economics

Interesting article on a tenured professor struggling financially.

What’s interesting to me about it is just that I can see how this article would quicken the political pulse of just about everyone that reads it. There’s so much material! I’m almost suspicious of it being some kind of hoax designed to drive the entire political spectrum insane with fury.

I’ll briefly mention and skip the irony of a religion professor as a single mother raising her kid alone and messing around with bad boys who lie and cheat (sorry, couldn’t resist).

I’ll try again: her stated complaint in the article is that the brewing attack on the welfare state would be catastrophic to her counter-factual life (ie she’d have had to get a job with which she would be able to pay the bills).

But she isn’t an unbiased observer, folks. She works for a private university in a field where the median wage is probably set by public institutions, who have been giving it (in a bad way) to teachers for a while now:

Overall, if we exclude for-profit schools, which were a tiny part of the landscape in 1999, we have seen tuition fees rise by 32% between 1999 and 2009. Over the same period, instruction costs rose just 5.6% — the lowest rate of inflation of any of the components of education services. (“Student services costs” and “operations and maintenance costs” saw the greatest inflation, at 15.2% and 18.1% respectively, but even that is only half the rate that tuition increased.)

The real reason why tuition has been rising so much has nothing to do with Baumol, and everything to do with the government. Page 31 of the report is quite clear: “except for private research institutions,” it says, “tuitions were increasing almost exclusively to replace losses from state revenues or other private revenue sources.”

In other words, tuition costs are going up just because state subsidies are going down. Every time there’s a state fiscal crisis, subsidies get cut; once cut, they never get reinstated. And so the proportion of the cost of college which is borne by the student has been rising steadily for decades.

Her skills aren’t worth much and her job is to teach other people those same skills. For 35 Gs plus room and board?

Yeah friggen’ right.

From my hometown:

Those owners want to add 500 acres of space under glass, which would allow them to operate 24 hours a day, 12 months a year. That would translate into 2,300 short-term and 1,050 permanent jobs, not to mention allow the town to expand its market for locally grown fruits and vegetables.

It seemed like a done deal when system upgrades in Essex County were set to begin in May 2010. But when Leamington Mayor John Paterson met with hydro officials he learned the ugly truth. “They said, with the way the economy was going in Windsor, their bosses said there wasn’t enough economic activity down here to worry about it,” he said. “My jaw dropped.

This infuriates me. A potentially positive NPV infrastructure project going unfunded because the bureaucrats in charge of the process possess local POWER but no local KNOWLEDGE.

THIS is a fantastic example of why governments fail. This makes me want to camp outside this despicably ignorant bureaucrat’s office and shout Arnold Kling blog posts from the top of my lungs.

Want job security?

Have a look at the professions you should consider.

There are, broadly speaking, three industries with impressive future/current demand. The first is easy: anything that requires math and science. Want a free lunch for our grandchildren? Find a way to increase M&S aptitude and interest in your kids by 1%.

The second is a darker reality. Remember TGS and Baumol’s cost disease: the share of health care and education in our economy will be constantly rising over time.

Here are the skills:

1. People good at math and science

2. Healthcare and pharmacology (50% math and science, 50% Baumol’s cost disease/TGS).

3. Teaching teachers (100% TGS).

#3 makes me think of the (perhaps proverbial) merchants in the gold rushes of history. We’re funneling talent into the teaching profession, but the smart talent doesn’t go into the mine, the smart talent sells miners $50 pints of recycled beer and $10,000 pickaxes.

Wall St Bonuses Dropping.

Meh, it was a terrible year for fixed income and volatility, generally.

As long as governments continue to absorb the tail risk on the leverage these banks employ, they will be back.

And back and back and back. Willfully oblivious to the fact that they’re the best-paid government employees on the planet.

Big picture econ heavy.

1. Tyler Cowen gives us a brace of thoughts today: First is a big-think:

Going back to unemployment, labor market opportunities for college grads have been eroding — except for the elite — in absolute terms since 1997-2000, well before the collapse in AD.  If those same grads are highly willing to be geographically mobile, highly willing to consider actuarial training, and highly willing to take tougher courses and study where the jobs are (doesn’t have to be tech subjects, some of those are failing too), the unemployment response to a given AD shock will be much lower.  But they aren’t, so it isn’t.  I’ve seen only small adjustments in the ambition and flexibility of college goers, not enough preaching about TGS I suppose.

Read it all.

2. Next he makes two points with quotes: 1. online education is improving and 2. ‘real’ education is stagnating. My ax grinds away.

3. Now Sumner gives us the word of the day, which I also like: “Reify” in quoting Yglesias:

don’t reify the concept of an inflation rate and then worry about whether or not the government is “really” calculating the “real” one. Things change in a lot of ways, preferences are heterogeneous and aggregating it all up into a single number is inherently wrong. It’s just that the programs need a single number.

Excellent. He follows up:

A few decades back the British tried indexing the initial benefit levels to the CPI (not wages as we do.)  Eventually the old people revolted, because as real wages trended upward over time, the living standards of the old fell further and further behind the lifestyle of those still working.

I commented on his blog with this:

My grandfather remains a retired college instructor/administrator, which he’s been for over 30 years. In fact, his life was divvied up into thirds: 1/3 before work (including WW2), 1/3 working and 1/3 retired. He’s (I think?) 90 right now. He is often amazed at how his living standard has skyrocketed since he retired.