0

Over the past year, consumers from Mexico to Indonesia have been protesting the increasing cost of staples such as corn and soybeans, which has been linked to the rising demand for biofuel. And while Americans have been largely sheltered from rising food costs that eat into their income, there are signs that the rush to convert commodity crops into fuel may be starting to have an impact on the food budgets of poor American consumers as well.

 

As way of background, the ever-expanding number of ethanol plants in the U.S. are consuming greater and greater shares of domestic corn supplies. This has pushed corn prices to a record high, and as farmers shift their crops to keep up with the increasing demand, they are planting fewer acres of wheat and other crops, pushing up prices for those staples as well.

 

Poor people in developing countries by and large bear the brunt of increased prices for these staples, but poor American consumers are starting to feel the pinch as well, in the form of higher prices for milk and eggs, which rose 29 percent and 36 percent last year, respectively (corn forms the basis of the feed used for cows and chickens). Since corn is also widely used in most processed foods, the cost of everything from hot dog buns to soft drinks may start to rise as well. And although Americans spend a relatively small amount of their incomes on food, the poor, who already pay a disproportionate amount of their paychecks at the grocery store, will be impacted the most, especially since they tend to consume mainly processed foods. While the extent to which biofuel is alone responsible for resulting price increases at the supermarket is still being debated, it is undeniable that it is having an impact.

 

As the IMF reports, "until new technologies are developed, using food to produce biofuels might further strain already tight supplies of arable land and water all over the world, thereby pushing food prices up even further."

 

So what's to be done? The rising demand for corn-based ethanol and other biofuels has meant the expansion of crops that already depend on government subsidies. Eliminating subsidies and tariffs on these crops would have the greatest impact in the short term, and would help lower-cost foreign producers get in on the game, ultimately lowering prices. But ditching subsidies is never a politically popular idea, and is even more unlikely with the country heading into an election year (and possibly a recession). In addition, there is growing alarm about the ultimate environmental impact growing biofuel crops may have, to the extent that the EU has proposed restrictions on biofuels, and Brazil is discussing a moratorium on burning large swaths of the rainforest to grow sugarcane used for fuel. Other ideas, like a radical shift in the way we produce and eat our food in this country, seem equally unlikely and politically unpopular. In the meantime, poor Americans may have to fork out increasing amounts of their take-home pay to put food on the table.

 

Biofuel may be able to lead us out of the wilderness of foreign energy dependence, but at what cost?

0

With the economy emerging as the central issue in the presidential primaries (cited by an overwhelming 55% of Republican voters in Michigan as the most important issue, with the war in Iraq and immigration coming in at distant second and third places, respectively), "anxious" has become the adjective-du-jour to describe how middle-class Americans are feeling about the future. Sluggish wages, rising health care costs, the mortgage crisis and an uncertainty about the benefits of globalization are all contributing to a widespread sense of unease that candidates are trying to address through various economic policies.

 

And although Democrats and Republicans often differ fundamentally about what the role of government should be in supporting Americans going through tough times, the frontrunners are remarkably aligned in their positions on one particular source of this anxiety: Americans who have lost their jobs due to outsourcing. Mitt Romney
John McCain, Hillary Clinton, and Barack Obama all support some version of worker education and retraining programs for those displaced by trade.

 

The positions of the Republican candidates, however, were lambasted in the New York Times today in "What to Expect When You're Free Trading," an Op-Ed by Steven Landsburg, a professor of economics at University of Rochester who dismisses the argument that worker retraining is a moral issue the government should put resources into, writing, "Even if you've lost your job, there's something fundamentally churlish about blaming the very phenomenon that's elevated you above the subsistence level since the day you were born." While I believe that his argument does indeed exhibit a lack of moral imagination for the plight of displaced American workers, the question at the core of his piece is nonetheless an important one: "What do we owe those fellow citizens?"

 

Putting aside the broader issue of the social contract for now, even if you do not believe we have a moral imperative to help Americans who have lost their jobs due to forces beyond their control, the economic imperative is undeniable. Put another way, what does our country lose by NOT retraining workers, many of whom have lost jobs in the prime of their lives? Years of lost productivity. Declining house values in communities abandoned by industry. Strained public services. Families breaking apart under the strain of unemployment. And so on. That an economist would argue against worker retraining programs boggles the mind.

 

This is a rare instance in which all the major candidates are united on an important domestic policy issue. And while their ultimate policies may differ, the impulses behind them--that everyone deserves a second chance, that American workers need skills that allow them to be more flexible in the job market, and that government should invest in its workers--should be embraced as economically, but also morally, correct.

