The Common Core curriculum standards, we’re all told, are “state led” and “voluntary.” So why are the Chiefs for Change – a group of Core-supporting state education chiefs – writing to U.S. Secretary of Education Arne Duncan to oppose a moratorium on Common Core accountability?

On behalf of Chiefs for Change, thank you for your continued leadership and collaboration on education reform issues, especially as states across the nation work to raise standards and strengthen accountability….

Recently, some members of the national education community have advocated for pulling back on accountability in our schools. With the majority of states across the nation adopting new assessments – based on higher academic standards – in the 2014–2015 academic school year, it is important for state education leaders to communicate in detail how we will sustain strong accountability during this transition.

The members of Chiefs for Change reject any calls for a moratorium on accountability. This position overstates the challenge and undervalues our educators. A one-size-fits-all suspension of accountability measures denies the unique circumstances each state faces. We will not relax or delay our urgency for creating better teacher, principal, school and district accountability systems as we implement more rigorous standards. That is a disservice to our students and would undermine the tremendous amount of preparation our states’ education agencies, districts, schools and educators have contributed to this multi-year effort….

We welcome additional opportunities to work with other states and with our federal partners on strengthening accountability in education.

What the heck is going on here? If this is all truly state led and voluntary, why are the chiefs writing to Secretary Duncan? Doesn’t he have zippo to do with it? And if they are really worried about states having the ability to deal with their own, “unique circumstances,” why do they positively refer to the 2014–15 school year, when Common Core-aligned national tests – selected and paid for by Washington – are supposed to kick in? And if they actually want Washington to have nothing to do with this, why didn’t they just write the following letter, saving themselves lots of time and pixels?

Dear Secretary Duncan,

Please don’t get involved.

Your friends,

The Chiefs for Change

The almost certain answer to all of these questions is that the chiefs know that Washington, through Race to the Top and NCLB waivers, has been the key to Common Core’s spread, and they want the Feds to keep twisting states’ arms. But since few Americans want Washington controlling standards or assessments, they can’t just come out and say this. So they write an obtuse open letter to the U.S. Secretary of Education that talks of states’ “unique circumstances,” and decries a possible accountability moratorium without saying who would, or would not, enact it. And, ultimately, the intended message seems to be “thanks for pushing states to do what we want. Now don’t go wobbly on high-stakes testing.”

Thankfully, as the recent explosion of Common Core resistance is making clear, people aren’t being fooled by the rhetorical tap dancing anymore. They know this is federal, and they are tired of efforts to deceive them.

Paul Krugman and Berkeley blogger Brad DeLong appear peculiarly agitated about two of the many articles I have written over the past 42 years. The first, from 2009, summarized a longer critique of Krugman’s claim that “liquidity traps” left monetary policy powerless in the U.S. in the 1930s and in Japan since the 1990s. The second, in June 2010, voiced premature optimism about Ireland’s nascent recovery – months before that country wasted a fortune bailing out the banks.

In these cases and others, Krugman and DeLong go to great lengths to put words in my mouth – a proclivity that others have observed.

Krugman writes, “here’s what I find remarkable about Reynolds and people like him: they have a track record. Here’s Reynolds in 2009 ridiculing my claims that we were in a liquidity trap, so that even large increases in the monetary base would not be inflationary. Here he is in 2010 declaring that Ireland’s embrace of harsh spending cuts will produce an economic boom.… And here we are in 2013, with the Fed’s balance sheet up by more than 200 percent and no inflation, with Ireland still mired in a deep slump …”

What I find remarkable about Krugman and DeLong is that they provide links to my articles. That makes it easy to discover they are misquoting me egregiously. Let’s focus first on Krugman’s notion that my skepticism about the notion of a “liquidity trap” is tantamount to predicting that large increases in the monetary base (bank reserves and currency) must be wildly inflationary.

DeLong dredged-up my skepticism about liquidity traps as proof that, “Alan is part of a group [???] that thinks that policy is dangerously close to producing a mammoth outbreak of inflation … And he’s been telling this story for 3 ½ years or so.” Really? If I had been warning of a mammoth outbreak of inflation for years you might think Google could find some record of that.

