Month: October 2012

Tuition by Major

A task force convened by Florida Governor Rick Scott has recommended changes in tuition subsidies according to job market demand:

Tuition would be lower for students pursuing degrees most needed for Florida’s job market, including ones in science, technology, engineering and math, collectively known as the STEM fields.

The committee is recommending no tuition increases for them in the next three years.

But to pay for that, students in fields such as psychology, political science, anthropology, and performing arts could pay more because they have fewer job prospects in the state.

“The purpose would not be to exterminate programs or keep students from pursuing them. There will always be a need for them,” said Dale Brill, who chairs the task force. “But you better really want to do it, because you may have to pay more.”

The task force has the right idea but the right way to target subsidies is not to the job market per se (let alone Florida’s job market), wages already reflect job market needs. Subsidies instead should be targeted to fields where education has the greatest positive spillovers, benefits that spill over wages and flow to the public at large. Overall, this likely means subsidizing the STEM fields more than anthropology which is why the taskforce has the right idea. If the task force wants to explain the idea, however, they should make it clear that the goal is to focus subsidies on those fields where education most benefits the taxpayer.

Defensible conclusions from observing UK fiscal policy

Here are a few which are at least what I call “defensible”:

1. The UK economy was hit with serious problems, and fiscal (and monetary) policy did not respond strongly enough to keep the nation on track.  (NB: If you are citing measures of a cyclically adjusted gap in UK fiscal policy, you probably are citing evidence in support of this proposition.)

2. There has been a shift in the composition of government spending, which has led in turn to sectoral shift problems for former UK government employees.

3. UK government spending is underinvesting in that nation’s future, most of all in education but other public goods too.

You may or may not agree with these views, but again they are defensible.  You can point to both evidence and theory in their favor, noting that the skeptics may have other reasons for dissenting (but still they should accept the first-order evidence and theory).

Here is the view which is not so defensible:

4. A negative shock to UK government spending led to a negative AD shock and that drove the recent poor performance of the UK economy.

People, that one just ain’t true.  I’m receiving a lot of comments and emails, all citing evidence which supports versions of 1-3, but interpreted incorrectly as support for #4.

There is a big difference between #1 and #4 for their concrete implications.  For instance if you believe in #4, it seems that problem would be relatively easily fixed by more AD.  If you believe in #1, you have to think long and hard about what those initial shocks were, and then ascertain how much the resulting fallout from those shocks could be fixed by AD measures.  These become murky waters very quickly.  For instance a mix of collapsing London finance, disappearing North Sea oil, and mysterious British productivity puzzles (one possible set of options in these murky waters) probably can be fixed only a bit by a more expansionary fiscal policy.

I’m on board with the government spending/sectoral shocks to government employment point, though of course it is only one part of the problem.  I would note that everyone criticizes sectoral shocks theories until they wish to use them.  I also would suggest that this point is well explained by the conservative critique of entitlement spending, namely that it swallows up too many parts of the budget and the broader economy.

People are trying to use the UK fiscal policy evidence to argue for the “simple” view when instead they should be pushing the “murky” view.  And the murky view implies the whole mess just isn’t that easy to fix, or for that matter diagnose.

GMOs and pesticide use (an email from Greg Conko)

Here is a further Mark Bittman column on GMOs, arguing against GMOs on the grounds that they lead to greater use of chemicals and pesticides.  I would start with quite a simple point, namely to the extent there is a problem with chemicals and pesticides (as there may be with or without GMOs), let’s regulate that problem directly.  Somehow that option is not put on the table as an alternative to what is widely recognized as a rather dubious referendum.  In any case, I posed the question about GMOs and pesticides to Gregory Conko, who has written a book on GMOs, and he responded to me (Greg’s email goes under the fold)…

GC: Note that “pesticide” is a broad term that includes both insecticides and herbicides, as well as fungicides, nematocides, rodenticides, etc. Use of GE crops has had a measurable impact on insecticide and herbicide use, with insecticide use incontrovertibly down and a mixed record on herbicide use. And because there is much more acreage planted with GE herbicide tolerant varieties than with GE insect resistant varieties, herbicide use trends tend to drown out insecticide use trends.  Critics tend to obfuscate these distinctions by using the term “pesticide”, rather than the more specific sub-types, probably because they know casual readers will think “insecticides”.  But even the herbicide data need some additional context.

