By JENNIFER MEDINA

Published: November 25, 2009

The New York Times – link to original

WASHINGTON — Mayor Michael R. Bloomberg said on Wednesday that New York City public schools would immediately begin to use student test scores as a factor in deciding which teachers earn tenure, a proposal that has been bitterly opposed by the teachers’ union and criticized as putting too much weight on standardized exams.

The city already uses test scores in evaluating the system: to determine teacher and principal bonus pay, to assign the A through F letter grades that schools receive, and to decide which schools are shut down for poor performance. The mayor is now putting even more weight behind those scores by using them to decide which teachers should stay and which should go.

In a speech in Washington on Wednesday, alongside the secretary of education, Arne Duncan, the mayor also called on the State Legislature to make a number of changes, some of them also anathema to the unions, that would help New York State compete for hundreds of millions of dollars in the so-called Race to the Top federal grants. The program will distribute $4.35 billion in stimulus financing to states for innovative education programs.

The speech suggested that the mayor may use his third term to take on the United Federation of Teachers, which sat out the mayoral election during a period of relative labor peace. The mayor did not mention that he could achieve some of the same changes by negotiating with the union, whose contract expired shortly before the election.

While many of the changes he is seeking could be accomplished at the negotiating table, his speech indicated that he would turn to Albany to take up much of the fight.

The Bloomberg administration contends that it already has the power to use test scores in tenure decisions. But, he said that the Legislature should require all districts in the state to evaluate teachers and principals with “data-driven systems,” one of the factors Mr. Duncan will use in deciding which states will receive Race to the Top grants.

The mayor also said the state should allow teacher layoffs based on performance rather than seniority, as they are now. It is a particularly crucial topic now, because the city may face large budget cuts and potential layoffs.

“The only thing worse than having to lay off teachers would be laying off great teachers instead of failing teachers,” Mr. Bloomberg said. “With a transparent new evaluation system, principals would have the ability to make layoffs based on merit — but only if the State Legislature gives us the authority to do it.”

Sheldon Silver, the Assembly speaker, suggested that the mayor would not find satisfaction in Albany. “These are all contractual issues that should be dealt with at the bargaining table,” he said.

The teachers’ union has fought the use of test scores in tenure decisions, and last year successfully lobbied the Legislature to ban it for teachers hired after July 1, 2008. That law is to expire next year.

The city contends that it has the power to use scores for the next batch of teachers up for tenure — those hired in 2007 — and if the Legislature does not renew its law, the city could do so for all teachers hired thereafter. Teachers generally receive tenure after three years; 93 percent of teachers up for tenure in the last school year received it.

Mr. Bloomberg said that banning the use of student achievement in tenure decisions is “like saying to hospitals, ‘You can evaluate heart surgeons on any criteria you want — just not patient survival rates.’ ”

Michael Mulgrew, the president of the city’s teacher union, said he was “very, very disappointed” in the tone of the mayor’s speech.

He did not rule out filing a lawsuit once the details of the mayor’s plan have been fleshed out.

He said that using the test scores was a poor way to measure teachers, citing criticism that the tests have become too easy, with so many students showing large improvement that they have lost their meaning as gauges of learning.

“How do we constructively fix that instead of saying let’s play political agenda and propaganda?” Mr. Mulgrew asked.

Perhaps anticipating such criticism, Mr. Bloomberg also urged the state on Wednesday to adopt national standards and make the test more difficult.

Kate Walsh, president of the National Council on Teacher Quality, called the issue of state tests the “Achilles’ heel of the accountability movement.”

“When you ask any teacher, even a good one, they tend to be pretty leery of being held accountable on these tests,” Ms. Walsh said. “These tests aren’t linked to the actual curriculum, and they have to be.”

But, she said, they have “validity for making decisions at the extreme end: Teachers who are really talented tend to be in the top and teachers who are poor tend to be in the bottom year after year.”