My mid-2009 article on liquidity traps did not say or even imply that large increases in the monetary base must cause inflation. On the contrary, I explicitly argued that large increases in the monetary base (bank reserves and currency) were necessary in the wake of bank crises – including 2008 when the Fed was much too tight. “In any bank crisis,” I wrote, “the public wants to hold more currency rather than bank deposits, and banks also want to hold excess reserves as insurance against bank runs. Japan’s central bank never adequately accommodated that demand for bank reserves and currency before 2001 (if then) nor did the Fed in 1929–33. But that does not mean (as the liquidity trap implies) that monetary policy was impotent and merely ‘pushing on a string.’”

That short 2009 piece was distilled from a detailed Cato Journal critique of Krugman’s Return of Depression Economics (RDE), which includes data for the U.S. from 1929 to 1940 and for Japan after 1991. “America spent most of the 1930s in a liquidity trap,” says Krugman; “Japan has been in one since the mid-1990s.” My data show otherwise. But Krugman and DeLong would rather quarrel with an imaginary inflation forecast than with my data.

Krugman’s wrote in his 1999 book that “a Friedman-style focus on a broad monetary aggregate gives the false impression that Fed policy [in the 1930s] wasn’t very expansionary. But it was; the problem was that since banks weren’t lending out their reserves and people were keeping cash in mattresses, the Fed couldn’t expand M2.” My figures show that M2 fell dramatically when the Fed let the monetary base fall in 1931–33 and doubled reserve requirements in 1938, but M2 rose by more than 10 percent a year during the rapid recoveries of 1934–36 and 1939–40. Krugman credits the good years to FDR’s undefined fiscal stimulus. But spending rose most rapidly under Hoover (from 3.4 of GDP to 6.9 percent in 1930–1932), and deficits were just 3.6 percent of GDP from 1933 to 1940.

Krugman’s mistaken impression that the Fed “couldn’t expand M2” was a sensible definition of a liquidity trap because it is testable against facts. By that test, the U.S. has clearly not been in a liquidity trap recently, since M2 grew by 6.6 percent a year from 2008 to 2012.

To a monetarist (a proponent of the quantity theory of money) “quantitative easing” is the only kind of easing there is. But it is the quantity of broadly-defined money that matters in this model – not the quantity of monetary base, and certainly not nominal interest rates. Near-zero nominal interest rates in the U.S. in the early thirties and in Japan since the nineties were not evidence of liquidity traps, but symptoms of negative money growth in the U.S., and slow money growth in Japan(2.3 percent a year from 1991 to 2012). The U.S. today is quite different. You don’t have to be a monetarist (I’m just a sympathizer) to suspect that M2 growing by 7.3 percent in 2011 and 8.5 percent in 2012 was cogent evidence against Krugman’s protracted habit of crying wolf about deflation.

There were a wide range of opinions back in 2009 about the net impact of the Fed’s quantitative easing when combined with the opposing squeeze from tighter bank regulation and interest paid on bank reserves. Krugman focused rhetorically on the extremes, as if doubting his predictions of deflation was equivalent to predicting hyperinflation. In reality, very few economists expected much inflation by now, though many expected somewhat less tepid growth of nominal GDP. When it comes to all the U.S. fiscal and monetary tinkering of the past five years, mainstream macroeconomics has much to answer for.

Krugman’s latest call for central banks to pursue higher inflation suggests that he doesn’t believe his own chatter about liquidity traps. “The key … is for the Fed to convince investors that it will allow somewhat higher inflation in the medium term,” Krugman wrote in a 2013 introduction to his book. The obvious problem here is that (1) the Fed can’t raise expected inflation unless it can raise actual inflation, and (2) if the Fed can raise inflation then there is no liquidity trap. Besides, if investors became convinced that inflation will be 3 or 4 percent for a few years, why would they keep holding 5‑year Treasury bonds with a yield below 1 percent? Once bond yields moved up with higher expected inflation, it would sink stocks and raise government interest expense.

