects that under current law, if the commission established in August meets its target of $1.5 trillion in deficit reduction and if Congress simply declines to extend the Bush tax cuts and postpone deficit reduction measures already written into law, the budget deficit will shrink to a manageable 1.2 percent of GDP by 2021 and the federal debt will stabilize at just over 60 percent of GDP. So where is the fiscal crisis? The argument is often made that a credible plan to reduce the deficit will restore business confidence and help stimulate growth in the near term. But the standard way that lower future deficits could help the economy is by lowering long-term interest rates. With the interest rates on ten year Treasury bonds currently below two percent – and inflation-indexed bonds actually offering a zero or negative rate of return – interest rates cannot go much lower. We are left with the hope that cutting future deficits will restore business “confidence” – but how? The thing that worries businesses most about budget deficits is the future tax increases and spending cuts that will be necessary to close them. How would it restore business confidence to lock those tax increases and spending cuts into law today? Finally, the “go big” letter hints at another avenue: businesses might increase spending and hiring if they are assured that Washington is capable of dealing with a vexing political problem. But if Washington is to prove its chops by tackling a vexing political problem, wouldn’t it be best to pick the real problem that is staring us in the face rather than the mostly imagined problem that will hit us a decade or more from now?

The business executives and former government should have called for Congress and the President to “go big” not on deficit reduction, but on job creation. There are a lot of ideas out there and I don't agree with every single one. But it would have been helpful for a group of centrist leaders to make proposals that run the gamut of sensible policies. For starters, our political leaders could be asked to form a supercommittee including the Democratic and Republican leaders of both houses of Congress, the President, former government officials, and business and labor leaders. The supercommittee would be assigned the task of developing proposals to restore growth and reduce unemployment. Rather than the $4 trillion deficit target that the letter writers apparently have in mind, the supercommittee should be given the target of developing policies that will increase growth of GDP to a minimum of four percent per year in 2012 and beyond, as certified by the Congressional Budget Office and macroeconomic forecasting firms.

The supercommittee should be prepared to enter into a “grand bargain” on growth that includes policies favored by Democrats and Republicans alike. Such policies could include (again, I don't and you don't have to agree with every one of these): passing President Obama’s jobs bill; corporate tax reform; an expansion and streamlining of government loans through the Small Business Administration; use of the government’s regulatory authority to encourage* banks to make loans to household and business borrowers who would meet lending standards in normal times; a vast expansion of the Administration’s mortgage refinancing program; a temporary moratorium on new government regulations except for those related to the health reform and financial reform laws; and accelerated spending on infrastructure projects.

The Federal Reserve should undertake more aggressive efforts to stimulate the economy. Specific measures could include lowering the interest rate on bank reserves to zero; initiating another round of quantitative easing; and announcing its willingness to see inflation rise above its implicit two percent target until the economy has recovered.

If the letter writers were bold they could address their concerns to the nations of Europe as well. The European nations need to set aside political divisions and resolve the banking crisis once and for all. The European Central Bank needs to lower interest rates and signal its willingness to tolerate a reasonably high rate of inflation for a time.

Our nation’s leaders need to end their obsession with budget deficits and turned their attention to the critical economic problems that confront us today. With the economy on the precipice of a second recession we need a full court press to get the economy moving again.

* I mean "encourage" in the sense that Tony Soprano "encourages" a construction contractor to hire his brother-in-law for a make-work job.

Lost decade(s)

A macroeconomist's greatest fear is that the current recession could linger for years, giving the US a "lost decade" like Japan experienced in the 1990s. (Actually, since Japan's situation has hardly improved in the 2000s it's time we started referring to their experience as the lost - what would it be, "eikosiad"?)

But in light of the new Census report on income and poverty, people have begun to argue that by many measures America's lost decade actually began around 2001. Paul Krugman displays some disturbing data from the report: the number of people in "deep poverty" has been on a pretty much continuous upward march, and real income for working-age households and the percent of workers getting health insurance from their employers on a relentless downward march, since 2000. Look at Krugman's graphs, look at the report: it's depressing.

How about for a change we try NOT leaving $500 bills on the sidewalk?

