Archives for category: Economy

This is the most important post you will read this month or maybe even this year. It refutes the basis of American education policy.

This is major study of the relationship between scores on PISA and economic growth. It demonstrates that there is none.

It was written by Hikaru Komatsu (Associate Professor at National Taiwan University) and Jeremy Rappleye (Associate Professor at Kyoto University, Graduate School of Education) for the Network for International Policies and Cooperation in Education and Training. The authors criticize the work of Hoover economist Eric Hanushek and demonstrate how his theories of human capital development were widely adopted by American and European organizations and became the convention wisdom.

Komatsu and Rappleye demonstrate the flaws in Hanushek’s theories, which have led to unprecedented emphasis on improving standardized test scores in many nations.

They begin by reviewing a paper published by the European Commission, based on Hanushek’s human capital theories. Open the link to see the graphs.

The EC report was written by Eric Hanushek (Hoover Institute, a think tank on the campus of Stanford University) and Ludger Woessmann (University of Munich, ifo Center for Economics of Education). It laid out the same findings, methods and arguments that can be found in a range of publications in the United States dating back to the early 2000s (e.g., Hanushek & Kimiko, 2000), and reaching back even – with a bit more historical awareness – to the heady Anglo-American neo-liberalism of Reagan and Thatcher in the 1980s (e.g., Hanushek, 1981, Hanushek, 1986). These claims were articulated strongly in a 2013 book by the same authors, published by the Brookings Institute and intended to reach US policymakers, entitled Endangering Prosperity: A Global Look at the American School. These same findings were also publicized in major reports by the World Bank (2007) and the OECD (2010, 2015), both of which commissioned Hanushek and Woessmann to write their findings into development policy. The World Bank would later officially adopt the model as the underpinning logic of Learning for All (2011) (see Auld, Morris, and Rappleye, 2019), while the OECD’s 2010 report entitled The High Cost of Low Educational Performance – The Long-Run Impacts of Improving PISA Outcomes would be virtually transferred carbon copy into the EC’s 2019 report. That is, the EC 2019 Report claims that an aggressive, focused 15-20 year reform push to raise scores by 25-points would “add €71 trillion to EU GDP over the status quo” and which “amounts to an aggregate EU gain of almost 3 times current levels of GDP and an average GDP that is seven percent higher for the remainder of the century”. Based on the Hanushek and Woessmann numbers, Andreas Schleicher enticed European leaders with precisely that same narrative in 2010, as shown here in a slide from his presentation below (Slide 34 in the original presentation). Schleicher claimed that a PISA-improvement reform add 30% of the current GDP in 2100, which makes the total economic value of this reform is equivalent to 340% of the current GDP – the exact value shown in Figure 2…

For quite some time, we and others (here, here, here, and here) have pointed out that the Hanushek and Woessmann “findings” are deeply flawed. Our work includes a number of published papers, newspaper articles, and blogs published since 2016. We have tried to call attention to this situation in two previous NORRAG blog pieces here and here. Our argument in the main 2017 paper was simple. Hanushek and Woessmann used a relationship between students’ performance in international tests and economic growth for estimating the economic value of improving 25 points of PISA scores. However, Hanushek and Woessmann surprisingly compared students’ performance for a given period and economic growth for the same period. However, as it logically takes several decades for that cohort of students to occupy a major portion of workforce and then contribute to economic growth. We logically compared students’ performance for a given period and economic growth for a subsequent period. Surprisingly, in doing so we discovered virtually no relationship between them, casting strong doubts on the purportedly strong causal claims (Komatsu & Rappleye, 2017). While we find it disheartening that there has been no response to our work, it is far more disappointing that find that now the EC have turned to Hanushek and Woessmann, paying them hefty consultancy fees to write policy recommendations for Europe. We wonder aloud: Why does the EC Directorate for Education, Youth, Sport, and Culture need to turn to American think tanks to generate new policy ideas?…

Returning again to the larger picture, it seems that now the EU and OECD, alongside the World Bank, OECD and often highly influential figures in UNESCO, are now utilizing the same Hanushek and Woessmann Knowledge Capital claims. What makes this ‘Western consensus’ so alarming – at least to us – is not simply that education and economics are being so tightly coupled or that PISA is being embedded deeply into policymaking goals through these works. It is, instead, that so many leading minds in the West seem unable or unwilling to think differently.

