Saturday, November 7, 2009

Where Goeth the Economy?

Here’s the new thread that picks up from where Pluto posed good questions based on his valid observations:

My academic training and research was heavy on labor market theory and much lighter on economic theory. What I fear is being missed is the disruption to the labor market that is being suffered, along with the economic and structural factors that will prolong the disruption as well as emerge from the disruption. There's some "The Chicken or The Egg" issues here, as far as I see.

My research was in "dual labor market" theory, and predominantly the structural side. I had colleagues who looked at the sociological side, and we shared data, as the phenomenon is both structural and sociological in nature. In short there are two distinct labor markets, "Primary" and "Secondary". The Primary market is what we normally think of in terms of desirable employment. Earnings are a statistically predictable factor of education, experience, age, tenure on the job, etc, and jobs have established reasonable security and upward mobility ladders, even if that ladder is simply longevity raises. Job turnover in the market is modest.

The Secondary market shows none of the above predictors of earning, stability and upward mobility. Earnings are predicted by the prevailing minimum wage and hours worked. The market is oft times colloquially referred to as "burger flipping", for example, even though there are numerous other industries in the farm and service sectors involved.

I looked at the structural reasons why such jobs exist (actually the industries that were characterized by a predominance of such jobs), and there is more to that than fits in the allowable space here. The sociologists looked at the incumbents in the labor market, and germane to our discussion here is that once someone spends 18-24 months or so in Secondary labor market employment, the probability of entering or returning to Primary labor market employment decreases drastically, without regard to the person's education, experience, etc. Amongst ourselves, we called it the "Roach Hotel" phenomenon - many check in, but few check out. It is not unusual, for example, for even a scientist who has to “flip burgers” for a couple of years to remain in that state. The contributing factors are complex and many.

One major question was if the residency in Secondary labor market employment was a product of the nature of the employing industry or the laborers themselves. The answer was strongly suggested to be both. It was a saprophytic relationship, more or less. At least at that time, and while I have been away from the field for nearly 30 years, what we learned then would be generally applicable now.

Very briefly, however, Secondary labor market industry has grown since the days of my graduate/dissertation research (76-82), and more industries have developed employment practices and relationships that have Secondary market characteristics. I must state here that I returned to active military service in 83 and left that world behind, so I am not as closely involved with the material. However, from my view, many jobs have been "converted" to employment with at least some Secondary market structural characteristics since 82, and I would offer "independent contracting" as an example, due to the inherent instability therein. Pay may be higher in some fields of contracting, but surety of employment from one contract to the next is not predictable, future earnings are not predictable and all too many contracts limit future employment options (contract or direct hire by contractor, contractor's clients or competitors and their clients) in a given field. As an aside, many "independent contractors" do not meet the eligibility criteria for unemployment benefits when their contract is terminated. Thus, in my view, over the past two decades, we have actually created a new, higher pay category of Secondary-like (and thereby imprisoning and unstable) employment.

A second concern is that we created good jobs in "bubble" fields that appeared in the short term to be traditional Primary market employment, but because of the unsustainable growth, were not. Home construction for example. The underlying causes of these jobs was tenuous and non-sustainable at best.

So, to the conclusion. The current crash and high unemployment has eliminated many jobs in the Primary market. Further, the “Secondary-like” fields, such as those that employ contractors at reasonable pay, is displacing Primary market jobs, undermining employment security. That puts millions into the “desperate for work” category who will accept anything to hold their heads above water. Typical answer – “temporary” Secondary market job, if it can be found.

Whether we want to accept it or not, I fear that this recession is profound enough to reshape the overall labor market. The “engine of growth” of the past three decades, irresponsible and boundless personal credit and debit, was not, is not and cannot be sustained. Consumers account for 70% of our GDP and cannot continue the debt fueled spending spree. Home values for many, now at 1999 levels, will not rise to the mortgaged value for another 8 years or so, trapping many people with “upside down” mortgage situations into paying to hold on until they finally get some equity, sell at a loss or allow foreclosure. There will not be home equity to finance consumer spending for a few years, if that trend return at all.

Thus, the trend of our nation’s wealth moving more and more into the hands of the top few will continue. Manufacturing companies and other “necessary” industries will staff at “lean and mean” levels, or shift manufacturing to lower cost overseas facilities/sources to maximize profits. Employment in Secondary labor markets will grow disproportionately as the portion of the population that does not amass wealth will grow, and we will see the “underclass” expand.

And, to address the implications for foreign policy, as more and more of the population becomes economically disenfranchised, the remaining holders of wealth will entertain more and more adventures overseas if it doesn’t conflict with their economic goals, while many of the poor and nearly poor will accept it as a result of their feelings of helplessness and/or the only source of national pride available.

