Archives for category: Economy

It is not often that you see a juxtaposition between these two concepts: income inequality and school reform.

But I would like to argue here that they are related and they matter.

In a recent column, Paul Krugman reviews the evidence about income inequality.

The rich have grown dramatically richer, while the poor have gained nothing from the economic recovery.

Here are the basic facts, as he describes them:

The data in question have been compiled for the past decade by the economists Thomas Piketty and Emmanuel Saez, who use I.R.S. numbers to estimate the concentration of income in America’s upper strata. According to their estimates, top income shares took a hit during the Great Recession, as things like capital gains and Wall Street bonuses temporarily dried up. But the rich have come roaring back, to such an extent that 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. In fact, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.

Basically, while the great majority of Americans are still living in a depressed economy, the rich have recovered just about all their losses and are powering ahead.

The people at the top–that is, the ones who think the current distribution of income is just fine and is the result of meritocracy–like to assure us that if we just test kids more often, raise standards higher, adopt the Common Core, fire more teachers, and open more charter schools, then we can heal the divisions in our society.

But of course this is nonsense. As Krugman points out, even college graduates are having a hard time in this economy, many burdened by college debt and unable to find jobs that pay what they expected and hoped for.

These numbers should (but probably won’t) finally kill claims that rising inequality is all about the highly educated doing better than those with less training. Only a small fraction of college graduates make it into the charmed circle of the 1 percent. Meanwhile, many, even most, highly educated young people are having a very rough time. They have their degrees, often acquired at the cost of heavy debts, but many remain unemployed or underemployed, while many more find that they are employed in jobs that make no use of their expensive educations. The college graduate serving lattes at Starbucks is a cliché, but he reflects a very real situation.

What’s driving these huge income gains at the top? There’s intense debate on that point, with some economists still claiming that incredibly high incomes reflect comparably incredible contributions to the economy. I guess I’d note that a large proportion of those superhigh incomes come from the financial industry, which is, as you may remember, the industry that taxpayers had to bail out after its looming collapse threatened to take down the whole economy.

In any case, however, whatever is causing the growing concentration of income at the top, the effect of that concentration is to undermine all the values that define America. Year by year, we’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy.

Another story in the New York Times showed just how stark the current income inequality is. It says:

The top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.

The figures underscore that even after the recession the country remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the 1930s, if not more so.

The wizards of the financial industry, who have benefited so handsomely in the past few years, are the biggest boosters of charter schools. That is supposedly the way to open the path to opportunity for the lucky few, and perhaps it will.

But wouldn’t it make more sense to change our tax structure, so that the gap between the haves and the have-nots was not so outrageous?

I recall reading a book a few years ago called The Spirit Level: Why Greater Equality Makes Societies Stronger by Kate Pickett and Richard Wilkinson, which argued that societies that are more equal are happier, less violent, heathier, and better on almost every measure one can imagine.

I am not making a plea here for socialism or for onerous taxation, but for the kind of society I remember from my childhood, when the distribution of wealth was not as unequal as it is today. We had people who were rich, but they were not billionaires; they did not have private jets or own half a dozen houses or employ a fleet of servants.

Unless we do something in our political economy to bring up those who struggle for daily subsistence, this will not be a society of equality of opportunity, but one where inherited wealth determines one’s fate in life.

And no school reform will be strong enough to overcome those basic economic facts.

As states cut the budget for public schools, lay off teachers, increase class sizes, fire librarians and social workers, guidance counselors and teacher aides, we hear the same refrain: Sorry, the money’s all gone.

But is it? Read this article and you will find where the money went.

