Wednesday, January 31, 2007


You might have heard that Monday was Milton Friedman Day, and a big event for that day was the premiere of a new PBS television show, The Power of Choice. You'd've thought our local PBS station might carry this important show? Particularly when they have two stations, not one?

Guess again.

A colleague wrote to Twin Cities Liberal Public Television to see when the show would be put on. The response:

Thanks for contacting member supported tpt, we appreciate hearing from you. We do not have an air date yet, but it will run, most likely in April. We will send an email when it comes into our schedule.

Oh, well, that's better. What did they run instead?
On TPT 2
The American Experience
�The Nuremberg Trial.� A gripping study of the groundbreaking prosecution, which began Nov. 20, 1945, as Nazi Germany's leaders were held accountable for war crimes, infamously blamed on �following orders.�

And on TPT 17?
Independent Lens
Roy Westler's film �Shadya� profiles 2003 shotokan-karate world champion Shadya Zoabi, a young Muslim woman living in Israel. Included: how Zoabi balances her karate dreams with societal pressures regarding how Muslim women are expected to live.
Well, you know that stuff was really time critical. Much more important than Friedman. Can't wait to see Shadya 2.

Limiting thoroughbred supply 

Here's a fact I did not know in relation to Barbaro not being used for artificial insemination: It's against the rules.
The Jockey Club has never allowed artificial insemination, or AI. Vials of frozen sperm are easier to transport and dilute and can impregnate more mares than live cover [i.e., intercourse --kb], so AI could produce a glut of thoroughbreds born from popular studs and mares. Some breeders believe this could result in the overproliferation of offspring from particularly desirable studs, and limit genetic diversity. If too much of a thoroughbred's sperm were available, it would be less rare, and perhaps less valuable. (It was estimated that Barbaro, who was 4 years old when he died, could have commanded $1 million a year had he recovered enough to mate. His virility was so valuable that his owners had it insured.)
The article has more facts about horsebreeding than most of us want to know. But it's pretty clear that this is an attempt to control supply and drive up prices for the most desirable studs.

Mild surprise 

Gross Domestic Product came in a little above average for the last three months of 2006, registering a 3.5% increase. For the year, GDP rose 3.4% in 2006 versus 3.2% in 2005. Nonresidential investment was flat, but strong consumption lead the way (and with a 1.5% inflation estimate, it appears to be sustainable.) Inventories are down. The housing shortfall is quite apparent in the data, but the fall in oil prices contributed to a marked improvement in net exports.

The trade and housing parts of this should not come as a surprise. The most important number, to me, is the PCE inflation is below 2%; this is likely to keep the Fed from reacting to consumer spending in any way. Interest rates should hold steady.

UPDATE: ... and so far, they have.

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.

Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.

The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

It's worth remembering that this month the membership of the FOMC changed with new Fed presidents replacing old ones (four seats rotate annually.) The Richmond Fed president Jeffrey Lacker has rotated off the committee; he had voted to tighten interest rates at the last few meetings.

Because they are looking out for you 

The EU is regulating how vodka advertisers label their products. Some countries -- Poland, Sweden and Finland -- want to restrict the name vodka to only those products created from grain or potato. In fact, vodka requires starch, which is also found in fruit, molasses, and beets, and some southern European countries produce vodkas made with these ingredients. Those vodkas are now still safe from EU regulation.

I am still partial to bison grass vodka.

Tuesday, January 30, 2007

The way to control prices is to increase demand? 

Just some more donkonomics.
Raising spending for the Pell program and for scientific research was among the top budget priorities announced by Democrats during and since their successful campaign last fall to take control of Congress. The Democrats said the federal government should increase aid to college students to help them cope with rising tuitions.
This is why we teach economics, to tell journalists like this one that it just ain't so.
Substituting grants for loans increased the likelihood of a low-income student actually starting college at the school by only 3 percentage points, and this number is not statistically significant. In the case of low-income minority students, the likelihood of entering this institution grew between 8 and 10 percentage points, with statistical significance at the 10 percent level.

Another new book to read 

The Wall Street Journal reviews the memoirs of Janos Kornai, who is argued to be the first eastern European economist to study socialism as it actually operated in the East. I first read The Socialist System as I prepared to visit the newly-created Slovak Republic in 1993, and have long held that we had much more to learn from the people in that area than the western observers I had been reading up to that time. (Perhaps that's why I travel so often to the area now.) Yet I know very little about Kornai himself.

The review makes clear that Kornai is no conservative -- he is said to have respected Marx as an economist -- but there is little doubt he understood the perils of transition from socialism.
At one point in 1974, under the more relaxed rule of J�nos K�d�r, when Hungary was the "most cheerful barrack in the camp," Mr. Kornai and his wife decided to build their own home. Over the course of several months, they personally confronted the corruption, endemic shortages and shoddy construction materials that were so common in Eastern Europe. A year later, on a trip to India, Mr. Kornai was faced by idealistic young Maoists whose concern for the desperately poor reinforced their support for socialism. Mr. Kornai responded to them by arguing, as he puts it here, that "rationing systems that spread misery equally may assuage feelings of injustice for a while, but they will not solve anything."

"It's business, not personal" 

I think I'll just let Stephen have Quote of the Day before lunchtime:
[W]hen a student challenges a professor, it's business, not personal. Part of personal development is learning where the limits are and whether or not they are credible. One simply has to learn to say "no" very pleasantly and stick to it. (I don't get paid to prepare my notes, I don't even get paid to check the marginal conditions in my research. I get paid to say no and to enforce standards.)
I have many young faculty now, with the department shepherding its Vietnam-era faculty into retirement. Some are good at saying "no", and a subset of them can do it pleasantly. Sadly, I have to "mentor" the ones that don't come off as pleasant, as the rest of Stephen's post explains.

Marginal or inframarginal? 

That's at the basis of the question of whether JOBZ tax breaks create jobs.
The JOBZ program, launched in 2004, has given qualifying firms exemptions from sales, income and property taxes for up to 12 years. Of the nearly 300 firms getting the tax breaks, 13 moved to Minnesota from other places, according to the state. The bulk of the firms in the program expanded existing operations in Minnesota or relocated from a taxed zone to a tax-free one.

An analyst from the Department of Revenue said this month that the exemptions could cost state and local governments more than $100 million through 2015.

The state says businesses that entered the program since 2004 have committed to creating 4,236 jobs and retaining 9,131 in outstate Minnesota.

But some who have scrutinized the program wonder how many jobs have been created and how much credit the program deserves.

"There is really no way at this point to figure out if these jobs would have taken place in the absence of the program," said Laura Kalambokidis, a University of Minnesota economist who has been studying JOBZ.
Some of the debate over JOBZ has been over the wages paid by these firms, but that's not the real issue. If you agree to take a job at the wage offered, you've revealed that the money earned on that job is worth more to you than what you could earn elsewhere, and worth more than if you were at leisure. The wage requirements in JOBZ are an attempt to make the jobs created worth the amount of tax breaks paid. (For example, there's got to be a very big wage differential over existing jobs for the $336,000 per job subsidy John Palmer reports on an electric plant in Quebec.)

What's more important is whether the tax breaks actually increase jobs. One local economic development official refers to JOBZ in this story as "the extra dollop or two of whipped cream on top of the pudding." The question is whether the extra dollop of whipped cream induces more pudding to be consumed -- is the JOBZ money changing the marginal cost of hiring another worker? If it is, then you have the question of elasticity, or "how much does a $1 property tax break lead to hiring of an additional worker?" (Attention students: Seminar topic.) John's comment on the long-run Phillips curve, as he acknowledges, doesn't apply if you've changed the marginal revenue produced by a unit of labor. But if JOBZ is just a transfer to the capital owner without any change in labor's marginal value, then there would be theoretically no effect on the amount of labor hired. Moreover, if there is an effect that causes JOBZ-favored firms to increase wages then all wages go up, even at the firms not gifted by JOBZ, as good workers are bid away to the place where their marginal revenue product is higher.

Worth a read: Prof. Kalambokidis' 2003 summary of the effects of enterprise zones. She's a skeptic; I don't agree with every point she makes, but on balance I share her skepticism. See also this MN House research report from 2005.

Monday, January 29, 2007

Repaying the sugar 

SCBA blogger Larry Schumacher notes that Indiana politicians are getting to cut in line for Super Bowl tickets.
An e-mail from the team late Thursday offered each lawmaker the chance to purchase a pair of tickets at the face value of $600 apiece.

"I can't spend that kind of money," said state Rep. Vernon Smith, D-Gary. "It's not only (the ticket price). It's what the hotels are going to cost down there and flights. I know making a flight this late is going to be high. I can't do that."

Smith said his nephew, a coach at Westside High in Gary, expressed interest in the tickets, but the e-mail from the Colts said lawmakers must use the tickets themselves.

State Rep. Bob Kuzman, D-Crown Point, said he already had bought his own ticket to the game but might use the team's offer to score a seat for his wife or his father.
Scalping is legal in Indiana, but let's be real: A politician that took the tickets as a gift from the team -- gift insofar as the face price on the ticket is below its equilibrium price -- and converted that gift to cash would be roasted. (Although giving them to someone, having them turn it to cash might be palatable. Whether that sugar comes back to the legislator or not is hard to say.)

So why give the tickets to the pols? Here's why. And bet your bottom dollar that if the Twins make the World Series in the next five years, this dude isn't paying for his ducats.

No, just beat the Yankees 

Boston Red Sox pitcher Curt Schilling has announced he would rather pitch than face Sen. John Kerry for U.S. Senate in Massachusetts in 2008 which has been widely rumored after an appearance on a local radio station.
The right-handed ace, who last week had been rumored to be a U.S. Senate candidate in Massachusetts in '08, announced Monday morning on Boston-based WEEI-AM that he plans on pitching that year.

"My wife and kids want me to continue to play, which was the only reason I was retiring in the first place ... they talked me into it and I felt it was a decision that I wanted to make to continue to play, so [2007] will not be my last season," Schilling told the sports-radio station. "I was convinced and my family was abiding by that decision [to retire], and they talked me out of it, so I will be playing in 2008."
I'm not posting this as a Republican but as a Red Sox fan. Forget Kerry, G38, and keep pitching for Boston. Let's focus on the real pariah.

Mr. Taranto should try university campuses 

Sgt. Jason Hess, who's stationed in Iraq, wrote to a company called, and asked, Can you send a delivery to a military address? He got a reply saying, no, they're not able to do that, quote, "and even if we did, we would never ship to Iraq. If you were sensible, you and your troops would pull out of Iraq." He's sending this to a sergeant in the Army. Well, this started getting circulated on the Internet. Talk radio show hosts were talking about it. It caused an outrage. The company claims that it's fired this employee.

But my favorite comment as a result of this comes from a peace activist named Julie Enslow, who is quoted in the Milwaukee Journal Sentinel as follows: "This is a matter of free speech," she says. "It is totally irresponsible for radio stations and bloggers to attack a person for his personal political views."

So free speech means if you agree with her, you can mouth off on company time. If not, you can't say it in a public forum.

James Taranto, on the Journale Editorial Report over the weekend. He should come to SCSU, where for example a student can dress in drag to win Homecoming Queen but it's irresponsible for this blog to talk about it. Or a faculty member can come in physical contact with a student while arguing over a display in the student union, but it's irresponsible for us to talk about it. I'd provide links for those stories, but that would be, um, irresponsible.

No podium is worse than one-sided podium 

In an effort perhaps to avoid the partisan battles spreading onto his campus, Duquesne University has banned three politicians as commencement speakers at its law school graduation. Senators John McCain and Barack Obama, and Rep. John Murtha, were deemed inappropriate.
Duquesne President Charles Dougherty's decision, based on a new university policy and concerns about partisanship and Catholic Church teachings, has sparked debate on campus and led to circulation of a petition in the law school by students unhappy with it.

...In a letter this week to deans and other leaders on the campus, explaining his decision, Dr. Dougherty cited a policy enacted in June under which Duquesne generally avoids politicians at graduation ceremonies.

"I had two reasons for disapproving the politicians," Dr. Dougherty wrote. "First, I believe that a high-profile partisan political figure is inappropriate for a commencement speaker.

"Anyone of that description, including all three proposed, is sure to offend large numbers in the audience," he said.

"Even if such a speaker steers clear of political content, it makes a political statement that we provided them an occasion and a platform -- and one in which there is no possibility for dialogue or the expression of alternative points of view."

Dr. Dougherty also cited "the likelihood that some or all of these politicians have taken public positions on issues in opposition to Catholic Church teachings."
It has offered these and other politicians other venues for their views, but has done so in places where they can invite opposing viewpoints.

A private religious school of course has the right to decide who can and can't speak on its campus. It's inimical to its mission, however, as a campus that has a mission of
serving students � through commitment to excellence in liberal and professional education, through profound concern for moral and spiritual values, through the maintenance of an ecumenical atmosphere open to diversity, and through service to the Church, the community, the nation, and the world.
How can it maintain an ecumencial atmosphere open to diversity when it fears having commencement speakers that might offend someone?

