The new revenue forecast is out, and the news is not too bad.

A weaker U.S. economic forecast has changed the state’s budget outlook. General fund revenues now are forecast to fall $739 million (2.2 percent) below end-of session estimates, while spending is projected to be $66 million (0.2 percent) higher. A budget deficit of $373 million is now projected for the biennium. Previously a balance of $294 million had been expected.

The forecast notes strong second and third quarter growth but, relying on a forecast for the U.S. economy for 2.2% GDP growth in 2008 and 2.3% in 2009. The revenue reductions come mostly in corporate income tax and sales tax revenues. As we've noted, the decline in corporate profits is already ongoing.

There are two points worth noting. First, the budget reserve is $653 million and the cash flow account has another $350 million. (There's a small pot of money for Human Services funding untapped, too.) So one could easily carry on spending at projected levels without any increase in taxes. So news reports that "this might be "the tip of the iceberg" or that tapping the reserves might hurt our credit rating are pretty thin gruel. It's probably also not the time to make major spending cuts; I don't see those as necessary on macroeconomic grounds. (I would favor them on efficiency grounds, but that's a different story.)

The reason takes me to the second point. The use of Global Insights as the forecast driver (meaning their national numbers are being used to project state revenues) puts us on the low end of the economic forecasts out there. In the November WSJ Economic Forecasting Survey, GII's Nahraman Behvaresh put in a forecast of 0.7% for first quarter 2008 vs. 1.9% average for the survey, 1.6% vs. 2.4% for Q2. Following up on something I wrote yesterday, if you set those growth rates low, they have substantive impact on growth for the rest of the biennium, as they push down revenue generation for 3/4 of the period, not just those two quarters. (GII isn't far off the average survey for the rest of the survey.) Now it may be that Global Insights and, by extension, the Finance Department are right on this forecast. I'm already on record making the probability of recession up here in the local area around 40%. GII is not forecasting a recession as its baseline, but has an alternative blended model with a weight of 35% on a national recession scenario. Most economists in the recent NABE Outlook do not foresee a recession. Today's weak consumer spending report has made some revise their estimates downward, though.

Revenue forecasts tend to be pessimistic, because the costs of errors are asymmetric -- nobody minds finding extra money under the stocking five months before the end of the biennium, but a shortfall causes pain. Not to suggest that Finance is writing something gloomy (even if people do think Tom Stinson is sobering and careful), but it's a very brave forecaster who would have bucked Global's negative outlook ... and I'm not one of them either. Still, it will be hard to imagine the story getting much worse than this forecast unless there's some additional shock to the system. The biggest risk would be oil prices staying higher than $80 a barrel through next year.

Labels: economics, legislature, Minnesota

Read this.

Then this.

'Nuff said.

There's already comments on last night's debate from Mitch (who sat next to me at the Patriot Primary), Michael (two seats down), Ed, and others. I'm puzzled by Scott's conclusion that Romney won. I thought he came off far too combative; the "I was wrong" on abortion line was buried in a lot of non-answering of questions. And too much attack: Even when he was right, such as tagging Mike Huckabee on signing Arkansas' DREAM Act, Romney comes off as meanspirited.

I also utterly disagree with Ed on the quality of CNN's questions (even discounting to zero the planted general.) A commenter at Powerline got this exactly right:

CNN chose the questions so once again we get the liberal's perspective of conservatism.

"What would Jesus do?"
"Do you believe this book"
Lock and loaded gun prop question.
Confederate Flag.

And of course...Should women go to jail if they have an abortion.

Not a single question on trade. Not a single question on education. Shoving the Iraq questions until late in the program. It was highly manipulative towards CNN's ends, and not for the betterment of the Republican watching this program to decide who they should support in the primary.

Last thing I learned -- Rusty Humphries is more than a Louie Anderson look-alike. Michael and I greatly enjoyed dinner with him and Patriot station manager John Hunt before the debate, and that fellow's knowledge of the Middle East was impressive. I'll have to start listening.

Labels: politics

It's one of these half-full/half-empty stories. The national economic news is considered delightful, as GDP growth in the third quarter was revised up (as expected) to 4.9% from an advanced estimate of 3.9%. Yay! In the same report we find corporate profits fell. Boo! Home sales went up. Yay! Prices went down. Boo! Forecasted growth for 2007 is up. Yay! The forecast for 2008 is down. Boo! Foreclosures are up 94% in the last year, but they've leveled off. Booyay?!? Yayboo?!?


What's a poor economist to do?

Pay attention to the revisions, and the effects of one-time shocks. This third quarter figure appears to be one of these. When I write a forecast within a model, I evaluate it based on whether my guess for X next period (or some periods out in the future) is close to what X turns out to be. The percentage change in X isn't the point of the forecast for the most part.

So suppose I am forecasting the value of X now (call this time t) for two periods from now (t+2). You ask me to represent that as a growth rate, and so I do the necessary calculation. You ask for a forecast for t+1 and I give you that as well, again as a growth rate.

Now let's suppose I receive data on X for next period, and suppose it's higher than that one-period-ahead growth rate I gave you. Do I revise now my estimate for X for period t+2? The answer, as always in economics, is "it depends". It depends on whether there was any information in the one-period-ahead data that causes me to change my mind about what happens two periods ahead. There may or may not be. So, for example, the CEA forecast for GDP was moved up for 2007 and down for 2008 because, for the most part, there's been no change in their medium-term forecast. The jump in 2007:III GDP is moving some of the growth of GDP between mid-2007 and end-2008 into that quarter.

An imperfect analogy: Mario Mendoza is a .200 hitter in baseball (thus the Mendoza Line). After establishing this level of batting crapitude for years, one day he goes four-for-five. Do you revise your opinion of Mario's hitting prowess, or do you think it's just one of those days (which would be expected to occur randomly about once a season?) Of course not -- hitting has a random quality. So too does GDP or about every other phenomema in economics.

Revisions also play a role. Calculated Risk shows how not focusing on the revision can completely change how you view the home sales data. Others have noted as well that these repeated revisions in previous-month home sales is softening the focus on that market's decline.

One last thought thought that might make things more rosy. Cindy discusses the state revenue forecast due Friday her in Minnesota, and fears that it will come in very negative. Revenue forecasts need a base on which to tax, so they forecast output, not percentage change in output. If today's GDP numbers turn out to be true, the additional income in the Minnesota economy is present longer, and is taxed each period. Even if a slowdown occurs next year, higher revenue collections now are already in the bank for the state government. I have no idea what the forecast will be, but a revenue shortfall of less than $500 million is possible, and that would only chew up the reserves and not cause blood on the tracks in St. Paul. Much more than that, though, and it will be one helluva spring at the Legislature.

I'll be on Heading Right Radio at 2:30pm CT to discuss the state of the economy; those reading this post are invited to question me there!