Teachers interviewed on Wednesday about the plan were universal in their condemnation. “It’s ridiculous,” said Kanayo Al-Broderick, a third-grade teacher at Public School 56 in Clinton Hill, Brooklyn, who is in her 22nd year of teaching. “It just means they did well on this test. Does it show we’ve built them to be lifelong readers, to love reading? That’s what all teachers want.”

Education officials said they had no details on just how scores would be used for tenure decisions. Many teachers have no scores to go by: Only children in grades three through eight take the annual English and math state standardized tests, and high school students take Regents exams only in certain subjects.

The mayor also called on legislators to make it easier to fire bad teachers and teachers whose jobs have been cut but who are guaranteed their salaries even if they cannot find a new job in the system. The city is now paying more than $100 million for these so-called reserve teachers, many of whom lost their positions because their schools were closed for poor performance. Mr. Bloomberg said that the state should place a one-year limit of teachers in the reserve pool, something he could also press for in the contract.

In a move almost certain to increase that pool of teachers, the mayor also said that his goal was to shut down the lowest-performing 10 percent of city schools. So far, the Bloomberg administration has shut down 91 schools across the city.

Legislators in Albany are preoccupied with cutting the state budget, and Mr. Bloomberg appears to be trying to convince them that changes in state education law could bring much-needed millions of dollars to the state.

“We’re committed to exploring any avenues to bring in increased federal funding to the state,” said Austin Shafran, a spokesman for Senate Democrats.

Many states have made significant changes to state law to improve their chances at receiving Race to the Top money, but the Legislature in New York has not made any considerable effort to do the same.

Mr. Duncan, who sat just feet away from the mayor but remained silent on most of his proposals, said that he supported the idea of tying student data to teacher evaluations but he stopped short of endorsing the administration’s plan.

“Everyone agrees the current system is broken,” he said. “We have to talk about what makes sense.”

Karen Zraick contributed reporting.

By Thomas Oliver

The Atlanta Journal-Constitution - link to original

6:19 p.m. Thursday, November 19, 2009

You know things are awful when Washington politicians seem genuinely concerned about small business, rather than simply spouting the usual platitudes toward an amorphous group that typically lacks the political muscle of Wall Street or unions.

Within the last week, head honchos from the Federal Reserve, the Treasury, Goldman Sachs and Warren Buffett himself have expressed concern that small business isn’t responding as needed.

And it is needed.

Small business (defined as 500 or fewer employees) creates 60 to 80 percent of new jobs. So it’s not an exaggeration to suggest that without a healthy, growing small business sector, there will be no recovery.

Yet there is mounting evidence that small business has taken an unusually hard hit this recession.

In looking at data since 1992, Atlanta Fed economist Melinda Pitts wrote: “Firms with less than 50 employees have made up approximately one-third of the nation’s employment growth. During the employment declines associated with the 2001 recession, these firms made up only 9 percent of job losses. In the current recession, though, these very small firms have made up 45 percent of the nation’s job losses.”

Ouch. That’s five times the rate of job losses than in the previous recession, or over 3 million people dropped from payrolls of the smallest firms.

And to make matters worse, the financing needed to reverse that trend and fuel growth just isn’t there.

Treasury reported that the 22 largest banks receiving TARP money had cut $10.5 billion from their small business portfolio.

The Small Business Administration has approved one-third fewer loans this year than last.

Smaller banks, too, have clamped down on lending.

Add the fact that many small businesses are partly financed through their owners’ credit cards and home equity – two major lines of credit that banks have clamped down on — and the picture grows dim.

As if that wasn’t bad enough, Fed officials note a link between smaller banks, which normally supply small businesses their loans, and the commercial real estate crisis that is further curtailing lending.

In a recent speech to the Urban Land Institute’s Emerging Trends in Real Estate Conference in Atlanta, Dennis Lockhart, president of the Atlanta Fed, said banks with the most exposure to commercial real estate are the same banks that lend mostly to small businesses.

Those banks are hunkering down. They aren’t looking to help small business get back on track.

