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Posts Tagged ‘Economic Issues’

Detroit’s Schools: A Canary in the Coal Mine for Urban Schools Across the Country

November 22, 2018 Comments off

Crain’s Detroit Business News reported on an alarming– but wholly unsurprising— finding from Moody’s Investor’s Service: the Detroit Public Schools need a multi-million dollar influx of state funding to upgrade their facilities.

Without sufficient state support, the growing capital needs of Detroit’s public schools pose a potential threat to the city’s economic revitalization, Moody’s Investors Service said Tuesday.

“Two years after from a state bailout that staved off insolvency, the Detroit Public Schools Community District (DPSCD) is again at a crossroads,” the Moody’s report said. “The bailout strengthened the district’s operations, but the state did not provide sufficient resources to address large and growing capital needs.”

A recent evaluation of the district’s facilities, along with the discovery of high lead levels in the district’s drinking water, has increased the urgency, Moody’s said.

The district cannot finance capital improvements on its own and the City of Detroit (Ba3 stable) has its own challenges, placing the burden on the State of Michigan (Aa1 stable) to potentially step in again,” Moody’s wrote in the report. “Absent state support, or sizable philanthropic donations, the deteriorating school facilities will hinder the City of Detroit’s post-bankruptcy economic revitalization.

From my perspective Detroit Public Schools are a canary in the coal mine. Shortchanged by a State intent on tax cuts for the wealthy, located in a city unable to provide services due to a declining population and loss of businesses, and full of aging facilities with crumbling infrastructure, the Detroit Public Schools cannot survive unless the state changes its thinking or some philanthropist steps in. But here’s what is especially sad about Detroit’s schools: they were under the control of the State who turned them over to the kind of privatized operators that philanthropists love to fund… and the privatization and state control went so badly that they have now restored the traditional model of governance. And the traditional model IS working. The operating budget management is under control but the newly elected board has inherited school facilities that require a huge investment, as outlined in Moody’s report:

 

  • The 2016 state bailout solved only part of the district’s problems. The state responded with a cash infusion and restructuring plan that contributed to surplus operations. However, the district’s financial health is at risk over the next decade due to the projected deterioration of its school facilities.

  • Facility needs are substantial with costs likely to rise. A recent facility assessment commissioned by the district depicts large-scale capital needs, which are poised to grow over the next decade. Needs vary across the district as buildings outside greater downtown more likely to be categorized as poor or unsatisfactory. In August, the district had to shut off drinking water due to unsafe lead levels.

  • Local funding solutions are limited, pointing to the need for another state bailout. The district lacks the resources to afford capital upgrades. Additionally, the district’s ability to access the capital markets at affordable rates is also limited. While the city of Detroit’s fiscal fortunes have improved, it is unlikely to offer meaningful assistance to the school district.

  • The state of Michigan is the most viable source of support for the district’s sizable capital needs, though political appetite so soon after the bailout is uncertain.

  • The district’s unmet capital needs are a potential threat to the city’s economic recovery. High levels of investment have revitalized the city’s downtown, although marked improvement in outer neighborhoods has lagged. Poor facility conditions have the potential to slow revitalization and further limit the prospect of reversing the city’s core credit challenges, rooted in low property values, poor socioeconomic characteristics and persistent out-migration.

The cost of the original bailout was $617,000,000… which reflected the impact of the diminished spending over a period of time due to underfunding by the state. But THAT underfunding was to the operating budget…. and the deferred maintenance and operations costs are even higher:

Moody’s cited a facility assessment commissioned by the districted and conducted in July by a third-party consulting firm, OHM Advisors. The assessment reported that the district’s 100-plus school buildings in operation have approximately $530 million in capital needs and deferred maintenance. The report projected that the figure could top $1.5 billion by 2023 if not addressed, the ratings agency said.

“Many of the district’s buildings are well past their useful lives,” Moody’s wrote, although it points out that most of the district’s students attend schools in buildings classified as “good” or “fair”. This could change if more capital investments are not made in the coming years, it said.

The GOP State legislators have deferred spending for years assuming that tax cuts to corporations would attract businesses and increase the tax base. That hasn’t happened in Michigan— and hasn’t happened anywhere… and the result in Detroit is likely to play out in urban areas across the nation in the years ahead.

