austerity

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Tories Waste £120 Million in Two Years Persecuting Disability Claimants

Mike put up another excellent article yesterday about the news that Johnson’s government had spent £120 million over the past two years fighting appeals against rulings by the DWP and Maximus against disabled benefit claimants. These are people, whom have been ruled ‘fit for work’ under the Fitness for Work tests. As Mike and others have reported for a very long time, three-quarters of these rulings are overturned on appeal. This means that the Tories have spent something like £100 million on trying to get people, who have every right to benefit, thrown off them.

Mike also states in his article that under the internal regulations of the DWP, each new claim is subject to ‘mandatory reconsideration’ during which time the claimant receives no benefit for a period of four weeks. It is only recently that this policy has been overturned by the courts. Any claim that this is fighting benefit fraud is spurious. The actual number of fraudulent claims is less than 1 or 2 per cent, whatever bilge rags like the Daily Mail tell you. And the increase in expenditure against appeals by the disabled is far greater than the 13 per cent rise in new claims. Which means, as Mike points out, the Tories have been spending this money and trying to stop people with real needs claiming benefits simply out of a vindictive hatred of the sick and disabled. He concludes

So the huge proportion that the Tories refuse – and the amount of time and money wasted in the appeal process – can only mean one thing:

The Tories hate disabled people and want them to die.

Why isn’t this a national – if not international – scandal?

See: https://voxpoliticalonline.com/2020/09/01/tories-have-wasted-120m-in-two-years-trying-to-tell-people-theyre-not-disabled/

This isn’t about saving money. I’ve got a feeling the amount of government expenditure on ordinary welfare claims is trivial. Especially compared to the handouts the Tories have given, even before the Coronavirus, to big business through tax breaks, the bloated contracts awarded to the private outsourcing companies, and subsidies to the banks and other industries, like the railways. And the situation in America is even worse, thanks to the greater advance of corporatism in the American system and the massive expenditure on the military-industrial complex and armaments. It’s why there are books like Take the Rich Off Welfare attacking it.

Left-wing critics and activists have pointed out that Thatcherism has represented nothing less than a massive transfer of wealth upwards, away from the poor, the sick, the disabled and the rest of the working class. As a result, the 1 per cent have become massively richer.

This is all about persecuting the poor for the benefit of the bloated rich. And I would like it to be a national scandal. I would like the same kind of mass demonstrations that spontaneously erupted with the Black Lives Matter movement to occur and be organised against this horrendous persecution of the disabled. I would like people to march, holding placards denouncing the Tories – and New Labour, for their part in creation of this disgusting policy – showing the faces of the people, who’ve died after being found fit for work, and starved to death or took their own lives after being thrown off benefit.

Because, dear Lord, there have been more than enough of them. I lost count of the number who’d starved to death after it hit five hundred. And the number of disabled people, who’ve died from their conditions after being found fit for work is 113,000. Or more. One of the last victims was a Black man, Errol Graham, a diabetic who also died of starvation after he was declared fit to go back to work. Black Lives Matter have protested – rightly – against the shooting of unarmed Blacks by lawless cops in America. They’ve held protests here about institutional racism, and pulled down statues of slavers. But why aren’t they marching against the institutional murder – ’cause that’s what is – of disabled Black people. Because Blacks and Asians have been especially hard hit by austerity because of their general poverty and lack of opportunities compared to Whites.

The Tory persecution of the disabled is a real scandal. And it’s not going away. We need mass demonstrations against it until the message gets through.

While a governmental blame game distracts the public, what democracy we had is being further hollowed out.

Published by Anonymous (not verified) on Sun, 30/08/2020 - 6:00pm in

Before it’s too late let’s not let the window of opportunity pass us by. The government is us, or it could be.

Fingers pointing at the words "The others"Image by Gerd Altmann from Pixabay

As many of us sit in our living rooms watching TV it often feels that we are living in some sort of tragic farce being played out on the world stage. Or maybe even that we’ve been transported into the realms of the ‘imaginary’ Matrix of Agent Smith and Morpheus. It is difficult to know these days what is real, what is not or indeed what the future holds for us humans as Covid-19 brings a new normal and AI and automation becomes a seeming reality. We are coasting along perhaps hoping tomorrow will be another day and will bring better things.

Our illusory sense of stability and certainty is being replaced with deep anxiety. It is alarming for many to find that the foundations we have been standing on for decades were actually made of sand and prone to eventual collapse. On a daily basis, the pandemic reveals the gaping holes in public and social infrastructure provision that has resulted from over 40 years of neoliberal orthodoxy aided by the deeply held and politically inculcated public beliefs that there is always a price to pay for too much spending. We seem to have accepted instinctively that reducing inequality and poverty or addressing climate change is unachievable because governments are constrained by the scarcity of money. That nothing can be done.

We confuse Charles Dicken’s character Micawber’s dilemma as a currency user “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery” by translating that same household budget narrative into how the UK government spends. Instead of understanding that governments are currency issuers and cannot be confused with currency users, we believe in a logical but mistaken fashion that after the big spend the government will, like Micawber, have to pull in its horns eventually if it is not to end up in debtors’ prison or be proscribed by the ratings agencies as not good credit risks.

The ’there is no alternative’ mantra lives on as if somehow the market is all-powerful and governments must bow down to its all-knowing nature. And yet none of this is true. Sovereign currency-issuing government like the UK and many others not only hold the key to finding solutions to the economic chaos that is currently before us and the future challenges we face but also have the keys to the public purse. Unlike the commonly believed narrative, neither the bond markets nor the taxpaying rich determine how much the government can borrow or spend. These are government decisions relating to a political agenda and political will to deliver it with the resources it has at its disposal. It is beautifully simple.

The wreckage of 10 years of austerity, deliberate and continued shrinkage of our publicly managed and paid for infrastructure, as well as the increases in poverty and inequality as a result of a low wage, precarious economy is strewn in its wake. Combined with the on-going consequences of the pandemic on the economy in the form of increasing levels of unemployment then things are looking distinctly worrying.

