Archive for 2010

POLITICAL DECISIONS MATTER in state economic performance. Indeed. Plus this: “If California had North Dakota’s unemployment rate, it would have over 1.3 million jobs than it has today. That is almost the entire population of Sacramento County and 30 percent more than the entire population of Northern California’s Contra Costa County.” If only California could do as well as . . . North Dakota? Yep.

THE FIGHT OVER WHETHER TO require sprinklers in new homes. Too many things are driving up the cost of housing, even as we face a glut of existing homes. And the return on investment seems poor. A sprinkler system adds $5000 to the price of a home, but: “The fire survival rate in homes with working smoke detectors is 99.41 percent, according to the NFPA. Toss in a sprinkler, and the rate rises to 99.6 percent.”

STRANGELY, THEIR PARTY AFFILIATION IS OMITTED: “The mayor and seven other current and former officials of the small Los Angeles suburb of Bell were arrested on Tuesday on charges related to a pay scandal, the Los Angeles County District Attorney said.”

UPDATE: Reader David Marcus writes: “In California, non statewide offices are non partisan. The candidates may self identify with a party, or may be registered with a party, but its not going to show on the ballot. Because Bell is a heavily minority (Latino) city, it is most likely they are all Democrats, but they did not run for office as Democrats. That is not on their campaign literature and not designated on the ballot.”

WHY CAN’T WE HAVE HIGHER INFLATION? “One question I have is simply whether inflation would really be that great. It would solve some of the problems we have, but it would produce others. There’s a great temptation in policy circles to think that whenever you are plagued by a given problem, its exact opposite would be much more desirable. If we did stimulus and the economy isn’t great, then austerity must be better. If we have low inflation producing an assortment of known problems, then we’d be happier if there were much higher inflation. I’m not saying that either of these propositions are wrong. I’m only reminding myself that we can see the problems with very low inflation here and now.”

JOHN HINDERAKER: “True, to describe someone as ‘better than Obama’ may be damning with faint praise nowadays. But that fact, too, can hardly give the Dems comfort.” Think how much bigger the gap between Palin and Obama would be if the two got equivalent press . . . .

CUBA AND THE DEATH OF COMMUNISM: Fidel Castro Finally Admits The Obvious. “There may yet be admirers of Cuban communism in certain precincts of Berkeley or Cambridge, but it’s hard to find them in Havana.”

RASMUSSEN: Alaska Senate: Miller (R) Holds Double-Digit Lead Over McAdams (D), Murkowski. “Republican Joe Miller attracts 42% of the vote in the first Rasmussen Reports poll of the Alaska Senate race since GOP Senator Lisa Murkowski announced her write-in campaign to try to keep her job. The telephone survey of Likely Voters in Alaska shows Murkowski picking up 27% of the vote and Democrat Scott McAdams earning 25%.”

MEGAN MCARDLE: Irish Example Doesn’t Support the Case Against Fiscal Austerity. “Whatever the case for stimulus in the US, Ireland is just a terrible example to use in its favor. In fact, I am hard-pressed to understand why stimulus proponents insist on returning to it. Constantly talking about a country which has substantial borrowing constraints seems to reinforce the conservative complaint that stimulus proponents think we live in a fairy tale simple economic model where adequate capital to fund stimulus borrowing can simply be assumed. Ireland’s example could serve at least as well as a warning about the dangers of acquiring an unsustainable debt load, rather than an encouragement to hog-wild deficit spending.”

ANDREW GILLEN: THE AMAZING COLLEGE DEBT BUBBLE.

This heavy debt load is causing much suffering, and whenever there is suffering, it is tempting to blame it on some easily vilified scapegoat. The for-profits seem to be serving that function these days, and while they are by no means blameless, there is plenty of blame to spread around.

First up are students and parents. While earlier generations that paid only a few hundred dollars a semester can perhaps be forgiven for continuing to believe that college is a nearly risk-free decision financially, today’s students do not have that luxury. Exploding tuition and the related horror stories about crushing debt loads appear regularly in the media. Yet students and parents largely ignore these warnings. The views that more (formal) education is almost always a good thing and that the loans needed to finance it are “good debt” since it is an investment are both widespread and contribute to the problem. While true to an extent, these views can be and are being carried too far by some, blinding some individuals to the dangers of debt.

The government also shares blame for the high debt load. Part of the problem is that the government seems to be encouraging too many students with little prospect of graduating to borrow money to attend college. . . . But by far the largest share of blame for the tsunami of debt falls on the colleges themselves. As Robert Martin argues, “higher education finance is a black hole that cannot be filled.” Colleges have nonetheless attempted to fill the hole with student borrowing. Such greed, when filtered through a well-functioning market, need not be a cause for concern as the market channels it into useful and productive activities. Unfortunately, the higher education sector cannot be characterized as a well functioning market. The lack of adequate measures of outputs or outcomes is primarily responsible for this, but there are other contributing factors including the non-profit or public status of most institutions, the principal agent problem, and peer effects.

Read the whole thing.

UPDATE: Reader Scot Echols writes:

I know I’ve been pestering you a lot lately Glenn, but as one of those with crushing educational debt, I have to weigh in here.

It speaks to the general branding of the value of a college education that, unlike almost any other expense, people don’t even seem to question the benefits of getting a college education, regardless of the cost, over other options. I realized in my first failed attempt at grad school that all one had to do was show u p, and the school would figure out how to keep you there. I saw some hint of that at the undergrad level, but it was glaringly obvious at the grad level. If you meet the minimum requirements for their program, ESPECIALLY if you are a minority or female student, they are going to move heaven and earth to get you funding. But this is a Faustian deal if there ever was one. If one had the knowledge to do a financial projection of the long-term value of a college education, trade school, workforce, or military options start looking really good. My oldest son enlisted in the Marines, and now, at 25 years old, he owns a house, has about 40K invested into two classic Dodge Chargers almost completely restored, has tens of thousands in retirement and other savings, and a gun collection that would be the envy of many life-long collectors. Now they are PAYING HIM to get a degree! He will retire a millionaire without breaking a sweat because he chose to enlist FIRST rather than going straight to college. Going into debt to get a degree is just plain wrong, and the people who push the debt are worse than credit card companies in taking advantage of their customers.

I agree that debt for a generic college degree is a big mistake.