The National Low Income Housing Coalition has put together the map above (h/t NYT) that underscores the real impact of inequality in our society. In a sentence, it shows the the rent is too damn high and the wages are too damn low.
In fact, there is no state in the country where a 40-hour minimum-wage worker can affordably rent a two-bedroom apartment (at fair market rent). In fact, in about half the states, even two 40-hour minimum-wage workers can barely afford that. This is why, pre-crisis, many activists focused on the fact that minimum wages are not living wages (and thus, the Democrats successfully raised the minimum wage after taking Congress in 2007). Regardless of that change, the minimum wage is worth less than it was in 1968. The value of the minimum wage over time actually captures the general stagnation of lower-class wages over the last 30-40 years.
And, one personal anecdote on this: when I was at Notre Dame, before I knew much about economics, my big cause was a living wage campaign on campus that turned into a more general pro-labor and pro-union effort. We organized and organized without getting very far, and the recession hit as I was graduating, and so little has happened since. However, what first drew me in was the simple notion that a worker at a Catholic institution (or anywhere for that matter) should be able to support their family working 40 hours. Maybe that is no longer part of the social contract, and we should just focus on employment. When the economy recovers, though, the ranks of the working poor will still be huge.
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Today marked the end of the 2011 History of Economics Society annual conference, hosted this year at Notre Dame. There were many interesting discussions, and keynote lectures given by journalist John Cassidy and historian of physics David Kaiser. But here I want to focus on this year’s HES presidential address, annually given by the outgoing president of the society.
This year’s HES president, Jerry Evensky of Syracuse University, gave a lecture entitled “What’s Wrong with Economics?” His brief answer to this question is that we ignore what he calls the “Pogo Principle,” that is, that “We have met the enemy and he is us.”
As a scholar on Adam Smith, Evensky says that the problem with economics today are models based on “homo economicus” because there is no room for vice or virtue or ethical behavior. Unlike the conception of man that was used by Adam Smith, homo economicus has no norms.
This also relates to the lack of analysis of power and power structures in society. According to Evensky, power can be generated by both political institutions and socially constructed norms such as gender or race. Given the existence of power structures, unfettered competition will NOT be fair competition. Rather, “the powerful win in the race for wealth because they control the race.” But these concepts elude economists who use the standard economics toolkit of utility maximization. For Evensky, the value of a research toolkit is not in the answers it gives, but in the questions it encourages us to ask. By this measure, the neoclassical economics toolkit leaves much to be desired.
Evensky ended his talk on an even more troubling note. He explained how the history of economic thought course that he taught at Syracuse had been part of the core graduate economics curriculum when he went to work there. But, the department decided that HET course had a very high opportunity cost and should not be part of the core; in 2002 the course ended. This is not a trend that will help economists remember the “Pogo principle” in the future.
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University of Notre Dame professor Philip Mirowski has been awarded, along with Avner Offer of Oxford University and Gabriel Soderberg of Uppsala University, a grant by the Institute for New Economic Thinking for “a research project to investigate the influence of economic doctrines on policy norms in recent decades through analysis of the history of the Nobel Prize in Economics.” From the press release:
The Nobel Memorial Prize defines high achievement in economics, and validates the discipline’s claim for scientific authority. And yet, historically, it can be understood as a reflection of domestic policy conflicts in Sweden. In the 1970s-90s, the prize committee was dominated by Assar Lindbeck, and lent authority to his domestic liberal policy agenda. Likewise, outside Sweden, between the 1970s and the 1990s, the prize tended to reinforce a market-liberal policy agenda.
The research project will analyze the extent to which the selection of a Nobel winner played a role in the advancement of theoretical and policy agendas in other countries, especially the USA.