Already this week more redundancies have been announced with Pret a Manger indicating that 2700 people will lose their jobs at its branches across the country as cities become deserts devoid of workers looking for their lunch. These will not be the last. As has been pointed out in previous blogs, many more will find themselves without employment over the next few weeks and months as the Job Retention Scheme comes to a close when many employers will find themselves with no choice but to let their workforces go. As Frances Grady of the TUC indicated this week millions of jobs are at stake.

This is the government’s wakeup call, but it is important to understand that what comes next will be a political decision unrelated to the state of the public finances. When the Chancellor Rishi Sunak says that the nation must buckle up and prepare for hard times it is almost as if he is saying that what happens will be unavoidable. It is as if he is saying that the short spell of propping up the economy with a round of fiscal intervention is unsustainable and that he will have no choice but to bow to the dictates of the market. We will have no option but to take the pain (by which he means us) to sort out the mess which will clearly mean a reset of the economy even if that means huge unemployment whilst at the same time as he has already intimated getting deficits and debt down and the public finances back into order. A recipe for disaster.

His job retention scheme and the much-praised ‘eat out to help out’ have shown what government can do, but those programmes have quite simply been skirting around the edges in terms of what government must do if we are to avoid a collapse of the economy and further hardship for citizens. It is avoiding the opportunities that exist to address the key challenges which face us in terms of climate change and indeed that ‘levelling up’ which Boris Johnson has spoken about which will be essential to ensure a fairer distribution of wealth and resources across the population. The truth is that we need an expansion of the public sector alongside a Job Guarantee and Green New Deal if we are to confront and address these challenges directly and effectively.

The implication of Sunak’s statement is that the government is not in charge and does not have the tools to manage the worst economic effects of the pandemic, nor indeed of coming climate change which will demand big solutions not just for the health of the planet but human existence.

It’s the market, stupid! It’s not the fault of government! That is what they want us to believe. The blame game lives on and not just in terms of the neoliberal diktat that the invisible hand of the market rules the roost. Like a magician’s sleight of hand which draws our attention away from the real trick being played on us, government has used the same mechanisms to ensure that the public is not looking at what is really happening and why. And more importantly who is responsible.

Indeed, this week the news was encapsulated in Boris Johnson’s statement that we had a ‘mutant algorithm’ in our midst. The computer had messed up apparently. Never mind the uncomfortable fact that computer programmes and algorithms are only as good as the person who programmed them.

It has become an on-going cause of criticism of government’s handling of this crisis and in particular of the Prime Minister that it is always someone else’s fault for the train crash that is occurring. Who has not come in for the opprobrium of various government ministers when things have gone wrong? From teachers to nurses, to social care workers and now civil servants who have either been sacked or had to resign in recent weeks and months.

Melanie Stefan, a computational neurobiologist at Edinburgh University, puts it quite clearly in a tweet thread she posted on the ‘A’ level results scandal which has ruined the chances of so many young people.

“Saying the computer got it wrong is doing two things: It makes it sound accidental, as if that was never really the plan. And it makes it sound like some weird computer uprising with no human agency or oversight involved.

Both are untrue. Humans are behind this. Humans made decisions, and in this instance the decision to further disadvantage students from already disadvantaged schools. This is a scandal, and we should be angry”

The fact is that it is humans in the form of politicians, their economic advisers and journalists who have been pumping out the false narratives and apportioning blame, that are in fact responsible for the disaster that neoliberalism and austerity policies have wreaked upon societies across the world.

The current government has done everything it can to avoid scrutiny of its actions and blaming the algorithm is a symptomatic example of its failure to accept responsibility for its policies over the last ten years and their damaging consequences. Others have conveniently become the fall guys for government failure, whether it is ordinary people being characterised as lazy scroungers living off the state, those who have been given the task of implementing government policy or those who speak out against the system. Government has turned its back on democratic accountability, seeking others to blame whilst at the same time encouraging us to turn on each other thus weakening the power we have to force the changes we so desperately need through the ballot box.

As Mary Bousted from the National Education Union commented this week ministers have a duty to parliament to account and be held to account for the policies, decisions and actions of their departments. Instead, they are doing the very opposite.

Our democracy both at the national and local level is under attack, our public and social infrastructure in decay, poverty and inequality rife and growing. Only this week it was suggested that by abolishing 213 smaller councils in England and replacing them with 25 new local authorities could save over £3bn.

In an age where deliberate government-driven austerity has almost brought local authorities to the brink of financial failure, the idea of saving money might seem attractive. However, in reality, it represents a further hollowing out of local democracy and its replacement with an impersonal money saving approach that no longer takes account of local people’s needs or serves their communities with targeted policies.

When the need to cut costs because of an alleged scarcity of money drives policy and replaces the need to meet public purpose and well-being, whether it is at national or local level, then we have been led astray.

When our social security system fails to serve those in most need both in these difficult times and normal times with adequate financial support then it is time to question those who promote such policies on the grounds of unaffordability.

When our public services are squeezed financially or put out to tender or privatised resulting in poorer services then it is time to dissent.

When a county council announces its intention as it did this week to shut most of its children’s centres reducing them from 38 to 17 saying that buildings do not serve communities then it is time to protest. Replacing buildings with outreach workers who will contact families instead makes the future of society start to look bleak as increasing social isolation threatens those very families who depend on these meeting places for comfort, support and conversation to help them through difficult times.

Money, or claimed lack of it, lies behind the dismantlement of those structures which form the backbone of a healthy economy and healthy citizens.

While we allow ourselves to be influenced by the cleverly executed blame game, our society is being deprived of the means to achieve a stable and secure future.

Government is the currency issuer. It makes the decisions. It decides what and who it will spend on. The future will be bleak if we continue to allow our societal voice to be drowned in a sea of naysayers who tell us that money is scarce and that ultimately there is no alternative to fiscal discipline and book balancing and that after the spending must come a reckoning.

