Reihan Salam http://blogs.reuters.com/reihan-salam Thu, 24 Jul 2014 14:34:30 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 Paul Ryan’s promising new plan to end poverty http://blogs.reuters.com/reihan-salam/2014/07/24/paul-ryans-promising-new-plan-to-end-poverty/ http://blogs.reuters.com/reihan-salam/2014/07/24/paul-ryans-promising-new-plan-to-end-poverty/#comments Thu, 24 Jul 2014 14:34:14 +0000 http://blogs.reuters.com/reihan-salam/?p=924 Ryan speaks at the SALT conference in Las Vegas

Paul Ryan has long been known as the GOP’s budget guru. With the release of his new report on expanding opportunity in America — the most ambitious conservative anti-poverty agenda since the mid-1990s — he is on the cusp of becoming something much more than that.

Loved by the right and loathed by the left, Ryan has been the architect of the most consequential Republican domestic policy initiatives of the Obama era. In spirit if not in name, Ryan spent much of President Obama’s first term as the leader of the opposition, rallying Republicans against Obamacare and in favor of long-term spending reductions. His controversial calls for entitlement and tax reform as chairman of the House Budget Committee were singled out by the president for over-the-top denunciation. In the spring of 2012, well before Ryan was named the Republican vice-presidential nominee, the president went so far as to characterize the Wisconsin congressman’s budget proposal as “thinly-veiled Social Darwinism.”

And yet Ryan soldiered on. As Mitt Romney’s running mate, Ryan often seemed ill-at-ease, uncomfortable in the role of attack dog. Those close to Ryan maintained that he would have been far more comfortable doing more listening than talking, and getting a feel for communities across the country still reeling from the lingering effects of the Great Recession. Once the campaign drew to a close, Ryan decided to do just that. He retreated from his role as the Republican Party’s chief intellectual strategist to think hard about the problems plaguing America’s most vulnerable neighborhoods and families. With the help of Bob Woodson, president of the National Center for Neighborhood Enterprise, Ryan and his team traveled across the country to find community groups, churches and local governments that were working to better the lives of the poor, and to learn about the obstacles they faced and how the federal government might lend a hand.

Ryan’s ultimate aim has been to find a new approach to combating entrenched poverty. In March, the House Budget Committee released a richly-detailed report on federal anti-poverty efforts, and the many ways they’ve failed to help poor families achieve economic independence. But the report was more of an autopsy on a half-century’s worth of failed programs and frustrated ambitions, not a new agenda in itself. With this week’s report, Ryan has gone further.

Though Ryan is known for having devised budgets designed to shrink deficits by aggressively — some would say too aggressively — trimming the growth of Medicaid and domestic discretionary spending in the coming years, the first and most important thing to note about Ryan’s new anti-poverty agenda is that it is deficit-neutral. Rather than reduce anti-poverty spending in the immediate future, Ryan’s proposal aims to make anti-poverty spending more effective by leveraging the strengths of the federal government (the resources at its disposal) and of states, local governments, and private organizations (their local knowledge). Eventually, more effective anti-poverty spending will yield savings by helping women and men trapped in poverty become solidly middle-income workers who will pay more in taxes than they will collect in benefits. But Ryan’s proposal recognizes that helping families achieve this goal will take time and resources.

A homeless man searches for recyclable materials in a trash bucket at the Port Authority Bus Terminal in New YorkThe centerpiece of Ryan’s proposal is a new Opportunity Grant pilot program, which would consolidate a number of federal programs, like the Supplemental Nutritional Assistance Program (SNAP), Section 8 housing vouchers, and public housing funds, into a single funding stream that state governments could use to help low-income families escape poverty. Instead of simply making life in low-income households more tolerable, the Opportunity Grant is premised on the idea that well-timed, targeted interventions can give low-income households the resources they need to achieve economic takeoff.

The proposal offers a useful distinction between situational poverty, in which individuals fall on hard times yet have the skills and social networks they need to climb the economic ladder, and generational poverty, in which individuals face more fundamental challenges in finding their footing in the working world. People who find themselves in situational poverty might need short-term help to get them out of a crisis, and the economic breathing room to invest in their long-term earning potential. People who find themselves in generational poverty, in contrast, might require far more comprehensive interventions that tackle several different problems at once.

The needs of poor families vary along many dimensions, and they are different in Brooklyn than in the Mississippi Delta. Some poor people need a fair bit of short-term money to, for example, cover a rental deposit on an apartment within commuting distance of job opportunities, but they have little need for ongoing assistance once they’ve wriggled free of this constraint. Others need meaningful ongoing assistance to help them overcome drug addiction or the lingering aftereffects of a chaotic upbringing.

Existing social welfare programs often fail to tease out these differences, and so poor families will often find themselves with too much of what they don’t need and too little of what they do. By granting states more flexibility, and allowing them to partner with a wide range of organizations that specialize in serving the poor, the Opportunity Grant program will harness the creativity and intelligence of the people closest to the problem.

Ryan also calls for a substantial increase in the earned-income tax credit for childless workers, modeled closely on a recent proposal by the Obama administration. The main difference between Ryan and Obama’s approach to the EITC is that Ryan favors paying for the expansion by eliminating corporate welfare and phasing out ineffective programs. Conservative Republicans have often been accused of reflexively opposing all ideas backed by the Obama administration, so the family resemblance between the two proposals is notable. In theory, at least, the idea of EITC expansion offers the possibility of bipartisan common ground.

And Ryan draws attention to a number of other barriers to upward mobility for the poor, including the rising cost of high-quality post-secondary education, the baleful effects of mass incarceration on those caught up in the criminal justice system and their families, and occupational licensing that make it difficult for poor people to secure remunerative employment. All of these are areas that have been neglected by most Republican lawmakers, and Ryan is declaring that they must become conservative priorities.

Since President Obama’s reelection, leading conservatives, led by Ryan, Florida Sen. Marco Rubio, and Utah Sen. Mike Lee, have been engaged in a friendly contest of domestic policy ideas. Other would-be policy innovators, like the governors of Wisconsin and Louisiana, are waiting in the wings. Rather surprisingly, 2014 has become the most fruitful year for conservative policy thinking since the late 1970s, when a small band of supply-siders, led by Jack Kemp, paved the way for Ronald Reagan’s successful 1980 presidential campaign. During the 2012 Republican presidential primaries, the candidates waged almost impressively substance-free campaigns, which steered clear of policy detail in almost every domain but taxes. It is already clear that the next battle for the Republican future will look quite different. Paul Ryan deserves much of the credit.

