Economist's View

Gone Fishin'

Trout fishing in America today (near French Pete). Back later.

"A Call for Economic Justice"

The local scene:

Editorial: A call for economic justice, Register Guard, Eugene, Oegon: Nearly 2,000 people made a statement in Eugene on Saturday — a statement of economic and political discontent that made up in intensity for what it lacked in specificity.

It was fascinating — and revealing — to see the wide range of people who participated in the march. They were young, old and all ages in between. They were employed, unemployed, underemployed and still in school. They were frustrated voters on the political left, center and yes, some on the right. ...

What they shared in common was a profound dissatisfaction and anger with an economic inequality that has become the grinding norm... What they shared was a desire, a demand for an “economic justice” that meant different things to those who marched but that bound them together in a common cause. ...

Protesters marched in Eugene — and across the nation — to voice their frustration not only with Wall Street but also with federal lawmakers, both Republicans and Democrats, who for decades have laid the legal groundwork for a tectonic shift of wealth and opportunity from the middle class to the wealthiest Americans.

There was an impressive sense of order and cooperation among not only the protesters, but also the police who accompanied the protesters as they marched from the Wayne Morse Free Speech Plaza across the Ferry Street Bridge to Alton Baker Park and back. The event’s organizers wisely chose to work closely with city officials and police to avoid conflicts and misunderstandings, but it also was clear that the police officers were sympathetic to marchers’ call for economic justice and governmental accountability. ...

Fire at the Fire Station

This must have been embarrassing:

Rural fire engine burns in Alvadore, by Emily Gillespie, The Register-Guard: The Santa Clara fire station responded to a fire at the Alvadore fire station near Junction City at around 8:45 p.m. on Tuesday night where a fire engine was burning. The 1980s-era vehicle was lost in the fire and is also presumably the cause of the fire...

"They Can't be of Asian, African, Latino or Native Descent"

A minority advocacy group in Oregon plans to offer college scholarships to white students only:

Oregon minority group to offer scholarships to white students, by Janie Har, The Oregonian: An Oregon group that represents minorities will start offering scholarships to white students -- and only white students -- in a bid to get people in the majority to champion issues important to minorities.

The stipends will be small, perhaps no more than $2,000 over five years, for students to study race relations in college. The idea is to get students to translate what they learn in school into action in life.

The Oregon League of Minority Voters has not figured out details for the awards, to be issued this spring, said Promise King, executive director of the statewide nonprofit organization. But recipients must live in Oregon. And they can't be of Asian, African, Latino or Native descent. ...

The idea of nudging white people to take up diversity and equity may be the way to go in a state and city where whites far outnumber people of color. But it also underlines a stark reality in Oregon: the stubborn lack of color in power.

"The minorities we have in Oregon are not in a position to effect changes," King said. "The ones in position to effect changes are white."

But not all minority leaders are comfortable ceding control to majority whites. Nichole Maher,  executive director of the Native American Youth Family Center in Portland, welcomes any move to get whites involved in matters usually relegated to minorities.

She rejects the idea that Oregon lacks qualified people of color to lead committees, serve in office or otherwise shape public policy. ...

"Promise's group should not just focus on whites being good allies but ensuring those people use their power and influence to give up their spot for a person of color," she said. "The most courageous thing a white ally can do is truly share power."

People of color make up about 20 percent of Oregon's population. In Portland, Latinos make up 9 percent, Asians 7 percent and African Americans 6 percent. Native Americans and mixed race people are at 4 percent. ...

[A] study by the Urban League of Portland last year that found blacks in Oregon rank near the bottom of nearly every quality-of-life indicator... Of the 90 members in the Oregon Legislature, only three are people of color.

King, a native of Nigeria, said he deliberately courted white leaders when he launched the group in 2007. ... He needed prominent policymakers to make progress on race and poverty, and in Oregon, that meant getting more whites on board. ...

Former state Rep. Jo Ann Bowman, who is African American, isn't sure how she feels about spending cash on whites. But, she readily agrees that diversity and equity matters shouldn't be limited to people of color. "It's certainly thought provoking," Bowman said.

Others are more effusive about the league's ideas to sign up more whites. "I love it," said Kendall Clawson, a self-described middle-class African American and executive director of Q Center,  a North Portland nonprofit group that serves the gay, lesbian, and transgendered communities. ...

If the goal is to get "prominent policymakers to make progress on race and poverty," I'd guess that there are much better ways to spend the money.

One of the Fifty Little Hoovers

This is still hard to believe given the recent history of this state when it comes to taxes of any kind:

Oregon Voters Approve Tax Increase, by William Yardley, NY Times: Two ballot measures that would raise taxes on businesses and higher-income residents in Oregon appeared headed for approval late Tuesday.

The tax increases, which would raise about $727 million largely for public education and social services, were approved last year by the Legislature, but later put to a public referendum after opponents gathered signatures in a petition campaign.

The Legislature, controlled by Democrats, has already put the $727 million into the current budget. So if the ballot items, known as Measures 66 and 67, had been rejected, lawmakers would have been forced to hold a special session to find other ways to reduce spending or raise revenue.

Tax measures have frequently failed at the polls in Oregon, one of only five states without a state sales tax. ...

Experts noted that, given the broader recession and Oregon’s 11 percent unemployment rate, Measures 66 and 67 had been carefully drawn to focus on wealthier residents and businesses. Measure 66 raises income taxes on individuals who earn more than $125,000 and on couples who earn more than $250,000... Measure 67 raises taxes and fees on most businesses. ...