A decade ago, when I wrote The Death and Life of the Great American School System: How Testing and Choice Are Undermining Education, I quoted a study by Keith Baker, a statistician who worked for many years in the U.S. Department of Education. Baker pointed out that the U.S. had placed last in the first international assessment in 1964, yet over the next half-century had outperformed the eleven nations with higher scores. He concluded then that test scores do not predict economic growth or anything else. Every time the results of a new international assessment are released, whoever is in charge says that the performance of the U.S. students is horrible, shameful, alarming, and proclaims “a new Sputnik moment.” And every time I point out that the U.S. has never been number one on international assessments and that these scores are meaningless. But the press reports the lamentations without contradiction anyway.

Everyone wants schools to open but Congress and the Trump administration don’t want to pay for it. That cost includes reduced class sizes for social distancing, additional teachers, cleaning services, nurses, ventilation improvements, personal protective equipment, and whatever is recommended by CDC.

In places where the disease is out of control, reopening will not be possible. First control the disease, then reopen schools. Trump could start the process by wearing a mask in public, whenever he is in public. His refusal to do so has spread the virus by encouraging his admirers to do as he does, which violates the strong advice of medical professionals.

Where reopening is possible, Congress must foot the bill because the stayes’s coffers have been depleted by the economic toll of the pandemic.

Thus far, Congress has been generous to high-income individuals and employers, but stingy with the nation’s schools, as David Dayen of “The American Prospect” explains here. To see the links and open them, go to his post here.

Dayen writes:

As we head into crunch time on coronavirus relief, the demands coming from the White House threaten to upset the entire deal. Donald Trump remains obsessed with a payroll tax cut, which nobody in Congress, really, wants. Any payroll tax cut with any real impact on people—a three-month holiday would run around $300 billion—would cut deeply into the other White House demand for a relief bill topping out at no more than $1 trillion.

The proper amount of spending for this bill is “whatever it takes.” If you don’t like the cost, maybe you shouldn’t have completely botched the policy response such that major regions of the country have to shut down again. The same people whining about expense are the ones who drove the country into despair. The cost of a continued runaway virus is much higher than the cost of emergency measures to ensure millions of people have adequate food and shelter during this crisis.

But if you really, really must constrain the response, and you really, really must have this payroll tax cut, then I have an idea: get rid of all the other long-term tax cuts mostly targeted toward the rich, many of them passed in the very last coronavirus relief bill.

They don’t get much discussion but there were a host of tax provisions in the CARES Act, passed in March. In fact there was a payroll tax holiday, but for the employer side, not the employee. Not only can employers delay payroll taxes to next year, they can eliminate them if they retain employees. The two measures are estimated at about $66 billion, and the savings falls on the business.

A bigger tax break has been termed the “Millionaire’s Giveaway” by Americans for Tax Fairness. This $135 billion tax break allows people with partnerships or other structures to carry forward losses from previous years and offset gains in their taxes in future years. It only affects people making half a million dollars in income from the partnership or more. The same type of deduction for businesses costs another $25 billion; the oil and gas industry in particular has been using that one, converting their losses in recent years into corporate welfare checks. There’s also an interest deduction available to larger corporations ($13 billion). Certain aviation taxes were suspended ($4 billion); see if that shows up in a lower ticket fare.

Add it up and that’s $243 billion in tax giveaways to rich people and corporations in the CARES Act. If the White House wants a payroll tax cut it can come out of that. Most of the benefits from those changes don’t hit until next year and the payment of 2020 taxes, and beyond. It makes sense to pull up spending (tax breaks are spending through the tax code) to when it’s needed now.

