Friday, December 4, 2009

Budgetary Driven Brain Drain

Iowa does not have a tremendous amount going for it in terms of natural endowments. We don't have booming natural resources, cultural and economic meccas, or universally desirable recreation areas. What we do have is an abundance of space, feed corn, and lots of nice perfectly linear roadways due to our farming heritage. We also have a lot of great educational institutions and a number of families with young future taxpayers that should be future resources. Perhaps unfortunately, many of our brightest leave the state for greener pastures and we bemoan that and refer to it by the ominous euphemism of "Brain Drain". Brain Drain triggers thoughts of aliens sucking our intelligence out with needle like instruments of torture but the truth is that a lot of that sucking is coming from the aliens we call Legislator, Regent, and Governor.

It is fashionable, and expected, for good Iowans to bemoan the loss of our youngsters and longingly recall the glory days of Iowa. In an effort to combat this, we throw tax money into tax credits meant to encourage job growth and creation to keep our youngsters here that not only does not create jobs for young people but more importantly drains the resources we have to benefit those young brains. We subsidize wine production, movie production, and numerous other activities in which Iowa does not and will not ever have a competitive advantage. We try and control the economy and control the market system that tells us where certain businesses should locate. This arrogant ignorance and the culmination of idiotic decisions and spending by our Legislature have meant that our state universities are taking unprecedented cuts in funding from the great state of Iowa.

Today we were told that on top of the approximately 12.5 percent decline for this fiscal year we should prepare for an additional permanent 20 percent reduction for next fiscal year. This will result in a little under 1/3 of the university budget from state funded resources to disappear in a two year period and with tremendous implications.

In an effort to deal with the decline in revenue, the Board of Regents has proposed a 6% increase in tuition next year despite the fact that enrollment projections were already lower. Do they not have an economist to explain elasticity to them? Most likely an increase of that magnitude, in addition to the recent increases and decline in services, will actually reduce overall revenue from tuition. The majority of our students are native to the state and their parents are struggling with the same economic conditions creating hardship at the university and then some. They are facing lack of credit and financial aid to pay for college education and are probably finding it difficult to keep the kids they have in our universities, let alone pay more to enroll new ones.

If the idea was to drive students to community colleges then I would say its pure genius because that will be an unintended consequence. If the idea is to drive college students to other states for education then once again, genius. If the idea is to drive our youngsters out of the state to get jobs instead of staying here to get educations, you got it, genius.

Let it be known, I am a proud employee of Iowa State University. I never attended a public university for my undergraduate or graduate work for the very reasons that are going to be exacerbated by these budget cuts. I had no desire for huge class sizes, classes taught by teaching assistants, and a very impersonal relationship with my educators and because I valued those things I missed out on some of the amazing research and talent that are housed at public universities. Due to budget cuts, more students are going to miss out on that opportunity and there will be less capacity to deliver high quality research and meaningful outcomes.

I cannot argue that all college education is valuable in monetary terms. If I'm honest I think there are a number of majors and disciplines that not only don't increase people's lifetime earning expectancies but might actually reduce them. Sometimes community college is the better option, I get that. Sometimes people over invest in education, I am about to become the Wikipedia entry for this phenomenon. BUT, Education has economic value beyond its value to the student's lifetime earnings. Education has a public welfare benefit that cannot be measured.

I also cannot argue that perhaps if the education and research we produce at state universities is valuable that markets won't intervene, they already do in areas that the economy dictates as valuable. A number of us at the University bring in private sector dollars to fund our research and salaries. The more we are encouraged to do this the closer we are to moving toward a private university system.

What I can argue is that Iowa's university system is one of the greatest things about this state. We should be grateful to have young minds in this state for however long we can get them, particularly since we don't have very many cool jobs to offer them once they graduate. The bottom line is if you value the public university system, you cannot justify another huge tuition increase and massive cuts to our Regent's Institutions. I can honestly say I would rather lose my job than see another tuition increase on students that will not solve the problem. Particularly when the economics of a college education are getting decidedly more negative with the lack of employment opportunities and the increasing costs.

