This should settle the question

What is more important to economic development, sex or a college education? Considering what so many of the women are studying, I'd bet on sex and the underperformance of an overeducated population contra the concept of a causal relationship between education and economic growth. Carpe Diem has more:

It's college graduation season, and according to data available from the U.S. Department of Education, an estimated 3,092,800 degrees will be granted this academic year (2008-2009) for Associate's degrees (714,000), Bachelor's degrees (1,585,000), Master's degrees (647,000), Professional degrees for MD, DDS and JD (91,000) and Doctor's degrees for Ph.D and Ed.D (55,800).

On a tangential note, I'd say that those 3 million degrees being granted on an annual basis are far past the limits of the economy's aggregate demand. Note that we haven't added a single net job to the economy since mid-2005 according to the BLS labor force statistics, so 12 million new additions to the labor force over the last four years have to find job openings based solely upon demographic attrition.

Unlike those who wring their hands about this, I think the problem will settle itself as such problems always do. The more unemployable women graduate with worthless degrees, the more the value of a degree will fall. Attempts to turn to government in order to forcibly maintain the value of their degrees will fail because of the limits on government action enforced by the ongoing economic contraction; the sort of men who start companies without college degrees will be very difficult to convince of the need for them or to waste valuable company resources on unproductive staff.

Comments ()

Rhetorical lunacy

Thus spake the Magic Negro:

The future does not belong to those who gather armies on a field of battle or bury missiles in the ground.

Someone has told him that he is the nominal Commander-in-Chief of one of the world's largest armies and largest buriers of missiles in the ground, right? Perhaps Mr. Teleprompter needs the history module installed.

The future belongs to those who show up for it.

Comments ()

Most favored bankstas

It's probably easier to make a case for shutting down Goldman Sachs as a threat to national security than bailing them out again:

The collective message of all this - the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds - is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." ...

And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5 trillion in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4 a gallon and to push 100 million people around the world into hunger, after securing tens of billions of taxpayer dollars through a series of bailouts overseen by its former CEO, what did Goldman Sachs give back to the people of the United States in 2008?

Fourteen million dollars.

This is a remarkable tale of parasitical bankers living up to and exceeding every nasty stereotype of evil bankers. If I worked for Goldman Sachs, I'd be retiring before the end of the year and moving very far away from New York City. Once the depression hits in full force next year, a lot of Americans are going to be very, very unhappy. And thanks to Henry Paulson, they'll have a pretty good idea of who is at least somewhat responsible for their dire straits.

Comments ()

WND column

Irrational Finance
"The public in many countries is understandably concerned by the commitment of substantial government resources to aid the financial industry when other industries receive little or no assistance. This disparate treatment, unappealing as it is, appears unavoidable. Our economic system is critically dependent on the free flow of credit, and the consequences for the broader economy of financial instability are thus powerful and quickly felt."
– Ben Bernanke, chairman of the Federal Reserve, Jan. 13, 2009

One of the more remarkable things about the expansion of the subprime financial crisis into a general economic contraction is the Federal Reserve System's narcissistic focus on itself. In his speeches, Ben Bernanke spends more time talking about the Federal Reserve's balance sheet and how stupendously fabulous it continues to be despite the vast quantities of loans it is making to shore up various aspects of the financial system than he does about the unemployment rate or the expected effects of economic contraction on the public.

Comments ()

Liberal Fascism - Chapter Three

I don't know about you, but I found Chapter Three to be the best and most informative thus far. Next week's reading is Chapter Four: Franklin Roosevelt’s Fascist New Deal and the quiz for it will be posted on Saturday, July 11th.

Comments ()

And this is the case for the defense?

The New York Times hosts an open debate on the value of a graduate degree:

"As an M.A. student in English, I don’t think I’ve met one person in my program, or one professor for that matter, who has expressed that he or she is “in it for the money.” In fact, most people, including myself, are there because they are genuinely interested in the subject matter, and in discourse with others who have similar interests... For M.A. students like myself, the benefits have little to do with money."

"What if knowledge itself is what you seek? Master’s of Arts and Liberal Arts degrees are not designed to get you a high paying career."