 

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Disaster Capitalism Proceeds as Puerto Rico Privatization Progresses With Appointment of Former Louisiana State Superintendent

November 22, 2018 Comments off

Education Week blogger Andrew Ujifusa reports that “...Paul Pastorek, the former Louisiana schools chief who helped lead the overhaul of New Orleans’ schools after Hurricane Katrina, has agreed to a contract with Puerto Rico’s Department of Education to provide various services as island schools continue their recovery from their own catastrophic storm, Hurricane Maria in 2017.” In a (presumed) effort to avoid any editorializing, Mr. Ujifusa does not speculate on whether Mr. Pastorek’s entrance is a sign that Puerto Rico will go the way of New Orleans, but it is abundantly clear to anyone one watches policy issues that is the direction their public schools are headed… and I will not be surprised to see the schools in the FL panhandle headed the same way soon because, as Rahm Emmanuel famously said, every disaster is an opportunity for change…. and vulture capitalists love to see a hurricane, a train wreck, or an economic downturn.

ANOTHER Post About Amazon… and the Bottom Line is Amazon Benefits at the Expense of Children

November 14, 2018 Comments off

Chalkbeat writers Christina Veiga, Alex Zimmerman, and Reema Amin wrote a post describing “Four Ways Amazon’s Arrival Could Affect NYC Schools“…. and some are clearly negative, and none of them is unequivocally positive and in sum they do not offset the revenues that will be diverted as a result of the decision to provide enticements for Amazon to locate there. What are the four consequences?:

  • Overcrowded schools as new workers move into Queens, which already has too many students enrolled
  • Concerns about a possible increase in homelessness as housing prices increase, a phenomenon that occurred in Seattle where Amazon is now headquartered.
  • Changes in demographics as a result of the influx of new families, especially in the area of ESOL which has expanded in Seattle.
  • The unlikelihood of the philanthropic donations expected from Amazon, based on the city’s experiences with other partnerships,

Which of these problems might have been solved had $1,500,000,000 been earmarked for schools instead of Amazon?

 

The Great Amazon Auction is Over… and MAYBE Americans Will Now Wake Up to the Scam of Corporate Welfare

November 13, 2018 Comments off

Atlantic writer Derek Thompson’s recent article on Amazon’s recent “search” for a second headquarters is titled “Amazon’s HQ2 Spectacle Isn’t Just Shameful—It Should Be Illegal” and offers this subheading:

After recounting the procedure Amazon followed to seek out its second headquarters, Mr. Thompson poses a series of questions critics of this process and of Amazon are posing and and poses one very blunt question himself:

The rumored announcement has emboldened Amazon’s army of critics. Did the world’s smartest company really need 13 months, and applications from 238 cities, to reach the striking conclusion that it should invest in New York and D.C.?  The former is America’s heart of capital, and the latter is America’s literal capital, where Jeff Bezos, chief executive of Amazon, already owns a house and a newspaper.

Was this national auction nothing more than a scripted drama to raise the value of the inevitable winning bid? And did the retailer miss an opportunity to revitalize a midwestern city by choosing to enrich the already-rich East Coast?

All good questions. But here’s the big one: Why the hell are U.S. cities spending tens of billions of dollars to steal jobs from one another in the first place?

After offering rationalizations for why corporations should engage in this kind of bidding between local and state governments and why those local and state governments should play the game of lowballing their taxes to entice businesses to locate in their town or state, Mr. Thompson offers three major problems with this “system” of reading corporations by providing them with tax breaks:

First, they’re redundant. This process doesn’t expand the local, state or national economy at large in any way, shape, or form. As Mr. Thompson notes, “Companies often decide where they want to go and then find ways to get their dream city, or hometown, to pay them to do what they were going to do anyway.

Second, companies don’t always hold up their end of the deal. Mr. Thompson cited the recent FoxConn scam in Wisconsin as an example, but the fact is he could have chosen any one of the examples he offered earlier in the article.

Third… it’s… ludicrous for Americans to collectively pay tens of billions of dollars for huge corporations to relocate within the United StatesTo underscore the ridiculousness of the competition between cities and states he describes the ongoing “battle” between Kansas City, KS and Kansas City MO for corporations that undercuts local and state taxes in both states, cuts that diminish the ability of both Kansas City’s to provide public services.

