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“The Silence Of The Austerians”: Here’s Why 2014 Could Be The Year America Finally Ditches its Inane Deficit Obsession

The year 2013 will be seen as a year of crushing intellectual defeat for advocates of fiscal austerity. There were many smaller victories, but this big one came in April. Researchers at the University of Massachusetts examined the Austerian ur-paper, “Growth in a Time of Debt,” by Carmen Reinhart and Ken Rogoff, which said that countries whose debt-to-GDP ratio reaches 90 percent experience dramatically slower growth. The UMass folks found not only dodgy statistics and backwards causation, but a goof in the paper’s Excel spreadsheet. The causation and statistics errors were more serious, but the fact that elites around the globe had gleefully embraced something with a flub any office temp could understand was horribly embarrassing.

It was an intellectual rout that badly wrong-footed the Austerians, who have since been notably half-hearted in the face of a resurgent left now campaigning on economic justice. This includes, for example, increasing Social Security benefits, which was unthinkable two years ago, when the fight to stop benefits from being cut was nearly lost.

The question for 2014, then, will be whether this triumph can be consolidated and expanded into the policy sphere. Because despite the intellectual collapse, Austerian assumptions and reasoning still dominate United States policy, which is undertaking fiscal consolidation at a pace not seen since the WWII demobilization. If the current Austerian death grip on the framework of policy negotiation can be broken, there might be a chance.

The answer to this question turns on how one views intellectual debate. Given the history of the last few years, one could be forgiven for thinking it’s pointless. As the Polish economist Michal Kalecki demonstrated brilliantly, there are powerful cultural and class-based reasons for both political and business elites to favor austerity now.

We see this today, as Steve Randy Waldman has demonstrated, in the blatant double standards applied to austerity as compared to inequality or raising the minimum wage. Consider a recent paper by the liberal economist Jared Bernstein, which while outlining much excellent evidence about the economic harm of inequality, is stuffed with unnecessary hedging and hesitation. The Reinhart and Rogoff paper, by contrast, was weak even without knowing about the Excel and stats errors (as Paul Krugman, among others, observed at the time), but elites nearly tripped over their own feet seizing on it anyway. Their bogus “90 percent” conclusion was stated as economic fact by everyone from Paul Ryan to the Washington Post editorial board.

However, biased reasoning is different than no reasoning at all. Seizing on a fig leaf paper fulfills a deep psychological need. Current elites may be largely greedy, corrupt hypocrites, but the cultural credibility of science is such that what amounts to outright class warfare must have an “evidence-based” patina. It’s far too gauche to simply ram through one’s favored policies because you want all the money or to kick the poor.

Therefore, fiscal policy in 2014 and 2015 will hinge on whether the Austerian coalition can be split (assuming, as is probable, that progressive Democrats don’t sweep the 2014 midterms).

Roughly speaking, we’re talking about the center and the right, and there are good reasons to suppose that neither will be brought around. For the center, it takes an intellectual defeat roughly akin to the Battle of Trafalgar to get them to grudgingly abandon austerity. (And if some hack economist churns out another pro-austerity paper, they will probably grab it eagerly.) Meanwhile, “straight” reporters have been culturally conditioned to code deficit reduction as a non-ideological good thing, so even very recent straight reporting still contains buried Austerian assumptions.

And on the right, things look especially hopeless. Denial and motivated reasoning are so epidemic that even Mitt Romney believed the “unskewed” polls before the 2012 election. Ivory tower arguments alone are useless here.

However, all hope is not lost. The key is to change what is considered acceptable for budgetary negotiations. Right now, they all assume that any new spending must be “offset” by cuts elsewhere. That aversion to deficit spending is 100% Austerian.

So while Republicans are largely immune to evidence, it’s also true they don’t actually care about the deficit in and of itself. They favor reduced taxes on the rich, and cutting social insurance. What’s more, conservative reformists at places like National Affairs have gotten louder and bolder in their advocacy of new thinking, even including infrastructure spending.

So if the center, especially including President Obama, can be persuaded to drop their deficit obsession (and again, it’s hardly possible to overstate how badly this debate has been lost), we could trade tax cuts for some austerity relief, like re-extending unemployment benefits and food stamps. And, it’s important to note, both spending increases and tax cuts count as austerity relief. Tax cuts, especially on the rich, aren’t very good stimulus, but they still put money into people’s pockets.

But the main point is to shift ground for negotiation. This strategy of “tax cuts for more spending” has been suggested many times in the past few years and gone nowhere. But before that, it has been the basis for many successful bipartisan deals, including expanding Medicaid in the 80s and the CHIP program in the 90s.

