Open Ed, Trump, Brexit

The #Trexit Conversation

I’ll be leading  a panel discussion at OER17 called Open Education in a time of Trump and Brexit.  Joining me in the panel live at the conference will be Maha Bali (@bali_maha), Lorna Campbell (@LornaMCampbell), and Martin Weller (@mweller).  While we four could easily carry on a lively discussion for 80 minutes (some would say I could jabber that long myself), I wanted to bring in additional perspectives.  To that end, I have enlisted the help of a few people to provide different perspectives to get the conversation going.  These people, Robin DeRosa, Nadine Aboulmagd, Chris Gilliard, and David Kernohan, unfortunately couldn’t attend the conference in person, but they’ve kindly provided us video statements intended to help provoke the discussion and stimulate our collective thinking and learning.  I’ve embedded those video statements below in this post.

I know many, perhaps most or even all, open educators have thought about the implications of the Trump election, the Brexit referendum, and other political movements for open education and OER.  I hope this panel can help stimulate a wider and deeper discussion and sharing of ideas.  Feel free to participate on Twitter with the hashtags #trexit #oer17.   Or, add your comments here or blog them yourself.

The Topic

The original motivation for this panel discussion came from private discussions among some of us just after the US presidential election in November 2016.  We thought those discussions should be expanded and made more open. After all, one of the core values of the open education movement is that more participation and open involvement improves the outcomes, right? Hence, this panel discussion with the open education community at OER17. The original proposal for this panel discussion stated:

Like the Internet itself, the Open Education movement, including OER and OEP, has grown in a world of globalised capitalism that has been dominant in North America and Europe, and indeed, developed and growing economies. The Brexit vote, Donald Trump’s election, and shifts toward nationalist-right parties elsewhere are changing the political landscape. At a minimum, the rhetoric of these movements, both in support and opposition, has altered public discourse and often attitudes toward higher education. These political shifts have complex and multifaceted implications for the open education movement.

At the OER17 conference in London, our panel aims to stimulate deeper thought beyond our initial reactions to these political movements. We hope to provide different perspectives on the relationship between Open Education and the political changes represented by Brexit and the Trump election. Many questions arise, including:

  • What challenges do these political movements pose for Open Education? What opportunities?
  • Open Education movement has largely embraced values of inclusiveness, sharing, connectedness, equity, voice, agency, and openness. How might these values be furthered under these new regimes? How might these values be hindered?
  • Will our work in the open education movement change?
  • In what ways can we shape the future of the Open Education Movement?

When considering the relationship between Trump/Brexit and the OER/ open education movements, it is tempting to think in narrow terms. We’re tempted to see think first of funding implications, academic freedom concerns, or wavering support for education as a public good.   These are valid concerns. But as our three “provocateers” suggest, there’s more to the intersection of Trump/Brexit and OER/Open Education than we might think at first.  It’s complex.

The Provocations

Robin DeRosa

Robin DeRosa, (@actualham), suggests we observe and consider the parallels between the larger political environment and the environments we create in the classroom. (4:47 min)

Nadinne Aboulmagd

Nadinne Aboulmagd, (@NadinneAbo), provides a close-up insight into some challenges the Trump administration policies create for open scholarship. Note: Nadinne was prevented from creating the video at the last minute due to illness but has very generously shared her script for the video here.

Chris Gilliard

Chris Gilliard, (@hypervisible),  notes the role of surveillance and monitoring and urges us to think of open as in freedom. (2:28 min)

David Kernohan

David Kernohan, @dkernohan, takes a look at the “roaming auto-didacts” involved in the Trump/Brexit movements and considers what open education/OER did and did not contribute.

At this point, we’ll insert insightful and witty commentary from our panelists.

UPDATE:  After I put this blog post together but just before the panel started, we received the video from Nadinne (who went beyond the call of duty!).  I wanted to include it:

Employment Is Likely to Improve – Morale Improves When the Beatings Stop

Recovery from the employment losses suffered in the Great Recession (worker’s depression?) of 2007-2009 has been excruciatingly slow.  As I write this post in November 2013, total employment in the U.S. is still more than 1% fewer jobs than when we started this mess 5 years and 10 months ago. That’s 976,000 jobs still missing when compared to 6 years ago. Bill McBride at CalculatedRisk has been tracking this slow recovery of employment and compares it to previous (post-WWII) recessions in this graph.  Typically, we recover from a recession and re-gain the lost jobs in two years or less (2001 is the only other exception).  

