tag:blogger.com,1999:blog-582368152716771238.post3561802912685647478..comments2024-03-28T14:41:03.793-05:00Comments on The Grumpy Economist: Economies in reverseJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger55125tag:blogger.com,1999:blog-582368152716771238.post-61661523726896968872017-05-08T16:35:14.541-05:002017-05-08T16:35:14.541-05:00Another explanation for K12 education is the openi...Another explanation for K12 education is the opening of the labor market to women. In 1970s, most women, including high ability women, could only become teachers, nurses, clerks, or stay-at-home moms (or before they became stay-at-home moms). Now high ability women are doctors, lawyers, managers, etc. There has been huge adverse selection into teaching.Michael Wardhttps://www.blogger.com/profile/08041701258028777913noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-84381382958069993922017-04-10T11:30:03.037-05:002017-04-10T11:30:03.037-05:00This is a very good article which quantifies the (...This is a very good article which quantifies the (obvious) extra cost of public sector bureaucracy, which is the inevitable corollary of increasing public sector spending to GDP. Unfortunately, it does not touch on the crowding out of private sector investment/productivity, or the political consequences of creating a massive class of public sector bureaucrats, with a strong motivation for constant expansion, led by both major political parties in the US (and also my country, the UK). <br />Do you think the wrecking ball approach taken by Trump offers a solution?<br />Professor Michael from Englandnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-58715476448606563592017-03-26T15:54:01.698-05:002017-03-26T15:54:01.698-05:00But in France, or Korea, or China, each of those s...But in France, or Korea, or China, each of those systems Cochrane mentioned are run extremely cheaper and more efficient. In each of those countries, they all have far more governmental power and involvement compared to the US.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-36094611750906550752017-03-14T15:55:09.333-05:002017-03-14T15:55:09.333-05:00Is there evidence to support the administrative bl...Is there evidence to support the administrative bloat idea in cross-sectional variation across schools? The marginal value of an additional administrator is hump-shaped---at some point it is negative value-adding to add an additional administrator.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-75440388694963446062017-02-22T10:35:30.965-06:002017-02-22T10:35:30.965-06:00Professor,
Thought provoking post as always. I'...Professor,<br />Thought provoking post as always. I'm a physician, but do have an undergraduate degree in econ/finance. I linked in to the post by way of the health economics posts. Just some thoughts I'd like to hear you take on.<br />1) Baumol's theories, I assume, can't explain fully the nearly tenfold increase in the costs of the heath care sector. What you expect to see if it were the case, however?<br />2) An idea I've read about a few times is that lack of wage/income growth is at least partially or maybe fully explained by health care inflation and having employer based health care coverage. If health care coverage really is a 6-time greater portion of a workers compensation, can that along explain stagnant incomes?<br /><br />Michael<br />(from Florida)Michaelnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-59303258063839149432017-02-21T10:50:28.777-06:002017-02-21T10:50:28.777-06:00"Labor productivity -- number of people per q..."Labor productivity -- number of people per quality adjusted output..."<br /><br />... you mean quality adjusted output per person employed.Anonymoushttps://www.blogger.com/profile/04446072606031124944noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-89754692872864690142017-02-21T00:03:09.517-06:002017-02-21T00:03:09.517-06:00I think it has been fairly well established, in th...I think it has been fairly well established, in these comments, that the school cost example is mainly a matter of changing requirements. The chart, after all, does come from a treatise excoriating the teachers' union. And that the civil engineering examples are largely a matter of differing circumstances.<br />Healthcare in USA is dominated by insurance business. Insurance is a terrible business model for healthcare. Incentives for minimising cost exist only if a long term view is taken. Insurance, because business horizon is the next quarter, cannot foresee cost reductions well into the future that can result from preventive care. Whereas government run basic healthcare (e.g. France, UK, NZ, Japan, etc.) does have the ability to take account of long term consequences.<br />--E5Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-51724520966917168402017-02-20T15:47:03.575-06:002017-02-20T15:47:03.575-06:00How does your thesis stack up against the fact tha...How does your thesis stack up against the fact that countries like France (hardly a libertarian paradise) seem to have much less of a problem with cost disease? It seems to me than any argument for cost disease relying on this concept of "simply too much government" crashes right into this problem.TheLoneAmigohttps://www.blogger.com/profile/00984096812960996717noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-13796383388830174512017-02-19T16:50:46.245-06:002017-02-19T16:50:46.245-06:00A fascinating post that reads like a suspense myst...A fascinating post that reads like a suspense mystery. Why have certain sectoral costs risen so disproportionately over the decades?