RATING TEACHERS; IS THERE A BETTER WAY?

If you don't know where you're going, any road will do. ~ Lewis Carroll

Except for folks who have been happily residing inside caves in the middle of nowhere or who had school-age children a long, long time ago, the issue of K-12 teacher evaluations or ratings has been an involving and vociferous one. Nearly everyone has an opinion about if and/or how teacher ratings should be performed. Googling "teacher rating system" produces over 17 million results. Now it's my turn.

Evaluating teacher and student performance has a long history; as lengthy as there's been formal schools, and that covers the last 3000 years (from the Zhou Dynasty in China according to Wikipedia). Until 2001, when Congress passed the "No Child Left Behind" Act (NCLB) with President George W. Bush's enthusiastic support, virtually all formal K-12 evaluation was done by teachers of students – through the awarding of course grades. The NCLB fundamentally changed that by requiring any primary and secondary (K-12) school receiving federal funds to administer annual, state-wide standardized tests to all students in grades 3 through 8 and high-school. The federal Education Department would use these test results to assess whether the school has taught its students sufficiently well. The Act also required that schools provide "highly-qualified" teachers for all students. Information about the schools' and teachers' performance would be made available to parents and other interested parties.

The NCLB essentially altered educational accountability. Henceforth, states have instituted a variety of methods to measure teachers' performance, almost always based on student scores from the NCLB-required standardized tests. Needless-to-say, this has been controversial. The major stakeholders in the K-12 public school system – teachers, school administrators, students, parents, school boards and politicians – have very different perspectives about these changes and what to do about them.

My perspective as an outsider – for the first time in over three decades, no child of mine attends a K-12 public school – is influenced by my professional experience. This experience includes significant involvement evaluating energy efficiency (EE) programs designed to reduce usage of electricity and/or natural gas. Sure, there are huge differences in assessing EE programs' performance as compared to K-12 teachers (and students), but there's also some similarities.

In every type of evaluation, whether looking at education or energy, the effectiveness and suitability of specific types of evaluation depend on first answering several important questions:

1.      What is the objective of the rating/evaluation?

2.      Who/What is to be evaluated?

3.      How are the results going to be used and by whom?

The objective of the evaluation process needs to be clearly stated. For education evaluation there are several possible objectives including: to identify and reward the "best" teachers; to get rid of "poor" teachers; to provide information that allows teachers to improve their effectiveness; to meet some Federal, State or local standard or requirement; and/or to improve students' educational experience. These objectives are related, but distinct. Closely linked is the second question, who or what is being evaluated; is it all teachers, just new teachers, administrators, and/or students. Finally and closely associated with the first two questions, how are the evaluation results to be used, and who is going to use them. Teacher evaluation done to determine if a teacher will become tenured is predominantly a local district matter. Teacher evaluation for NCLB is a combination of district, state and ultimately federal matter. Unless the answers to these questions are understood, accepted and affirmed, any evaluation method will do.

I believe there are four options for rating high-school teachers, as shown below. The first option, doing no evaluation, is not acceptable for several reasons, thus I rank it as NC-5

High-School Teacher Rating Method	My Ranking (based on Movie Ratings)
1.      No rating	NC-5
2.      Rating based on Customer (student) observation & review	G-15
3.      Administration (e.g., Principal) observation & review	PG
4.      Professional (third-party) observation & review	R-$$

(No child over 5 allowed to attend a school where there is no teacher evaluation). A principal reason it isn't acceptable is NCLB mandates such assessment. This mandate is indirect – teachers' performance is derived from the classroom performance of their students, as represented by the students' scores on standardized tests. Teachers whose students perform better on tests are viewed as more qualified.

I am sympathetic with criticisms of this basis (standardized test scores) for teacher evaluation. Teachers certainly hold a key influence on students' performance, but there are other factors that have at least as significant an influence as teachers. These other, inter-related factors include parent-guardian involvement, student socioeconomic status, school attendance, school resource availability and student peer-group characteristics. Such crucial factors are rarely accounted for directly in teacher evaluations. This is a mistake.