As I said here, it would be better if federal help had been available and we didn't have to raise taxes or cut spending in a recession. But there was no choice but to do one or the other (or some combination of both), and this was the best available option.

Update: Kevin Drum adds:

I await the immediate immolation of Oregon's economy. That's what happened to America after Clinton raised taxes on the rich, after all.

State and Local Governments Need More Help

I have an op-ed in the Oregonian (on state ballot measures to fill a hole in the state's budget).

"Oregon's State Finances Desperately Need Stability"

An op-ed in The Oregonian:

Oregon's State Finances Desperately Need Stability, by Mark Thoma (comments are welcome here)

Tim Duy: The Oregon Employment Report

Tim Duy on today's employment report for Oregon. It's not good.

"Note to the WSJ"

Tim Duy says he knows better than to read the editorial page in the WSJ:

Note to the WSJ – Don’t Write About Oregon, by Tim Duy: I generally leave political commentary to others, so I admit to going out on a limb a bit here. And I generally resist the urge to read the editorial pages of the Wall Street journal, lest it darken my respect for their many fine reporters. But, alas, we all make mistakes, and this afternoon I found myself reading Kimberly Strassel’s piece “How to Block a Liberal Agenda.” Why do I make myself suffer so much? Strassel attempts to argue that the Democrats inability to capture 60 votes in the Senate is a reflection of American’s desire to provide a check on the Obama administration. What caught my eye was this:

These numbers aren't an accident, but instead say something about America's interest in a check on the Democratic majority. Mr. Obama won Oregon by 15 percentage points, yet thousands of his own supporters pulled the lever for Republican Gordon Smith, who lost narrowly. In Minnesota Mr. Obama won by 10, yet Mr. Coleman leads. Alaskans appear to have voted for a felon in part to deny the left a supermajority.

I am not in a position to comment on Minnesota or Alaska, but I have to imagine Strassel has never set foot in Oregon, or put much if any thought into considering our political issues. That Democratic Jeff Merkley barely edged out a victory says little if anything about Oregonians’ desire to prevent a filibuster-proof majority. Instead, Senator Smith’s loss speaks to voter resentment of the Republican party, and, even worse for the GOP, the willingness of their core to destroy themselves.

Losing School Choice

I'm not sure if this will be of general interest, it relates to school choice, but it looks like our local school district is considering restricting the ability of parents to move their kids to the school of their choice. In the past you could move your kids to any school so long as it wasn't full, and most weren't, and that has led to increasing segregation by income within the district:

A step away from choice, Editorial, Register Guard: Choice and equity have been on a collision course in the Eugene School District for years. At its meeting tonight the Eugene School Board will discuss goals and principles that, if they are embraced, imply a painful but necessary move toward equity and away from choice.

Choice means allowing parents to send their children to any school in the district that can accommodate them, including a variety of alternative schools. Equity means providing a high-quality education to all students. Choice has led to a degree of self-segregation that impedes the district’s ability to fulfill its commitment to equity. ...

Achieving the goal of narrowing the range of enrollments found in Eugene elementary, middle and high schools would unavoidably mean tightening students’ ability to transfer to schools outside their attendance boundaries. Achieving the goal of ensuring that student transfers don’t leave neighborhood schools with fewer resources or disproportionate numbers of low-income or minority students also points toward restrictions on school choice.

Such restrictions will be resisted by many parents whose children have been well-served by open enrollment and school choice. These parents pay taxes, vote, volunteer, raise funds and attend meetings — they are a big part of the backbone of the public school system.

But efforts to reconcile equity and choice have not prevented Eugene schools from becoming more economically segregated than ever, with the percentage of students receiving free or reduced-price lunches ranging from 4 percent at Eastside Elementary to 75 percent at River Road Elementary. The demographic trends suggest that segregation will increase if nothing is done.

Widening disparities make it harder for the school district to fulfill its obligation of providing a good education to all students. In his report Russell quotes research by the Piton Foundation that concluded, “when more than 50 percent of students at a school qualify for free and reduced-price lunch, it becomes more difficult for low-income students to excel.” To maintain policies that concentrate low-income students in a few schools would require, at best, the acceptance of a double standard, and at worst the abandonment of a segment of the district’s student population. ...

The challenge for Russell, the board and the community will be to make these changes into a gain for all students, rather than a loss for some of them.

The schools in Eugene are excellent if you go to the right school, but there are also schools that struggle. Because of that, if choice is restricted, some parents who didn't bother to do so before will move into the more desirable districts. In the past you could move anywhere and keep your kids at the school they were at, or move them pretty much at will, so location didn't close off opportunities. Convenience mattered, and it is easier if kids live near their friends from school, but lots of people chose to send their kids to schools outside of their home district (in my area, 17% of high school students transfer). I'm guessing we will see more segregation in the long-run as these locational choices are expressed.

[What did I do? Initially, my kids went to their neighborhood school, and the elementary school was one of the lowest average income schools in Eugene. I volunteered a lot - e.g. I led science experiments in third and fourth grades - and what I saw was a learning environment was less than optimal. Test scores were awful and many of the higher income families had moved their kids elsewhere. But I believed kids should go to their neighborhood schools, partly for social reasons, so I started them in their neighborhood school. But after a couple of years we moved to a new district and things changed dramatically. You pretty much had to take a number to help in the classes, the parents in the school used fundraisers to hire extra science and music teachers to come in once a week, all sorts of things like that. The state sent the same amount per pupil to both schools by law, but because of the difference in parent involvement and differences in income, and the use of devices like external fundraising and volunteers, the disparities were pretty large. If I had to do it over, I would likely transfer my kids much sooner, i.e. from the start.]