Labels: economics, Minnesota

Students at Friends for Life, a group that advocates for pro-life positions, received a letter from another student group called Out Loud, a group "that takes a stand against homophobia and heterosexism." The letter invited them to participate in an event called the Real Real World, an event I find described from a 2004 newsletter of our Social Responsibility program as

...an interactive program that addresses and exposes oppression on an everyday level as well as a larger level. This is mostly portrayed through visual and auditory media, where students take a tour through the life of different populations who face oppression on a regular basis.

A newsletter from this spring for students to find volunteering opportunities on campus describes Real, Real World as

a campus event ... that showcases displays on anti-Semitism, heterosexism, sexism, body image, racism and empowerment.

FfL felt it should present a booth for an oppressed group: the unborn. Its leader, David Brix, then reports to me that he received a call from Out Loud's faculty advisor, who is the interim director of the campus' GLBT Services office. While never explicitly told that FfL could not participate, Brix says he was told that the group's proposed presentation "would probably not fit with the theme of the real real world as her group is about women's progress not about restricting what they can and can not do with their bodies. " (His quote, not the advisor's.) Brix concluded from the conversation that any further discussion would not result in FfL getting the make their presentation.

Perhaps the descriptions of the event that I have are not accurate. In this case, perhaps Out Loud would like to provide a more accurate description of its program. But even then we have a coordinated event created by something paid for by state dollars, to which a student group is discouraged from participation based on viewpoint. One can only imagine what might happen on a university campus if a group created a public presentation called "Real, Real Fetuses".

Labels: higher education, SCSU

In relation to my economics post yesterday, which included a reference to Black Friday sales, we're seeing the same pattern on Cyber Monday: Traffic up 37%, number of visitors up 38%, sales up 21%, heavy discounting experienced. Is this a blip up, or pipeline stuffing? Stay tuned.

Labels: economics

...just got away from me. I expect a quote in the local paper on this latest report from the US Council of Mayors on the effect of the mortgage crisis on local economies. I'll add two quick points unlikely to make the paper (one I didn't even mention because it had no context in the reporter's questions). First, I think the report occasionally confuses stock measures of wealth loss with flow measures of income loss, when they get to the city level. The national estimate -- $166 billion of lost output (about 1.2% of GDP); 524,000 fewer jobs grown; $1.2 trillion in lost home equity -- is a little higher than I might have spitballed, but not outrageous. Second, Global Insights did the estimates, and other forecasts of theirs that I've read would suggest they are towards the lower end of the consensus forecasts. I visited some of the issues in this post from last month. If the Fed is forecasting 1.8-2.5% growth for 2008, you can put GI at the low end of that. Their national recession probability is at 35%.

Also finished grading and reviewing exams. There was a question on the frictional unemployment that results from a decline in the price of oil. More than half the students seemed to conclude that a decline in oil prices was therefore bad. Mr. Bastiat made a call to help explain the make-work bias. Then a pile of kid-taxiing.

Which brings me to the best thing I read tonight. Not that the NBER is going or not going to have its Business Cycle Dating Committee meet, but the history lesson Justin Fox provides.

The Business-Cycle Dating Committee is one of my favorite weird little American institutions. It was set up by Harvard economist Marty Feldstein after he took over as president of the NBER in 1977. Before that, veteran NBER staffer Geoffrey H. Moore (he'd been there since 1939) had more or less singlehandedly determined what was a recession and what was not. Feldstein decided such work was better done by a committee.

...Its members do not follow the short-hand rule that a recession is two consecutive quarters of negative growth in real GDP, a misdefinition that, I learned today (thanks, Barbara!), was probably the dastardly doing of Arthur Okun, chairman of LBJ's Council of Economic Advisers. That's partly because, given the constant revision and re-revision of GDP, you'd have to wait about five years to conclusively declare a recession. But it's also because economic downturns don't necessarily start and end on a quarterly basis.

The NBER explains its procedures here.

Labels: economics

Brian Goff calls the tug of war between the NFL Network and big cable firms a "classic game of chicken" and the NFL has the upper hand this week thanks to a Packers-Cowboys marquee game on a network that currently reaches 1/3 of the market. Brian worries about the government trying to force a deal. That is already happening in some parts of Wisconsin with the Big Ten Network. Smaller cable companies don't have the whip hand and usually capitulate.

At least the NFL Network is somewhat a private entity. But Steven Dubner points out they carry two tiers of broadcast, and to get the one that has what you want -- the game -- you have to put it in the basic cable and pay for every subscriber to your service ($.70@), not just the ones that want to watch pro football. Even the Packers and Cowboys get less than a 100% share. Steve Dittmore indicates the NFL Network is a loser so far.

But the cable companies aren't exempt from criticism; they are government-protected in many markets as monopolists. Indeed, given BTN has mostly public universities, it's two government created monopolists fighting each other. Too bad both can't lose.

Please help me convince Mrs. S that freedom of choice in the Banaian household means Daddy gets Dish for Christmas.

Chatting with someone last night, we made one of those Man Law things: No watching bands that have tribute bands. For him it was Journey. For me, an old prog-rocker, it was Yes. Not too hard given most of the music had gone downhill the last fifteen years. But I thought, who has a Yes tribute band?

What a story this is. Not only is there one, but they end up getting to play with Steve Howe.

Following the recent highly successful tour of the UK, Belgium and Holland with Steve Howe of Yes, the founder members of Fragile have taken the decision to call time on any band activities for the immediate future. Steve Carney, Jon Bastable, Mitch Harwood and Tom Dawe (who established Fragile in 1998) intend to explore other musical ventures,...

“We view Fragile as a job done. Our recent tour with Steve Howe was a seminal moment that convinced each of us that anything after the tour with Steve would probably fall prey to the law of diminishing returns. We have nothing left to prove and the last show in Holland was a truly defining moment. We would like to extend our genuine thanks and best wishes to everyone who has supported Fragile over the last decade. ...

I'd like to know of other examples of this. They didn't just do it once, they played four shows with Howe, who hasn't been exactly lazing about. As I said to my friend, if you are in a tribute band and the guy you're tributing comes to play with you, isn't that like Costner in For the Love of the Game? Don't you just send the ball to the owner's box and ride off with Kelly Preston now?

Labels: music

Attention to my friends at Fraters Libertas, whose feature on NARN: The Opening Act "This Week in Gatekeeping" is always a hit: I think I have a winner. A conversation between a blogger writing about baseball in Philadelphia (and Phillies fan) and longtime sportswriter Bill Conlin devolved into this quote from Mr. Conlin:

The only positive thing I can think of about Hitler’s time on earth–I’m sure he would have eliminated all bloggers. In Colonial times, bloggers were called “Pamphleteers.” They hung on street corners handing them out to passersby. Now, they hang out on electronic street corners, hoping somebody mouses on to their pretentious sites. Different medium, same MO. Shakespeare accidentally summed up the genre best with these words from a MacBeth soliloquy: “...a tale told by an idiot, full of sound and fury, signifying nothing...”

