Archives for category: Economy

Paul Krugman, the Nobel Prize winning economist who writes a column for the Néw York Times, demolishes the “reformers'” claim that bad education is at the root of inequality and economic issues.

He flunks the talking heads and pundits (and by implication, the Néw York Times editorial board, which employs the arguments he debunks) for asserting that schools and teachers are to blame for inequality.

Among other things, he critiques laments about the “skills gap.” If employers want certain skills, they would pay higher wages for those skills.

The Massachusetts Business Alliance for Education commissioned a study comparing MCAS, the 20-year-old state assessment system, and PARCC, the federally funded Common Core test. It concluded that PARCC is superior to MCAS in preparing students to be workforce and college ready.

This is a surprising conclusion, since MCAS has been in use for two decades and PARCC is not only untried but very controversial. When Arne Duncan handed out $360 million to create two consortia to develop tests for the Common Core, PARCC enlisted 24 states and DC. Now, only 10 states and DC are sticking with PARCC.

Even more surprising are the reports about a lack of well-prepared workers. Massachusetts is by far the most successful state in the nation, as judged by NAEP test scores. Maybe test scores don’t translate into the skills, behaviors, and habits that employers seek. But how do these business people know that PARCC will be better?

The Economist published a fascinating and disturbing article about the hardening of class lines in the U.S. most of us grew up believing that anyone could grow up to be President. Maybe it was never true, although the examples of Abraham Lincoln and Harry S Truman encouraged us to believe it was true. But now?

“WHEN the candidates for the Republican presidential nomination line up on stage for their first debate in August, there may be three contenders whose fathers also ran for president. Whoever wins may face the wife of a former president next year. It is odd that a country founded on the principle of hostility to inherited status should be so tolerant of dynasties. Because America never had kings or lords, it sometimes seems less inclined to worry about signs that its elite is calcifying.

“Thomas Jefferson drew a distinction between a natural aristocracy of the virtuous and talented, which was a blessing to a nation, and an artificial aristocracy founded on wealth and birth, which would slowly strangle it. Jefferson himself was a hybrid of these two types—a brilliant lawyer who inherited 11,000 acres and 135 slaves from his father-in-law—but the distinction proved durable. When the robber barons accumulated fortunes that made European princes envious, the combination of their own philanthropy, their children’s extravagance and federal trust-busting meant that Americans never discovered what it would be like to live in a country where the elite could reliably reproduce themselves.

“Now they are beginning to find out, (see article), because today’s rich increasingly pass on to their children an asset that cannot be frittered away in a few nights at a casino. It is far more useful than wealth, and invulnerable to inheritance tax. It is brains.
Matches made in New Haven
Intellectual capital drives the knowledge economy, so those who have lots of it get a fat slice of the pie. And it is increasingly heritable. Far more than in previous generations, clever, successful men marry clever, successful women. Such “assortative mating” increases inequality by 25%, by one estimate, since two-degree households typically enjoy two large incomes. Power couples conceive bright children and bring them up in stable homes—only 9% of college-educated mothers who give birth each year are unmarried, compared with 61% of high-school dropouts. They stimulate them relentlessly: children of professionals hear 32m more words by the age of four than those of parents on welfare. They move to pricey neighbourhoods with good schools, spend a packet on flute lessons and pull strings to get junior into a top-notch college….

“None of this is peculiar to America, but the trend is most visible there. This is partly because the gap between rich and poor is bigger than anywhere else in the rich world—a problem Barack Obama alluded to repeatedly in his state-of-the-union address on January 20th (see article). It is also because its education system favours the well-off more than anywhere else in the rich world. Thanks to hyperlocal funding, America is one of only three advanced countries where the government spends more on schools in rich areas than in poor ones.”

An economist recently predicted trillions of dollars of increased productivity if schools raised test scores and thus eliminated poverty.

This teacher has a different view, grounded in reality, not speculation.

“As a teacher in a high poverty urban school, I would like to weigh in here. My school is not set up to eliminate poverty. That argument is rubbish. Would any of these economists like to put a price on the psychological toll of poverty? My kids are worried about getting shot. It is a common occurrence in the neighborhood. They eat the school breakfast totally lacking in nutrition as if it were mana from heaven. Some wear the same clothes day after day. The vast majority are not focused on their studies due to shouldering the unrelenting burdens of poverty.”

This article in The Chronicle of Higher Education tells a fascinating story about the fate of higher education. On February 28, 1967, California Governor Ronald Reagan said that the state could no longer afford “intellectual luxuries,” and that taxpayers should not have to subsidize “intellectual curiosity.”