That’s the “Readers’ Digest Condensed Version” of a very complicated issue. Please feel free to pick at it, challenge it, reject it and/or expand on it. Nothing would make me happier than to find I have reached an inaccurate conclusion.

How’s that for cynicism? Now, in closing, all of us at the university that were working in dual labor market theory at the time agreed on one point. It was a depressing subject.


  1. Thanks for the response, Al. Now that I think about this, you've mentioned a lot of it before.

    Thus, the trend of our nation’s wealth moving more and more into the hands of the top few will continue

    This is also true outside of the US. I see two major factors driving this change.

    1. The world population is growing and more workers are becoming available to produce goods for the world market. As a consumer this is a good thing because it allows the companies to shop around and lower their costs as much as possible (not withstanding translation and quality assurance issues). As a producer (which is my role at my job), this is a bad thing for the same reasons.

    2. Technology, particularly the Internet, is causing major reductions in the amount of human effort needed to produce goods and services. The book industry right now, for example, is beginning to cut out the printers, distribution networks, and retailers in favor of having the user buy a book and have it instantly delivered to the purchaser's Kindle or eReader.

    Think about how many people currently employed by the paper industry, printing industry, shipping industry, and the retailers are going to lose their jobs because of this minor change.

    Al noted that this topic is depressing, and to an extent I can't really argue with him. But I find the challenge of trying to predict which jobs are going to be safer than others to be very interesting.

  2. Pluto-

    While you point #1 intuitively sounds good (lower priced goods), if family earnings are flat or decrease over time, the consumer treads water while the corporations make profits. In short, our society gathered homes and "stuff" over the past several years through debt, not increased earning capability. The labor force grew, in a major part, because all too many households needed two paychecks to live the life they desired to live, or worse, to survive. Now, two people working to stay afloat can create jobs in the daycare industry, which pays wages so low that the typical daycare worker cannot afford daycare for their own kids. So GDP "grows" while the quality of life for a major segment of society is flat, or is only lifted by more and more debt.

    The problem is not as great in many European countries as the US, simply because they have not been offered, nor is it culturally acceptable, to live significantly beyond one's means via ever increasing debt. A "Diamond Studded Platinum Visa Card" (sarcasm intended) here in Greece would have a credit limit of 10,000 Euro. 3,000 is more typically the limit, and one also typically need some sort of deposit account with a bank to open a credit card account. There is no such product as a "home equity loan" here to extract 125% of real estate value from an already owned home.
    Now, some countries have followed our reckless path to a lesser degree, but none to the amazing level we "achieved".

    As to point #2, you are spot on. Just a decade ago, technophiles claimed that technology would create amazing numbers of jobs in manufacturing the technology and servicing and operating it. Of course, the manufacturing seems to be predominantly offshore, and much of the servicing and operating of many forms of technology can be done by long distance communication to??? - yup, off shore. It's cheaper to pay people who have a lower cost of living and aren't paying huge debt service and thereby wanting high wages. Of course, corporate profits know no geographical limits for their source. Thus, the wealth continues to migrate to the few already at the top.

    Sadly, there is no indication that these trends will change.

  3. NAFTA, GATT, WTO, New World Economic Order: Rising tides lift all boats.

    Except while others were building boats to take advantage of the opportunity to join the consumer rat race, many are anchored to their literal and figurative beach condos.

    The sandbag walls are leaking, and eventually they shall know the third world lifestyle much more intimately.

  4. Al, I'm about ready to lodge an official protest. It's just not fair that one man is so learned and has such a broad intellect. You da man.

    Interesting article on unemployment in the NYT today. Based on what I'm seeing, I fear that permanent un- or underemployment is going to be the future lot of many folks in this nation. Note I didn't say "Americans." The reality is many of the statistics aren't citizens. They may be illegal; they may be green card holders. Regardless, our feckless immigration policies, which favor unskilled migrants, and our security policies, which deny serious enforcement of our borders, have given us millions of people who may never be able to make a living in our society. That, coupled with our broken educational system and our chronic inability to convince millions of Americans—many from distinct minority groupings—of the value of education, makes a large underclass in perpetuity inevitable.

    I don't like how the future is shaping up, for Americans, or for mankind. Too many people, not enough work. Too many rich people with no appreciation of the damage they're doing, and appreciation of the possible consequences to them personally when the hoi polloi finally decide they've had enough. Everybody talks about oil wars and water wars. We're going to see class wars, too.

    A little nobless oblige would be refreshing these days. Interesting to note that the British government has decided to break up Britain's three largest banks: they want nothing more to do with "too big to fail." It won't happen here: too many in government are rich, hang out only with rich people and want to be richer. The USA is eventually going to OD on capitalism.