"The reason I went for my MLA (graduated in June 1997) was because I was fascinated by the subject matter. Has it paid off for me financially? No. In fact, I am no longer even employed. I have never even paid off my student loans, nor do I believe that will ever happen. Do I regret earning that MLA? No.... Learning how to learn appears to be the single, greatest lesson one can learn in going for the advanced degree."

"If you measure graduate degrees in dollars, mine Ph.D. is worthless. I earned less money with each graduate degree. If, however, you measure it in terms of quality of life, understanding of the world, personal satisfaction and the accomplishment of non-monetary goals, it is priceless."

One thing I've noticed is that no one contemplating spending thousands of dollars on a graduate degree ever admits that it's of no probable monetary value BEFORE they make the decision to go to grad school. Those who actually think the expense of a monetarily worthless graduate degree was worth it tend to fall into two categories. The first are grad students still in school who are enjoying the process and have neither begun paying the costs nor genuinely understand the consequences of being deeper in debt with no marketable job skill. I suppose that men utilizing the services of prostitutes also believe said services are worth the expense while in the midst of obtaining them. But they may well think otherwise upon discovering that their wallet is missing, learning that the test results are positive, or being handcuffed and reminded of their rights.

The second type are the sort who believe that their personal enjoyment trumps all concerns about expense. It should come as little surprise that these people usually also mention the importance of learning how to learn. In other words, these are the individuals who are dumb enough to genuinely require at least 17 years in school in order to learn how to learn, so the value of their opinion is quite high if taken in the negative.

It's fine if you genuinely enjoy taking classes so much that you're willing to spend thousands of dollars on them. But understand that doesn't make you any different than someone who enjoys spending thousands of dollars on cars, drugs, or professional women. The only significant difference is that the car, drug, or escort aficionado seldom believes he will become a better person through paying for his pleasures.

One of the saner, if sadder, perspectives on the matter was expressed by one recent purchaser of an advanced piece of paper from an advanced paper seller: "As one of the many now-graduated, now-unemployed Masters of Fine Arts, I have felt that this great accomplishment is akin to opening up a nicely-wrapped gift box, only to discover that it was empty." Except, of course, it wasn't exactly a gift....

Comments ()

A portrait in jealousy

Maureen Dowd considers Sarah Palin's resignation with all the intelligence and political astuteness we have learned to expect from her, colored by the emotional temperance of a head cheerleader forced to confront the reality of a new and prettier transfer student:

Caribou Barbie is one nutty puppy.... As Alaskans settled in to enjoy holiday salmon bakes and the post-solstice thaw, their governor had a solipsistic meltdown so strange it made Sparky Sanford look like a model of stability.

It's entirely possible that Palin resigned for reasons that are narcissistic, ambitious, greedy, or insane. But we simply don't know. The fact that she was smart enough not to offer an explanation when none short of imminent death from cancer would be considered sympathetic indicates that lunacy is the least plausible reason.

What I find most interesting is that two of the leading contenders for the GOP nomination appear, at least for the moment, to have taken themselves out of the running. If one considers this from the economic perspective of 2010 being 1931, it suggests that the prospect of being forced to deal with the challenges ahead is a daunting one. Unfortunately, these are the circumstances in which the human predators of the world tend to see their opportunities; to paraphrase Rahm Emmanuel, one never wants to waste a crisis.

I don't pretend to know why Palin resigned. Not being a supporter, I can't even say I particularly care. But I do know that it's far too soon to dig her political grave, as many in both the Republican and the Democratic parties are now attempting. As both Ronald Reagan, Hillary Clinton and even Newt Gingrich have demonstrated, it's always dangerous to assume a politician is finished. As a class, they're very much like zombies; never count one out entirely until you've actually seen it dismembered and burned.

Comments ()

Steve McNair killed

Former Titans quarterback Steve McNair has been killed. Police said McNair suffered a fatal gunshot wound to the head in downtown Nashville.

A real shame. I didn't follow McNair's career closely, but he struck me as the positive ideal on whom more ballyhooed but lesser quarterbacks like Michael Vick and Vince Young should have patterned themselves.