The Heroes Act, the House Democratic bill, actually accomplished a form of this, by cancelling the Millionaire’s Giveaway permanently, as it was due under the Trump tax cuts to come back in 2026 anyway. That brings in $246 billion overall, according to the Joint Committee on Taxation, enough for a decent-sized payroll tax holiday.

And as long as we’re talking about the Trump tax cuts, we could eliminate the measures most tilted to the rich and powerful—the corporate tax cut, the S-corporation pass through for rich people who set up partnerships, the deducations for dividends on foreign earnings, and the inheritance tax cuts—and take in about $3 trillion. If the next relief bill simply has to be capped at $1 trillion, then you could do $4 trillion in spending and add these measures in and hit that number.

Again, I think it’d be ridiculous to offset anything for emergency relief. But playing by the rules set up by the White House isn’t an obstacle, thanks to the trillions of dollars in offsets Trump created with his tax law. There is also a case to be made that rebalancing the inequality baked into the tax code is good public policy anyway, and if it can facilitate critical crisis spending under the stupid strictures of straitjacket budget politics, all the better.

Unfortunately, Chuck Schumer is trying to leverage the new bill to get a tax cut for well-off people, particularly in his own state, by removing the cap on the state and local tax deduction imposed in the Trump tax cuts. That was also in the Heroes Act (albeit just a two-year suspension). There’s no need whatsoever for this kind of long-term help for people who itemize when the unemployed and the poor are in desperate trouble right now. Wealthy people don’t need another champion to engage in special pleading for them.

Most nations in Europe imposed strict quarantines, masking, and social distancing. They eventually got the virus under control.

Not Sweden. It took a different route, relying on the good sense of individuals and the hope of “herd immunity.” It didn’t work, according to this story in the New York Times.

LONDON — Ever since the coronavirus emerged in Europe, Sweden has captured international attention by conducting an unorthodox, open-air experiment. It has allowed the world to examine what happens in a pandemic when a government allows life to carry on largely unhindered.

This is what has happened: Not only have thousands more people died than in neighboring countries that imposed lockdowns, but Sweden’s economy has fared little better.

“They literally gained nothing,” said Jacob F. Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “It’s a self-inflicted wound, and they have no economic gains.”

The results of Sweden’s experience are relevant well beyond Scandinavian shores. In the United States, where the virus is spreading with alarming speed, many states have — at President Trump’s urging — avoided lockdowns or lifted them prematurely on the assumption that this would foster economic revival, allowing people to return to workplaces, shops and restaurants.

In Britain, Prime Minister Boris Johnson — previously hospitalized with Covid-19 — reopened pubs and restaurants last weekend in a bid to restore normal economic life.

Implicit in these approaches is the assumption that governments must balance saving lives against the imperative to spare jobs, with the extra health risks of rolling back social distancing potentially justified by a resulting boost to prosperity. But Sweden’s grim result — more death, and nearly equal economic damage — suggests that the supposed choice between lives and paychecks is a false one: A failure to impose social distancing can cost lives and jobs at the same time.

Sweden put stock in the sensibility of its people as it largely avoided imposing government prohibitions. The government allowed restaurants, gyms, shops, playgrounds and most schools to remain open. By contrast, Denmark and Norway opted for strict quarantines, banning large groups and locking down shops and restaurants.

More than three months later, the coronavirus is blamed for 5,420 deaths in Sweden, according to the World Health Organization. That might not sound especially horrendous compared with the more than 129,000 Americans who have died. But Sweden is a country of only 10 million people. Per million people, Sweden has suffered 40 percent more deaths than the United States, 12 times more than Norway, seven times more than Finland and six times more than Denmark.

The moral of the story: Social discipline and leadership are necessary to get the disease under control. In the absence of both, the virus will continue to spread and destroy lives.