Jimmy Adams, executive vice president of the Atlanta-based Adams Transfer & Storage, said his bank is providing credit for continuing operations but nothing that would be associated with growth.

“Anything beyond the core that even remotely smells of investment, or something for which you don’t have a contract in hand to pay for it, and you aren’t going to get credit,” Adams said.

“We are all on the sidelines,” he added.

Growth does not occur on the sidelines. Nor does it feel like a recovery to those on the sidelines.

It feels fragile.

Like “any bump in the road will put us back in recession,” Adams said.

————

Thomas Oliver writes the Sunday business column. He can be reached at toliver.writeright@gmail.com.

OP-ED CONTRIBUTOR

By FRANK R. GUNTER

Published: November 15, 2009

Bethlehem, Pa.

The New York Times – link to original article

AFTER returning from the second of two tours in Iraq, I can attest to notable progress. Iraqi civilian casualties have dropped sharply, the result of both the United States surge and negotiations with Sunni groups. There has been political progress as well. Provincial elections were held this year and national elections are scheduled for early 2010.

The future of the Iraqi economy, however, remains bleak. Without fundamental change, unemployment and the accompanying instability will rise while the widespread corruption will worsen. The political and security gains made at such great cost in Iraqi and American blood and treasure will be imperiled.

Iraq not only has a severe shortage of jobs, it also has a growing number of job-seekers. As much as 51 percent of the Iraqi labor force is either unemployed or underemployed; the number is even higher for young workers. For three decades, the Iraqi government has been the primary source of employment. Almost half of the country’s labor force is paid by the government from its revenues from petroleum exports. With the exception of agriculture, legitimate private-sector employment is small — by my calculations, about 6 percent of the labor force. Most of the remainder of the Iraqi labor force is either unemployed or working in the underground economy.

In 2008, the sharp rise in oil revenues and improved security led to an economic boom. The government created more than enough new public sector jobs to absorb the approximately 250,000 young people who enter the work force every year.

However, this economic surge was short-lived. After oil prices dropped by almost $100 a barrel earlier this year, the government imposed a hiring freeze and unemployment began to rise.

Unfortunately, there is nowhere for these job-seekers to go. Iraq’s private sector is unable to employ many of the jobless because the country has one of the most hostile business regulatory environments in the world. (Of the 183 countries ranked by the World Bank for the “ease of doing business,” Iraq is 153rd.) In Iraq, it is hard to legally start a business, get credit or trade internationally. As a result, most private businesses either hide in the underground economy — with all of the associated inefficiencies — or accept the necessity of bribing an unending stream of government officials.

This is not sustainable. In 2010, the Iraqi government will hit the wall. A combination of low oil prices, exhausted cash reserves and the expense of paying for a bloated government sector will prevent the creation of public sector jobs. And the private sector, as it continues to struggle with excessive regulation and corruption, is unlikely to create more than a fraction of the needed employment. Rapid growth in the number of unemployed young men will likely follow — and these young men will be attractive recruits for political insurgents, fundamentalist terrorist groups and criminal gangs. Increased instability is almost certain.

There is another path. The potential for private sector job growth in Iraq is great. The country is blessed with a strong entrepreneurial tradition, a relatively well-educated labor force and a natural resource more valued in the Middle East than oil: water. Only Iraq and Turkey have sufficient water for large-scale agribusiness, and Iraq is surrounded by wealthy countries that need to import food. But to exploit these advantages, Iraq needs to make important changes. And it should start by rationalizing its commercial code.

The chief problems in Iraq’s commercial code are its incredible complexity, long delays in processing requests for licenses and high cost. For example, registering a new business in Iraq costs almost $2,800 compared to $139 in Delaware. (However, a group of Iraqi businessmen assured me that if $600 in cash was given to the right person, a license would be available immediately and no further fees would be required.)

The country could simply throw out its current commercial code and adopt a less restrictive, regionally acceptable one — like Saudi Arabia’s. Or, more realistically, it could make its code more user-friendly by, say, allowing business owners to work with one ministry — as opposed to a dozen.