The only balancing we have to do is linked to deciding upon how the available resources will be deployed, what should be provided and how it will be distributed. The questions we need to ask as a matter of urgency is what sort of society do we want to live in? Those are political decisions, not monetary ones. And, even if the mountain seems unclimbable, if we want to change things then as Bill Mitchell has said ‘The government is us’. Or it could be if we want it to be.

 

 

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The post While a governmental blame game distracts the public, what democracy we had is being further hollowed out. appeared first on The Gower Initiative for Modern Money Studies.

John Weeks 1941 -2020

Published by Anonymous (not verified) on Sat, 29/08/2020 - 4:12am in

We received the sad news  that our great friend and colleague John Weeks died on 26th July 2020 after increasing ill health over the last few months. John was one of the founders of PEF and coordinator of the council.

John Weeks was fundamental to the creation and launch of PEF and making it a success . I approached John in January 2018 inviting him to discuss the idea of a new economics forum.  He responded enthusiastically and at our first meeting it was obvious that we shared the same vision  and passion as to how progressive economics could be used to change the world for the better. Our mission was to provide analysis and intellectual and practical support to enable the next government to  bring progressive policies into action. We firmly opposed the madness of austerity. We saw the Labour opposition and John McDonnell as  our prime focus. John had excellent contacts and an early meeting with John McDonnell following our launch at Westminster confirmed that we were on the right track.

John agreed to be the coordinator of the council and was instrumental in bringing in most of the initial members. His impeccable academic credentials gave us credibility . John attended every one of the initial planning meetings as we devised our web site and mission statement. Quite simply we could not have done it without him. Our success in the first two years was a huge source of pleasure to John who often told me how important PEF was to him

John has been PEF’s greatest supporter and ambassador. He has written more blogs for us than anyone else. He has attended every lecture and spoke at many of them as discussant or contributor.  I found his thinking clear and informative on all the major issues. I always went to him to discuss our next moves and our ups and downs. His recent book The Debt Delusion has been by my side for many months. His dry wit enlivened debate and he was the source of endless quips and jokes about academics and the issues of the day

We saw that John’s health was failing him but still he managed to attend meetings and deliver the blogs. Even two months ago he willingly accepted the role of joint editor for our new book, the Return of the State. He soldiered on and took each health setback stoically. ‘Getting old is not for sissies’ he said.

I am pleased that we were able to film an interview with John about the March 2020 budget. See here . He was, as usual, crisp in his analysis and withering in his denunciation of the apparent retreat of the government from austerity.

John will be a huge loss to PEF and to us all personally – his energy, friendship,  companionship, contributions to our debate , practical and moral support. I will miss him badly

PEF ‘s continued success will be an important part of his legacy

The post John Weeks 1941 -2020 appeared first on The Progressive Economy Forum.

Our Converging Crises V: Weak Democrats and their Governing Boards Feed Austerity Budgets

Published by Anonymous (not verified) on Tue, 11/08/2020 - 9:51am in

That may be my worst title ever but it's an important point.  So here we go. 
Where are university budgets near the end of our bad policy summer?  In a bad place -- a worse place than seemed likely during the weeks of activist government from mid-March to mid-May. In this post, I'll discuss the national issue, describe a flawed university budget discourse that makes universities more vulnerable, and link this to the failure of today's mainstream Democrats to accept the economic role of government.
The federal CARES Act was signed on March 27th, and sent universities $14 billion of the $46.6 billion they'd requested (with half of that going directly to students). Having gotten 1/6th of their stated need, higher ed advocates placed their hopes in a follow-up HEROES Act passed the House on May 15th, which Mitch McConnell, Senate Majority Leader, sat on throughout the summer.  Thus the nation's schools and colleges planned for fall in a state of deep uncertainty and growing dread.
This past weekend, POTUS signed executive orders (mostly "memoranda") mandating supplemental unemployment benefits at $300 rather than CARES's $600 per week, with another $100 to come from the states. He extended student loan forbearance from September 30 to the end of the year.  Even if these orders go into effect, there are no provisions for supplemental funding for education at any level, including nothing for the K-12 systems that POTUS and his Department of Education secretary have been trying to bully into opening.  If the states are forced to pay part of the federal unemployment supplement, which some say they can't, that will mean even bigger state cuts to education.
The American Council on Education has a helpful summary of the current situation:

There are technically three bills under discussion in the COVID-19 emergency aid negotiations. The first bill is the HEROES Act written by House Democrats and approved by the full House two months ago. The second is the HEALS Act, which represents the ideas of Senate Republicans and the White House. Finally, the Coronavirus Childcare and Education Relief Act (CCCERA) is legislation introduced by Sens. Chuck Schumer (D-NY) and Patty Murray (D-WA) that reflects Senate Democrats' ideas about education spending in response to the pandemic. . . . The bills all include emergency aid for students and institutions, but the levels of funding proposed differ greatly. ACE has estimated that institutions have a total of $46.6 billion in increased student financial need and lost revenues, and will spend at least $73.8 billion on new expenditures to reopen in light of the COVID-19 pandemic. While CCCERA provides a total of $132 billion to meet these needs, the $37 billion provided for higher education in HEROES and the $29 billion provided in HEALS fall far short. 

The federal bill that comes closest to meeting actual higher ed need--at $132 billion--has no chance of passing McConnell's Senate.

Republican control of key governing bodies has artificially induced massive state failure in suppressing SARS-CoV-2.  The U.S. has the worst Covid-19 suppression record in the wealthy world, and, by failing to build public health infrastructure (see Jeneen Interlandi's superb overview), will continue to inflict massive suffering, disparately along lines of race and class, in all of the areas where common life should offer equal treatment, including education.  The failure of public infrastructure is damaging the private economy that Republican-driven premature opening was trying to protect. Republican opposition to a new stimulus increases the odds of a new depression (see Hiltzik and Krugman for summaries). 

Operating on this familiar political landscape, it's hard for people to maintain transformative ambition.  I sketched one version at the end of April ("Our Converging Crises III"), which involved massive public spending for full Covid-19 suppression, full employment, and educational experimentation. The American self-conception is of a nation that leads the world into a better future. The reality, given our decrepit social infrastructure, is a vast majority focused entirely on getting by. 

