Friday, September 16, 2011

Yes, I'm a Union Member, But...

I have several broader topics on the "to-do" list for this blog, but this week a colleague's observation reminded me that too many people see issues from stark, all-or-nothing, positions.

Since joining the faculty at a private, non-profit, university, I've been publicly stating that the union isn't starting its negotiations for a new three-year contract from a position of power and authority. That bothers me.

"How can you be in a union? You've detailed union corruption, negative effects on employment, and complained about public employee unions. I thought you hated unions?"

I do not "hate" all unions. I dislike many unions, definitely, primarily because of their leadership. But that does not mean that I am opposed to all unions. If anything, I want to reform unions and help guide change to make them relevant. Unions, as they are, represent the past — a romanticized past that often overlooks the problems of unions.

I am opposed to the romanticization of unions. The truth is, union corruption is a serious problem, even today. According to the National Labor Relations Board, which is clearly pro-union under this White House, "Within the last five years, the NLRB has received more than 150 complaints of union violence."

Union actions remain reckless, damaging public perceptions of workers and the union leaders. In the last week, we've had two stories of unions ignoring courts: longshoremen and teachers, both in Washington state. The longshoremen story is particularly strange, since it is union against union:
Associated Press: September 15
TACOMA, Wash. — A federal judge found a union in contempt of court Thursday, a week after police said hundreds of its members raided a grain terminal in southwestern Washington, smashed windows and menaced security guards.
U.S. District Judge Ronald Leighton said he wants the operator of the Longview grain terminal, EGT, to provide him an accounting of the damage for purposes of gauging how much he should fine the International Longshore and Warehouse Union Locals 4 and 21.
As for the teachers in Washington, the courts are also unhappy with them:
By Debbie Cafazzo, The Tacoma News Tribune: September 16
Striking Tacoma teachers remain off the job despite a court order that told them to report for work, and schools are closed for a fourth straight day as the teachers union and school district prepare for a courtroom faceoff Friday.
Unions have to be careful, especially when they are on the verge of losing public support. In the case of educators and other public employees, restraint and professionalism are more important. Taxpayers support your (our) salaries, directly in the K-12 system and somewhat indirectly for those of us at universities. If taxpayers start to question our motives, we might lose ground.

As I wrote earlier this month, the New York Times, not an anti-union right-leaning publication, calculated it takes as many as 106 households to support one teacher's salary and benefits. This does entitle taxpayers to question the demands of any PEU when it seeks increased funding.

Regular readers know I am a member of the Dramatists Guild of America, am hoping for Writers Guild of America credits, and am represented by an American Federation of Teachers unit at my university. I am not going to embrace counterproductive actions and statements by some unions. Nor am I going to sit silently by if one of my unions starts to embrace poor attitudes, lousy rhetoric, and make other bad decisions.

I take two distinct views of the unions to which I belong. I've written about this before, and it deserves repeating:

Creative writing, especially for film and stage, is not an "essential" role in society. I consider what I do as a writer important. Writers can and do change societies. But, if a play is delayed a week or two the effects are limited. A comedy isn't released to movie houses? No big deal. I'll admit that my creative works are luxuries that are generally embraced by a small, small segment of society.

If people voluntarily buy tickets to a theatrical production, I will fight for a share of the ticket revenues. No writer? No entertainment. But, it is entertainment, for the most part. Without question, I want to improve the world through my words, yet writing pales compared to my other role.

Education is an essential role in this and any society. If I don't show up in the classroom, and no other teacher does, students fall behind their peers in other school districts, colleges, or universities. Being the best teacher I can be is a matter of personal pride. No recognition for writing matches the emotional high of learning a student has found personal success beyond the classroom.

I would not strike, as a teacher. The only way I'd leave a classroom and its student is if I knew beyond any doubt that the room itself was a danger to myself and students. If you want to have informational pickets? That's fine, if you do it before and after classes. Never penalize students, though. Students are first. Everything else is secondary.

