Posts Tagged new york times
Devaluing the Bachelor’s Degree Fast Track Edition
Posted by TonyLima in California Economy, Current issues, Education issues on March 13, 2013
In a way, the legislation has a head start: Last year, in an effort to bring down textbook costs, Mr. Steinberg won passage of a law requiring free online textbooks for the 50 most popular introductory college courses, and in the process created a faculty panel — three members each from the University of California, California State University and the community college system — to choose materials.
The new legislation would use that panel to determine which 50 introductory courses were most oversubscribed and which online versions of those courses should be eligible for credit. Those decisions would be based on factors like whether the courses included proctored tests, used open-source texts — those available free online — and had been recommended by the American Council on Education. A student could get credit from a third-party course only if the course was full at the student’s home institution, and if that institution did not offer it online.
Today’s New York Times includes an article about a potentially disastrous bill wending its way through the California state legislature. I’ve written about devaluing the bachelor’s degree before. If this bill passes, that will become devaluing the bachelor’s degree, fast track edition. My lovely wife has made numerous insightful comments about this. Unfortunately I’m very busy this week (and probably next week, too) on a project with a tight deadline. For now you’ll have to settle for this brief note.
In brief, this law would force public colleges and universities in California to accept transfer credit for online courses. The courses would be approved by an already-existing panel →→→→→→
Yes, you read that correctly. Nine — nine — faculty members get to make this decision for the rest of us. If anyone can take the time to find out who those nine people are, I would appreciate it. But there’s one more statement made by State Senator Darrell Steinberg:
“We want to be the first state in the nation to make this promise: No college student in California will be denied the right to move through their education because they couldn’t get a seat in the course they needed,” said Darrell Steinberg, the president pro tem of the Senate, who will introduce the bill. “That’s the motivation for this.”
In other words, students deserve a bachelor’s degree. They have a “right to move through their education.” And here I thought the faculty had something to say about who gets a degree and who doesn’t.
Color me nauseous.
Ah the French
Posted by TonyLima in Current issues, Economic policy on February 21, 2013
Dear Mr. Montebourg: I have just returned to the United States from Australia where I have been for the past few weeks on business; therefore, my apologies for answering your letter dated 31 January 2013. I appreciate your thinking that your Ministry is protecting industrial activities and jobs in France. I and Titan have a 40-year history of buying closed factories and companies, losing millions of dollars and turning them around to create a good business, paying good wages. Goodyear tried for over four years to save part of the Amiens jobs that are some of the highest paid, but the French unions and French government did nothing but talk. I have visited the factory a couple of times. The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three, and work for three. I told this to the French union workers to their faces. They told me that’s the French way! The Chinese are shipping tires into France – really all over Europe – and yet you do nothing. In five years, Michelin won’t be able to produce tire in France. France will lose its industrial business because government is more government. Sir, your letter states you want Titan to start a discussion. How stupid do you think we are? Titan is the one with money and talent to produce tires. What does the crazy union have? It has the French government. The French farmer wants cheap tire. He does not care if the tires are from China or India and governments are subsidizing them. Your government doesn’t care either. “We’re French!” The U.S. government is not much better than the French. Titan had to pay millions to Washington lawyers to sue the Chinese tire companies because of their subsidizing. Titan won. The government collects the duties. We don’t get the duties, the government does. Titan is going to buy a Chinese tire company or an Indian one, pay less than one Euro per hour and ship all the tires France needs. You can keep the so-called workers. Titan has no interest in the Amien North factory. Best regards,
Maurice M. Taylor, Jr.
Chairman and CEO
French Labor Strike
Today’s New York Times brings a story that will warm the hearts of believers in free markets everywhere. At least one U.S. capitalist understands capitalism. That gentleman is Maurice Taylor Jr., the head of Titan International, a U.S.-based tire manufacturer. He has been in “negotiations” over the last four years aimed at keeping the Goodyear plant in Amiens, France, open. As of today that deal appears off the table. Ah, the French. They would rather cut off an arm than seek treatment for the infection.
France: Home of the 35 Hour Work Week
France is the home of the original 35 hour work week. This law, 13 years old this month, limits workers to 35 hours per week at no change in weekly pay. Economists recognize this as a negative supply shock that leads to higher unemployment and short-term inflation. The law is based on the long-discredited “bundle of work” economic hypothesis. If there is only a certain amount of work that can be done in an economy, then limiting workers’ hours will spread the work among more employees. On its face, that is an attractive model. But it assumes the amount of work is limited. In fact, the quantity of labor in any economy is directly related to the country’s gross domestic product — which, as almost everyone knows, fluctuates. The quantity of labor demanded is not fixed, but varies in response to a number of variables.