But even if NCLB wasn't the educational law of the land, evaluation is still important and vital. Teacher evaluations, at their best, would utilize an agreed-upon framework to provide useful information to teachers, parents and schools about their competence as well as a guide for future improvement.

In order to be worthwhile and useful, the teacher evaluation review process must be based on a series of direct observations by knowledgeable observers, not just test scores. Perhaps the largest question about teacher evaluation is who should conduct the observations? There are 3 choices: school administrators (e.g., principals or vice-principals), professionals not affiliated with the school or district, and education's primary consumers, the students.

Of these choices, I believe the best evaluation process should use students as the source of teacher assessments. Students have the broadest, most exacting experiences with their teachers. Of all the education market's stakeholders, students have more information, more practice with, more knowledge of and more at stake with teachers. This conclusion is ultimately based on common sense; no other group spends as much time with teachers as their students. The students are the customers of the teachers, have daily experience with the teachers, and share the most time and effort with a teacher than anyone else. School administrators can observe a teacher's classroom activities once or twice a semester, given their other responsibilities while students do this every class day, offering an unmatched perspective on their teachers' capabilities and knowledge.

I'm not alone in believing that students are best equipped to evaluate teachers.

“We’ve spent $300 million in this country on teacher-effectiveness research, and what turns out to be the best predictor?” asks Timothy Knowles, who leads the Urban Education Institute at the University of Chicago. Knowles answers, “It’s students.” Their evaluations of teacher quality are surprisingly accurate when correlated with other measurements. Standardized tests, he says, “have been gamed so mercilessly by many states that they’re of limited use.”

For these reasons, I rank student evaluation of teachers' performance a G, generally acceptable, and most preferred.

A second option is having school administrators observe teachers in their classrooms and, based on this observation, rating the teachers. This might work – and has been the most-used means of evaluation – except that most administrators have little time to do such observations since they already have at least 100% of their time committed to a myriad of other tasks. Sure, school administrators can observe a teacher's classroom activities once in a great while; but students do this every class day, offering an unmatched perspective on their teachers. Also, since teacher evaluations serve as a basis for judging the school's overall performance, administrators' assessments could have an unavoidable potential conflict. My sense is administrator evaluations are likely to be well-meaning and genuinely offered, but because of time limitations, would be perfunctory at best; and not as representative of a teacher's performance as the students' ratings. For these reasons, I rank administrator evaluations a PG; parental guidance strongly advised.

A last option would be to have third-party professionals observe and review the teachers. These third-party evaluators could provide quite insightful and valuable assessments. If we lived in a different educational world, one without funding constraints that virtually all school districts now face, I would favor either this option or a hybrid that involves both third-party evaluators and students. Unlike students, the advantage of such specialists – perhaps former teachers or administrators or professors of education – would come from their broader and deeper experience beyond a single school environment. Such professional evaluators would expect to be paid. And, given the severe fiscal challenges that every level of education now deals with, securing additional funding to pay third-party evaluators is now extremely unlikely. This is why I've ranked this option R-$$, restricted due to funding constraints.

There are clear limitations to evaluation of teachers by students. Fundamentally, the students need to be mature enough and aware enough to actually perform a meaningful evaluation, whether it is a survey or a conversation. At the extreme, it's hard to imagine most third-graders performing a detailed evaluation of their teacher. Thus, despite being over-committed, school administrators are the only practical source of primary school teacher evaluations. And not every high-school student has the perspective and acuity to offer an insightful evaluation of her/his teachers. But, there are plenty of adults that lack perception as well. So, like Mr Knowles, I have no doubt that overall, high-school students can produce substantive evaluations of their teachers effectively and appropriately.

Has student-based teacher evaluation worked? Yes. Every teacher at every school has always been informally rated by students. Remember when you were in school and asked your friends, "Who's the best teacher in US History (or Spanish or any other class)?" You always got an answer, and sometimes you could act on it.

Student-based ratings of teachers have been formalized, beyond the ubiquitous word-of-mouth tradition, at several websites. You need only go to www.ratemyprofessors.com to see student evaluation in action for college professors. This popular service states that it contains over 13 million ratings for over 1.5 million professors at more than 7,500 schools in the US, Canada and the United Kingdom. A similar website, www.ratemyteachers.com , contains reviews/ratings for K-12 school teachers across the US and other English-speaking nations.