Friday, January 26, 2007

The 3 Es: Environment, Economics, Education 

A recent Wall Street Journal article online talks about Al Gore's push for Kyoto. It also discusses a few problems with his agenda. I'll try to summarize them.

Mr. Gore is traveling around the world to tell us how we (he, too?) must change our civilization b/c of global warming. He was in Denmark last week. The main Danish newspaper, Jyllands-Posten, requested and got confirmed that Mr. Gore would have an interview with Bjorn Lomborg, author of "The Skeptical Environmentalist". The interview had been scheduled for months. Guess who was a "no show"? Not only did Mr. Gore try to change the terms of the interview 24 hours before the meeting was to occur, he backed out totally at the last minute. Wonder why?

Mr. Lomborg took his share of criticism for his book - criticism that was never proved. However, he has been critical of Mr. Gore's claims and can substantiate his views. Does Mr. Gore dislike it when someone disagrees with him and his agenda? We don't know but there is substantial accurate information that contradicts Mr. Gore's mantra:

1 - The U.N. CLimate Panel suggests that if we follow Al Gore's path, the average person will be left 30% poorer. (Note, this is a UN study - that organization the left loves to quote - except when it doesn't agree with them.)
2 - Mr. Gore's movie sites a 20' rise in sea level, the same U.N. panel expects only a 1' rise by 2100, the same as the last 150 years. Why exaggerate by a factor of 20? (Might there be an agenda?)
3 - He cites Nairobi as experiencing an increase in malaria - problem with this is that WHO (World Health Organization) has stated that Nairobi is free of malaria.
4 - He tells us that Antarctica is warming - well, 2% of Antarctica is warming but 98% is cooling and getting thicker. Guess he didn't want to take his cameras to the other side of the continent.
5 - Sea ice is decreasing in the Northern Hemisphere but increasing in the Southern Hemisphere.

There are numerous other problems with the global warming fear proponents. But there are also related economic and education problems.

Economically, to implement Mr. Gore's plan, would cost $553,000,000,000,000 (that is $553 trillion) over the next century. Do we really want to spend this kind of money and saddle our kids with this debt and a lower, less healthy standard of living for a problem that will happen (thanks to the sun) no matter what we do? Maybe we should spend the money on something constructive vs. destructive.

Educationally - just why do we continue to tell our youth only the facts we want them to know versus all the facts? Are they that slow? No - but they are impressionable and feeding them data that is at best half-true is a detriment to all societies on the planet.

Today, there is no doubt the planet is warming yet in the 1970's we were told we were entering another ice age. What is it? "Climate" is weather over a long period of time - not just the last N years - take your pick, whatever fits your agenda.

It's time to learn the facts, all the facts. Humans have adapted for thousands of years - we will again. It will be much easier if we tell people the whole truth and nothing but the whole truth.


The local news reports on a new proposal for a statewide smoking ban, and the proposers include GOP Rep. Dan Serverson of Sauk Rapids.

It would outlaw smoking in indoor workplaces and public transportation. They said it's an issue of workplace safety, nonsmokers' rights and public health.

"I believe it's the right thing to do," said Severson, who supported a similar bill two years ago.

In the past 10 years, there has been a "consistently steady move toward a smoke-free environment," he said, "because we know it's healthy and because the public overwhelmingly supports it."

Smoking opponents made their last run at a statewide smoking ban in 2005, when the House Commerce committee killed the bill.

Debate centered on how far to extend smoking restrictions, and one panel supported a scaled-back ban that wouldn't hit bars and American Legion posts.

Gov. Tim Pawlenty's spokesman, Brian McClung, said in an e-mail that the governor supports a statewide smoking ban but would prefer that it contain an exemption for private clubs such as VFWs.

My objection to the logic of Pawlenty and Severson's position is that any bar is in a sense a private club. You're just fussing over the membership rules. But I admit to being quite disappointed with Rep. Severson's response to the challenge that smoking bans violate personal rights:
"The most important part, though, I think we need to understand is 20 percent smoke. Eighty percent don't," Severson said. "That 80 percent has to have a voice in this personal rights issue as well. When that smoke impinges upon our ability to breathe without our consent, that impinges upon our rights as individuals as well."
Personal or individual rights do not need protection if they are being done by a majority or even a supermajority. The purpose of claiming something as a right is that it is something not subject to majority rule. A right is a restriction on the power of government. Severson's explanation says that 80% of the public can run over the right of barowners to their property or the 20% of the public that smokes who enter into contracts with bar owners by buying a drink and asking for and receiving an ashtray.

(Note: I am not a smoker save for the occasional, open-air cigar. I felt like I was choking in the smoke outside the conference room in Yerevan when I was there two weekends ago, but I understood the rights allocation to be different there, just as I do when I walk into bars. I have, in short, invited myself to the nuisance, and cannot both receive the benefit of a bar being in that place because of the business it receives from smokers, and the benefit of kicking out those smokers.)

This is drawing many comments and much ire from conservatives on the Times chat, including this post:
Sorry to say I supported Dan in both elections. My vote, my money, my time making contacts. But he has knuckled under to the radicals and is willing to take the freedom away from the business owner to operate his livelihood as he sees fit. And he claims to be a Republican, a party against big government. Well, Dan, goodbye. No more money or support.
I don't know as I'd go that far. It is a much smaller issue to me that a Republican supports a statewide ban on smoking than, say, passing sense of the Senate resolutions opposing administration policy in Iraq. But it is symptomatic of what Paul Mirengoff discusses in reviewing a lunch speech by Judge Janice Rogers Brown, "that erosion of our freedoms and, more importantly, the philosophic underpinnings of these freedoms, have caused a critical mass of the body politic to become too comfortable with the 'parasitic state.'"

Yet it seems that local barowners are capitulating to the predation of a tyrranical majority: Many reports include a line that says they will accept a statewide ban as preferable to a city-by-city ban. (Barowners in Duluth and Moorhead might have a different view of this.) Resistance is futile. And so Leviathan marches on, and Republicans seem willing to join arms with Democrats on the parade. If the barowners will not protect themselves, they get the government they deserve.

Undeclared, undecided, uninformed, and unformed 

At Phi Beta Cons, there's a note about Boston College eliminating majors for freshmen. (Notice, PBCs -- the preferred term is "first-year students".) They are encouraged instead to explore more, a policy that should lead to "increasing self-knowledge, reflection, and maturity in decision-making." Kristin Deasy thinks we should be developing students' ability to decide on majors in high school, but I disagree. I would ask instead -- what is it about any field that requires one to start as a first-year student on an education path different than those in other fields? If your answer is 'nothing', then why wouldn't you instead have these students all take a common first-year curriculum? Deasy notes that European students choose their fields of study much earlier ... but that hasn't really helped unemployment rates of college graduates there.

You might train people in logic and critical thinking earlier, and you might want students to choose earlier. But that doesn't change the fact that students simply do not know themselves well enough at age 18 to say what they want to do at age 48 with any degree of certainty. Would it not be better to give them time to form as college students before they choose?

Thirty percent of students change majors at least once. Do you really think 70% got it right the first time?

Matt finds the kernel 

I think the policy is kind of unfair to Minnesota residents, but instead of blaming Wisconsin, they need to look closer at why they pay more.
From Scholar's Notebook, regarding the news today that the Universities of Minnesota and Wisconsin might end their reciprocity agreement. But you know what the answer will be, don't you? "Minnesota has reduced its 'investment' in higher education." Richard Vedder discusses whether the investment is wise. There are arguments that the return on the investment could be positive or negative.
The first argument suggests that universities have what economists call "positive externalities" or spillover effects. For example, the knowledge gained through education allegedly makes us more discerning citizens, more likely to elect level-headed leaders and not charlatans. The advance in higher forms of literacy facilitates communication, making markets function better. Tolerance learned in the course of advanced study ultimately reduces divisiveness, rancor, and arguably civil uprisings. Those subscribing to this view argue that since some of the gains of higher education accrue to the broader populace, it should subsidize it --via appropriations for universities, grants for students, etc.

Yet maybe college has "negative externalites" as well. For example, maybe the celebration of multi-culturalisim in universities has reduced social cohesiveness that binds diverse persons together in a nation. Maybe universities preach a moral relativism that ultimately leads to more crime, greater corruption, etc. Maybe universities promote sin more than virtue, ideology more than knowledge. Maybe the taxes used to finance government support have severe disincentive effects on private activity, and that the "crowding out" of such activity by universities lowers GDP since private market activity in general is more efficiently generated than that at our largely not-for-profit universities.

It is very difficult to measure externatlities or spillover effects. The limited work that I have done in the area, however, leads me to believe that the negative externalities may well exceed the positive ones. For example, states that spend more on higher education, other things equal, tend to have lower rates of economic growth. People do not flock to higher education-intensive areas because of their alleged higher quality of life (the reverse is closer to the truth). If the negative externalities dominate, not only should we stop subsidizing higher education, but probably we should tax it (a point made to me first by Milton Friedman in an e-mail).

Thursday, January 25, 2007

How about "first-year crooks"? 

Among the things attendees at this morning's National Journal /NBC post-SOTU breakfast learned was that it is no longer politically correct in the House Dem caucus to refer to the newly elected members from '06 as "Freshmen." How did we learn this? House Maj. Whip Jim Clyburn referred to the "freshmen" and then corrected himself and then went on to admit the new policy. Freshman, er newly elected Rep. Jason Altmire (D-PA) told the crowd that he "suspected" it had something to do with the word "new" being more appealing to the public than "freshman," which can be seen by some as derogatory.
I note that in the programs at SCSU athletic events, 'FY' has replaced "Fr" or "Frosh". Al McGuire's famous crack doesn't work here.

(h/t: Our House. Fix yer RSS, ye champions of the taxpayer!)

Union membership continues its decline 

The rate of unionization in America fell from 12.5% to 12.0% in 2006 according to the Bureau of Labor Statistics this morning.
The union membership rate for government workers (36.2 percent) was substantially higher than for private industry workers (7.4 percent). Within the public sector, local government workers had the highest union membership rate, 41.9 percent. This group includes several heavily unionized occupations, such as teachers, police officers, and fire fighters. Among major private industries, transportation and utilities had the highest union membership rate, at 23.2 percent, followed by construction (13.0 percent). Within the information industry, telecommunications had a 20.7 percent union membership rate. Financial activities had the lowest unionization rate in 2006--1.9 percent.
I would have guessed manufacturing was higher than the reported 8%. This puts in rather stark relief the relationship between the Democrats and unions -- it's actually the relationship between government workers and their paymasters.

Conservative optimism 

Arthur Brooks this morning:
...the data do not tell us that conservatives are uncaring; they actually tell us that conservatives are optimists. Conservatives are relatively untroubled by inequality, and unsupportive of government income redistribution, because they believe the American economy provides private opportunities to succeed. Liberals are far more pessimistic than conservatives about the possibility of a better future for Americans of modest means.

Consider the evidence. While 92% of conservatives believe that hard work and perseverance can help a person overcome disadvantage, only 65% of liberals think so. This difference of opinion, contrary to the convention, is not because conservatives earn more money. In fact, lower-income conservatives are about twice as likely as upper-income liberals to say they think there's "a lot" of upward mobility in America. If a liberal and a conservative are exactly identical in income, education, sex, family situation, and race, the conservative will be 20 percentage points more likely than the liberal to say that hard work leads to success among the disadvantaged.
He's quoting from the 2005 Maxwell survey; here's the new 2006 survey. Interesting results in that survey include:
Among those who think everyone has the opportunity to succeed, President Bush�s job approval rating in 2005 and 2006 was 49.5 % approve � 42.1 % disapprove, a relatively positive reaction at a time when his overall ratings were 31.1 % approve � 59.3 % disapprove. Among those who think only some have the opportunity to succeed, his ratings were 11.3 % approve � 81.6 % disapprove.

Those who are optimistic about opportunity, do not see a haves-have-nots society, who do not see inequality as a serious problem, and think government should do less and emphasize individual motivation are much more likely to identify with the Republican Party. Those with opposing opinions are much more likely to identify with the Democratic Party. The parties are attracting voters with very different views, which provides them with the electoral base to be strong advocates for diverging positions.
But in general, 88% of respondents to this poll thought that, "given the effort you have put in and the talents you have ... things have worked out for you have been fair" or somewhat fair. Less than ten percent think family background drives economic outcomes.

I read these polls with an eye towards the distinction between how people view their own experiences versus how they view others' experiences. People tend to be more willing to ascribe other people's problems to circumstances than their own; they believe their situation is he fruit of their own hard work. There's a lesson in that, I think, for how the political parties can talk about inequality in the 2008 election.

Not inconsistent? 

The NCAA has ruled that Mississippi and South Carolina can continue to host championships even though they display the Confederate flag. So American Indian mascots are bad, but the Confederate flag is OK. Hmmm. Anyone wonder how President Saigo, who is a member of the committee that voted on this issue, explains this difference?

Wednesday, January 24, 2007

No truer words are spoken 

2) If you�re in college, make friends with the secretaries and computer jocks. Between the two of them, they�ll get you everything you need.
The other two rules aren't so bad, either.