    Earlier today, my wife was watching some crappy movie about a Brit upper class family facing some sort of crisis. When I asked if they were royals, she didn't know. But she agreed when I noted that all rich Brits seemed to be princes, dukes, earls, counts, viscounts or knights of one kind or another. There's always a title.

    She also agreed when I observed that we should do the same thing in the U.S. Imagine how a Senator or corporate CEO would delight in being "Duke Whatever" with his cronies being earls. I mean, shit, they act like it now. Give 'em the title.

    I thought introducing the titles of royalty to the US would make it easier for us peons to identify the criminal class....

  5. The only thing I know about economics is that it's called "the dismal science" for some reason.

    However, I can read, and think, and I'd opine that Al's unassailably obvious point seems to have missed almost everyone in the public square.

    Up until the bursting of the last bubble, my understanding is that our economy was powered by roughly 70% consumer spending, 15% financial activity and 15% for all the rest (manufacturing, commodities trading, agriculture, pornography, whatever).

    Even a cursory observation suggests that this was neither sustainable (and is unlikely to be resuscitated) nor desirable. However, I cannot imagine what will replace it. Manufacturing? Agriculture? Some sort of e-commerce? The bottom line of globalization is that your workers have to compete with the most impoverished and abused workers on the face of the planet. Of course you'll lose. generally speaking.

    In fact, here's Bob Reich saying straight out that he has no idea what will replace the old economy ( - he calls it the "X Recovery".

    What does seem plain is that the "recovery" will not include a recovery of living wage jobs. This has been a trend since industrialization and the digital revolution has just intensified the trend.

    The problem is that our public policies and our economic realities don't meet. The reality is that we have no real need for more warm bodies, especially unskilled warm bodies. So a tax code that gives a credit for every kid is the epitome of foolishness. If you really wanted to make sense you'd give everyone a break for the first two, make the third one neutral and start levying a tax penalty on an increasing scale for each one past four.

    Of course,what happens when you need disposable young men for war, I don't know...

    What also seems inevitable is the entrenchment of the already-burgeoning underclass and the resultant social stratification and oligarchy we've been seeing for the past 50 years...

  6. In case the link doesn't work, here's Reich's miney graf:

    "This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.

    The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin."

  7. Publius:
    I don't like how the future is shaping up, for Americans, or for mankind. Too many people, not enough work.

    Short-term I'd say you've got cause for concern.

    Longer term I think things will be okay. My studies of economics and history make abundantly clear that both subjects are basically balancing acts and our act right now is way out of balance.

    Barring nuclear war or total ecological disaster things will eventually swing around to achieve some sort of balance again. It's only a matter of how long it takes and how many people get hurt in the process.

    The Chief's quote from Bob Reich is dead on. I was a big Robert Rubin fan back when he was the Secretary of the Treasury and was rather disdainful of Bob Reich but I've changed my mind over the years. Reich still has too many Space Cadet moments in his public comments but he's got a MUCH better understanding of what's going on out in the real world than anybody in Obama's staff and is very much worth listening to.

  8. Wanna Look at a dirty Pic.....ehrr, I mean Graph?


  9. Lemme be lazy and just post a link to what I wrote about the economy problem on my blog months ago:

  10. I echo Publius' sentiments, Al, you da man. Since I can't offer much in the way of intelligent discussion on this topic, at least I can comment on pretty pictures. (thanks Fast for bringing me into the fight).

    You know what is really disturbing about that graph? In all of the previous recessions before 1980's, the recovery was almost a straight line going up after hitting bottom. But starting in the 80s, each recession the recovery took longer and longer (the line gets flatter). If that trend holds true, assuming we've hit bottom, we should be recovered from this thing sometime in the next 4-5 years.

    Al, do you have any smart guy theories that helps to explain this? Is this evidence of the labor market theory evolution that you were discussing?

  11. bg-

    No, I would posit that the economy has more effect on the labor market than visa versa. However, since consumer spending is such a large part of the economy, the continuously smaller portion of the nation's wealth that goes to the working stiffs means that GDP cannot grow without debt. Thus, increasing Secondary labor market employment means less consumer spending unless there is more debt, so the labor market will exacerbate the slow recovery. Since the least expensive goods are from off shore, consumer spending will not support/create as many jobs in the US as overseas.

    As many economists have written, we cannot return to the debt driven model of the past. Thus, a sane economy will depress debt financed spending and thus effect jobs and so on. The question is, will the rich will get richer and everyone else continue to get proportionately poorer?

    If and when we truly recover to a sustainable model, it will have little resemblance to 2007.