Comments ()

A treasure hunt

In case you could use a break from scarfing hamburgers while you wait for the evening fireworks, I'm looking for quotes from 2006 - 2009 about the prospects for recession and depression from every mainstream or contrarian figure of note. I've collected a fair number already, but the more, the merrier. I intend on grading them on the following curve:

Grade: A-
Another major problem is that the housing bubble has finally burst. Thus far it has only produced a slow leak, but by next year the air will be rushing out with gale force winds.... If Bernanke tries to borrow from Greenspan’s playbook and attempts to prevent or mitigate the severity of the coming recession, the excess liquidity will not simply move into another asset class, as it did from stocks to real estate, but into real stuff, such as commodities and consumer goods.
Peter Schiff, June 29, 2006

Grade: F
“As I’ve discussed on CNBC’s Kudlow & Co., the strong, across-the-board, five-month rally in stocks cannot possibly be predicting a recession. While the stock market can sometimes emit false positives on recessions, rarely does it give off false negatives. In fact, I think it is predicting a "Goldilocks" soft-landing for the economy.”
Larry Kudlow, Debunking Krugman’s Recession, December 2, 2006

The more direct the quote, the better. I don't care if it's positive or negative, as it's just as useful to have someone declaring there is no recession or there will not a depression as the contrary. I don't have much use for the mealy-mouthed attempts to have it both ways, though. Please include the date, the name of the economist or financial figure, and a link to the source along with the quote.

Comments ()

Provoking the Palindrones

Jonah Goldberg upsets fans of the Alaskan governor:

Dear Governor Palin,

You’re blowing it.

We haven’t met, but you might remember I was one of the first columnists to tout you for John McCain’s running mate. I cheered you mightily when Senator McCain selected you, and I still believe that you were the smartest choice he could have made given the obstacles before him. I’m also assuming you want to run for president some day.

I really don't see what Palin's more hysterical fans are so upset about. Goldberg is correct. Palin has great natural political gifts, but her performance as a vice-presidential candidate in 2008 was sub-par. If she makes the mistake of relying upon her natural talent rather than improving her game, she will likely lose the nomination since the GOP squish faction is gunning hard for her.

Although I correctly predicted Palin would be McCain's running mate, I'm not favorably impressed by her. Like Obama, she's just bright enough to think that she can coast through the big leagues, but that's only true when the powers-that-be are laying down the palm leaves for you. The fact that she let McCain's advisors tell her what to do told us all we needed to know about her capacity for judging some of the more complicated factors of national politics. If she's learned her lesson and is now playing for keeps, she'll listen to Republicans who wish her well, like Goldberg, while paying no attention to the likes of Brooks and Frum, who do not.

UPDATE: It seems Mrs. Palin may have taken Mr. Goldberg's advice too much to heart, seeing as how she immediately announced her resignation from the governorship.

Comments ()

The Best Little Whorehouse in Washington

Closes temporarily:

Washington Post publisher Katharine Weymouth said today she was canceling plans for an exclusive "salon" at her home where for as much as $250,000, the Post offered lobbyists and association executives off-the-record access to "those powerful few" — Obama administration officials, members of Congress, and even the paper’s own reporters and editors.... Weymouth said the paper had planned a series of dinners with participation from the newsroom “but with parameters such that we did not in any way compromise our integrity.

I don't see what the problem was. It's not as if they had any integrity to start with. Nor is it any secret as to why the media is dying so quickly, not with complete cretins like these in charge.

Comments ()

But it's an investment!

I believe most regular readers are familiar with my opinion that taking out student loans in order to obtain pieces of paper from paper-selling institutions is usually a remarkably stupid idea. However, even those who think equate spending on education with investment must admit that the utility of the concept has its limits:

Robert Bowman was refused entry to the New York bar because of $400,000 in student debt.... “The size of this account is extremely unusual, but not surprising given that the customer took out 32 loans to pursue undergraduate, law and masters of law studies and has not made a single monthly payment over his 26-year student loan history,” Ms. Holler said.

Doesn't the New York bar know that that studies show people with graduate degrees make loads more money over their lifetime? With an investment of $400,000 in Mr. Bowman's education, surely he'll be worth hundreds of millions soon!

As if this story wasn't amusing enough, one can only wonder what Mr. Bowman would have to do in order to sufficiently establish: "the character and general fitness requisite for an attorney and counselor-at-law". Murder his mother with an axe? Rape a baby seal? Run an underage gay prostitution ring?