Mr. Thompson concludes his article offering some possible solutions that could be reached at the federal level, but laments that such solutions are unlikely given the bi-partisan support for corporate welfare. He observes:

…in a starkly divided country, corporate pandering is the last bastion of bipartisanship, an activity enjoyed by both Democrats and Republicans at every level of government. New Jersey and Maryland, both blue states, insisted that Amazon take $7 billion in tax savings just months after congressional Republicans passed a corporate income-tax cut that some analysts project will save Amazon nearly $1 billion over the next decade.

Corporate America is getting all the help it doesn’t need. You and I may not like it. But executives such as Jeff Bezos have no reason to care. They are winning by the rules of a broken game.

And who suffers? Mr. Thompson answered that question earlier in the article:

…since cities and states can’t print money or run steep deficits, these deals take scarce resources from everything local governments would otherwise pay for, such as schools, roads, police, and prisons.

So if your city or state plunks down millions or billions in “incentives” to entice a corporation to locate in your region, please connect the dots if your schools are substandard, your police force is spread too thin, and your roads are in terrible shape. If you want to know where the money went to provide those services, drive past the spiffy new office park, vast new warehouse staffed by robots, or the gleaming skyscraper full of pink collar workers.

 

 

 

David Brooks’ Sees Our Stance on Immigration as “The Central Challenge of the Age”… But Overlooks the Roots of the Problem

November 6, 2018 Comments off

David Brooks column today, titled “The Central Challenge of the Age“, asserts that neither political party is helping our nation address the issue of immigration, which he sees as that central challenge. In dong so, he particularly singles out the Democratic Party, effectively conceding that the GOP is ripping the country apart by playing to the fears of xenophobe and racists. But his analysis seems to be implicitly defeatist, because he also concedes that defending anything that passes as “looser” immigration laws is a losing proposition politically. He writes:

The Republicans have flocked to Trump’s cramped nationalism and abandoned their creedal story. That’s left the Democrats with a remarkable opportunity. They could seize the traditional American national story, or expand it to gather in the unheard voices, while providing a coherent, unifying vehicle to celebrate the American dream.

And yet what have we heard from the Democrats? Crickets.

What is the Democratic national story? A void.

Why have the Democrats failed to offer a counternarrative to Trumpian nationalism? For two reasons, I think, one political and one moral.

The political reality, as described above, is that any position short of the GOP’s wall building and Muslim immigration ban is painted as “soft” and “anti-American” by the GOP. The moral problem is more complex. He writes:

Democrats have a very strong story to tell about what we owe the victims of racism and oppression. They do not have a strong story to tell about what we owe to other Americans, how we define our national borders and what binds us as Americans.

Here’s the central challenge of our age: Over the next few decades, America will become a majority-minority country. It is hard to think of other major nations, down through history, that have managed such a transition and still held together.

Here’s the comment I left in response to Mr. Brooks’ column after doing some quick Google research on immigration in the early 1900s:

How about OUR country as an example? I think this same “central challenge” existed  in the early 1900s when the percentage of immigrants was higher than it is today. Somehow we managed to absorb the Italians, Poles and Russians who sought refuge in our country. In 1900 it would have been easy to see that we might become a “majority-minority” country if we defined “minority” based on recent immigrants. What’s the difference today? Could it be race? Could it be religion? Could it be our own loss of optimism? And since we DID “manage” this transition in the early 1900s why can’t we do it today? Could it be our racism? Our religious intolerance? Or our pessimism about the future?

What got us out of our funk in the 1900s was an embrace of Progressivism. Our era then, like our era now, was one of extreme economic inequality; one of economic transition— then from an rural agrarian economy to an industrial urban one and now from an industrial urban one to a technological suburban-exurban one; and one of xenophobia— then against the wave of immigrants who arrived in the decades preceding that time and the African Americans who had been freed to now, where our latent racism and religious intolerance is being fueled by a power-mad President and his political party.

Mr. Brooks concludes his essay that effectively urges the Democrats to take the leadership on this issue with this:

But if the Democrats are going to lead this transition, they’ll need not just a mind-set that celebrates diversity, but also a mind-set that creates unity. They’ll need policies that integrate different groups into a coherent nation, with shared projects, a common language and culture and clear borders.

If you don’t offer people a positive, uplifting nationalism, they will grab the nasty one. History and recent events have shown us that.

