New book about Teach for America

Relentless Pursuit by Donna Foote. Here is what the Weekly Standard says about it:

The last few chapters are especially fascinating for policy enthusiasts as they offer a hopeful look at the changes taking place in public education. TFA teachers at Locke launched a special "academy" within the larger school that was showing promising results. An important component of the academy was an extra period that allowed teachers to spend time with students in subjects where they needed extra help. The TFA teachers persuaded Locke's principal to call a teachers' meeting to discuss making the extra period a schoolwide reform.

When the TFA teachers made impassioned pleas to their colleagues regarding the need for more class time, the teachers' union rep coldly retorted: "If you guys want to work 20 percent more, and not get paid 20 percent more, then vote for seven periods." The teachers voted down the proposal to extend the school day by a 72-to-36 vote. (Interestingly, Locke students supported the idea of a longer school day.)

But the story does not end there. After the 2005-06 school year, several TFA teachers left Locke to start two nearby "Green Dot" charter schools where bureaucracy and union work rules would not be an impediment to student achievement. These schools immediately proved so successful that Locke's principal, Frank Wells, saw the light and decided to join forces with Green Dot. After a protracted struggle with the union, Wells was able to convince a majority of Locke's tenured teachers to sign a petition that would allow the school to convert to charter status. Last year the Gates Foundation provided $8 million to fund Locke's transformation into 10 small Green Dot charter schools, and the new Green Dot Locke campus opened its doors last September--minus 22 incompetent teachers Wells had long sought to get rid of.

My sympathy makes me nonexpressive

Will Wilkinson summarizes The Theory of Moral Sentiments:

We are naturally sympathetic. Of course, our sympathy is rather limited and weak. But because we are sympathetic, we sympathize with the weakness of others’ sympathy. So, being sympathetic to the limits of others’ sympathy, we mute the expression of our own emotions, so that others will not be made uncomfortable or burdened by their failure to connect fully with what we really feel. And, likewise, we appreciate it when others do this for us. A sympathetic person doesn’t put other people out. Observing many instances of this pattern of praise for the sympathetic accommodation of weak sympathy (”thank you for not asking me to be that sad for you!”), we produce a general rule. And then we apply it to ourselves and come to disapprove of freely expressing unmuted emotion even when alone — even though we are actually having our emotions and not trying to sympathize with them. Our natural sympathy, wedded to the general weakness of sympathy, generates an individual conscience that demands that we be no more emotional than other people are ready to handle. Therefore, stoic self-command is awesome. “It’s OK! Just let it all out.” Nonsense! Why would you so rudely embarrass yourself with your own emotions?

I hope my girlfriend is reading this.

What happens when politicians set prices

The oil company BP, known for thorough statistical analysis of energy markets, estimates that countries with subsidies accounted for 96 percent of the world’s increase in oil use last year — growth that has helped drive prices to record levels.

...

Malaysia’s government incited public anger on June 4 when it raised gasoline prices by 40 percent. The prime minister, Abdullah Ahmad Badawi, announced the following week that he would retire, although he has since said that he will not do so until 2010.

Before adjusting the prices, Malaysia was spending 7.5 percent of its entire economic output on fuel subsidies, a greater share than any other nation. Indonesia follows with 4 percent.

China and India are up there too. Read the rest here. In other words, as a percentage of GDP, many Asian countries spend as much on fuel subsidies as we do on defense.

I can hear you getting fatter

The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies.

The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.

Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.

Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.

Sen. Jim DeMint, R-S.C., delayed the final vote because Democrats refused to allow him a vote on a proposal to ban the companies from lobbying or making political donations to lawmakers.

"We can't have the people who are supposed to watch over these organizations getting money from these organizations," DeMint said. "At least if we're going to ask the American taxpayer to be on the hook for billions, possibly trillions of dollars, let's stop this."

That is sad.

Jobs for experimentalists

Within the last three years, both Google and Yahoo have built in-house economics facilities of their own to work on such tasks as optimizing their keyword auctions, and dozens of other companies have turned to outside consultants for help on specific projects. EBay used experimental economists to develop a new seller-feedback system that wound up boosting the total value of goods sold on the site by 25 percent, according to the researcher who worked on the project.

Read the rest from Wired. The article mentions Vernon Smith, but alas not the ICES lab that he built at GMU, and where I'm a research assistant.

The real cause of the housing bubble

But one area in which Cindy McCain’s spending — and its impact on her husband’s lifestyle — can be chronicled is real estate.

Property records show that trusts and corporations controlled by her and her children spent nearly $11 million between the summer of 2004 and February 2008 on three condominiums in Phoenix and a pair outside San Diego.

