Both Matthew Yglesias and Reihan Salam discuss why smaller class sizes are not always better and produce some alternatives to that narrative. I don’t have any research to counter those points, but I will argue against premise in which this debate exists. For policy wonks and economists, students are commodities. Each student sits in school to learn a set of skills that then transfer to the working world. In this same vein, how efficiently teachers teach a certain subject or in what way that subject is taught increases or decreases the productivity of a student. Class size is one of those methods to increase or decrease the means of production. My problem is that students are not commodities. Education should be about teaching students to think critically. Education policy should not be based on an equation that says: if students learn “X” at “Y” pace and with “Z” efficiency they will achieve the end result. The worry should be about whether students pick up basic skills and how they utilize those skills later in their educational careers.
Category Archives: economic policy
By John Stang
Matt Yglesias writes in his new book The Rent is Too Damn High about how to make urban housing cheaper and its impact on the economy. He notes how right and left politics get in the way of this and how both can offer solutions in different ways:
That’s why housing is so expensive in the major coastal metropolises and also in the core downtown areas of lower-cost midwestern cities. The appropriate policy response is to stop disparaging apartment buildings as tenements and stop preventing developers from building them. People should by no means be “forced” to stop owning and driving cars, but there’s no reason for regulations to incentivize these activities. Progressives and urbanists need to move beyond their romance with central planning and get over their distaste for business and developers. Conservatives need to take their own ideas about economics more seriously and stop seeing all proposals for change through a lens of paranoia and resentment. Lastly, politicians of both parties who like to complain about “regulation” and “red tape” ought to spend some time looking at the specific area of the economy where red tape and regulation are most prevalent.
By John Stang
Derek Thompson at the Atlantic notes how Friday’s jobs report is encouraging because of where jobs are being added:
One way to drill down into this question is to reflect on the really big picture: Where the jobs are going and where aren’t they going. Since Obama’s first month on the job, total government has lost 600,000 jobs. (He’s a pretty bad socialist, apparently.) The goods-producing sector, which includes manufacturing and construction, is still down 1.6 million jobs — as many jobs as we added all of last year! All the growth has been in services, where we’ve added 1.3 million new positions.
Here’s what the January 2009 – February 2012 change looks like as a share of total jobs in government, goods, and services. If you break out services by education, you would find evidence that people with college and advanced degrees were both less likely to lose their jobs in the recession and more likely to find higher-paying positions in the recovery.
By John Stang
When trying to cut the deficit in some way, that obviously requires trying to change some form of entrenched social policy for which a constituency exists. In Europe and the U.S., this is the case. Matt Yglesias writes about Europe:
Whether you agree with Kierkegaard about that or not, this once again highlights thecentral dilmma of the “independent” central bank. Kierkegaard is a writer and a policy analyst. He pushes for labor market reforms by trying to convince people that they’re a good idea. Thorning-Schmidt is a politician, she pushes for labor market reforms (or not) by campaigning and winning elections and securing votes in parliament. But Draghi is a central banker. His job is supposed to be to provide macroeconomic stability—low unemployment and non-accelerating inflation. But he’s got views on these matters every bit as much as Thorning-Schmidt or Kierkegaard or myself. But he actually has the power to make Kierkegaard’s version of the old saw about the Chinese characters for danger and opportunity into a reality. By tweaking the speed and alacrity with which he responds to short-term demand-side growth issues, he can mightily influence the course of long-term structural policymaking. Elected officials in Italy and Spain don’t have the tools to stabilize the Spanish and Italian macroeconomies over the short term. But they do have the tools to implement long-term structural reforms that Draghi either likes or dislikes, and Draghi has the power to dispense short-term stabilization in accordance with his estimation of the merit of Spanish and Italian long-term policies. In effect, he and his colleagues are running the whole show while simultaneously being accountable to almost nobody.