The blogger points out several errors in Mr. Conlin's defense of the blogger's disagreement with Conlin over the National League MVP (Conlin supported the winner, Phillies shortstop Jimmy Rollins, while the blogger was persuaded by some statistics that Rollins was not the most deserving.) Conlin went on to suggest that his one mistake in his column was his editor's fault.

My columns are read by a minimum of three editors for fact, style, fairness and balance. Despite that scrutiny,errors still filter by the goalies. In my Rollins column that has upset so many of you, the only thing I would remotely take back was having Holliday performing his Game 163 heroics against the Diamondbacks when, of course, it was the Padres. D’Backs were on my mind as the soon-to-be-vanquished division champions when I wrote the line. Any editor worth his salt should have caught the error. However, most of them are so intent at catching the bad stuff they let the obvious error slip by. Who checks your facts and deletes a line that is over the edge of good taste or might demean or defame an athlete or subject? Did you take a course in the libel and slander laws? Or do you merely throw it against the wall and see what sticks? That’s what most of you do. I can’t pin that on you specifically because I have never read your blog.

So there you have it. His opinion is read by three gatekeepers, and even if they missed his factual error, it is still better than the opinion of a blogger who he never read.

Labels: Media, NARN, sports

You know that old saw: A recession is when your neighbor's out of work, a depression is when you're out of work. (And a recovery is when George Bush is out of work, the Democrats will say, but that's just stealing.)

So what happens when you view it as the Goldilocks Economy? I mean, my GOD, when you can't even get Christmas lights at Costco, how can you think the economy might be in a recession? I mean, don't pay attention to that one-third of respondents to some stupid Zogby poll said they were cutting back on Christmas gift-buying:

The main reasons cited were: lower income this year (28 percent), general economic concerns (25 percent) and increasing energy prices (19 percent). Forty-five percent plan to spend under $500, and only 16 percent plan to spend more than $1,000 on holiday gifts this year.

Even if they choose to purchase an item at a retail store instead of online, 69 percent of shoppers in these cities plan to use the Internet to browse or check prices before heading to the store.

The average spent per person went down; it was just that, with all the stores opening earlier and pushing discounts, more people got through the doors. Kinda like Woodstock. For what it's worth, the online sellers today for Cyber Monday are having network traffic load problems. Not sure how that will translate to sales.

"Oh, King. So negative! Even Ed says you should just look at the data!" Well...

To those concerned: A forecast is just a forecast. And when it comes to recessions, we economists are known to predict them at least eight times in the last five. (It's amazing to me, by the way, why there are so many different ratios of predictions to recessions. I've seen 8-5, 9-5, 8-3, 2-1 in that one link!) There are things we see in the market to which we say "you know, when that's happened before, it was followed by a recession." That doesn't mean one necessarily will follow this time, but it means one had better think about risk.

The Federal Reserve surely is, when it announces that it's willing to make loans that used to be two weeks in length maximum now six weeks. It says it "plans to provide sufficient reserves to resist upward pressures on the federal funds rate above the FOMC’s target rate around year-end." Why would it do that, if not because it fears banks need more money? And why? Perhaps the Fed saw this graph showing that $362 billion in adjustable rate mortgages are going to, um, adjust. Maybe those are converted to fixed rates -- though violating contracts by insisting banks not adjust a contract they paid to adjust by offering a teaser rate seems an odd solution -- and maybe they won't be a problem to pay. But it cannot be good for home prices, and it's not wrong for Larry Summers to point out that when that's happened in the past, recessions usually follow. Not necessarily, of course, but when a rumor runs around Wall Street that Citigroup might be dumping as many as 45,000 workers, shouldn't one pay a little attention?

Not to mention the dollar. If Europe is not going to cut rates as fast as the Fed is, there's little chance that the exchange rate will turn around any time soon, making cheaper oil (in dollar terms) less likely going forward.

All this makes me think that what we're in for is a long, shallow recession. The Fed is hemmed in and unable to provide massive doses of liquidity. Tim Duy argues that the Fed doesn't want to repeat the lessons of Greenspan:

They do not want current policy to breed conditions that foster future instability, such as, for example, an extended period of ultra low interest rates that supports an asset price bubble. In order to keep current policy tethered to the long run anchor, the Fed needs to shift policy before the need is obviously evident. Which means doing something that might be surprising to market participants, such as pausing when inflation trends may still be on the uptrend (sound familiar?). Or, what is likely most challenging, pausing in an easing cycle when the economy remains weak.

Of course, it is the latter situation that the Fed is facing. Policymakers intend to pause at a time that may be somewhat “uncomfortable,” when it is not clear the economy has reverted to its upward trend.

The Fed is signaling a slowing economy that will stabilize shortly because it does not want again to have its hand forced by the market to cut rates, so it instead is having to rely on extraordinary measures like the six-week repo. It remains to be seen if that trick will work, but that it is trying a trick should give Goldilocks enough reason to keep one eye open while she slumbers in Baby Bear's bed, lest she find her neighbor jobless.

Labels: economics

For those who thought the Mark Ritchie story was no big deal, the price of poker just went up.

The state's legislative auditor is racheting up his investigation of Minnesota Secretary of State Mark Ritchie after a response Ritchie's office provided proved "unreliable" regarding allegations of inappropriate use of a mailing list generated through an official program.

As a consequence, the legislative auditor will be requiring Ritchie and members of his staff to submit to questioning under oath, an unusual step in legislative audit investigations.

Legislative Auditor Jim Nobles said today his office will continue working on several other investigations but will proceed quickly into the Ritchie probe.

D.J. Tice of the StarTribune says this is no trifling matter:

Nobles is one of the most widely respected figures in Minnesota state government. When he calls someone’s responses “unreliable” and “belated” that someone may have some explaining to do.

Tice provides a copy of Nobles' letter to the Legislative Audit Commission.

The idea (for example from DFL chair Brian Melendez) that this is just Republicans hounding Ritchie is thus quite wrong. Michael of course is reporting on this. Perhaps others can now give credit where it is due: MDE has struck paydirt.

UPDATE (10:30pm): Brunswick story moved on us -- here's an alternate link that works just now. Not up on the STrib's main page.

Labels: Minnesota, politics

In New Mexico, a county votes narrowly for a sales tax to support the creation of a spaceport (plus a fillip to the school district for "spaceport-related education.") But because the state's enabling legislation required two other counties to join in taxing for the spaceport project to proceed and expenditures to be made, the county doesn't know what to do with the money. The Tax Foundation reports that the county might "be stuck with a pool of money that it wouldn't know what to with." They might not be able to charge the tax as planned from January 1. The blame is largely laid on the other counties that aren't moving fast enough to raise their taxes.