Read more here. I guess the Austrians are right, bubbles are always caused by government.

The Metro monopoly keeps serving up laughs

Another question I asked my students was the following:
1) What kind of business is Metro? Are you happy with that? How could it be improved?

The answer of course is it's a sorry-ass government monopoly, which can only be remedied by competition. In the meantime it gets to do things like raise price way above marginal cost, pack people like sardines into rush hour trains, run non-rush hour trains rediculously infrequently, completely abandon bus schedules, put you on hold for hours when you call, run off the rails, open the doors while moving and on the side without a platform, run people over, and waste money on frivolous programs and excessive salaries.

Today's Examiner finds one more reason to laugh or cry or cry through the laughter:

A Metro station manager and a Metro custodian were arrested on prostitution charges after an undercover transit police investigation found they arranged sexual trysts for money from inside the Dupont Circle Metro station.

At one point the employees used the Metro loudspeaker system to facilitate an illicit sexual arrangement, according to police who arrested the pair last week.

I think H.L Mencken's statements on democracy apply equally well to Metro:

I report only that when the suckers are running well the spectacle is infinitely exhilarating. But I am, it may be, a somewhat malicious man: my sympathies, when it comes to suckers, tend to be coy. What I can't make out is how any man can believe in democracy who feels for and with them, and is pained when they are debauched and made a show of. How can any man be a democrat who is sincerely a democrat?

This post is dedicated to Rusty at Why I Hate DC.

Have some fun, shoot the gun!

Shooting guns is not fun for me, nor do I enjoy chainsaws, but I do believe we should be allowed to own them. Of course there should be restictions on what you do with them and where you use them, e.g. not near my ear. And everyone draws the line somewhere, i.e. no sensible person believes in a right to own nuclear weapons.

So I'm glad the Supreme Court has overturned DC's ban on handguns. That it existed for 32 years, during which time we were named murder capital of the world, illustrates how out of whack democracy can get.

Principles of microeconomics

I just finished teaching this as a summer school course at George Mason, my first time teaching. I had no idea what to expect, but I'm happy to report that I really enjoyed it. My students were fantastic. We covered 15 of the 16 chapters in Gwartney and Stroup's Microeconomics, an excellent introduction to the subject.

Here are some of the questions I asked on the final, and for which most students gave very good answers:

1) Why are wages lower for women on average?
Answer: Specialization in the household.

2) Is the lottery fair? Explain using the difference between procedural justice and social, or redistributive, justice.
Answer: It's voluntary so it's procedurally just, but it widens income inequality so it's not socially just. See Hayek's "Atavism of Social Justice" in New Studies. (Do you think voters and pols get this distinction?)

3) Why are gas prices so high?
Answer: Many reasons, including supply constraints from OPEC and Congress, inelastic demand, and government subsidies.

4) Why do theaters offer discounts to students and the elderly?
Answer: Price discrimination.

I also wanted to ask a question about the difference between inequality and diversity, but we didn't spend enough time on that.

Cristo Rey schools

The concept of having students work to earn their tuition was borne of financial necessity. Children like Muñoz are desperate to escape the gangs and low expectations of big city public schools, but few can afford the full cost of a private education.

Over the past decade, though, members of the Cristo Rey network have discovered that requiring students to work does more than keep tuition low. It teaches children that there’s life beyond high school, with its teen-centered obsessions on things that don’t matter. It teaches them that working hard can help them get ahead—a lesson students from far nicer areas than the Pilsen/Little Village neighborhood could stand to learn, too. The model has helped revive Catholic inner-city education, and it offers some lessons for education more broadly. Anyone can create one school that works. The Cristo Rey Network has hit upon one of the few education models that can actually be replicated with reasonable success. It seems to be working everywhere it’s been tried.

More from Doublethink.

In other education news:

1) How to kill charter schools

2) Privatized student loans

Who shall we blame for teen pregnancy?

I have no idea. Here's the story from Time:

School officials started looking into the matter as early as October after an unusual number of girls began filing into the school clinic to find out if they were pregnant. By May, several students had returned multiple times to get pregnancy tests, and on hearing the results, "some girls seemed more upset when they weren't pregnant than when they were," Sullivan says. All it took was a few simple questions before nearly half the expecting students, none older than 16, confessed to making a pact to get pregnant and raise their babies together. Then the story got worse. "We found out one of the fathers is a 24-year-old homeless guy," the principal says, shaking his head.
...

Gloucester's elected school committee plans to vote later this summer on whether to provide contraceptives. But that won't do much to solve the issue of teens wanting to get pregnant. Says rising junior Kacia Lowe, who is a classmate of the pactmakers': "No one's offered them a better option." And better options may be a tall order in a city so uncertain of its future.