Last week President Obama rejected a proposed EPA rule to reduce ground-level ozone emissions. The EPA had proposed reducing allowable ozone emissions from 75 parts per billion to 65 ppb, a change that would save up to 12,000 lives (mostly from complications related to asthma) and have other benefits that amount to tens of billions of dollars per year. There are costs associated with reducing ozone emissions - it would cost billions to install equipment on manufacturing facilities and take other measures, and so industry groups objected vociferously. Still, the EPA determined that the benefits most likely would exceed the costs. In this economic and political climate, however, the Obama Administration thought it prudent to stick with the current standard.

Ok, I see the point. But in the current economic environment (9.1 percent unemployment), the social cost of using unemployed workers and factories to produce pollution abatement equipment and install it in areas of the country with high ozone levels is close to zero. So forget the EPA rule: as long as Obama is asking Congress for money for infrastructure, teachers and so on, why not ask them for a few billion more to reimburse local governments and industry for the cost of installing equipment that would reduce ozone emissions to 65 ppb? Name an infrastructure project that has benefits on the scale of this one. What argument would Congress use to reject this spending: that they'd rather see 12,000 people die?

Steven Pearlstein eloquently dissects the Republican economic world view

Steven Pearlstein in the Washington Post. A choice passage:

My favorite, though, is a proposal, backed by nearly all the candidates along with the U.S. Chamber of Commerce, to allow big corporations to bring home, at a greatly reduced tax rate, the more than $1 trillion in profits they have stashed away in foreign subsidiaries.

“Repatriation,” as it is called, was tried during the “jobless recovery” of the Bush years, with the promise that it would create 500,000 jobs over two years as corporations reinvested the cash in their U.S. operations. According to the most definitive studies of what happened, however, most of the repatriated profits weren’t used to hire workers or invest in new plants and equipment. Instead, they were used to pay down debt or buy back stock.

But fear not. In a new paper prepared for the chamber, Republican economist Douglas Holtz-Eakin argues that just because the money went to creditors and investors doesn’t mean it didn’t create jobs. After all, creditors and shareholders are people, too — people who will turn around and spend most of it, in the process increasing the overall demand for goods and services. As a result, Holtz-Eakin argues, a dollar of repatriated profit would have roughly the same impact on the economy as a dollar under the Obama stimulus plan, or in the case of $1 trillion in repatriated profit, about 3 million new jobs.

It’s a lovely economic argument, and it might even be right. But for Republican presidential candidates, it presents a little problem. You can’t argue, at one moment, that putting $1 trillion of money in the hands of households and business failed to create even a single job, and at the next moment argue that putting an extra $1 trillion in repatriated profit into their hands will magically generate jobs for millions.

Indeed. In fact, think of the $1 trillion stashed inaccessible overseas as the equivalent of money kept in government bonds. Repatriation allows individuals (the ones who own shares in the companies) to convert those 'bonds' to cash. It's as if the Federal Reserve had just bought $1 trillion in bonds, creating currency to finance the purchase. When quantitative easing of this kind is done by the Fed, Republicans call it ineffective, inflationary, and possibly treasonous. But when the same quantitative easing is done by American corporations, it's the key to economic recovery. Amazing!

Rick Perry doesn't realize that he is Pope Urban VIII

Scene from last night's Republican debate:

Jon Huntsman: Listen, when you make comments that fly in the face of what 98 out of 100 climate scientists have said, when you call into question the science of evolution, all I'm saying is that, in order for the Republican Party to win, we can't run from science....

Rick Perry: Well, I do agree that there is -- the science is -- is not settled on this. The idea that we would put Americans' economy at -- at -- at jeopardy based on scientific theory that's not settled yet, to me, is just -- is nonsense. I mean, it -- I mean -- and I tell somebody, I said, just because you have a group of scientists that have stood up and said here is the fact, Galileo got outvoted for a spell.

Boy, you couldn't make this stuff up. Recall that Galileo was hounded by the Catholic Church, who objected to his scientific theory because it conflicted with their religious ideology. Catholic Church, meet the 21st century Republican Party and the American Petroleum Institute. Pope Urban VIII, meet Rick Perry.