The Real Covid Budget Crisis

The same is true in higher education. There's been no follow-up on the early burst of federal effort,  and higher ed is engaged in a new round of austerity, translated as operations cuts, layoffs, and program downsizing. The Cal State system threw in the towel early, announcing on May 12th that it would be all-online.  This was at a time when most administrations assumed Covid-19 would be well in hand by fall; Cal State's Chancellor Timothy White could see pretty clearly that they didn't have the extra billion they needed for testing, tracing, isolating, cleaning, tent classrooms, and the rest. Since then, reopening plans have gone into full reverse, including at wealthy private institutions like Princeton and Johns Hopkins whose core value is small-scale face-to-face learning.  

University of California campuses are quietly joining Cal State's closures on a case-by-case basis.  Berkeley announced all-online on July 21st.  The other semester campus, UC Merced, will open August 26th with an unspecified ratio of remote and in-person. Among quarter campuses, which start a month later, UCLA has dropped its in-person proportion from the 15-20% announced in June to 8%.  UCSB hasn't officially updated its mid-June description of fall quarter as "some face-to-face," but is heading toward basically closed. UC Irvine is keeping its students in the "most classes will start remotely" twilight zone.  All sorts of intensive planning is going on behind the scenes.  And so are planning for budget cuts when UC needs that same extra billion that Cal State needed to open safely.

Although dominated by liberal Democrats, the California state legislature put stable CSU and UC funding in the hands of Mitch McConnell at at time when he was already holding it hostage.  In the final state budget, UC will get a 5% increase over 2019-20 if and only if California gets $14 billion in federal stimulus.  If there's no stimulus, UC gets what UCOP calls an 8% cut from 2019-20.  

In addition, the permanent state budget is cut either way: the federal stimulus money will be treated as a one-time backfill on the state cut.  Even that was a bizarre combination of "augmentations totaling $212.9 million and reductions totaling $471.6 million." Rather than offering higher ed affirmation and stability during the pandemic, the legislature provided a changing combination of cuts and increases that, without an unlikely Senate backfill, gives UC and CSU a major cut.

How big a cut, actually?  The legislature reduced the state allocation for UC from $3.938 billion in 2019-20 to $3.466 billion in 2020-21.   This is a year-on-year reduction of 12.2%.  Its a Covid cut of a size that a red-state legislature could brag about.

It's worth remembering all the way back to November 2019, when The Regents requested an increase of $422.1M in overall state funding, which would have brought state general funding to $4.360B (see the slide here minus $25M for the Riverside School of Medicine).  Annual base cost increases at UC are a bit more than 5%, and since that's 5% on less than half the revenues of the core budget, which comes mostly from (long-frozen) tuition, 5% state increases put core funding further behind.  Campuses have tirelessly tried all sorts of revenue workarounds, mostly involving overenrollment coupled with non-resident student growth, but it hasn't worked. (For the resulting long-term austerity, see "Three Essential Charts"). On top of its rather brutalist history, the California legislature now proposes to cut UC by $903.5M from its November request--barring a McConnell conversion like Saul's on the road to Damascus. The is a cut of 20.7% from the Regents's November request.  

Remember too that even had that $903.5 million November increase been enacted, many campuses were projecting deficits in 2020-21 or the following year. That was not a luxury budget. To repeat: because of prior cuts by Govs. Schwarzenegger and Brown, years of tuition freezes, and sub-inflation state growth, the non-miracle state budget cut that now looks likely is a 20.7% cut from pre-Covid's home for UC semi-solvency.

This would be a disaster for UC (and CSU). And it's likely enough to be treated explicitly in plans for both budgeting and the University's political engagements.

Budget Idealism at the UC Regents

This brings is to the July 30th UC Regents meeting. The Regents have absolute authority over budgeting, revenue strategies like borrowing, as well as political advocacy. If alerted to a budgetary emergency, the Regents might be expected to instruct UCOP to mount a massive siege of Sacramento and Washington D.C., pulling in their contacts in the tech community as well as in national politics.  But UCOP's budget presentation (see the July 30 afternoon session at the bottom of this page), rather than rallying the Regents, kept the real dangers behind the curtain. And Regental behavior encouraged this concealment. 

UCOP presented the budget as in basically good shape.  Medical losses for March-June 2020 are $1.7 billon rather than the earlier projection of $2.8 billion.  UC Health VP Carrie Byington had already suggested that the med centers have learned so much about Covid treatment that they won't repeat spring's revenue losses during the current and future infection spikes. 

Undergrad enrollments are "looking very strong," in the words of associate budget VP David Alcocer (11'47"). He said the same was true of international enrollments, in spite of a very turbulent policy picture on top of Covid travel problems.  He basically claimed that enrollment targets would be hit no matter what. I'm also a bit of an optimist on enrollments because I'm a pessimist on the economy: even remote-college looks good compared to a nonexistent job market.  Polling data suggest we're both wrong, and that colleges should expect a growing enrollment melt.

The presentation noted that housing and dining revenues will be down, but UCOP did not quantify or tie these to different durations of Covid-related reductions. A bit later, UCLA chancellor Block offered some campus numbers, and in later questions a couple of Regents clarified that only single rooms will be offered in the fall, though without revenue numbers for system losses. New VP for Research and Innovation, Teresa Maldonado, gave a candid appraisal of major disruption to research, UC's distinguishing educational activity. She was particularly direct on the damage to women and early-career researchers. But this remained a matter of delayed research progress more than a fiscal crisis.

The presentation of the state budget was a delicate matter (starting around 7'40"; I'm not following UCOP slide order). Alcocer explained the numbers in the slide below (they are different from my calculations above). He noted that the final July budget has a better upside than the May Revise and a smaller potential downside. 

He then went on to explain his right-hand column. He noted that "there's a lot of uncertainty here" because the range of outcomes is nearly half a billion dollars, or 5% of the core budget (9'20").  I can attest that the uncertainty has created in campus planning a somewhat toxic mixture of paralysis, wishful thinking, gloom, and fatalism about cuts. Uncertainty is actually encouraging austerity by making the early stages seem very mild.  