It's in character 

If you haven't seen Rep. Bachmann's greeting of President Bush after the SOTU last night, you're probably too busy to look now. My view: That's our Michele. The extended embrace gave me the same reaction it gave Andy, but it is who she is. And I don't think this is a president that minds someone greeting him like a woman at the back of a church. It has to be nice for him to know he still has a few friends in Congress.

Private university functions 

Is it proper for a university to hold speaking events at which it tries to sanitize the audience? Or is it censorship?

The Brandeis administration would like to keep the event at arms length. It was an ad hoc committee of faculty and students that invited the former president. Nevertheless the university remains quite attached to the event by having to assume logistical and security responsibilities.

What is more important is whether the event will turn out to be a publicity stunt for Mr. Carter or whether it will actually be an opportunity to question his views. The event is open only to members of the press, students, faculty members, staff, and trustees. Already, though, rigorous critics are not permitted to be present at the speech. Alan Dershowitz, a professor of law at Harvard, who was supposed to debate Mr. Carter, will now speak at a separate event later today due to Mr. Carter's unwillingness to enter a debate with Mr. Dershowitz. Stephen Flatow, whose daughter, Alisa, was a Brandeis student killed in an Islamic Jihad bombing in 1995, says he was "privately discouraged" from attending.

Had he attended, Mr. Flatow, who endows a scholarship in his daughter's name, would have asked Mr. Carter whether he supports Palestinian violence directed against civilians. "I would have liked to stand up there and say �My daughter would have been a Brandeis graduate in the class of 1996 had she not been murdered by Palestinian terrorists. Is it ok for Palestinians to resist the Israeli occupation with murderous force?'"

Meanwhile in Virginia and Missouri, legislators are proposing bills that would require public universities to report on their efforts to assure intellectual diversity. Such bills would probably cause them never to host Mr. Carter.

I'm sure I'm repeating myself, but... 

Phil Miller:
Raising the minimum wage is a low-cost way for politicians to show they care for the downtrodden in society - low-cost to the individual politicians, that is - not to those negatively affected by higher minimum wages.
Costs are always costs to someone. Minimum wage increases are a low-cost way to politicians; they tax only a subset of businesses or, if the tax can be shifted forward, the consumers of the products and services created by minimum-wage labor. To one of those two groups, they are not low cost.

There is no free lunch; it's only a question of who pays.

Beware the "fud" 

For too long I've read too many "news" accounts that either distort or omit facts because the facts don't support the author's agenda. I've become particularly frustrated because the impact of making decisions based on distorted or omitted "data" affects everyone. Students especially can be misled since they are often a captured audience. I've been looking for a term to use and finally got one: FUD - fear, uncertainty and doubt.

It all came together in my class last night. We were reviewing Moore's Law, the statement that the number of transisters on a computer chip would double every 24 months, eventually reevaluated to every 18 months. We heard horror stories that the rate of change would fail in the 1980's; then, 2000 would result in the crash of every stock market on the planet; then science would have reached the end of its computer applicability by 2007, then 2015, now, it's 2045, etc.

The point? No matter what the doom and gloomers say, given enough freedom and open markets, we will keep on improving. As I told my students, the naysayers and doom and gloomers simply have no faith in the human spirit and they will always be there. THerefore, listen to them, assess their words, then get on with your life.

Tuesday, January 23, 2007

Benefits are harder to figure 

That's a statement I make in teaching cost-benefit analysis. The cost of government action is often fairly clear in terms of the outlay on a spending project. The benefits received are much harder to ascertain and evaluate correctly. (Then there's whole discount-rate thing, but skip that for now.)

Last week it was reported that two Colorado legislators had asked the state's auditor to investigate the spending of $21.8 million in 2006 of the University of Colorado's Diversity Administration. The Independence Institute in Golden reports that the spending may be more than that, and that there is inadequate oversight.

Any organization undertaking a major expenditure like this would engage in some kind of assessment of the costs and benefits, right? According to the Chronicle of Higher Education, though, maybe not. (subscriber's link)

News of the Colorado development distressed, but hardly surprised, many of the nearly 170 college administrators, faculty members, and admissions counselors who were gathered here on Monday for Clemson University's Fifth National Conference on Best Practices in Black Student Achievement.

Although several said they had grown accustomed to justifying their affirmative-action efforts and felt confident they would be able to account for every dollar spent on diversity programs, others said they worried that colleges were ill prepared to defend such efforts against those demanding that they be subjected to a strict cost-benefit analysis.

...One of Monday's featured speakers, Damon A. Williams, the University of Connecticut's assistant vice provost for multicultural and international affairs, said he saw the Independence Institute's efforts to scrutinize university spending on diversity as representing "the next wave" of attacks on affirmative action. He said he had responded to news of the institute's report by sending letters to three major national higher-education organizations, which he declined to name, urging them to mobilize colleges elsewhere to defend themselves against similar scrutiny.

"I think many institutions are greatly at risk," Mr. Williams said. Colleges have only in the past few years begun documenting the educational benefits of diversity, he said, and while they generally can make good arguments that the diversity programs serve a valuable purpose, they have not done enough to document and track the money spent on such efforts and their results.

Richard Bayer, dean of enrollment services at the University of Tennessee at Knoxville, said he saw the inquiry about diversity spending at Colorado as part of a broader movement to demand accountability of higher-education institutions. "To some degree I think it is going to have an impact on diversity on campus," he said. "It makes you stop and think very carefully about how you are spending your dollars, and are you making a difference."

"Every time we try to do something, there is a group that is challenging what we are doing," Mr. Bayer said. "We are going from analysis to, almost, paralysis."

Translation: "If we have to document and justify what we do with public money, we might not be able to spend as much." Those who have been challenged to do just that are said to be best able to meet the challenges of reports like II's. But the problem is that few do so, because again, the measurement of the benefits are quite difficult.
Following the U.S. Supreme Court's 2003 decisions involving race-conscious admissions policies at the University of Michigan at Ann Arbor, colleges throughout the nation were advised by lawyers to document the educational benefits of diversity in case their affirmative-action programs were challenged. But when UConn's Mr. Williams asked the nearly 170 conference participants to raise their hands if their institutions were actively trying to measure the educational payoffs of diversity efforts, only a few hands went up.
Discriminations asks:
Why should they have to do that, they might well ask, when they can�t even document the �benefit� of History or English or a whole slew of the social sciences? But while the benefit of the Humanities might be hard for accountants to justify, their cost isn�t hard to document. At most institutions this is not true of �diversity�spending, and some honest accounting would seem to be entirely in order.
That's a good point: The opportunity cost of a discriminatory system is hard to measure since those costs -- mismatching students with universities that can serve them best -- are not directly observed.

Jumping sharks and tunas 

Trying to write and read some things today for my seminar students, so a few thoughts and then off until late afternoon:

Do athletics affect academics positively or negatively? 

Stephen Karlsson and John Palmer say nay. The local paper has been critical lately of the University of Minnesota's spending on new coaches. But there is some evideicne out there if you want to look at it. A few sources:
Now one can be dissuaded from the evidence if one chooses -- there are other studies that will dispute the claims -- but we need more care than to say no evidence exists. Here's an older post from Phil Miller with more. (Can't seem to get this on his newer site.)

Monday, January 22, 2007

Cost of D-1, again 

Alumni are reporting to me that a meeting of the athletic program at SCSU discussing a move of other sports to Division I NCAA status -- hockey is already D-1 -- led to some tough questions asked of our athletic director. Interestingly, yesterday the local paper ran a column by its sports editor, Dave Deland, which mourns the move to D-1 by South Dakota State, at least its basketball program.

In its last nine Division II seasons, South Dakota State led the nation in men's basketball attendance six times, with a peak of 5,350 in 1997-98. The Jackrabbits' home record in those nine seasons: 125-15.

"A lot of times, it was hard to communicate with players on floor because of the noise. We had to use hand signals," Schlagel said. "It was the event in that area of the state."

Said Huskies athletic director Morris Kurtz: "They were the crown jewel of Division II basketball."

No longer. Brookings is now the Siberia of men's college basketball: the Jacks are in the big time, and the big time is treating them shabbily.

Since South Dakota State quit the NCC and moved up to Division I in 2004-05, the men's basketball program has gone from being a Division II national power to a Division I punching bag.

The timing of this column is a little fishy. There is nothing timely about an article about SDSU, unless it's because of the meeting last Monday. At that meeting individuals pointed out that the record of the Northern Sun Intercollegiate Conference -- into which the rump North Central Conference would be folded into -- was to have won more than 80% less than 20% of men's basketball games, and to not have lost won a single football game. It was pointed out that student activity fees -- which could be used to fund a move to D-1 -- are lower at St. Cloud than any of the Dakota schools. A $50 per student per semester increase for athletics would provide about $1.4 million per year. The university claims that it would need $1.3 million in additional scholarship money to move to D-1, but summing up the cost of the scholarships needed, said one person at the meeting, came up to only $450,000. No justification was given to the discrepancy between the numbers.

The column compares South Dakota State's participation as an independent D-1 school to its performance as a member of a highly-ranked and very popular D-2 conference. How many independent D-1 programs make money besides Notre Dame? Even Penn State finally succumbed to the Big Ten Eleven. The proper comparison can only be made if and when SDSU can join a real conference ... which could be the old NCC if schools get their acts together.

One speculation: Four of the NSIC schools are members of MnSCU, as are petitioners St. Cloud State and MSU-Mankato. Will there be pressure from the chancellor to grease the skids to allow the two big schools in with the rest of MnSCU? Because if there's not, why would the NSIC allow two schools with 13-14,000 student bodies join a conference with no school over 10,000, and against which the NSIC schools have not been very competitive?

UPDATE: Twisted a sentence up badly, whoops! Edits displayed.

It's net price, Princeton 

Princeton has made a splash by freezing tuition, but the rise in room and board rates is four times higher than last year, so that the net increase is almost the same as last year. Bryan O'Keefe writes,
The University denies that these new room and board fees are linked to the tuition plan, but one can only wonder if they are being 100 percent honest here. They claim that the university heavily subsidizes student housing (which may or may not be true) � but why cut that subsidy in the same year that you are freezing tuition? Purely a coincidence?
What does it mean to say you are "subsidizing student housing"? What are the opportunity costs of putting a student into a dorm room if the dorm is already built? Am I to believe that the cost of feeding a Princetonian is being subsidized with below-market meal plan prices and, assuming they all eat cafeteria food, what really is that meal's opportunity cost?


If you like the link I sent to Chad, you owe it to yourself to pick up the new edition of Phil Lowry's Green Cathedrals. This is by far the best book on baseball parks ever put together. I perused it at Borders last weekend and if I hadn't an arm full of books already it would have come home with me. Instead, I'll hit Amazon for it. (Full disclosure: I'm a past member of SABR.)

25 days to pitchers and catchers, by the way.

P.S. For us Red Sox and Yankee fans, it looks like a great season ahead. That projects using the Pythogorean theorem to winning percentages of .583 and .584 for the two teams, or about 95 wins each.

Quick note on Ukraine 

It looks like the Orange Revolution is pretty much dead. LEvko noted last week that Yulya Timoshenko's party has joined with the Yanukovych majority in the parliament to override Viktor Yushchenko's presidential veto on the power-sharing arrangement between the executive and legislative branches. In practice this means that Yushchenko has lost his two cabinet appointments -- defense and foreign affairs -- and his power over other cabinet positions.
Since the orange revolution, Yushchenko has, in the eyes of many orange supporters, made so many [coerced?] political errors, that BYuT see him as a 'busted flush' [a poker term meaning someone or something that had great potential but ended up a useless failure] having no future prospects.

Clearly for Tymoshenko, always a high-stakes gambler, to gain power, she must defeat her biggest political enemies -Yanukovych and PoR. She is the only leader who could possibly benefit if early elections were to take place. 'Den' suggests maybe Friday's maneouver was an attempt to drive Yushchenko, from whom power is rapidly draining away, into a corner, and leave him no other card to play but to [somehow] force early VR elections.
Perhaps some broad coalition forms there, but otherwise it appears Yushchenko either will be marginalized or create a coalition with Yanukovych to keep Tymoshenko out of power. His ability to shape events in the country has decreased.

Sunday, January 21, 2007

Armenia from afar 

As I mentioned on the show Saturday, there are protests going on in Turkey after Armenian-Turkish editor and journalist Hrant Dink was shot to death in Istanbul Friday. Doug Muir has a nice tribute. A young man has now confessed to the murder, but the suspicion remains that the 17-year-old was just a triggerman for others.
Pointing to [Ogun] Samast's young age, Dink's lawyer raised the possibility that he might only be a hit man. "The boy might have pulled the trigger, but the authorities should find those who are behind him," Erdal Dogan told the Aksam newspaper. "The state should not just say 'this boy did it' and shut up."

Istanbul's chief prosecutor, Aykut Cengiz Engin, said organized crime units would probe the murder, even though there was no immediate indication that an illegal organization was involved.