Who shall we blame for high gas prices?

From the LA Times:

The lines are getting longer, and Tang Yao is finding fewer gasoline stations open in his neighborhood here. But the 48-year-old motorist has no gripes about the price at the pump.

While consumers in much of the world have been reeling from spiraling fuel costs, the Chinese government has kept the retail price of gasoline at about $2.60 a gallon, up just 9% from January 2007.

During that same period, average gas prices in the U.S. have surged nearly 80%, to about $4 a gallon. China's price control is great for people like Tang, who drives long distances in his gas-guzzling Great Wall sports utility vehicle.

But Tang and millions of other Chinese are bracing for a big jump in pump prices. The day of reckoning? Everybody believes it's coming right after the Summer Olympics in Beijing conclude in late August.

"Everything will change after the Olympics," said Tang, a real estate businessman, as he waited for an hour to fill up at a service station in a Shanghai suburb.

Sorry, Tang, it's today:

Oil fell below $134 a barrel on news that China will raise retail gasoline and diesel prices for the first time in 8 months to help refineries recoup losses from record oil prices.

More from the a-holes who are playing with prices:

At a meeting of energy ministers in Japan over the weekend, a senior official at China's top economic policymaking body said the surge in crude prices should not be attributed to rising demand from developing countries such as China and India. Rather, Zhang Guobao, vice chairman of China's National Development and Reform Commission, blamed the high oil prices on speculators.

Which is exactly what our a-holes are doing:

In a pair of lengthy and sometimes testy closed-door sessions in the Senate last week, executives from Goldman Sachs and Morgan Stanley, two of Wall Street's largest investment banks, made the case that their multibillion-dollar investments in energy contracts have not led to higher oil prices. Rather, they told Democratic staff members of the Energy and Natural Resources Committee that the trades allow international markets to operate efficiently and that the run-up in oil prices results not from speculation but from actual imbalances of supply and demand.

But the executives were met with skepticism and occasional hostility. "Spare us your lecture about supply and demand," one of the Democratic aides said, abruptly cutting off one of the executives, according to a staff member in the room.

Another aide at the meetings warned the executives that no matter what arguments they muster, it would be hard to prevent Congress from acting. Referring to a vote earlier this year to impose new mileage standards on automobile makers, the aide said, "At 90 bucks a barrel, Congress rolled the autos for the first time in 30 years -- is it too much to think that Congress will impose more restrictions on you if oil goes to $150 dollars a barrel?"

Guess who's to blame.

Iowa flooding

"Cities routinely build in the flood plain," Enshayan said. "That's not an act of God; that's an act of City Council."

Read more from the Post.

Since when does DC pass up federal money?

When the teachers' unions demand it. Here's Dan Lips describing Del. Norton's absurd battle:

How much funding for the education of students is District of Columbia Delegate Eleanor Holmes Norton willing to lose to prove a political point? At least $18 million, apparently.

Del. Norton is using her voice in Congress to try to end the D.C. Opportunity Scholarship program, a federally-funded program that currently helps more than 1,900 disadvantaged kids attend private schools in the District.

This program has proven widely popular with D.C. families. Since it began in 2004, approximately 7,200 students have applied -- about four applicants per scholarship.

...

Unfortunately, Del. Eleanor Holmes Norton remains fiercely opposed to vouchers. She was honest about her intentions: "I can tell you that the Democratic Congress is not about to extend this program." As the House Appropriations Committee considers whether to fund the program, Norton appears intent on leading an effort to block the $18 million in funding for scholarships.

For D.C. taxpayers, this is a costly way to score points in the political struggle over public education. Terminating the program would pull $18 million out of the D.C. public education system and increase the burden on the school budget by sending 1,900 kids back into public schools.

For families with children in the scholarship program, it's impossible to quantify what taking these scholarships away will mean. You can hear directly from participating families themselves by visiting http://www.voicesofschoolchoice.org/. There, families explain how they are benefiting from the opportunity to choose a safe and effective private school for their children.

Conveniently, as the House Appropriations subcomittee considers the issue today, the Department of Education issues a report claiming no significant improvement from vouchers. From the Post:

The congressionally mandated study, conducted through the Institute of Education Sciences, the department's research arm, compared the performance and attitudes of students who had scholarships with those of peers who sought scholarships but weren't chosen in the lottery.

Both groups took widely used math and reading tests, such as the Stanford Achievement Test. Overall, there was no statistically significant difference in performance.

But some groups of voucher recipients showed improvement. For instance, among students who earned relatively high reading scores before the program started, those with scholarships progressed faster and are now about two months ahead of their peers.