But Alcocer's statement about uncertainty incurred an interruption from Chair John Pérez, who said, 

I just want to push back on the way we characterize this uncertainty. And here's why. The way this reads to me, in simple terms, is "uncertainty is bad, and smaller uncertainty is better than greater uncertainty." When in fact the final budget, in both the worst-case scenario and the best-case scenario, are better for the University, than the May Revise. . .  "Uncertainty" is inherently a bad term, so if we want to look at "range"--some other way to characterize it--because we don't want a negative connotation to the spread we see in the final budget, when in fact it serves us better than the May Revise does."

This intervention forced Alcocer to repeat what he had said two minutes before, which was that the upside was better in July than in May. It suggested to me that Pérez has no idea how uncertainty is weakening the campuses. It also suggested that he would not tolerate university officials criticizing the state legislature in even a polite and indirect way. Any campaign to get a reliably flat budget from the state (not conditioned on McConnell's conversion to St. Mitch), or an increased budget that could cover Covid costs, would never get off the drawing board under Pérez.

The misty aura of fiscal stability was punctured only by Berkeley chancellor Carol Christ, who projected a $340M deficit through fiscal 2021 (or more than ten percent of the campus's $3 billion or so in annual revenues).  She read a version of her administration's July 15th statement, and stressed the dependence of the campus on tuition and state revenues. She stated that the latter were $100M below their 2008 level even though the campus enrolls 8200 more students today.  

If the Regents had paused to take that in, they'd get a glimpse of the system's deep structural woes. Berkeley is historically wealthier per student than any campus except UCLA, so a responsible Board might wonder what its woes say about the rest of the system.  This was the only time in living memory that a Berkeley chancellor has said point blank that privatization doesn't work and thus we need good state support. Actually Christ didn't say that, but she came closer than ever before to noting that the problem isn't just Covid but a flawed business model in which the University has let state funding massively decline.

Later, as Alcocer was about to move to UCLA chancellor Block for a campus view of losses in auxiliaries, Board chair Pérez interrupted to complain about how long the budget presentations were taking.  "This was identified as a thirty minute discussion. . . . when an item is 30 minutes, the presentation is no more than half of that. We've now exceeded 35 minutes, before we've gotten a single Regent engaged in discussion." (32'30"). The obvious remedy would be to allocate more than a half-hour to analyzing what may be most important fiscal crisis in the University's history.  The time overrun was entirely due to letting three chancellors say a few words about their campus finances outside of the UCOP PowerPoint story.  Things got even more rushed after that--and even more superficial.  

In questions, terribly delayed to minute 38, Regent Makarichian performed his solo role of asking for budget numbers, and guessed at overall losses by adding some numbers in his head.  Pérez instructed CFO Brostrom to have those figures in the September meeting. I know Brostrom had versions he could have produced then, but who would dare try the Pérezian patience by pulling up another slide?  

In the meantime, UC is covering its losses with borrowing. It floated a bond for $2.8 billion in July, with $1.5 billion in "working capital" and the rest for capital projects. (UC debt has doubled in a decade from around $10 billion in 2009-10  to $24.6 billion in 2018-19). The budget discussion ended with a hopeful wait-and-see good-case scenario which, as I've said, is translated on the campuses as cuts.  

A Plausible Scenario for 2020-21

The Office of the President and the campuses are all doing projections, so I'm going to adjust some internal UC numbers to draft a plausible negative scenario.  This is not a good case, but it's not a worst-case: for example, I optimistically assume that students who can enroll do enroll, and that all are willing to pay full tuition for mostly remote instruction.  The nicer scenarios assume a return to mostly-normal after the fall term. Based on our country's failed-state approach to Covid suppression, I assume that full fall impacts last through the end of Spring 2021.  I use the governor's January budget as a base for state funding, which was $220M less than the Regents' November budget.

The assumptions:

  • Tuition: full undergraduate enrollment.  Though 75% of admitted international students do not enroll, many are replaced by domestic non-resident and resident students. Waitlists and "appeal" lists are liberally used, maintaining overall totals.
  • Housing is converted to singles, and dining does not return to normal, costing campuses 70% of normal revenues.
  • Grad student enrollment. This falls 15%, slowing research, but it has little impact on revenues as campuses simply eliminate sections as necessary in remote courses, while canceled grad seminars free up some faculty to teach more undergraduates.
  • Research continues to be affected by outbreaks made worse by shortages of tracing and isolation programs.
  • Philanthropy is reduced by renewed turbulence in the markets, as is UC investment income.
  • Medical center and clinical revenues recover from spring 2020 levels but don't get back to normal.
  • The Republicans block higher ed stimulus funding in the Senate. Although the Democrats win back the Senate in November, President Biden wishes to govern from the center, and decides not to antagonize the 48 remaining Republicans by giving too much help to education.  Like public universities everywhere,UC goes to its lower permanent state funding base.

Here's a rough estimate of what this would look like by standard budget category.

Scenario B

Budget Category

Decline $Millions

Negative % Change

2020-21 Base

39,738

 

Student Tuition and Fees

     775

14

Auxiliary Enterprises

   1165

61

Research Contracts & Grants

     779

12

Philanthropy & Investment Income

     555

19

Medical Centers

  2279

15

Educational Activities (esp Clinical Rev)

    521

12

State General Fund Appropriation

    481

12

Total Losses

 6555

16.6

Projected 2020-21 UC Revenues

32,823

 

Scenario B is a decent guess at one possible program for 2020-21: 17% revenue declines for the UC system overall, and 12% or so for the educational core.  Cuts like these would cause major damage to teaching and research, and of course prevent meaningful Covid-19 suppression.  If two things happen, first, Covid illness persists for several years, as some medical officials predict, and second, U.S. politics allows economic decline, then UC, like other universities, will be permanently downgraded.