So, I believe parents, administrators and teachers should cast aside their qualms about having students assess teachers' skills. High-school students are the best qualified to perform teacher evaluation. The NCLB process should be amended to mandate student-based evaluation as a more effective complement to standardized testing. We need not wait for Washington DC to require this student-based process. We would likely be taking AP shuffleboard classes at the senior center by that time. With enough effort, local school boards and/or state-level educators can initiate such a valuable process.

I remain amazed that in my experience as a parent of several K-12 students, there has never been a school-wide mechanism for students to anonymously tell their principals how they rate each of their teachers at the end of every semester. Any feedback from students regarding their teachers was initiated by individual teachers. While useful, this is ad hoc not systematic, and thus not really actionable except for the teacher. In many other work places, periodic performance reviews are completely systematic (and required) for every employee and supervisor – and their compensation usually depends on these reviews. Every K-12 school should welcome knowing how students evaluate their teachers, and how students' performance varies by individual teacher so teachers can improve their skills. With such feedback, the education process can be made more successful; and that's something that will benefit everyone.

BANKERS' FOLLY

The advice given to governments by bankers, like the advice they gave to industrialists, was consistently good for bankers, but was often disastrous for governments, businessmen, and the people generally.  ~ Carroll Quigley

A fundamental friction that we've been living with for a while is not red states vs. blue states, rock-and-roll vs. hip-hop, or the Giants vs. the A's (or if you're from NYC or Boston, the Yankees vs. the Red Socks) – although these are indeed important. No, it's one that humans have faced for millennia and is at its heart is bankers vs. the rest of us.

Banks and bankers have been at the center of key public decisions for a very long time, way before they have dictated (again) how far the Greeks – and their government – need to bend over to receive precious funding. According to The Economist, banking originated in Mesopotamia around 3000 BC, and the first "central" (national) bank was created in 1668 by Sweden. Ever since governments around the globe have been beholden to "too-big-to-fail" banks (and vice versa). Why else would the US government, in the persons of Treasury Secretaries Henry Paulson (former CEO, Goldman Sachs) and Timothy Geithner (former President, New York Federal Reserve bank), have provided at least $500 billion through the infamous Troubled Asset Relief Program (TARP) to shore up the nation's largest banks (and also included foreign-owned banks and AIG, General Motors and Chrysler) without requiring any substantive "strings" attached? Strings such as, forcing the recipient banks to provide loans to needful individuals and/or firms.

Despite the vast influx of taxpayer funds that re-capitalized the banks, they didn't provide needed loans – home lending is at its lowest level in 12 years. The banks got cleaned up 3 years ago thanks to TARP, but individual loan- and mortgage-holders who went "under-water" due to the banks' shenanigans are still suffering, still going bankrupt and still being foreclosed upon without any meaningful relief. Over 10 million home-owners' mortgages are now underwater; $150 billion in home loans became delinquent at the end of 2011. In large part this is why Main Street now despises Wall Street.

This happened for several reasons, most prominently because provisions of the Glass–Steagall Act  (aka, the Banking Act of 1933) were repealed in 1999 by the Gramm–Leach–Bliley Act. This change effectively removed the separation that previously existed between investment banks which issue securities, and commercial banks which make money through deposits and loans. There were two consequences. First, investment banks purchased commercial banks (and vice versa), increasing banking market consolidation of power even more. And second, after 1999 the banks could once again speculate with "their" money using ever-more complex financial instruments such as mortgage-backed securities (MBSs), collateralized debt obligations (CDOs) and credit default swaps (CDSs). Many argue these investments by banks brought down the US economy in 2008.

In effect, the bankers have become more powerful than political institutions. Given the bankers' influence, it is unsurprising that no meaningful, politically-possible solutions have appeared yet to actually remedy the underlying causes of the bank/credit crisis. But that hasn't stopped Ken Livingstone, former mayor of London (Including the "City of London", one of the world's most important financial centers), from suggesting a constructive reaction to the financial crisis might be to "hang a banker a week until the others improve." Mr. Livingston is now running for mayor once again – guess what institutions are not supporting his campaign.