"Hoover Economics" at the State and Local Level

Menzie Chinn's post on the pro-cyclical nature of state and local government spending, "Make that Four Reasons Why Recession May be Averted," reminded me of this editorial written by a colleague exactly six years ago. Menzie is analyzing and disputing a claim that robust state and local government spending will help to avert a recession. As he notes, due to reasons such as balanced budget requirements at the state and local levels and borrowing constraints, in recessions revenues fall as income falls, and since the budget must be balanced, spending falls as well (and the fall in property taxes in the current case could make things worse than usual). This is about Oregon, but the principles apply to all state and local government spending  where budgets are required to be in balance year by year. [For a bit of background, in Oregon (where there is no sales tax) if state revenues are more than 2% above the forecasted amount, the entire amount of the surplus must be refunded to taxpayers - I received a check a couple of weeks ago since revenues have been higher than anticipated this year even though future finances are in question if the economy falls into a recession. It works the other way too - if revenues are too low there are automatic cuts in state spending. This editorial was written when state and local government services were being cut by quite a bit due to revenue problems from the 2001 recession.]:

Commentary: State badly needs a rainy day fund, by George Evans, Commentary, The Register-Guard, December 20, 2001: Oregon's budget crisis is the direct result of the lack of a rainy day fund and indirectly due to past tax kickers. The principle of the rainy day fund is simple: income tax revenue automatically rises in boom times and falls in recessions, so common sense and a sound economic policy dictate that part of the revenue during periods of strong growth be set aside in a special fund to finance expenditures in recessions.

This is common sense, because it is a principle that would be followed by a prudent household facing systematic fluctuations in income. It is sound economics because it helps to smooth government expenditures and stabilize the state economy. Economists agree that government budgets should also be balanced over the business cycle, running surpluses in booms and using them to finance deficits in recessions. Such a policy acts as an automatic stabilizer, restraining the economy during booms and stimulating the economy during recessions.

The way to implement this policy at the state level is through a rainy day fund. The advantage of such a fund is painfully obvious now that we have entered a recession, but it should have been anticipated by setting up a rainy day fund in Oregon in the early 1990s.

What political forces prevented setting up a rainy day fund that would have avoided the current budget crisis? The principal obstacle has been the "tax kicker," which returns to households the "excess" tax revenues that are generated during booms.

I understand the argument made in favor of the kicker, that it prevents state spending from increasing if politicians are tempted to spend the excess tax revenues. But this argument fails to apply if the excess tax funds are instead set aside in a rainy day fund that can only be tapped during recessions. In contrast, the kicker operates with a perverse and devastating cyclical timing. Because the kicker deprives us of the rainy day fund, it in practice leads to downward pressure on state government spending during recessions, and therefore acts to intensify the recession. ...

The current State budget crisis would have been much less acute, and possibly entirely avoided, if a rainy day fund had been in place, and tapping the rainy day fund would have also helped reduce the extent of the recession in Oregon.

The current regime of balancing the budget year by year is bad economics. At the national level this "Hoover economics" approach to fiscal policy is widely understood to be discredited. The same principle applies at the state level. Current budgetary choices remain critical, but we are operating under artificial constraints. Not having a rainy day fund in place is subjecting us to unnecessary economic distress. Surely we can at least now agree to change our flawed budget policy design so that we are never again compelled to face a recession so unprepared.

I wonder how much additional stabilization could be achieved at the national level if all states had such a fund to stabilize their economies over the business cycle.

Proposed Bush Budget Cuts Threaten to Reignite Battles over Logging

Here's the problem. In some counties in western states, most of the land is federal timberland and these counties are not able to collect property taxes on the government owned land leaving few options to finance schools, roads, and public safety. Because of this, federal aid has been used to help finance necessary services in these areas. Under the Bush budget proposal, these funds are scheduled to be cut in half and then eliminated. This threatens a return to days not so long ago when revenues for rural counties were linked to timber sales and all the bad incentives this method of funding brings about:

Swinging a budget ax at Oregon's timber towns, Editorial, The Oregonian: President Bush's proposed budget hits ... where it most hurts:... in ... cash-strapped schools and ... struggling rural communities. The Bush administration's ... budget ... includes a plan to cut in half, and ultimately phase out, the program that compensates rural, timber-dependent counties in 39 states for federal timberlands that generate no property taxes.

Bush's proposal threatens ... federal aid now received by rural ... counties and schools. It also promises to rip open old wounds by linking support for rural counties to the sale of public lands and eventually reconnecting federal aid to timber harvest. Bush and his undersecretary of agriculture, Mark Rey, are proposing to lead ... the West back to the days when rural towns -- and particularly schoolkids -- were used as pawns in fierce battles about public-lands logging. ...

It's not just the money, although the Bush proposal will bite deep into road, school and public safety funds. The cut also threatens a newfound cooperation across much of timber country. ... The Bush administration seems intent on reigniting the public-land disputes of the past. Its plan to require the selloff of unidentified "isolated or inefficient to manage" public lands to fund the compensation of counties is pure ideological genius, if one of your objectives is to liquidate public lands...

For decades the money provided to counties came from a share of the receipts from federal timber sales. Then timber sales on federal lands collapsed because of the spotted owl protections and other environmental restrictions. Timber receipts plunged. ... [A] bipartisan coalition of lawmakers pushed through the county payments program in 2000, even though environmentalists attacked the idea of creating local forest planning groups.