It's time to decide Iowans. Do we want the private sector to take care of education? Perhaps. If not, it is time to demand that the state is accountable for the pillaging of taxpayers when it comes to our schools. We have great brains, great schools, and great opportunities in the area of education. Unfortunately, we have myopic and idiotic legislators and decision makers to muck that up.

Thursday, November 19, 2009

Going Rogue: Why Must Stupid Rule?

The Newsweek cover is out with Sarah Palin prominently displayed in runner's attire next to the ingenious headline, "How Do You Solve a Problem Like Sarah?". The cover has been called sexist by Palin and a gaggle of Republicans and Palin supporters. One of the most common arguments against the cover is that it undermines her intelligence. Seriously? It seems to me that no one has undermined Sarah's intelligence more than she.

Sarah Palin does not have a competitive advantage in the brains department. How anyone could argue otherwise is beyond me. I would argue that attending 5 schools to get a degree in journalism and repeatedly speaking about the economy, structure of government, and world geography in a fashion that demonstrates she isn't smarter than a 5th grader is irrefutable evidence in support of my statement.

In Sarah's defense, it is obvious that you don't need to be an intellectual or well read to be elected to public office. Sarah Palin's popularity leads me to ask an elitist question: Why don't voters care that idiots are being elected? Why is it that Sarah Palin is popular because she is in touch with "Real Americans"? Why do we have the euphemism "Real Americans" to describe uneducated Americans who don't understand economics, political theory, or the United States Constitution? Why, Why, Why??

Now I do understand why pro-life supporters love her, truly she is the poster child for the movement. I can also understand why Second Amendment supporters love her; where else are you going to find a female politician that shoots Moose? The problem is that guns and abortion are wedge issues, salient with a small fraction of voters, and when politicians focus on these issues they do so at the expense of the issues that really govern the economy and our collective well being. Republicans know this. That is why they don't care if she's smart, she needn't be to serve the purposes of the party.

Because I know Republicans understand what her real role is, I was baffled at first by the notion that these are sexist attacks. Why make it about her intelligence when you cannot win that fight? After some consideration, I am of the opinion that Republicans are doing this to fool people into thinking she is smarter than we think she is. If you talk about her intelligence enough and cry sexism perhaps no one will actually question her intelligence.

In the ultimate irony, its a bit like what has happened with President Obama. Republicans argue that when they criticize Obama they are called racist, even when they have legitimate reasons for their critique. Now Republicans can counter every criticism of Sarah Palin with the argument that it is sexist. Brilliant!

The problem is that criticizing Palin isn't sexist. Criticisms of her are based on fact not sexism, much like most criticisms of Obama aren't racist.

Without sex, Palin doesn't get votes. White middle aged men love her because she is attractive and will help them keep their guns. If she were ugly she would be a political non-starter. She doesn't have the intellect, temperament, or savvy to survive in politics without her looks. That is not sexist, it is fact.

Sexism is better described by a situation where a highly intelligent and competent woman doesn't get the opportunity to succeed because she is a woman. If that woman doesn't get the opportunity to succeed because she is a woman and ugly than I guess that is sexism and uglyism combined. These women do not get elected.

Sarah Palin and the Republican Party should be grateful for sex* and female stereotypes. Without em, she's got nothin, you betcha (;

*And by sex I am of course referring to intercourse between a man and woman in a loving committed marriage with the intention of making babies.

Sunday, November 8, 2009

It's Liberty For All, Not Liberty For Some

In the ultimate irony those comparing Obama to Hitler and suggesting our country is becoming a model of communism and socialism are largely the same individuals fighting for the ultimate move towards totalitarianism in wanting to ban gay marriage.

In Iowa where a ban on gay marriage was ruled unconstitutional, the masses are clamoring for the people of the state to be able to vote to add a constitutional amendment banning gay marriage on the ballot. This is the ultimate perversion of liberty by the same people that claim to fear the government and embrace liberty.