For a very long time, the power elites' (PEs') ultimate underpinning has been financial institutions (aka, banks and bankers). The banks and the PE's money are even more intertwined thanks to the Supremes' Citizens United decision two years ago. Now, the power elite's chokehold on placing favored politicians in office has increased immeasurably, as we've seen in this year's presidential primaries.

The voices of the supposedly-secure PE have always spoken with a common, money-tinged accent consisting of hypocrisy, conceit and self-righteousness.

Interestingly, with considerable help from the PE, at some not-so-distant point in the past the banks have transformed from being the lubrication system for the engine of our economy to being treated as the engine itself. How did this happen? The banks create nothing in and of themselves, yet they siphon off significant amounts of wealth. [According to the NYTimes, in 2010 the financial sector accounted for 29% of all US private sector business profits; up from 19% 30 years ago.] To no one's surprise, US banks' power is highly concentrated. The five (5) largest banks in the US – out of over 9,000 operating banks and savings & loan institutions – control 45% of the US banking market; concentration in specific markets like the San Francisco area is much higher, the top five (5) banks control over 77% of all bank deposits in the SF area.

Like all too many people, bankers apparently believe (and certainly act like) there is no long-run, no short-term; there is only now. As narrow-minded as this perspective is, it contrasts with Mitt, Rick, Ron and Newt who seem to want to reverse time and go back to those wild, crazy "good old" days, say  in the 18^th century, when government was "small" and average life expectancy at birth in the US was 39 years, about half of what it is today. Where's that stretch DeLorean when we need it?

GREENER STOCKHOLDERS?

I try to buy stock in businesses that are so wonderful that an idiot can run them.

Because sooner or later, one will. ~ Warren Buffett

A recent New York Times article by Tyler Cowen suggests an alternative to breaking up the "too big to fail" banks; namely, increase the fiscal liability for major financial institutions through their shareholders. Prof. Cowen suggests for every dollar a bank shareholder invests, he/she becomes liable for at least $1.50 worth of losses as insolvency approaches or occurs. He proposes by making shareholders directly liable for the costs that bank failures impose on society, banks could become more adept (and motivated) at sorting out the risks associated with their activities and tactics without having to increase regulatory overview or split up behemoth banks. His idea apparently is gaining some support, although the article does not state how this fundamental change in shareholder responsibility could be enacted.

I think Prof. Cowen's clever idea should be expanded way beyond the finance sector. It should be applied as one solution to the classic problem of how to deal with negative environmental externalities.

But first, some background. Until recently, and in tandem with other market-oriented policies generally favored by Republican policy-makers, the regulatory machinery of government has increasingly focused on using “market” mechanisms to resolve environmental issues like air and water pollution. Public deregulation of the airlines and to a lesser extent of the electric utilities was an early example of such regulatory policy shifts away from traditional, centralized “command and control” mechanisms. In the environmental policy arena the emergence of so-called market-based (M-B) mechanisms for incenting companies to reduce production of environmental effluents, such as greenhouse gases (GHG), gained some prominence.

Two principal M-B mechanisms have been considered, Cap-and-Trade (C&T) and a Carbon Tax (CT), where carbon-based materials (e.g., fossil fuels) are taxed according to their carbon (CO2-producing) content. Cap-and-trade became a favored market-based environmental mechanism for public policy. There are several examples: The Regional Greenhouse Gas Initiative (RGGI), involving states from Maryland to Maine (with Pennsylvania and Canadian provincial governments as “observers”), is a C&T scheme initiated by New York in 2003 to reduce CO2 emissions. The European Union’s Emission Trading scheme, started in Jan 2005, involves each of its 25 nation states, is currently the world’s largest M-B emissions trading market. In Feb 2007, California governor Arnold Schwarzenegger, along with other western governors, created The Western Climate Initiative (WCI) that originally committed California, Arizona, New Mexico, Oregon and Washington to create a C&T-based regional system by Aug 2008 to reduce GHG emissions. As of Jan 2012, the WCI parties include California and four Canadian provinces, British Columbia, Manitoba, Ontario, and Quebec. Every other US state has now dropped out of the WCI.