PHOTOS: Paul Ryan, U.S. congressman (R-WI), speaks at the SALT conference in Las Vegas May 16, 2014. REUTERS/Rick Wilking

A homeless man searches for recyclable materials in a trash bucket at the Port Authority Bus Terminal in New York March 22, 2014. REUTERS/Eduardo Munoz

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Reality check: Death penalty is too expensive to make sense http://blogs.reuters.com/reihan-salam/2014/06/20/reality-check-death-penalty-is-too-expensive-to-make-sense/ http://blogs.reuters.com/reihan-salam/2014/06/20/reality-check-death-penalty-is-too-expensive-to-make-sense/#comments Fri, 20 Jun 2014 20:47:52 +0000 http://blogs.reuters.com/reihan-salam/?p=829 Handout of revamped lethal injection room at San Quentin State Prison

Last week saw the first executions in the United States since the botched lethal injection of Oklahoma inmate Clayton Lockett, which drew renewed attention to the death penalty. Despite a sharp decrease in support for the death penalty — from 78 percent as recently as 1996, to 55 percent in a survey conducted last year by the Pew Research Center — the practice remains on the books in 32 states. This reflects the fact that support for the death penalty is uneven, with conservatives and Republicans far more likely to support it than liberals and Democrats.

The result of this disparity is that even as liberal states like Maryland and New York do away with the practice, conservative states like Texas and Utah are likely to stick with it. The fundamental reason conservatives tend to support the death penalty is that, as University of Pennsylvania law professor Stephanos Bibas recently told the Boston Globe, it reflects their belief in the importance of individual responsibility. For conservatives troubled by the rights revolution that transformed the U.S. criminal justice system in the 1960s and 1970s, “the death penalty became a symbol: Are we willing to hold people accountable for their actions?”

Perhaps in recognition of this widespread belief in the death penalty as a symbol of individual responsibility, at least some death penalty critics are choosing to emphasize its physical cruelty. For example, the political theorist Austin Sarat of Amherst College, author of Gruesome Spectacles, a history of botched executions, argues that the death penalty is inseparable from physical cruelty, as evidenced by the long history of mishaps and malfunctions that have turned seemingly humane methods of execution into hellish torments.

My own belief is that while virtually all methods of execution, including the most ingenious ones, will at some point fail to deliver a painless death, this isn’t in itself an argument against the death penalty. All human institutions suffer from limitations, and it’s hard to deny that contemporary executions are in important respects less cruel than those used in past eras.

A man and his son hold candles outside the prison before the execution of John Allen Muhammad at the Greensville Correctional Center in Jarratt, VirginiaMoreover, there is no reason to believe that progress has ceased. If you embrace the basic premise that the death penalty has important symbolic value, as a sign that some crimes are so heinous as to merit death, you’re not going to be convinced that botched executions are reason enough to abandon it.

The argument that I find most compelling is that prosecuting death penalty cases is extremely expensive. A 2008 Urban Institute study found that in Maryland, which recently abolished its death penalty, the cost of the average capital-eligible case in which prosecutors did not seek the death penalty was $1.1 million, including $870,000 in incarceration costs and $250,000 in expenses associated with adjudication. In capital-eligible cases in which prosecutors sought the death penalty unsuccessfully, the average cost was $1.8 million — $950,000 in prison costs and $750,000 in adjudication costs, or three times as much as in cases in which the death penalty was not sought. And in capital-eligible cases in which prosecutors successfully sought the death penalty, the average cost was $3 million, with $1.3 million devoted to incarceration and $1.7 million to adjudication.

The numbers appear to be even more egregious in other states. In 2003, the Kansas state government found that cases in which the death penalty was sought cost 70 percent more than those in which it was not sought.

It might seem rather bloodless to oppose the death penalty on the grounds that it is extremely expensive. But given that the death penalty doesn’t appear to have much of a deterrent effect, a cost-based opposition might be reason enough to abandon it, or at least to only pursue it in cases uniquely offensive to the moral order.

I agree with those who believe that the death penalty ought to remain on the table as a way for society to demonstrate the seriousness with which it embraces the idea of individual responsibility. Yet we can enshrine this belief while using the death penalty very, very sparingly.

(Editor’s note: The original version of this column appeared on June 20, 2014. It was updated on June 23.)

PHOTOS: An undated handout photo of the revamped lethal injection room at San Quentin State Prison supplied by the California Department of Corrections and Rehabilitation October 25, 2012.

Darick Lane (L) and his son Desmond Lane (R) hold candles outside the prison before the execution of John Allen Muhammad at the Greensville Correctional Center in Jarratt, Virginia, November 10, 2009. REUTERS/Jonathan Ernst

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What Eric Cantor’s loss — and a quirky economist’s win — means for Republicans http://blogs.reuters.com/reihan-salam/2014/06/12/what-eric-cantors-loss-and-a-quirky-economists-win-means-for-republicans/ http://blogs.reuters.com/reihan-salam/2014/06/12/what-eric-cantors-loss-and-a-quirky-economists-win-means-for-republicans/#comments Thu, 12 Jun 2014 13:16:12 +0000 http://blogs.reuters.com/reihan-salam/?p=819 U.S. House Majority Leader Cantor discusses primary election defeat during news conference on Capitol Hill in Washington

On Tuesday Republican primary voters asserted themselves in spectacular fashion by wresting the GOP nomination from House Majority Leader Eric Cantor and giving it to quirky economist Dave Brat, who now looks very likely to win the seat in the fall. This is much more than a run-of-the-mill primary upset. Because Cantor was second in command to Speaker John Boehner among Republicans in the House, his defeat has set off a scramble for power, the outcome of which has yet to be determined.

Cantor’s defeat has led to searching questions about what exactly Brat’s victory means? Let’s run through a few different interpretations.

Immigration. One widely-held view is that Cantor’s defeat means that immigration reform is dead. There is one problem with this line of thinking: comprehensive immigration reform, as endorsed by the Obama White House and a bipartisan group of senators that includes Chuck Schumer (D-NY) and John McCain (R-AZ), among others, was already dead. The fundamental bone of contention is whether or not unauthorized immigrants should be granted a path to citizenship, provided they jump through various hoops, like paying back taxes and demonstrating English language proficiency, most of which would be impossible to implement.

Grassroots conservatives staunchly opposed a soft amnesty along these lines when it was proposed by the Bush administration, and they continue to oppose it now. They’ve long had the numbers and the influence in Congress to keep legislation to this effect from making it to President Barack Obama’s desk. It’s true that Cantor and other Republicans, including Boehner, had tried to find ways to revive the immigration reform effort, but they weren’t gaining much traction.

Tea Party vs. the Establishment. Though Cantor is now being portrayed as an establishment Republican par excellence, it is important to remember that he had long styled himself as a more conservative alternative to Boehner, who was always careful to cultivate allies to his right. Cantor predates the Tea Party, and his urbane manner contrasted with the populist style that is a hallmark of the Tea Party right.

Tea Party candidate Dave Brat defeats House Majority Leader Cantor in GOP Primary in VirginiaNevertheless, Cantor was, by and large, a man with whom Tea Party conservatives could do business, and he was willing to take on the thankless task of leading often fractious House Republicans. It is true that, as Ross Douthat observes, Cantor was seen as a friend of K Street, the lobbying corridor that does so much to shape American politics on both sides of the partisan divide. But it’s only relatively recently that (some) Tea Party conservatives decided that they wanted Cantor’s scalp. To suggest that Cantor’s defeat is a victory for the Republican right over the party’s squishy centrists is not quite correct.