When measuring raw quantities of active ingredient, you find herbicide use on herbicide-tolerant GE crops to vary widely with crop species and region. In corn, for example, where atrazine is used extensively on non-GE varieties, a switch to Roundup Ready varieties tends to reduce slightly the quantity of active ingredient used, but mainly results in a switch from one to the other chemical. In soy, on the other hand, where herbicides of any kind are used much less frequently in non-GE varieties, a switch to RR soy almost invariably increases active ingredient use significantly.  And because RR soy is by far the most widely grown GE crop (amounting to well over 60 percent of all the soy grown anywhere in the world), on net across all species, this tends to result in an increase in quantity of active ingredient for GE crops generally.

However, merely saying that GE HT varieties result in higher use of active ingredient says little about the environmental or human impact of that change.  Because glyphosate, the active ingredient in Roundup, has close to zero mammalian, avian, invertebrate, etc. toxicity, and biodegrades rapidly, it has a vastly lower Environmental Impact Quotient (EIQ) than the herbicides it’s replacing.  Thus, a switch to RR soy may result in an increase in “pesticide” use while nevertheless being far better for humans and the environment.  Focusing only active ingredient use without any discussion of EIQ is therefore patently misleading.

It’s also worth noting that there is nothing unique about genetic engineering’s ability to produce herbicide tolerant crop varieties. In fact, there are scores of non-GE herbicide tolerant varieties grown all around the world.  A farmer who wants to plant HT canola or rice but doesn’t want to be beholden to Monsanto, or another farmer who’s tired of waiting for full regulatory approval of Roundup Ready wheat or sunflowers, can buy “Clearfield” branded seed from BASF that’s been bred with induced mutagenesis to tolerate the herbicide imidazolinone. Why are GE opponents not talking about imi-tolerant crops? Because they’re not GE. Plant breeders can expose seeds to mutagenic chemicals or ionizing radiation to scramble the plant’s DNA in entirely unpredictable ways and then put them on the market in the United States without reporting to or asking permission from a single regulatory agency, and not a one environmental activist or consumer group will bother criticizing them for doing so. For some reason, skeptics seem to be fixated on the use of recombinant DNA techniques, even though what they criticize publicly are phenomena that occur with all sorts of plant breeding methods.

See here, for example, for a nice critique of the recent study by Charles Benbrook concluding that GE crops increase pesticide use: http://weedcontrolfreaks.com/2012/10/do-genetically-engineered-crops-really-increase-herbicide-use/. And a related discussion, with references
to the literature, can be found here: http://academicsreview.org/reviewed-content/genetic-roulette/section-6/6
-2-new-herbicide-tolerant-crops/.

For a more general discussion of the impacts of GE crops on pesticide use, see:

National Research Council, Impact of Genetically Engineered Crops on Farm Sustainability in the United States, 2010,
http://www.nap.edu/catalog.php?record_id=12804
” Generally, GE crops have had fewer adverse effects on the environment than non-GE crops produced conventionally. The use of pesticides with toxicity to nontarget organisms or with greater persistence in soil and waterways has typically been lower in GE fields than in non-GE, nonorganic fields. … When adopting GE herbicide-resistant (HR) crops, farmers mainly substituted the herbicide glyphosate for more toxic herbicides.” (p. 3).  And, ” Targeting specific plant insect pests with Bt corn and cotton has been successful, and the ability to target specific plant pests in corn and cotton continues to expand. Insecticide use has decreased with the adoption of insect-resistant (IR) crops” (p.6).

G. Brookes and P. Barfoot, “Global impact of biotech crops: Environmental effects 1996-2009,” GM Crops Vol. 2, No. 1 (2011) pp.
34-49, http://www.landesbioscience.com/journals/gmcrops/BrookesGMC2-1.pdf
Abstract:
This paper updates the assessment of the impact commercialised agricultural biotechnology is having on global agriculture from an environmental perspective. It focuses on the impact of changes in pesticide use and greenhouse gas emissions arising from the use of biotech crops. The technology has reduced pesticide spraying by 393 million kg (-8.7%) and, as a result, decreased the environmental impact associated with herbicide and insecticide use on these crops (as measured by the indicator the environmental Impact Quotient (EIQ)) by 17.1 %. The technology has also significantly reduced the release of greenhouse gas emissions from this cropping area, which, in 2009, was equivalent to removing 7.8 million cars from the roads.