The government could take other steps, too. With the exception of tax collection and international trade regulations, responsibility for regulating private businesses could be taken from the Baghdad ministries and delegated to the country’s 18 provinces. Encouraging the provinces to compete for private-sector jobs would lead to friendlier regulatory environments around the country — just as it has in the United States.

But whatever is decided, the government of Iraq is running out of time. It must either end its hostility toward private businesses — or accept that a sharply growing mass of unemployed will nullify the progress of the last three years.

Frank R. Gunter, an associate professor of economics at Lehigh University, was the senior civilian economics adviser to the Multinational Corps in Iraq from 2008 to 2009.

The Department of Education reported the other day that, of the $97.4 billion in economic-stimulus funding that Congress steered its way, 69 percent was “obligated” by September 30. (The balance — including Secretary Arne Duncan’s much-discussed “Race to the Top” money — must get out the door by September 2010.) In other words, Washington spent almost $68 billion more on education in fiscal 2009 than it otherwise would have. Though this is less than 10 percent of total “stimulus” spending, it’s a whopping big number by historical standards of federal aid to schools and colleges.
What has all that extra money actually bought? The main answer, trumpeted by the Obama administration in a new 250-page document, is jobs, jobs, jobs. “The data,” boasts the Education Department, “indicate that approximately 400,000 jobs have been retained or created through the U.S. Department of Education ARRA grants. They reveal that the rapid distribution of this funding allowed States to fill significant education budget gaps in order to avert layoffs of personnel in public school districts and universities across the nation.” (Colorado, for example, salvaged or added 3,370 educator jobs with its $844 million.
It’s a fact that employment was an explicit purpose of stimulus funding — Congress said as much — and with today’s jobless rate over 10 percent, only a churl would deny the humanitarian value as well as the political appeal of this. That said, well-run public organizations and private firms are using the economic crisis to purge weak performers, cherry-pick talent, and position themselves to be more productive going forward. Turning schools into a jobs program is a dubious way to tone them up for the 21st centuryAnd a tone-up — indeed, a makeover — is what they need. When the American Recovery and Reinvestment Act (ARRA) was unveiled last winter, President Obama and Education Secretary Duncan said exactly that. In February, Obama told Congress that “We know that our schools don’t just need more resources; they need more reform.” Duncan termed ARRA an “historic opportunity to create jobs and advance education reform.” He declared that “a lot of this money will be tied to higher standards and reforms that are desperately needed.” In March, he told the House Budget Committee that ARRA provided “unprecedented levels of Federal support for our schools in return for a commitment to meaningful reform strategies.”
Eight months later, however, it’s all about jobs — and this in a sector that has been a job factory for many decades. Indeed, education employment has grown far faster than pupil enrollment, and more dramatically than employment in many other fields. Though coaxing greater productivity and efficiency from the private-sector workforce has been a major contributor to U.S. prosperity and economic growth, things haven’t worked that way in our schools.
Primary- and secondary-school enrollments have risen by about 10 percent since 1970, but the teacher rolls grew by 61 percent during the same period — an addition of some 1.4 million instructional personnel. The higher-education picture is similar though less egregious, with enrollments up 64 percent since the mid-1970s while campus employment doubled.
Let’s at least acknowledge that all these added employees have not boosted the performance of our schools and colleges. Seen in that light, today’s recession, however painful for individuals who might lose their jobs, could have had a useful purgative effect on the education workforce as in other fields. One might even wager that seizing this opportunity to shed the least effective instructors and ancillary personnel would result in higher quality. Such close analysts as Stanford economist Eric Hanushek estimate that substantial gains in pupil achievement would follow from (permanently) ridding K–12 education of the weakest 10 percent of today’s teachers — even if that means adding a few pupils to the classrooms of those who remain.
ARRA has cushioned districts and states from having to consider such bold moves. Meanwhile, there’s absolutely no evidence — let’s acknowledge the administration’s honesty here — that ARRA’s flood of additional federal spending has done anything for pupil learning or education reform.
To be sure, the $4.5 billion in “Race to the Top” money that remains to be committed in 2010, though barely 5 percent of education’s ARRA funding, may well pay for some worthy changes. Enthusiasts, including David Brooks and a bevy of zealous reformers, point to cases in which states have already been prompted to lift their charter-school caps or revisit their data policies so that, for example, student achievement can be linked to teacher evaluations. Such measures are welcome indeed, but it’s not clear whether they justify ARRA’s whopping cost or the avoidance of belt-tightening that it has made possible. It’s good that the administration pushed Congress to include Race to the Top, but the education stimulus package still looks like a jobs cake with a bit of reform frosting.
Moreover, while Duncan seems bent on making Race to the Top a program with real traction, will he be able to stick to his guns once senators and governors start to pound on the White House for their states’ shares? It could yet disintegrate into superficial compliance, canny grant-writing, and political arm-twisting. Still, optimism is a virtue. And heavy-duty reform, as Duncan well knows, remains America’s top education need.
Someone should point out that “our children will compete for jobs in a global economy that too many of our schools do not prepare them for . . . [even as we have] managed to spend more money and pile up more debt, both as individuals and through our government, than ever before. In other words, we have lived through an era where too often short-term gains were prized over long-term prosperity, where we failed to look beyond the next payment, the next quarter, or the next election.” Oh, wait. Someone did point it out. That was President Obama, addressing Congress in February about ARRA. Seems so long ago. Today, with two-thirds of that money out the door, the best his administration can claim is that hundreds of thousands of adult jobs were saved (and even more created), not that kids are learning more or schools are more effective.
The teachers who are beneficiaries of the grants are surely grateful. Their unions are undeniably pleased. But this is not the audacious change that was promised — and that is needed. Indeed, the 50 million young people who will end up repaying these 97 billion borrowed dollars might want to inquire about a refund.
Chester E. Finn Jr. is president of the Thomas B. Fordham Institute. Frederick M. Hess is director of education-policy studies at the American Enterprise Institute.