Dan Berrett writes:

“Sometimes, sea changes in attitude start small, gradually establishing assumptions until no one remembers thinking differently. This is how that happened to liberal education. It’s a story of events on campus and beyond: the oil embargo, the canon wars, federal fiscal policies, the fall of the Soviet Union. On that day in 1967, Reagan crystalized what has since become conventional wisdom about college. In the early 1970s, nearly three-quarters of freshmen said it was essential to them to develop a meaningful philosophy of life. About a third felt the same about being very well off financially. Now those fractions have flipped.”

Now students and policymakers alike see higher education as career training, a way to get a better job. Lost is the idea of learning for learning’s sake. That is an intellectual luxury we can no longer afford or even remember.

– See more at: http://m.chronicle.com/article/The-Day-the-Purpose-of-College/151359/?cid=wb&utm_source=wb&utm_medium=en#sthash.WZgFNwou.dpuf

The report released today–titled “Schools in Context”– by the National Superintendents Roundtable and the Horace Mann League tells a different story about international comparisons by looking at a broad range of indicators, not just test scores.

 

One part of the report is called “The Iceberg Effect,” and it shows what happens when you look only at the tip of the iceberg–test scores. A more complex and more interesting portrait of schools and society emerges when you look at the whole iceberg, not just the part that is easily measured by a standardized test. See the pdf here.

 

The full report of “Schools in Context” may be located in this pdf file.

 

The countries included in this contextual study are the United States, China, Canada, Finland, Germany, Great Britain, France, Italy, and Japan.

 

 

When we think of the phrase “the American dream,” we think about a belief that everyone has a fair chance to better themselves, to get a free education, to land a job that provides them the means to be self-supporting and live in a good home. Behind the phrase is an assumption of fairness and opportunity, of earning good wages for your work and knowing you can take care of yourself, your family, and your old age.

That “dream” is slipping away. To understand why, read this important essay-review by economist Robert Kuttner in the “Néw York Review of Books.” It is a review of two books that helps explain the profound transformation of work in our time.

One of the books is by David Weil: “The Fissured Workplace: Why Work Became So Bad For So Many and What Can Be Done to Improve It.” The other is by Eileen Appelbaum and Rosemary Batt: “Private Equity at Work: When Wall Street Manages Main Street.”

Kuttner describes a new system in which employers outsource work to contractors, keeping a close watch on the quality of the product but taking little or no responsibility for salaries and working conditions. He gives two examples for starters: the treatment of workers building NYU’s satellite campus in Abu Dhabi, and the factory fire in Bangladesh that killed more than. 1,100 workers producing luxury items for wealthy consumers.

 

Kuttner writes:

 

“The same system of outsourced employment increasingly operates at home. In the past generation, there has been a drastic change in how work is organized. Regular payroll employment is becoming the exception. The employer of record is no longer the corporation, but a web of intermediaries. The outside contractor demands stringent worker performance, even as it drives down wages, job security, and benefits….

 

“This system, which began in peripheral occupations such as janitors or security guards, has become pervasive. FedEx workers wear the company’s uniforms, drive its trucks, and adhere to stringent rules; but they are independent contractors, not company employees. At many leading hotels, room cleaners and desk clerks actually work for management companies, not for Marriott or Hilton. The technician sent by Comcast to fix your cable may well be a freelancer, not an employee. When you go into a government building, the receptionist/guard is likely not a civil servant, but the low-wage hire of a security firm.”

 

At this point, the rest of the essay unfortunately goes behind a paywall. You might find it worthwhile to subscribe (a one-week online subscription is only $4.99). I have the print edition, and I will quote a bit more.

 

“The new system frees corporations from the obligations of a tacit social compact in which employees’ loyalty is reciprocated, companies have an incentive to invest in workers, and people can look forward to predictable careers. Moreover, the entire structure of workers protections and benefits legislated beginning in the New Deal is predicated on the assumption that the employee is on the payroll of the company that makes the product. A casual worker has fewer rights, and those that carry over are harder to enforce. A contract workers or temp pays his or her own Social Security taxes, can seldom collect unemployment compensation, rarely receives company-provided health insurance or pension benefits, and has scant opportunity to organize or join a union.”

 

In the current economy, inequality of income and wealth grows, and at the same time there is a disconnect between productivity and earnings “because it allows corporations to batter down labor costs–people’s paychecks.”

 

“In explaining inequality, many economists emphasize the importance of education and technology, contending that widening gaps reflect shifts in the demands for skills and the failure of America’s educational system. Yet the old postwar social compact calling for far greater equality was respected at a time when most Americans did not go to college and many factory workers had not completed high school. Since 1980, college graduation rates have soared yet inequality has increased. Generally, it has widened among college graduates, not just between those with college degrees and those with only high school diplomas or less.”