  12. (1 of 2)

    You know what is really disturbing about that graph? In all of the previous recessions before 1980's, the recovery was almost a straight line going up after hitting bottom. But starting in the 80s, each recession the recovery took longer and longer (the line gets flatter). If that trend holds true, assuming we've hit bottom, we should be recovered from this thing sometime in the next 4-5 years.

    What do you mean "can't offer much in the way of intelligent discussion on this topic?" That question and observation was priceless.

    I had also noticed the same trend and was trying to figure out what was causing it. Unfortunately, the smart guys in economics are just getting warmed up on the topic and don't have any good explanations.

    Paul Krugman (Nobel-winning economist) had made the same observation that labor markets tend to recover very slowly these days and he estimates (based on averaging the 1992 and 2001 recessions) that we are looking at 6-8 years before we fully recover.

    Since the big boys are left speechless, I'll throw in my two cents. The increasingly slow recovery time is caused IMHO by a combination of globalization, our decreasing standards of education, and our increasingly screwed-up economic system.

    Globalization is providing more competition for the lower-wage, lower-skill level jobs and the jobs tend to leave during recessions and not come back. But this really isn't the cause of our problems, it is just a side-effect.

    In response to globalization, we should have been beefing up our educational standards so that our workers could more easily transfer from one field to another. There's tons of unfilled jobs in the high-tech sector but there aren't enough qualified people to fill them and the government is making the situation worse, not better, by continually lowering educational standards in order to save money.

    BTW, I want to make SURE that people realize that the Democrats have been just as bad as the Republicans on this topic. The Democrats tend to want to keep the current, non-functioning system in place and beef up teacher's salaries. Nice for the teachers but not good for the students.

  13. (2 of 2)

    But the real problem is that over the last 50 years there has been a strong tendancy among US government and business leaders to continually reorganize the deck chairs on the Titantic to hide the fact that the ship is sinking. To a certain extent, there isn't anything they can do about the problem. The rest of the world was wrecked after WWII and we were on top of the heap. It is logical that as the rest of the world has recovered we'd lose jobs and wealth.

    BUT instead of publically admitting this and trying to cope with it in the best way possible, they've done the "frog in the boiling water experiment" on a grand scale and now, as Sven has pointed out, we are in for a world of hurt. What INFURIATES me is that even now that our folly is being laid out before our eyes, the government (at the direction of the banking sector) has chosen to ignore just HOW messed the situation is and work towards resetting the economy to what we had in 2007.

    As Sven says, the 2007 model was impossible, we were creating bubbles out of everything and kept digging ourselves deeper in debt every waking moment. AND THEY WANT US TO GO BACK TO THAT?? WTF???

    But it isn't going to happen. There is no power on Earth with enough cash or credit to make it happen. The fact that the US government (under Obama, dammit, he's SUPPOSED to be smarter than this) is burning its financial and political capital at such truly heroic rates to attempt to restore a status quo that is as truly GONE as the 2007 model is cause for grave concern.

    One final note. Part of the reason the unemployment rate stays so stubbornly high is because the US government tends to underestimate the number of unemployed people during the recession and then rediscovers them as the recovery starts to hit.

    Check out for a good basic discussion on the hows and the whys. But you'd better be sitting down when you go there because John Williams estimates the combined unemployment/underemployment at 22.1% (nearly 1 in 4 workers!). The weakness of the Shadowstats site is that it is for-profit and they tend to overstate the negative things but everything I've seen suggests they are closer to accurate than the official government statistics.

  14. Pluto-

    Don't throw a disproportionate amount of the blame for our education mess on Government. Back in the 60's LBJ said, as part of the Great Society, that we must move to the day when every American has a HS diploma. The Schools of Education (both public and private) smelled the blood (money) in the water and zoomed in like sharks, saying that with enough resources, they could accomplish the job. I'm talking about the Schools of Education, not the school systems or teachers of the day. The latter knew that there was a portion of the population of the population that was unwilling and/or unable to achieve the standards that a H.S. diploma was intended to represent.

    But the Schools of Education had a fantastic $$$ and power incentive to say that everyone could get a H.S. diploma, so they went about creating courses of study, advanced degree programs and strategies to fill their classrooms with education majors, existing teachers, administrators and more, because governments at all levels bought their marketing crap and dumped piles of money into the endeavor. Of course, the Schools of Education do not educate a single elementary or H.S. student, so when student achievement did not soar, they craftily laid the blame on the teachers they produced, or the tests those teachers wrote, etc. So they began to produce courseware (texts, lesson plans, study guides, tests, etc) that their subject matter incompetent graduates could use to "teach" the subject, and if the materials were too difficult (for teachers as well as students), they simply dumbed them down to increase retention and pass rates.