Among the detainees was reportedly a friend of Samast, named as Yasin Hayal, who spent 11 months in jail for a 2004 bomb blast outside a McDonald's restaurant in Trabzon. Samast said in his initial testimony that Hayal encouraged him to kill Dink and gave him the gun, the Milliyet newspaper said.
Vigils have been held in Armenia and in Turkey, and sharp statements from the Armenian government have made tensions a little stronger than one would hope. The conference last weekend was a time in which we could reflect on a world in which the two countries started healing and learning to live with each other, and Dink's murder is no doubt going to slow that process. But despite hard feelings the fact remains that Armenia and Turkey are neighbors, that a closed border is harmful to Armenia much more than it is to Turkey, that one must find a way out of this mess, and that hoping the EU will get Armenia the recognition and apologies its diaspora want may be little more than wishful thinking. Onnik Krikorian says it well in this comment:
Turkey will only be changed by internal AND external pressure � and that is what we can expect from European intergration and the deaths of many Turks and Kurds, and now an Armenian, at the hands of Turkish nationalists.

Otherwise, I don�t think anybody needs to �use� Dink�s murder to campaign for Genocide Recognition. Just the very fact that a man who stood for peace and reconciliation between Armenian and Turk has been killed because he also spoke about the past does that automatically.

Friday, January 19, 2007

Tomorrow on the Final Word... 

...I'm back (the sinus infection reported earlier this week is waning, though my voice still sounds bad) and pleased to welcome Rep. Laura Brod (R-New Prague) to the show. Rep. Brod has made some noise this week in calling for tax rate cuts to the lower portions of the income distribution, and has also sponsored legislation that would treat income earned by National Guardsmen the same as that earned by reservists.

Michael has apparently gotten fishy on the minimum wage, so I will bet the issue comes up again on the show. And who knows what else? Maybe my Armenian travelogue?

That's tomorrow, 3-5pm. Tune in, or stream it, or podcast it.

Driving up demand for season tickets 

That's my explanation for the Indianapolis Colts and San Diego notsosuperChargers choosing to sell their walk-up playoff tickets only to local buyers. Phil Miller thinks the explanation isn't clear, but consider: I buy season tickets under uncertainty. I do not know if the team will be good or bad; I do not know if it will make the playoffs. I do know that if it does, that ticket has high value to me either as a fan or as a businessowner who now can give a very valuable favor to a customer. That is, it may be in the team's interest to raise the cost of tickets on the secondhand market in order to induce purchase of season tickets. (I know that for some teams there's a waiting list for season tickets -- the length of that list is a discipline device for wavering current season ticketholders to keep paying.)

I don't think it's personal against the Patriots or their fans. Indeed, if I were the Colts front office, I'd subsidize at least one ticket for Tom Brady to improve fan ambience.

Students hung by PAYGO 

A Democrat platform plank and a first-100-hours legislative agenda item was to reduce interest rates on student loans. Well they did, kinda. The House at least has passed a bill that will cut interest rates in half. The only problem is, it's only halves the interest rate for six months, it's only for loans that already are subsidized, it's only for one kind of student loan, and it won't happen until 2011. The Senate gets the bill next. No current student will feel any gain, as the interest reduction only affects those who pay interest, which means it only helps students after they graduate and are paying back those loans. The bill did not provide the increase in Pell grants that Democrats had originally said they would provide, though Ted Kennedy's bill in the Senate still does at present.

The problem for the House was how to pay the subsidized interest under its new PAYGO rules (or actually the old rules, according to Dick Armey -- WSJ subscriber link.) The subsidies are a $6 billion gift to young college graduates which must be paid by increasing taxes and fees or cutting spending somewhere else. In this case the burden is being paid by lenders who provide students with college financing (if you own Sallie Mae or Nelnet stock, you lost money this week.) Thus the House is reducing the amount of money available to finance incoming freshmen to give a temporary tax break to young college graduates. So which group votes more?

UPDATE 1/20: KT correctly points out that the interest rate falls immediately in increments, but is subject to a sunset in 2012. The rate schedule is
The current rate is 6.8%. And again, it's only for those students who receive subsidized Stafford loans.

A larger point, however, is that setting any credit control that binds interest rates below what the market will bear shifts money out of the controlled market into uncontrolled markets. A bank that might have made subsidized student loans in the past may instead now shift their assets into Treasury bills or business loans.

Reduced demand for the M.R.S.? 

It is well-known by now that the number of women in college exceeds the number of men. The question is why. In a new NBER working paper, Claudia Goldin, Lawrence Katz, and Ilyana Kuziemko try to figure out if it's an increase in the demand for college degrees by female students, or perhaps an increase in the supply of college-educable females.

There are many demand-pull factors, including delayed marriage, increased female labor participation, and the "pill". The authors note that "the jury is still out concerning whether the full lifetime economic returns to college are greater for women than for men," but that the wage premium for college degrees for females is greater than that for males.

More surprising to me, however, is that the supply of males eligible for college might be dropping relative to that for females. In the paper itself (link for NBER subscribers only) :
Jacob (2002) finds, using the NELS, a much higher incidence of school disciplinary and behavior problems for boys than girls and a far lower number of hours spent doing homework for boys than girls. Controlling for these non-cognitive behavioral factors can explain virtually the entire female advantage in college attendance for the high school graduating class of 1992, after adjusting for family background, test scores, and high school achievement. Similarly, we find that teenage boys, both in the early 1980s and late 1990s, had a higher (self-reported) incidence of arrests and school suspension than teenage girls, and that measures of behavioral problems significantly attenuate the female college advantage. Reinforcing these findings is evidence that boys have two to three times the rate of Attention Deficit Hyperactivity Disorder (ADHD) than girls and much higher rates of criminal activity (Cuffe, Moore, and McKeown 2003; Federal Bureau of Investigation 2004). Boys are also much more likely than girls to end up in special education programs. The source of boys� higher incidence of behavioral problems is an area of active research and could be due to their later maturation as well as their higher rates of impatience (Silverman 2003). Because gender differences in development and behavior are not unique to any particular country, they can explain why the reversal of the gender gap in college has occurred throughout much of the developed world once female access to college and to labor market opportunities were improved.
So perhaps the cost of the 'war against boys' can now be measured. As Christina Hoff Sommers pointed out last year, it may be that the supply of female students to college is higher now because the education establishment finds it easier (or more desirable?) to generate a female college-prepared high school graduate than a male one.

We know best how to beg 

Remember last month when I mentioned that MnSCU was creating a group to cheer on more government spending? That apparently didn't sit well with my faculty union. In the December newsletter,
Recently MnSCU started a Friends Action Network (FAN) to encourage faculty, students, alumni, and community members to sign petitions and write to legislators in support of MnSCU�s legislative budget request and legislative agenda. While I think it is good that MnSCU is developing community and alumni support for higher education funding, I am concerned that MnSCU not try to usurp the voice of the faculty on legislative matters. IFO is the official voice of the state university faculty and has its own network for communicating with legislators. We are more than willing to lend our support to most of MnSCU�s budget request, but we don�t think MnSCU is asking for enough money, and there are some portions of the request that appear to link money to pay-for-performance. Faculty are, of course, free to sign petitions and communicate anything they want to legislators, but I would urge faculty to know exactly what is in the MnSCU request before they sign petitions or write letters.
"We want more money, and we don't want it tied to performance." That's our union.

Thursday, January 18, 2007

I just remembered 

...that I was going to check to see if Al Franken's PAC here in Minnesota did in fact get back a $500 contribution from Tarryl Clark's campaign. As I reported here, Senator Clark called here and said she never got the check and Midwest Values PAC MN said they had been contacted about the check. The date on the email I received from MVP MN was Sept. 24. I had left myself a Post-It to see if that report was ever fixed. Yes it was, but notice the date on the report. The report was due 10/30, and it reports that the check was returned on 9/1/06. Yet MVP MN said they had not been notified about the mistake until 9/24/06. Hmm. I'll have to ask Brodkorb to see if Mark Ritchie will be investigating this.

It's also worth noting the number of DFL legislators who sent back their money (all of whom had their returns dated 10/23, by the way): Tim Faust, Andy Welti, Mindy Greiling, Sandy Peterson, Katie Sieben, Don Betzold. Why are these people running away from a potential standard-bearer of their party?

Inflating the Minnesota budget 

Gary has posted something on the new budget proposal, featuring tax relief, that Michael reported earlier, and on which I wrote the other day. Commenter "Deminn" -- a regular on the Times chat board and a rather iconoclastic fellow, not one to take dogmatic positions -- started his note thus:
There is a �surplus� because of Republican magic which at one time attempted to deny the laws of economics and decree that inflation is something that only happens to Minnesota Citizens,...
You can look at this two different ways. One, if you believe that any level of government activity budgeted once is budgeted forever, then not budgeting government spending with inflation adjustment would be seen as a cut, and you'd want to portray expenditures with the inflation adjustment. But why would you choose this as the basis? If private companies always budgeted costs to rise with inflation without any increase in activity -- and ergo, revenue -- these firms would soon dry up of money. I'd as soon see governments engage in zero-based budgeting than use budget forecasts either with or without inflation adjustment, a zero basis meaning no need for a forecast, but at least zero-inflation budgeting puts some pressure on government servants to be more efficient.

Second, once one decides to budget for inflation, the question is which inflation rate to use. This isn't a simple choice between CPI and a few alternatives; it is a question of how one calculates the price of a government service. CPI itself includes governmental fees and some taxes, so there's a feedback loop between government size and CPI. And since the largest part of government spending at the state and local level is personnel, and since health care costs rise faster than the CPI generally, there would be a push for a higher inflation adjustment ... without any assurance that the money actually goes there.

Even if you could agree to a particular index, the question then is how to forecast it. Every forecaster deals with a loss function -- what is the cost of an error? And in particular with government budgeting, the cost to the political system of an error that requires a tax increase or spending cut in the second year of the biennium to balance the budget is much greater than cost of overbudgeting in year one and holding a surplus in year two (all the better for giving away in an election year run-up. Nice deal there -- they take credit for borrowing money from you and paying you back with zero interest!) The budgeting process would then have an inherent bias towards conflict in politics and likely to overspending and overtaxing.

The bill
should be rejected -- the current system actually works quite well, protecting almost all of government spending while allowing gradual adjustment of the budget to shifting priorities.

Costs, seen and unseen 

Mitch Pearlstein looks at a Catholic school to support the case of vouchers.
A common myth is that schools across the country with lots of low-income students are less-well-funded than schools with fewer low-income students. The opposite, actually, is more routinely the case. Minnesota, in fact, recently ranked fifth best in the nation in terms of "extra poverty-based funding per student living below the poverty line." This (benevolent) gap was $3,075.

But given that African-Americans in Minneapolis are doing unusually poorly academically, how do these conflicting findings compute?

To complicate matters even more, consider Ascension School, a K-8 Catholic school in north Minneapolis. Students are overwhelmingly minority; they're overwhelmingly non-Catholic; and in 2005, 90 percent of eighth-graders there passed Minnesota's Basic Skills test in math and 95 percent passed Minnesota's Basic Skills test in reading.

In contrast, eighth-graders in Minneapolis public schools, in 2003, passed at these rates in math: 82 percent for whites; 57 percent for Asian/ Pacific Islanders; 41 percent for Hispanics; 40 percent for American Indians; and 28 percent for blacks. ... MPS scores were significantly better in reading than they were in math; but again, they were significantly below Ascension's reading scores.

What are tuition rates (for non-parishioners) in inner-city Catholic schools in the state? According to the Minnesota Catholic Conference, they average under $3,200 for elementary schools and under $8,000 for high schools. By contrast, as long ago as 2003 -- in the wake of a recession -- federal, state, and local revenues in Minneapolis Public Schools totaled $13,658 per "pupil unit."
As I often teach, costs are always costs to someone. So when you hear that parents of the students at Ascension are the cream skimmed off the top, what does that mean? It probably means that those parents contribute more of the cost of their children's education in time and sweat than in cash dollars. (It's also worth noting that a religious school subsidizes education in order to gain the ears of children they hope to convince to be lifelong followers of the religion ... and adults who fill the coffers.)

So I'm not as comfortable with the dollars-for-dollars comparison Mitch is making here. But it raises another point. Let's suppose parents invest in their children's education (for whatever reasons) by a combination of time, talent and money. If there are no financing constraints, parents choose for their children the school that makes the best use of the parents' time and talent, given the cost of borrowing for education. Constraints on financing educational choice, not least of which come from taxation to pay for public education, lead some families who can benefit to public rather than private choices. Vouchers are a way of overcoming the financing constraint; this is why vouchers seem particularly attractive to African-American families who both may face financing constraints and have historically cared a great deal about the educaiton of their children (and thus willing to commit lots of time and talent.)

Tough luck 

Suppose 36% of fourth-graders are tested to have an IQ below 95. Charles Murray argues that such a group might have a hard time passing standardized exams, and that it's a waste of resources to try to get them above that line.