There still is no better way to compensate forest counties, or to encourage local people ... to come together to support forest improvement projects. These communities have suffered wrenching economic changes. They have struggled to keep their schools open five days a week, and to maintain their roads and other basic public services. Many urban [residents] have long forgotten them.

Now the president has, too.

Whale of a Job

It's too bad that the whale they were trying to rescue from the Thames did not survive the ordeal. It reminded me of this story of "A whale that ... will always have the last laugh":

Bob Welch: Tale of flying blubber keeps bubbling up, by Bob Welch Columnist, The Register-Guard, November 10, 2005: Saturday marks the 35th anniversary of the funniest thing that ever happened in Oregon: the exploding whale. Like you needed reminding, right? ... [E]ach year at this time, [we] pay tribute to the ... Oregon Department of Transportation ... for bringing us the laugh heard 'round the world.

Who can we thank for helping keep the spirit alive? An otherwise unassuming Eugene man, Steve Hackstadt, mastermind of the ever-popular "TheExplodingWhale.com" Web site. It receives about 10,000 hits a day ... "There are still people who don't believe," says Hackstadt, a 35-year-old software engineer who works for NASDAQ. "Some think it's an urban legend." No, it's too perfect for legend.

In 1970, an 8-ton sperm whale washed ashore dead - this is an important fact, this "dead" part - just south of Florence. After considering ways to get rid of the stinking, rotting remains, the Highway Division gathered its finest minds to noodle a solution.

Being guys, they naturally figured a half-ton of dynamite would do the job. Most of the ex-whale, they figured, would blow out to sea as mist and any small pieces would be cleaned up by the gulls. ... As KATU's Paul Linnman says while narrating film footage: "The humor of the situation gave way to a run for survival as huge chunks of whale blubber fell everywhere." A woman can be heard saying, "Here come pieces of ... ." The hood of a car is crunched like a pop can.

Nobody was hurt. "However," reported Linnman, "everyone on the scene was covered with small particles of dead whale." Oregon rain - with a ... twist.

For most people, the story faded. But .... In 1990, columnist Dave Barry saw the video and called the explosion "the most wonderful event in the history of the universe." Then, in the mid-'90s, along came Hackstadt, a graduate student in the University of Oregon's computer information science department. He saw the video and slapped it on his personal Web page. "It's a classic," he says. ... Eight tons of whale blubber, splattered up to a quarter-mile from the ex-whale, attest to that.

If engineers thought the idea of burying the whale to be impractical, the story itself refuses to be buried. It has a cult following, ... "I've received death threats. Some people don't understand that the whale was dead when this happened. A lot of people are confused. It's like: 'You killed Keiko.' "

No, no, no. This story isn't about death. It's about a whale that refuses to die. A whale that lives on. A whale that, thanks to man's stupidity, will always have the last laugh.

It's an Option

I'm not sure how to price the value of this option precisely, I suppose I could give Black-Scholes a try, but I'm glad I have it:

• Supreme Court Upholds Oregon Assisted Suicide Law

Liberals and Conservatives Have Beef in Common

Conservatives supply a liberal demand and in the process love - or at least the market - brings them together:

In Oregon, Thinking Local, by Marian Burros, Eating Well, NY Times: Six years ago "organic" was the next big thing in grocery shopping, but the term has begun to lose its luster. It has been co-opted by agribusiness, which has succeeded in watering down the restrictions of the definition. Today "local" and "sustainable" are the new culinary buzzwords. ...

"I think there is a gathering sense that organic and local are not the same," said Michael Pollan, the author of a forthcoming book, "The Omnivore's Dilemma,"... "Buying national organic products does very little for the local economy. ... Organic has important values having to do with pesticides and how land is treated, but now that it is industrialized, buying organic doesn't necessarily support living in a place that still has farmers consuming less energy." He added: "Moving organic food across the country uses just as much energy as conventional. I think this is becoming more important."

Kristen Crittenden ...[said] "It's nice to know where our food is coming from because you know how it was raised," she said. "It makes you feel good about supporting your local farmer and your local fishing industry." ...

The opportunity to sell locally has kept some area ranchers from going out of business in Oregon and nearby states. Doc and Connie Hatfield, who founded the Country Natural Beef cooperative in 1986, said the co-op now has 70 ranchers, who raise beef on a vegetarian diet free of hormones, antibiotics and genetically modified feed. "Nineteen years ago we were going broke," Mr. Hatfield said. "Now we are paying income taxes."

Mr. Hatfield was just as pleased about an unexpected byproduct of selling locally: the bond forged between rural and urban residents. "Most of the ranchers are rural, religious, conservative Republicans," Mr. Hatfield said. "And most of the customers are urban, secular, liberal Democrats. When it comes to healthy land, healthy food, healthy people and healthy diets, those tags mean nothing. Urbanites are just as concerned about open spaces and healthy rural communities as people who live there. When ranchers get to the city, they realize rural areas don't have a corner on values. I think that's what we are most excited about."...

Inflation Adjusted Tuition and Fees Since 1975

This is a follow up to this post.  I decided to use data I know fairly well to illustrate how tuition and fees have changed in the last thirty years, so I used data for the University of Oregon rather than national averages, but these trends are common across states.  These figures are adjusted for inflation using the CPI. The nominal tuition and fee statistics are here, and the  price deflator used is here (1982-84=100, e.g. the nominal value for 2004-05 is $5,670).

Inflation Adjusted Tuition and Fees

Time periods when the disinvestment in higher education has been the most rapid, around 1981, 1991, and 2001, are evident in the graph.

