Confessions of a Free Market Economist

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner I’ve a weakness for dystopian literature (think Cormac McCarthy’s The Road). The premise of these books is a disaster thThe Roadat fundamentally alters the trajectory of the planet. The apocalypse is typically human-caused, some act that taps into our collective guilt about environmental degradation, warlust or technological hubris.

An economist’s dystopia is portrayed in Kurt Vonnegut’s Player Piano. Instead of a despoiled planet or some biological or digital monster, Vonnegut’s first novel portrays a society nearly bereft of work. Set at a thinly disguised General Electric (where Vonnegut once worked), World War III prompts an acceleration in automation, allowing the U.S. to win the war. A decade later, automation has become near total. The only people needed are the very best engineers, who spend their days seeking new efficiencies, displacing yet more human involvement. They’ve been freed from work—utopia, right? Read more »

Faith v. Reason: The Pitfalls of Ideology

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner A friend characterized many policy debates as disputes between “faith and reason.” The political season—particularly the primaries—involves repeated “professions of faith.” Candidates appear before the high priests of their sect and are judged on purity and zeal.

Unfortunately, uncritical faith leads to irrational policy. Consider Republicans’ faith in tax cuts. The lesson of the 1964 income tax cut—a Kennedy initiative, I remind you—was that high taxes can discourage industry and that cutting tax rates can paradoxically yield more tax revenue as the economy expands. When Ronald Reagan followed Kennedy’s lead, the tax rate on the highest earners was nearly 70% and almost surely discouraged enterprise. Cutting taxes was a reasoned response. Now an article of faith in republicanism, raising taxes has become a sinful act that invokes moral sanction. Even closing some of the loopholes that riddle the tax code can be deemed “raising taxes.” Reason responds that taxation is necessary and must be balanced—reductio ad absurdum surely applies: Reducing taxes to zero would be absurd and would lead to a very different society than what we now enjoy. Read more »

A new commissioner takes the helm at NYS Education Department

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner Mary Ellen EliaNewly appointed NYS Education Commissioner MaryEllen Elia will require the wisdom of Solomon, the patience of Job, the confidence of Donald Trump and the guile of Machiavelli to succeed in her new job. The divisions both between and within stakeholder groups have never been deeper.

First, she has to figure out who she’s working for. Is there a more complicated reporting relationship in state government? The Commissioner of Education is hired by the NYS Board of Regents. Which is appointed by the NYS Legislature. Not the NYS Senate or the NYS Assembly, but the entire legislature sitting in joint session. As there are 150 Members of the Assembly but only 63 Senators, the Assembly really makes the decision. Since 2009, the Chancellor (the person who leads the 17-member Board of Regents) has been Merryl Tisch, ally of the formerly-all-powerful Sheldon Silver. After Silver lost his post, the Assembly has shown more independence, replacing two regents who were supportive of Tisch and her endorsement of the Common Core and strong teacher accountability. If you have to report to a committee of 17, you’d better hope that the committee is either unified or strongly led, conditions that appear to be waning. Read more »

Opt-outs Create Challenge for NYS Testing Regime

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner Choose to RefuseThe Common Core opt-out movement built up quite a head of steam this year. Although opposition to testing is hardly new, frustration over the Common Core standards, anger at Governor Cuomo’s budget power play over accountability and other factors spurred the formation of a large and diverse refusenik coalition.

State Education plans to use the tests anyway: “We are confident the department will be able to generate a representative sample of students who took the test, generate valid scores for anyone who took the test, and calculate valid state-provided growth scores to be used in teacher evaluations.” We’ll see. The Democrat & Chronicle reports the refusal rate for the math test was at least 25% for every Monroe County district but Brighton and Rochester. Read more »

Cuomo & NYSUT Go Nuclear

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner Nuclear OptionVladimir Putin’s most ominous bit of saber rattling over the Ukraine has involved allusions to the “nuclear option.” For him, that’s not a metaphor.

The problem with nuclear weapons is the collateral damage. Sure, you might win the battle. But everyone loses the war. I worry that both Governor Cuomo and the New York State United Teachers (NYSUT) are playing with “nuclear” weapons.