To put it simply, whether on a central banking or political level, someone will make a decision that impacts a social situation of someone else, which is how economic policy operates. Except, central bankers can have an impact on interest rates while politicians can control social policy, such as labor reforms. Both are critical, but the latter takes more staying power than the other because the latter is accountable to a voting public. On the American side, David Brooks discusses the tax code and its implications for social policy:
The U.S. does not have a significantly smaller welfare state than the European nations. We’re just better at hiding it. The Europeans provide welfare provisions through direct government payments. We do it through the back door via tax breaks. For example, in Europe, governments offer health care directly. In the U.S., we give employers a gigantic tax exemption to do the same thing. European governments offer public childcare. In the U.S., we have child tax credits. In Europe, governments subsidize favored industries. We do the same thing by providing special tax deductions and exemptions for everybody from ethanol producers to Nascar track owners.
By trying to change the tax code, or simplifying it, by eliminating loopcauses and carve-outs, that offsets specific incentives for people to have children, buy a house, or even purchase economic necessities for the good of the country, like green technology. Not to say trading it for a welfare state wouldn’t be a bad thing, but the perception of eliminating some sort of tax credit does have a small psychological affect.
The point is that economic policy, an obvious point, is complicated because every choice not only has an economic consequence, but also changes a human behavior and sways public opinion. Think of it as one “ecosocpolitical” sphere. That’s why the tax code can’t be simplified so easily or we are not on our way to a single payer health care system.
By Luke Brinker
Ezra Klein notes that with the economy likely to pick up steam in 2012-13, the outcome of this November’s election will determine which party receives credit for the recovery. By virtue of presiding over a reviving economy, the party that wins in 2012 stands an excellent chance of winning in 2016, as well. Here’s how Klein argues President Obama or President Romney might take advantage of improved economic performance:
The 2008 economic crisis was not nearly so deep as the Great Depression — in part because of an aggressive policy response — and so the recovery is not likely to be so remarkable, nor the political benefits so dramatic. But they’re still likely to be present. And because a recovery is likely within five years, whichever party wins the White House in 2012 is likely to get the credit, and so too will its policy agenda.
You can see how this will work. If Romney wins the presidency and the economy begins to rebound, Republicans will argue, and America’s experience will seem to show, that they were right all along: The stimulus was useless and the regulatory uncertainty the Obama administration created with its health-care plan and its talk of cap-and-trade and all the rest kept businesses from investing. Of course, if Obama keeps the office, that argument will be largely discredited, and he’ll be able to make the case that he and his party steered the country through incredible choppy waters despite relentless obstructionism from the Republicans — oh, and in 2014, he’ll also give 32 million Americans health-care insurance, just another little side project he got done while saving the economy.
This seems about right. While I’m not fond of the quadrennial pronouncement of each presidential election as “the most important in our lifetimes,” I do think that the 2012 outcome is highly significant in predicting which party will dominate the 2010s. (It’s worth noting that even though voters don’t give President Obama’s stimulus package much credit, numerous studies have found that without it, the economy would be in worse shape. So while he won’t be inclined to thank his predecessor, a President Romney would be indebted to Obama for laying the groundwork for recovery.)
Two caveats: First, if President Obama is re-elected in 2012 and presides over a robust recovery, the Democrats may yet lose in 2016 simply because recent history shows that voters are often ready for a change in presidential party after a two-term presidency. (See 1960, 1968, 1976, 2000, and 2008.) Second, although economic performance is highly predictive of electoral outcomes, it isn’t the only factor. In 2006, the nation was still in the midst of its credit bubble, unemployment stood at a mere 4.5 percent, and the Dow Jones Industrial Average rose above 12,000 for the first time, but in the midterm elections, the Republican Party lost control of Congress and several statehouses. Voters were fed up with the “culture of corruption” in Washington embodied by several lobbying scandals, and discontent with the Iraq War was at its apex. In 1994, when the Republicans ended 40 years of Democratic control of Congress, the economy was growing at a respectable four percent annual rate and unemployment stood at 5.8 percent in October – a substantial improvement from the recession earlier in the decade. The lesson from 1994 and 2006? It’s hard to predict what other (i.e., non-economic) issues may affect later elections in the 2010s. So while a healthy recovery will give whichever party wins in 2012 a leg up in 2016, it won’t be sufficient to ensure electoral success.