The Growing Education Gap

David Brooks says:

The Education Gap, By David Brooks, NY Times: Especially in these days after Katrina, everybody laments poverty and inequality. But what are you doing about it? For example, let's say you work at a university or a college. You are a cog in the one of the great inequality  producing machines this country has known. What are you doing to change that?

Let me defend universities against the implied notion that colleges aren't doing anything to address these problems. I apologize that this post is a bit "me" oriented, but Brooks struck a nerve. First, there are whole offices devoted to this problem, e.g. see here, but that by no means exhausts the available resources. On another front, I am currently Chair of the University's Scholastic Review Committee and an elected member of The Undergraduate Council. Both committees are concerned with these issues, but let me back up to the many years I chaired the University's Scholarship Committee, the committee responsible for allocating the entire pool of University scholarship money. As Chair, I had the committee reexamine each step in our process to try and identify hidden bias in the award of scholarship money. As an example, one part of our evaluation process used the number of AP courses a student completed as a measure of academic quality. However, there is a wide disparity in the number of AP courses across high schools and it varies with both the size of the high school and its demographic characteristics. To overcome this, we changed the standard to something along the lines of "The student takes full advantage of available educational opportunities" and distributed a list identifying the number of AP courses available at each high school. Some schools offered no AP courses at all and those students were no longer penalized for not having AP courses on their transcripts. In Oregon, there are a few large cities with large, high average income high schools and lot of smaller and less affluent schools spread out across the state. Subsequent data indicated that this change was successful in, as we saw it, more fairly distributing scholarship money according to merit across high schools with such varied demographics. This is not all we did, at the evaluation orientation each year we discussed these issues with regard to the evaluation process, e.g. when looking at a student's extra-curricular activities to be sure and account for circumstance and we would cite examples of how that might work, and the committee has members to specifically represent the interests of the students Brooks is writing about. The extra-curricular expectations for a single mom or an older sibling with imposed child care responsibilities are different from those of a student without such time or resource constraints. In any case, from my experience on this and other committees, I resent the implication that we do not care, are not sensitive to, or are not taking action to address these problems. We are.

Brooks goes on:

As you doubtless know, as the information age matures, a new sort of stratification is setting in, between those with higher education and those without. College graduates earn nearly twice as much as high school graduates, and people with professional degrees earn nearly twice as much as those with college degrees. But worse, this economic stratification is translating into social stratification. ... The most damning indictment of our university system is that these poorer kids are graduating from high school in greater numbers. It's when they get to college that they begin failing and dropping out...

Why is this an indictment of the university system and not our under funded primary and secondary education systems? I have no idea when assigning grades to the 50-300 people in a course what a student's economic circumstances are. I can only assign the grade the multiple choice or essay test supports and if a student fails, I can't pass them on some other basis. They need to come to college prepared and that starts long before they get to universities. Having done the University's grade inflation study and having examined high school grades as part of that process, I have my own ideas about why high school graduation rates might be rising. Take a look at the pressures and incentives current education policy gives primary and secondary schools for a start, and I've already mentioned funding issues. In any case, that we get more under privileged students coming through our doors but many fail along the way is something we do our best to address, but students need to arrive prepared and that is a social problem that extends far beyond the reach of our universities. Finally,

...I'm going to come back to this subject and write about what some colleges are doing to help these students and how most colleges are neglecting them. But let me conclude with the thought that while we have big political debates in this country about equality of results, all those on the left and right say they believe in equality of opportunity. This is where America is failing most.

I'll agree with that, equality of opportunity is essential, but I'm guessing we will disagree about the source of and solution to this problem.

UPDATE:  Arnold Kling comments on this post and writes:

In my view, the issue is larger than universities' policies concerning admissions and financial aid. It concerns how universities are financed, and how this affects the distribution of income. First, consider state subsidies for universities. These are almost certainly regressive. Much of the subsidy goes to raise the rents earned by administrators and professors. Much of the rest goes to affluent students. The taxes that pay for the subsidies come from all economic classes. Second, consider university endowments. Again, they serve to increase rents of employees and to subsidize those students who attend the most elite institutions--a student population that is disproportionately affluent. Imagine instead what might happen if state funds and alumni donations  funded vouchers for student tuition. Compared with reforming university finances, tinkering with admissions and scholarship policies is beside the point. It may "show that you care," but has little practical significance.

A couple of quick notes.  First, I was answering the question Brooks posed, what have I done personally.  If I controlled state taxes and expenditures, my approach would be different!  Second, I disagree it is of little practical significance.  That's not what our numbers told us, that's not what the people on the committee that work with students tell us, and if you are one of the students who gets a scholarship, it is of huge significance.  Sure, we need to work on the issues Arnold identifies, but is he implying we shouldn't do this too? 

One final note, we are a state institution, but our "subsidy" is 13 cents per dollar, down from around 30 cents fifteen years ago.  The impact of this is that we have increased tuition to make up the difference at a rate far greater than the rate of inflation and this has reduced access.  A lot of our work internally has been to counter the trends in enrollment the changes in state funding have caused and scholarships are one part of that strategy. The changes have not been insignificant. Some figures:

1990:  Tuition was 23% of budget, state funded 32% of budget
2004:  Tuition was 33% of budget, state funded 13% of budget

That's a big change in funding over the last 15 years and this is common across universities.  The disinvestment you hear about is real and it has harmed educational access.

Governors Object to Administration's Forest Policy

If you've never seen the old growth forests of the Pacific Northwest, I hope you get to someday, before it's too late:

A Light in the Forests, editorial, NY Times:  The Bush administration has largely succeeded in its systematic effort to roll back environmental protections for America's national forests. It has weakened agreements to protect old-growth trees in the Pacific Northwest, persuaded Congress to adopt an industry-friendly plan for fire suppression and overhauled rules governing forest management in ways that erode safeguards not only for the forests but also for the endangered species that live there.