This post will propose a GRAND BARGAIN for reopening the schools.

There is a great demand to reopen the schools for the sake of the economy, and there is great resistance to reopening the schools due to fears about the safety of children and staff.

Parents and teachers are worried that if schools open too soon, they won’t be safe. Students won’t be safe if classrooms are crowded. If students don’t wear masks, they will be in constant confrontations with teachers. How do you keep very young children six feet apart? What about safety measures to protect the staff? These are all genuine problems.

What makes this entire discussion surreal is that Congress and the Trump administration have thus far refused to pass legislation that would send the aid needed to help schools reopen safely and help local and state governments cope with drastic reductions in revenues due to the shutdown of the economy.

Some states are planning to cut school funding by large amounts. They are willing to lay off teachers and support staff, including nurses. Under these conditions, schools cannot possibly reopen safely and should not.

A few states, like California, plan to hold the school budget where it is, with no cuts.

But to reopen, schools need MORE funding. They must reduce class sizes drastically to have safe social distancing. Depending on room sizes, classrooms should have no more than 10-15 students. To do that means hiring MORE teachers.

The Council of Chief State School Officers has estimated that it will require up to $244 billion in additional federal aid to reopen schools safely. It might be even more. If that is the cost of reopening schools and reopening the economy, it is a price worth paying.

Since the federal government has failed to take the lead in controlling the pandemic, the number of cases of coronavirus continues to rise, unlike the EU or Canada or many other nations. Where the virus is still rising, as in Texas, Florida, Arizona, and other states, schools cannot open safely.

But where the virus has been contained, schools can act on reopening plans only if they are adequately funded.

The only way to reopen schools safely, whether in the fall or months later, is by a dramatic increase in the budget so that there will be enough staff to protect the health and safety of the children, the teachers, and other staff.

Schools will need to hire additional nurses and health aides to monitor the temperature and health of everyone in the school as well as psychologists and social workers to aid students who have suffered trauma in recent months.

Some advocates of distance learning think it should become “the new normal,” but the past few months has demonstrated that not much learning is going on, that students are bored and long to be with their friends and teachers, and that distance learning is at best only a temporary fix.

Parents, business leaders, and everyone concerned about reopening the schools and the economy should together demand that the federal government provide whatever funds are needed to reopen schools safely so parents can return to work knowing that their children are safe. It may or may not happen in September, and there will be regional and local variations, depending on whether the coronavirus has been controlled.

But whenever it happens, the highest priority must be the safety and well-being of children and school staff.

It will not happen safely without a massive increase in funding from the federal government.

It should not happen until that funding has been approved.

A number of informed observers noted that the U.S. unemployment rate did not fall precipitously.

During the campaign of 2016, Trump insisted that the data from the Bureau of Labor Statistics was a hoax.

The data may not be a hoax, but they are wrong.

Robert J. Shapiro explained in the Washington Monthly that the data were wrong.

The Washington Post reported a “misclassification error” that reduced the unemployment rate.

The Post reported that:

When the U.S. government’s official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major “error” indicating that the unemployment rate likely should be higher than the widely reported 13.3 percent rate.
The special note said that if this “misclassification error” had not occurred, the “overall unemployment rate would have been about 3 percentage points higher than reported,” meaning the unemployment rate would be about 16.3 percent for May. But that would still be an improvement from an unemployment rate of about 19.7 percent for April, applying the same standards.
The Bureau of Labor Statistics, the agency that puts out the monthly jobs reports, said it was working to fix the problem.

Of course, these careful statements did not present Trump crowing about the jobs report and claiming outrageously that the recently murdered George Floyd would be happy to see the new data. Trump beloveds

The AFT issued this statement:

Statement by AFT President Randi Weingarten on Jobs Report

WASHINGTON—American Federation of Teachers President Randi Weingarten issued the following statement after the U.S. jobs report showed the loss of more than half a million additional public sector layoffs amid a rebound in private sector jobs:

“The jobs report out today confirms what we already know: The CARES Act is working, but if we don’t act now on a new round of stimulus for states, communities and schools, then millions more Americans will be out of work.