In various ways these two mechanisms add to the market price of these goods, so that price better reflects environmental impacts. Although it merits no substantive discussion, there is a third policy alternative: to do nothing. This is what the Bush administration followed by myopically and unsustainably assuming it could continue to live in that great Egyptian river, denial. Although during its halcyon, early days the Obama administration stated its interest in following a much more active plan for environmental mitigation. To date nothing significant has come of this to the consternation of many. President Obama cannot be accused of swimming in denial, but has displayed apparent ambivalence (at best) about enacting new M-B environmental mechanisms to counter growing environmental hazards.

As mentioned above, with the notable exception of electricity markets, efforts in the US to make a good's price better reflect the actual environmental costs associated with its production and distribution have failed, in part because of fairness issues. Even advocates of C&T and/or a carbon tax have to conjure up complex means for distributing tax or permit revenues to lower-income folks in order for the M-B mechanisms to not end up having distinctly regressive effects.

Instead of new federal M-B action to relieve continuing environmental degradation, perhaps it's time to engage the Republicans' much-loved equity markets to directly remediate environmental impacts. This could be done by adapting Prof. Cowen's idea of increased shareholder liability to reflect the cost of environmental clean-up.

There would be at least two (2) advantages to significantly broadening firms' stockholder responsibilities to include the social costs (and benefits) of environmental performance. (1) It would elevate the market value of firms that perform better than others – or who take advantage of this new basis of stock value by supplying technology/equipment that contributes to the firm becoming "greener." (2) By its very nature, it would internalize the costs of remaining a polluter and the benefits of becoming greener through the price of firms' equity, rather than other M-T based schemes that would almost exclusively affect the price of the firms' final products. Equity-holders, not just product purchasers, would have a direct stake in a firm's improving environmental performance. Stock prices of "dirty" firms (eg, coal producers) would fall (unless they quickly figured out how to become significantly greener), and that of "clean" companies (eg, renewable energy producers) would rise. Incentives to make our environment healthier would be closely aligned with stock prices, not merely EPA regulations.

All this without direct government regulation of the environment. What could be more beneficial for cleaning up our environment than making stockholders environmentally (not just fiscally) greener?

MADDIE AND THE MACHINE

The real problem is not whether machines think but whether men do. ~ B.F. Skinner

It's not even just the economy any more; it's jobs, jobs, jobs. Yesterday's announcement that the economy added 243,000 jobs last month and the unemployment rate declined slightly to 8.3% is what passes as good economic news. All economic news stories now seem to require a statement about the proposed action's presumably-positive effect on jobs, be it a tax reduction for the wealthy or a new oil pipeline. These alleged job numbers can be very suspect – do you really think that under Mitt Romney, Bain Capital, a private equity firm, really added 100,000 jobs as a result of its flip and sell actions? Mr. Romney's manufactured number appears quite "shaky," as factcheck.org discusses.

Nevertheless, the pre-eminent emphasis on jobs is both warranted and not surprising in an economy that still suffers from high unemployment. From an historical perspective, having such a significant number of unemployed people for so long remains unusual. Except for the brief recession in 1981-82, one has to go back to 1932-40 amid the trauma of the Great Depression to find unemployment rates comparable or higher.

What is it about this recession that has made high unemployment linger for so long? I believe there are three (3) Inter-related factors: the globalization of product and labor markets; the ever-increasing use of technology that displaces lower-skilled workers; and the failure of education (both by schools and students) to produce workers with skills now needed by employers. Some people – like the Wobblies[1] in the early 20^th century – disparage the substitution of labor with machines. As I mention below, this process is not new; it's been present since at least the Industrial Revolution in virtually all industries, and has been especially prevalent in the US. Workers have long been displaced by machines/automation, and eventually everyone gained, even the dislocated workers, once they learned new skills. The use of automated machines in many industrial and manufacturing processes is now completely commonplace, and regarded as normal. It is workers and machines, not versus machines.