 

Kuttner says that the new economy represents a shift of political power. Employers have been trying for over a century to lower labor costs. In this new era, with unions having lost numbers and political power, employers find it easier to outsource and replace workers with temps. Financial deregulation, he says, set off the latest round of work degradation. The second book he reviews “explains how the business strategies of these [private equity] investment companies logically destroy and degrade jobs, not for economic efficiency or better management but to transfer wealth from workers to financial profiteers.”

 

Private equity is, he says, “a sly rebranding of what used to be called leverage buyouts (LBOs), or more coarsely, corporate raids….Contrary to the industry’s claims about being experts in turning companies from losers to winners, private equity typically targets healthy companies rather than underperforming ones, the better to extract cash reserves. Having loaded the balance sheet of the company with debt–debt incurred in the purchase of that very company–they hire managers to run as lean and ruthless an operation as possible. They borrow even more money to pay themselves ‘special dividends,’ to recoup their initial small equity outlay many times over even if the operating company goes broke. The big losers in this game are the company’s workers….

 

Since the general partners of private equity firms make such outsized returns, investors want a piece of that action. But Applebaum and Batt cite data showing that most of the returns to limited partners do not beat the performance of the S&P 500. Even more peculiar is the fact that some 35 percent of the investment capital put up by limited partners comes from pension funds–which represent the deferred wages of workers. So workers’ own funds become part of the financial system that drives down workers’ wages and often plunders other pension systems.”

 

Kuttner writes:

 

“For reasons unrelated to education or technology, a great many jobs can be configured either as casual labor or as normal payroll employment. In many states, for example, home health aides are individual contractors with low wages and insecure employment to match. But in states with strong unions, such as California, home health aides have won the right to form bargaining units and are compensated as payroll employees. Warehouse workers for Walmart are hired and employed by logistics contractors; they are low-paid and subject to arbitrary dismissal. Elsewhere, however, many warehouse workers are salaried employees and receive middle-class compensation….The general trend to lower-paid work has little to do with education, technology, or management ‘efficiency.’ It is a pure transfer from labor to capital.”

 

The best way to halt job degrading is, one, to enforce the laws on the books; and two, to strengthen workers’ rights to join unions, “since unions remain the best defense against gratuitous job job-degrading.”

 

When you think about education “reform” in the context of job-degrading and rising inequality, the pieces begin to fit together with the larger transformation of our economy to the highest levels of inequality since the age of the Robber Barons.

EduShyster, aka Jennifer Berkshire, interviews political economist Gordon Lafer in this post. He explains the role of corporate education reform in a broad economic and political context. This is one of the most enlightening interviews she has conducted. I urge you to read it.

 

She asks Lafer whether Walmart is helping poor kids get a better education by swelling the coffers of the Walton Family Foundation, which generously funds charters and vouchers across the nation.

 

He replies:

 

First of all, the thing that correlates most clearly with educational performance in every study is poverty. So when you look at the agenda of the biggest and richest corporate lobbies in the country, it’s impossible to conclude that they want to see the full flowering of the potential of each little kid in poor cities. To say *I want to cut the minimum wage, I want to prevent cities from passing laws raising wages or requiring sick time, I want to cut food stamps, I want to cut the earned income tax credit, I want to cut home heating assistance. Oh but, by the way, I’m really concerned about the quality of education that poor kids are getting*—it’s just not credible. You’re creating the problem that you now claim to want to solve….Walmart has no trouble filling positions and operating with very high turnover because what’s demanded of people who work there is so little. They’re certainly not asking *where are we going to find more people who can do algebra and craft well-written paragraphs? In fact, the big problem with the *send every kid to college* argument is that there aren’t jobs for these kids after they graduate. You cannot find an economist who predicts that more than one-third of jobs in the US are going to require a college degree in our lifetime. The real question is not how can everybody be a college graduate, but how can people make a decent living. And here is where you see that the same corporate lobbies that are pushing education reform are doing everything possible to make that harder.

 

EduShyster pushed Lafer to explain how the corporate reform agenda made sense–especially the combination of budget cuts for the public schools combined with tax cuts for corporations. Lafer answered:

 

I think the direction that the most powerful forces in the country is pushing is a bleak and frankly scary one—that at some level they want us to forget the idea of having a right to a decent public education, which is one of the last remaining entitlements, and make it more like health care, which is increasingly seen as a privilege. What’s being done to schooling is, I think, devastating on its merits. It has ideological implications for lowering expectations for what you have a right to as a citizen or a resident. And it raises big, profound questions: How does your experience in school affect, not just your skill set for employment, but your sense of yourself as a person and what you think you deserve from life? I think that for the real one percent, the big political challenge is *how do we pursue a policy agenda that makes the country ever more unequal and that makes life harder for the vast majority of people without provoking a populist backlash?* One of the ways of doing that is by lowering people’s expectations, and one of the key places to do that is in the school system.