The Governance Problem

The Republicans are obviously the biggest problem, but so are Democrats and their governing boards.  The Republican donor base sees government as a potentially victorious competitor to business and finance in economic management (through equitable tax policy and regulation but also better social infrastructure and more productive investment).  Weak government has enabled today's "plutonomy." Republican politicians logically oppose programs that will make government useful, effective, and popular and thus empower their direct rival.

But Democrats are also a problem when they reject both strong and weak Keynesianism.  In the strong version, public agencies spend massively to reconstruct society on the principle of equal treatment. This would fund a Green New Deal in which, for example, some of our tens of millions of unemployed people would be paid by the government to insulate the country's housing stock, starting with those owned by low-income people. I pointed towards this kind of spending in an April post.  Let's call it democratic-socialist Keynesianism, Sanders and AOC-style.  

There's also weak Keynesianism, a very useful combination of FDR and LBJ, in which public agencies spend massive amounts to keep an unjust and unequal status quo economy from imploding.  That would include the common-sense goal of keeping the education sector from shedding employees into a non-functional economy by giving schools and colleges stable funding. It would include the UK policy--enacted by the Conservative government--of covering 80% of the salary of laid-off employees so they can be furloughed rather than fired.  

Mainstream Democrats don't exactly oppose this kind of thing. But they don't promote it as their bread and butter. They also don't clearly expose the urgent need for it, or encourage others to expose it. At times, liberal Democrats like John Pérez actively block the creation of a budgetary need for weak Keynesian spending by preventing the open declaration of a budgetary problem. 

The current UC Board of Regents is chaired by the former Democrat Speaker of the Assembly. It includes the Democrat Lt.Governor, the husband of California's senior U.S. senator, and several former or current members of two Democratic governors' immediate offices. It also boasts several wealthy and prominent Hollywood liberals.  There is really no reason for this group not to activate itself in centrist Keynesian fashion. They would then create an urgent obligation on the part of the state to sustain its educational workforce, infrastructure, and student population, whose lives are currently set to be permanently damaged by the Covid depression. 

I don't understand the complacency that demands the current UC budgetary vagueness in which nothing is true and everything is possible, until the only possibility becomes austerity. It feels like proleptic excuse making--"we didn't fail to act, because we didn't know." I don't understand the lack of ambition, even the bare ambition to keep the rising generation whole. We can obviously do that, but it will take much clearer budget work at the level of senior management and governing boards.  It will take boards willing to support unprecedented mobilizations of political will for higher education, or at least willing not to block them,

Principles for a Post-COVID University

Published by Anonymous (not verified) on Fri, 29/05/2020 - 3:16am in

Statement from the American Association of University Professors chapter at New York University

In ordinary circumstances, most of what AAUP chapters do is reactive—stepping up to advocate for the protection of faculty and student rights when they are under threat. At a time when higher education’s morbid expectation of its future is one of crushing austerity and, for some colleges, extinction, our NYU group decided to be proactive and assemble some principles for a post-COVID university. This was not done because we labor under the illusion that a university can be a morally purified space. Instead, we wanted to honor (by gathering together) the ideas and suggestions and arguments for reforming our institution that we have heard being made by faculty and students over the years. Of course, many of the action items on the list are far above our pay grade, but, at some point, we have to start behaving like self-organizing employees of the more humane workplace outlined here. --Andrew Ross, Professor of Social and Cultural Analysis, NYU

****
Principles for a Post-COVID University
How should NYU play its role in a “just recovery” from the COVID crisis? How can we build on the experience of the crisis and from the opinions, grievances, and solidarity that circulated in NYU communities during this period? In thinking about how the university can sustain and rebuild itself, the AAUP envisions NYU as a more transparent, democratic, caring and resilient institution, prioritizing the equitable treatment and rights of its students and employees, minimizing the cost of attendance, and striving more single-mindedly to live up to its motto—“a private university in the public service.”

For too long, NYU policy has been dictated by debt-leveraged expansionary growth, domestically and overseas, and by an institutional desire for upward mobility as measured by national and international rankings. Post-COVID, and in the spirit of social and ecological sustainability, we would like to see NYU focus on thriving in place rather than reaching after “performance” goals that are defined by financial institutions or managerial value metrics. 

Transparency

With the university’s finances under pressure, now is the time to provide faculty, students and staff full access to NYU’s fiscal affairs.

Participatory budgeting should be a key component of the transition to transparency

Executive policy-making should be open to faculty review, and senior administrators should draw more routinely on faculty expertise

Top-level decision-makers should consult and solicit input from the faculty body before making large-scale policy moves, especially on GNU matters

The terms of operation of global branches – in Abu Dhabi, Shanghai, and other GNU “nodes” -- should be transparent to the entire NYU community.

Democratic

The faculty role in shared governance, as recognized by AAUP principles, should be fully restored and clarified.

The NYU administration should agree and affirm that the Faculty Handbook is contractually binding.

Faculty and students should be represented on the Board of Trustees.

Faculty who are elected, and not handpicked, should serve on committees to choose senior administrators, including the Provost and President.

Minutes of BOT and administrative leadership meetings should be accessible to faculty and students.

The right to organize (including that of contract and tenure-track faculty) should be upheld and encouraged, and NYU should recognize any bargaining unit formed by a majority of its eligible members.

Community-driven town halls and plenary assemblies should be instituted on the NYU Calendar to inform and review institutional decision-making.

Caring
NYU should be a sanctuary campus, prioritizing safety and sanctuary to members of the university and its host communities.

Resources and legal assistance should be extended to vulnerable and marginalized community members.

NYU should not operate branches of the university, domestic or overseas, in breach of its nondiscrimination policies.

Employees and students should have (free) access to comprehensive health care at Langone-Grossman if they choose.

Workplace welfare councils (with faculty, student, and staff representation) should be elected in every university unit to safeguard employee well-being and workplace quality.

Affordable

Every effort should be made to lower tuition and retire NYU’s reputation as poster child for student debt.

NYU’s unequal pay structures should be addressed, including gender salary gaps, salary compression, and the role of underrepresentation of minority faculty.

Senior administrator salaries should be sliced, and nonacademic administrative personnel positions downsized.