Other teachers argue that pay and benefits affect students. Yes, that's true, but you don't enter a classroom with expectations of wealth. Plus, your salary is coming from the parents of these students. To ask more of these parents has its own repercussions. In the case of public schools, some parents will struggle in the face of higher rent and house payments to cover taxes. For universities, higher costs already result in tuition increases higher than overall inflation. We have to consider these families.

As a teacher, I want my union to promote quality teaching practices. I want the union to promote training and mentoring programs. I want the union to stand up and tell administrators that the quality of teachers is what concerns parents and students. If you want a successful school, you want the best teachers.

I want my union to embrace removing bad teachers from the classroom — and not merely moving those men and women to other posts, either. I want the union to help raise standards and qualifications for educators. This does not mean opposing alternative credentials or promoting meaningless continuing education programs. Too often, education unions embrace ideas that do not improve teaching. The best teachers are not necessarily those with long transcripts; other factors are more important.

I want my union to focus on my classroom, the resources available to my students (and me), and increasing the flexibility to teach in alternative ways. I want the union to embrace online and hybrid education. I want the union to encourage members to interact with students outside the classroom, as well.

Our faculty bargaining unit has, at least in public statements, been too concerned with the workplace minimums instead of seeking ways to improve student outcomes. I sat through a thirty minute presentation during which students and their needs were not mentioned once. That's troubling.

Bargain from a position of strength. That strength, in education, comes from the reputation a school has in the community, among other schools, and among employers. If we focus on improving our teaching, we become assets the university wouldn't dare mistreat. If I am the best educator and researcher in my field, I can and will leave one university for another if I'm not content.

If you don't focus on education, you lose students and, eventually, there is no university. It is that simple, at least in higher education. Students, parents, and employers have options; there are a dozen colleges and universities within 20 miles of our campus.

The union has to promote pride in teaching and scholarship. It has to be an active proponent of being the best we can be. When you are confident, you are in a much better position for negotiations. That is why I plan to be an active force for change within the union.

I like where I work. I like the administration. What I'd like to help do is move the union from an old-fashioned perspective to a forward-thinking collaborative role. When student applications to our institution outpace admissions because we're respected, the union will have much more influence than its members might realize. Ideally, we then use that influence to help students receive an even better educational experience.

Thursday, September 15, 2011

Pres. Obama and 'Unexpectedly' Useless Economists

This week, a CNN/Opinion Research poll found only 43 percent of potential voters favor Obama's jobs plan. That means 57 percent aren't convinced this plan will do much. In another poll, 51 percent of likely voters said the plan was likely to have no effect on unemployment.

"But… but… but…" the President's people stammer. "Economists like Moody's Analytics Chief Economist Mark Zandi says it will create 1.9 million jobs!"

That's the problem. The public is starting to realize that economists are "unexpectedly" useless when it comes to forecasting the economy. If you want evidence, do a search on the word "unexpectedly" and any combination of "unemployment," "housing," "prices," "wages," or "inflation."

Today's top story on CNBC:
The weekly jobless claims number, which is closely watched as an indicator for employment trends, unexpectedly rose 11,000 to 428,000, well ahead of estimates of 411,000. 
The consumer price index, meanwhile, gained 0.4 percent…. For the 12 months ending in August, the core index surged 2 percent, the biggest year-over-year increase in nearly three years.
Yes, it unemployment claims rose "unexpectedly" again. Shocking, since they have remained high "unexpectedly" since 2008. You would think that three years of "unexpected" data would indicate to economists they need to revaluate their models — and even their reliance on models. This goes back to my belief that models are only useful if you use best/worst case models to plan ahead, but you cannot use models as predictors.

On a personal level, my wife and I can "model" our household budget. We can model based on one of us losing a job, one of us having a medical emergency, and various pet expenditures. We also add in a car repair. If none of these things happen, our model allowed us to save money for later emergencies. However, we do not "model" to predict anything. We model to plan.