Globalization.  Over the past decade, the international flow of goods and services has steadily increased. According to the World Trade Organization in 2010 (latest year available) total world merchandise trade was $14.350T, which represents a 14% increase from 2009. The US remains the world’s biggest trader in merchandise, totaling $3.247T in 2010. International trade is important to our economy. Increasing exports have certainly been one of the movers of our domestic economic growth. But foreign trade remains a fairly small proportion of US national output – about 14% of GDP – despite the media's barrage of stories saying how we are being decimated by jobs lost to the Chinese. Yes, we have lost many jobs, but the US remains one of the top three exporters and manufacturers of the world. Our merchandise exports are dominated by higher-value goods and services including machinery and equipment, and aircraft and parts. Nevertheless, globalization of markets, especially labor markets, has left all too many lower-skilled wage-earners without opportunities here in the US.

Technological advance.  Virtually all of the technological change that has occurred in the US has been capital-using and labor-saving. Creating better machines remedied our nation's relative lack of manpower. [Although it's no longer true, up until the mid-20^th century, it was mainly men working.] These machines allowed the relatively scarce workers to become much more productive.

Historic examples abound, including those in the agriculture (ag) sector. Harnessing water- and wind-power to mill grains more efficiently had been used since Roman times. Significant American ag improvements began in the 18^th century and have never stopped. The enormous increases in agricultural labor productivity were produced by the adoption of a series of new technologies including hybrid seed; iron/steel plows; mechanical planters, reapers, thrashers, harvesters and combines; barbed wire; and mechanical tractors. [Interestingly, it wasn't until 1954 that farmers used more tractors than horses on the nation's farms.] By 1987, farm labor productivity had increased 100-fold in 150 years. [In 1830, it took 250-300 labor hours to produce 100 bushels (Bu) of wheat on 5 acres of land; by 1987, it took 3 hours to produce 100 Bu of wheat on 3 acres.] These advances allowed ag workers to leave the farms, move to the cities and become industrial workers at the same time as ag output was increasing – in 1930 one farmer supplied 9.8 persons in the US and abroad with their food, by 1970, a single farmer supplied 75.8 people. In 1900, 40% of the US labor force lived on farms; in 1990, less than 2% lived on farms. Similarly dramatic improvements have been made in manufacturing and industrial labor productivity.

As described, agricultural workers were "displaced" by machines that allowed crop production to increase using less labor. This process of substituting machines for labor continues today In the US and elsewhere, as it has for generations. However, unlike times past when the nation's economic growth absorbed dislocated workers in other jobs, such workers (especially lower-skilled folks) now find it far more difficult to secure well-paying full-time jobs. Thus, real wages have stagnated. In essence, our real GDP is now roughly the same as it was in 2007 (before the "Great Recession"), but the US is producing this output with 6 million fewer jobs than in 2007, confirming the significant, continuing increases in labor productivity.

With globalization and technological change, the geographical opportunities for production of goods have again multiplied. The choice of where to produce both high-value and lower-value goods has significant ramifications for current and future jobs. This article, "How the US lost out on iPhone work," illustrates these job consequences, using the example of where and why the iPhone is designed (the US), manufactured (China), and purchased (world-wide).

Education.  If the issue at hand is our nation's enduring unemployment in the midst of globalization and technological change, and it is, we should critically assess both how our educational system can help alleviate this issue and enact public policies to reduce unemployment. I have mentioned before that implementing public policies now to promote robust and broad economic growth – namely targeted, expansionary fiscal policies together with policies to lessen our structural deficit – are an absolute imperative for reducing unemployment.

But in the midst of significant unemployment, numerous industries have noted they are finding it increasingly difficult to hire qualified workers with the skills they require, especially in science, technology and engineering.

What can we do? Unlike the vapid – "don't bother me with the facts" – Republican pronouncements (especially those of Mitt, Newt, Ron and Rick), there is no simple answer to this key question. I believe a solution must be based on improving our nation's human capital – the skills, talents and knowledge of our people and workers. However, improving our human capital takes time and focus that is in very short supply. Increasing funding into our existing educational system is not sufficient, although it is probably necessary. The focus and effectiveness of education must be altered to emphasize producing high-quality "middle-skilled" workers along with needed "higher-skilled" graduates who achieve college degrees. Middle-skilled workers are those that do not require a bachelor’s degree, but do require some education or training following high school. Ideally, workers could receive such skills with re-focused curricula at community and junior colleges. Tragically, in California (and other fiscally-challenged states) these 2-year colleges have been hard hit by state budget cuts, $502 million in cuts just this year, which represents almost 9% of their budget.