Titan, the Amiens Plant, and the French Government
Some facts are in order. The Amiens plant employs 1,173 French workers. Four years ago the French government asked Titan to try to save the plant. Rather than describe the course of the negotiations, I’ll simply quote Mr. Taylor’s letter to the French industry minister, Arnaud Montebourg (text from BusinessInsider, typographical and grammatical errors inin the BusinessInsider version). See pullquote →
Comparing the U.S. and France
Using OECD data, I assembled two economic indicators: the growth rate of real GDP per capita and the unemployment rate. Both variables covered the period 1990-2011 (the latest annual data available in the OECD online database). Here are the averages:
| Country | Average Unemployment Rate (1990 – 2011) | Average growth, real GDP per capita (1995 – 2011) |
| France | 9.01% | 1.00% |
| U.S. | 5.84% | 1.39% |
Pay close attention to that last column. The difference in the growth rate is 0.39% per year. Doesn’t sound like much, does it? First, you should know that real GDP is the same as the purchasing power of income (per capita). Let’s consider these growth rates over 30 years (usually the definition of one generation). If the annual income in year 1 was 20,000 (dollars or euros), after 30 years French income will be $26,992.89 versus $30,258.12 in the U.S. The U.S. economic standard of living will grow faster than that of France.
Let’s look at some graphs of the same variables. There’s something disturbing about one of them. I’ll point it out below.
Did you spot it? Since 2008 (the beginning of the Obama administration) the U.S. unemployment rate has risen to French levels. You may draw your own conclusions. I’ve written about this issue many times before. You can read my thoughts by clicking here and here and here.
As always, my data sources and methods are transparent. Click here to download an Excel 2007 file containing all data and calculations.
Conclusion
Mr. Taylor has stated his case very well. France is traveling the same road that Greece, Spain, and some other European countries followed years before. When the French economy begins to collapse I doubt very much that the German government will bail them out.
Jon Corzine Will Get Away With It With a Little Help From His Friends
Ms. O’Brien declined to cooperate with the investigation without receiving immunity from criminal prosecution. But the government is hesitating to grant her request, according to the people close to the case, fearing that doing so would set a bad example for future investigations.
A long story in today’s New York Times is headlined “MF Global’s Bankruptcy Nears a Happy Conclusion“ has some good news for former customers who have been waiting 15 months to find out whether they would ever see their money again. It now looks like they will get 100 percent of their funds back. Probably without interest, however. Since many of those accounts were in six figures, even at a low interest rate that’s a bit of a hit. For example, at a 2 percent interest rate, the loss on $100,000 would be about $2,500. Not exactly chicken feed (sorry).
Ms. O’Brien declined to cooperate with the investigation without receiving immunity from criminal prosecution. But the government is hesitating to grant her request, according to the people close to the case, fearing that doing so would set a bad example for future investigations.
My prediction: Jon Corzine will walk. And that’s yet another mark of shame for what’s left of the U.S. justice system.
Regulatory Overreach, SEC Edition
Posted by TonyLima in Current issues, Economic policy on December 12, 2012
“Regulatory overreach” describes an effort by a government regulatory agency to expand their power by extending existing regulations to cover situations for which the regs were never intended. This article discusses regulatory overreach, SEC edition. Netflix is being investigated for a possible violation of regulation FD. The company’s crime? CEO Reed Hastings posted a message that Netflix had streamed over a billion hours of video the previous month. The message was on the Netflix Facebook page. If this seems pretty harmless to you, you are not alone. Columnists for both the Wall Street Journal and the New York Times have denounced this enforcement action. (The Times gets the AOL “me, too” award, as their column appeared today. The Journal had this story on Saturday, December 8.)
The SEC is, of course, the U.S. Securities and Exchange Commission. They are charged with regulating financial markets. One of their more contentious regulations is rule FD. That rule requires companies to fully disclose new information to all shareholders. Previously, companies would often brief financial analysts before a public release. When rule FD was under discussion, critics pointed out that companies would probably respond by releasing less information and the rule would reduce the value of financial analysts. In fact, that is what has happened. One outcome not forecast by many observers was less coverage of smaller companies by financial analysts. Under the leadership of chairman Arthur Levitt, rule FD marked a big change in regulations.
So now the SEC is trying to apply rule FD to the Netflix case. Talk about overreach, this is a moon shot. Sadly, with the current administration in Washington, D.C., I don’t see relief from this kind of stupidity any time soon.
Mitt Romney’s Eating Habits
Posted by TonyLima in Current issues on September 3, 2012
In the September 3 New York Times op-ed page, Ms. Marie Myung-Ok Lee analyzes Mitt Romney’s eating habits. Specifically, she takes Mr. Romney to task for only eating the top halves of muffins. Has she noticed that neither Mr. Romney nor Mr. Ryan are overweight? Rather than castigating Mr. Romney, she should be cheering him for his example to the rest of us: don’t clean your plate because the extra food will make you fat.