Change vs. the Status Quo. My preferred interpretation is that Cantor’s defeat represents a defeat for those Republicans who believe that there is nothing wrong with the party that can’t be solved by a charismatic candidate and moving to the left on social issues like marriage equality and immigration reform. National Review senior editor Ramesh Ponnuru laments Cantor’s defeat because he had done so much to tout the work of conservative policy thinkers offering an alternative to the centralized, top-down, big-government policies offered by the left and the coziness with big business and Wall Street that defines too much of the right. He is right to do so. Cantor really did make an effort to open up the domestic policy conversation on the right.

Yet like Douthat, Ponnuru suggests that Cantor’s shift might have been too little too late: had Cantor been quicker to champion Main Street over Wall Street, he might have bested Brat. Instead, Brat’s call for a Main Street agenda resonated with enough GOP primary voters to put him over the top. If Brat’s success doesn’t demonstrate that rank-and-file Republicans are hungry for change, nothing will.

The Tea Party movement does not represent some irrational, nihilistic force, as its critics both inside and outside of the Republican coalition maintain. Rather, it is a movement founded on the belief that the Republican elite has grown fat, happy and complacent at a time when the country faces serious challenges — economic, fiscal, and social — and that the elite needs to be shaken out of its torpor.

What the movement needs is an agenda: something to be for, not just something to be against. Cantor’s defeat underscores that this longing for change persists, and that it won’t go away until Republicans start seriously addressing the economic stagnation at the bottom and the crony-capitalist corruption at the top of the American economy.

PHOTOS: U.S. House Majority Leader Eric Cantor pauses while discussing his defeat in his Virginia Republican primary election during a news conference on Capitol Hill in Washington, June 11, 2014. REUTERS/Jonathan Ernst

A truck driven by a supporter for Tea Party candidate Dave Brat’s campaign is parked in front of his headquarters in Glen Allen, Virginia, June 11, 2014. REUTERS/Mike Theiler
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Technology, not regulation, is the best way to tackle climate change http://blogs.reuters.com/reihan-salam/2014/06/06/technology-not-regulation-is-the-best-way-to-tackle-climate-change/ http://blogs.reuters.com/reihan-salam/2014/06/06/technology-not-regulation-is-the-best-way-to-tackle-climate-change/#comments Fri, 06 Jun 2014 15:48:40 +0000 http://blogs.reuters.com/reihan-salam/?p=809  warming111

By all accounts, President Obama is deeply interested in his legacy. And though relatively few American voters see dealing with climate change as a top priority for the federal government, the president famously sees it as the most important issue he can address in his second term. Having failed to shepherd climate change legislation through Congress in 2009, when Democrats had large majorities in the Senate and the House, the Obama administration has shifted to using new regulations to achieve its environmental policy goals. This week, the Environmental Protection Agency introduced its Clean Power Plant Proposed Rule, a sweeping initiative that aims to reduce carbon emissions from coal-fired power plants.

The heart of the 2009 legislation — the Waxman-Markey bill — was a new cap-and-trade system, which would allow businesses to trade the right to emit a certain level of carbon. The new EPA regulations are actually much less flexible than the cap-and-trade system envisioned in Waxman-Markey, and they will reduce carbon emissions at a much higher cost to the economy.

So you might be tempted to think that we ought to embrace cap-and-trade. Conservatives often get lectured for failing to embrace cap-and-trade or stringent carbon regulation. Ezra Klein, writing for the liberal news site Vox, observes that Arizona Sen. John McCain favored a cap-and-trade system during his 2008 presidential campaign, and he takes today’s GOP to task for being less enlightened.

But if anything, it is McCain who was wrong in 2008, not Republicans who balk at policies that will raise energy prices. Indeed, rather than avoid talking about climate change and the environment, the right should go on the offense. While the president and his allies back price-hiking regulation, conservatives should call for accelerating price-lowering technological innovation.

smokestack777Like a carbon tax, the goal of cap-and-trade is to raise the cost of emitting carbon, and in doing so it encourages firms and households to find low-cost ways to emit less of it. If we all agree that carbon emissions are bad for the environment — and no, not everyone agrees, but let’s stipulate that we do — then why not impose a government-mandated price signal and let the market figure out how best to reduce them? What could possibly be simpler? There are a few problems with this approach.

First, government-mandated price signals aren’t set in stone. The carbon price that serves as the basis of a carbon tax or a cap-and-trade system is determined in part by (well-meaning, highly-qualified) government officials. But it is inevitable that democratically-elected lawmakers will get involved. And these lawmakers might want to ensure that a carbon price doesn’t negatively impact, say, low- and middle-income households, so we’ll need to create subsidies to protect them. They will also want to protect important industries in their districts, so we’ll need subsidies to protect them too.

If the carbon price proves particularly onerous for one sector or another, it’s a safe bet that the system will be “reformed.” All industries will seek carve-outs and breaks, and those with the most political muscle will get them. Suddenly a proposal that looks appealing on paper meets the realities of real-world politics, and the results are not pretty.

Consider the European Union’s Emissions Trading System (ETS), an ambitious cap-and-trade system first launched in 2005. As Roger Pielke Jr. has observed, the European Union and the United States have experienced the same 6.4 percent reduction in aggregate emissions since 2000, and their paths don’t appear to have diverged since the introduction of the ETS. Moreover, the U.S. has actually seen a slightly steeper decrease in its carbon intensity (21 percent) than Europe (19.5 percent). That is, Americans have reduced the amount of carbon they emit per dollar of GDP faster than Europeans in recent years. Pielke maintains that the reason the ETS appears to have failed is that it set the carbon price at a very low level.

Of course, the reason that the EU set the carbon price at such a low level is that European voters would have revolted otherwise. Even Germany, which has gone the furthest among the large European economies in pushing for renewable energy despite the resulting increase in electricity prices, seems to be saying that enough is enough. Germany’s coalition government has just backed new legislation that will slow the growth of green energy. Suffice it to say, Americans are even less enthusiastic about higher utility bills than their European counterparts.

Second, even if government-mandated price signals were immune to political pressure, it’s not at all obvious how we should go about setting a carbon price. In 2010, the Obama administration estimated that the “social cost of carbon” was roughly $23. The natural implication of this estimate is that measures that cost less than $23 per ton make good economic sense.

As Oren Cass, Mitt Romney’s domestic policy director during the 2012 presidential campaign, has argued, however, this line of thinking neglects the fact that climate dynamics are “extraordinarily non-linear.” What matters most is not the flow of carbon, but rather the atmospheric concentration of carbon. If the U.S. pursues policies that reduce carbon emissions at the margin, it won’t matter much if the atmospheric concentration continues to climb because of rising Chinese and Indian carbon emissions. All we’ll succeed in doing is to make ourselves poorer. I don’t know about you, but I don’t find that prospect terribly appealing.