We hear repeatedly about the shortage of qualified
engineers and the need for more science, technology, and
mathematics majors. I am all for that. I would also like to see
more majors in the arts, philosophy, history, government,
literature, and world languages. This reader–who signs as
“Democracy”–offers thoughts about “the STEM crisis”–and examines
the role of Lockheed Martin’s Norman Augustine, who has been
outspoken on this and other educational subjects. (See his defense
of standardized
testing here.
). And more on “the STEM crisis” here.
But Augustine and the president of Cornell wrote an article
stressing the importance of the humanities and foreign languages
here,
while making a case for the Common Core. All seem to be about jobs
and national competitiveness, the aims of the day. . “Democracy”
writes: It seems that former Lockeed CEO Norm Augustine was invited
to tour Charlottesville-area public schools, where
he touted his brand of corporate “reform
” and lauded
schools for their STEM (science, technology, engineering, math)
focus, which goes under the rubric of “21st-century education.” As
CEO at Martin Marietta, Augustine brokered the merger of that
company with Lockheed to produce Lockheed Martin and got taxpayers
to subsidize nearly a billion dollars of the merger cost, including
tens of millions in bonuses for executives (Augustine netted over
$8 million). And then the merged company laid off thousands of
workers. The promised efficiencies and cost savings to the
government (and taxpayers) have yet to materialize. Lockheed Martin
is is now the largest of the big defense contractors, yet its
government contracts are hardly limited to weapons systems. While
Lockheed has broadened its services, it is dependent on the
government and the taxpayers for its profits. It’s also #1 on the ”
‘contractor misconduct’ database” which tracks contract abuse and
misconduct. Meanwhile, while Norm Augustine touts the need for more
STEM graduates (Science, Technology, Engineering and Math) and STEM
teachers for public schools, Lockheed is laying off thousands of
engineers. Research studies show there is no STEM shortage, but
Augustine says (absurdly) that it’s critical to American economic
“competitiveness.” A 2004 RAND study “found no consistent and
convincing evidence that the federal government faces current or
impending shortages of STEM workers…there is little evidence of
such shortages in the past decade or on the horizon.” The RAND
study concluded “if the number of STEM positions or their
attractiveness is not also increasing” –– and both are not –– then
“measures to increase the number of STEM workers may create
surpluses, manifested in unemployment and underemployment.” A 2007
study by Lowell and Salzman found no STEM shortage (see:
http://www.urban.org/publications/411562.html ). Indeed, Lowell and
Salzman found that “the supply of S&E-qualified graduates
is large and ranks among the best internationally. Further, the
number of undergraduates completing S&E studies has grown,
and the number of S&E graduates remains high by historical
standards.” The “education system produces qualified graduates far
in excess of demand.” Lowell and Salzman concluded that “purported
labor market shortages for scientists and engineers are anecdotal
and also not supported by the available evidence…The assumption
that difficulties in hiring is just due to supply can have
counterproductive consequences: an increase in supply that leads to
high unemployment, lowered wages, and decline in working conditions
will have the long-term effect of weakening future supply.” Lowell
and Salzman noted that “available evidence indicates an ample
supply of students whose preparation and performance has been
increasing over the past decades.”

Bloomberg News reports that the city’s corporate leaders and super-wealthy are offended by mayoral candidate Bill de Blasio’s plan to raise taxes on those earning over $500,000 a year to fund universal pre-K and after school programs for middle school kids.

The head of the business leaders’ group was astonished by de Blasio’s indifference to the needs of corporate executives. ““It shows lack of sensitivity to the city’s biggest revenue providers and job creators,” said Kathryn Wylde, president of the Partnership for New York City, a network of 200 chief executive officers, including co-Chairman Laurence Fink of BlackRock Inc. (BLK), the world’s biggest money manager.”

Some predicted an exodus of rich people from the city.

What has de Blasio proposed?

“De Blasio’s plan would raise the marginal tax rate on incomes above $500,000 to 4.4 percent from almost 3.9 percent. For the 27,300 city taxpayers earning $500,000 to $1 million, the average increase would be $973 a year, according to the Independent Budget Office, a municipal agency.

“For those making $1 million to $5 million, the average extra bite would rise to $7,793, the budget office said. At incomes of $5 million to $10 million, it would climb to $33,518, and for those earning more than $10 million, it would mean paying $182,893 more.”

Here is the reaction of one hedge fund manager: “E.E. “Buzzy” Geduld, who runs the hedge fund Cougar Capital LLC in the city and is a trustee of Manhattan’s Dalton School, where annual tuition tops $40,000, said de Blasio’s plan “is the most absurd thing I’ve ever heard” and “not a smart thing to do.”

Think of the billions that Bloomberg squandered on technology projects that fizzled (like the $600 million Citytime project), the failed merit pay plan ($53 million wasted), the failed plan to pay students to get higher test scores, etc.

