Wednesday, September 4, 2013

Bogus Cato anti-welfare study

Nowadays, thanks to the Internet and the abundance of hawk-eyed journalists and economists, it takes only days to debunk the dishonest, slanted "research" of Koch-funded think tanks like the Cato Institute, that attempted to prove that welfare pays better than a job.

Rick Ungar of Forbes summarizes what's wrong with the Cato "study":

Cato has rigged the result by taking only the most highly paid recipients of welfare (women with two children) as their basis for comparison, and then proceeds to pretend that all of these recipients receive benefits from each and every one of the eight programs included while completely omitting those on welfare who receive dramatically less. Then, for extra measure, the study falsely pretends that working families receive absolutely no welfare benefits whatsoever in order to make minimum wage earners look like their income is lower than a welfare recipients’ take.

Ungar concludes thusly:

If the problem is real—and I acknowledge that, to some extent, it is—you ought to be able to provide real data to get to your proposed solutions. When an organization like Cato is forced to offer up one of the most bogus studies I can recall as the means in which to make a point, rest assured that reasonable, thinking Americans will be left to conclude that the conservative side of this argument offers no real solutions—only false propaganda—and that will benefit exactly nobody.


By Rick Ungar
September 3, 2013 | Forbes

Studies: Wealth makes us less generous

According to professor Dacher Keltner, "In just about every way you can study it, our lower-class individuals volunteer more, they give more of their resources — they're more generous."

Whaddya know?  Yet more evidence that wealth changes people for the worst.


By Shankar Vedantam
September 3, 2013 | NPR

Tuesday, September 3, 2013

Why U.S. college tuition is so high

Interesting analysis by Dylan Matthews over at Wonkblog of why U.S. higher education is so expensive.  (Spoiler: It ain't tenured left-wing professors or the education lobby).  Basically, it's a messed up market.  Higher education is a market for what economists call an "experience good" whose ultimate quality is unknown for a long time even after a student begins to consume it; and there are too many customers involved in one transaction; and there's something called Bowen's Law at work:

The main signal that you can use is price, and in particular sticker price. The theory is schools that cost more will deliver a better education. That means schools have a real incentive to push up tuition for its own sake. And if the Bowen theorem is right, once tuition goes up, so too does spending, making it harder for the effect to be undone.

“It sets in motion some really bad incentives,” [Robert] Martin [of Centre College] says. “The first is that consumers tend to take their cue on quality from how much each institution spends. Even more damaging is that any institution that tries to compete on the basis of cost, consumers are going to construe that to mean they’re cutting quality. So you don’t have cost competition, and you thus don’t have a competitive pressure to reduce cost.”

Matthews offers evidence that administrative "gilding" is the real cause [emphasis mine]:

At public and private research universities, “institutional support” costs grew more than instruction costs from 2000 to 2010. Indeed, instruction costs accounted for only about 28 percent of cost increases (in those areas where they occurred) for public research universities from 2000 to 2010. It sure looks like administration, rather than instruction, is what’s driving this.

Meanwhile, as Matt Taibbi recently described in Rolling Stone, we have the federal government financing this zany college spending spree while loading up America's youth with onerous debt.

  

By Dylan Matthews
September 2, 2013 | Washington Post

The real decline and possible REBIRTH of Detroit



Joyce's article about the real Detroit, its "4 economies," and the hopeful developments there is worth reading in full.  




But I want to highlight the racial, or rather, racist elephant in the room that Joyce, a native Detroiter, points out while the MSM ignores it.  This might sound like the urban area near you:

And yes, race does have everything to do with it.  There are three counties that make up the political economy of Southeast Michigan.  Wayne County encompasses Detroit but also includes large suburbs such as Dearborn,  Livonia (the most segregated city of more than 200,000 residents in the entire country) and most of the affluent Grosse Pointes.  Oakland County immediately north of Detroit is the 4th most affluent county of its size in the United States.  Nearby Macomb County is predominately working class and the “birthplace” of “Reagan Democrats”.  

Much of the Detroit punditry one reads or hears conveniently ignores race altogether, concentrating instead on the decline of the domestic auto industry or macro economic trends.  Usually when race is included on a list of “causes for Detroit’s decline,”  it is described with weasel words such as “racial tensions” or “the racial divide.”  Nonsense. What it was and what it remains,  is white racism pure and simple.  Bloviators love to talk about the “unsustainable legacy” costs of pensions for city workers.  They never talk about the “legacy” costs of racism. 