To summarize: My 2009 articles on about the history of liquidity traps complained that increases in the monetary were not large enough during past bank crises – not that large increases in monetary base were inherently inflationary. Yet DeLong cites this as proof that “Alan … thinks that policy is dangerously close to producing a mammoth outbreak of inflation.” DeLong is “pissed off” that I deny making an inflation forecast that exists only in his imagination. Really?

Last year, officials at the Univerity of New Hampshire complained bitterly about legislative budget cuts. UNH President Mark Huddleson, who earns more than three times the salary of New Hamphire’s governor at over $330,000 a year, called the cuts “a devastating and historic loss of $31 million,” which is just under six percent of UNH’s $583.5 operating budget. The wailing and gnashing of teeth made the recent revelation that UNH was paying a New York City marketing firm between $91,400 and $108,200 to redesign the school’s logo particularly surprising.

University officials felt that the school’s current logo, which features a clock tower from a building on campus, was not competitive enough in the 21st century so they paid the NYC firm to produce three proposed logos. Apparently this is what $100,000 gets you:

Unsurprisingly, a number of students and alumni are not happy with any of the proposed designs and some created a Facebook page to organize the opposition:

The Facebook page — UNH Students Against the Change of the Thompson Hall Logo — was created May 13 and had 572 likes as of Tuesday evening. Not all posts are supportive of Thompson Hall, but most are critical of the three finalists proposed by the design team.

“I think that a bunch of first graders could have come up with better designs! These are awful!” wrote Julie Glover, a 1983 UNH graduate.

Scotty Arsenault said the university should hire a local artist. “You’re paying a ridiculous amount for insultingly mediocre designs. Don’t limit yourselves to this shield/​crest concept,” he wrote.

Grant Bosse, the editor of New Hampshire Watchdog (and my former colleague at the Josiah Bartlett Center), responded by creating a public Facebook page to crowdsource a new logo. Within 24 hours, there are already several submissions that at least as good as the $100,000 logos, including these:

Not only is crowdsourcing free, it’s likely to create a better logo from an involved community that is clearly more invested in the product.

Seeking to draw attention to their…uh…“plight,” the U.S. sugar lobby took to Congress this week to protect their interests and defend against an amendment to the Senate farm bill that would roll back the wasteful and corrupt U.S. sugar program. But in so doing, Big Sugar has used a tactic that would be more appropriately used by their pro-reform opponents. According to a Congressional Quarterly article today [$],

…the American Sugar Alliance, a trade group for the sugar industry, is taking no chances. In a statement, the group said it delivered replicas of 1940s, World War II-era sugar rationing coupons to Senate offices.

Rationing happened because the United States was dependent on foreign sugar at the time, the group said. Changes like those proposed by Toomey and Shaheen could once again lead to a flood of imported sugar and the loss of the domestic industry, said Ryan Weston, the Sugar Alliance’s chairman. [emphasis mine]

Actually, sugar is already rationed already in this country. The USDA tightly controls the domestic supply of sugar through “marketing allotments” and sugar imports through a system of tariff-rate quotas. These interventions cost American sugar consumers and sugar-using industries billions of dollars a year through higher-than-world-average sugar prices. As my colleague David Boaz blogged recently, it really is a sweet deal for the sugar growers. Nothing rational (sorry) about it.

Politicians and liberal economists get misty-eyed when thinking about grand infrastructure projects. But recent stories in the Washington Post about D.C.-area projects illustrate the realities of government capital investments.

Arlington County recently spent $1 million for a single bus stop, and the structure doesn’t even shelter passengers from wind or rain. The stop is one of 24 along a planned streetcar route, which is a mode of transportation that makes no sense in this area. (I understand that the streetcar dream of local politicians is currently on hold in the face of strong citizen opposition). Why is Arlington wasting so much money on these bus stops? Probably because 80 percent of the costs are being paid by state and federal taxpayers, not local taxpayers.