Labels: economics, taxes

Another one of my activities is participating in a book club. This one is a bit unusual - the members are mostly current and retired college professors. The intellectual discourse that occurs can be hyper polysyllabic but it is interesting. I've read two books recently and decided to share my thoughts.

Most of our selections are non-fiction, covering a wide range of subject matter areas (history, politics, economics, philosophy, religion, etc.).

We just completed Infidel by Ayaan Hersi Ali, the Somali woman who was elected to the Dutch Parliament. She is seeking asylum in the USA because of death threats in Holland. There she was under 24 hour a day security because she dared to speak out against Muslim treatment of women. The Dutch are now refusing to protect her in the US yet want her out of Holland. It appears for now that she is living in Holland while security issues are resolved. I thought the book was incredible in many ways. Her life story is absolutely amazing: from Somalia, to Saudi Arabia, Kenya, to Germany to The Netherlands and the US. She is multi-lingual and an excellent writer. Her story is one every woman should read - it is real, it is sad, it is uplifting.

The other book I just completed is Freakonomics, the best seller by Steven Levitt and Setphen Dubner. The book was interesting but after going through all their logic, ideas, stories, results, including sumo wrestlers, real estate, etc.) what I found most valuable was the classic demand/supply theory of economics, as applied to oil prices. Pages 268-271 take the reader through the impact of high and low oil prices, and the ramifications in the West, China, and Saudi Arabia. This is one of the best, clear summaries of oil prices (and any other commodity for that matter) I've read anywhere. You can substitute ethanol, corn, etc. for oil and you get it.

Labels: books

The Air Mobility Command (AMC) has just completed its 1,000,000th sortie (defined as a takeoff and landing) since September 11, 2001. About every 90 seconds, a mobility aircraft lifts off somewhere in the world.

What do these great fliers do?
1 - Move fuel to US and allied aircraft (nearly 1,200,000,000 gallons)
2 - Keep about 12,000 people and almost 5,000 trucks off Iraqi roads each month, helping defeat Al Qaeda's IED strategy
3 - Transport senior US leaders, including our president
4 - Currently are rushing about 12 Mine Resistant Ambush Protected (MRAPs) vehicles to Iraq and Afghanistan, every day. These are awesome machines, incredibly well designed to protect our soldiers against the IEDs. Yankee ingenuity at work, again. We adapt - one reason we can achieve what we do achieve.
5 - Provide aeromedical crews to wounded soldiers on a very timely basis.

Thanks to Michelle Malkin for finding this information.

Labels: US Soldiers

Michael and I are taking a week off from The Final Word. Just as well, as Michael is busy chasing down pieces of the Mark Ritchie debacle. Gary has found another one.

Me? I'm trying to figure out how to get a gig researching a Cigar Aficionado bash. Otherwise I'm writing. Have a good weekend.

(Shopping? No, because I'm trying to improve the trade deficit and stay out of those Icelanders' way. And Greg Mankiw anticipates my Tuesday principles lecture -- all the better since I use his book!)

Labels: Minnesota, NARN, politics

More than three years ago, I wrote a study of Armenian migration and remittances around the world. (Here are the two papers that research generated.) At the time, one of the complaints I heard from many sources were the high prices charged for remittances by Western Union. The only reason I could find for the higher prices was the ubiquity of WU around the world, with over 320,000 offices. An article in Wednesday's NYT suggests it has "five times as many locations worldwide as McDonald’s, Starbucks, Burger King and Wal-Mart combined."

Stung by the criticism, Western Union now ties its future to immigration and has become a champion for open borders.

Having once stressed efficiency (“the fastest way to send money”), Western Union now emphasizes the devotion the money represents. One poster pairs a Filipino nurse in London with her daughter back home in cap and gown, making Western Union an implicit partner in the family’s achievements. “Sending so much more than money” is a common tag line.

The company sponsors hundreds of ethnic festivals, concerts and sporting events, from cricket matches for Indians in Dubai to sack races for Jamaicans in Queens. Last year it paid a Filipino pop star, Jim Paredes, to record a Tagalog song urging migrants to send money home. It paid the producers of a Bollywood film, “Namastey London,” for a scene in which a Western Union wire transfer helps rescue the heroine.

The Western Union agent in Panama played the rescuer’s role himself. With many of his customers illegal immigrants — mostly from Colombia — he put three lawyers on retainer and started a radio show. The lawyers answered callers’ questions and scheduled free appointments to get them legalized.

“Every time an immigrant is forced outside the country, we lose a potential customer,” said the agent, Jaime Lacayo, who provided the legal services for two years and still runs the radio show. “We have participated in many marriages of foreigners marrying Panamanian ladies, because that is the best way to legalize your status.”

Fees have dropped, but along with this are concerns about the use of the system by illegal aliens and by terrorist groups. A slowing economy in the US has slowed the growth of remittances according to this survey from July. So if you want to place bets on the immigration debate (along with the state of the US economy), you can either go long or short in WU.

In the Armenian case, WU still has the lion's share of the market for remittances from everywhere else (there's one decent competitor making some inroads), but the ex-Soviet remittance market -- which is a majority of the market -- is picked up by banks with ties to either the old Soviet savings bank or postal bank systems. If competition works elsewhere, WU still has the largest network.

Side note: cool graphic from the Times on remittances from the US to the world.

Labels: economics, remittances

John Hinderaker has found the best story about this Thanksgiving -- a "Director of Equity, Race and Learning Support" who uses the Thanksgiving story to create resentment among native American tribes for "500 years of betrayal returned for friendship." Hey that's great. I hope s/he* decides next to invite guilt on the Fourth of July, for being so mean to the British. I mean, they gave us the common law and our common language, and look how we thank them! You KNOW this list is going to show up in his/her professional development report to demonstrate his/her work accomplishments.

John notices this Fox News story on the matter, which includes a quote from a native American in Seattle:

The spirit of Thanksgiving, of people working together to help each other, is the spirit I think that needs to grow in this country, because this country has gotten very divisive.

To the Seattle School District's director of Equity, Race and Learning Support, a special Thanksgiving wish from my friends at Fraters Libertas.

*This is not a bow to PC. I have no idea if someone named "Caprice" is a man or a woman. But no way is someone named "Caprice" a conservative -- you'd use "Cap" or "Cappy" instead if you were.

Labels: education

Mrs. S noticed this morning: Right around Thanksgiving our SCTimes newspaper is delivered with a greater amount of care. Mrs. likes to keep a number of trinkets on our front step -- seasonal lights are up year-round. The newspaper is usually thrown (a tradition I carried on in NH in my own youth) and stuff gets knocked over constantly. Breakable trinkets are broken. But over the last few days the paper is placed against the side of the entry, on end, able to be grabbed while still standing in the doorway.