To let the majority remove the rights of the minority is the most dangerous path this country could go down. Since it is in fashion these days to compare the U.S. to Nazi Germany how is it that the comparison between the rights of homosexuals is not analogous to the systematic violation of the rights of Jewish people, free thinkers, and so called “undesirables” under Hitler’s regime. In Germany’s case the majority decided that the minority was not entitled to the same rights of property and life as the majority with horrific consequences. I am not suggesting we will move toward the grievous violations carried out in Germany against the Jews, but for a country that was based on liberty the violation is ideologically egregious.

In the interest of full disclosure let me state that I am a nerd and I would appreciate if you feign shock here. I carry a copy of the Constitution in my purse and have read it thoroughly multiple times. For those of you who haven’t let me promise you that nothing in the Constitution of the United States suggests that its residents should have the right to remove rights from other citizens.

To illustrate how ridiculous of an idea it is to allow U.S. Citizens to vote to remove the rights of their fellow citizens it is helpful to take homosexuality out of the equation. What if we replace homosexuality with stupid people? Would it be just to allow intelligent people to vote to remove the rights of stupid people to vote, marry, and procreate? Now I know I have friends out there who think this is a genius idea and while they may fantasize about the desirable outcomes of such a ban this would represent a fundamental violation of what the United States is founded on.

Now imagine, shouldn’t be hard to do, that the stupid outnumber the smart and vote to remove the rights of intelligent people. Totally different set of consequences and less palatable to those who would support removing the rights of stupid people. This is a slippery slope to go down and I believe our founding fathers would be appalled to see the perversion of their intentions in allowing votes like this to exist.

As an intellectual exercise you can substitute any group you want here. Imagine Republicans ban Democrats from marriage or vice versa. Attractive people ban ugly people or vice versa. Where you stand on those issues depend on where you sit, and one day you might find yourself sitting in the minority seat and without your civil liberties.

A great solution would be to remove government from marriage altogether and simply ban the role of government in sanctioning or promoting marriage. Since marriage is a contract between two individuals why should the government dictate who can enter into it? We don’t ban homosexuals from getting drivers licenses, entering into employment contracts, or buying homes; all of which are contractual agreements.

If you don’t believe marriage is a contract between two people but rather those two people and God then the argument is even more profound. Let individual religions decide whether they will honor contracts between homosexuals rather than the government. The U.S. was based on freedom of religion not the dominance of one religion and most certainly not the hijacking of the rights and privileges of its citizens by one religion.

It is time to focus on the real issues in this country and I promise you homosexuals are not the cause of them. Homosexuals didn’t destroy our financial markets, they didn’t attack the World Trade Center, and they sure as hell didn’t send us into two highly contentious military actions abroad.

The focus on banning gay marriage in the upcoming elections will do exactly what its proponents want and that is to promote fear and ignorance in the masses. Ironically that is the same formula Hitler used in Germany to carry out an entire platform of destructive social and economic policies.

This country is based on liberty for all, not liberty for some.

Thursday, November 5, 2009

We'll tell you when its over

Perhaps more economists should watch the movie Animal House. If they did they would realize it is the drunken frat boys of the world who decide when something is over, not the head honchos in charge.

I heard an economist on the radio saying that the recession is over and perhaps it is time to tell the consumer. This, in a nutshell, is what is wrong with economists and the economics discipline.

In our Wall Street bashing have we forgotten that consumers run this economy? Consumer spending is two-thirds of our GDP and has been since the 1940's with little fluctuation in its share of economic activity. Economists don't tell consumers when a recession ends, the consumers should tell economists.

Any good economist knows our current "recovery" is based on federal stimulus whether directly in the form of government spending, or indirectly where government spending props up automobile sales like through Cash for Clunkers (Hate it) or housing throught the first time homebuyer tax credit.

Long term growth will totally hinge on the private sector and only long term growth in GDP is a predictor of consumer behavior. Joe the Plumber doesn't care that GDP is rising when his own income is falling: His consumption choices are based on his perception of his wealth and the likelihood it will rise or fall. I don't know anyone who says, "Hey GDP is finally rising, now I can go splurge on a big screen TV".