Percent Job Losses in Post WWII Recessions

There are several reasons why this recovery has been so slow compared to others. The losses were deeper than the others, a financial crisis recovers slower, and households were deeply in debt which slowed recovery in spending.  But government policy is one of the most significant causes of the slow recovery.  

One of the lessons of all those earlier fast-recovery recessions is that counter-cyclical fiscal policy and automatic stabilizers work.  Yes, there are technical problems in implementing discretionary fiscal policy such as how big, when to do it, and whether to use tax- vs. spending-based policy changes. But it works -especially when the economy has a lot of slack and the recession is deep and severe.

The concept is actually very simple – if consumption spending (C) and investment spending (I) are declining, then the government needs to step in and increase its economic stimulus either by spending more and reducing taxes on those who spend.

Another lesson of those earlier recessions is that automatic stabilizers work very, very well.  Automatic stabilizers are programs like unemployment compensation, SNAP and welfare assistance, and the progressive income tax system.  The problem is that counter-cyclical fiscal policy is largely the responsibility of the national government since only the national government has the freedom to run large deficits when it’s needed.  State and local governments are constrained to run balanced budgets every year and they don’t have the sovereign power of the currency like the national government.

State and Local Government Payroll Employment

This requirement of state and local governments to always run balanced budgets means that state and local governments make recessions worse and recoveries slower. Instead of being counter-cyclical, state and local governments are pro-cyclical.  Again, Bill McBride of CalculatedRisk helps us visualize how state and local governments helped make the recovery slower.

In earlier recessions the national government would step up and offer stimulus to both offset the declines in private spending and private demand, but help fund state and local government to prevent state and local government layoffs.  That didn’t happen this time.  The national government stimulus was too small for too short of time. What’s worse, the national obsession with the deficit has led to premature austerity policies at the national level.  The result was state and local governments, instead of helping the economy recover, were effectively beating the economy for not being more robust.

The good news, though, is that state and local governments appear to finally be done beating the economy into submission.  State and local austerity is coming to an end according to the data. As McBride notes, state and local government employment rose by 74,000 in October 2013.

If this continues and state and local governments are starting to hire teachers, firefighters, and police instead of laying them off, then we will likely come closer to finally recovering all the job losses from the recession by spring 2014 instead of spring 2015.  Not surprisingly, once the beatings stop, morale actually improves.

Yes, Inflation/Deflation is Hard to Measure

One of the hardest concepts for Principles students, politicians and pundits, oh heck, just about everyone to fully grasp is inflation.  A big part of the reason is because inflation is an abstract concept that is not directly measurable.  We can conceive of it, but we can’t measure it.  I’m no physicist (and open to correction) but it strikes me that it’s a bit on par with “momentum” or “latent energy” in physics.   We don’t have direct-measuring energy-o-meters.  We measure the effects and infer the energy.  Inflation is similar.  We can conceive of a generalized, across-the-economy, sustained trend pushing all/most prices upward such that the unit of money is losing real value in general terms.  Inflation is the sustained push behind all prices. We can’t measure that directly. But we can measure the effect it has: rising prices. The problem comes in that not all prices will be rising at the same time or by the same amount.  Further, during any time period, at least part of the change in price for any good is it’s change in real price relative to all other goods (supply and demand as taught in micro).

We try to deal with this measurement issue by creating a price index – an index that tracks the changes in shopping list of goods over time.  But any price index is a just a subset of all the prices.  Even the Billion Price Project index at MIT admittedly misses most services and lots of consumer goods that aren’t available online.  Price indices are very imperfect beasts.  They have many faults, not the least of them being that they often tend to be volatile in nature.  Since we’re looking for an estimate of inflation which means sustained increases, we need to massage the data further by creating some kind of “core inflation” measure or “trimmed means” type price index.  I’ll explain those some other time.

What prompted today’s post is an article in Bloomberg and a post by Krugman about it.  Together they illustrate one of the reasons so many people want to believe we have greater inflation than we really do.  Companies like to disguise price changes.  They don’t want to be known that prices could be cut in response to demand. Example: auto company offers $2000 rebate on $20,000 car but won’t cut price by 10%, or a firm offers a “value meal”, or they offer a freebie bundled product.  Similarly they often disguise price increases by reducing sizes or portions or by changing the financing.  From Krugman:

Good article in Bloomberg:

Procter & Gamble Co.’s failure to raise the price of Cascade dishwashing soap shows why investors are buying Treasuries at the lowest yields in history, giving the Federal Reserve more scope to boost the economy.