NYU should establish a much more equitable range spread between the highest and lowest paid of NYU employees, with total compensation packages included in these re-adjustments.

Salary and student fellowship increases should be tied to COLA, and not merit evaluations.

NYU should secure the steady conversion of NTT into TT faculty positions at every GNU location and in its US campuses; as a preliminary goal, NYU should aim for not more than 25% NTT positions in 5 years across the university.

NYU should extend protections comparable to those that accrue to tenure to all full-time faculty who have served continuously for seven years.

Faculty housing rent should be capped at an affordable percentage of income.

Sustainable

NYU’s carbon footprint should be minimized and its endowed funds should divest from the fossil fuel industry, and all enterprises involved in incarceration, immigrant detention, and military production.

Air travel, to global sites and to academic meetings, should be curtailed.

Cross-disciplinary climate crisis research and study should be prioritized.

New environmental justice and climate justice initiatives should be targeted and funded.

NYU should adopt an environmental stewardship role in downtown Manhattan and downtown Brooklyn, modelling and propagating just practices.

Public Service

Since NYU sits on occupied lands of Lenni Lenape peoples, it should fully adopt a charter of decolonial ethics and practice.

NYU should extend public access (for meetings, workshops, assemblies) to its underutilized classrooms and buildings when they are not being used. It should also seek to provide students across the city access to its libraries and online research resources.

NYU should prioritize pathways for students from New York public schools and community colleges to matriculate at NYU; it should also extend and deepen support to such institutions in other ways that those institutions identify as arenas for collaboration.

NYU should make special efforts to support DACA and undocumented students.

NYU’s reach as a landlord and real estate owner should be surveyed and redefined to help address the city’s urgent housing crisis.

Representatives from Lower Manhattan and Brooklyn communities should have the right to review and participate in the approval of all new building and expansion plans.

Local community representatives should have the right to serve on a committee for developing university-community initiatives that will benefit from NYU’s research and resources.

Racial and Social Justice

Indigenous study and engagement should be instituted and encouraged in all university programs.

NYU resources should prioritize the reduction of institutional inequalities for students, staff and faculty of color, along with LGBTQ, disabled community members, DACA and undocumented students.

NYU should insist on staffing reforms on the part of departments and units with an overwhelming majority of white instructors.

Gender balance and racial diversity should be adopted as an institutional principle of all NYU workplaces.

Truly affordable housing should be made available for faculty of color and first-generation academics who often have higher student debt burdens than their peers and cannot rely on family wealth.

Global University?

NYU should convene a community-wide review of the GNU mission and its record.

Free movement of students and scholars across borders and GNU sites should be guaranteed by NYU and host authorities.

NYU should loudly and visibly protest travel and enrollment restrictions at its GNU sites and NYC campuses and lobby the relevant political authorities to lift those restrictions. In cases where there are boycotts of NYU campuses by faculty and students in other parts of NYU because of these restrictions, NYU should recognize these as fundamental expressions of academic freedom.

Academic freedom protections, in all of the forms and expressions recognized by the AAUP, should be guaranteed across all NYU sites.

NYU should uphold the right of all employees, including those contracted to construct and maintain GNU buildings, to be protected by the ILO's basic international labor standards.

NYU should insist that US authorities remedy the challenges faced by international students and faculty--travel restrictions, embassy closures, and impractical visa protocols.
     
      The Executive Committee of the NYU Chapter of the AAUP
       
         Rebecca Karl, President
         Paula Chakravartty Vice-President
         Andrew Ross, Secretary
         Anna McCarthy, Treasurer
         Fred Moten, Member-at-large
         Vasuki Nesiah, Member-at-large
         Mohamad Bazzi, Member-at-large
         Marie Monaco, Immediate past President
     

It's the demand, stupid! The role of weak demand on productivity growth

Published by Anonymous (not verified) on Mon, 06/10/2014 - 12:52pm in

I couldn't resist the title.

Last week I was invited to give a short talk on what I thought was the most pressing policy issue facing the world economy today.

So I presented the findings from a very interesting paper entitled "Explaining Slower Productivity Growth: The Role of Weak Demand Growth" by Someshwar Rao and Jiang Li.

The paper examines the link between demand and productivity growth in both Canada and OECD countries. This issue has been an interest of mine ever since I read these lines in a book by Alan Blinder several years ago:

Economic slack...discourages business investment because companies that cannot sell their wares see little reason to expand their capacity. In consequence, the nation gradually acquires a smaller, older, and less efficient capital stock. 

[A]lthough the state of the national is far from the only factor, who doubts that a booming economy provides a better atmosphere for inventiveness, innovation, and entrepreneurs than a stagnant one? As the cliché says, a rising tide raises all boats...From 1962 to 1973, our generally healthy economy experienced only one mild recession, an average unemployment rate of 4.7 percent, and productivity growth that averaged a brisk 2.6 percent per annum. [Between 1974 and the mid-1980s] the economy [was] frequently...out of sorts. We...suffered through two long recessions and one short one, with an average unemployment rate of 7.3 percent and a paltry average productivity growth rate of 1 percent. This association of high unemployment with low productivity growth is no coincidence. 

Surveying these concomitants of high unemployment -- lack of upward mobility for workers, sluggish investment, lackluster productivity growth -- suggests an ironic conclusion: the best way to practice supply-side economics may be to run the economy at peak levels of demand. (1986:36).

This still makes lots of sense to me.

Verdoorn's Law

During my talk I described the paper as lending support to the well-known findings of economist Petrus J. Verdoorn, who several decades ago published research showing a positive relationship between labour productivity growth and real output growth.

In retrospect, I probably shouldn't have discussed this since it led to a number of questions on Verdoorn and his research, which shifted the focus away from the paper and the real purpose of my talk, which was to drive home the point that there is considerable evidence that productivity growth shouldn't be viewed as solely a supply-side phenomenon.

Specifically, the paper supports the -- in my opinion, common sense -- view that a slowdown in domestic and external demand is detrimental to growth in labour productivity, real incomes and economic activity because of the negative impact of weaker demand on scale and scope of economies, formation of physical and human capital, innovation and entrepreneurial activity.