Students who previously attended struggling schools -- a group the program is designed to help -- showed no boost in test scores compared with their peers. Grover J. "Russ" Whitehurst, director of the institute, said one possible explanation is that those children lagged far behind academically and had trouble adjusting to what may be a more demanding classroom.

Parents of students with scholarships were more satisfied with their children's new schools and were less likely to worry that schools could be dangerous, the report found. Students showed no difference in their level of satisfaction.

First, the program has purposely been hobbled by its political enemies through regulations and spending limits, precisely to limit any significant effects. Second, insignificance indicates just that, i.e. neither significantly positive nor negative effects. This is not surprising in a new (and hobbled) program. Third, so why give up the federal money? There's no loss to DC taxpayers. Fourth, a little perspective is in order. We're talking about allowing parents and kids, poor parents and kids, the freedom to choose a way out of a miserable state run monopoly. If monopoly is so great, why not expand it to shoe sales, let the government do that. Or consider the beautiful irony of the Senate's monopolized cafeteria, courtesy of Jonah Goldberg:

As befits a government-run commissary, the Senate cafeteria has a decidedly Soviet attitude toward variety. It has averaged only two new menu items a year over the last decade. The food is so bad, every lunch hour Senate staffers rush to the House side of the Capitol, like starving New Yorkers of the future storming the last Soylent Green vendor.

According to auditors, the chain of restaurants run by the Senate food service, including the snooty Senate Dining Room, has almost never been in the black. It's lost more than $18 million since 1993 and dropped about $2 million last year alone. If the food service doesn't get an emergency bridge loan of a quarter-million dollars, it won't be able to make payroll.

So how will the Senate fix the problem? Well, with California Sen. Dianne Feinstein taking the lead, the Democrats -- that's right, the Democrats -- have called a classic Republican play: Privatize it.

The House of Representatives made the switch in the 1980s, and its food service is now better. And profitable: the House has made $1.2 million in commissions since 2003. True to the founders' vision of the Senate as the more slow-moving branch of government, the Senate has taken 20 years to follow suit.

This was a painful decision for many Democrats who believe that privatization cannot be justified simply because it delivers better service and higher quality for less money. "What about the workers?" they cried. Apparently, some in the Democratic caucus feel that the top priority in the restaurant business is to generate paychecks for people who are bad at their jobs.

Feinstein, head of the Senate Committee on Rules and Administrations, was forced to deal with reality. "It's cratering," the Washington Post quoted Feinstein as saying. "Candidly, I don't think the taxpayers should be subsidizing something that doesn't need to be. There are parts of government that can be run like a business and should be run like businesses."

Yes, yes, go on Dianne. Run with that thought. Explore it, as the therapists say.

Perhaps you might meditate on the District of Columbia's public school system, which spends roughly $14,000 a pupil in exchange for one of the worst educations in the country. Every year, one of the greatest mysteries in the nation's capital is whether textbooks have been delivered to the right kids, or even to the right schools. It can take until Christmas to get it all worked out. FedEx Corp., meanwhile, can tell you where any of its millions of packages are in more than 100 countries, right now. (Why not just FedEx the textbooks to the kids?)

And fifth: There's an immense amount of evidence that vouchers work. See Salibury and Tooley's international overview, especially Lewis Andrews chapter on special education.

American weddings

This is not Monsoon Wedding, this is a real wedding in downtown DC! Manan Shah married Swati Raval at the Ronald Reagan building. He rode in on an elephant. Read more, courtesy of today's Post.

Occasionally I wonder about the extravagance of American weddings. Especially when I'm forced to buy a $100 herb grinder for my friend because that's all that's left on his Williams-Sonoma registry. I've been to a few weddings that probably cost upwards of $100,000. I know some couples who have taken out loans to pay for it. According to this site, the average wedding costs $28,732. What gives? Why not get married in Safeway, as I plan to do?

I figure part of it has to do with credible commitment, i.e. the bride and groom will think twice about redoing such a costly venture. And in this way they are also tying their own and each others hands to some extent. This of course was accomplished by the bonds of marriage before divorce became socially and legally acceptable, with the advent of no-fault divorce, etc. So has the cost of marriage gone up as a result? I can't really tell from this site (or without paying for a subscription), but I would need to correct for increased income anyway. One thing to look at is divorce rates by state and see if that is correlated with average wedding cost. It looks like states in New England and the Midwest have the lowest divorce rates. So I would expect them to have the cheapest weddings.

So does that mean India, with notoriously extravagant weddings, should have high divorce rates? Good luck finding those numbers!