The problems the U.S. faces today are not the problems faced by Ms. Lee’s parents and grandparents. The solutions are not the same either. But I’m quite certain of one thing: Mr. Romney’s eating habits are hardly worth 25 words on the Times’ op-ed page, much less an entire column.
P.S. I was going to include a picture with this, but decided to spare both you and me.
Algebra is Hard, So Why Bother?
Posted by TonyLima in Math Is Hard on July 31, 2012
[Updated August 1 with link to Daniel Willingham's excellent piece.] Algebra is hard, so why bother teaching it? That’s the “point” made by Andrew Hacker, an emeritus professor of political science at Queens College, City University of New York in the Sunday, July 29 New York Times. The sheer stupidity of this column is breathtaking. I use algebra every single day. I know many people who aren’t very good at algebra. They usually spend more than is necessary because they can’t do simple calculations and comparison pricing.
Can’t do algebra? Congratulations. You’ve just given up any career in engineering, science, math (surprise), computer science, some social sciences (including economics), finance, and … wait for it … political science. I wonder exactly what sort of ”political scientist” Prof. Hacker is. So I went looking. He is listed as teaching one course: American Politics and Government (PSCI 100). Aha. He’s not really a political scientist. He’s a politics professor. (Brandeis University is one of the few to honestly call that department the Department of Politics.) More about Prof. Hacker and Queens College shortly.
The blogosphere is all over this story. The best (and most vicious) is from Memento Mori. Here’s a sample:
“Ultimately, I think Hacker’s own innumeracy is preventing him from making a clear argument. All his praise of numerical skills doesn’t obscure the fact that he doesn’t seem to understand exactly what those skills are, much less how they are acquired.
One final shocker from Hacker’s piece, a full paragraph that I quote unaltered:
It’s true that students in Finland, South Korea and Canada score better on mathematics tests. But it’s their perseverance, not their classroom algebra, that fits them for demanding jobs.
My first reaction to this is “What the HELL?!?!?” That’s a logic test right there, in two sentences. Unpacking it, however, should be A) another show, and B) grounds for Hacker’s de-emeritification.”
Others slamming Prof. Hacker include patheos.com, Rob Knop at Galactic Interactions, and Andy Soffer’s blog. If you’re looking for something a little more in-your-face, try Maddox at The Best Page in the Universe. Daniel Willingham has put together a nice analysis, complete with footnotes and citations.
Back to Prof. Hacker. One good reason for learning algebra and other math is so you can put together a web page that doesn’t break when Safari tries to render it. Below is a (rather large, sorry) screen capture of the Queens College page. Enough said.
Queens College Info Page, Andrew Hacker
Paul Krugman: Return Your Nobel Prize
Bernanke In Space
I call on Paul Krugman: return his Nobel Prize in economics. My request is based on his article in the April 29 New York Times magazine. Titled “Earth to Ben Bernanke,” the article actually supports many of Dr. Bernanke’s actions, specifically the quantitative easing program. (Dr. Krugman, for some reason, does not like this name, calling it “This is the strategy that has come to be known, unhelpfully, as quantitative easing.” Really? Unhelpfully?
So what does Dr. Krugman believe the Fed should do? I can summarize his proposal in one phrase: announce a higher target for long-term inflation. Currently the Fed’s implicit inflation target is probably around two percent. Krugman believes, with some empirical support, that raising the inflation target would cause people and businesses to increase their spending because they will expect the purchasing power of their money holdings to depreciate faster. However, there is another point that Krugman overlooks that is at least as important as increasing velocity.
Higher inflation expectations mean higher nominal interest rates. Krugman seems to be following the lead of Dr. Olivier Blanchard, now “Economic Counsellor and Director, Research Department” at the IMF. Prof. Blanchard is currently on leave from M.I.T. He once proposed that increasing the inflation target would increase interest rates, giving the central bank more room to — get this — lower interest rates. Let me quote from my blog entry in March, 2010:
“Blanchard’s argument is that by raising the inflation target, nominal interest rates would be higher. This, he proposes, would give central banks more room to reduce interest rates to stimulate the economy.
Unfortunately, Prof. Blanchard has made an error that should make him blush. It is the real interest rate, not the nominal interest rate, that affects most economic activity. The only way Prof. Blanchard’s model can work is by appeal to the long-discredited “money illusion” hypothesis.”
Spending depends on real interest rates, not nominal rates. Increasing inflation expectations will indeed increase nominal interest rates and raise spending a bit by increasing the velocity of circulation of money. But the increase in spending won’t be very large because real interest rates have not changed.