The business executives said nothing because no one suggested that they would be taxed to pay for it.

De Blasio is proposing research-based programs. Those who care about education and kids should be cheering and should gladly pay an extra $973 (or more if their income is higher) to do what is right for kids.

Oh, and one more thing. The article says:

“The city’s richest 1 percent took home 39 percent of all earnings in 2012, up from 12 percent in 1980, according to the Fiscal Policy Institute, a nonprofit research group in New York.”

Don’t cry for me, Argentina.

Economist Robert Samuelson describes the relationship between labor and business as three eras.

He says that over the past century, there were three broad labor regimes.

“The first, in the early 1900s, featured “unfettered labor markets,” as economic historian Price Fishback of the University of Arizona puts it. Competition set wages and working conditions. There was no federal unemployment insurance or union protection. Workers were fired if they offended bosses or the economy slumped; they quit if they thought they could do better. Turnover was high: Fewer than a third of manufacturing workers in 1913 had been at their current jobs for more than five years.” (Sound familiar?)

Then:

“After World War II, labor relations became more regulated and administered — the second regime. The Wagner Act of 1935 gave workers the right to organize; decisions of the National War Labor Board also favored unions. By 1945, unions represented about a third of private workers, up from 10 percent in 1929. Health insurance, pensions and job protections proliferated. Factory workers laid off during recessions could expect to be recalled when the economy recovered. Job security improved. By 1973, half of manufacturing workers had been at the same job for more than five years.

“To avoid unionization and retain skilled workers, large nonunion companies emulated these practices. Career jobs were often the norm. If you went to work for IBM at 25, you could expect to retire from IBM at 65. Fringe benefits expanded. Corporate America, unionized or not, created a private welfare state to protect millions from job and income loss.”

After the recession of the early 1980s, after President Reagan broke the air traffic controllers’ strike, things changed.

“Now comes the third labor regime: a confusing mix of old and new. The private safety net is shredding, though the public safety net (unemployment insurance, Social Security, anti-poverty programs, anti-discrimination laws) remains. Economist Fishback suggests we may be drifting back toward “unfettered labor markets” with greater personal instability, insecurity — and responsibility. Workers are often referred to as “free agents.” An article in the Harvard Business Review argues that lifetime employment at one company is dead and proposes the following compact: Companies invest in workers’ skills to make them more employable when they inevitably leave; workers reciprocate by devoting those skills to improving corporate profitability.”

Surely ALEC, funded by major corporations, deserves some credit here for rolling back state laws that protect collective bargaining.

A reader posted this comment about Labor Day:

“Because my father, a lineman at the local electric company, was able to collectively bargain a contract, my sister, brother & I were able to live a middle class existence. My dad was able to send three kids to public universities in Indiana without acquiring debt. Did we all work to make it happen? Absolutely! The State of Indiana also helped by supporting its public universities which made college affordable for middle class & poor families.

“If he were alive today, he’d be heartsick by the way Democrats have turned their backs on working people.”

If you read about education, you are sometimes tempted to think that all common sense has departed this nation, its leaders, and its mass media.

They keep looking for quick fixes, miracles, turnarounds, and magical answers as “solutions” to education problems.

Here is Ray Strabeck, a retired school superintendent in Mississippi, who reminds us that there are still people who know what they are talking about and who are willing to speak up.

He reminds his readers of the fads that came and went over his 50 years in education.

He reminds them of the limitations of standardized tests.

As for all the weeping and wailing about how “our schools are failing,” “we are losing the race to nations with higher test scores,” Strabeck has a few wise observations about the goal of “beating” other nations:

 

I find such a motivation ridiculous. Who first landed on the moon? Americans trained in American public schools. Who has orbited Earth more times than any other nation? Americans who were educated in public schools. Who has probed deeper in the sea than anyone else — maybe excluding Jacques Cousteau? Again the answer is Americans who began their learning in public schools. Solar energy, fossil fuels, electronic technologies, social programs, jurisprudence — and the list goes on and on.

If history is to be examined regarding Common Core, it is a program that might last some four to eight years. Having been involved in public education for nearly 50 years, I have watched this timeline remain fairly constant across the years: both politicians and educators finally conclude that the latest fad is not working, and something new arises they want to try.