National Guard Troops in New Orleans Face Tough Conditions in Relief Effort

A reporter from The Oregonian is embedded with local National Guard troops sent to New Orleans and has been reporting daily on their role in the relief effort.  Today, Harry Esteve talks about the lack of support for the troops that are in place and the conditions they have encountered:

Daily miseries complicate relief mission for Oregon Guardsmen in New Orleans, Harry Esteve, The Oregonian: NEW ORLEANS -- In a city without power or running water, meeting the basic needs of more than 1,700 soldiers and airmen has become an exercise in cunning, brazen "borrowing" and head-shaking frustration for the Oregon National Guard.

Dude!!!

For you eastern Oregonians out there, time for some Friday cow blogging:

When Pigs Wi-Fi, By Nicholas D. Kristof, NY Times: This is cowboy country, where the rodeo is coming to town, the high school's "kiss the pig" contest involves a genuine hog, and life seems about as high-tech as the local calf-dressing competition, when teams race to wrestle protesting calves into T-shirts. But Hermiston is actually a global leader of our Internet future. Today, this chunk of arid farm country appears to be the largest Wi-Fi hot spot in the world, with wireless high-speed Internet access available free for some 600 square miles. Most of that is in eastern Oregon, with some just across the border in southern Washington.

Flocking to Danger

Problem 1 (15 points):  Use supply and demand curves to explain why people rush to the beach when there is a tsunami warning:

Still a tsunami of work to do, The Oregonian: Tuesday night's tsunami warning spotlighted some admirable emergency planning by Northwest coastal communities, but also some glaring weaknesses in the region's readiness to respond. Too many people tried to evacuate by car, creating potentially lethal traffic blockages along the Oregon coast … Other people foolishly flocked to dangerous viewpoints, well within tsunami inundation zones, hoping to see the anticipated wall of water … law enforcement agencies did an excellent job of clearing people from popular Oregon beaches. And many communities … staged well-coordinated evacuations of residents and tourists from inundation zones. … Unfortunately, some coastal communities sounded no sirens and organized no evacuations. … Tuesday's drama demonstrated that tsunami defense involves much more than erecting sirens. Oregonians and their neighbors all along the West Coast have work to do before the next tsunami warning brings the real thing.

Magnitude 9 earthquakes occur off the Oregon coast every 300-500 years. The last was a little over 300 years ago and occurred on January 27, 1700 at 9:00 p.m. (See here for an interesting discussion of how this tsunami was so precisely documented and what to expect if one hits again. See  here for what to do.)   The clock is ticking.

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Get along, li'l halibut

Wanted. Experienced fish wranglers. Apply within.

Get along, li'l halibut - High-seas "ranches" offer promise of abundant fish but raise serious health and environmental questions,The Oregonian:

… [T]he stampede to develop high-seas fish ranches out to the federal limit of 200 miles … is: a concession that the United States and the rest of the world have badly damaged and mismanaged the ocean's bounty. The damage … is not irreversible. One promise of … fish farms … is the possibility of feeding a hungry nation while relieving some of the pressure on wild fish stocks. Done carefully … fish farming will not necessarily cause widespread damage to the ocean environment or the Northwest commercial fishing industry. … seen in Canada, Norway, Chile and other nations that have raised vast numbers of fish in their waters. It seems likely that taking the farms farther offshore …, could reduce the spread of disease and other problems caused by intensive fish farming in sheltered, near-shore waters. New technology could create better, stronger fish pens and stop the frequent escapes and genetic pollution caused by inbreeding of farmed and wild fish. But it is worrisome that the administration is laying out a proposal to quintuple the amount of fish farming in U.S. waters during the next 20 years yet leaving until later the hard, crucial work of defining the appropriate health and environmental safeguards. The tough rules need to be in place long before the net pens go into the water. Large-scale fish farming has been a long time coming to the United States, but there is no stopping it now. The market for fresh fish … is large and getting larger. If this nation is unable or unwilling to safely and carefully raise seafood for the American market, other countries will fill the void. We're cautiously supportive … But as the government prepares to open the high seas to fish farms, it should heed the advice given to everyone setting out to sea: Be careful.

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Nicholas Kristof Gets a Bad Draw From His Inbox

Nicholas Kristof writes: 

Day 141 of Bush's Silence, By Nicholas D. Kristof, NY Times: A reader from Eugene, Ore., wrote in with a complaint about my harping on the third world:    

"Why should the U.S. care for the rest of the world?" he asked. "The U.S. should take care of its own. ... It's way past time for liberal twits to stop pushing the U.S. into nonsense or try to make every wrong in the world our responsibility."

And while that reader wasn't George W. Bush, it could have been. Today marks Day 141 of Mr. Bush's silence on the genocide, for he hasn't let the word Darfur slip past his lips publicly since Jan. 10...

I live in Eugene, Oregon, one of the few places in the country where Democrats made gains in last November’s election. Eugene, Oregon, the place where flower children come when Berkeley has offered it's full plate of liberal fare and it's not enough. This (scroll down) is more typical of the Eugene I know:

Eugene Oregon, a liberal blogger, and Feddie, a conservative blogger, started a group blog called Coalition for Darfur. If you haven't seen it, or haven't been keeping up with Eugene Oregon's (of the blog Demagogue) coverage of the crisis in Sudan, then you are missing out on much of the story.

Didn't want anyone getting the wrong impression.