But I held off on posting that waiting for former Scholar Kevin McGrew to post on this issue, as a fellow who devotes his life to understanding intelligence testing. He's weighed in, and I'm glad I waited. He says there's more to school performance than IQ.
I refer readers to a report I previously wrote re: this issue. It is often referred to as the "Forrest Gump" report. The report, IMHO, points out a serious flaw in Dr. Murray's logic...namely, that a specific IQ (esp. low IQ dooms a person to a lower set of achievement expectations). The bottom line...there is a normal distribution of achievement around any IQ score, whether it be below the 50th percentile or above. My point in the Gump report is that for any individual person, their general IQ score is not accurate enough to deny any individual to reasonably appropriate and high academic expectations.

However, Dr. Murray's position does fit with the extant body of group (vs individual) based intelligence research that suggests that, on the average, interventions to raise IQ and achievement have meet with limited success. This is one reason why the mastery learning experiment (which I have always maintained has conceptually been reborn in the form of NCLB) ran up against a major dilemma in individual differences/learning research....the "time-achievement equality dilemma." ...

In simple terms....educational psychology research has repeatedly shown us that at the group level (not to be confused with my individual Forrest Gump expectations report), education policy can either hold instructional time constant, and then achievement will vary as per the normal curve, or can attempt to hold achievement constant (standard expectations for all), and time will then vary as per the normal curve. This is the rub against which NCLB is now bumping up against. ...The educational research suggests, IMHO, that we can likely move the mean level of educational achievement (I'm not sure how far) via attention to variables "beyond IQ", such as instructional time, quality of instruction, high standards and expectations, interventions focused on non-cogntive/conative characteristics of students, etc., but that there still will be a normal distribution around the new mean. This is still a laudable goal.
The below-average will always be among us.

Wednesday, January 17, 2007


We're having one today, so I'll be away from my desk until late afternoon. I'll post tonight.

UPDATE: Home, but sick as a dog. Armenia gave me a sinus infection as a gift and I tried to lead a retreat with one eye watering constantly for the last hour. The screen is too hard to look at, so off to bed. Sorry.

Tuesday, January 16, 2007

Budgeting for inflation = higher spending 

According to a newsletter for the faculty union:
This week Rep. Rukavina and Senator Cohen introduced legislation to require the Governor to include inflation estimate in future budget forecasts, starting with the February 2007. This is an important piece of legislation�the Governor has not recognized inflation adjustments in his budget forecasts and budget recommendations for the last four years. In that time, inflation (the CPI) grew by 11.83%, eroding purchasing power. If inflation is recognized, there really isn�t a budget surplus. This will be a sobering realization for many legislators who had plans to use the surplus for new initiatives. The IFO�s #1 budget priority is to fund inflation at 3.5% for each of the next two years. To do so will cost $140 million.
Here's the bill. The state legislators have already started correcting for inflation with their own pay. A reminder from former state representative Jim Knoblach: "I don't think it's in the state's interest for inflation and spending just be on autopilot."

A puzzle or a mystery? 

A colleague in my department -- one with whom I share almost no opinions about the world at large and politics in particular -- has written about the Iraq conflict in a way that I think is interesting, though in the end I disagree with the conclusion. I think this is his premise:

Mistakenly [Bush] has defined his objective as victory. A convergent problem, call it a puzzle, is one that has a clear, even unique, solution, like a crossword puzzle or a math problem. Building a bookshelf or sewing a quilt are examples of convergent problems.

A divergent problem, call it a mystery, is one that has many solutions, none of which is definite and absolute. Marriage is a divergent situation; there is no unique solution. International diplomacy is a divergent problem.

He states that convergent problems are easier to solve and therefore that the word "war" is wrong to use to describe Iraq. There's nothing new in that statement, and really nothing with which I would disagree. But the word "war" isn't applied to Iraq by Bush but by his detractors. Bush's war is against global terror.

That, my colleague would say, doesn't help matters much.
But there is no war against terrorism. Terrorism is a tactic in a divergent struggle, like the "troubles" in Northern Ireland or the Israeli-Palestinian conflict. A war against terrorism is like a war against chemical weapons; the phrase doesn't make sense.
True. Of course there isn't a war against terrorism. There is a war against terrorists, though, particularly those who do so in the name of Islamism (as opposed to Islam.) To make the war one on Iraq is to say that the insurgency there and the insurgency and counterinsurgency in Somalia are separate -- they of course are not.

I wonder whether it is correct, though, to say that a divergent problem has only divergent solutions. Since the conflict is about fundamental values -- and indeed, my colleague says in his last sentence we need to first understand that make terrorists take up arms, a statement easy to say from an office at SCSU but a little more difficult in a Humvee on patrol in Iraq -- and since those views are apocalyptic, there is for both Islam and Christianity a point where there is convergence. The Second Coming is not a multiple-equilibrium solution, and Islam has its own end-times predictions. There are many paths to those endpoints, but there is a separating hyperplane between them. Each side will only accept solutions on opposite sides of that plane.
The solution then is a matter of waiting for both sides to weary of conflict, as Thomas Sowell has pointed out in his work on ethnic conflicts and civil wars such as that in Sri Lanka. That too is a convergent solution. It is the one in fact for which the insurgency waits, that America's patience wanes first. Attrition, too, is a convergent solution.

That doesn't obviate the article's conclusion, that Bush's use of the word "war" defines the problem badly. On this in fact I agree. But I don't believe it's a mystery; what the US seeks is global security. I would suggest that Andy read the transcript of Hugh's interview on the first chapter of Tom Barnett's book. Is this Bush's strategy? I don't think so, and to the extent it is not it is a problem. One can hope that new generals will persuade Bush of that strategy, and not care so much whether the solutions are solving puzzles or mysteries.

Intrafamilial competition 

While I was away, news came that Mrs. S is now joining the ranks of hobby columnists. (The Pioneer Press pays better.) This obviously does not mean this blog will end its criticism of the paper's editorials when they are wrong. It does mean I better do a better job getting stories up here before I get passed over at the dinner table as the source of news items.

Sunday, January 14, 2007

TV "News" 

Last week, over lunch, my friend and I were discussing a variety of topics, one of which was the news. As stated earlier, I don't watch TV - in particular, the news is too negative, depressing, and often anti-American. I figure my mental and physical health is better not being fed the constant stream of aberrations that comprises news today.

When I mentioned how negative so much news was, my friend was surprised. "I don't think it's negative," she commented. When I asked her what positive or good or decent "news" she could recall (weather doesn't count), she had none. Though she was not convinced of my conclusion, she finally admitted, "Maybe since I watch it all the time, I don't see the negativity."

That is food for thought. Does watching the news and its constant coverage of events that tear apart a society, events that show people at their worst, events that must "bleed to lead" eventually numb our minds to the point where we don't see how negative it is?

What happens to a civilization's social structure when only the anomalies, deviations and distortions are implied as the total truth in the common visual media?

Second New Year's Day in Armenia 

Last post (likely) from Yerevan:

They celebrated New Year's Day here again last night. Armenia used to be under the old Julian calendar, and last night would have been the start of the New Year. Apparently that calendar is reason enough for a celebration downtown Yerevan with a sound stage, dancing in the square and (after I had wanted to go to bed) fireworks.

Here's why I don't like working on projects that involve governments. The purpose of the conference I spoke at was to assess the economic and social consequences of opening the border between Armenia and Turkey, closed by Turkey as a response to the war between Armenia and Azerbaijan in 1993. Closing the border is a political decision. Now my job was just to talk about what the effect on foreign investment would be in Armenia if the border was re-opened -- the opening would be, in my view, a representation that the risk of external conflict was reduced in the region. But we were told that we could not talk about politics at all. There was the acting ambassador here to make sure we didn't and when he left the local USAID guy kept watch on the proceedings. The local community is upset that the issue cannot be raised. Worse, the Turkish scholars here -- who either didn't get the memo or weren't obeying it -- tried to say something about how to solve the political issue. For this, they have been hammered by the more nationalistic Armenians here. In one sense I feel bad for them, but frankly there's one that keeps putting his foot in his mouth, so to heck with him. Yet if the US government wasn't so nervous as to place an imperfect gag order, none of that would have happened. They would have debated, and at the end hopefully we all have food and drink.

Armenians have a historical memory for the land just over the border. This scares the Turks, who also claim historical ties. Having watched such battles elsewhere in the world and their own neighborhood, you can scarcely blame the Turks for being a little nervous about border opening. But trade certainly helps both sides; the question is whether it helps enough to get the Turks over their nervousness. The meeting this weekend didn't leave me very hopeful, though my good Turkish Cypriot friend in attendance assures me that it will happen in less than two years.

That's one small vodka for man, one giant leap for international relations!

Friday, January 12, 2007

And don't forget 

Andy and Michael do NARN Final Word without me this week again.  AM 1280 the Patriot (stream available from link).


On the same day both the USAToday and the New York Times run articles on 24.  The results speak for themselves.  But please don't tell me what happens in the first four hours.  I still need to finish the last six hours of Season 5 first!

Iraq - Our Soldiers Know 

In previous posts, I've reviewed our wonderful session with Mike, the young NG soldier home on leave from Iraq. This is the last post on this topic.

When asked about politicians, Mike's responses was, "Some agree, some don't agree".

However, when asked about support, "We know Americans support us. We get so much stuff from individuals, scout groups, churches, schools. What we don't use we give to the Iraqis."

He related the story of receiving school supplies, candy, books, etc. After giving an Iraqi student a notebook and pencil, the youth said, "Now my teacher won't yell at me because I have these. Thank you!"

Mike's unit also made basic desks and chairs for a school. They set up a water system in a more remote town.

The list continued. The mainstream media (MSM) doesn't want us to know about these kinds of activities. They have decided we're the bad guys. Well, we're not. Mike and his unit are doing what they can to help. The Iraqis do have to take ownership and it will be painful. But as I stated before, too much of that part of the world wants us dead. We've tried everything else over the past 100 years (money, talking, tolerance of thugs as leaders, etc.) and nothing else has worked. We don't need to be attacked again. We have to give them the chance. If they blow it, it won't be because we didn't try to make it happen.

Line of the day (or yesterday) 

Damn time difference! Anyway, Craig is absolutely correct:
It�s indeed ironic that Democrats blast Bachmann for being �anti-science,� but when it comes to the science of economics, Democrats ignore the science and opt for a faith-based trust that they are doing good.
At least on minimum wage laws, they do. But it's not even trust, it's cynicism.

Why not just make it a graded assignment? 

Another of those annoying notes we get from the union:
The Minnesota State University Student Association and the Minnesota State College Student Association are hosting their biannual Rally Day at the State Capitol; a day for students to voice their support for higher education funding.

We are asking for that you consider helping to in support Rally Day in any of the following ways. As students and faculty are united on issues, we ask that you might consider the following:
  • Include Rally Day on your class syllabi
  • Do not punish students for missing scheduled class time to attend Rally Day in St. Paul
  • Announce Rally Day in your classes on the first class of the semester
  • Allow students to make brief presentations in your classrooms about Rally Day
Email us if you would like a student to give a presentation in you class.
Write me down as someone not united in the push to grab more tax dollars.

The snow came here 

Yerevan is not normally a very snowy place, but there was about a
foot dropped on the city a few weeks ago and it has not melted. A
couple more inches came this morning. In older times I would have
thought this would close the airport but they seem to have made improvements.

As I came back from a meeting last night I saw not one but about six
Father Snows -- Santa Clauses -- out in Republic Square. There is a
huge tree in the middle of the square, and the national museum has
large 2007 numerals hanging between its pillars. The rest of the
city looks a little bewildered by winter, with very slow walkers
dealing with slippery sidewalks, but down here it's very
pleasant. You still see people vending pastries through open
windows, and the smell of fried meat-, cheese- and fruit-filled dough
is intoxicating in the cold. The shops have changed down here quite
a bit in the last two years since I was here, but the look on the
street has changed only to putting fur and high-heeled boots on the
females and even more hunched-over males.

I was fairly shocked to see the exchange rate versus the dollar has
appreciated 40% since my first visit in 2002. I used to think
Yerevan was a cheap tourist place for Westerners, but no
longer. Businessmen on the plane in that I spoke to asked me what
the heck the central bank was doing. "Targeting inflation," was my
answer. They think that the central bank can somehow increase
lending, but the problem is every time liquidity is injected into the
system the banks do almost anything other than lend it to businesses,
because those businesses are opaque. A western banker familiar with
Armenia told me that the statements given by businesses in loan
documentation were almost always full of holes and
misstatements. Not necessarily lies, but more "why would you want to
know that?"

More as I learn it later.

Thursday, January 11, 2007

Europe, Wake Up! 

Tonight, my husband and I attended a concert by the Minnesota Orchestra. It has been years since went but it was worth it.

Any of you following classical music know that there has been a push the last few years for modern classical. Sorry, in my book, "modern" is not "classical". The sound is dissonant, edgy, sharp, sometimes even nerve-wracking. I don't like it. Perhaps because I have a musical ear, it grates on me more than others. Dorati's composition played tonight was technically good but musically, well....

The rest of the program - wonderful: Liszt; Brahms; Berlioz; Tchaikovsky. I'd forgotten how powerful so much of the music of 19th century European composers is/was. What we heard tonight was rich, massive; it resonated internally and externally.