What, then, assures good schools and higher student achievement? Economics, pure and simple. Find me a good school, and nine times out of 10 there will also be found a flourishing economy in that school community.

Our plea that good schools bring good industries is a misnomer, a case of getting the cart before the horse. Make sure that parents have good jobs, that small businesses are flourishing in the neighborhood and that people take pride in where they live and one of the unfailing outcomes is good schools.

And he adds:

If we would spend the money currently being spent on Common Core on economic development and sustain that kind of effort for, say, four or five years, we would soon see “good” schools emerging. 

Please read the whole article.

 

 

 

Lance Hill of Néw Orleans, who has a long history in the civil rights movement, notes that Governor Bobby Jindal has been routing the “comeback” of Néw Orleans, giving credit in part to its privatized schools.

Lance points out that Forbes ranks Néw Orleans as 198th of 200 US cities in job growth. No miracle there .

In a recent article in the New York Times about the Common Core, I was quoted saying that some kids don’t need to go to college. I was trying to explain to the reporter that the New York Common Core tests used absurdly high standards that resulted in a 70% failure rate. Not every child will make an A, I told her, and we should not fail B and C students.

This was the printed summary of our interview:

“Some critics say the new standards are simply unrealistic. “We’re using a very inappropriate standard that’s way too high,” said Diane Ravitch, an education historian who served in President George W. Bush’s Education Department but has since become an outspoken critic of many education initiatives. “I think there are a lot of kids who are being told that if they don’t go to college that it will ruin their life,” she said. “But maybe they don’t need to go to college.”

I have since heard that my remarks were elitist because everyone should go to college.

So, it is time to clarify what I believe.

Who should go to college? Everyone who wants to.

What prevents them from doing so? The cost of college today puts it out of reach for many students, and those who get a degree spend years paying back their student loans.

Education is a basic human right. Every state should have free community colleges for anyone who wants to go to college. In recent years, states have increasingly shifted the cost of higher education to students, when it should be paid for by taxation.

Does everyone “need” to go to college? No, and not everyone wants to go to college. Some people choose to go several years after high school, and some get on-the-job training.

Last week, a terrific auto mechanic fixed my car. He had not gone to college. He loves his work.

When my refrigerator broke down, two expert mechanics arrived, diagnosed the problem, and fixed it. They were proud of their skill. They were not college graduates.

In my professional life, everyone I interact with has one or several degrees. In my real life, where things break down and someone has to do work that is essential to my daily life, many–most–do not have a diploma. Should they? That should be their choice, not my compulsion.

In my ideal world, higher education would be tuition-free for those who can’t afford it. Then everyone who wants to go to a college would not be kept out by high tuition.

So to those who want a higher rate of college attendance and participation, I say “demand tuition-free colleges, open to all.”

This article reflects on the future of news outlets in the U.S.

There have always been a few fabulously wealthy men and families who owned large media outlets.

But there were also thousands of small-town, small-city newspapers and even local radio and TV stations.

The small papers and media have been snapped up by the big fish, and many have folded outright.

The spread of the Internet has been disastrous for print publications.

These days, the media outlets are conglomerates, and a handful of super rich men and corporations own most of them.

With the acquisition of The Washington Post by amazon.com’s Jeff Bezos, another major family-owned newspaper falls into the hands of a billionaire.

Unfortunately, the typical billionaire apparently believes in privatization of public education; after all, those are the values that made them rich beyond their wildest dreams.

Will the New York Times be acquired by Michael Bloomberg?

The Times is in deep financial trouble. It bought the Boston Globe 20 years ago for $1.1 billion, and just sold it for $70 million.

The Los Angeles Times may be bought by the Koch Brothers, or Eli Broad.

What is at risk? Democracy.

Thank goodness for social media.

The Internet may have doomed many newspapers, but it has given everyone a way to communicate outside the reach and control of the major media.

We don’t have to confine ourselves to listening to, watching, and reading only what they give us.

We can write what we want, read what we want, express our views without their censorship or approval.

Through social media, we have the power to organize and to use the tools of democracy.

That is our strength, and it is our greatest weapon against the power of big money.