Let’s agree, first, that public education in NYS could be, should be, must be improved. We’ll not make an impact on urban poverty, particularly in Rochester, if we don’t raise the levels of literacy and numeracy among children in poverty. Eventually, young people have to make their own way in the world and the labor market has no mercy on people without the academic basics. Second, let’s agree that both Governor Cuomo and New York’s teachers want children to succeed. The governor isn’t an evil megalomaniac clawing his way to national prominence on the backs of children. And teachers care about far more than just their paychecks and prerogatives. Read more »

Social service “block grants”—Just give ‘em cash

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent Gardner Yes, Jesus warned us of the persistence of poverty, but we can do better here in Rochester. There is renewed energy directed at the issue, both here and in the nation. The Poverty Task Force announced by Governor Cuomo will continue to focus attention and, hopefully, resources on the problem.

Ah, but what to do? Several of my colleagues at CGR recently completed a global scan of anti-poverty programs. And they concluded that there aren’t a lot of new ideas out there, although size and execution of established programs can be improved (e.g. the Earned Income Tax Credit, economists’ favorite). Read more »

Healthcare.gov’s second act

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerBy all accounts, the Affordable Care Act’s front door, healthcare.gov, performed admirably for consumers in its second year (although “back end” problems remain). Just to keep track, I registered on the site and have been getting a steady stream of emails and text messages ever since—29 text messages since October 24! They are filled with teasers like, “8 in 10 people who sign up can get financial help. You could too!” plus special messages for special days: “Cyber Monday: Shop for health plans today” and “Start the New Year with new health coverage.” And plenty of countdowns: “Only 9 days until the Dec 15 deadline” and, on Sunday, “Act now: Only hours left! This is your last chance to enroll . . .” Except that if you claim to have tried by Sunday, you’ll have until 2/22 to sign up for March 1 coverage. And the deadline to avoid an income tax penalty will likely be extended right up to Tax Day, avoiding shock and horror when the penalty becomes real. Read more »

Red Light Cameras, Charlie Hebdo and Our Own Privacy

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerRedlightcameraThe Chicago Tribune is at war with the City of Chicago over red light cameras. In a series of articles printed before Christmas (read at my mother’s kitchen table in suburban Chicago), the Trib reported on a study of the effects of the red light cameras on motor vehicle accidents: The number of accidents at intersections with cameras hadn’t changed. The Trib accused the City of Chicago of having installed the cameras only to raise money—slander, slander!

redlightcamera2If you’ve received one of those surprise citations for a “rolling right” turn, as my wife did, then you may share the Tribune’s indignation. My wife’s was compounded by the fact that she hadn’t been driving at the time (can’t imagine who was at the wheel). A colleague of mine was auto billed courtesy of a camera that captured her coming to a full stop at a red light, but beyond the crosswalk. See the November report on Rochester’s program.

A few quick observations about the cameras before I move to my main point (which is privacy): Read more »

Let’s Keep Gasoline Expensive

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerBig is back. Light trucks (pickups, SUVs, etc) outsold cars by 100,000 in the month of November—sales were up 10% from the same period in 2013 while car sales were up just 1%. Oh, and gasoline prices have been sliding all year. Coincidence? Don’t think so.

And gas prices may have some distance to fall, even if crude oil prices stop their descent: Crude is down nearly 40% from its 2013 average while gasoline prices have dropped only about 25%.

gas pumpDon’t you love the low gas prices? Filled my little car’s tank for under $30 for the first time in, oh, forever. Actually, it only feels that way. Today’s prices are roughly where they were in 2010. Isn’t it interesting how quickly we adjust to new prices? Read more »

Improving Rochester Schools: A Steep Hill to Climb

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerI attended a Great Schools for All event on November 10, a discussion of the school reform efforts of Raleigh, NC. Underlying the discussion was the proposition that when a substantial share of children in a classroom are in poverty, it is nearly impossible for students to achieve at a high level. Raleigh, part of the Wake County school district, responded to poverty concentration by establishing and preserving a balance of poor and non-poor children in every school in the district. Raleigh points to trends in graduation rates and other indicators that suggest that the policy has been effective. See Hope and Despair in the American City: why there are no bad schools in Raleigh, by Gerald Grant, Professor Emeritus, Syracuse University. A book review and summary can be found here. Read more »