“An additional 585,000 public sector jobs were lost, following a drop of 963,000 in April. That includes another 375,000 educators, for a total of 750,000 so far during the COVID-19 pandemic, double the carnage of the Great Recession.

“The numbers are an argument for state and local aid, not against it. Business wants to come back, but we can’t halt stimulus now, particularly for states and schools, otherwise we’ll be confronting a fresh slump that will wreak havoc for years.

“We are in the midst of three crises: a pandemic, an economic crisis and a crisis of systemic racism. The news that private sector jobs grew was a step in the right direction, but these crises are far from over.

“The president’s comments today about George Floyd were tone-deaf. Floyd was murdered by police, and racial inequalities remain unaddressed. The report showed that Black unemployment rose, as African Americans continue to feel the disproportionate effects of the downturn.

“There are no magic fixes for this economy—only a path to recovery if we keep up the stimulus and investments to fund, rather than forfeit, the future. We urgently need the federal funding included in the HEROES Act that helps states, cities, towns and schools weather this rolling storm. If we fail to act, essential services will be gutted, schools won’t be able to reopen and public employees will stay laid off.”

Trump says even if the coronavirus comes back for a second round, there will be no more shutdowns. That means that even if there is a sharp increase in infections and deaths, the economy will keep humming, no matter the risk to life.

The Boston Globe wrote:

President Trump said on Thursday that “we’re not gonna close the country” again if the coronavirus sees a resurgence.

During a tour of a Ford plant in Michigan, a reporter asked the president if he was concerned about a potential second wave of the illness.

“People say that’s a very distinct possibility. It’s standard. And we’re going to put out the fires. We’re not gonna close the country. We’re going to put out the fires — whether it’s an ember or a flame, we’re going to put it out. But we’re not closing our country.”

Put another way, Trump is willing to sacrifice as many lives as necessary to keep the economy open.

Steven Singer hears the growing demand to reopen schools in the midst of the pandemic, and he sees an ulterior motive.

The clamor to reopen the schools is not about education or even the lives of children, but freeing their parents to go back to work.

He writes that despite the lack of testing or vaccines, the Trump administration is eager to open up the economy, and reopening schools is central to that goal.

The rich need the poor to get back to work. And they’re willing to put our lives on the line to do it.

What’s worse, they’re willing to put our children’s lives on the line.

I don’t know about you, but I’m not willing to risk my daughter’s life so that the stock market can open back up.

As a public school teacher, I’m not willing to bet my students lives so that the airlines and cruise industry can get back in the green.

Nor am I willing to gamble with my own life even if it means the NBA, NFL and MLB can start playing games and Hollywood can start premiering first run movies again.

There’s still so much we don’t know about COVID-19.

Initial reports concluded that older people were more susceptible to it, but as infections have played out worldwide, we’ve seen that 40% of patients are between 20-50 years of age. Children seem mostly asymptomatic. However, many immunologists suspect they are acting as carriers spreading the virus to the older people with whom they come into contact.

Children have a more difficult time with the constant hand washing and separating themselves at least 6 feet apart recommended by health experts. This is one of the justifications for closing schools in the first place. If we reopen schools too quickly, it could jumpstart another wave of infections.

Paul Waldman, an opinion writer for the Washington Post, writes here that the coronavirus pandemic has made reform of healthcare an urgent matter.

Millions of people have been laid off, losing the health insurance provided by their employers. He predicts that access to health insurance will be a major issue in the November election because Trump’s war on Obamacare has stripped millions of their health insurance.

Many will be destroyed by the cost of their healthcare during this current crisis.

The pandemic will revive support for Medicare for All, and its fate will depend on the composition of Congress.