TC again: In other words, the charge about chemicals and pesticides is not such a strong one.  As we can see from the earlier Indian farmer suicide accusation, the critics are still just clutching at straws.

Words of wisdom

Some people I know will hate it when I say this, but as written by E.J. Dionne, this seems to me true, true, true:

The right wing has lost the election of 2012.

The evidence for this is overwhelming, yet it is the year’s best-kept secret. Mitt Romney would not be throwing virtually all of his past positions overboard if he thought the nation were ready to endorse the full-throated conservatism he embraced to win the Republican nomination.

…The right is going along because its partisans know Romney has no other option. This, too, is an acknowledgment of defeat, a recognition that the grand ideological experiment heralded by the rise of the tea party has gained no traction.

There is more at the link.

Anthem: Ayn Rand’s Dystopian Masterpiece

Rod Long offers a very insightful reading of Ayn Rand’s Anthem:

The book’s most striking feature, both stylistically and in the substance of the story, is the absence of the first-person singular. The idea of a totalitarian state suppressing subversive ideas by banning or distorting the language needed to express or even formulate it has been made generally familiar by George Orwell’s Nineteen Eighty-Four, with its fictional language, “Newspeak”; but Rand’s treatment precedes Orwell’s by more than a decade (and may possibly have influenced it).

In Rand’s dystopia, the first-person singular pronoun — the word “I” — has been abolished in order to prevent people from thinking of themselves as individuals with identities distinct from that of the collective. The struggle of Equality 7-2521 (Rand modeled her characters’ names on telephone exchanges of the “Pennsylvania 6-5000” form) to discover his own individuality is mirrored in his, and the text’s, struggle to move from “we” to “I.”

…If the book’s linguistic center is the first-person pronoun, its imaginal center is light — the guttering candlelight of the collectivist dystopia, contrasted with the electric light that the protagonist reinvents, the latter symbolizing the fire that Prometheus of Greek myth stole to give to the human race, and, consequently, symbolizing as well the creative fire of the unfettered individual mind.

…Rand was a dedicated Aristotelian and a lifelong critic of Plato, and many of the features of Anthem’s dystopia, such as government assignment of professions, state regulation of breeding and reproduction, and abolition of private property and the family, seem drawn from the recommendations in Plato’s Republic. The prohibition of the word “I” in favor of “we” is likewise a natural development of Plato’s dictum in the Republic that all citizens should say “mine” and “not mine” about the same things — a proposal criticized by Aristotle, who warns in his Politics that the attempt to give a community the same degree of unity as a single individual is doomed to disaster.

…Moreover, Equality 7-2521’s journey down into an abandoned subway tunnel to discover an artificial light source turns on its head Plato’s allegory of the cave, in which the wise man ascends from the cave of physical reality, lit by the artificial light of the senses, to discover the “real” world of abstract Forms, lit by a sun of pure ineffable intellect. By reversing Plato’s parable, Rand, in Aristotelian fashion, reorients the pursuit of knowledge away from the supernatural and back to this world, to empirical reality.

Read the whole thing.

Will Ohio State’s football team decide who wins the White House?

Here is my recent Slate.com piece with Kevin Grier, excerpt:

Just how irrational are voters? It is statistically possible that the outcome of a handful of college football games in the right battleground states could determine the race for the White House.

Economists Andrew Healy, Neil Malhotra, and Cecilia Mo make this argument in a fascinating article in the Proceedings of the National Academy of Science. They examined whether the outcomes of college football games on the eve of elections for presidents, senators, and governors affected the choices voters made. They found that a win by the local team, in the week before an election, raises the vote going to the incumbent by around 1.5 percentage points. When it comes to the 20 highest attendance teams—big athletic programs like the University of Michigan, Oklahoma, and Southern Cal—a victory on the eve of an election pushes the vote for the incumbent up by 3 percentage points. That’s a lot of votes, certainly more than the margin of victory in a tight race. And these results aren’t based on just a handful of games or political seasons; the data were taken from 62 big-time college teams from 1964 to 2008.

The good news, we suppose, is that sports really can cheer us up and make the world seem like a brighter place. The sports fan is left happier and more satisfied all around, not just on the gridiron. When you are feeling upbeat and happy, you feel more satisfied with the status quo in general. And feeling satisfied with the status quo makes you more likely to vote for the incumbent politician, even if that’s totally irrational.