It would be nice if Europe would re-discover its musical heritage. It is truly awesome! Living in a culture that provides such entertainment is another reason to have pride in the west.

Iraq - The Other View 

I don't know what happened to this post - it appeared in draft; disappeared; reappeared. Since the content is related to the other two posts, I decided to post it out of sequene.

In the previous post I introduced Mike - the young man home on leave from Iraq. While here, he attended a "sending off" gathering for another National Guard (NG) unit. Families were together, sharing some last moments. Counselors were there. The kids were really nervous because all they'd seen on TV was the bad news. They were scared and did not appear to be getting much help from the professionals.

Mike watched the scene play out for awhile then started talking to the kids. "I've been there," he said. "It's not all bad. Iraq has kids just like you. They go to school, now. They have homework."

Then he asked them, "Do you like ice cream?"

"Yeah!" they said excitedly.

"Well, we have Baskin Robbins, all the flavors."


He spent time with the kids, sharing real experiences that were different from the constant negativity seen on TV. He helped them understand that their dads will miss them but are doing something very important, for them (and us). The kids felt better after hearing Mike's stories.

Is Iraq 100% safe? Of course not. But do we adults have the right to scare the living daylights out of kids with half truths, half stories, and only fear? No. We owe them the bigger picture. We have much at stake in this war, including the future of our kids. Agree or disagree with the what, why, how, the bottom line is the subset we're fighting in Iraq wants freedom (and us) gone.

Mike is doing his part and from the sounds of it, doing it very well.

But will it increase retention? 

A new bill tries to allow students the chnace to lock in their tuition rates.: "
Buesgens' legislation mandates that all colleges and universities that receive state funding must guarantee a stable tuition cost for a four-year or two-year degree. If a student un-enrolls for a period of time, that student would have to re-enroll at the new tuition cost. A student who fails to complete the degree within the four-year time line would be charged the new tuition rate for the fifth year and beyond.

'The worst thing we could do is to simply buy down the cost of a degree,' Buesgens continued. 'Any time government masks the true cost of a product or service from the user, it defeats economic logic and ensures ever escalating costs. There will come a time of reckoning and it will surely be at the taxpayers' expense.'"
This transfers the risk of increased educational "costs" from the student and his/her parents to the institution. It would end up giving institutions an incentive to hold those costs down, I think.

Where else would you have her speak? 

Am I thrilled that Cyndy Sheehan is coming to campus? No, not exactly. But I think college campuses are fine places for Sheehan to speak. She will find a very sympathetic audience at St. Cloud State -- which says nothing about Sheehan and a whole lot about St. Cloud State. And I don't think Leo means for her not to be allowed to speak. It will be interesting to see if she has some staged event elsewhere on campus, though, as the campus has a speech zone policy and she may run afoul of it. Maybe campus security could hire a few of those Capitol Hill cops?

So if Blue Star parents like Leo show up, do you think they'd pull a Columbia Minuteman protest?

Sheehan is part of an annual event on our campus called NOVA Week, where NOVA stands for Non-Violent Alternatives (I'm still working on the O). I've spoken at one of their events, on vegetarianism. It is the usual mishmash of leftism, from animal rights to GLBT-LSMFT to the School of the Americas nonsense. Again, nothing wrong with this -- it is in fact a chance for sunlight to be shone onto some of our more rabid faculty. The problem is that the left does not wish to engage a real debate. They want a theater, not a lecture hall.

Laptop fixed and some observations on the road 

I actually had the cure for the laptop problem in my previous post
figured out before I got off the plane in Armenia but needed time and
quiet to do it. But here I am writing the blog from my hotel room
now and so it's fixed. (Short story: Do not ever do a full shutdown
of an X41 ThinkPad on your X4 dock. The battery seems to not come up
when you go to turn on again, and for some reason the power supply
isn't recognized. Solution: take out the battery, unplug the laptop
entirely and give them about a five minute rest. Then reconnect and
you should be able to power up.)

Early observations:
1. The new terminal at Zvartnots airport in Yerevan is open. To
show you how these airports are used as revenue centers, after you go
through immigration -- itself all gussied up with electronic signals
to send you to an officer and a much better visa processing system --
you must step through a shop with Armenian goods and souvenirs before
you get to baggage claim. Now THAT, my friends, is vertical integration!
2. There is no WiFi in Charles de Gaulle. Indeed, as airports go I
really dislike it. The queue for getting through security to the
gates was miserable and chaotic (I eventually succeeded in getting
someone to let me into the VIP line, mostly by bluff) and the
officers there are a testament to the French work ethic
[/sarc> Awful, awful, awful. The bus service between terminals is,
well, interminable.
3. While I'm going on about airports, Detroit is no longer the
hellhole I remember it as. Clean and airy, good wifi. Regrettably a
long way between bathrooms. And let me give a A+ rating to the TSA
people at my hometown airport. St. Cloud has the most helpful
officers I have seen in any airport. You got something you can't
carry on? They get it to the checked baggage if possible. No baggie
for your gels and liquids? They have one for you. And after flying
through there a few time they remember my name (which is memorable,
true, but it means someone made an association.) Now if we could
just do something about the lack of coffee out there...
4. So someone picks me up to take me to the hotel from the
airport. He has a nice sound system with the removable face on the
stereo. Would I like some music, he asks. Sure, I say. What does
he play? Barry White. Who plays Barry White any more (except Eric
Kusilias on ESPN Radio as his outro)? Who plays it in a transport vehicle??

Wednesday, January 10, 2007

Iraq - A Maturing Process 

This past weekend we had the opportunity to meet a young American soldier on leave from Iraq since December 24. His visit was unexpected because Mike, as I'll call him, didn't tell anyone he was coming home - in case it didn't come to pass.

Mike, 20, is assigned to a National Guard (NG) unit helping our Marines. He'd been in the NG over two years when his unit was sent to Iraq. Of course we are concerned but meeting Mike, listening to him share his experiences, watching his father's reaction to his son's communication was a heartwarming experience. I wish to share some of what this fine young man had to say.

He joined the NG, learned skills and knew that if called upon, he would help defend his country. In the beginning, Iraq was not in the picture. Things change. As Mike now knows what is planned is not necessarily what will happen.

I asked him about Internet access because it's often limited to 30 minutes a day. Mike and his buddies, located on a large base with facilities similar to college dormitories, decided they needed more I'net access so they pooled their money, bought a dish, wired their building and now have I'net access 24/7. This is American ingenuity - identify the problem, find a solution, implement.

He uses the system to take classes on line. During his R & R he noticed his NG unit was getting a significant number of new recruits. "They will need leaders. I'm taking these courses so I can apply for those leadership positions when I return at the end of my tour."
This is a young man who will go somewhere. Though Iraq is a tough experience, Mike has gained exposure to a significantly different culture; learned teamwork; decided to take the initiative to improve his skills; realized there are opportunities.

His dad is very proud of him, rightly so. A son, not too sure of himself when he left, has returned mature and confident. He has an idea of what he wants to do with his life. As he said, it may change, but now, he has direction, purpose, and awareness that we have it pretty good.

CNN, TV, and the "News" 

Yesterday my college age son and I ate where the always pervasive TV was showing the "news". My husband and I do not watch television at all. We pulled the plug about three years ago and have not missed the box a bit.

Watching CNN reinforced the wisdom of that decision. The Iraqis got ambushed patrolling Haifa Street, a nasty part of Baghdad. They asked for US reinforcements. The battle was a win for the Iraqis, (note Reuters' use of the term "people" versus "terrorists" in the first paragraph). You would not have known that watching CNN at noon yesterday. Sure, what they reported were "facts". It's just that their selection of facts was distorted. Remember, this is the same network whose president, Eason Jordan, after resigning from CNN, admitted his Baghdad people refused to report monumental atrocities committed by Saddam and his regime. Yes, he had reason but why does the news report negatives for the US but not others?

I have friends who, by their own admission, are "addicted to CNN". The network showed nothing positive anywhere about anything while we were eating lunch. This constant barrage of negativity has to be detrimental to the human psyche (and has to affect digestion). No wonder Americans think everything is bad.

Tuesday, January 09, 2007

Yes, Things are Better 

After the holiday bustle, my husband and I decided to take a trip to our friend's cabin in a fairly remote section of WI. Our cell phones don't work, nor is there Internet access. We find ourselves "coming down" as we get near the house.

The scenery is beautiful - a house in the middle of trees on a hill above a small lake. It is well insulated with a wood-burning stove. The former owners lived and worked in this remote community.

What struck me recently, though, is knowing the background of our friend and that of my husband and me. Not one of us was raised with money. In fact, high school was the highest education level attained by most of our parents. No one had a fancy, high-paying job. All three of us did pursue education and made sure we participated in every retirement plan (IRAs, 401Ks, defined pension, etc.) that appeared during our working years. All of us practiced rather conservative fiscal behavior. Don't get me wrong - our lives have not been risk free by anyone's evaluation. We've all had ups and downs but we also have been practical.

As a result, we are now in the wonderful position of being able to enjoy a week in a remote location, listen to the silence in the woods, watch dogs run in total freedom across an ice-covered lake, see an eagle soar over the trees. Not one of us ever imagined in our youth we would be in the situation we find ourselves today. We consider ourselves very lucky. But, luck wasn't all of it, conservative money management made possible what we enjoy now.

I hope that younger people reading this blog will take advantage of the opportunities that will come along in their lives. The result is the satisfaction of knowing that one can achieve more than one might think one can. We are the land of opportunity. All three of us are living proof of it.

On the road with dead laptop 

I am posting on my cellphone from Detroit about to board another plane. My laptop died somewhere between my house and MSP airport. Armenians are clever so it will come for the ride. But this cell will not work there. So until I find a cafe or a wizard, no more for now. Janet may post meanwhile.

Monday, January 08, 2007

Layover day busy 

I'm in St. Cloud debriefing the interviews for the screening committee -- the short of it: lots of great candidates, hard choices ahead -- and a trip to Yerevan for a conference this weekend. I have to do take a little time here for the rest of the day to prepare. So meanwhile, read this article sent by loyal reader JW. It tells of Robert Putnam, the Harvard sociologist whose work I have admired, who was reluctant to release results of his research showing less trust in more diverse communities.
They don�t trust the local mayor, they don�t trust the local paper, they don�t trust other people and they don�t trust institutions. The only thing there�s more of is protest marches and TV watching.
The quote is Putnam, and he says it's accurate. Author Steve Sailer goes through the history of the debate on diversity and trust and emphasizes towards the end some surprising conclusions on things that built trust in diverse groups.

More posts as I can, either here or on the road the rest of the week. Pictures from Armenia are definitely coming up!

You can discriminate in economics again 

I didn't get to the meeting as I was pinned down interviewing, but the meeting of the American Economics Association led to a change in the policy of editing job ads. According to the Chronicle of Higher Ed (subscribers' link):
After a period of widespread discontent, the executive committee of the American Economic Association voted on Thursday to loosen restrictions on references to minority groups in the association's job notices. The decision was formally announced on Saturday during the association's annual meeting here.

Since 1986, the association has banned advertisements in its newsletter, Job Openings for Economists, that discriminate "on the basis of race, color, religion, gender, national origin, sexual preference, or physical handicap." And for at least a decade, it has interpreted that policy with an unusual strictness, so as to forbid phrases such as "We encourage applications from women and members of underrepresented minorities." Broad language such as "We are an equal-opportunity, affirmative-action employer" has been accepted, but explicit encouragement to particular groups has not.

Three months ago, Stephanie Seguino, an associate professor of economics at the University of Vermont, was angered when the association deleted language from a recruitment ad that declared that her department "welcomes applications from women and underrepresented ethnic, racial, and cultural groups, and from people with disabilities." Ms. Seguino notified colleagues, and several e-mail lists have been ablaze with discussion since October. Dozens of scholars at the Chicago meeting wore small maroon ribbons as a gesture of protest.

As Ms. Seguino and her allies see it, the association was foolishly censoring commonplace phrases that might play a small role in broadening the representation of women and people of color in the discipline. (According to the most recent report of the Committee on the Status of Women in the Economics Profession, women earned 27.9 percent of the economics Ph.D.'s issued in 2004, a percentage that has been generally flat during the last decade. And a 2006 report on a study by Gregory N. Price, a professor of economics at Jackson State University, noted that only 44 of the 2,785 faculty members in Ph.D.-granting American economics departments were African-American.)

During the Chicago meeting, the association's executive committee conceded the argument. The new policy's exact terms have not yet been set in stone, but the association will now allow recruitment language that encourages applications from people who belong to underrepresented groups covered by federal civil-rights law.

"We will permit the discussion of those groups now when it's done in terms of broadening the applicant pool," John J. Siegfried, a professor of economics at Vanderbilt University and the association's secretary-treasurer, said in an interview on Saturday. "But we will continue to prohibit such language if you're talking about hiring criteria."

According to several accounts, the most contentious issue during the board meeting was the treatment of advertisements from sectarian religious colleges, which are legally permitted to discriminate on the basis of religion. (The federal government gives that power only to colleges that can demonstrate that religion is fundamental to their mission.)