    So, on the day that LBJ made his commitment, a H.S. chemistry teacher usually had a BS in Chemistry, often a Masters in Chemistry, both from the Chemistry Dept of a School of Arts and Science and enough additional education courses and teaching practicum to have a teaching certificate. The same went for Math, Biology, English, History, etc. For their annual "in-service education" they did refresher/advanced studies in their field. In 2005, the Chemistry teacher at the H.S. where I was a substitute teacher had a BSEd in "Science Education" and a Masters in "Curriculum Design" from a School of Education. Most of the other faculty had Education degrees and the minimum credits in a subject to qualify to teach the subject. The bulk of their "in-service/refresher training" was annual education courses offered by the local School of Education.

    I could go on, but that's just one example of the watering down of education by the Schools of Education of the Universities who have created quite a healthy industry for themselves.

  15. Geez Al, that's some of the most reasonable and simultaneously depressing information I've heard in a while.


    This situation kind of reminds me of Mike Resnick's "Birthright: The Book of Man" where humanity struggles mightily to dominate the galaxy and when that is achieved throws away every single advantage and ally in an orgy of gluttonous stupidity and is exterminated by thousands of angry alien races whom we had done wrong. Hopefully the US will manage to win a happier ending.

  16. Al,

    Great post. I want to comment more a bit later when I have some more time, but for now I'll simply offer these two posts by a blogger I have a lot of respect for that tie into some of what you wrote:

  17. Andy-

    Let me comment on the second link you gave. GDP is by no means an indicator of our general well being. A simple example would be the costs of Hurricane Katrina pumped billions into GDP, but one would be hard pressed to say that it made life better for the residents of New Orleans.

    In our American society, where the nation's wealth has continuously accumulated more and more into the pockets of a smaller and smaller percentage of the population, what benefit to the lower income 1/2 of the population has the growth in GDP offered? The economic well being of over half the population has not improved since Regan while the GDP has increased significantly. Today, some 21% of all mortgages are "upside down", millions have forfeited on their mortgages, losing whatever they had invested in them, and GDP is still a bit higher than it was 3 years ago. And how do you factor in the millions that lost health insurance coverage since the day GWB was inaugurated, while the GDP rose 19%, and working class wages lost ground? When the figure was first put into use, and our society was a bit more egalitarian, GDP was a modest proxy of the population's well being. "Trickle Down" economics changed that relationship dramatically.

  18. Al, Pluto: As someone who has a MS in Geology and spent a year teaching freshman science in HS (as well as years teaching Geology in community college) I can say with some authority that you don't have to be a subject matter expert to teach HS level science.

    Which is good, because most of your students will come to you with little or no understanding of scientific principles like theory, hypothesis, dependent and independent variables. Not to mention the general decline in literacy and fundamental math skills.

    Add to this a societal shift away from hard, cold, nasty reality into various forms of fantasy, from the "everyone can win" fantasy to the "taxes are theft" fantasy, the "we're all speshul snowflakes" fantasy, the "talent is everything, effort is nothing" fantasy...

    Al is on to something when he points out that there is a percentage - and in my experience it's fairly high, perhaps 10-12 percent or so - that simply cannot meet the intellectual standard of a truly rigorous HS diploma.

    Hence the lowered standards and the edufollies.

    My big issue is not with the Schools of Education's marketing themselves per se, but the WAY they marketed themselves. Remember that the 60's and early 70's were the Space Age, and everything from Tang to underwear had to be super scientific and neato?

    Well, in my experience teaching isn't a Science. It's not really an Art. It's a Craft, like carpentry or blacksmithing. You can't "learn" it in a classroom, or "analyze" it through hypothesis and experiment. You have to have a gift for it, and then learn from a master teacher through a long apprenticeship.

    Or you can get a half-asses degree in "education", receive a lick-and-a-promise apprenticeship called "student teaching", often under a bored and burnt-out teacher who is only taking you on because he/she is getting paid extra money to do so.

    And then you get thrown into an educational system modeled on early 20th Century industrial theory, where ranked rows of bored and disconnected kids sit receiving information mostly visually and verbally or through text.

    Needless to say, all of this is lost on the lowest 10-20%, who are physical learners who need to be modeled, shown and then practice their trade to learn it.

    And then when these poor schmoops emerge, they find themselves in a world where the jobs they are best at doing, the jobs really suited for them, the low-tech agricultural, industrial and commercial work they had been doing since Sumer, has entire been offshored or no longer pays a living wage.

    Is there any wonder our technical civilization is headed for a permanent 10-15% unemployment? There's just 10-15% of the population that has a VERY marginal place in that civilization.