Projections from the Bureau of Labor Statistics indicate that during the next decade, 45% of job openings will be in middle-skill positions. What skills are these? These jobs encompass a broad range of professions from construction supervisors and machinists to dental hygienists and paralegals. However, experts believe that many students in our educational system are not attaining the skills needed for these highly-demanded jobs.

An insightful commentary in The Atlantic, "Making it in America," looks at Standard Motor Products, based in Queens, NY, and Madelyn “Maddie” Parlier, one of Standard's middle-skilled workers. It's well worth reading. Standard manufactures after-market (replacement) precision fuel injectors used in internal combustion engines. The article uses this American firm as an example of how modern manufacturing has dramatically evolved. It is now a computer-controlled, machine intensive process, requiring particular labor skills. From the article, Ms. Parlier states, “What worries people in factories is electronics, robots. If you don’t know jack about computers and electronics, then you don’t have anything in this life anymore. One day, they’re not going to need people; the machines will take over. People like me; we’re not going to be around forever.” For now though she is around, through a lot of hard work, determination and some luck. Her future is by no means guaranteed at Standard, as the firm fiercely competes with other auto parts businesses across the globe.

The article mentions that higher-value manufacturing that US firms seek (and compete against  foreign firms with lower labor costs) needs workers who have skills that are much more specialized than those 40 (or even 15) years ago. Unlike what happened in the much of the 20^th century, very few new US manufacturing jobs will go to workers who are unskilled or low-skilled – those with just a high-school education. Now, manufacturing requires middle- or higher-skilled workers, especially in technical tasks like interacting with machines. The more skilled, intelligent and flexible these workers are, the more likely they will continue to hold industrial/manufacturing jobs in America. But, these talents are far less broadly distributed than typified industrial job entrants in decades gone by. Finding a job in industry with just a high-school degree that can lead to a middle-class existence will be doubtful, due to globalization and technological change.

US students need to recognize that in order to succeed in the globalized work place, they must be disciplined and focused in their efforts and perform well. And, despite President Obama's and others' exhortations, a significant surge in US manufacturing jobs while possible, is not that likely – it's not 1950 anymore when the US's industrial and economic might was without peer (due in large part because our industrial and educational infrastructure hadn't been destroyed by bombs and battles in WWII).

Nevertheless, making public investments are worth the risks simply because the opportunity cost of not investing is so large. Re-forming and re-focusing post-high-school education programs to offer students the opportunity to learn employable middle-level and higher skills is essential. Such motivated, skilled workers will be an indispensable ingredient for our economy's broad and sustainable growth. Can we do this? It's hard to believe it will be straightforward, given the riven nature of not only our politics, but our collective sense of what needs to be done to secure a meaningful future for ourselves and our children.

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[1] The Industrial Workers of the World, or Wobblies, is a labor union founded originally by socialists, anarchists and radical trade unionists in 1905. Of local note, the city of Berkeley's recycling is picked up, sorted, processed and sent out all through two different IWW-organized enterprises. And according to Wikipedia, in 2006 the IWW Bay Area Branch organized the Landmark Shattuck Cinemas in Berkeley. The Union has been negotiating for a contract and hopes to gain one through workplace democracy and organizing directly and taking action when necessary.

PREVAILING PRINCIPLES OF ECONOMICS AND MODERN LIFE: 2011 Edition

The study of economics usually reveals that the best time to buy anything is last year. ~ Marty Allen

With 2012 fast approaching, here are some notions that provide me with a bit of guidance for living in this tumultuous, tenuous time.

·         Because everything is ultimately related to everything else, it's wise to remember that the Law of Unintended Consequences reigns supreme. All other economic "laws" – such as the Law of Demand, of Supply, of Diminishing Returns –pale in significance.