The world’s largest consumer-products company rolled back prices after an 8 percent increase lost the firm 7 percentage points of market share. Kimberly-Clark Corp. (KMB) started offering coupons on Huggies after resistance to the diapers’ cost. Darden Restaurants Inc. (DRI) raised prices at less than the inflation rate as patrons order more of Olive Garden’s discounted stuffed rigatoni than it anticipated.

This is basic economics; prices tend to fall, or at least slow their rise, when there is vast excess capacity and weak demand.

As both the article and Krugman’s excerpt show, we’re closer to deflation than most people realize.  They don’t see the failed attempts to raise prices.  They don’t see the shifts in portions or increase in coupons that reduce effective prices.  What they do see and remember is the $.50 increase in a loaf of bread or the $.70 increase in a gallon of gas.  But even with the gas, they selectively remember the $.70 price increase in summer, but forget the $.75 price drop in autumn.  Inflation and deflation are tricky things to measure.

 

David McWilliams Explains Why Austerity Is Doomed In Europe

A very interesting video by an Irish economist explaining how the current reduce government spending (“austerity”) approach to the Eurozone debt and currency crisis is doomed to fail. It is doomed because cutting government spending in a recession only makes the recession worse, which in turn, reduces tax collections which then makes the government deficits worse not better.  But not only is the austerity approach all wrong to solving the debt crisis, it carries very significant risk of social upheaval.  (hat tip to Philip Pilkington and New Economic Perspectives).

Now I’ll offer one pre-emptive comment.  Critics of the arguments McWilliams makes often claim that either government spending isn’t really effective, that somehow only private investment spending will stimulate an economy.  Or, the critics claim that any resources the government puts into use through spending actually detract from the economy by denying those resources to some supposedly better, privately chosen use. Both of these criticism fail.  We are clearly discussing a situation in which there are excess, unused economic resources in the economy.  In plain language:  there’s high unemployment and people are out of work.  The criticisms are all based on an idea called “crowding out”.  For crowding out to occur, the economy must be at full employment – the opposite of being in a recession.

Government and the Slow Jobs “Recovery”

Government finally starts to get out of the way of recovery. In an earlier post today on the good news of the January 2012 employment report, I observed that one of the major factors resulting in an improved (but not good enough) jobs report was that government employment numbers stopped dragging down the total.  I wanted to briefly expand on that idea here.

First, let’s make no mistake the “recovery” from this last recession has been very, very weak.  Private sector growth has been anemic at best. In employment, the recovery has largely been missing in action.  Today, 31 months after the supposed end of the recession, we have only recovered 1/3 of the jobs we lost during the 19 months of recession. As I’ve mentioned before, we are well on our way to a lost decade or more before we regain full employment.  A huge part of the weak recovery has been slow and at times negative growth in private sector employment.

But a bigger problem has been government.  Government has a three-fold impact on employment during a recovery.  Government spending by itself will create employment in the private sector.  For example, if the government chooses to react to a recession and high cyclical unemployment by increasing it’s spending it can create new private sector employment. This would be a classical stimulus program.  The government could embark on highway, bridge, or school construction.  The spending with construction contractors causes those contractors to hire employees. That’s direct private sector employment through government spending.  As long as there are significant unemployed resources (workers), such government spending will increase employment.  Arguments about crowding out do not apply when large unemployed resources exist.

The increased government spending then has a second effect, a “multiplier” effect.  The multiplier effect reflects the idea that workers who got jobs in the initial round of spending themselves spend their incomes and create more demand for more goods. This increased demand for goods results in even more employment.  In other words, the construction workers hired to build the new bridges or schools spend their paychecks.  The firms selling those workers goods then have to hire in order to produce the goods/services the construction workers want.  The exact size of the multiplier effect is uncertain and subject to dispute depending on the econometric methods used to measure it.  However, it’s clear that as long there were substantial unemployed resources to begin with, there is a positive multiplier effect on private employment from increased government spending.