Cass thus recommends a technology-first approach. Price signals are, to be sure, designed to encourage firms to develop new technologies. Yet what artificial pricing really does is encourage investment in expensive technologies that couldn’t survive without an artificial leg up, and which will have a hard time spreading in the low- and middle-income countries that are quickly joining the ranks of the world’s biggest polluters.

What would a technology-first approach actually look like? We know exactly what it would look like because, as Jim Manzi explains in National Review, a technology-first approach has given us a revolutionary new technology that has done much to decarbonize the American economy, and that has the potential to do the same around the world. Over the past decade, the chief driver of declining carbon emissions in the U.S. has been the rise of hydraulic fracturing, or fracking, which has led to a sharp decline in domestic natural gas prices. Though natural gas is a fossil fuel, gas-fired power plants emit less carbon than either oil or coal.

The fracking boom is not, as Manzi makes clear, a product of pure laissez-faire. The government played a large role in funding the basic research that made the fracking revolution possible. Yet private entrepreneurs played an equally crucial role in perfecting and spreading the technology at the ground-level, knowing that the tools they were building would be valuable and exportable with or without a boost from artificial pricing.

But can the technology-first approach go further still when it comes to decarbonization, or do we need command-and-control regulation to get the job done? Samuel Thernstrom of the Energy Innovation Reform Project, a new think tank, has identified a number of areas where government, working with the private sector, can make energy cleaner and cheaper, including enhanced oil recovery and advanced nuclear technologies. Robert Zubrin, an engineer, author, and entrepreneur, often touts the environmental and economic benefits of methanol as a substitute for conventional gasoline, and William Ahlgren has called for a “dual-fuel strategy” that would radically reduce American dependence on oil. The possibilities of technology-first are limitless.

PHOTOS: A farmer walks on a dried-up pond on the outskirts of Baokang, central China’s Hubei province, June 10, 2007. REUTERS/Stringer (CHINA) 

A general view shows a coal-burning power station at night in Xiangfan, Hubei province September 15, 2009. Picture taken September 15, 2009. REUTERS/Stringer 

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Facebook, McDonald’s and the divided American workforce http://blogs.reuters.com/reihan-salam/2014/04/25/facebook-mcdonalds-and-the-divided-american-workforce/ http://blogs.reuters.com/reihan-salam/2014/04/25/facebook-mcdonalds-and-the-divided-american-workforce/#comments Fri, 25 Apr 2014 19:54:16 +0000 http://blogs.reuters.com/reihan-salam/?p=786

On Wednesday, Facebook released data on its performance in the first quarter of 2014, and the results were very impressive. The social network has succeeded in monetizing its enormous audience, having generated $642 million in profit on $2.5 billion in sales. The expectation is that Facebook profits will amount to 25 cents per share, quite a bit more than the 9 cents per share it generated last year.

McDonald’s, a much larger and older company, reported $6.7 billion in revenue in the first quarter, slightly higher than its revenue from last quarter. Yet its net income fell to $1.2 billion and its profits per share to $1.21, down from $1.26 last quarter. Analysts attribute McDonald’s lackluster performance to a modest decline in U.S. comparable store sales.

I mention Facebook and McDonald’s not just because they are both iconic American brands, but because they represent the contrasting poles of American business. Though both Facebook and McDonald’s are innovative firms operating in a competitive landscape, Facebook is a social media company that lives almost entirely in the cloud. McDonald’s, meanwhile, is the quintessential quick-service restaurant, which, like Wal-Mart, depends on an extensive, expensive and labor-intensive logistical apparatus to meet the needs of its franchises.

This difference helps account for the fact that Facebook had a 102.27 price to earnings ratio in 2013 while McDonald’s had a 17.99 price to earnings ratio that same year. It’s much harder for a brick-and-mortar company like McDonald’s to grow than its code-driven counterpart.

Yet the contrast between Facebook and McDonald’s that interests me most is the difference in how each approaches human capital investment. Facebook is a high-wage employer. Its workers pay relatively high taxes and get relatively little in benefits. You might think of them as net contributors to America’s public coffers.

McDonald’s is a low-wage employer. Its workers pay relatively low taxes and get a relatively high level of benefits, particularly if they’re members of low-income households, as many of them are. This has led many observers to conclude that while employers like Facebook are the good guys, employers like McDonald’s are the bad guys. If McDonald’s employees can’t get by on their wages, and they need the earned-income tax credit, food stamps, and Medicaid to lead decent lives, surely their employer is a corporate villain that is forcing taxpayers to take on the needs of its employees.

This notion that McDonald’s and companies like it are bilking taxpayers undergirds the case for increasing the minimum wage. Andrew Biggs of the American Enterprise Institute has criticized this argument by observing, correctly, that wages primarily reflect skills, and that the “bilking taxpayers” thesis suggests that all social programs should be abolished, as they allow companies to get away with paying their workers a pittance. That’s a rather odd argument coming from the left.

I would go further than Biggs. McDonald’s and other low-wage employers aren’t just not bilking taxpayers. Rather, they are taking on a task that many American families and schools are failing to perform. To put it bluntly, McDonald’s is a company that hires large numbers of people with limited skills, many of whom are teenagers and young adults, and it introduces them to the ways of the workplace.

There are many bright young people in this country who lack the non-cognitive skills — like grit, self-regulation, motivation, and the ability to work constructively with others — that one needs to climb the economic ladder. Schools generally rely on parents to impart these skills, and for good reason.

Parents who don’t have the presence of mind to provide a stable environment for their children expect the schools to pick up the slack. The result is that children who don’t have stable families that impart the habits and skills necessary for steady employment can find themselves struggling in the labor market, if not locked out of it entirely.

In order for McDonald’s to be successful, it either needs to inculcate these habits and skills in its workers, or it needs to de-skill the work of operating a quick-service restaurant to such an extent that it can withstand high turnover without going out of business. McDonald’s, like many businesses that employ workers with limited skills, pursues a mix of both strategies.

Facebook does not, as a general rule, hire people from difficult backgrounds who lack cognitive and non-cognitive skills. Yes, one assumes that Facebook is willing to hire people who lack certain social skills if they’re excellent software developers. But those employees generally make up for their lack of social skills with an excess of grit, self-regulation and motivation.

Leaving aside our stereotype of the rebellious college dropout coder, Facebook and companies like it tend to hire people who’ve already made large upfront investments in their human capital by going to college and graduate school, and often by taking unpaid internships or underpaid entry-level jobs that essentially serve as apprenticeships. Once these workers arrive at Facebook, or at a place like it, their employers assume that they will get up to speed quickly, since they have been pre-trained.

If we’re going to condemn McDonald’s for employing people who need to rely on anti-poverty programs, should we condemn Facebook for employing people who’ve already been trained — by parents, educators and other employers — to do their work at a high level?

If anything, Facebook wants to go even further by dramatically increasing the number of employer-based visas, a step that would allow it and other tech companies to hire employees who’ve been educated in other countries, where training is often generously subsidized by the state. This type of hiring suppresses wage growth for skilled employees who already live in the U.S.