What will come next is the now-standard Christmas card from the carrier, replete with cute photo. Because it's a morning paper most of us don't know who the young man or woman is. I worked delivering an afternoon paper and did collections myself, offering me more opportunities for tips and gifts. (The SCTimes collects subscription payments itself by mail.) Indeed, the afternoon delivery person, being more visible, is likely tipped at a much greater rate. No chance of the morning carrier telling the neighbors about the cheap Banaians.

Come January, of course, the paper will once again by tossed on the step, and once again I'll have to put on shoes to step through the snow to get it. That's OK, though. The WSJ is always left in the driveway, and that guy never expects a tip.

Labels: economics

I recall (can't find the story right now) that there was once a poll in the new Russia of 1992 or 1993. The question was whether you would rather have shops with goods that you didn't have enough money to buy, or would rather have money but nothing in the shops to buy. Of course, the former won handily -- getting money was something you controlled, goods in the shops was something you had no control over.

Venezuelans are getting both and neither, simultaneously.

President Hugo Chavez's government is trying to cope with shortages of some foods, and the lines at state-run "Megamercal" street markets show many Venezuelans are willing to wait for hours to snap up a handful of products they seldom find in supermarkets.

"You have to get in line and you have to be lucky," said Maria Fernandez, a 64-year-old housewife who was trying to buy milk and chicken on Sunday.

The lines for basic foods at subsidized prices are paradoxical for an oil-rich nation that in many ways is a land of plenty. Shopping malls are bustling, new car sales are booming and privately owned supermarkets are stocked with American potato chips, French wines and Swiss Gruyere cheese.

Yet other foods covered by price controls — eggs, chicken — periodically are hard to find in supermarkets. Fresh milk has become a luxury, and even baby formula is scarcer nowadays.

The shortages are prompting some Venezuelans to question Chavez's economic policies while he campaigns for constitutional changes that, if approved in a Dec. 2 referendum, would let him run for re-election indefinitely.

Perhaps ol Hugo could look at what good price controls have done for Zimbabwe.

The government says it now has to import leg of pork "because local suppliers declined to participate." This is, they say, political. So too is starvation.

(h/t: Angus at KPC)

Labels: economics, food

A few weeks back, after some investigative reporting by my NARN colleague Michael Brodkorb, we ran a story on The Final Word about a potential irregularity with the use of a mailing list from an official function of the Secretary of State, Mark Ritchie, for a newsletter that solicited donations for Ritchie's campaign. At the time, Ritchie was quoted as saying he didn't know how Republican operatives who attended the official meeting got his solicitation. Today, Ritchie admits he personally gave the lists to the mailer. Michael now documents as well that Ritchie's office claimed not to know how the lists got to the mailer in a response to questions from two legislators.

Kudos of course to Michael. Also to Mark Brunswick at the StarTribune for following up on this story and getting the scoop on Ritchie's admission.

Now it's the rest of the media's turn. On Nov. 4, 2006, the PioneerPress endorsed Ritchie (which Ritchie has reproduced on his own campaign site), including this paragraph

We will hold Ritchie accountable to his promise to run his office as a "nonpartisan" — a big challenge for anyone affiliated with a political party.

PP, you're on the clock.

Labels: Minnesota, politics

Courtesy of John Palmer. Here's a much earlier version of the same story. Someone gave it to me in graduate school, and I still share it with my classes.

Labels: economics

A new policy paper by Richard Vedder of the Center for College Affordability and Productivity argues that public higher education is overpriced and overinvested. He finds that

Looking at hundreds of regression results, the overwhelming majority show a statistically significant negative correlation between state government appropriations and economic growth—the more states spend on higher education, the lower the growth in personal income per capita in future time periods. In some estimates, the results are not statistically significantly negative, but never do I obtain results consistent with the conventional wisdom that university spending promotes economic growth.

He points to examples such as Illinois, New Hampshire, South Dakota and Tennessee (low state appropriations, high growth rate) versus Michigan, Kentucky and North Dakota (high appropriations, low growth.) The difference in income in 2002 dollars may be as much as $1400 per capita.

Some of Vedder's writing is a little overwrought, for example suggesting that university professors like myself have too large a conflict of interest to take the lead in this research. And this particular report doesn't show the research behind what he's done (though for the point above, you could read this paper from the Mackinac Center.) But he makes a couple of good points. One is that there's no real reason to believe an increase in state appropriations for higher education will increase the state's growth rate. You are measuring an input, not an output. Vedder's research shows that even holding state tax burden constant (which has a negative effect on growth, in his regressions), you get a negative impact of state appropriations on growth. I note he includes a measure of number of bachelors degrees awarded as share of the25+ population -- it does have a positive impact on growth. But he argues (in his 2004 J Labor Research paper, not openly available online) that there's only a weak link between current appropriations on higher ed and the proportion of the population holding a bachelors. Seems to me to make a big difference whether or not you believe that.

Best of what he has isn't the growth regression, but a list of reasons why college is overpriced. These include third-party payers (often by government, making the system too politicized); resource rigidities; and issues of ownership and governance. See the report for the full list. One suggestion for reducing these costs that I love is the idea to tie presidential salaries to tuition increases. Student governments should start clamoring for this now.

Anyone interested in doing something similar with Minnesota? SCSU's data is here.

Labels: economics, higher education

During this time of Thanksgiving, I hope all will remember our troops in a manner fitting their sacrifice. Since our inception as a nation, we have been extremely fortunate to have outstanding men and women who understand the value of freedom and the price we sometimes must pay.

Today, as in generations past, our best are protecting the rest of us. We here in the states can celebrate with family and friends. Our co-citizens overseas cannot. Please take a moment to send a "THANK YOU" to our troops. You can do it here. It won't take long but means a ton to our overseas men and women.

To all our readers, Happy Thanksgiving.

Labels: US Soldiers

My friend Dave Aiekens at the St. Cloud Times sends me a link to an interview with state economist Tom Stinson in the new MinnPost. I commend it to my more conservative friends; as Dave pointed out in his email, I'm not the only person who's a bit pessimistic about the state economy. Given Stinson is writing up the new budget forecast as we speak, we cannot look at this interview and figure there'll be much glee.

Stinson responds to a question

MP: There has been a lot of debate about whether this is because of a lack of investment in government or a refusal to pay taxes, or, on the other side, too much taxation hurting the business climate. How much of a factor are these things and how long does it take before these decisions are reflected in economic performance?