I wholeheartedly agree with half of this conclusion. I DO agree that we can only overcome the latent racism and intolerance that exists in many disenfranchised Americans by fostering “…a mind-set that creates unity”. I DISAGREE that we can only accomplish this unity through “…a positive, uplifting nationalism“. It can also be achieved by getting voters united in their desire to restore the government services that provided every citizen with an equal opportunity to experience economic well-being, an opportunity that has been undercut by the corrosive winner-take-all economy that the GOP has buttressed with its tax cuts and deregulation. In short, the Democrats can achieve a mind-set that creates unity by helping the public see the benefits of a strong government.

How Are Our Schools Doing? Jack Schneider Reports They are Doing MUCH Better Than Most People Believe!

October 21, 2018 Comments off

Both Valerie Strauss and Diane Ravitch cross posted a recent article by UMass professor Jack Schneider that describes how America’s public schools are REALLY doing…. and the answer is that they are doing surprisingly well.

Mr. Schneider offers an analysis of polls on public schools and NAEP test scores and comes to the conclusion that the American public’s perception of public schools in general has taken a hit because of national policy, not because of any substantial decline in overall performance as measured by standardized tests. He writes:

It seems, then, that abstract perceptions of schools — the nation’s schools — have suffered, while satisfaction with actual schools remains fairly constant. Today, roughly one-third of Americans have a “great deal” or “quite a lot” of confidence in the nation’s public schools — a massive falloff from the early 1970s, when nearly two-thirds expressed such positive views. Meanwhile, nothing appears to have changed for the worse…

it seems that national reform rhetoric has driven the decline in perceptions of school quality.For the past several decades, Americans have been inundated with messages about a crisis in public education. In 1983, the authors of “A Nation at Risk” claimed: “If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war.”

Signing NCLB into law in 2002, President George W. Bush spoke of a need to “free families from failure in public education.” And in a recent address, Education Secretary Betsy DeVos lamented the fact that, according to results from the Program for International Student Assessment, “the U.S. ranked 23rd in reading, 25th in science and 40th in math.”

Politicians are not alone. Policy advocates and philanthropists routinely decry the state of American public education, generally as a prelude to their prescribed reforms. The XQ “Super School” project, for instance — a venture funded by billionaire Laurene Powell Jobs — explained its objective by making the case that we need to “scrap the blueprint and revolutionize this dangerously broken system.” One can’t even open a book about education without being told how bad things are. A quick search on the Google Books Ngram Viewer indicates that the likelihood of encountering the phrase “failing schools” was 100 times greater in 2008 than it was in 1975.

Given the fact that there is no evidence that school performance has declined overall since 1975,  Mr. Schneider is skeptical that a wholesale shake-up of schools is needed. Instead, he sees that the schools who struggle the most today are the same schools that struggled in the past and they need something more than a structural change:

…sweeping, large-scale reform is hardly the remedy for what ails our most vulnerable schools — the schools where our poorest and least advantaged students are all so often concentrated together. Disruption, which is so highly lauded in the private sector, is exactly what those schools don’t need. Instead, what they need is courageous policy addressing issues like school integration and compensatory funding.

But integration and higher taxes are not on either party’s radar, nor are they issues that the public at large values. Mr. Schneider concludes his article with this indictment of our country’s moral failings:

But America’s schools don’t merely reflect our nation’s material prosperity. They also reflect our moral poverty. Our schools are simultaneously an embrace and a refusal, revealing exactly who is included and who isn’t. Most of us can say our children are getting a great education. Yet whose children are “ours”? What do they look like? Where do they rest their heads at night?

Reform rhetoric about the failures of America’s schools is both overheated and off the mark. Our schools haven’t failed. Most are as good as the schools anyplace else in the world. And in schools where that isn’t the case, the problem isn’t unions or bureaucracies or an absence of choice. The problem is us. The problem is the limit of our embrace.

Perhaps, then, a reset is in order. Instead of telling a largely untrue story about a system in decline — a story that absolves us of any personal responsibility — we might begin telling a different story: about a system that works. It works to deliver a high-quality education to those we collectively embrace. And it works in a different way for those we have collectively refused. When a school fails, it is because we have failed.

We HAVE failed the children raised in poverty, especially those children of color and those children who are not from our country even though they are of our country. And when democracy fails to provide for ALL of its citizens, it cannot succeed in the long run. Mr. Schneider is right: The problem is us. The problem is the limit of our embrace.