·         Make sure to distinguish between correlation and causality. Failure to do so is called the "post hoc fallacy," the mistaken notion that just because one thing happens after another, the first event was a cause of the second event. Post hoc reasoning is the basis for many erroneous beliefs and superstitions that are espoused all too often.

·         Daily "explanations" in the media of what caused yesterday's changes in some stock/bond market index are vacuous. At best, they reflect flawed post hoc reasoning about the index (Dow Jones or whatever) and some prominent, but essentially unrelated event(s) during the day. As one trader put it, "I cannot explain today's action in the market… it's head-scratching." So much for verbal efficiency of markets.

·         Objective data and analysis don't exist (and never have). All data and analysis contain some bias either explicitly or implicitly. Remember this apt saying, "Why are statistics like a bathing suit? Because what they reveal is enticing, what they hide is essential." Or this one by Paul Krugman, "All economic statistics are best seen as a particularly boring form of science fiction." You don't believe that objective data and analysis have been extinct? See, "The Myth of Objectivity" in The Atlantic .

·         Doddering Democrats and truculent Republicans have emasculated fiscal policy mechanisms (changes in govt spending and/or taxes) to counter macro-economic imbalance (like the current, continuing recession). Total political dysfunction has removed one of the two most effective and proven mechanisms of Federal macro-economic policy. With no meaningful fiscal policy possible, what's happened? The Federal Reserve, home of monetary policy (the other principal macro policy mechanism), has had to step into the fiscal vacuum. Thus the Fed has been forced to continue its essential and very aggressive expansionary monetary policy to get the economy moving forward. Is this good? Time will tell. But don't be fooled, the Congress (and the President) have abdicated their roles as purveyors of timely,  appropriately expansive fiscal policy during this period of deficient aggregate demand – the stubbornly high unemployment rate (8.6% in Nov) is but one prime indicator. In this time of mounting need, politicians won't meaningfully increase govt expenditures and/or meaningfully reduce taxes (for the lower 99% of us anyway – 2 months of payroll tax cuts, wow!) due to fallacious, unyielding political ideology. I hope Ben Bernanke and his cohorts can, with a moderate amount of luck, pull it off. As one of the millions of concerned voter plankton, I'm counting on him.

·         Whenever you hear that some semi-important person is leaving his/her job to "spend more time with my family," should you believe it? Not for a nanosecond. The real reason(s) for the departure have nothing to do with family interests. Sorry kids.

·         The more emphatically and more often an official denies (or agrees) with a particular position – e.g., Nixon stating "I'm not a crook" or the head of the National Association of Realtors saying "Housing prices are now headed upwards." – the more likely that stated position is bogus and/or soon to change.

·         The 80/20 rule holds true in a wide variety of circumstances. For example, in many markets 20% of customers account for 80% of revenues. Why is it that this 20% minority really rules? And should we be glad it's 20% and not 1%, like it is in income or wealth "markets"?

·         The process of becoming educated is akin to flowing down a funnel: you begin at the widest-top by knowing virtually nothing about everything, you end up (especially those of us with PhD's) by knowing pretty much everything about next to nothing. And yet, I remain exhilarated by again being part of this dynamic, necessary process for personal and economic growth.

·         Temporary is forever. Despite their rhetoric, politicians never, ever allow "temporary" tax cuts or subsidies to be transient. Witness what's now happening (once again) in Congress with President Obama's desire to "extend" the "temporary" payroll-tax cut. Thus, "temporary tax cut" is one of the highest-order political oxymorons. A close variant of this principle is allegedly short-term subsidies offered to "infant" (new) industries – e.g., ethanol, solar and oil & gas producers. Like virtually all other interim subsidies, these folks (remember, corporations are now people) continue to enjoy the benefits of sizeable taxpayer-provided funding for years and years and years. Subsidies, like tax cuts, are forever even when they stop making economic sense.

·         The "good old days," although rarely as uniformly superior as we romantically remember, nevertheless offer a nostalgic foundation for progress.

On that note, I hope the days of 2012 prove to be good for you and everyone else. Happy New Year!