TS: There is not much you can do in the short run to stimulate a large economy like the State of Minnesota's. Typically it takes awhile for a cumulative impact to be noticeable. But one of the large changes that may have occurred is that the production of defense material has become more important in the U.S. economy than it was five or 10 years ago. And that is not an important sector in Minnesota. So to the extent that the growth in the U.S. economy is coming from defense production, Minnesota is bound to grow more slowly.

Another place where we have to be concerned is our investment in new technology. We are not talking about just the state government's investment, but the broad range of investments in research and development. The identification of new products and new processes and new ways of doing things has slumped significantly in Minnesota compared to what it was 20 or 30 years ago. It could be that part of our underperformance economically is that we just haven't been investing enough in r&d compared to the rest of the country.

I wonder if Tom has seen my note on the new study on Minnesota's place in acquring international patents. Now try to square that with the latest press release from St. Cloud's own state Senator Tarryl Clark:

Sen. Clark said the Legislature must focus on passing a new bonding bill, a transportation finance package to fix the state’s roads and bridges, as well as a new tax bill aimed at spurring job growth and reducing property taxes soon. Many other strategies to promote growth in the emerging bioscience and renewable-energy industries should be examined, according to Sen. Clark.

What in this would fix the Minnesota economy? The tax bill being discussed raises taxes on some in order to give others the possibility of a property tax break. At best that's sloshing money between households. If you raise taxes on rich individuals, from where do you get the money for private investment? As Craig Westover points out, "Talk about how ‘we’ distribute the resources ‘we’ have easily becomes talk about how ‘we’ distribute the resources ‘you’ have."

Gary Gross provides a reminder of what the Senator wanted to use to fix our economy last year. Leo suggests the taxing will continue until morale improves.

It's no use pretending the problem of a softening economy isn't there. The sooner conservatives recognize it and propose what to do with it, the sooner they can start beating back the tax proposals of Sen. Clark. Next week will focus the mind...

Labels: economics, legislature, Minnesota

This makes perfect sense to me:

According to Chinese Restaurant News, there are nearly 41,000 Chinese restaurants in the United States, three times the number of McDonalds franchise units, and more than the number of McDonald's, Wendy's and Burger King franchises combined!

If you run a franchised outfit, in order to make profits you have to limit entry. Franchisers will make money by providing exclusivity, so of course the number of Chinese restaurants will be larger.

Mrs. S and I were driving out to LA once, and laid up for the night at a half-decent hotel outside Ogalalla, NE. One of the tricks of traveling as vegetarians in America is to know where all the Indian and Chinese restaurants are. We ate at this place, which looked pretty iffy from the outside. I recall the food being only so-so, no better than most St. Cloud Chinese, but given the options in western Nebraska...

You wonder how that place ended up there.

Labels: economics, food, travel

In today's StarTribune, Katherine Kersten describes a case of campus "making an example" of a student who made a flip joke. A student at the MCTC campus newspaper jokes about missed deadlines by creating a noose out of his sweatshirt drawstring, hangs it with a note of mock warning, and then removes it before leaving the newspaper's office. Within days, he is fired.

At a meeting set up by college authorities, he apologized profusely to staffers. He called the noose joke "unprofessional" but explained that it was a misunderstanding.

"Too late," one student responded, said Keith. "The staffer told me, 'An example needs to be made. We need to raise awareness of issues like this on campus.'

"They didn't want an apology," Keith added. "They wanted me out of there so they could launch the aftermath."

Not the student's best moment; it's a tasteless joke. But one could hardly have said he was singly out black student reporters for the noose. That did not matter.

"We are angry," Lisa Dean, president of Association of Black Collegiates, a student group, told the Star Tribune for an article about the incident. "If we do not nip it in the bud, it will spread and a lot of students may not want to attend this college because of racism."

At the P.C. circus' surreal climax, Keith unknowingly walked into a protest rally where a crowd vented outrage at his bigotr. Meanwhile, administrators scrambled to use the incident as a "chance to educate our students."

Educate about what? You guessed it: "We want to educate around cultural understanding," Laura Fedock, interim associate vice president for academic and student affairs, told the Star Tribune. "We need to teach each other when something is offensive."

Kersten wonders if students learn anything else. But she then gets to the heart of the matter:

The thinly veiled secret is that an incident like this is a godsend to campus political posturers and must be milked for all it's worth.

Today, a favorite college pastime is fanning the flames of grievance. Victimhood is a tremendous source of moral power, and being outraged and oppressed is a sure bet to get your picture in the paper -- displaying a look of grave concern for all humanity.

On the St. Cloud State campus last week, some muttonhead scratched swastikas in our student union building. One was in the muticultural office, found last Tuesday. It's unlikely we'll ever figure out who did it. But this doesn't prevent one administrator of saying we will "come together as a community and develop a plan."

For what? If the perpetrator(s) are not on this campus, what good does it do? Because it gives the political posturers not only a photo op but power, power to impose a particular view of race. One member of the campus sent around a statement on the use of swastikas which concluded with this sentence:

While what might be thoughtless provocation should not be criminalized to an extent beyond room for education and socialization, hate crimes must be identified as such and condemned and persecuted.

The contradiction within that very sentence -- don't criminalize, but persecute -- is a shining example of the problem with the definition of hate crimes. (So too an exhortation at the bottom of his flyer advertising a public forum which says "Zero tolerance for undemocratic statements." In bold and underlined, just in case you might miss that.) At both these schools, statements of "zero tolerance" make it more difficult to have these conversations in the open.

Not that the posturers really care.

Labels: higher education, SCSU

Normally I don't refer to Powerline because so many people read it. However, if you don't, you simply must see John's video of his youngest daughter's chorus. Part of the program was sung by the elementary students only. Much of the rest was performed by the four high school choirs. The finale, a combined chorus rendition of the "Battle Hymn of the Republic" - it is wonderful!!!

Many (many) years ago, grades five through eight, I participated in city-wide music concerts sponsored by the Catholic schools in my hometown. Participants included at least 500 band members and 1000+ choir members. The finale was always "God Bless America" and it brought down the house. This video of John Hinderaker's daughter's concert brought back the memories, the tears and had the same emotional effect. Simply awesome!

Labels: education

I don't think I've ever seen this line of logic before. Senator Christopher Dodd is holding up any confirmations of Federal Reserve governors until after the elections.

Senate Banking Committee Chairman Christopher Dodd (D., Conn.), suggested Friday that he might not bring a vote on the renomination of Federal Reserve Governor Randall Kroszner, a leading figure in the central bank’s effort to overhaul its mortgage regulation.

Kroszner’s term at the Fed expires Jan. 31, and the White House nominated the former academic to a 14-year term that would run through 2022.

“There’s one nomination here that would be for somebody [for] 14 years,” Dodd told reporters on a conference call. “We’re frankly getting down to less than a year away from the [November 2008] election. On nominations of that length, I’m fairly reluctant.”