 

Putting aside the broader issue of the social contract for now, even if you do not believe we have a moral imperative to help Americans who have lost their jobs due to forces beyond their control, the economic imperative is undeniable. Put another way, what does our country lose by NOT retraining workers, many of whom have lost jobs in the prime of their lives? Years of lost productivity. Declining house values in communities abandoned by industry. Strained public services. Families breaking apart under the strain of unemployment. And so on. That an economist would argue against worker retraining programs boggles the mind.

 

This is a rare instance in which all the major candidates are united on an important domestic policy issue. And while their ultimate policies may differ, the impulses behind them--that everyone deserves a second chance, that American workers need skills that allow them to be more flexible in the job market, and that government should invest in its workers--should be embraced as economically, but also morally, correct.

0

Should middle and high school start later in the day?  Will it improve our education system?  According to numerous studies and an op-ed in yesterday's New York Times, teenager's bodies are set to a different sleep schedule than younger children and adults. Teenagers naturally go to bed later due to the sleep-inducing hormone, melatonin, kicking in around 11 pm, instead of earlier in the night.  Thus, they wake up every school day with what some call sleep deprivation.   It is estimated that over 28% of teenagers fall asleep during first period class, wasting precious class time.  Additionally, insufficient sleep has been linked to teenage dropout rates and failing grades, along with learning disabilities and obesity.

 

Nancy Kalish, the op-ed author, recommends that politicians address this problem by changing the hours of the school day, pushing it back for teenagers and lengthening it for younger children.  For example, teenagers could attend school from 9 - 5, while younger children could start at the earlier time but extend the school day  until 4 or 5 by increasing both scholastic and creative subjects.  Kalish bases her recommendation on several examples of schools across the country who have done this and who are seeing improvements in test scores, drop out rates, attendance rates, grades and reduced behavioral problems.  It seems to be true that starting school later could have tremendous results.

 

But is that enough?  Obviously, there have been successful results in some schools, plus there are numerous benefits to having parents and children on the same schedule.  But in today's failing education system, I am not so sure this will cause a nation wide effect.  Instead I think this is a small recommendation for a much larger policy initiative.  We can not simply forget about other elements for education reform, such as overhauling our standardized testing system.  Instead our politicians need to develop/restructure our education policy, taking every aspect into consideration.

0

The Federal Government’s poverty guidelines have always struck me as antiquated—that a family of four whose annual income is $20,650 would be considered poor is beyond obvious to anybody who has tried to pay rent or buy groceries nearly anywhere in the country. It’s no wonder that the guidelines have little relation to reality, since they were developed in 1955 and are based on the cost of groceries. While these guidelines (or percentages of them) have been used for programs like Head Start, CHIP, and food stamps, many counties have created their own guidelines for residents to be eligible for local services. For example, last year San Mateo County, where I live, launched a program to provide health care to residents who make 200% of the federal poverty level for a family of four, or $41,300. That may be OK in some parts of the country, but around here if your family makes that little income, chances are you’re barely getting by.

 

So it was a breath of fresh air when Mayor Bloomberg announced that as part of his broader anti-poverty program, New York City would develop its own guidelines for poverty, which they hope will provide a more accurate measure how many poor there are in the city. In addition to factoring in how much families spend on necessities such as rent, food and childcare, the new measure will also capture financial aid many families receive in the form of food stamps and housing vouchers, which are typically worth thousands of dollars. All eyes are now on New York to see the results of this experiment. With any luck, it will start a domino effect to update the way we measure poverty in America.

0

Denver teachers' merit-pay plan is receiving attention among 2008 Democratic presidential candidates, and for good reason.  The program is designed to reward teachers who document student progress, improve their teaching skills and agree to work in hard-to-serve schools.  Those who meet these criteria are eligible for a $1026 bonus.

 

Charged with the most important job in the country, teachers are finally being given an incentive to challenge themselves and our children to push the (mostly) mediocre boundaries of this nation's educational system.  This country's CEOs lead many of the most important companies in the world, and they are compensated on the basis of their performance.  So don't we owe it to our children and our prospects for continued economic growth to compensate our teachers on their performance?  After all, teachers are shaping our future human resource pipeline.  If they do not have the tools and the incentives to produce the best and brightest graduates in the world, our CEOs will soon be replaced by more competent ones from other countries.

 

Merit-pay represents systemic change in our present education system, potentially requiring a great deal of persistence, short-term sacrifice and goodwill; however, if we don't move ahead we will continue to nourish a system of disincentives that is broadening our children's achievement gap internationally.