By 1980,  African Americans out numbered whites within the city limits of Detroit.  Yes,  capital started leaving Detroit in the 1940’s. But the population disinvestment is just as important.  Make no mistake about it.  The extreme segregation that has long characterized Southeast Michigan was anything but accidental. 

For decades,  it was the policy of the Federal Housing Administration to deny loans to African Americans trying to buy houses in the suburbs.  To this day,  if you buy a suburban house that hasn’t changed hands in a long time,  the deed may well contain a “restrictive covenant” that explicitly prohibits the sale of the house to Negroes. 

That’s not all.  Twenty-three out of twenty-three attempts to create a tri-county transportation authority to improve region-wide public transit went down to defeat in the white controlled state legislature.  So,  not only was it impossible for African Americans to buy homes near where the jobs were moving,  it was difficult to get to suburban jobs that came along with suburban growth.

And just to add insult to injury,  the financial institutions that wouldn’t lend money to African Americans to move out of the city wouldn’t lend it for home improvement in the city either. But they would charge more,  far more,  for home and car insurance.  For those too young to remember,  that practice was called redlining.  It’s still prevalent today. 

One dramatic example of the cost of racism born by Detroit is this:  Detroit has an income tax on those who work within the city limits.  The two-tier tax is lower for those who work in the city but live in the suburbs.  In enacting the tax,  the state legislature required employers based in the city to collect the tax via payroll deduction as they do with federal and other taxes.  Suburban based employers are not required by the law to collect the tax. Most of them don’t.  The revenue lost to Detroit per year is estimated to be as much as $142 million.   

Zooming out our historical lens even further,  we see the unbroken pattern of white supremacy even more clearly.  The counterrevolution to the civil war was the Jim Crow system.  The counterrevolution to the end of Jim Crow is mass incarceration and other components of the institutionalized racism that perpetuate and in some ways intensify white privilege today.  Detroit’s history as the national leader in residential segregation and all that flows from it definitely underpins today’s Detroit crisis and that of Flint, Pontiac,  Benton Harbor and Muskegon as well. 

While observers sometimes notice that a majority of predominately African American cities in Michigan are under some form of emergency management.  The question they don’t ask is,  why are there predominately African American cities in the first place? 

The beauty of this “willful ignorance” for many whites is that as the quality of life declined in Detroit,  the decline itself became the moral justification for whites for the inequality itself.  It’s an old story.  Slave society did the very same thing.  Slaves were routinely portrayed as lazy and shiftless.  To put the meme in contemporary terms,  the slaves were demonized as the takers and the slave owners were the makers. 



By Frank Joyce
September 2, 2013 | Alternet

Sirota: Higher education should be a right like high school

Following up on Matt Taibbi's expose of the scam that federal student loans have become, David Sirota offers us an alternative [emphasis mine]:

Just consider the critical difference between how high school and college education programs are funded.

The former is funded by broad-based taxes and few would ever suggest changing it to an individual tuition system. Why? Because we've come to view access to high school as a right. This view is based not just on notions of morality but also on an economic calculation. Basically, we know we need a workforce with as many high school graduates as possible, and we've decided that forcing young people to go into crushing debt to get a high school degree would deter many from getting the degree.

Yet, even though we know that higher education is also increasingly an economic necessity, we do not have the same funding model or outlook for college. Instead, we still predicate access to higher education on a student's wealth and/or their willingness to go into crushing debt.

[...]  No doubt, shifting our policies to treat post-secondary education as equally necessary as high school -- and therefore worthy of similar fiscal treatment -- requires a paradigm shift in thinking.

It requires us to see higher education as not just 4-year university programs, but also 2-year community college programs and vocational and technical education.

As I've been saying for years, we can give millions of Americans marketable, in-demand job skills without four-year colleges.  For too many, four years of college is an extravagant waste of time and money; they don't want or really even need to be there, (hurting the college experience for those who do); they just need a piece of paper at the end that generically qualifies them for gainful employment.


By David Sirota
August 29, 2013 | Alternet