The study’s authors control for economic, demographic, and political factors, so the results are much more sophisticated than just a raw correlation. They also did a deeper analysis that took into account people’s expectations. It turns out that surprise wins are especially potent, raising local support for incumbent politicians by around 2.5 percentage points.

The nature of UK austerity

Veronique de Rugy sums up many points I continue to be thinking:

When I looked at the data back in June, we saw that of the roughly £40 billion that was shaved from the deficit during the 2010–2011 budget cycle, for every £3 of new tax revenue, U.K. taxpayers got £1 in cuts — exactly the reverse of what was promised.

What’s more, the evidence indicates that U.K. has, at best, slowed down the growth of spending, but it has not engaged in actual spending cuts. I documented the trend in British spending earlier this year:

A look at the data in Her Majesty’s Fiscal Year 2012 Budget shows (see table 2.3) that total managed expenditures will increase from £696.4 billion in 2011–2012 to £733.5 billion in 2014–2015, and further to £756.3 billion in 2016–2017. Adjusted for population growth, this is slow growth, but not a savage cut. That table also shows a “projected” drop in Public Sector Gross Investment between 2012–2013, but if it ever materializes, it will be contained to that year alone.

Spending cuts in the UK can’t be blamed for the weak growth path the country is on. On the other hand, tax increases can. Here is a list:

(For more, go here.) The bottom line is that the U.K. is another case of private-sector austerity (i.e., tax hikes) without public-sector austerity (i.e., spending cuts).

For more detail, here is a new and very good paper by Anthony Evans.  Here are some interesting remarks from Nicholas Crafts.

There is a great stagnation

Singapore Airlines Ltd. (SIA) will end non-stop services to Newark, the world’s longest commercial flight, next year as it phases out the aging planes used on the route.

The all-business-class flights will end in the fourth- quarter of next year, along with similar services to Los Angeles, the airline said in a statement yesterday, as it announced an order for 25 Airbus SAS aircraft. The Toulouse- based planemaker will acquire the five four-engine A340-500s used on the non-stop routes as part of the deal.

The end of the almost 19-hour service to Newark will lengthen Singapore travelers’ trip by more than three hours as they will have to change planes in London.

Here is more, and note that the new aircraft are designed to serve the budget market in the future.

*The Bretton Woods Transcripts*

That is the new eBook edited by Kurt Schuler and Andrew Rosenberg.  I cannot open the file they sent along to me, but Amazon summarizes:

The Bretton Woods Transcripts is the confidential, verbatim record of meetings of the historic conference that established the International Monetary Fund and the World Bank. The Bretton Woods conference, named after the New Hampshire town where the conference was held in July 1944, began a new era in international economic cooperation that continues today. Delegates from 44 countries attended the conference. The best known then and now was John Maynard Keynes, the most influential economist of the 20th century.

A companion Web site for the book contains extensive background material, including photos of the original transcripts and previously unreleased conference documents: http://www.centerforfinancialstability.org/brettonwoods.php

The culture that is Denmark

Some of them he slept with more than once, but most were one-timers. In all, he earned just over 24,000 kroner, or $4,150.

Henrik only paid 6,300 kroner ($1,090) in taxes, or 24.2 percent, because he was able to deduct 11,000 kroner ($1,900) for expenses, including his Macbook. He had sex with a client in Croatia when he was there on vacation, and when he returned, he called the tax authorities to ask if he could deduct the cost of the holiday. Flights yes, came the answer, hotel no.

I asked Henrik why his spreadsheet listed the distance he cycled to each client.

“Bike rides,” he says, “are reimbursed half a kroner per kilometer.”

Here is more.

Assorted links

Medicare cost control in action

Tens of thousands of people with chronic conditions and disabilities may find it easier to qualify for Medicare coverage of potentially costly home health care, skilled nursing home stays and outpatient therapy under policy changes planned by the Obama administration.

In a proposed settlement of a nationwide class-action lawsuit, the administration has agreed to scrap a decades-old practice that required many beneficiaries to show a likelihood of medical or functional improvement before Medicare would pay for skilled nursing and therapy services.

…Neither she nor Medicare officials could say how much the settlement might cost the government, but the price of expanding such coverage could be substantial.

The story is here.  Without knowing the cost, it is difficult to say whether this coverage expansion is a good idea.  But that is exactly my point.  I see a good deal of cognitive dissonance when I read discussions of plans for Medicare cost control.