There are already two empty seats on the Federal Reserve Board of Governors. Losing a third seat gives the Fed a much smaller board with which to make monetary policy than the original Federal Reserve Act intended. The nominations were made on May 16. My impression is that having Kroszner off the board and holding up the other two makes the FOMC more weighted towards academic economists, and possibly more hawkish on inflation. Why Dodd thinks this is a good idea is beyond me. And it seems a new extension of Congressional running-out-the-clock on divided government.

At any rate, fewer members on the Board of Governors robs monetary policy of a diversity of viewpoints.

Labels: economics, Federal Reserve, politics

This article from our campus newspaper is fairly persuasive that a room to allow Muslim students the opportunity to wash their feet before prayers is less controversial than it seems. The front page of the print edition has a very large picture of a student washing his feet, but the reporting inside is thorough in making the point that there is equal accommodation of all religions. The foot sink was installed in the student union -- not a state building, technically -- in 2004, though accommodations have been made since 2001.

"The purpose of our building is to serve student organizations, and as part of freedom of religion, students have the ability to create their own student organizations based upon religious tenants," [Ed Bouffard, Atwood Center director] said. "Our function is to serve the group, not to serve the religion. And if their group gathers around a particular context, that is their choice, and we serve those groups."

"One of the big issues has been unfair treatment of Christian groups relevant to Muslim groups," he said. "Sometimes people frame it as, 'well gee, you are catering to Muslim students, and Christians can't do that.' Well in the case of the foot sink, it is done for safety. They don't pray in that room, they wash their feet in that room, and that is a cultural difference. I think here we certainly serve both groups."

Bouffard said about 12 Christian groups use Atwood's facilities, and in 2006, Christian groups made 454 building reservations compared to 55 for Muslim groups.

A Christian organization also recently conducted a 24-hour prayer room, and Bouffard said Native American students have sometimes requested to burn sage to cleanse rooms. In those cases, fire alarms were temporarily turned off to allow the burning. Certain Pagan and Wiccan groups also meet in Atwood regularly.

It's a pretty compelling case Ed makes. One question, on equal accommodation, seems to be cared to by the numbers on number of Christian building reservations (those can be anything from a booth to hand out circulars to advertise to a prayer group.) The other, state funds, is met by the use of a student union paid for from activity fees. I'm a little uncomfortable with that, as students don't really have a choice on paying for it (short of not attending a public university.) But I don't know that this is a major objection.

Anyway, compliments to the reporter who wrote this piece, Chad Eldred. It was very informative.

Labels: higher education, SCSU

I was wondering about something the other day in thinking about the decline of the Minnesota economy. At what rate does the Minnesota economy create jobs?

Now, I realize you probably read that the economy lost jobs last month. But that's not the full story. Lots and lots of people got new jobs in October; lots and lots of other people lost theirs. It takes some time to get the numbers, but for instance in the quarter ending March 31, Minnesota added 140,915 jobs and lost 133,393. What you would get for the usual report is therefore "a gain of 7,522 jobs." The smaller number fails to give you a feel for how much dynamism there is in the Minnesota economy, or that for any other state.

The new Business Dynamics report from the Bureau of Labor Statistics today gives you a feel for that. Look at the last two pages of the report for a snapshot of state gross job gains and gross job losses as a percent of employment, and you can compare Minnesota to the rest of the area. I've selected data from Table 6 therein.

	Job gains		Job losses
	Mar-06	Mar-07	Mar-06	Mar-07
U.S.	6.9	6.6	6.1	6.2
Illinois	5.7	5.5	5.1	5.2
Indiana	6.2	5.8	5.6	5.6
Iowa	6.4	5.8	5.7	5.9
Michigan	6.0	6.1	6.6	6.5
MINNESOTA	6.6	6.1	6.0	5.8
No. Dakota	7.9	7.0	6.5	6.5
Ohio	6.0	5.7	5.8	5.7
Pennsylvania	6.0	5.7	5.4	5.4
So. Dakota	7.1	6.5	5.5	5.9
Wisconsin	6.0	6.0	5.7	5.9

March 2007 is the last quarter for which we have data. One can see that, though Minnesota has gross job gain rates below those in the national economy, so do all the other states in this area. California and New York, in contrast, have gross job gains in excess of 7%; Utah had an 8% job gain rate in March 2007. Governor Pawlenty, on his radio program this morning, noted the job loss but asked for comparisons to these states I've included in the table.

Whenever I present economic analysis about the St. Cloud economy, I show a picture of the counties around St. Cloud. There are dots on the picture. Each dot represents a worker who drives to a job within a five-mile radius of the St. Cloud City Hall. The dots extend along U.S. 10 to the north, along I-94 in both directions (not so much Highways 23 and 15). I then show them a second map. Lots of dots down into the Twin Cities, not so many going out. That map shows where people work who have a house within five miles of the St. Cloud City Hall. (The map isn't precise -- I freehand the location of City Hall by finding where Highway 23, Division Street, crosses the Mississippi. Go ahead, try it yourself.)

What these numbers should tell you is that the American economy is a job creation machine and a job destruction machine. This is sometimes called "the churn" or historically as "creative destruction". And the most beautiful thing about it is not the jobs it creates but the opportunities for new goods and services that produce happiness, in things from lawn care to health care. But these data are a marker that, somehow, the Minnesota economy still is able to provide opportunities for jobs and the dynamism to reduce or even eliminate those industries where we no longer have a comparative advantage.

People wonder, when I show them the maps, whether this is a problem for St. Cloud. What does it mean for an increasing share of St. Cloud residents to work in the Cities? What does it mean for an increasing share of St. Cloud workers to travel substantial distances to their jobs each morning? (A local manufacturer told me of a worker he had from Randall, for example -- he lost that worker when a manufacturer in Aitkin offered a similar job at about the same wage.) I reply to them, it's better than the alternative, to have job loss without job gain.

The question is what leads to job gain? What reduces job loss? For example, the discussion whether you can "government your way to prosperity" should turn on that. For it is only in knowing how to keep the churn moving that can lead to prosperity.

Labels: economics, Minnesota

Your Thanksgiving dinner:

The rising cost of oil and other utilities, combined with an explosion in the cost of corn feed, has increased the cost of raising a turkey by as much 35 percent and costing the industry more than a half-billion dollars.

Those increases haven't gone unnoticed in MetroWest.

"Oh, yeah, big time," Gerard Farms owner Mike Gerard said yesterday when asked if he has seen an increase in feed costs. "I'm paying 20 percent more for turkey this year than I paid last year."

Naturally, that increase has led to customers seeing higher prices.

Last year, Gerard said, the price of a roasted turkey with stuffing and gravy at the Framingham farm was $3.19 per pound. This year, it's jumped to $3.39. The price for fresh, uncooked turkey has increased even more, from $2.29 last year to $2.59 today.

