Minimum Wage aren’t Living Wages

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.

Read Full Post »

Comments on Re-Imagining Accompaniment

It appears that the Re-Imagining Accompaniment event at Notre Dame this week was a huge success. Dr. Paul Farmer and Rev. Gustavo Gutierrez shared their insights about working with the poor, global health, and the role of theology in all of this work. The video should be posted on the Kellogg Institute website shortly for those who want to check it. But I wanted to share some points that I find particularly poignant.

First, Dr. Farmer made three key points that are all closely related to the goals of our blog:

(1) Real service to the poor involved understanding global poverty, and this requires multiple disciplines as well as listening to those most affected.

(2) Understanding poverty must be linked to efforts to end it

(3) As science and technology advance, our structural sin deepens; as effectiveness of medicine and science increases, our failure to use such interventions compounds the inequality/the gap/ the problem.

Gustavo Gutierrez made some interesting points about the nature of poverty. He first explained how liberation theology was born out of a conundrum in Latin America: how to say to the poor person “God loves you” when their experience is that they are neglected, forgotten, and have no rights.

For Gustavo, then, poverty is a human issue. It’s not just about economics. Of course, the economics is important. But economists and everyone working in development must realize that poverty also means to be socially insignificant, forgotten, and to not have rights. He also stated that without compassion, one cannot really be committed to these people. This goes for theorists and practitioners working in development.

Paul Farmer concluded his remarks with a critique of only using cost-benefit analysis in economic models. For him, there is a danger in reducing every problem to a question of “cost-effectiveness,” when we don’t really understand what is “cost” nor what is “effective.” This is where interdisciplinary work is critical, so that these issues can be understood best as possible.

In conclusion, it was a very nice conversation and really a wonderful and unique event, to have a theologian and a physician finding so much common ground in their seemingly unrelated work. Unfortunately, events such as this one are incredibly rare on university campuses across the country. Hopefully, students and teachers and researchers can continue these conversations and Re-Imagine Academia as we move forward.

Read Full Post »

We have met the enemy and he is us

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.

Read Full Post »

Influence of the Nobel prize

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.

Read Full Post »

Coverage of the ND forum

The Notre Dame Forum 2010 panel on Morals and Markets included theologian Margie Pfiel, economist Bill Evans from economics, and Doug Cassel from the Law School. The video is certainly worth checking out, and will be available starting tomorrow on the forum website.

Dr. Pfiel discussed the notion of private property from the perspective of Catholic social doctrine. Her emphasis was on the idea of private property that is not an unconditional right. Caritas calls for gratuitousness, or giving freely what we have been given by God. Because of the common good, charity is not a gift to the poor, but giving to the poor what is theirs. She claims that the New Solidarity calls for a scaling down of consumption, and a moral conversion and lifestyle change that could possible be achieved through living in ecclesiastic communities.

Dr. Evans comes from the complete other side of the spectrum, arguing that the dramatic reduction in poverty has been achieved through markets. He claims that Pope Paul IV’s Popularum Progressio prescribes free trade. He says that the impacts of economic growth on changing lives cannot be overstated, even though in some circles “economic growth” is a dirty word. He claims that the Catholic church has always been an advocate of the market, and that the reviews of Caritas that suggest the Church is retreating from markets are wrong. There are no easy solutions to the downsides of globalization, but there is a silver lining: economic growth.

Dr. Doug Cassel gave the most balanced (and in my opinion, most accurate) account of Catholic thought on economics. He claims that the Papal documents have always been balanced, never a worship of the market, but an acknowledgement of both positive and negative aspects of markets. He cited John Paul II’s “Centesimus Annus” which warned against a capitalist ideology that could spread, putting a blind trust in market forces. He countered Dr. Evans’ example of China proving the superiority of market forces, reminding us that China if FAR from a free market. His understanding of Catholic teaching is that we should respect the fact of what the market has done for the poor, but not fall prey to China as an example of free market success. He cited the example of the Marlin mine in Guatemala. Gold Corp, a Canada-based company, has kept the vast majority of the wealth that the mine produced. Little was left to the Guatemalan people, but there were benefits to the company coming in. People had jobs, and wages. However, he reminds us to count the costs too. Heavy metals have been found in the water tables and the bodies of residents of the area, and these negative health effects due to the company’s negligence and disregard for the local population could outweigh the benefits. He suggests that if domestic governments are unable to regulate these situations, there should be a role for the company’s home country to do so.