<br /><br />We don't discover why here but Cochrane once again focuses his ire on the cost of government. "Rule of law good, regulations bad" has been Cochrane's recent refrain.<br /><br />This time, however, Cochrane slips in: "The main effect of our regulatory AND [emphasis mine] legal system …".<br /><br />Whoa, there. This is shifty rhetoric. <br /><br />In an earlier essay, Cochrane condemned the regulatory state via a divide-and-conquer argument. But that tactic fails when one recognizes that regulations exist only in a legal context.<br /><br />Now, when it suits, the entire legal system comes under his ire. Is Cochrane now broadly attacking our legal system? Or was this just a simple slip?<br />JZhttps://www.blogger.com/profile/12994372644670111315noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-20072839213215736962017-02-18T13:53:08.814-06:002017-02-18T13:53:08.814-06:00Non-profit enterprises do have this tricky problem...Non-profit enterprises do have this tricky problem of how to distribute rents. Many have commented elsewhere on the questionable spending of elite universities on fancy amenities. But as Prof. Cochrane points out in the above quote, hiring unnecessary people is the quickest way to to spend your budget.Anwerhttps://www.blogger.com/profile/08277173974258559733noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-56040934792193337552017-02-18T11:19:07.659-06:002017-02-18T11:19:07.659-06:00I think we have uncovered, in these comments, the ...I think we have uncovered, in these comments, the possibility that the mysterious increased spending is on stuff like classroom equipment, supplies, cafeterias, fancier buildings, and so on.<br />--E5Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-5675798208178601342017-02-18T06:00:06.070-06:002017-02-18T06:00:06.070-06:00On the case of subway in the US versus rest of the...On the case of subway in the US versus rest of the world. Unlike most countries, in the US property rights are much better defined. While around the world governments own drilling rights, that is not necessarily so in the US. How much of the costs of building a subway system come from making sure that the drilling can actually happen? It may not be a difference in terms of efficiency, but simply of transparent rents (government to government in China or Paris is invisible). I would delve into the actual costs for the case of subways before comparing US and rest of the world. RodZhttps://www.blogger.com/profile/07053247307278042751noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-66188162584450926902017-02-17T22:53:53.048-06:002017-02-17T22:53:53.048-06:00It's a new enemy and we have not adapted our m...It's a new enemy and we have not adapted our military funding stream to it. George W and the neocons went about inviting folks to be our enemy ("if they are not with us they are against us" (but, by the way, the Bible says the opposite)). The folks who accepted the invitation (like ISIS) don't drive tanks and such. But our military, and the industrial momentum of making stuff for it, is adapted for blowing up tanks and such. <br />Hence the need to build new military thinking. And maybe new equipment for it. Unfortunately.<br />--E5Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-82130291861456733742017-02-17T16:31:16.582-06:002017-02-17T16:31:16.582-06:00Yes indeed.
"extremely cheaper" ... incl...Yes indeed.<br />"extremely cheaper" ... include dentistry in Mexico.<br />"government interference and crony capitalism/cartels" ... "conservatives", "the left", and sane business would do well to unite against the capture of government by crony capitalism.<br />--E5Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-89949788894826931532017-02-17T15:32:39.339-06:002017-02-17T15:32:39.339-06:00This is a very good point. Students may be learnin...This is a very good point. Students may be learning the same quantity of "stuff" but qualitatively much different stuff. They have never seen a floppy disk but know how to store memory on the cloud, and those skills are more valuable but also require greater investment from schools on internet lines, email accounts, etc. Constantine Alexandrakishttps://www.blogger.com/profile/03148709241309623293noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-86435095228838172192017-02-17T13:09:16.276-06:002017-02-17T13:09:16.276-06:00There are a lot of product/services that are extre...There are a lot of product/services that are extremely cheaper and of much better quality in other developed nations in Europe and Asia than in the US: internet, TV, telephone data, air travel, private medicine, office supplies and many more instances. It is administative bloat, government interference and crony capitalism/cartels, all working together to deliver a raw deal to the American peopleAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-89841130484034501492017-02-17T00:23:17.667-06:002017-02-17T00:23:17.667-06:00"Unlike schooling, health care is unquestiona..."Unlike schooling, health care is unquestionably better now"<br />Maybe schooling is not better now but it is certainly delivering a different product and is serving a changed need. The education delivered by a 1975 school, for a 1975 workforce, was significantly different that that needed for a 2016 workforce. Therefore using a 1975 test to evaluate the effectiveness of 2016 education is a bit silly. Sure it proves that the students of both periods got adequately trained in basic reading comprehension and minimal mathematics. But what of all the other stuff they have to learn? Both then and now? What if the extra stuff of 1975 was much cheaper than the extra stuff of 2016?