For a 15-pound bird, which should serve about 10 people, that adds up to an increase of only between $3 to $4.50 a turkey.

...With many growers switching to the more profitable corn for ethanol, turkey farmers are trying to cope with a one-two punch of increasing corn prices and decreased soybean production.

According to some estimates, the higher prices translate to about an 8 cent increase per pound, per turkey, or about a 35 percent increase in the cost of raising just one bird.

The decline in soy production has also hurt us vegetarians. Tofurkey is made of course with soybeans, so that price is also rising. The roast itself was $10-$12 for a26 ounce piece with stuffing included five years ago. You seldom see them under $20 nowadays.

This just another part of what John LaPlante calls The Dark Side of Ethanol.

(h/t: Mark Perry, who suggests you hedge your food bill with ADM purchases.)

Labels: economics, food

Mark Steckbeck answers the reasons why restaurants play loud music and run the air conditioning down to 60 degrees.

A restaurant ties two goods together and then charges you one price. You pay for the food and they give you a free place to sit down and eat. (It makes you wonder where the D.O. J.'s Antitrust Division is since Microsoft.) The restaurant makes only so much money from each table of patrons and relies on continuous turnover to keep the money coming in.

So the goal of the restaurant is to make you just comfortable enough that you enjoy the restaurant but not enough to keep you hanging around.

This of course ties in to my Panera discussion from Wednesday -- where, I'm happy to report, the restaurant has gone back to discounting the coffee for those with travel mugs. The net price change for coffee, bagel and cream cheese with your own mug is now about 12% vs. 28% before.

Steckbeck suggests trying to prove his point by saying to the server who asks if you need anything else "Yes, some peace and quiet. We're going to visit awhile." My mother-in-law used to go out to Perkins with three other older women, buy coffee and a roll and have a long chat. The manager eventually brought out an egg timer. They never returned.

Labels: economics, food

Molly Hatchet knows a little something about Mitch "Erstwhile MOB" Berg:

You think you're real sassy,
But you know your headed for your doom,
You look a little older but you sure ain't no wiser,
You're running for a stone-cold tomb.

Untouchable, he says? Hardly. We can get to him. We will give him no quarter in which to practice his silly bagpipes. He and his "it was twenty years ago today" navel-gazing shall be put to the power of the MOB.

You've got to find out for yourself,
You've got to learn it all on your own,
All this messing around,
Gonna put you in the ground,

I fail? Have you checked his Blog Readability? Go ahead, put the Berg blog in there and see what you get? Yes, Elementary School. Centrisity scores Junior High by comparison. All that pontification, all those twenty-years-ago-today piffle, and for what?

Start to feel the power,
Hundred miles per hour,
You're on the wrong side of the road,

There is of course hope for Mitch. There is redemption. He may indicate his loyalty to the MOB government by a very simple act. He must change the banner of his MOB badge to read

That's right. Sent to the Caucasus, the ancestral home of your mayor, where an eagle will devour your Guinness-infested liver each day and then have it regenerate each night, only to suffer that fate again.

Your hands a-start a-shaking,
You'll feel your mind a-breaking,
You'll wonder why it's getting so cold,
Your body's feeling icy,
That box will hold you nicely,
You'd better say goodbye to your soul.

This is your last chance, or the titans of the MOB will leave you dead and gone.

Labels: mayor directives, MOB

I've been meaning to write this for a few days. I saw a link from Lileks on the Minnesota Early Learning Foundation. I was reasonably sure I knew what that was about, after hearing Strom interview Art Rolnick a couple weeks ago. Sure enough, MELF is the attempt by Rolnick and others to see if the economic research on benefits from early childhood education are something one can intentionally do (as opposed to finding benefits from early childhood ed in natural settings, where the addition of education is perhaps the by-product of something else.)

United Health is giving money away to boost its corporate image, and MELF got $2 million. MELF is funding a $30 million pilot project in St. Paul.

Early childhood programs show "the biggest bang for the buck," Rolnick said. A $20,000 per-child, two-year investment could show a return of up to 20 percent for society each year of the child's adult life -- in the form of higher income, taxes paid, staying off welfare and staying out of jail.

His proposal: A market-based system to fund scholarships for low-income families. They would get scholarships of $10,000 to $13,000 per year per kid to use for high-quality child care.

...An eventual endowment of $1.5 billion to $2 billion, he said, would fund the program for nearly all Minnesota families in poverty.

"This one-time investment," Rolnick said, "is roughly the cost of two stadiums."

In the Strom interview, Rolnick states that the project will provide results that will be public and assessable by independent researchers (focusing on 1200 families in Frogtown.) I don't know all the details of the program -- the program includes counseling of parents on educational choices, so if a parent has two preschoolers, you only need one counseling, but there'd be a scholarship for each child -- but the issue is one of scalability, as the originators clearly understand.

Small-scale early-childhood-development programs have been shown to work, but can their success be reproduced on a much larger scale? There are reasons to be skeptical; some recent attempts at scaling up early-childhood development have been disappointing. But based on a careful review of past and current programs, we believe that large-scale efforts can succeed if they incorporate four key features: careful focus, parental involvement, outcome orientation, and long-term commitment.

The project seems something worth trying; it's a good thing that both liberal and conservative groups can agree to put effort into finding out whether the larger scale is viable. Here's a status report of what they've done so far.

Labels: education, Minnesota

I have to wonder, after reading this article on how the share of baseball revenues going to player salaries has dropped to 41% from 58% six years ago (h/t: Felix Salmon) whether the luxury tax and increased revenue sharing in baseball has held down salaries. The luxury tax was imagined not to do too much, and revenue sharing may be a drag only because it transfers money to small-market teams that do not compete for free agents. If it transfers 17% of revenue from players to owners, I suspect your next collective bargaining agreement will have that as a sticking point. Lucky for us, that's not until 2011.

I had wondered whether Torii Hunter might take $55 million for four years, but the article argues he would get $75MM for five -- not likely a price the Twins would go, no matter how you project the revenues, because that sets the bar for the M&M boys.

So A-Rod returns to the Yankees for the Yankee premium. If Torii goes there, the premium probably gets him an extra $3MM/yr.

Labels: economics, sports

Indoctrination on campus, such as the residential life program at the University of Delaware, is not limited to students. Faculty members are also on the receiving end.

One of the most blatant examples came early in my university teaching experience, when the annual spring faculty conference featured a session on “White Belligerence in the Academy.” The promotional brochure said that

Like previous white calls—Remember the Alamo! Remember Little Big Horn! Remember the Maine! Remember Pearl Harbor! Remember 9-11 has recently become a racially quoted term among whites to question non-EuroAmerican views and beliefs.

This workshop will explore an unde