  19. FDChief wrote: Which is good, because most of your students will come to you with little or no understanding of scientific principles like theory, hypothesis, dependent and independent variables.

    Which is exactly what Mr Decker, Mrs Ulrich and Dr JJ Mele taught my cohort in 7th, 8th and 9th Grade General Science in our town's public school back in the 1950's. Dr Ruth Taylor taught us Biology, Dr Nelson Paine taught us Chemistry and Dr David Patrick taught us Physics all based on the foundations provided by Decker, Ulrich and Mele.

    The current crop of high school science teachers "do not need to be subject matter experts", because, at least in the schools where I taught, there were actually course administrators delivering pre-packaged pap from the publishers without any intellectual involvement required on their own part.

    One ninth grade Science class where I subbed had been subjected, by mid-year, to 50% 0f their classes being video tapes. Several were videos of experiments they could have been doing themselves rather than a real lab period! They had elected one student to keep a diary, and on the last day I was with them, he showed it to me, putting me in the awkward position of defending the teacher for behavior I find unsat. The kids were shocked that I spent a week personally presenting the material to them, complete with extensive discussion and thought provoking homework assignments, and actually worked with them to actually do the lab assignments, expecting them to do more than the "fill in the blank" workbook that was part of the tepid "instructional package". Apparently, the regular teacher learned of it, as I was never allowed to sub in his classroom again.

    BTW, as to MEd programs, when I taught at a State University in the late 70's and early 80's, one could get MEds in "Curriculum Design", "Multi-Media Education Techniques", "Lesson Plan Design" and similar fields. In return for such a degree, teachers received an automatic salary increase, even if they couldn't find a hypothesis taped to the end of their nose.

  20. Al: You're right, of course. The issue isn't really about whether kids can learn science (or any other subject) if it is taught rigorously and to standard. We know they can, because they could.

    But I would suggest that there are several structural issues with re-creating the kind of education you got in the 1950's.

    First, I would suggest that you got an exceptionally good education for the time. While you were receiving the wisdom of Mssrs Decker, Ulrich and Mele, kids in the central urban schools in Philadelphia, Chicago and New York (as well as a hell of a lot of the rural schools in Alabama, Mississippi and Oregon) were barely getting the basics.

    They WERE basics, and taught more carefully and with more attention to detail than today, where flash-bang and gee-whiz and video are the rule; it was a more literate time, and a more detail-oriented elementary school system produced better readers and writers - where the money and resources existed. But we were educating a hell of a lot fewer kids to the standards you got.

    "Special Ed"? Didn't happen. "ESL"? "Learning tracks"? Not even. The poor kids, the slow kids, the disabled kids...they got a minimal education, if any, and were allowed to drop out before graduation. Same as now, but then, it was acceptable not to even try. And in that time it wasn't the end of the world, since a kid with a 9th or 10th grade education could always get a job on the road crews, or in the mill, or as a field hand.

    AND we were, in a lot of ways, a smaller nation. Smaller schools, in many places, where teachers, students and parents knew each other.

    Schools are now expected to crank out kids like widgets - ALL kids - and, not surprisingly, they're failing. And the failures have no place to go - the road crews are a mechanized grader, paver and roller. The mill is closed, or uses industrial robots supervised by an "operating engineer" with an AA in engineering technology, and the farm uses a monster combine to do the work of the field hands.

    I think one of the reasons that the "job curve" has gotten so broad and so flat is because every time the economy falls off the table a few more of these low-skill jobs go away.

    And, honestly? I have no idea what to do about this. In a logical world with no human emotion, the loss of these low-end jobs would result in evolutionary pressure on the low-skills people. Those who had the skills and smarts would survive and reproduce. The others, well...

    To change things would require

    1. a truly massive investment in education, or
    2. a ruthlessly Malthusian extermination of the poor sods at the low end of the scale, or
    3. a sad little make-work jobs program to keep the low-skills people doing "something".

  21. Chief: "In a logical world with no human emotion, the loss of these low-end jobs would result in evolutionary pressure on the low-skills people."

    In a logical world, an illiterate would not be granted a HS diploma and be told he or she now has a "High School Education".

    Back when Clinton was governor of Ark, I was stationed there, and just for kicks, attended a "town hall meeting" about his proposed education reforms. The Pres of the teachers' union began berating "the bureaucrats in Washington" for the dismal state of affairs in Arkansas. Clinton said, "Madam, do you accept the findings of the Rockefeller Foundation that a significant proportion of high school diplomas in this state are issued to people who are functionally illiterate and cannot do basic math?" She answered, "Yes, Governor, but the people in Washington, especially the Republicans.....". Clinton cut her off and asked, "Excuse me, madam, but who signed their report cards authorizing the issuance of a diploma? You, or the Republicans in Washington?" The woman simply stammered.