I have no problem with Facebook’s approach, as I think society benefits from its eagerness to assemble talented, capable teams of workers. I do think, however, that it is unfair to blame McDonald’s for pursuing a human capital strategy that is far more inclusive, and far more challenging, than Facebook’s.

One of the central developments in modern economic life is de-verticalization, or the process of separating the parts of production that might have once been undertaken by a single business. Globalization is often understood as nothing more than an increase in the volume of international trade, in which the Chinese sell us more of their stuff and they buy (maybe) more of ours.

But what globalization really means, and why it really matters, is that it represents a transition from vertically-integrated businesses to a world in which companies orchestrate complex multi-firm, multi-country networks to achieve their goals. A company like Apple might own valuable intellectual property, and it might even manufacture a few key components of its devices itself. Yet it outsources much of the rest of the manufacturing and assembly work.

The central question about the future of the American economy is whether we can make this de-verticalization process work for us. In the context of globalization, the United States needs to retain the most valuable parts of the production process — like software design — that pay lucrative wages and lead to more companies and jobs. More importantly, we need to separate out the services and functions that companies perform in ways that better serve the interests of American workers.

Employers have always outsourced human capital investment to other institutions, like families and schools. Yet as families deteriorate and schools fail to keep up with the changing demands of the economy, employers need new solutions.

The good news is that a handful of innovative businesses and non-profits are entering this space. Clearly Innovative, a Washington, D.C. app developer, is hiring people with little or no training as web developers and teaching them the tools of the trade. The non-profit Coalition for Queens launched Access Code, a program that teaches people how to code iOS apps and provides them with mentorship as they search for jobs. The results have been extremely encouraging so far.

One wonders how the business model for training workers will evolve. Perhaps the employers who makes a risky bet on a raw employee, and who take the time and effort to train her, should be entitled to a small portion of her lifetime earnings as she moves on to more lucrative employment. That would create a powerful incentive for employers to devote real resources to building the skills of their workers. Or perhaps some entirely new model will emerge. But one way or another, we need to find a better, smarter way to train workers. Demonizing McDonald’s, or for that matter demonizing Facebook, won’t cut it.

PHOTOS: An employee writes a note on the message board at the new headquarters of Facebook in Menlo Park, January 11, 2012. REUTERS/Robert Galbraith

McDonald’s worker Keyana McDowell, 20, (L) strikes outside McDonald’s in Los Angeles, California, December 5, 2013. REUTERS/Lucy Nicholson 

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The Cliven Bundy in all of us http://blogs.reuters.com/reihan-salam/2014/04/17/the-cliven-bundy-in-all-of-us/ http://blogs.reuters.com/reihan-salam/2014/04/17/the-cliven-bundy-in-all-of-us/#comments Thu, 17 Apr 2014 21:13:17 +0000 http://blogs.reuters.com/reihan-salam/?p=769

At first glance, Cliven Bundy, the Nevada cattle-rancher who has been fighting the Bureau of Land Management tooth and nail for over twenty years, might strike you as an anti-government radical. He has, after all, led an armed rebellion against federal land managers, who contend that he owes over $1 million in back fees, penalties and other costs for grazing his cattle on federal land.

But the truth is that Bundy’s underlying beliefs are quite common, and not just among self-styled scourges of federal overreach. Once we understand what Bundy is really trying to pull off, we can understand why our country is plagued by sky-high rents and crumbling roads, and why our streets are choked by congestion.

First, it is worth recalling that Bundy has deep roots in Nevada. His family homesteaded the ranch that he owns and operates in 1877. Bundy’s ancestors were quite happy to work with the federal government when it was offering settlers the opportunity to claim federal land as their own, provided they were willing to work the land. Homesteading was an ingenious idea, as the federal government didn’t have the manpower to do the hard work of settling these vast expanses. Tempting young families westward had the added effect of making America a more dynamic, ambitious, upwardly-mobile society.

Yet in their wisdom, the lawmakers behind the Homestead Acts limited the size of the claims a family could make under its rubric. At first, families were granted no more than a one-quarter-section, or 160 acres — the exact size, as it happens, of Bundy’s ranch.

For years, Bundy has behaved as though the public lands bordering his property are an extension of his property. While other cattle-ranchers pay for grazing privileges on these lands, Bundy has decided that he is under no obligation to do so. This is despite the fact that if everyone chose to act as Bundy has, these lands would soon become a grassless wasteland.

As Travis Kavulla observes in National Review, what Bundy is really trying to do is unilaterally annex a vast new swathe of federal land to the property his family lawfully claimed from the federal government way back in 1877. Indeed, Kavulla goes so far as to describe Bundy as a squatter, who is no different from a “dreadlocked freegan who sets up living quarters in an abandoned building in Brooklyn.”

There is another comparison that is just as apt, if not more so. Cliven Bundy is a lot like the wealthy homeowners in San Francisco and New York City who fight new construction in their sought-after urban neighborhoods just as tenaciously as Bundy and his cohorts have been fighting the Bureau of Land Management. These women and men, whom I’m sure vote differently from Bundy and who tend not to brandish firearms, are treating a commons — the cities in which they live — as though it is their private property.

The whole point of a city is to bring people closer together to lower the transaction costs associated with economic activity. When we make it harder to develop new homes and new offices in the most desirable cities, we force people, particularly poorer people, to live further and further away from the economic action, and this leads to longer commutes, lower incomes, and lower productivity, as Ryan Avent argued in The Gated City.

Of course, wealthy homeowners could just buy all of the land around their homes so that no one else can develop it. Yet that would be appallingly expensive. So instead they use their political muscle to create historic preservation districts, or to press for zoning restrictions that make it all but impossible for the non-rich to afford homes within easy reach of their jobs. Just as Cliven Bundy refuses to pay for grazing privileges on other people’s land, these homeowners refuse to pay full price for their spectacular views, and for not sharing their sidewalks with the great unwashed.

Or consider our hatred for toll roads and congestion charges. We tend to think of roads as the kind of thing you pay for just once, when you first build them. In reality, roads are a depreciating asset. Over time, as cars and trucks drive over them, and as the elements take their toll, they deteriorate. The most obvious way to pay for roads would be to, well, charge for grazing privileges, or rather to charge a user fee. Those of us who actually use roads the most — by driving many miles in extremely heavy vehicles, like big rigs, let’s say — would pay more than those of us who drive a small number of miles in light vehicles.

Ideally, we’d also charge people on the basis of when roads are at their busiest, as doing so would nudge people towards driving when traffic isn’t quite so heavy. Gas taxes have long functioned as a kind of user fee, but as gas mileage has improved, we’ve seen a disconnect between the wear-and-tear vehicles cause on the road and the gas these vehicles consume. Many ideas have been floated to address this disconnect, like taxes on vehicle-miles traveled, but our refusal to acknowledge that roads need to be maintained and maintenance isn’t free keeps getting in the way.