Early last year, Peter J. Hill, a professor of economics at Wheaton College, a Christian institution in Illinois, wrote an essay objecting to the association's refusal to publish an advertisement declaring that Wheaton's faculty must "affirm a Statement of Faith and adhere to lifestyle expectations." Such requirements are perfectly legal, he noted, adding that it seemed pointless not to inform prospective applicants about the college's nature.

Under the new policy, the association will treat such advertisements exactly as it does announcements that mention race, gender, and sexual orientation, Mr. Siegfried said. That is, from now on, Wheaton will be permitted to "encourage" or "welcome" applicants who are evangelical Protestants -- but the association will still not allow Wheaton to list evangelical Protestantism as a job requirement, even though such advertisements are legal.
The militants against the AEA's policy said it would be better to "think about how to enhance the success of minority students and junior scholars." That has a very distortionary sound to it. Increasing hiring of junior scholars who are women and minorities increases competition for those candidates and leads to higher wages. Schools such as ours cannot compete in that market effectively, and yet we are criticized for not having enough of the quota'd faculty. (I do note we are a 25% female department.)

The better than good book 


Washington D.C. (January 6, 2007) -- In a controversy that eerily mirrors the recent dispute over a congressman's use of the Koran, several Christian representatives have asked to be sworn in on the best-seller, The Purpose Driven Life.

"We were asked to use the most meaningful text in our life," said Rep. John T. McGruder of Colorado Springs, from his state's seventh district. �And, as far as I can see, my Pastor preaches more from Rick Warren than the Bible."

McGruder and Rep. James R. Newhell of Wheaton (R-Ill) both petitioned Speaker of the House Nancy Pelosi to be allowed to use the famous evangelical guidebook in the swearing in ceremony at the Capitol.

Reactions from other Congressman and public figures were mixed.

"I see no reason not to allow others to use their own books -- as long as ALLAH AKBAR!" shouted Rep. Keith Ellison (D-Minn). Rep. Ellison, who is a Muslim, had requested to use the Koran for his swearing in ceremony and is, apparently, the inspiration for the requests from Representatives McGruder and Newhell.

Well-known talk show host Dennis Prager was among those who roundly condemned Rep. Ellison�s request. Prager, who is Jewish, was also opposed to the use of The Purpose Driven Life.

"I don�t understand why a Christian wouldn�t use the Bible, especially an evangelical,� Prager asked rhetorically. �Do they think they've used up all the material there?"

Other evangelicals welcome the change.

"This open-mindedness is truly godly," said Lincoln Bradford, pastor and noted praise-song author. "I hope eventually they'll use more personally inspiring items � worship music CDs, Ron Dicianni paintings, the �Foot Prints in the Sand� poem. This country and the modern church were founded on a christian�s right to have a personalized relationship with God � regardless of what�s in the Bible."
Source. Forwarded to me by my pastor.

Saturday, January 06, 2007

Deep dish, parts 2 and 3 

John has details of our visits to Pizano's and Uno. They're different places and all three (see the Giordano's note) have something to recommend them. Here's the tally, in order of preference (play The Good, The Bad, and The Ugly as you read):
3. Giordano's. The good: when this thing came out hot, it was a melt-in-your-mouth experience. Maybe the best first bite of the three. The bad: The rest of the bites; as noted before, this pizza has a short half-life. Cheese was too commercial, the crust quite bland. The ugly: not that this should count against the pizza, but the recommended fried mushrooms were not well cooked, not well spiced, and added to the indigestion. Final rating 4.5/10 (where Domino's is a 2, Pizza Hut is a 3, the Papa Murphy takeout is a 4.)
2. Uno's. The good: This is pizza! It was hefty, it smelled marvelous, and the sauce was the best of the three. (More on this below.) The vegetables were baked into the crust, giving it a just-for-you feel. The bad: I wasn't crazy about the cheese. I wanted it to be stringy, stingingly hot, and what I got was pretty average. Not bad, just not something I would want to crown such a beautiful pizza. The ugly: Romo's placeholding. No, actually it was the waiting for this thing, and the barely-legal bathroom. You can call it ambience if you want; I called it a hip that ached and a smell that could choke a donkey. BTW, that was one of the best waitstaffs I have ever witnessed. Once you had the seat and an empty bladder, it was great. Final rating 8/10.
1. Pizano's. The good: Omigod the crust! Let me confess that my favorite food on Thanksgiving growing up were those Pillsbury crescent rolls. My first year of grad school, those were a Friday night treat. And I made those stupid pigs in blankets with them as a boy scout. Well, imagine that stuff rolled out and made into a deep dish crust! You might not think that works, and it didn't work for John or Hari, but I thought it was spectacular. Buttery as heck, flaky. The bad: John was more negative than me with the chopped tomato over the spicy sauce. I disagreed last night, but after the delicious sauce at Uno's I will reverse myself and take his point. But the cheese was oh so much better. It adhered to the buttercrust, and had a less stringy, more gooey consistency. With the butter, it worked. The ugly: $2.50 for bread and butter? Don't do that. Ever. I thought the two pizzas tied, but the tiebreaker is the facility. There was something more local family about Pizano's. The pictures of local sports heroes, the clear division between managers and help, the paneling -- it felt like you stepped into a neighborhood pizza place. Thus final rating: 8.5/10.

(You may wonder what my 10 is? Behold. We New Hampshirites want our pizza Greek. Some days Captain Zorba's downtown. Honorable mention to Paras in York Beach, ME. I know they aren't deep dishes. I would call both Uno and Pizano the best deep dish I've ever had.)

What two days of interviewing candidates at an economics conference makes you feel like 

Thanks to reader Roger Lewis for the link.

Friday, January 05, 2007

If you want to read what the evidence really is 

Russ Roberts has done a good service in providing a summary of the literature on the minimum wage. He tries to avoid taking a dig at those who push for an increase but can't resist this one:
I find it strange that those who favor an increase in the minimum wage often are the same people who complain about outsourcing, or the moving of factories to low-wage countries or the greed of corporations such as Wal-Mart eager to squeeze every last penny out of their employees by paying only what the market will bear. Surely, such greedy and enterprising organizations will find a way to avoid the impact of the minimum wage by hiring fewer workers and finding other ways to reduce the cost of workers who are suddenly more expensive yet no more productive. I'm a big believer in the profit motive. I again commend to you this article at Coyote Blog that shows how a real business responds to a sudden increase in the cost of labor.
The Coyote blog link is worthwhile.

Economics, pizza, and rain 

So far the conference has been marked by unseasonably warm temperatures, a torrential rain last night that took out Doc's umbrella entirely (a Wimbledon souvenir is no match for The Hawk) and one deep dish pizza. Doc has reported on the pizza as a 7/10; I'd give it about the same, but then I consider Pizza Hut barely a 3 (unless you are in a very foreign country and aching to eat something American -- then it's an 11!) and for the locals I make House of Pizza in St. Cloud a 6. What I would add to his review is that the pizza doesn't hold up to temperature change. The first slice was very, very good, but diminishing returns were immediate and swiftly declining. I tried to eat some leftovers this morning, but two bites were all I could manage. Besides, you know how I feel about Dunkin Donuts, and there are two within three minutes walking...

First four interviews of candidates came up with a new question interviewees ask: How do you think I'll fit into your department? "Like Terrell Owens," I thought to answer. Maybe they are asking about the ability to do collaborative research -- if so, ask it that specifically. It sounded like I was being asked how someone would fit in the department's culture, as if a 30-minute interview could determine that.

John is right that the wine was good, so good that he's thinking now about ten dimensions.

Thursday, January 04, 2007

En route 

I'm at the airport in MSP waiting to go to Chicago for economics and pizza. I'm stealing John's question for interviewees (eighth person we're hiring since I became chair, got to change the repetoire.)

This girl will keep an eye on things while I travel; she will also make sure Andy doesn't mess up my studio.

(Interviewees, learn this dog's name for extra prizes!)

At least the farm bill was more honest 

Captain Ed, discussing the push for a minimum wage increase, points out that the poor aren't necessarily helped by increasing the minimum wage.

Whose money is getting given away? Yours and mine, and all 479,000 minimum-wage workers, that's who. i can absorb the incremental loss of buying power, but the people at the bottom rungs cannot. If they're lucky, all that will happen is that their buying power will remain the same as it was after a short period of adjustment. More likely, some of their jobs will get eliminated as businesses have to support the cost increase in some other fashion than price hikes.

And it's not even the working poor that gets helped in the increase. The working poor may have started at minimum wage, but they move up as they progress in their jobs. It is an absolute fallacy to argue that minimum-wage workers have not gotten a raise since the last federal increase of the minimum wage; they get raises as they increase their value to their employer, not from Uncle Sam.
The point I raised on the air about this a few weeks ago was that it's not even giving away tax money. It's the government requiring McDonalds, Target, Cub Foods, etc. to give away their money. So to argue that after helping the farmers in 2002 and businesses via earmarks in 2005 we have no ability to help the poor is a canard. To do the same for the poor would mean taxing all Americans -- maybe a tax on food! -- and giving the money directly. This is a far less efficient means of doing so, all so that the Democrats do not have to say they raised your taxes to help the poor.

Wednesday, January 03, 2007

Ethics, not rocket science 

At Southern Illinois University in Carbondale, there is a debate over about sixty-five professors who have been flagged by the state for taking a mandated ethics exam too fast. (Subscriber link to Chronicle of Higher Ed; an older article in the Carbondale paper.) The exam requires first that a state employee reads a ninety-page manual; some recorded a time for reading and taking the ten-question quiz at less than seven minutes. State officials overseeing the ethics exam are threatening disciplinary action up to and including dismissal. The time requirement is new to the test.
"The fact that I completed the training and quiz quickly is, I believe, proof that I am what I claim to be, and what the State of Illinois pays me to be - a professor of English, well trained and practiced in reading and thinking," [Beth] Lordan wrote in a letter to Executive Inspector General James Wright.

History professor Theodore Weeks said the exams aren't rocket science, hence they don't require much time to complete. Weeks also clocked a finishing time for the exam less than 10 minutes.

"Frankly, we're pretty busy," he said. "We've got students, papers and conferences to deal with. This is basically harassment for political purpose."
So these faculty are told they have to read a manual and sign a statement. This will not be timed.

The decline of the full time retail worker 

I'm mildly surprised that the news of WalMart's new flexible scheduling hasn't been a bigger piece of news. (subscriber link to WSJ; freebie at WakeUpWalMart.) Scheduling done by a computer -- the same one that Target uses to schedule 350,000 workers nationwide in six hours -- will increase profitability but makes workers' lives a little more stressful.

Employer-employee contracts entail a good bit of risk-sharing; one of the risks is the risk of the business not having customers when workers are scheduled. When employers bear that risk, part of the cost is borne by employees in lower wages. Thus, if the flexible schedules are burdensome to employees of WalMart the firm should find it costs more to keep productive workers -- other firms that do not use flexible scheduling will be able to attract your best workers by agreeing to take the risk that those workers will find not enough to do on a slow Thursday night, for example. Paradoxically, something that is harmful to workers will lead to higher wages at WalMart as the workers claw back some of the gains in productivity that the new software produces.

If it does not, it will be because flexible scheduling is not burdensome to WalMart's workers. For the part-timers who work there after school -- teens -- that might be true.

In an earlier article while WalMart was still experimenting with the idea, the National Retail Foundation's Daniel Butler is quoted:
Until the late 1970s and 80s, people shopped more on weekdays. Then with more two-income households, people were shopping more at night and on weekends. That changed the demand for full-time workers. Until the mid-90s the full-time, part-time ratio was 60-40. Now its more 40-60.
That trend is likely to continue, and as that time might be more variable, the need for this software and the scheduling it does has increased.

Lessons of the Duke lacrosse case 

Those who remember the humble beginnings of the Scholars (back when there were multiple SCSU professors here) will see something vaguely familar in K.C. Johnson's summation of the Duke lacrosse story. The Left on American campuses decries any conservative critique of its behavior as McCarthyism but engages in that behavior when it suits them, as it did in this case. Those faculty took out an ad in the campus newspaper that said something must have happened, but as the case has now unraveled have instead turned on the majority of students who have heard the evidence against the lacrosse players and found that evidence lacking.

Johnson links to a post by Duke engineering professor Michael Gustafson describing the tragic result of an immoral prosecution cheered by a politically correct mob:
We have removed any safeguards we've learned against stereotyping, against judging people by the color of their skin or the (perceived) content of their wallet, against acting on hearsay and innuendo and misdirection and falsehoods. We have formed a dark blue wall of institutional silence; we have closed Pandora's box now that all the evils have made it into the universe; we have transformed students from individual men to archetypes - to "perfect offenders" and "hooligans" - and refused to keep their personhood as a central component of all this. We have taken Reade, and Collin, and Dave, and posterized them into "White Male Athlete Privilege," and we have sought to punish that accordingly.