    BTW, in very uncharacteristic fashion for a Dem, Clinton did not see the answer as simply throwing money at the problem. He saw it as an issue of standards: The standards applied to teachers, the standards applied to instruction and the standards applied to students. He freely admitted that there were students who were unwilling and/or unable to meet proper graduation standards and should not be awarded diplomas, but he also held, based on the Rockefeller study, that there were too many substandard teachers and sub-par standards for passing courses. Until these last two factors were closely examined, no additional money would be considered, as additional money should be used to fix the existing problem, not simply fund it at a higher level. SCANDALOUS!!! It was also shocking to see how many teachers could not pass a high school equivalency test when it was ultimately administered to those who didn't resign before the embarrassment of the test being given.

    When I was teaching at the undergrad level in TX, fully 20% of all recent HS grads needed to take remedial math and/or English before being found fit to take the Freshman level course in either subject, and this included student in "Honors" programs. Who signed their report cards and told them they were ready to leave high school, no less enter college?

    There is no "pressure on low skill people" in the face of reduced low skill jobs if our schools tell them, by the issuance of a bogus diploma, that they are not low skill. They just get screwed, and think it is the system, not themselves, and in a large part, it is the "system". Further, low graduation standards also create low skill people from material capable of doing better, but are carefully trained, at great expense, not to do better.

  22. Returning to the issue of prolonged unemployment and the impact on displaced workers, The Fed today warned that high unemployment will continue for several years.

    Well, boys and girls, unless we re-institute the unsustainable credit frenzy of the past few years, what do you expect. No economy can continue to grow if it is dependent on people extracting equity from their homes to sustain their standard of living. If wages remain flat, they are going to reach the point of unaffordable mortgage/equity loan payments, and stop spending. I learned that from Mr Peeler in 7th Grade Math when he taught us about mortgages and why there were limits to borrowing. Oh yeah, he also taught us how to maintain a checking account, to include balancing the checkbook, and ran a 6 week long paper simulation (no computers to do it for us in the early 50's, you know) to drive the point home. What % of Americans can't reconcile a checkbook (bank account) today? Better than 25%, I'll bet.

    What will be the human cost of "several years of high unemployment" on those displaced. Screw the economy. What about the people? I am not concerned about numbers as much as flesh and blood.


  23. Al: Your analysis of the "education problem" is correct. But the reality is that to return to the standards of the pre-Cold War high school would now require an obscene amount of money.

    Entire states worth of teachers would have to be trained, tested and prepared. Parents would have to give up watching "Wife Swap" and actually help their kids with their homework. The taxes! The taxes! Ohmigod the world would come to an end.

    Just like the fat slob staring at his personal trainer, we've gotten into the habit of eating educational cream puffs for the past 40 years. To get lean and fit again, at this point, will damn near kill us.

    And I'm not worried nearly as much about the people as I am about the nation. Having 15-25% un- or underemployed for half a decade is NOT going to be good for the already-debased political discourse in our country.

    We can decide to do something now. Or, mark my words, the Man on Horseback will decide it for us later.

  24. Chief:

    RE/ Good old edumacation in the fifties.

    You forgot two things

    1. discipline in school....fuckup, and the brother or lay teacher (catholic school) gives you the strap or otherwise fixes your clock. No can do in future G.I.

    2. the parents...if they're rich scumbags they want biff and buffy to go to harvard, and no teacher better get in the way of that by giving realistic grades. The poor and middle class = a mixed bag: ranging from good parentage to sociopathy plus and squared.

    Oh: and the average grade in the fifties at Harvard was a C minus.

  25. Fasteddiez: the corollary for #1 was - as I mentioned above - the chronic fuckups just dropped out and that was OK; there were still jobs for them. Not true today.

    Let's not get too nostalgic for the education of the 50's - there were lots of problems then, too; read the doom and gloom that critics wrote about the schools of the time. It's just in retrospect that it looks so good.

    One thing I would like to quash is the damn grade inflation. As you point out, the median grade in any class SHOULD be a C. But there's a number of factors - especially including the parental mania for admission to elite schools prevents anything like a reasonable grading policy.

  26. I understand those A-F grades are relative to the others in the clss?

    Germany uses an absolute system. it's 1-6 (1 best) till 10th grade and 0-15 points (more is better) in 11th-13th, with a 1-5 system later at universities.

    These absolute systems allow for fair treatment of above-average classes. We recently introduced central exams in 13th grade on state level to avoid regional inconsistencies.