Comments ()

Krugman and the 50 Hoovers

UPDATE: Krugman keeps piling on the verifiable historical falsehoods. It may interest you to note that I prepared a version of this chart the day before his most recent column, that's how predictably wrong he is:

All of this is depressingly familiar to anyone who has studied economic policy in the 1930s. Once again a Democratic president has pushed through job-creation policies that will mitigate the slump but aren’t aggressive enough to produce a full recovery. Once again much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.

Where, one wonders, is this "budget retrenchment" of which he speaks. It was only Federal spending that declined in 1937 and 1938, as Krugman even notes in describing 1937 as "the year that F.D.R. gave in to the deficit and inflation hawks",so to point the finger at the state and local governments who were doing precisely the opposite of that Democratic president is bizarre. Krugman is playing a dishonest game, implicitly referencing the two-year decline in local spending with regards to events three years later. And state spending never declined, so Krugman's 50 Hoovers theme is not only demonstrably wrong on two levels, as can be seen in the three charts below.

Now, it must be admitted that Krugman could, theoretically, have made a case by utilizing spending as a percent of GDP. However, he doesn't dare because that would show Herbert Hoover to have been significantly more aggressive in his use of expansionary fiscal policy than FDR and that would explode far more than Krugman's argument for a third fiscal stimulus package in three years.



Our favorite Nobel prizewinner wrote the following back in December:

But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.

Very well, let's look at the action of Herbert Hoover and compare his four years in office to the previous four years using constant 2000 dollars in order to correct for inflation/deflation. I don't know about you, but I sure don't see any spending being slashed.



While the deflation of what Milton Friedman called The Great Contraction often confuses the economic analysis of those who fail to account for it, Krugman doesn't even have that excuse as a potential fall-back position. Federal spending not only increased in real terms and as a percentage of GDP, but increased in nominal terms as well.



Now, Krugman may well be right in that the state governments will be forced to slash spending as the economy continues to contract. However, this does not change the fact that this was not the historical behavior of either Herbert Hoover or the state governments, and likely has nothing to do with economic ideology. It is nothing more than the deficit-spending of the recent past limiting their range of options.

Comments ()

Mailvox: better sooner than later

JB wonders what to do next:

I've been reading your blog ever since I finished The Irrational Atheist and I am currently participating in your Voxiversity III study. I have a question for you concerning college education.

I earned my B.S. degree in Molecular biology and worked some at a local community college teaching some basic math courses. I then applied to a PhD program in Biomedical Science and was accepted. I've been in this graduate program for a year now, but I have realized that I am not cut out for research and the whole degree just seems like a waste of 5-6 years (the official time for completion). I have read your statements in the past concerning the "paper-selling institutions" and the problems with college educations, and I am inclined to agree with you at this point. My problem is that I am now about to be leaving a program (which is essentially my job) and beginning a job search during a rather poor economic state (I have three weeks to find full-time work) and having very few marketable skills. Since you have investigated this more than I have, what can a guy like me do to find work? It has become clear that my B.S. degree is really quite meaningless, so I feel as though my job options are very limited. I am married and I need to maintain a certain level of income, so my situation needs resolution quickly. At this point, I've asked everybody I know for advice and all that they have come up with is simply "stay in the PhD program", even though I would like to hear some alternatives.

First, I should like to commend JB on at least attempting to think for himself in the face of what is likely significant social pressure. Second, I would urge him to keep in mind that a pursuing an education is not "essentially a job", it is not a job of any kind except to the extent that one is financially compensated for pursuing it. Given the many complaints I've read about the sweatshop income provided to graudate students, it seems hard to imagine that one could not do better working in consumer retail, if nothing else.

The three-week time frame complicates things, of course, but the first thing that I would do is find some sort of income-producing job no matter what it is. I have seen lawyers take jobs selling computers at big box retail outlets and MBAs take jobs at department stores; at least in the case of the former it worked out extraordinarily well, so JB should not be too proud to work low-status labor. That's just to generate a positive income flow and send a signal to the next employer that one is willing to do whatever it takes to get the job done.

The second step is to identify the employment areas that are undermanned in JB's area. I would look at technical service areas like plumbing and automotive mechanics that see constant demand regardless of the economic situation. Talk to people, find out where the shortages are, then go speak with the owners of those firms. Employers like smart worker with personal initiative, so that fact that he doesn't know anything but is willing to learn will be a bonus. He might consider looking to see if he can combine work as a trainee and office assistant; every business needs someone to handle the paperwork and that's something that even a molecular biologist should be able to handle.