We have demanded proof of innocence; we have stated that even if innocent of the alleged crimes, "whatever they did is bad enough;" we have established false dilemmas and presented them as deductive enthymemes - "White innocence means black guilt." "Men's innocence means women's guilt." In so doing, we have heaped all that is and has ever been White and Male on the backs of these three men, and all that is and has ever been Black and Female on the back of this woman. We have given to them all the responsibilities of being representational caricatures and stripped away any sense of their being individuals, making it ever so easy to sidestep the individual liberties and responsibilities in pursuit of some representational good.
What of this could apply to the charges of anti-Semitism, the silence of our faculty, or the use of a student as an assault on traditional values at a homecoming? We can hope that the Duke case makes plain the use of these students and this woman as tokens in an ideological fight. But I'm not hopeful.

Tuesday, January 02, 2007

The cost of the NCAA 

My brother had recommended to me that I read Michael Lewis' The Blind Side, and like Doc I thoroughly enjoyed it. (I actually listened to it rather than read it, as my schedule puts me in the car more than I used to be.) John went to the part of the book that bothered me the most, which is the story of Michael Oher. That link tells you want you should focus on:
Son of Denise Oher and Sean and Leigh Anne Tuohy.
Denise Oher's story is one of sadness, poverty and brokeness, a combination of bad choices and bad circumstances. The Tuohys, on the other hand, pick this young man up and put him into a private Christian school, buy him the best education possible, and still have trouble getting him into and continuing in college. (John has a longer synopsis.)

What bothered me was not the Tuohys' generosity to the child -- yes, Michael Oher is a lucky young man; yes, there are many other possible Ohers out there, as Lewis and the Tuohys both realize -- but that the lengths one had to go through to have Michael Oher play football are the consequences of the NCAA's regulation of football. Is there any doubt that Ole Miss would have admitted him to college and given him a scholarship regardless of his GPA and SAT scores as long as he could play football? So all that the Tuohys must do to get Michael into Ole Miss is driven by the NCAA's eligibility rules.

John asks "How many times has Michael Oher been given the message that because he might become an NFL left tackle, people will bend or break the rules for him." But the rules that are bent or broken are for the most part* rules that are created by a group of university presidents to protect their own franchises and the attendant revenue streams (as Phil points out nicely in another context.) What the Tuohys' money purchased was the ability to escape a set of rules that had the consequence of denying Michael Oher the right to specialize and exchange that one thing he does better than he does anything else.

At the end of the book the Tuohys begin to wonder whether they can find another child to bring along like they had with Michael. The NCAA creates thousands of them, folks, take your pick.

* -- there is the assault story that John mentions, and the behavior of the family there troubles me to same extent that any rich kid in college might buy their way out of legal jam.

So why not chess? 

Some people seem to be questioning the wisdom of chess scholarships. The University of Maryland at Baltimore County has the oldest one, and turns out to have a performance requirement.

The best scholarships cover tuition, room and board, and are worth $69,400 over four years. For that package, Dr. Sherman said, a student must meet several requirements, including maintaining a grade point average of at least 3.0 and achieving nearly a grandmaster rank in chess.

And they do quite well at that. So why is there a problem? The issue here is that the chess scholarship is in essence an academic scholarship by another means, so as to focus the money on people with analytical skills without worrying about the diversity of the chess team. The chess program isn't making money for the school, and the students who try to reach GM rank are still far away from being able to make a living at chess.

Elasticity of demand for condoms 

A story in the Milwaukee Journal-Sentinel is concerned about the effect of locking condoms behind a case to deter theft. It would lead, one person argues, to more people having unprotected sex. Well, maybe. It might also lead to more people abstaining from sex altogether, as Sean Hackbarth notes. This is simply a question of elasticity. Working it the other way, does reducing the price of condoms -- as the UK has recently done -- mean more people have sex generally that might have otherwise abstained? If so, could it lead to increased HIV incidence and increased unplanned pregnancies (by making sexually active those that would otherwise not be)? Again, this is a question of the elasticity.

What evidence does exist suggests that a 100% change in the overall price (wherein price means the sacrifice one endures to obtain a good) leads to a reduction in the quantity of condoms demanded by 5-15%. (Source.) So the question is simply, how much of the sacrifice a teen makes in acquiring a condom comes from the act of asking for the little box behind the counter vis-a-vis the monetary cost? I have a sample of one: It scared me to death.

UPDATE: Great article thinking about AIDS in December's Esquire. (h/t: Freakonomics blog, found via the Economic Roundtable, though Levitt's post seems to have gone missing.)

Monday, January 01, 2007

Speaking of Harford... 

...I usually take the time on New Year's Eve to finally go through and read those little newsletters people include in their Christmas cards, wherein a family announces all the good stuff that happened to them and theirs in the last year. We do it too, though I've decided that there's a seriously diminishing return to additional information in them so that I print only a half-sheet. I'd like to know if someone got married or went on an exotic trip. I'm fine with hearing if a pet died. I do not need all the details on the new car you bought last summer. (I did not make that up.)

Harford's Dear Economist column at the Financial Times included this letter and answer:

Dear Economist,

Christmas cards are starting to drop through the letterbox and many contain infuriating round-robin newsletters from people I barely know. This is no substitute for real friendship. Why do people send junk mail instead of a proper letter?

Tom, Lancaster


Dear Tom,

You say that people send newsletters �instead of� a proper letter, but I wonder if this is true. Newsletters are subject to extreme economies of scale: the first copy is time-consuming to produce but the rest take just seconds. The likely result is that many people receive newsletters who might otherwise get nothing at all, or only a card reading �best wishes, Brian�, leaving you to wonder who on earth Brian might be.

We have a list of about 40-50 cards that go out each year, along with a tick sheet for cards received. We will get about a half-dozen cards each year from people not on the list, for whom a frenzied "oh God how did we forget them" ensues and a card and half-letter sent. Worst are the ones who have the "best wishes, Brian" and a last name that has Mrs. and I me scratching our heads. (Gad, that was awful English.)

That is no consolation if it is really preferable to receive nothing at all than to receive a newsletter. But that seems unlikely: economists talk of �free disposal�, a theoretically convenient assumption that would not apply to a half tonne of manure on the doorstep, but surely describes the marginal cost of throwing away Brian�s newsletter along with his card. If you are so certain that these newsletters contain nothing of interest, waste no time in reading them.

Which admittedly for some of them I do. If you're someone I've seen on campus weekly or more, chances are I know as much about your family as I care to. I get a couple of these each year. I do not send the half-sheet to my parents because they know what's on there already. Thus the newsletter has the most value in those cards from people I did not see last year,

You have evidently not discovered the work of economists Jess Gaspar and Ed Glaeser, who show that the new communication technologies - mobile phones, e-mail, word-processors - are not substitutes for traditional human interaction but complements to it. These newsletters, like e-mails and weblogs, help keep friendships alive and actually increase the number of old-style face-to-face meetings.

Thus, for instance, I have not seen Doc Palmer in person since the last time the ASSA meetings were in Anaheim, which I think was 1993. But we have known each other from the old Usenet days of chatting on, and managed to create a podcast (now gone, it appears) with Phil Miller on the economics of sports (and indeed, I'd've not met Phil either if not for the internet.) And yet Doc announces we are going for deep dish next weekend in Chicago, an event to which I am looking forward. (Yes, "Sparky". It's a baseball thing.)

Most of the Christmas cards I read will say "let's get together in the New Year." And certainly some of us made a resolution this year to reconnect with old friends. Isn't the newsletter in the Christmas card a useful instrument to start that conversation? Does it perhaps increase the number of old friendships rekindled?

Opportunity costs in everything -- single-payer grocery edition 

Dave Downing discusses why groceries cost more in an urban center, and how difficult it is to find supermarkets for the poor who live there. It's really quite simple, and we can do this with a question from Heyne. This is question 14 from the end of the second chapter:
Have you ever noticed how few gasoline stations are to be found in the center of large cities? With such heavy traffic one ought to be able to do an excellent business.
(a) Why are there so few gasoline stations in the center of large cities?
(b) Would it be efficient for city governments, which have the right of eminent domain, to take over a small amount of downtown land in order to provide gasoline stations in areas where the demand is obviously great?
The answer, quite simply, is that the land has higher value in alternative uses. Whenever you see gas stations downtown, they tend to be in very small, constricted spaces. So too with grocery stores. The value of the land is so great in alternative uses that no one can support the rental cost of the land needed to build a supermarket. What land there is to use has high enough rent that food prices in the downtown grocery will be greater. Goods that could easily be bought through a trip to the suburbs will not be sold there, because the higher price would be competed away.

A similar logic would be, why do parking spaces in downtown St. Cloud sell for so much less than those in Minneapolis.

Tim Harford explains this as well in The Undercover Economist. Think of the urban area as a meadowland and the suburbs as scrubland.

UPDATE (1/3): Craig Westover writes a column on this and argues for easier transportation from urban centers to suburbs. That would already exist in a private market if it was beneficial.

What's it worth now? 

I get my own signal to evaluate the StarTribune's sale. (I don't think I've ever been Photoshopped before. It's quite an honor.)

I've tried to read up on what's happened with the sale of the StarTribune. First off, it's not really a $530 million deal as some are reporting. When McClatchy bought Knight-Ridder several months ago, it took on over $3 billion in debt. To help reduce the debt load and to appease anti-trust concerns, McClatchy sold off twelve papers (including the PioneerPress.) Those sales generated a taxable gain for the company, which according to at least one press release from the company was about $700 million. So the sale of the StarTribune at a loss creates an offsetting tax deduction that saves the company $160 million. That's not insubstantial; as far as McClatchy is concerned, it got $690 million for this deal.

I cannot get a grip on what the valuation of the StarTribune was here. When McClatchy sold off the KR papers it didn't want or couldn't keep it fetched 11 times cash flow. I don't have an EBITDA number for the StarTribune so I cannot judge what $690 million divides to so as to get a valuation. (Ad revenues are in the area of $300 million annually as best I can tell; I'll guess the circulation revenues are another $50-60 million. According to the 2005 annual report, it had $378 million of total revenues in 2005, down $2 million from 2004. But I have no idea what their operating costs are.) I do see from the company's reports that its Midwest properties were the worst-performing in advertising revenues.

The goal of McClatchy in purchasing KR was to get into more local markets to increase its online content. Bambi Francisco covers new media for the MarketWatch:
Take a look at some of the local sites that McClatchy is starting to roll out and essentially you'll see that they're a Craigslist meets CitySearch-like service, behind a Google-like fa�ade.

...Hendricks says that the nine search sites he plans to have up and running across the country by this summer will all have a different appearance depending on the community feedback. He intends to ask the readers and users to help shape the sites. (If you're interested in what the other eight sites might look like, check out and

Ultimately, however, he said that it's his bet and inclination that "the look and feel will likely end up that [Google's] way over time."

But so what, right? A nice interface may attract the user, but the quality of searches will keep them. And, unfortunately, since there isn't a local site for San Francisco, I haven't been able to test the search technology to see if it's any different from the information I get today.
For that to work, McClatchy has wanted to find fast-growth markets, operate the leading local internet business, and selling direct marketing and direct mail.

That is, contrary to what Nick Coleman might think, McClatchy is no longer a traditional newspaper company. I listened to CEO Gary Pruitt's last presentation on the web this morning and I cannot hear a single time where, in describing the synergy between web and print, did he mention the 'flagship' StarTribune. Not only did McClatchy need the cash then, but the StarTribune did not fit the new business model the company had. (As a matter of fact, Mr. Coleman, I suggest playing that recording of Pruitt before writing about this again. The writing was on the wall. Does it dawn on you now why only the STrib didn't use CareerBuilder?) McClatchy saw itself in a declining, cyclical market for print media and decided to change. Whether its moves will pay off is beyond my ability, but it sounds clear from that recording that print isn't going to be as important in generating revenue for McClatchy as it did in the past. (See, for example, McClatchy Interactive.)

Now to Learned Foot's more specific question: Will Avista engage in a slash-and-burn to the StarTribune pressroom? Understand first that Avista paid only the $530 million, and that many of the services it needs to run the paper, such as McClatchy Interactive, it can contract out to do. What we don't know about Avista is whether it still wants to continue to operate legacy media. They are a very new group spun off of a management team at Credit Suisse, so we have almost no history to go on. Avista owns Thompson Publishing, a web-based service to help firms get information on regulatory conditions in their industries. They also have a cable business in the Midwest. It has on its board a James "Jimmy" Finkelstein with media experience, so that's my guess for who will be Nick Coleman's new boss/slavemaster. If I've got the right guy, he actually does have a broadsheet. (UPDATE: Captain Ed links to a story that says the overseer will be advisor Chris Harte, who has run papers. I don't see where Ed gets the number that the STrib was generating $125 million in (assumably net) revenue, though. If they paid the same multiple that McClatchy fetched on selling the KR papers it couldn't keep, that would have put free cash flow at about $48 million per year.)

But I don't know that's as important as this. Given you paid "only" $530 million for a property the size of the StarTribune, it does not require a very big growth rate in StarTribune income to make this a profitable company for Avista. But it will require some growth in net revenue. And lately that's been absent at the STrib, as McClatchy found. It's unlikely that what is there can be split up and sold off, since McClatchy already took the parts it wanted -- the online part.