  27. Sven-

    In the US, the grades are awarded as the teacher or school system sees fit. Only standardized exams are necessarily graded on an "absolute" basis. And, since primary and secondary level (grades 1-12) are under the governance of the individual states, there are 50 different systems in the US. While most states administer standardized achievement tests, they are unique to the state, and very often result in different findings from nationally administered tests of the same student populations. And, as much as it might stagger a European's imagination, the typical achievement test given for the award of a high school diploma (12 years of schooling) is given during (and not necessarily at the end of) the 10th year. Whether the student who passes this test ultimately graduates two years later is solely dependent on the grades individual teachers assign, with no further "quality control".

    Further, unlike university education that requires a student to have a "C" average of all courses taken to be awarded a degree, no such achievement level is required for a high school diploma. A student need only "pass", at least once, the required list of courses to graduate.

    We also use numbers to assign value for grade averaging. For example, A=4 (Best), B=3, C=2(Average), D=1 and F=0 (Failure). Thus, an average of 2.0 of the grades assigned is a "C". In university, for the computation of grade average, the grade will also be weighted by the number of credit hours the course involved. Thus a 4 credit course would weigh twice as heavily in computing a student's university grade average than a 2 credit hour course. Some high schools use a similar system, but typically, all high school courses are the same number of credit hours.

    I would say, in very broad, stereotype terms, that one major problem in the US is not only a lack of standards, but gross disregard for standards when they exist. How else can we be "The Land of the Free"?

  28. I feel it's important to point out that education only can do so much. Education does not create jobs, investment does. The sad reality is the prospects for highly educated physical scientists and engineers are declining in this country because both the private and public sector are not investing as heavily in R&D as they once did, with a few exceptions. A lot of basic science is moving to Asia. Without investment in this area (or any area, for that matter), the jobs simply won't be there, not matter how well someone is educated.

  29. Andy-

    In my view, the education situation is simply a reflection of the decline in standards our society has accepted. There is no investment in domestic production, R&D and jobs because wealth can be created elsewhere with greater ease.

    Since we have no national industrial policy, we have no industry. We have no national transportation policy, and "free market forces" are driving our airlines to bankruptcy and our roads and bridges are crumbling.

    But, without this investment, and lacking any national infrastructure policies, the rich have gotten richer because they, as least so far, have been able to reap rewards elswhere.

    Education isn't the problem, but just one of the symptoms.

  30. Sven, Al: Just to give you an example, when I taught Geology in Community College I graded on a curve.

    So the highest grade in the class was the top of the curve. If I gave a 100 point test and the best student got 70 right out of 100, 70 became the neww "100".

    In point of fact, I usually had to modify the curve even further; there would usually be one or two students who would be far and away above the bulk of the class. If I posted these scores as the top of the top 10 percent, I would typically have another student in the top decade, 2-3 students in the second (80-90%), another small cluster in the 70-80% ("C" grade) range and the bulk of the class in the "unsatisfactory but passing (60-70% or "D" grade) and the failing range.

    I tried once grading on a straight scale but couldn't even get a single student into the top ten percent.

    I should add that the college at which I taught gave me no guidelines regarding this; I had to develop it through trial and error.

    Al, Andy: One thing we do have is a tax policy. That tax policy penalizes those whose primary source of income comes from wages and salary and rewards those whose income derives from things like capital gains and dividends. And don't get me started about the ridiculous 100K limit on FICA.

    And investment doesn't "create" jobs; investment provides a pool of money that can be used for many different things. It can be used to create businesses that employ people and create jobs. It can be used to engineer the takeover of one business by another and in the process destroy those jobs. What creates jobs is, as Al points out, an economic system slanted in favor of job creation. An economic system slanted towards job creation, as Andy pointed out, is often slanted that way by goernment policy.

    Right now what government policy we have is slanted towards the maximization of the investor's profit, rather than the creation and maintenence of stable industrial employment.

  31. As I understood it, German teachers need to make up the point levels for the grades (grade 1-6, 15-0 points) before the test.
    A school with teachers who fumble around like that would be a national scandal (like much everyday stuff in the U.S., as for example in food safety).

    About the industry; there's plenty industry in the U.S. (albeit less than in PRC if measured in purchasing power parity terms), the problem is that
    a) its share of the economy is too small (by several percent points GNP)
    b) goods consumption is significantly larger than goods production.

    In short: Americans THINK they're richer than they really are. It's simply luxury financed by debt.

    This very basic and dramatic economic imbalance is still not publically understood as far as I can tell.
    The whole perception of the beast as a crisis instead of as a downgrade to reality is wrong.
    The only way back to the 'good old times' is another bubble - till another, even worse crash.