Economists make the mistake of believing they practice a science. They don't. I state that as someone immersed in economic books, theories, and reports. Yes, I really do read regional Federal Reserve reports. When I write that economists are useless when it comes to predicting the economy, I'm not dismissing their skills, I'm dismissing their faith in models.

Of course we no longer trust Pres. Obama and his team of economic forecasters. Consider this analysis of forecasting:
Bad Old Habits Plague Economic Forecasting
Reuters | June 29, 2011 | 10:07 PM EDT 
Three years after the Great Recession ought to have challenged even the most basic assumptions made by economists, they have instead settled back into the costly habits of old. 
The same experts who largely missed the onslaught of the worst recession since World War II have consistently overestimated the strength of the recovery in major Western economies. 
An analysis of Reuters polls shows economists were too optimistic about 20 out of 27 major monthly indicators for April and May in the United States, the euro zone and Britain — a list that includes industrial output, jobs, business and consumer sentiment data, and purchasing managers' indexes.
Twenty of 27 incorrect forecasts? And that was during a relatively "calm" quarter compared to the past two years. Economists wrong 74 percent of the time? Maybe a .259 batting average is great, but it is not the sort of record upon which I want our politicians to rely when planning budgets. I'd rather they use the model my wife and I use: bad case and even worse case — just in case!

According to an August 17, 2011, MSNBC article:
"People want the best information that we have right now. But people need to under- stand that the best information that we have right now isn't necessarily very informative," said Tara M. Sinclair, an assistant professor of economics and international affairs at George Washington University. "It's just the best information that we have." 
The growth rate that the government announces roughly one month after the end of each quarter — news much anticipated in Washington and on Wall Street — has been off the mark over the period from 1983 to 2009 by an average of 1.3 percentage points, compared with more fully analyzed figures released years later, according to federal data.
Historically the GDP has been off by 1.2 percent. Lately, they've been even less accurate? I'd fail a student statistical analysis that met government standards for accuracy.

Let's return to the Reuters story:
All too often these indicators — the May U.S. non-farm payrolls and The Federal Reserve Bank of Philadelphia's June business conditions index, to name just a couple — came in well below even the lowest forecasts provided by dozens of economists from banks and research institutions.
In 2010 the Federal Reserve Bank of San Francisco published a research paper, "Okun's Law and the Unemployment Surprise of 2009," written by Mary Daly and Bart Hobijn. In the paper, the authors admit that models of unemployment have been empirically flawed. If the model used by the Fed was flawed in 2009, I guarantee it is still flawed today. "This time it was different, but it will get back to normal," is patently absurd. Sorry, but government estimates have never been reliable. Why trust them in the future?

I'm not going to trust the Congressional Budget Office, the White House Office of Management and Budget, or the Federal Reserve. None of these organizations has been accurate in the last five years. We could argue they haven't been accurate since the 1960s. Forecasts in spending are generally off by a factor of ten or more! Forecasts in growth? Off by 1.2 percent, on average, which is a huge margin when growth is currently near 2 percent. Being wrong by 1.2 percent is a 60 percent error margin. That's horrible and most statisticians would suggest this makes the models useless.

This problem with forecasts is not limited to the United States, either:
In June 2008, not one of a sample of 24 top economists who track the UK saw a recession coming at any point from the start of 2008 to the end of 2009. 
We know now Britain's recession, one of the worst on record, had already started when the questionnaire went out, and latest evidence shows the UK economy is still barely growing. 
The story was exactly the same with the euro zone survey, in which economists failed to identify that a contraction was already underway. 
Similarly, polls of U.S. economists at around the same time showed no grave concern that the world's largest economy was about to plunge into its hardest times since the Great Depression, citing just a 50 percent chance of any recession.
Economists cannot even "predict" a current recession? And we're supposed to believe their predictions for months and years into the future?