 

The good news is that the interview ends on a hopeful note. We can’t abandon hope, because if we do, we are lost from the get-go. We must believe that a political awakening will happen if we work hard enough to make it happen, and that the Robber Barons will be tamed. American history runs in cycles, historian Arthur Schlesinger, Jr., argued, and we must not give up believing that we can make change. Because we can.

 

 

 

I wrote earlier this week about the frightening posdibility that we as a nation might be facing a future in which jobs are scarce, due to globalization (which encourages outsourcing to low-wage countries) and technology (in which computers and robots will replace large numbers of workers).

As it happened, Anthony Cody wrote a complementary post in which he factored in the rigorous Common Core standards and tests as the great sorting mechanism that will determine winners and losers in the new economy. The good test-takers will get the good jobs, and those with low scores will get the scraps or nothing at all.

The middle class is shrinking, he writes. There won’t be enough jobs for all who seek work. Students are crushed by debt.

“A smaller number of Americans will be better off than their parents – even with the advantage of better education. We are looking at a lottery system with fewer and fewer winners, and many more losers. And our educational system is being prepared for this.

“Our schools are the center of a battle for our collective soul.

“Our schools can be laboratories of democracy, controlled by local citizens, connected to the life blood of the community, preparing children to engage with and transform the world they are entering. The documentary series, A Year at Mission Hill shows what such a school looks like, and how it cares for the students, and nurtures their dreams as they grow. Most of us entered teaching with this vision in mind.

“But our schools can also be the place where dreams are squashed. A place where students are sorted into winners and losers based on their test scores. Students who are given academic tasks that are beyond their ability or developmental level become frustrated and discouraged. When I taught 6th grade math in Oakland, one of my greatest challenges was the many students who arrived and would write on my introductory survey, “I am bad at math.” These self images form early, and the scientific precision of our tests creates a false portrait that becomes indelible when reiterated time and again come test time. What we are creating is a system that says “If you are bad at math, and these many other difficult things on our tests, you are not prepared for college or career, and you are worthless…

“Our educational system is being used as a means to rationalize the economic marginalization of a growing number of students. That process will hit those already marginalized by class and race the hardest….

“These are the children that our educational system is being prepared to look in the eye and say “you are not going to be able to attend a good college.” In fact, many of you may not even graduate from high school if plans proceed to use these tests as graduation exams.

“So the students who have been labeled as “not ready for college or career” will be released into society, to join the permanently unemployed or underemployed, the low wage service sector, their jobs vulnerable to computerization.

“And what will the story be that explains why will this is their fate? It will not be because jobs have been sent overseas. Not because technology is increasing productivity and reducing the need for labor. Not because the economy is delivering ever more wealth to an ever smaller number of oligarchs. No. The story will be that they are surplus because they did not achieve the education needed to make themselves indispensable to some company’s bottom line. They are surplus because they are not needed to make the machinery of our society run.”

It doesn’t have to be this way.

Cody writes:

“The trends are not positive, so long as we are stuck in our current economic model. Teachers have a role to play. We can cooperate with the system, and validate the tests as accurate indicators of our students’ value as “productive members of society.” That is what we are asked to do when Bill Gates and Arne Duncan implore us to help implement the Common Core. Or we can offer our own vision of the role of education as a catalyst for democratic change. And that change that will increasingly require us to question the imperatives of an economy that no longer serves the majority of Americans, and reject the ranking and sorting of our students into those with and without economic value.”

Elizabeth Warren, Senator from Massachusetts, eloquently describes what the nation needs now. She says that people are discouraged by the power of big corporations, big oil, and their lobbyists. There is a palpable sense that government works best to protect the interests of the privileged, not the average family or individuals, and certainly not those who have fallen out of the middle class.

She writes:

“It’s not about big government or small government. It’s not the size of government that worries people; rather it’s deep-down concern over who government works for. People are ready to work, ready to do their part, ready to fight for their futures and their kids’ futures, but they see a government that bows and scrapes for big corporations, big banks, big oil companies and big political donors — and they know this government does not work for them.

“The American people want a fighting chance to build better lives for their families. They want a government that will stand up to the big banks when they break the law. A government that helps out students who are getting crushed by debt. A government that will protect and expand Social Security for our seniors and raise the minimum wage.

“Americans understand that building a prosperous future isn’t free. They want us to invest carefully and prudently, sharply aware that Congress spends the people’s money. They want us to make investments that will pay off in their lives, investments in the roads and power grids that make it easier for businesses to create good jobs here in America, investments in medical and scientific research that spur new discoveries and economic growth, and investments in educating our children so they can build a future for themselves and their children.”

The important thing is not to pass new laws and programs, but to ask whom they benefit.

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