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Administration Eases Protections on Roadless Forests

John Muir: Any fool can destroy trees. They cannot run away; and if they could, they would still be destroyed, chased and hunted down as long as fun or a dollar could be got out of their bark hides, branching horns, or magnificent bole backbones. Few that fell trees plant them; nor would planting avail much towards getting back anything like the noble primeval forests. During a man's life only saplings can be grown, in place of old trees— tens of centuries old— that have been destroyed. It took more than three thousand years to make some of the trees in these Western woods,— trees that are still standing in perfect strength and beauty, waving and singing in the mighty forests of the Sierra. Through all the wonderful, eventful centuries since Christ's time — and long before that — God has cared for these trees, saved them from drought, disease, avalanches, and a thousand straining, leveling tempests and floods, but he cannot save them from fools — only Uncle Sam can do that.

New Rule Opens National Forest to Roads, May 5, AP: The last 58.5 million acres of untouched national forests … were opened to possible logging, mining and other commercial uses by the Bush administration on Thursday…

Those of us who live in the northwest can see first-hand that the remaining old growth forests need more, not less protection. I understand that there is a need to log some forests and that managed properly forests are a sustainable resource. But as the following editorial notes there are vast tracts of second- and third- growth forests available to serve that purpose. In addition, these are public forests, not the large amount of private forestland held by lumber companies and others. However, the Bush administration is easing protections for roadless federal forests in spite of public opposition:

A dead end in the woods, The Oregonian The only thing the Bush administration will reopen for sure by rolling back protections for roadless forests is the bitter and counterproductive debate over logging the last remaining old-growth and remote forests in Oregon and the West. The administration can keep asking the public and prodding governors, but … A large majority of Americans do not want to see the last intact sections of national forests cut up with roads, logged or mined.

We have supported many Bush administration efforts to return some semblance of balance to management of federal forests … But roadless areas, many of them municipal watersheds, important wildlife areas and remnant stands of old-growth trees, are not the places to put Oregon loggers back to work. The fight over roadless forests is a costly and unnecessary diversion. The future of the Northwest timber industry is not in the last stands of old growth … It is in thinning and active management of the vast tracts of second- and third-growth trees that cover most of the lower elevation -- and already roaded -- forests. …

The administration's new plan for roadless areas gives governors 18 months to tell the Forest Service how they would like to see these areas managed, but the federal agency retains the final say … Maybe that amounts to more "local control," as the administration claims, but it looks more like fobbing the political pressure off on governors and creating another excuse for a tired debate about roadless areas. … The public will say again that it wants the state's roadless areas protected.

… It is laughable that the Bush administration is casting its rollback of President Clinton's roadless rule as useful to gather more comment, and more local knowledge, about roadless areas. Westerners have spoken loud and clear. More than 4 million people have commented on roadless-area policy -- more than on any federal rule in American history. But the Bush administration, pretending that it has not heard a thing, keeps driving down this dead end.

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The Economic and Social Benefits of Farmers Markets

Direct from the Oregon farm, May 04, 2005, The Oregonian

… "Farm-direct marketing," … has become a very big deal in Oregon. … Each one of these events sends Oregon growers back to their farms with thousands of dollars from the pockets of city folk who love the fresh radishes, spring greens, early strawberries, baby asparagus, goat cheese, Tillamook Bay oysters and endless other bounty from rural Oregon. …

The 64 farmers markets … may be Oregon's most effective bridge between town and country. … more than 90,000 urban and rural Oregonians connect this way every week …

Then there are the economic benefits: a revenue stream for people who work the land, spin-off enterprises such as bakeries and restaurants, and a much-needed additional way to combat Oregon's hunger problem. Last year, farmers markets around the state provided wholesome food totaling more than $1 million to the state-federal nutrition program serving needy seniors and women with infant children. ...

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Economics Can Help with Environmental and Resource Problems

From The Oregonian:

Back from the Dead, The discovery of an ivory-billed woodpecker in Arkansas is an inspiring story about wildlife habitat and hope, May 03, 2005, The Oregonian

It is a long way from the old-growth forests of Oregon to the Big Woods of Arkansas. Yet when researchers said last week that they discovered an ivory-billed woodpecker swooping over the swampland 60 years after it was declared extinct, you could stand in any forest and hear the beat of wings.

It was the sound of hope taking flight.

If this ghost of a bird can rise in the heart of the Old South, then almost anything seems possible. To share the excitement, to feel the goose bumps, you don't have to be one of those hard-core birders who sat down and sobbed after they first saw the large, red-crested woodpecker fly across the Arkansas bayou. You don't have to know an ivory-billed woodpecker from a common flicker. You just have to love wildlife.

This spectacular bird, the largest woodpecker in North America, is not from here. But the spirit and dedication that led to the protection of the Big Woods, and the rebirth of the ivory-billed, live right here in the Northwest.

This bird is, at heart, what the Northwest is struggling to protect on the Columbia and Snake rivers, in the old-growth fir forests of Western Oregon, in the big ponderosa pine country of Eastern Oregon. This woodpecker represents what Oregonians fight about, worry about, sacrifice for.

Too often, it feels like we're losing. Conservation groups publish bleak lists of species on the brink, animals around the world that are about to blink out, never to be seen again. Most of the time, it feels like all we can do is slow or delay the loss. Even the rare good news -- a big run of hatchery salmon, a single chick hatched in captivity -- seems so manipulated, so far from nature, that it is hard to celebrate.

But this is different, a bird that everyone believed had died off by the middle of the last century, suddenly soaring back into view. They had said it was gone forever. Hunters had killed the birds off for their showy red plumage. Loggers and developers had cut and dried their bottomland hardwood and swamp habitat.