The most important thing to understand is that "staying in the PhD program" is not working. Unless he's got an unusually sweet deal, it's cost compounded by debt, not income. Nor is it an "investment", investments have expected ROI which there's virtually no chance that anyone has actually bothered to compute in this case. And, because of the oversupply of PhDs, JB doesn't have any guarantee of a job at the end of the process anyhow. It's a gamble, and an expensive one with low odds at that.

I don't know if JB's wife is likely to pose an additional complication or not. Is social status more important than financial stability to her? On the one hand, it might be a perceived come-down to be married to an assistant pig-keeper rather than Dr. Molecular Biologist. On the other, she might prefer not to live her life trying to claw her way out of debt during a major debt-deflation cycle. So, that may be a consideration too, since divorce imposes more financial costs than a sub-optimal career.

Comments ()

Done, sort of

After what in retrospect looks like a ludicrously short period of time, the first draft of the new book is now in to the publisher. I'll be sending out chapters to proofreaders tomorrow, in case you volunteered and were wondering why I hadn't sent you anything yet. There's still the whole editing process to go through yet, to say nothing of the various appendices, but it's still nice to feel as if one of the major milestones is in the rear view mirror.

UPDATE - of course, this exchange of emails may not bode so well for its mass appeal:

At the cajoling of DC, I'm writing to you about the post "laughing at myself." We were talking about it last night, and DC said that it went well above his understanding of economics. I said, "Oh yeah. I read the first sentence and looked at the chart and tried again... looked at the chart, decided math was hard and went to look at kittens." When DC started breathing again after laughing himself silly, he told me to email that you and that it was a new level of economic geekdom that we just didn't get.

I have no idea who this broad is or what she's talking about. I'm assuming she's some crazy woman with a bunch of cats. I can tell you for certain that I often encourage people to do things. Sometimes I even persuade. But I have never, ever cajoled anyone. (I'm not even sure what that means but it sounds dirty.) Also, I find your boring, laborious, snooze-fest posts on economics down-right inspiring. As a good sycophant, when I start to nod off while trying to finish one, I assume it must be because I'm stupid and my priorities are wrong. It's just a reminder that I'm not yet perfect and I need to work harder at being like you.

Clearly I need some better sycophants. Or at least some smarter ones. And contra the notion that the new book will be a complete snoozefest, I think I can probably guarantee it will be the only one of its kind containing a quote about collecting morning dew in human skulls during the post-apocalypse.

Comments ()

Amazing archeology

Paleontologists Discover Skeleton Of Nature’s First Sexual Predator
Darwin be praised! It's truly astonishing what detailed information scientists can derive from a few fossilized remains.

Comments ()

The education bubble

A professor from Columbia and others warn of the financial danger of pursuing degrees:

The next bubble to burst will be the education bubble. Make no mistake about it, education is big business and, like other big businesses, it is in big trouble. What people outside the education bubble don’t realize and people inside won’t admit is that many colleges and universities are in the same position that major banks and financial institutions are: their assets (endowments down 30-40 percent this year) are plummeting, their liabilities (debts) are growing, most of their costs are fixed and rising, and their income (return on investments, support from government and private donations, etc.) is falling. This is hardly a prescription for financial success.... And now the economy makes matters worse. Only 19 percent of the class of 2009 had jobs at graduation.

The problem with most analysis of the value of a college or graduate degree is that the aggregate figures include the sharks graduating from the elite schools - many of whom would have been just as successful without their degrees - and then attempt to apply it to Jane Average who is planning to attend Podunk State. Many years ago, I read a book called Class. It was a pretty funny book, but one point that I remembered was the citation of a study which showed that unless you obtained it from a university that had been established prior to some date in the nineteenth century, your degree wouldn't add anything to your expected lifetime income. Perhaps the figures have changed in the intervening 25 years or so, but if more than 80 percent of the 2009 graduates are still unemployed, it's pretty obvious that a degree is not the obvious choice it was once considered to be.

Which makes sense. The supply of college graduates has nearly quadrupled since 1950 and the limits of the demand for them has been exceeded. Therefore their price is bound to decline.

Comments ()