This is where economists really get things wrong. Describing economic activity in macroeconomic aggregates like GDP, doesn't really tell us what is happening in the short run. And as we know, in the long run we're all the Grateful Dead.

Economists have long forgotten or ignored what the economy is at its most basic level. It is a collection of individuals acting on their own self interest making seemingly unrelated decisions and trades. When these individuals are not worried about losing their jobs or the decline in their wealth due to the housing market and their retirements, they will spurn economic activity.

So as a consumer and an economist, let me tell the others in my profession: We'll let you know when the economy has recovered, and don't hold your breath.

Wednesday, October 21, 2009

Bat Shit Crazy is the New Black

All right, here is my opening rant. It will get better, I just have some crap on my chest that must be released.

Clearly it is becoming more socially acceptable than ever before to be bat shit crazy. Whether it is incentives from our government, the Federal Reserve, or societal reinforcement it is becoming apparent that the new black is stupid and crazy.

Michelle Bachmann, congresswoman from Minnesota, has convinced some insane people that under the new proposed health plan, their unwilling children will be whisked away for abortions during recess without so much as a parental permission slip. Can you imagine? Well meaning and doting parents will find their children suddenly impregnated and then rushed off for emergency abortions as part of a left wing conspiracy to rid the world of sex having and fun loving people they might count on for future votes. WTF?

Banks are experiencing record profits during the 3rd quarter while our precariously and sometimes unemployed asses are bailing them out. In all fairness I worked in banking and lending and I am an economist and this one still baffles me. WTF?

Economists are saying we are in economic recovery. Let me insert the WTF here and again at the end. I am an economist but I hate economists by and large. Technically we are recovering but much like I know about foreign policy because I can see Russia from my house (I can't), this is a grossly misleading statement.

Gross Domestic Product (GDP for my non-econ friends) does not indicate we are recovering. Right now it just indicates we are spending an assload of money in the public sector because the private sector is smart enough (finally) to know this is a good time to disinvest. We are spending money on social services and safety nets because people are suffering. This is not recovery or economic activity, it is simply an effort to keep the status quo from becoming a beloved memory. Economic recovery has nothing to do with increasing GDP in the short term, it is long term GDP growth that increases wealth. Long term growth only occurs when the private sector creates jobs and provides opportunity for people to increase wealth and opportunity. We are NOWHERE near recovery. Oh yeah, WTF?

Oh yes, I am technically a state employee. Today the state agencies announced their proposed cuts resulting in roughly 800 job cuts across the state and this doesn't include the Regent's Institutions of which I am a proud employee.

Ironically, Iowa's Department of Energy Independence received no cuts. Could someone explain to me why we need this agency at all? Are we going to secede and become energy independent not only from foreign sources of energy but the rest of the United States? Suddenly we are those little bastards in the Children of the Corn, making all our own fuel and worshipping corn. There is an agency waiting to be slashed. People will reduce energy when it makes sense economically, not because you form a state agency to encourage such. Oh and by the way, ethanol sucks. WTF?

Glenn Beck is on T.V. complaining about the push towards volunteerism. He is comparing it to Mao's China. Fine Glenn, let me in the spirit of volunteerism prompted by my socialist/communist president, to be the first to volunteer to sell you a clue. Aren't you a conservative? Less money thrown at the nation's ills and more volunteers and goodwill might actually do some good....but we don't really want that, right? WTF?

The Democrats, those spineless wonders, aren't really sure what to do now that they are in office. Obama has surrounded himself with economic geniuses that got us in this mess. Yippeee!!! No Obama you are not Bush, but you guys sure run in the same circles when you ignore Halliburton. WTF?

Oh yeah, and on a personal note... I am alarmed by the number of people that want to overthrow our government and stage a Coup. Look people, it is a democracy. We elected Obama and our Congress. Overthrows are for far more serious stuff and your desire for such is demeaning to people that need them to survive. WTF?

I'm getting worn out already. This is just a rant, tomorrow will be more fun, I promise. Or not....