Yet here it is, showing up in the middle of a forest carefully pieced back together and protected by a number of state and federal agencies, conservation groups, hunters and landowners. The Big Woods is 550,000 acres of bayous, bottomland forests and oxbow lakes. The discovery of an ivory-billed woodpecker there is powerful evidence that how we manage land and resources today can have an enormous impact on the fate of wildlife in the future.

No one yet knows how many of the birds are alive in the Big Woods, or whether there is a mating pair. More than 50 field biologists and other experts have spent more than 7,000 hours in the past year searching the Big Woods for ivory bills. They have confirmed at least 15 sightings of the woodpecker.

It is hard to imagine the rush of seeing a species come back from the dead. It is exhilarating enough to see a wild chinook salmon charge up the Columbia River, watch a bald eagle circle over Portland's Ross Island or see gray wolves lope across Yellowstone 's Lamar Valley.

In the end, you don't need binoculars or a bird book to identify what they have discovered in Arkansas' Big Woods.

It's hope for all wild creatures.

At the UO we established a Center for Environmental and Resource Economics. One of the goals of the Center is to use economics to advise environmental and resource policy decisions, something there has been far too little of in the past.

In my view, there is too much conflict between various groups trying to solve environmental and resource problems and economists are often viewed with suspicion as they weigh in on the debate. Even on campus there is difficulty getting various groups to work together to form a comprehensive cross-disciplinary environmental and resource program. It is equally difficult to do so when forming actual policy.

Economists can help to get incentives correct in achieving desired environmental and resource outcomes, and in analyzing which types of policies are likely to be cost effective in achieving those goals. The quantity of resources available to address environmental and resource problems is limited, and economists can help to enlighten policymakers about how best to allocate those scarce resources to address important environmental and resource issues.

The Oregonian: Social Security Straw Man

It rains once in awhile in Oregon.  The Oregonian has learned to see through the clouds:

Social Security straw man:  The Senate panel's hearing begins on a disappointing note, Wednesday,  April  27, 2005, Editorial, The Oregonian      

A few weeks ago, Sen. Charles Grassley made a lot of Americans cringe by asserting that the Social Security trust fund was only "a mirage." Scary words, those, from the all-powerful chairman of the Senate Finance Committee.   

On Tuesday, the Iowa Republican said something equally as cringe-worthy, not to mention untrue, as his "mirage" remark. He blasted Democrats and other critics of President Bush's Social Security privatization plan for failing to offer ideas of their own on how to keep the system from falling apart.      

"Doing nothing is not an option," he fumed at some who appeared before the 20-member committee Tuesday.    

Trouble is, not a single critic of the Bush plan favors "doing nothing." Opponents of diverting Social Security payments into private investment accounts have been pointing out all sorts of responsible reforms that can put the popular social insurance program back on the path to solvency -- something that even Bush admits his proposal does not do.   

"We've had months of sparring and skirmishing," one committee member, Sen. Ron Wyden, D-Ore., noted on the eve of the hearing. "Tuesday," he added, "is Round One of getting into the substance."

So true. Which made it all the more disappointing to see Chairman Grassley pull out the old straw-man ploy right at the get-go. If he allows that kind of political posturing to continue in this important hearing, true Social Security reform will indeed be a mirage.

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Nike Casts Light on Factories

From The Oregonian:

Nike casts light on factories
The company lists all of its labor shops for the first  time and reports abuses at some
Wednesday, April 13, 2005
HELEN JUNG

Nike today is offering its critics an unprecedented look into its manufacturing network, providing the names and locations of the 705 contract factories that make its sneakers, clothing and equipment ... and makes Nike the first major apparel and footwear maker to reveal its entire factory base ...Activists, concerned about working conditions at alleged sweatshops, have sought the information for years ...Nike's disclosure of its factory base is "groundbreaking," said Neil Kearney, general secretary of the International Textile, Garment and Leather Workers' Federation, a global group of unions based in Brussels, Belgium. Kearney was a member of an external committee that reviewed the report ... Nike was able to collect data and identify patterns of problems including harassment, excessive overtime and unpaid wages ... The company works with 705 active factories in 51 countries, with concentrations in China/Hong Kong (133); Thailand (73); United States (49) and Indonesia (39). Collectively, the factories employ an estimated 650,000 workers ...

Nike's report: Violations of code of conduct
Wednesday, April 13, 2005
The Oregonian

In its first corporate responsibility report in four years, Nike identified five key areas in which factories did not meet the standards defined in Nike's code of conduct. The company's factory audits led to correction of problems in several cases, the report cites, including payment of more than $720,000 to workers who were underpaid.

Collective bargaining. Nike found that some factories illegally blocked organizing efforts and, in some cases, fired workers for organizing activity. In addition, China and Vietnam prohibit collective bargaining by law.

Harassment. Nike found that workers in some factories reported vocal, physical, psychological or sexual harassment or abusive treatment. In some cases, the factories lacked a confidential system for handling grievances.

Hours of work. Several factories required employees to work longer than the maximum of 60 hours a week, including overtime, that Nike directs its factories to follow. Some factories maintained multiple sets of books to hide the extra hours of work and falsify documents.

Wages. Nike found that workers frequently were underpaid for the time worked. In addition, workers often did not receive printed records showing their wages.

Child labor. Nike discovered five workers younger than the legal minimum age. Nike also found multiple instances in which factories failed to properly document the worker's age.

For more information: www.nikeresponsibility.com/reports

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