Here are the paper's main findings:

Our major findings is that 93 percent of the fall in average labour productivity growth between 1981-2000 and 2000-2012 can be attributed to the drop in real GDP growth between the two periods...In addition, our new empirical research shows that a slowdown in growth of domestic and external demand also impacts negatively some of the key drivers of productivity growth, such as, gross fixed capital formation, M&E investment (including ICTs) and R&D spending, thus leading to lower trend labour productivity. (2013:14)

I concluded my presentation by discussing some of the policy implications outlined by the paper's authors. At this point, I was hoping my comments would get the attention of the government policy analysts and economists in the audience.

First, I suggested that it would be prudent for governments to ensure that deficit and debt reduction measures are gradual in nature so that their negative impact on domestic demand would not be excessive.

Then, I explained that it's always a good idea for governments to spend on productivity-enhancing public investment, even during a period of economic slowdown, as it contributes to both today's demand as well as future productivity growth.

References

Blinder, A., Hard Heads, Soft Hearts, (Mass: Perseus Books)

Rao, Someshwar and Jiang Li, "Explaining Slower Productivity Growth: The Role of Weak Demand Growth", International Productivity Monitor, Spring 2013.

Anthony Atkinson on the public debt and intergenerational equity

Published by Anonymous (not verified) on Sun, 28/09/2014 - 11:05pm in

It's been a long time since my last post. Much of my spare time has been spent reading and thinking about the best way to think about the economy. In the end, I've come to the conclusion that it's the big picture that matters.

Take the question of the public debt. Much of the discussion in the popular press relating to the national debt focuses on the liabilities of the government and actuarial concerns (dealing with "how to pay it off"), but it rarely discusses the link between public debt and private wealth, wealth distribution and intergenerational equity.

Anthony Atkinson, I believe, summarized it best here:

Much of the rhetoric of fiscal consolidation is concerned with the national debt as a burden on future generations [...] One lesson of the public economics literature on the national debt is that we have to look at the full picture. We pass on to the next generations:
  • national debt, 
  • state pension liabilities, 
  • public financial assets, 
  • public infrastructure and real wealth, 
  • private wealth, 
  • state of the environment, and
  • stocks of natural resources.

We need to look at the overall balance sheet, where assets as well as liabilities are taken into account. This does not mean that the position is a healthy one. If we consider the difference between the assets of the state and the national debt, expressed as a percentage of the total national wealth, then in the 1950s the net worth of the [UK] state was negative, but it was becoming less negative, and turned positive in the 1960s [...]

The direction of change since the 1970s has however been in the wrong direction [...] In effect the process of privatisation, with the proceeds used largely to fund tax cuts, transferred wealth from the state to the personal sector. We saw that it was at the end of the 1970s that personal wealth began to rise faster than income. The worsening of the public balance sheet is the other side. Personal wealth has risen faster than national wealth since the 1970s because, in effect, assets have been transferred from the public to the private sector. We are passing on more privately to the next generation but less publicly.

Reversing this pattern can be achieved not only by reducing the national debt, but also by increasing public assets.

Now, to say that more wealth is being passed on privately rather than publicly does not mean that it's being passed on equitably.

For instance, when the government sells-off public sector assets such as parks and decommissioned military bases, the government can use the proceeds to pay down the debt, but the assets get transferred to the purchasers of those assets in the private sector, who, most of the time, don't have the same class and socio-economic profile as that of the whole population (i.e., the former "owners" of those assets).

So here's the bottom line: paying down the debt by selling off public assets to the financial interests has contributed immensely to the wealth inequality that is being discussed these days.

And the corollary to this statement is that there's still lots of wealth "out there" that could be used for public purposes and has the potential to be passed on to future generation in a more equitable manner. It hasn't disappeared, it's just changed hands.

Reference

Atkinson, A.B., "Public economics in an age of austerity", January 12, 2012

Greece: signs of growth come as austerity eases | Mark Weisbrot

Published by Anonymous (not verified) on Wed, 22/01/2014 - 10:36pm in

The IMF's austerity plan hasn't worked. Greece's possible recovery is down to a construction programme boosting the economy

It was nearly four years ago that the Greek government negotiated its agreement with the IMF for a harsh austerity programme that was ostensibly designed to resolve its budget problems. Many economists, when we saw the plan, knew immediately that Greece was beginning a long journey into darkness that would last for many years. This was not because the Greek government had lived beyond its means or lied about its fiscal deficit. These things could have been corrected without going through six or more years of recession. It was because of the "solution" itself.

Four years later, Greece is down by about a quarter of its pre-recession national income – one of the worst outcomes of a financial crisis in the past century, comparable to the worst downturn of the US's Great Depression. Unemployment has passed 27% and more than 58% for young people (under 25). There are fewer Greeks employed than there have been at any time in the past 33 years. And real public healthcare spending has been cut by more than 40%, at a time when people need the public health system more than ever.

Continue reading...

Impact of the US Payroll tax cut...and tax hike

Published by Anonymous (not verified) on Fri, 17/05/2013 - 11:13am in

This is a very informative (and short) piece by economists at the NY Fed on the effect of the 2011 US payroll tax cut and its recent expiration.

Here's a good summary:

Overall, our analysis suggests that the payroll tax cut during 2011-12 led to a substantial increase in consumer spending and facilitated the consumer deleveraging process. Based on consumers’ responses to our recent survey, expiration of the tax cuts is likely to lead to a substantial reduction in spending as well as contribute to a slowdown or possibly a reversal in the paydown of consumer debt. These effects are also likely to be heterogeneous, with groups that are more credit and liquidity constrained more likely to be adversely affected. Such nuances may be lost in the aggregate macroeconomic statistics, but they’re important for policymakers to consider as they debate fiscal policy.

Reference

Zafar, B., van der Klaauw, W., My Two (Per)cents: How are American Workers dealing with the Payroll Tax Hike, Federal Bank of New Work, Liberty Street Blog.

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