Dr. Krugman has one Nobel Prize, while Dr. Blanchard has none. Krugman’s proposal today is no more valid than Blanchard’s was two years ago. I call on Dr. Krugman to return his Nobel prize in economics for failing to see a fundamental flaw in his proposal.
Will MF Global Get Away With It?
Posted by TonyLima in Current issues, Economic policy on March 14, 2012
Will MF Global get away with it? And — by extension — will Jon Corzine escape any prosecution? Those questions are discussed in Joe Nocera’s excellent New York Times column today. Joe concludes that the answer is, “most likely they’ll walk.” He, like me, is nauseated and repulsed by this potential outcome. He notes that Mr. Corzine was both former governor of New Jersey and a very big fundraiser for President Obama in 2008. But he refuses to believe — at least in print — that Mr. Corzine’s connections have anything to do with the Justice Department’s failure to prosecute. Given Attorney General Eric Holder’s incredible politicization of Justice, I’m personally inclined to believe the story.
For those who have been asleep for the last six months, MF Global collapsed after making a highly leveraged (40:1) bet on European currencies. Mr. Corzine was the CEO who developed this great “strategy.” No problem so far. But there’s the small matter of $1.6 billion missing from supposedly segregated customer accounts. According to Mr. Nocera, that’s 25% of the total balance in customer accounts at MF Global. Excerpts from Mr. Nocera’s column tell the rest of the story better than I can:
“Yet, a few weeks ago, Azam Ahmed and Ben Protess, who have done a remarkable job covering the MF Global bankruptcy for The Times, wrote an article suggesting that prosecutors were having trouble putting together a criminal case against anyone at MF Global. So far, wrote Ahmed and Protess, they’d been “unable to find a smoking gun.” In fact, they continued, “a number of federal prosecutors have expressed doubts” that MF Global “intentionally misused customer money.” Apparently, the current theory is that it was all just a big accident, the chaos of those final days causing the firm’s executives to tap into customer funds without realizing it.
Excuse me while I roll my eyes. Of course there isn’t a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, “Hey, we’re desperate. Let’s break into the customer accounts!” And, of course, they are always going to say it was unintentional. They are saying it already, starting with Corzine, who told Congress last year that “there was no intention to violate segregation rules.”
As for the chaos, you bet it was chaotic at the end. How could it not have been? Last month, James W. Giddens, the bankruptcy trustee for the broker-dealer arm of MF Global, issued a report that vividly described the scene: “The rush to meet funding needs … led to billions of dollars in securities sales, draws on credit facilities and a web of intercompany loans. … The company’s computer systems and employees had trouble keeping up. … A number of transactions were recorded erroneously or not at all. …” And so on.
Well, fine. But is it really plausible that you can take $1.6 billion — nearly 25 percent of the customer assets under management — and not know you’ve used customer money? It is not. One theory, which is implicitly suggested in the trustee’s report, is that the executives “borrowed” the money thinking they would be able to replace the funds quickly, which they then couldn’t because the counterparties wouldn’t give back the collateral. That’s still a crime.
I understand that bringing complex financial cases in front of a jury is not easy. But what prosecutors don’t seem to understand is that the country needs them to bring these cases. When they took a pass on Angelo Mozilo, the former chairman and chief executive of Countrywide, and Richard Fuld, who was chief executive of Lehman Brothers when it went bankrupt, they sent a signal that the highly paid executives who gave us the financial crisis would not be held to account.”
This time, the politicization of the U.S. Attorney General’s office will do real harm by destroying quite a lot of credibility in markets. Until now, customer funds have been sacrosanct. If no one is prosecuted for the fiasco at MF Global, U.S. securities markets will take yet another hit. Globalization means that fewer trades will be executed on U.S. markets. And the economy will suffer yet another blow.
Welcome to the Real World, Prof. Mankiw
Posted by TonyLima in Economic policy on September 11, 2011
Prof. Greg Mankiw, writing in the Sept. 11 New York Times business section (p. 5), finally gets it:
“Yet it would be overly optimistic to think that any single public policy, by itself, could lead to the kind of robust investment spending seen in previous recoveries. Myriad government actions influence the expected future profitability of capital. These include not only policies concerning taxation but also those concerning trade and regulation.
For example, passing the free trade agreement with South Korea, which has languished in Congress more than four years after first being negotiated, would be a step in the right direction. So would reining in the National Labor Relations Board; its decision to block Boeing from opening a nonunion plant in South Carolina may have been hailed by organized labor, but it surely did not hearten investors.”
So would clarifying the 600+ regulations required by ObamaCare and the Dodd-Frank financial reregulation bill.
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