In a way, all of us who grouse about paying for the services we use are Cliven Bundys. We just don’t have the guts to have a standoff with the federal government, or the chutzpah to claim that we’re fighting for freedom. Before we judge Bundy too harshly, we ought to first consider our own sense of entitlement.

PHOTOS: Protesters fly a sign in Bunkerville, Nevada, April 11, 2014. REUTERS/Jim Urquhart 

Cattle that belongs to rancher Cliven Bundy are released near Bunkerville, Nevada April 12, 2014. REUTERS/Jim Urquhart 

Rancher Cliven Bundy gestures at his home in Bunkerville, Nevada April 12, 2014. REUTERS/Jim Urquhart 

 

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Why Congress must rethink sanctions on Cuba http://blogs.reuters.com/reihan-salam/2014/04/11/congress-sanctions/ http://blogs.reuters.com/reihan-salam/2014/04/11/congress-sanctions/#comments Fri, 11 Apr 2014 20:40:36 +0000 http://blogs.reuters.com/reihan-salam/?p=735

Alan Gross, the 64-year-old American who has been imprisoned by Cuban authorities since 2009, is an unremarkable man on the surface. He could be a friend or colleague, or an uncle you’ve been meaning to call.

Yet what distinguishes Gross from most of the rest of us, myself included, is his courage. As a sub-contractor for the U.S. Agency for International Development, Gross traveled to Cuba to help private citizens gain access to the Internet, and thus to news and information not managed or manufactured by the Cuban government. Gross likely knew that his work was dangerous, but he may have underestimated the risk he was taking. In a heartbreaking letter to President Obama, Gross recounted the many ways his wife and daughters have suffered in his absence. He beseeched the president to intervene in his case.

And so Gross, a husband and father from Maryland who seems to want nothing more than to be reunited with his family, has reignited the decades-long debate over how the United States should deal with Cuba, a rogue state that continues to adhere to Marxist-Leninist one-party rule long after the collapse of its Soviet patron.

While some lawmakers, including Cuban-American Sens. Marco Rubio (R-FL) and Robert Menendez (D-NJ), have urged the Obama administration not to negotiate — but instead to demand Gross’s unconditional release — Sen. Patrick Leahy (D-VT) has led the chorus of those calling for the president to play ball with Cuba’s rulers, or rather to “not shrink from the obligation to negotiate for his freedom.”

What the Cuban government wants most is a relaxation of the economic sanctions the U.S. government first imposed on the island nation in 1963, when it became clear that Fidel Castro intended to align his new regime with the Soviet Union and to have Cuba serve as a staging ground for armed insurgencies throughout Latin America.

In the decades since then, the sanctions regime has evolved in various ways. There are now a number of licensed exemptions that allow Americans to provide humanitarian assistance in Cuba, or that allow academic researchers to travel there. Cuban households receive $2.6 billion in remittances from Cuban immigrants and people of Cuban origin living abroad, most of which comes from the United States. And as Emily Parker observed earlier this week, for example, the Obama administration made it somewhat easier for U.S. telecom providers to do business with Cuba in 2009, in an effort to encourage the free flow of information in and out of the country.

So should the U.S. government ease economic sanctions even further? The plight of Alan Gross represents an opportunity to rethink the sanctions regime. One widely held view is that U.S. sanctions actually serve to entrench the current Cuban government, as they allow Cuba’s rulers to tightly control the flow of resources in and out of the island, and also to blame the United States for the poverty and deprivation that plagues Cuban society. The problem with this line of thinking, as Mauricio Claver-Carone, director of Cuba Democracy Advocates and a proponent of sanctions, notes, is that foreign trade and investment in Cuba is the exclusive domain of the state.

Whereas the Chinese government offers wide latitude to private enterprises, both domestic and foreign-owned, to operate on Chinese soil, the Cuban government severely limits the scope for private economic activity. This is one reason why China “feels” like a freer society than Cuba, despite the fact that the Chinese government maintains a large and expensive repressive apparatus. To grow the Chinese economy, China’s rulers have had little choice but to relax their grip on investment and entrepreneurship.

In recent years, the Cuban government has allowed for the emergence of a small-scale “self-employment” sector. Yet this sector shouldn’t be mistaken for private enterprise, as self-employed individuals are barred from building their own independent businesses.  If sanctions are lifted without conditions, it seems more likely than not that the Cuban government would insist that all U.S. trade and investment be channeled through state-owned entities. Given Cuba’s parlous fiscal state, this would be an enormous boon.

Rather than lift sanctions unilaterally, the U.S. ought to consider modifying the approach it has taken since passage of the Helms-Burton Act of 1996. Under Helms-Burton, the U.S. is prepared to lift sanctions if and when Cuba releases political prisoners and allows for the inspection of its prison facilities, legalizes political activity and opposition parties, and abolishes its secret police. Essentially, the law insists on immediate regime change, and it is easy to see why Cuba’s rulers find its conditions unacceptable.

Congress ought to consider a new approach: the U.S. will relax sanctions if Cuba allows its citizens greater scope to build their own private businesses, which will have the right to engage in foreign trade, receive foreign investment, and employ workers. The Cuban government will, of course, be allowed to tax and regulate these private businesses, but it will have to offer its citizens at least some economic liberty, so that an influx of U.S. trade and investment won’t simply bolster the Cuban state and Cuba’s repressive apparatus.

Yes, Cuba’s propagandists will characterize this deal as yet another example of Yankee meddling. It is also true, however, that this approach would offer Cuba’s rulers a meaningful alternative to Regime Change Now while also allaying the concerns of Americans who fear that easing sanctions might strengthen the current regime. And by loosening the economic stranglehold of Cuba’s state-owned monopolies, we can give Cubans the breathing room they need to start building a free society.

 

 

PHOTOS: A man walks past a painting of late Cuban revolutionary hero Ernesto “Che” Guevara in Havana January 29, 2014. REUTERS/Enrique De La Osa

A man rides his tricycle taxi in Havana February 7, 2012. REUTERS/Desmond Boylan 

A man repairs his car on a street in Havana February 7, 2012.  REUTERS/Enrique de la Osa 

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How to get Americans back to work http://blogs.reuters.com/reihan-salam/2014/04/04/how-to-get-americans-back-to-work/ http://blogs.reuters.com/reihan-salam/2014/04/04/how-to-get-americans-back-to-work/#comments Fri, 04 Apr 2014 18:38:24 +0000 http://blogs.reuters.com/reihan-salam/?p=726

Friday’s Labor Department data shows an uptick in jobs, but an unemployment rate that remained steady from February to March. While the size of the labor force is increasing, the economy is not strong enough to get all would-be workers off the sidelines and into jobs.

Part of the story is that the fates of the short-term unemployed and the long-term unemployed have sharply diverged. The short-term unemployment rate, as Annie Lowrey of the New York Times has observed, is lower than its pre-recession level, while the long-term unemployment rate remains very high.