The Washington Airports Authority has been in the news for mismanagement, overspending, and corruption. The Washington Post has a story today about corruption in contracting by the agency and the complete failure of senior executives to do anything about it. Why the corruption and mismanagement? Because the Authority is a government agency, and worse, it has a monopoly over D.C.-area airports. Airports should be privatized in order to introduce competition, improve service, end corruption, and reduce costs.

The Washington Post has also done an excellent job covering the Silver Spring Transit Center fiasco. The estimated cost of this grandiose bus/​train station has more than quadrupled over time to $120 million. It’s a classic government cost overrun story involving mismanagement, design screw-ups, and contractor failures. A key cause of the problems seems to have been that so many different government agencies were involved that no one had the responsibility or incentive to make needed hard decisions to ensure quality and control costs. Today, fingers of blame are pointing in every direction, and the costs will rise even further as major engineering defects are fixed. 

The grandness of political visions for infrastructure run far ahead of the government’s ability to actually implement projects in an efficient manner. There are types of infrastructure that governments must fund. But more infrastructure should be opened up for private funding, ownership, and control. Private businesses make mistakes, but when they are spending their own money they have strong incentives to control costs, eliminate corruption, and complete quality projects on time—incentives that simply don’t exist in the government sector.

On Thursday, the U.S. House of Representatives is scheduled to take up The Smarter Solutions for Students Act, which would end the practice of Congress designating interest rates for federal student loans, and instead link rates to the 10-year Treasury note. It would be a miniscule improvement. Basically, this change is like banging out a single dent in a car that’s careened off a cliff, rolled over twenty times, and caught fire.

It seems reasonable that if Washington is going to provide student loans, interest rates should be pegged to broader rates. There is disagreement about how much you add to base rates—Rep. George Miller (D‑CA), for instance, is unhappy that the act’s rates could result in profits that would be used for deficit reduction—but letting Congress designate set rates is why we are once again scrambling to keep the subsidized loan rate from suddenly leaping to 6.8 percent from 3.4 percent. 

Of course, the root problem is that Congress furnishes student loans at all, killing the natural discipline that comes from people paying for something with their own money, or money they get from others voluntarily. Getting major dough from taxpayers has enabled massive overconsumption of higher education punctuated by dismal completion rates and huge underemployment for those who manage to finish. And giving people cheap money largely just enables colleges to raise their prices at breakneck speeds, often to provide frills that heavily subsidized students seem to happily demand.

Congress may inject a milliliter of sanity into a swimming pool of irrationality, but what it really needs to do is drain the whole thing.

Cross-posted at seethrue​du​.com

The Wall Street Journal reports today that according to the latest Bureau of the Census figures there was a 0.4% drop in nominal U.S. public school operating spending from 2010 to 2011. The story then makes this unobjectionable factual observation:

Education officials say decreased spending will make it more difficult to prepare U.S. students for an increasingly competitive global marketplace. Some critics argue that public education costs are skyrocketing while academic achievement has not kept pace. They want the system overhauled before more money is spent.

What the story does not provide readers is any measure of student achievement that would allow them to determine who is right. Let’s see if we can help out. Below is an updated version of a chart some of you will already be familiar with. It shows the performance over time of U.S. 17-year-olds on the “Long Term Trends” testing program of the National Assessment of Educational Progress. The spending line corresponds to the trend in the total cost of a complete K‑through-12 public school education (i.e., what it cost to send a high-school graduate all the way through public school). For good measure, it shows how the number of public school employees has roughly doubled since 1970–from about 3.3 to about 6.4 million people. 

So, who seems to be right: “Education officials” or “some critics”?

Incidentally, the WSJ only gives the partial “operating” figures for per-pupil spending. Actual total per pupil spending in 2010, adjusted to today’s dollars, was $13,871. That was down from the all-time inflation-adjusted high of $14,090 in the previous year. Still, $346,767 per class of 25 kids doesn’t seem too shabby.