Will New York City’s public school administrators pander to the teachers’ union?

by Emily Esfahani Smith

11/12/2009

Weekly Standard – link to original

At the end of last month, the New York City teachers’ contract expired, opening the door to a series of negotiations between the teachers’ union and the city’s department of education, led by chancellor Joel Klein. But more than a week into negotiations over the new contract, the talks are ominously quiet.

Though Klein has talked tough on the unions, whether he will actually get concessions on issues like tenure, merit-based pay, and what’s known as the “absent teacher reserve” pool will soon be determined. That last point, in particular, reached a boiling point this past summer when the Department of Education instituted a hiring freeze that excluded talented new hires from getting teaching jobs–showing how necessary it is for the new contract to handle the ATR in a satisfactory way.

The ATR, or “absent teacher reserve,” excess pool is a pool of teachers that were let go by their schools’ principals. At its peaked, it numbered 3,000 this past summer. Though these teachers were let go, they still received their salaries and benefits thanks to the 2006 union contract.

One measure that Klein wants to see implemented in the new contract is limits on the amount of time a teacher can spend in the excess pool. After a nine month or so period, ideally, the teacher will no longer be on the city’s payroll. Today, they could stay in the excess pool until Armageddon. Some teachers even get tenure while they’re in the excess pool.

If each teacher received only the equivalent of a first-year teaching salary, 45,530 dollars, the Department of Education was paying at least $136,590,000 to maintain the excess pool–a significant sunk cost. As of September, about 1,400 teachers were still sitting jobless waiting to receive their paychecks.

“Excessed” teachers were either let go because their schools were downsizing or simply shut down, or because the principals were looking for ways to cut their budget. “Even with federal stimulus funds, we had a 400 million dollar gap between expenses and revenue,” said Ann Forte, spokeswoman for the New York’s department of education. The result? “Schools budgets were trimmed 3.8% on average.”