So while the deck is stacked against the anti-Austerians, continuing the intellectual battle is by no account useless. It’s highly possible to influence even a crooked debate.

 

By: Ryan Cooper, The New Republic, February 5, 2014

February 10, 2014 Posted by | Austerity, Deficits | , , , , , , , | Leave a comment

Invest In Your Child’s Future: Pay Teachers More

From the debates in Wisconsin and elsewhere about public sector unions, you might get the impression that we’re going bust because teachers are overpaid.

That’s a pernicious fallacy. A basic educational challenge is not that teachers are raking it in, but that they are underpaid. If we want to compete with other countries, and chip away at poverty across America, then we need to pay teachers more so as to attract better people into the profession.

Until a few decades ago, employment discrimination perversely strengthened our teaching force. Brilliant women became elementary school teachers, because better jobs weren’t open to them. It was profoundly unfair, but the discrimination did benefit America’s children.

These days, brilliant women become surgeons and investment bankers — and 47 percent of America’s kindergarten through 12th-grade teachers come from the bottom one-third of their college classes (as measured by SAT scores). The figure is from a study by McKinsey & Company, “Closing the Talent Gap.”

Changes in relative pay have reinforced the problem. In 1970, in New York City, a newly minted teacher at a public school earned about $2,000 less in salary than a starting lawyer at a prominent law firm. These days the lawyer takes home, including bonus, $115,000 more than the teacher, the McKinsey study found.

We all understand intuitively the difference a great teacher makes. I think of Juanita Trantina, who left my fifth-grade class intoxicated with excitement for learning and fascinated by the current events she spoke about. You probably have a Miss Trantina in your own past.

One Los Angeles study found that having a teacher from the 25 percent most effective group of teachers for four years in a row would be enough to eliminate the black-white achievement gap.

Recent scholarship suggests that good teachers, even kindergarten teachers, increase their students’ earnings many years later. Eric A. Hanushek of Stanford University found that an excellent teacher (one a standard deviation better than average, or better than 84 percent of teachers) raises each student’s lifetime earnings by $20,000. If there are 20 students in the class, that is an extra $400,000 generated, compared with a teacher who is merely average.

A teacher better than 93 percent of other teachers would add $640,000 to lifetime pay of a class of 20, the study found.

Look, I’m not a fan of teachers’ unions. They used their clout to gain job security more than pay, thus making the field safe for low achievers. Teaching work rules are often inflexible, benefits are generous relative to salaries, and it is difficult or impossible to dismiss teachers who are ineffective.

But none of this means that teachers are overpaid. And if governments nibble away at pensions and reduce job security, then they must pay more in wages to stay even.

Moreover, part of compensation is public esteem. When governors mock teachers as lazy, avaricious incompetents, they demean the profession and make it harder to attract the best and brightest. We should be elevating teachers, not throwing darts at them.

Consider three other countries renowned for their educational performance: Singapore, South Korea and Finland. In each country, teachers are drawn from the top third of their cohort, are hugely respected and are paid well (although that’s less true in Finland). In South Korea and Singapore, teachers on average earn more than lawyers and engineers, the McKinsey study found.

“We’re not going to get better teachers unless we pay them more,” notes Amy Wilkins of the Education Trust, an education reform organization. Likewise, Jeanne Allen of the Center for Education Reform says, “We’re the first people to say, throw them $100,000, throw them whatever it takes.”

Both Ms. Wilkins and Ms. Allen add in the next breath that pay should be for performance, with more rigorous evaluation. That makes sense to me.

Starting teacher pay, which now averages $39,000, would have to rise to $65,000 to fill most new teaching positions in high-needs schools with graduates from the top third of their classes, the McKinsey study found. That would be a bargain.

Indeed, it makes sense to cut corners elsewhere to boost teacher salaries. Research suggests that students would benefit from a tradeoff of better teachers but worse teacher-student ratios. Thus there are growing calls for a Japanese model of larger classes, but with outstanding, respected, well-paid teachers.

Teaching is unusual among the professions in that it pays poorly but has strong union protections and lockstep wage increases. It’s a factory model of compensation, and critics are right to fault it. But the bottom line is that we should pay teachers more, not less — and that politicians who falsely lambaste teachers as greedy are simply making it more difficult to attract the kind of above-average teachers our above-average children deserve.

By: Nicholas Kristof, Op-Ed Columnist, The New York Times, March 12, 2011

March 13, 2011 Posted by | Education, Employment Descrimination, Professionals, Teachers | , , , , , , , , , , , | Leave a comment

   

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