<br />And what if, perhaps, the underlying cause of greater cost is simply the availability of more pocket money to spend? Thus it gets spent on progressively less cost-beneficial stuff. This, I would assert, is a chief factor in the reduced cost/benefit ratio of healthcare spending. The extra cost of a faster car is way beyond proportional to the extra speed. But if you have that money to spend then why not? But then if it becomes that nobody's interested in faster cars then the recipe, and equipment for making them, will be lost. Who now has the means of reading an 8" floppy disk? Or an 8-track tape? It is, in some ways, easy to forget. But forgetting about burning coal (a move driven, in the short term, by hydraulic fracturing resulting in cheap natural gas) is causing a fair bit of angst.<br />--E5Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-2403619477262509942017-02-16T10:38:47.399-06:002017-02-16T10:38:47.399-06:00Two notes:
In regards to K-12 spending (2014 const...Two notes:<br />In regards to K-12 spending (2014 constant dollars):<br />2002: $10,455<br />2014: $11,009<br /><br />In regards to spending in public higher education institutions:<br />Total educational revenue per FTE (Constant Adjusted Dollars):<br />1990: $11,583<br />2015: $12,907<br /><br />Honestly, these numbers just don't seem that bad.LK Bélandhttps://www.blogger.com/profile/10345099680900371024noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-31973145537789030792017-02-15T18:48:58.225-06:002017-02-15T18:48:58.225-06:00It's hard to be honest on test scores and othe...It's hard to be honest on test scores and other educational achievement issues these days. Id you're being...honest...you have to tackle the elephant in the room: demographics. When you import the third world into your country, you need to spend more on their "education", and your scores will get progressively worse on average compared to a different cohort with very different demographics.<br /><br />This is why both simply using averages is silly and pointless, but also why you can't really have an "honest" conversation. <br /><br />So other excuses have to be found, like "administrative bloat" or other politically acceptable explanations. <br /><br />The explanation is pretty obvious to anyone who wants to be "honest": the HS I went to was in the 1970s mostly comprised of Italian and Polish third generation immigrants. Today that same HS is comprised mostly of recent arrivals from Guatemala and Honduras. <br /><br />What a mystery! Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-25316309483047781552017-02-15T09:01:33.747-06:002017-02-15T09:01:33.747-06:00We shouldn't accept speculation about "ad...We shouldn't accept speculation about "admin bloat" or any other potential explanation when we have the data. Most high schools that have been around since 1970 must have reasonable records of the changing budget (and number of students). The answer should be clear from historical data.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-299175551507072792017-02-15T08:58:27.733-06:002017-02-15T08:58:27.733-06:00I am not satisfied with these answers. Some of the...I am not satisfied with these answers. Some of the cases might be difficult, but certainly it is possible to find a public high school with good records on the budget, etc since 1970. We should be tell exactly how the cost structure has changed over time. We should not accept speculation.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-37348531368442288512017-02-14T23:45:24.814-06:002017-02-14T23:45:24.814-06:00The referenced articles claim that education is ex...The referenced articles claim that education is exhibiting "Baumol's cost disease." One of the articles directly links to Wikipedia which defines that creature as "a rise of salaries in jobs that have experienced no increase of labor productivity, in response to rising salaries in other jobs that have experienced the labor productivity growth." The claim that education has not experienced productivity growth is spurious. Test scores are not a metric for the productivity of education. Period.<br /><br />If you want to make this "cost disease" argument - you have to show that the students put out by schools are no more valuable to businesses than they used to be. I don't think you can do that. The point is that you can't just look at costs - you have to look at the value of the thing produced - and test scores aren't it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-15078816422459052052017-02-14T20:15:54.046-06:002017-02-14T20:15:54.046-06:00true that.true that.Paulhttps://www.blogger.com/profile/14580292813416508093noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-60198211390784532802017-02-14T18:29:10.446-06:002017-02-14T18:29:10.446-06:00John, interesting post as usual. It reminded me of...John, interesting post as usual. It reminded me of another entertaining article here:<br />http://strikemag.org/bullshit-jobs/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-59294780576812658692017-02-14T13:48:06.149-06:002017-02-14T13:48:06.149-06:00Constantine makes a good point.
The % of college...Constantine makes a good point. <br /><br />The % of college students who require remedial classes and special assistance has skyrocketed over the last few decades. We're pulling in students who are substantially less qualified to handle college level coursework as the students in 1970. Unknownhttps://www.blogger.com/profile/03169975846892706588noreply@blogger.com