We need to find better ways to help the 3.7 million American workers who’ve been out of a job for six months, and the twice-as-large number of workers who are working part-time although they’d prefer full-time employment. But we would do also do a great deal of good by ensuring that the short-term unemployed don’t remain on the sidelines for long.

That is why America needs wage insurance — a form of insurance that would subsidize a worker’s income if she were forced to take a job with a lower salary. The goal of wage insurance is to encourage workers to broaden their job search and to subsidize on-the-job training as they move from one kind of employment to another. A woman who worked in construction for most of her adult life might have a hard time transitioning to the hospitality industry, for example, and starting from scratch in an entry-level job would mean accepting a low wage. Wage insurance would cushion her and her family against this drop in income, and it would give her an opportunity to raise her skill level so that she could eventually command a higher wage from her employer.

Wage insurance was first introduced in 2005, by policy scholars Lael Brainard, Robert Litan and Nicholas Warren. The goal of the program was not to shield workers from all risk, but rather to provide them with a strong incentive for rapid re-employment. Workers who lose their jobs and then find jobs that pay less would receive an insurance payout that would cover up to 50 percent of the earnings gap, up to $10,000 a year for no more than two years.

The authors estimated that the program would cost roughly $3.5 billion a year (in 2005 dollars), and saw it as a way to protect the interests of workers permanently displaced by off-shoring and technological change.

Yet because the authors had no way of imagining the Great Recession and its impact, they ultimately understated the case for their proposal. Had we implemented a well-designed wage insurance program in the mid-2000s, we may have avoided much of the pain associated with the recent downturn.

To be sure, a wage insurance program would have cost more in recent years than Brainard, Litan and Warren had anticipated in 2005, particularly when the labor market was at its worst. But if the program had prevented millions of workers from entering the ranks of the long-term unemployed, it would have more than justified its expense.

One of the most attractive aspects of the proposal from Brainard, Litan and Warren is that it starts the clock on its two-year eligibility window after just a few weeks of unemployment. The sooner a person takes another job, the bigger the insurance payout she would ultimately receive. This provision would reduce the cost of traditional unemployment insurance while also limiting some of the damaging effects of being out of work.

Critics of the program worry more about “undermatching,” in which workers rush to take jobs for which they are overqualified, thus reducing their long-term earning potential. But the threat of undermatching must be balanced against the heavy economic and social costs of long-term unemployment. Wage insurance would reduce the costs associated with undermatching, and it wouldn’t prevent workers from returning to their old industries if or when they recover.

Granted, a new wage insurance program can’t do much to help the millions of workers who have already entered the ranks of the long-term unemployed. But it can spare future workers from the same fate.

PHOTOS: Job seekers speak to recruiters at a job fair sponsored by the New York Department of Labor in New York, June 7, 2012. REUTERS/Keith Bedford 

A woman brushes her hair outside a job fair for military veterans and other unemployed people in Los Angeles, California, October 7, 2010. REUTERS/Lucy Nicholson 

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What the GOP can learn from the Koch brothers http://blogs.reuters.com/reihan-salam/2014/03/25/what-the-gop-can-learn-from-the-koch-brothers/ http://blogs.reuters.com/reihan-salam/2014/03/25/what-the-gop-can-learn-from-the-koch-brothers/#comments Tue, 25 Mar 2014 15:35:23 +0000 http://blogs.reuters.com/reihan-salam/?p=702  

Republicans are very enthusiastic about this year’s midterm congressional elections, and it is easy to see why. Obamacare, the president’s signature domestic policy legislation, remains unpopular. Turnout during midterm elections skews older and whiter than turnout during presidential elections, and Republicans tend to fare better among older and whiter voters.

And then there is the fact that Democrats are defending a number of Senate seats in states that tend to back Republican presidential candidates. Nate Silver, the editor of FiveThirtyEight, best known for his eerily good job predicting the outcome of the 2012 presidential election, forecasts that Republicans will retake the Senate.

So can the GOP sit back and relax? Not quite. As Chris Cillizza of the Washington Post reminds us, even if Republicans barely retake the Senate in 2014, the GOP faces a much tougher Senate map in 2016, when the electorate will be younger and more diverse. If Republicans want to achieve ambitious goals like replacing Obamacare and implementing pro-growth tax reform, holding the Senate for two years under a lame-duck president will do them little good.

Republicans need to think long-term. First, the GOP should offer a more compelling domestic policy agenda, as the National Review’s Ramesh Ponnuru argues. The second, more prosaic step is to make better use of technological tools. Without a compelling agenda, Republicans won’t deserve to win. But even with a compelling agenda, Republicans will have to embrace the technological, experiment-based revolution that has allowed innovative companies like Amazon, Google, and Starbucks to conquer their markets, and which GOP campaigns have been slow to grasp.

Two recent articles describe how conservative political operatives helped Republican David Jolly win a March 11 special election in a Florida congressional district that Barack Obama won in 2008 and in 2012. The first, by Alex Roarty in National Journal, attributed Jolly’s success to the efforts of the National Republican Congressional Committee (NRCC). Roarty reports that the NRCC and its allies targeted the voters most essential to victory and hit upon a message — vote Republican or House Minority Nancy Pelosi will once again become House Speaker — that convinced them to come to the polls.

The second article, by Carl Hulse and Ashley Parker of the New York Times, told an entirely different story. Hulse and Parker focused on the role of Americans for Prosperity, a conservative political advocacy group backed by Charles and David Koch, the wealthy libertarian activists who have been vilified by Senate Majority Leader Harry Reid and others on the left as self-dealing plutocrats. According to Hulse and Parker, Americans for Prosperity transformed Jolly’s district into a laboratory in which a variety of different approaches were used to impact the outcome of the race. (The Koch brothers’ group is keeping the information proprietary, for obvious reasons.)

I don’t know which story is closer to the mark. What I can say is that Americans for Prosperity has the better approach for the long term.

To win an election, you have to do a number of things — raise money, register voters, persuade voters to back your candidate, and get voters who back your candidate to turn out and vote. To do these jobs well, you have to develop clear metrics to gauge how effectively you’re executing each of them. For example, you don’t just want to know how much money you’re raising; you also want to know how much money you’re spending to raise a given amount of money. A fundraising strategy that works in one month with one donor might not work as well in another month with the same donor. The same basic logic applies with the other jobs as well. Registration efforts that work well with one eligible voter might not work as well with another.

In an ideal world, we wouldn’t think about voters as part of broad, diffuse, ill-defined demographics, like “NASCAR dads” or “soccer moms,” because these groups are extremely heterogeneous. The problem with thinking in a demographic box is that an Asian-American single mother radiologist from the Bronx might behave like another Asian-American single mother radiologist when it comes to a fundraising appeal, but she will behave like a retired Mexican-American police officer when it comes to voting or, say, sharing campaign messages on Facebook.