There does seem to be an interesting story to tell about conflict between Swedish economists and their successful welfare state:
“The research problem focuses on the influence of economic doctrines that has worked to discredit government in the name of efficiency norms. The authority of the doctrines was enhanced by the creation of the Prize in Economics by the Swedish Central Bank, and more so after its incorporation into the Nobel procedure. The project strives to locate the origins of the Prize in the conflict between Swedish economists and their successful welfare state,” said Avner Offer, Chichele Professor of Economic History, University of Oxford. “The INET grant will make it possible for us to construct an economics citation database, to investigate Swedish-language source materials, to visit European and North American archives, to re-examine the work of the laureates, and to write up our findings for publication. This study will specify the role of the Prize in validating economic doctrines, and will provide a more skeptical overview of the achievement of economics since the 1970s.”
This is an important project whose findings could be very useful to the INET’s goal of returning economics to its core mission of guiding and protecting society.
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This week Tuesday, September 21, the University of Notre Dame will host its 2010 Forum. This year’s topic is the Global Marketplace and the Common Good (which, as others have pointed out, was announced at an interesting time, given the dissolution of Notre Dame’s pluralistic economics department).
I’ll be tuning in to the live feed and offering some coverage of the event. Much more information can be found at the forum website:
The topic was inspired by the 2009 Papal encyclical “Caritas in Veritate,” in which Pope Benedict XVI reveals his concern with the problems of global development and progress towards the common good. His Holiness argues that both love and truth are essential elements of an effective response. But are they enough?
Each Forum event will be streamed live on the internet on the ND Forum website. The first event takes place:
DATE: Tuesday, September 21
TIME: 7:00 – 8:30 p.m. ET
TOPIC: Morals & Markets: Being Catholic in a Global Economy
Opening remarks by Rev. John I. Jenkins, C.S.C., president of the University
Moderator: Mary Hirschfeld ’05 M.A., a graduate fellow of the Notre Dame Institute for Advanced Study
Doug Cassel, ND Law School presidential fellow and director, Center for Civil and Human Rights
Bill Evans, Keough-Hesburgh Professor of Economics
Margaret (Margie) Pfeil ’87, ’97 M.A., ’00 Ph.D., assistant professor of theology
HOW TO PARTICIPATE:
View live stream – beginning 7:00 p.m. ET on Sept. 21
If you are not able to view the discussion live, you can watch a video on forum.nd.edu, starting the day after the event. Following the event, there will be opportunities for continued online dialogue and possibilities for ND clubs to create local educational programming related to the Forum topic.
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I want to continue our string of postings on education (here and here) with a discussion on rankings. Rankings are both alluring and dangerous in their simplicity. For U.S. higher education, U.S. News & World Report publishes rankings as a guide for prospective students. And because universities need to attract students, they pursue a higher ranking, sometimes recklessly. At Notre Dame, the reckless and thoughtless pursuit of a higher ranking eliminated pluralism from the economics department. Pursuit of ranking also leads to some bizarre occurrences, such as strictly enforcing 49 person class sizes (to score higher in the “classes under 50″ category) and strange accounting measures on who is an alumni (to score higher for “% of alumni who donate”), among others.
Taking actions that seem to waste university resources or decrease the experience of the student may in fact be logical, if it helps the school’s ranking. It is easy for critics of US News and World Report rankings to point out the flaws. The Washington Monthly actually took up the challenge to provide an alternative ranking that better reflected university’s missions to be socially beneficial, as they describe:
Unlike U.S. News and World Report and similar guides, this one asks not what colleges can do for you, but what colleges are doing for the country. Are they educating low-income students, or just catering to the affluent? Are they improving the quality of their teaching, or ducking accountability for it? Are they trying to become more productive—and if so, why is average tuition rising faster than health care costs? Every year we lavish billions of tax dollars and other public benefits on institutions of higher learning. This guide asks: Are we getting the most for our money?
You can read the methodology on how they set out to achieve such a ranking, but it basically involves compiling a Community Service Score (which includes how many students do ROTC and Peace Corps, and what % of federal work-study grants go to community service projects) a Research Score ($ spent on research and PhD’s awarded) and a Social Mobility Score (which compares the proportion of students with Pell Grants and overall graduation rates).
You can see their rankings here. The University of Notre Dame actually improves slightly (from #20 in US News) to #19. Princeton drops (from #1 in US News) to #28th. Check it out. See, rankings are alluring, aren’t they?
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