The upshot of the budget cuts is that most schools in New York City experienced a hiring freeze at the beginning of this school year, or what Teach for America’s Jemina Bernard delicately called, “restrictions on hiring.” For the most part, schools could hire internally, from teachers already on the Department of Education’s payroll–meaning that in many cases, principals must hire from the excess pool, passing over the very talented recruits of Teach for America and the New York City Teaching Fellows.

But Klein has repeatedly said that he wants fresh blood entering the school system. Teach for America, which usually places 550 teacher recruits in public schools by the first day of school, only took on 320 this year, anticipating the Department of Education’s budget cuts, caused provisions of the 2006 contract. Still, Bernard was able to place many of her recruits in schools in large part because of some “exceptions” to the hiring freeze.

For instance, charter schools were not affected by the hiring freeze, nor were new schools less than three years old. Also, in the sciences–except for biology–and in special education, principals could continue to hire from external sources, since not enough “excessed” teachers are qualified to teach in those two areas. The Department of Education, for instance, hired only 1,700 new teachers this year–compared to last year’s 5,600–and 1,200 of those new hires were in special education and the sciences.

Despite these welcomed exceptions to the hiring freeze, the ATR still is a cause of concern. Teachers in the ATR are “excessed” based on seniority, meaning that least senior teachers are the ones principals must let go first. The highly mobile teachers market ensures that principals who need to fill vacancies will quickly snap up good teachers in the excess pool. One victory of the 2006 contract was abolition of the “seniority transfer,” which ensured that senior teachers could walk into a school and get a job. Today, thanks to the city’s education chancellor Joel Klein, that same contract allows principals to choose the teachers coming into their schools.

Now that the principals have a greater say in the hiring process, they avoid, at all costs, hiring teachers that have been in the excess pool for over nine months–and some have been in the pool for three years. Those teachers who can’t find new placements tend to either have a bad record, present themselves poorly in interviews, or simply do not want to work, since they receive a paycheck in any case. So though teachers are never put in the excess pool for incompetence, they remain there because they are unwanted.

There has been whispers in New York City that contract currently being negotiated will pander to the union agenda, despite Klein’s desire for reform. But if Klein is serious about education reform, he will at least limit the amount of time teachers can sit in the reserve pool–if not abolish it altogether.

Emily Esfahani Smith, a Collegiate Network fellow, is an editorial assistant at THE WEEKLY STANDARD.

By David Frum, CNN Contributor – link to original article

STORY HIGHLIGHTS

• The House bill passed Saturday night protects the fees of trial lawyers, Frum says
• He says states that have capped fees have seen increase in doctors
• When Texas capped fees, lawsuits fell and doctors moved to the state, he says
• Frum: Trial lawyers are benefiting because they provide campaign funds for Democrats

RELATED TOPICS

• Medical Errors and Malpractice
• Association of Trial Lawyers of America
• Health Care Policy
• Personal Injury Law

(CNN) — You’ve heard the saying: “In war, amateurs talk strategy, professionals talk logistics.”

The political equivalent: “Amateurs talk ideology — professionals talk interest groups.”

Small but sophisticated interest groups use big political battles to gain special advantages. Health care reform is, of course, the biggest battle of them all, with trillions of dollars at stake.

On Saturday night with the House vote in favor of the health reform bill, the trial lawyers sliced themselves a nice little piece of that bonanza.

It’s Section 2531 of the bill — to be precise Section 2531(4)b — and it provides as follows:

The new health bill will empower the Secretary of Health and Human Services to make grants to states that reform their medical malpractice systems. There are just two conditions: Those reforms must not “limit attorneys’ fees or impose caps on damages.”

Which is like saying that we’re going to encourage you to develop a personal weight loss plan that includes neither exercise nor changes in diet.

Here’s how Section 2531 works. Over the past decade and a half, states have reacted to abusive lawsuits by imposing various restrictions on personal injury awards.