But what I want to draw attention to today is direct employment effect of government.  One of the greatest reasons why we have had a very slow employment recovery is because government in the U.S. has been aggressively cutting jobs for the last 2-3 years. Conservative critics of government have been partially right. Government has been part of the problem – but not in the way they think.  Let’s look at total government employment in recent years:

The data series can be a bit tough to read because government employment has a very seasonal pattern to it.  That’s shows up by the regular up-and-down pattern each year.  Let’s focus on the trend, smoothing out the ups-and-downs. There’s four patterns. Government employment was essentially flat in 2002 and 2003.  Then a period of employment growth in government began running form 2004 through early 2008.  During the recession itself government employment was essentially flat.  Since 2009, though, government employment has been declining.  Cutting government employment is contractionary.  It directly reduces retail demand for goods and services by reducing the incomes of what were formerly government workers.

The pattern is a little clearer if we look at the data in a slightly different way.  The following graph, courtesy of Menzie Chinn at Econbrowser.com, shows the a smoothed trend.  It does this by plotting the 12-month change in government employment (000’s of jobs) by month.

While private employment continues to grow, government employment continues to fall; the decline is most pronounced at the state and local level (Wisconsin is a good example of the contractionary impact of such measures [1] [2]). However, civilian Federal government employment is also declining.

janempsit3.gif
Figure 3: Twelve month change in government local employment (blue), in state employment (red), and government employment ex.-temporary Census workers (geen), 000’s, seasonally adjusted. NBER defined recession dates shaded gray. Source: BLS via FRED, NBER and 

One thing I particularly like about this graph is that it shows the relative contribution of federal, state, and local governments. What this graph shows is that before the recession (the grey zone), government was net hiring approximately 250,000 additional jobs per year. Of that, most was at the local level and some at the state. Very little was federal hiring.

Since the end of the recession in June 2009, government has been firing more workers than it hires.  It has been reducing employment.  The federal government, contrary to popular belief, began shrinking (in employment terms).  State governments were largely able to hold the line on employment until early 2011.  Then state governments began reducing employment in rapidly increasing numbers.  But the big impact again came from local governments.  For the last 30 months, they have been laying off large numbers of workers. The reductions have slowed in 2011, but they are still cutting workers at nearly the same rate that they added them in 2007 – hundreds of thousands of lost jobs each year.

There is a temptation among politicians and commenters to think of government employees as representing largely just some bureaucrats mindlessly pushing paper in large bland office buildings.  That is not true.  At the federal level, most federal government employees are either soldiers or part of some security forces (TSA, FBI, ICE, etc).  At the local level, the vast majority of local government employees are police, fire and emergency workers, and teachers. Reductions in local government employment directly translate into fewer services and less education for children.

Why are state and local governments cutting employment?  Simple.  It’s reduced taxes combined with balanced budget requirements.  State and local governments, unlike a sovereign national government, must balance their budgets.  They are budget constrained.  The recession and weak recovery have hit income and sales taxes hard.  Even more significant is that the collapse of home prices a few years ago has translated into lower property tax collections.  Either way, state and local governments have been pinched.  The response has been to reduce government employment – fire police, firefighters, and teachers.

Paul Krugman notes the how this reduction in state and local government revenue has translated into reduced spending, which in turn has translated into lower employment.  Despite the federal government embarking on a stimulus spending program in early 2009, a program which is over and done with now, it was not large enough to offset the reduction in state and local spending.

if you look at what’s being cut, it’s heavily focused on investment:

That is, we’re sacrificing the future as well as the present. Oh, and the cuts that aren’t falling on investment in physical capital are largely falling on human capital, that is, education.

It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.

What an utter disaster.

On this point, I have to agree with Paul.  Unless we reverse course and do it strongly, we are flirting with a long-term disaster.  We are under-investing in our future.

A Journey of 100 Months Starts With the First Month

Finally we are getting some good news. At least most people will consider it good news. Republican Presidential candidates hoping to run against Obama on “weak economy platform” might not happy with the news.

Today the Bureau of Labor Statistics (BLS) released the January 2012 employment data.   The unemployment rate has declined again. It is now down to 8.3%.  The number of net new jobs was pleasantly above the consensus expectations.  Calculated Risk quotes the BLS for us:

From the BLS:

Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month. … Private-sector employment grew by 257,000 …

The change in total nonfarm payroll employment for November was revised from +100,000 to +157,000, and the change for December was revised from +200,000 to +203,000..

So what accounts for the increase?  As the BLS states, large gains were widespread – services, hospitality/leisure, and manufacturing. But overall positive effect compared to what was expected and to what we’ve grown accustomed is strongly due to two factors we didn’t see.  We didn’t see reductions in government employment dragging down the total numbers. I’ll have another post on that later today.  The other effect is that the weather was nice – the exact opposite of last January (2011) when the weather adversely affected the numbers.