He writes:

Let’s begin by considering a few things the coronavirus crisis and the accompanying economic downturn have illustrated about our system.

Perhaps the most vivid is that untold numbers of people are going to get huge bills from being treated for covid-19. Insurance companies made a big deal about waiving cost-sharing for coronavirus tests, but if you get it and have to get treated, you could still face thousands of dollars in costs, especially if you have a high-deductible plan of the kind that has proliferated in recent years.

The number of people facing those costs will be enormous. As bad as the virus has gotten in some other countries, that’s one thing their citizens don’t have to worry about.

That’s not to mention the huge numbers of Americans who have no insurance at all — especially in Republican-run states that refused the Affordable Care Act’s expansion of Medicaid — and so either won’t seek care when they get sick or will have to have the state pick up their tab, further straining state budgets.

Not only that, because of this wave of patients needing expensive treatment, insurance premiums could rise by 40 percent next year. How many people are going to be saying that everyone loves their private insurance when that happens?

Then we get to the effects of the budding recession. As I’ve argued before, the fact that we force most people to get insurance through their employers not only has no rational basis (it’s an accident of history), but it also makes things incredibly complicated during an economic downturn.

Right now we’re scrambling to figure out what to do about the millions or perhaps tens of millions of people who are losing their jobs and so may lose health care. Should we subsidize them to keep their old coverage through COBRA? Increase ACA subsidies? Widen Medicaid? Some combination of those and more?
In any other system, we wouldn’t even have to ask those questions, because your coverage is not tied to your job. If you get laid off or quit or your company goes out of business, your coverage is unaffected. Wouldn’t that be easier and less stressful?

It was always a myth that if you like your employer-sponsored coverage, you can keep it — your boss can change it at any time and often does, even if you keep your job. But if some of the predictions going around are right and as many as a quarter to a third of Americans lose their jobs in this recession, the idea of keeping insurance tied to employment may seem even more absurd than it already was.

Advocates of Medicare-for-all will say these twin crises make the case for their preferred system stronger than ever. But even if we’re not ready to go that far, what we’re living through still reinforces every argument in favor of reform.

It will certainly make health care a more potent issue for Democrats in November, since the central pillar of President Trump’s health-care policy is to get the ACA declared unconstitutional, immediately tossing 20 million or so people off their coverage and taking away protections for those with preexisting conditions (such as, say, having had covid-19).

And if Joe Biden should become president, it will increase the pressure on him to forge ahead with the reform he advocated during the campaign, a surprisingly progressive plan centered on the creation of a public option that could quickly enroll millions of Americans in coverage that would be stable and secure even through another pandemic.

The Trump administration eliminated a $200 million program to help scientists around the world predict pandemics before they get started, according to a report in the Los Angeles Times. Is it too much to call this decision criminal negligence? What’s the old poem? “For want of a nail, a kingdom was lost?” To save $200 million, a global pandemic was unleashed that killed many thousands of people and wrecked the world’s economy. Was the program scrapped to save money or because it was started by the Obama administration, which Trump hates?

Two months before the novel coronavirus probably began spreading in Wuhan, China, the Trump administration ended a $200-million pandemic early-warning program aimed at training scientists in China and other countries to detect and respond to such a threat.

The project, launched by the U.S. Agency for International Development in 2009, identified 1,200 different viruses that had the potential to erupt into pandemics, including more than 160 novel coronaviruses. The initiative, called PREDICT, also trained and supported staff in 60 foreign laboratories — including the Wuhan lab that identified 2019-nCoV, the new coronavirus that causes COVID-19.

Field work ceased when the funding ran out in September, and organizations that worked on the PREDICT program laid off dozens of scientists and analysts, said Peter Daszak, president of EcoHealth Alliance, a key player in the program.

On Wednesday, USAID granted an emergency extension to the program, issuing $2.26 million over the next six months to send experts who will help foreign labs squelch the pandemic. But program leaders say the funding will do little to further the initiative’s original mission.