Humanist Entrepreneur Offers Four Ways to Change the Dominant Paradigm

October 15, 2018 Comments off

The Evonomics blog offers weekly articles that offer thought provoking insights into how our economy could evolve into one that serves all consumers and citizens more effectively. This week’s blog offered a post that was an acceptance speech by “serial entrepreneur” Nick Hanauer. And the award he was receiving? The 2018 Harvard and MIT Humanist of the Year. 

His speech was full of pithy quotes about the failed Homo Economicus model that has dominated Western thinking for the past several decades. In the speech, Mr. Hanauer described the flaws of the current economic paradigm and his belief that our perspectives on how the market really works:

I believe (we have) a fundamentally flawed understanding of how market capitalism works, grounded in the dubious assumption that human beings are “homo economicus”:  perfectly selfish, perfectly rational, and relentlessly self-maximizing. It is this behavioral model upon which all the other models of orthodox economics are built. And it is nonsense.

The last 40 years of research across multiple scientific disciplines has proven, with certainty, that homo economicus does not exist. Outside of economic models, this is simply not how real humans behave. Rather, Homo sapiens have evolved to be other-regarding, reciprocal, heuristic, and intuitive moral creatures. We can be selfish, yes—even cruel. But it is our highly evolved prosocial nature—our innate facility for cooperation, not competition—that has enabled our species to dominate the planet, and to build such an extraordinary—and extraordinarily complex—quality of life. Pro-sociality is our economic super power.

In effect, Mr. Hanauer is arguing that that the Ayn Rand philosophy of economics– the so-called “Virtue of Selfishness”– proposed by Milton Friedman that is explicitly endorsed by the Conservatives and implicitly endorsed by the neo-liberals is wrong. Instead of adopting the “Greed is Good” credo we should instead adopt a pro-social credo based on the Golden Rule. If we did use the prosocial approach, here’s what Mr. Hanauer sees as the result… and it is full of great quotes, which are flagged in italicized red:

Properly viewed through this prosocial economic lens, we see clearly that it is our humanity, not the absence of it, that is the source of our prosperity.

But of course, in working to change the way we think about the economy, my ultimate goal is to change the way we act within it. And to this end, I’d like to close by offering four simple heuristics to guide your own actions and activism:

Heuristic number one: Capitalism is self-organizing, but not self-regulating.

The notion of market capitalism as a Pareto-optimal closed, equilibrium system is—to use the technical term—bullshit. Throughout the world, the most broadly prosperous capitalist economies are also the most highly regulated and highly taxed. To be clear: Government investment and intervention is not a necessary evil. It is just plain necessary.

Which leads us to heuristic number two: True capitalism is not shareholder capitalism.

The neoliberal claim that the sole purpose of the corporation is to enrich shareholders is the most egregious grift in contemporary life. Corporations are granted limited liability in exchange for improving the common good. Thus, the true purpose of the corporation is to build great products for customers, provide good jobs for employees, provide a fair return to shareholders and to make their communities stronger—in coequal measure.

Heuristic Three: Capitalism is effective, but not efficient.

Schumpeter’s “perennial gale of creative destruction” has proven extraordinarily effective at raising our aggregate standard of living, but it can also be extraordinarily wasteful, cruel, and unequal—unequal to the point that it threatens to destroy capitalism itself. If our economy and our democracy are to survive the ever-quickening pace of technological change, we must use every tool available to close “the innovation gap” between our economic institutions and our civic institutions.

And finally, heuristic number four: True capitalists are moral capitalists.

Being rapacious doesn’t make you a capitalist. It makes you an asshole and a sociopath. In an economy dependent on complex trust networks to facilitate the cooperative tasks from which prosperity emerges, and when prosperity itself is understood—not as money but as solutions to human problems—true capitalists understand that every economic act is an explicitly moral choice—and they act accordingly.

Mr. Hanauer concluded his speech with this hopeful and uplifting note:

And so, to all the aspiring business and technology leaders in the audience today, I want to challenge you to adopt an alternative credo, far more ambitious—and more humanist—than Google’s “Don’t be evil”: “Be good.” Or maybe, “Always do the right thing.”

And when you do the right thing, do it with confidence that if it is the right thing to do for your customers, for your employees, for your community, and for the planet—then it is also the right thing to do for your shareholders.

I hope the audience heard Mr. Hanauer’s plea and adopts his recommended credo… but I fear that doing right by the shareholders will be a hard paradigm to overcome.