In the past, when computing power and data storage were more expensive, breezy generalizations about large groups of people were the best that campaigns could do. Yet generalizations can’t tell you much about how real people will respond to stimuli. What campaigns really want is to be constantly learning how people actually behave — to learn not just what people will say in response to a survey, but how that belief translates into what they do. As the cost of computation and storage has collapsed, campaigns have more options. They can, like Americans for Prosperity, turn every campaign into a laboratory. As campaigns run more and more technology-enabled experiments, as they engage in a trial-and-error learning process, they will get better at learning from their mistakes and adapting to new circumstances.

Republicans often lament that Democrats are miles ahead of them when it comes to campaign technology. President Obama’s 2008 and 2012 campaigns prided themselves on being state-of-the-art and Democrats often mocked their GOP counterparts for being stuck in the past. Thanks to the efforts of smart political professionals and academic political scientists, Democrats have a big head start on applying trial-and-error thinking to campaigns.

But Americans for Prosperity is demonstrating that conservatives can catch up. By deploying more experiments faster, they can, in theory at least, cram a decade’s worth of learning into a much shorter period of time. And that will help the party do better — not just this November, but in many elections to come.

PHOTOS: Wisconsin delegate Mark Block wears a cheese hat, emblematic of his home state, at the 2008 Republican National Convention in St. Paul, Minnesota September 1, 2008. REUTERS/Rick Wiking 

David Koch, executive vice president of Koch Industries, attends the Economic Club of New York luncheon in New York, December 9, 2013. REUTERS/Shannon Stapleton 

 

 

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How to fix higher education http://blogs.reuters.com/reihan-salam/2014/03/17/how-to-fix-higher-education/ http://blogs.reuters.com/reihan-salam/2014/03/17/how-to-fix-higher-education/#comments Mon, 17 Mar 2014 22:17:37 +0000 http://blogs.reuters.com/reihan-salam/?p=678

America’s elite higher education institutions are the envy of the world. Foreign students flock to the oldest and wealthiest U.S. research universities to take advantage of resources that are unparalleled, thanks to the deep pockets of many centuries’ worth of captains of industry.

Yet when we consider the post-secondary institutions that educate the typical American high school grad, we see a very different picture. While the share of Americans who enroll in higher education has grown substantially in recent decades, graduation rates have been stagnant.

Community colleges promise an affordable education to millions of students, but they often fail to offer the courses students need to complete a degree in a reasonable amount of time. Public colleges and universities churn out graduates who are forced to take jobs that don’t actually require a four-year post-secondary education. Most private non-profits do the same, and they’re also notorious for charging obscene tuition that their graduates can scarcely afford. And private for-profits, which have grown enormously by taking on some of the hardest-to-accommodate students, stand accused of loading up their students with debt without offering them marketable skills.

It is hard not to sympathize with the Obama administration, which last week launched a new effort to ensure that career training programs are meeting the needs of their students. The problem with the new White House push, however, is that it focuses on a too-narrow aspect of America’s higher education crisis: about 8,000 vocational programs at community colleges, state universities, and for-profit colleges, which train students in subjects like business administration, nursing and automotive repair.

The basic problem that the Obama administration hopes to tackle is that while a large and growing number of students enroll in vocational post-secondary schools, most of whom make use of federal grant aid and subsidized loans to meet the cost of tuition, an alarmingly high share of them are failing to find well-paying jobs. And students who can’t find well-paying jobs struggle to meet the cost of servicing their loans, let alone pay them off.

The Department of Education plans to identify vocational programs that leave their average graduate paying a high share of their earnings in loan payments (8 percent or more of total earnings, 20 percent or more of discretionary earnings) as well as those with a high average loan default rate (of 30 percent or more). Programs that cross these red lines in two out of three years will lose the right to offer their students federal financial aid.

Curbing the abuses of this sector could do some good. But career training programs represent a small subset of the higher education universe. If we take a somewhat wider view, it seems pretty puzzling that, say, business or engineering majors at four-year colleges and universities aren’t being treated as enrollees in vocational programs.

Why not? Given the epidemic of underemployment among recent college graduates, it might make sense to apply the same standard to all post-secondary institutions, not just those that are explicitly labeled career training colleges.

Steve Gunderson, president of the Association of Private Sector Colleges and Universities, the trade association that represents the for-profit higher education sector, observes in a tart press release that “if the regulation were applied to all of higher education, programs like a bachelor’s degree in journalism from Northwestern University, a law degree from George Washington University Law School and a bachelor’s degree in social work from Virginia Commonwealth University, would all be penalized.”

My reply to Gunderson would be that, well, yes, let’s penalize these programs too. It makes perfect sense to establish a regulatory floor to protect consumers from the least effective post-secondary programs, whether they’re at vocational schools or standard-issue colleges and universities.

Even if we denied federal financial aid dollars to these programs, however, we’d still have students in need of post-secondary education options. The for-profit higher education sector often emphasizes that it serves students that community colleges and private nonprofits fail to reach, like working adults who need flexible schedules. It could be that wiping out the low-performing vocational schools will allow a new wave of high-performing vocational schools to flourish. Yet it’s also possible that vocational schools will stay on the right side of the new regulations by refusing to take on challenging students.

There are two really deep problems that plague U.S. higher education. The first is the absence of useful and reliable data that students and parents can use to evaluate programs of all kinds. In “College Blackout: How the Higher Education Lobby Fought to Keep Students in the Dark,” Amy Laitinen and Clare McCann of the New America Foundation recount how the private nonprofit higher education lobby has fought against efforts to create a federal student unit record system.

As obscure as this sounds, the lack of such a system makes it extremely difficult for higher education consumers to answer basic questions like which schools do the best job of preparing their graduates for the workforce and which leave their students drowning in debt. Making this data easily accessible would force the weakest performing schools to either change their ways or face steep enrollment declines. But if the students who turn away from the bottom of the barrel have nowhere else to go, as the best schools have only so many seats, we’ll still find ourselves in a bind.

This leads us to the second problem. While transparency would help expose the worst schools, it won’t necessarily improve the average quality of America’s higher education institutions. It’s true that in a world of greater transparency, schools would be more likely to offer a high-quality education at an affordable cost, but that’s not enough.

Andrew Kelly of the conservative American Enterprise Institute has emphasized that we need a supply-side strategy designed to increase the availability of affordable, high-quality college opportunities. This could mean making it easier for new schools to gain accreditation, or incentivizing existing high-quality schools to become more inclusive rather than more selective. Over time, increasing the supply of affordable, high-quality college opportunities will raise the average quality of higher education by driving the worst schools out of business and forcing the best schools to continually raise the bar.

By combining these strategies — greater transparency plus more entry of good schools and exit of bad schools — we can see to it that our entire higher education sector, and not just the elite slice at the top, is one that we can be proud of. That change advances upward mobility for all.

PHOTOS: A student in flip flops and shorts (C) watches as U.S. President Barack Obama (not pictured) receives an honorary degree during the spring commencement ceremony at Ohio State University in Columbus, May 5, 2013. REUTERS/Jason Reed

Anita Linton (L), from DeVry University, talks to job seeker Mario Juevara, 27, at a job fair in Los Angeles, California, November 18, 2013. REUTERS/Lucy Nicholson 

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