Mark Zandi, whom the White House is now citing daily, appears week after week on CNBC and various cable shows predicting lower jobless claims. And week after week, he's wrong.

And why is the same White House that doesn't like Moody's and S+P citing economists from Moody's and S+P to prove the latest and greatest stimulus plan will create jobs? I thought we weren't supposed to trust the ratings agencies? The White House is quick to point out the forecasts of mortgage backed securities' (MBS) safety and returns were way, way off the mark.

Pres. Obama claims his job plan will stimulate growth and create nearly 2 million jobs. After all, the economists agree with him. Forgive me if I "unexpectedly" don't trust his claims.

Wednesday, September 7, 2011

The Myth of the Multiplier - Reason Magazine

I have written in the past that I doubt the "multiplier" effect some economists and politicians cite when promoting federal spending. I believe this column makes several good points:

The Myth of the Multiplier - Reason Magazine

There are "indirect" multipliers, which I do believe are real — though not perfect. Money spent on roads and highways, for example, enables transportation of goods. The problem is, even spending on transit systems is seldom wisely managed.

Government is not efficient. Even what it should do, such as providing for the national defense, it does inefficiently. I admire the military, but it isn't efficient. Any "multiplier" effect from military spending is long, long term and often hard to quantify versus the waste.

NASA has created technologies that do provide economic benefits, certainly, but the NASA of today cannot even replace the space shuttle program in a timely fashion. The private contractors linked to NASA have developed inefficient habits, too. If there is a negative multiplier, NASA has become such a problem.

The university where I teach is private, but it depends on federal student loans and grants. As a result, it has developed inefficiencies. Worse, loans saddle students with future obligations diminishing their future savings (and consuming). A student with $36,000 or more in debt has to deal with that burden instead of buying new things. There will come a time when education spending, in the form of federal subsidies for loans, becomes a negative multiplier.

What government spends comes from taxes. Those taxes come from private individuals who might otherwise spend that money on new products or invest in new ideas. Whether you are paying down student loans, other personal debts, or paying taxes — that is money not spent on new and better ideas.

Creating more government employees is not stimulative. If anything, it causes drag in an economy.

Liberals argue that "Government employees pay taxes, too." That's absurdly misleading.

Let us consider a teacher, one liberals will claim was a "job saved" by Washington spending. The example teacher earns $50,000 and receives another $35,000 in overall benefits (about $10,000 in immediate benefits and the reminder over a lifetime). These are numbers from the BLS and Dept. of Labor.

Let us now assume average property taxes going to schools in a city are $800 of a $1200 tax (based on a New York Times estimate for 2010). That means that one teacher in a school district supported by local property taxes requires 106 households or a mix of about 80 households and 15 "average" businesses. The only "option" to save the teacher's job is higher taxes, which in turn drives residents and businesses out of a region. That kills any "multiplier" of saving the teacher's job.

My wife and I moved out of a high-tax city. That means the city loses us as taxpayers and as potential innovators. Any "multiplier" of paying that teacher? We cancelled out the benefit to saving the jobs of some teachers in shrinking school districts. And why are the schools in our former city shrinking and closing? Because families are leaving — due to high taxes caused by spending.

My wife and I earn slightly more than the teachers we help pay. Our taxes pay a small, small portion of the annual costs to employ one teacher, though. Moving away, someone will have to make up the difference.

That "multiplier" didn't work. Saving local teaching jobs with federal money? We're gone, so the remaining taxpayers will eventually be asked to replace the federal dollars. Many of them will likely leave, too.

I don't believe, overall, there is a net multiplier from our current federal spending. Government has expanded so much, it is probably a drag on the economy. Counting government spending towards GDP and other statistical tricks merely mask the opportunity cost of spending.

Yes, the federal government could "save" every local government job. But for how long? An artificial increase in GDP via such stimulus will be offset once the local taxes have to rise and some local government spending will have to be cut.