The panel discussion is worth checking out. There was a bit of tension of the stage, and obviously these people have very different opinions about politics, economics, and what the Church advocates. The discussion will continue on campus, and hopefully we can keep a discussion going on this blog as well.

Read Full Post »

The Global Marketplace and the Common Good

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
FEATURING:

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

Panelists:

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.

Read Full Post »

Ranking the Rankings

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?

Read Full Post »

Capitalist production of knowledge

I recently came across a quotation from Marxist historian JD Bernal‘s 1939 work, The Social Function of Science, which is often regarded as  one of the earliest works in the field of the sociology of science.

We now see that though capitalism was essential to the early development of science, giving it, for the first time, a practical value, the human importance transcends in every way that of capitalism, and, indeed, the full development of science in the service of humanity is incompatible with the continuance of capitalism.

Bernal was interested not only in science, but also on the impact of science on the world, and the relationship between industry and scientific research. I think these questions are important for scientists (both natural and social) to continue to ask. Today, the pharmaceutical industry is a clear example; the drugs that are researched and developed will be those that will be able to provide the highest returns, meaning that they treat people with money, even if there are other drugs that could improve more lives and to a greater degree in the third world.

And this is also related to the production of economic knowledge. As the American university becomes more of an embodiment of capitalism, the type of economic knowledge produced will tend to serve the interests of capitalists. Economic theories that challenge that status quo have struggled to find acceptance in universities, and the effects are obvious in policy realm as well. The financial bailouts and other policies of the Fed and Treasury are backed by neoclassical theory; certainly an economic theory emphasized the poor would prescribe very different policies.

As universities become more capitalist, they will seek to eliminate theories that challenge them. These changes will then undermine the university’s ability to understand and serve the poor in our society. Hence there does seem to be continued relevance of Bernal’s claim that “science in the service of humanity is incompatible with the continuance of capitalism.”

[The above structure of Photosystem I, from Petra Fromme’s lab at ASU, was determined using X-ray crystallography, a technique pioneered by Bernal]

Read Full Post »

The end of pluralism at Notre Dame

Ruccio notes that as of today, the Economics and Policy Studies department at the University of Notre Dame is dissolved, and the department of Economics and Econometrics has been renamed the Department of Economics; this new department is dedicated solely to neoclassical economic theory.

The professors in the Economics and Policy Studies (ECOP) department have been inspiring Notre Dame students for some time. They certainly contributed to students’ decision to start this blog on economic perspectives. I do hope that they continue to inspire in whatever role they play going forward.

Read Full Post »

Congraduations!

Congratulations to graduates! At the University of Notre Dame, Brian Williams gave a wonderful charge to the graduating class. (watch video here, read story here). He mentioned the role of Catholics in the world:

I’ve traveled the world and sadly that means I’ve walked through great destruction,” Williams said. “I’ve seen staggering loss…from Baghdad to Port-au-Prince to New Orleans, Louisiana. Where I’ve come across people suffering and dying, I’ve also found Catholic charities standing right there alongside me, ministering and soothing, helping and healing without regard to self, every one of them a shining, towering example of sacrifice and selflessness. Let’s make that what people think of when they think of the Catholic Church in America and around the world.

He mentioned other crisis that need to be addressed, including violence throughout the world, obesity in the USA, and the ongoing oil spill:

We are staring, make no mistake, at a slow-motion environmental disaster. It will destroy one of the richest wetland estuaries on the planet, and my urgency is because of this: my certainly that this institution, this graduating class, has the brain power to fix it. And now you’ve just been asked.

And probably my favorite part was his notion of patriotism:

The question is, when did we stop trying? 60 million of us are obese; we have a 17-percent poverty rate; and we’ve fallen to ninth now in global rankings of prosperity… We patriots, and I’m not talking about T.V. patriots whose belief is if you say it, loud and often enough, people will think you love your country more than you do. I am talking about those of us ordinary patriots who wake up every day, and love our country, and believe it’s the best place on earth and the best idea on earth. We patriots see the problem and we want to get better. This involves you.

Read Full Post »