Nonetheless, a solid increase is a solid increase and something to feel good about.  But in keeping with my skeptical self, it’s also very important to not declare victory yet. We’re not out of the woods by a long shot.  I can think of four reasons right away.

First, we’ve been here before.  As Calculated Risk explains,

Job growth started picking up early last year, but then the economy was hit by a series of shocks (oil price increase, tsunami in Japan, debt ceiling debate) – and now it appears job growth is picking up again.

Payroll jobs added per monthClick on graph for larger image.

This is the third or fourth time in this “recovery” that it appeared employment would finally be accelerating into the kind of “V-shaped” recovery we really need.  Each time before, something (often politics) interfered.

A second reason for caution involves both the employment-population ratio and the labor-force-participation rate.  Both rates are at lows we haven’t seen for 30 some years.  Both ratios indicate that large numbers of people have left the labor force and simply aren’t looking for work.  If they change their minds and start to look for work, then the unemployment rate could easily begin rising again as the denominator of the unemployment rate rises faster than employment (the numerator).

A third reason is that there are still too many unknowns on the horizon and most of them carry downside risk.  The UK and the Eurozone continue their self-inflicted austerity march into recession and flirtation with banking and default crises. House prices have continued to decline, threatening the ability of households to sustain increases in consumer spending. And there’s always the completely unknown.  Twelve months ago nobody would have considered the risk to economic growth from an earthquake that created a nuclear disaster.

The fourth reason to be cautious is the mismatch between the positive increase in employment we’ve just seen and the size of the employment gap we are facing.  This is the graph we need to keep in mind.  Again from Calculated Risk:

Percent Job Losses During Recessions

… third graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.

This shows the depth of the recent employment recession – much worst than any other post-war recession – and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

We are far, far from leaving this employment depression behind.  Dean Baker of the Center for Economic Policy and Research cautioned today that, while it appears that we are on stronger path, it is still too weak.  January’s numbers seem strong only because we have grown accustomed to such abysmal recovery for the last 2-3 years.  Even at the pace January showed, it will still be 2020 before we regain full employment.  That’s 8 years away – 100 months.  Government and central banks easily lose focus on growth in a period that long.  Congress and the President, while returning to jobs now in this election season, have already shown that they couldn’t sustain a focus on job growth last year as they turned to imaginary concerns over government debt instead.

We have a long way to go.  We should be running but we’re only walking. Nonetheless, at least we’re walking forward now instead of backwards they way we were in mid-2011.

Does Anybody Understand Debt?

Does anybody understand debt?  Some – but not many.  Today’s post is less of my normal extended prose and more of an outline.  I’ve been invited to speak at some writing classes here at the college and this is intended to serve as my speaking notes.


Background: What have you heard?

Krugman in New York Times

Harvey in Forbes

Background Info on U.S. National Debt

Brazelton:  The US CANNOT Go Broke


Numbers, Metaphors, and Stories


Get the terms right

Debt, Deficit, and tr/b/m-illions

$1,000,000,000,000

$1,000,000,000

$1,000,000

$1 trillion =  1 million times $1 million

Debt


Deficit

1984-present U.S. Federal Budget


Measuring the Debt

Counting Absolute Dollars of Debt Deceives. It's All Relative.


Three Bad Metaphors


Government is NOT a Household

Government is NOT like a Household!

Econproph: Once Again, Government is Not Like  a Household


 Govt Debt is NOT a Burden on future generations


Private Debt is NOT like Government Debt

Federal Reserve Breakdown of Household Debt

Foreigners Don’t Control


So…

A Sovereign Government Cannot “Go Broke”


Eurozone Countries Can “Go Broke”


Government Debt is Like Money that Pays Interest


But What About Inflation?  Printing money?

Inflation involves real demand vs. real supply, not just $


Test on Debt:  Interest Rates

Rates are historically low and staying low.


Are Gov. Deficits Necessary?

Yes, if you want to save money.

Forever?   Yes.

Econproph: But What About National Debt-to-GDP Ratio? Not a Problem, Really


Are There Limits to Deficits?

Yes, but related to full employment and capacity.


In Practice, Nobody Understands Money.

Well they understand yesterday’s money, not modern money.

That’s why they don’t understand debt.