In California, pain and suffering damages cannot exceed $250,000. Attorneys may collect no more than 15 percent of malpractice awards over $600,000.

The impact of these kinds of reforms can be dramatic. After Texas capped pain and suffering damages at $750,000 in 2003, the number of malpractice lawsuits dropped abruptly. Lawsuits in Harris County (Houston and environs) plunged by 50 percent.

Fewer lawsuits meant lower malpractice premiums. Texas’ largest malpractice insurance carrier cut costs to doctors by 17 percent. Lower insurance premiums attracted more medical professionals to the state. In the 1990s, Texas ranked low in the nation in the number of doctors per person. In the four years after 2003, the number of doctors in the state jumped by 18 percent.

“It was hard to believe at first, we thought it was a spike,” the executive director of the states’ medical board told the New York Times.

Texas’ experience is dramatic, but consistent, with other reforming states. States with damage caps gain more doctors than uncapped states — and the difference is greatest in the most underserved counties within capped states. Capped states have 5.5 percent more OB-GYNs per person in their rural counties than do states without caps.

But the money saved by insurers, doctors and their customers is money subtracted from the pockets of trial lawyers — and those lawyers carry real clout in the Democratic Congress.

The trial lawyers’ national PAC, the American Association for Justice, was the second-biggest source of PAC dollars for Democratic candidates in the 2006 election year: almost $2.6 million. That same year, Iowa’s trial lawyers elected a former president of their association to Congress. Had the National Enquirer been less inquiring, a former trial lawyer named John Edwards might well be serving as attorney general right now.

Huey Long once summed up the professional politicians’ credo:

“Those who support me early will have my close attention when I win office. Those who support me late will have my attention when I win office. And those who oppose me –” and here he’d wink — “they’ll get good government.”

We all know what Long meant by “close attention,” and his old party apparently still lives by his rules. On Saturday, House Democrats have delivered some very “close attention” to their friends in the trial bar. The question is: who will stand up for good government for the rest of us?

The opinions expressed in this commentary are solely those of David Frum.

Editor’s note: David Frum, resident fellow at the American Enterprise Institute, was a special assistant to President George W. Bush in 2001-2002. He is the author of six books, including “Comeback: Conservatism That Can Win Again,” and the editor of FrumForum.com

Hernando de Soto RAUL RUBIERA / RAUL RUBIERA

BY GLENN GARVIN

GGARVIN@MIAMIHERALD.COM

• The Power of the Poor with Hernando de Soto, 10-11 p.m. Thursday, WPBT-PBS 2

Posted on Thursday, 10.08.09

Third World governments come and go, trading monarchy for populism for military autocracy and even for the trappings, at least, of democracy. Yet the poor remain poor: from one to four billion of them, depending on whose estimate you accept. And, as everybody from ACORN to Hugo Chavez will tell you, the movement toward economic globalization doesn’t seem to be cutting their numbers.

In this provocative new PBS documentary, Peruvian economist Hernando de Soto argues that globalization has been irrelevant to the world’s poor because they’ve been systematically locked out by legal systems that force them into a shadow economy where their rights aren’t recognized and their resources don’t benefit them.

In fact, he says in The Power of the Poor with Hernando de Soto, the world’s poor are potentially anything but — they control as much as $1 trillion in unregistered property and unlicensed businesses. But the law prevents them from building their assets into anything beyond a subsistence existence.

“Because they are not legally recognized, because they have no legal identity, because they can’t make contact with the outside world, they are not part of globalization,” de Soto says.

The Power of the Poor is essentially a video version of his 1986 book, The Other Path, well known among economists if not ordinary readers. In the book, de Soto documented the vast so-called informal economy of his native Peru, where millions of poor people live as squatters on unowned land to which they cannot get title and operate businesses without legal licenses or permits.

Without a property title, poor Peruvians can’t use their land as collateral for loans to buy equipment for small businesses or seed for their farms. And no lender will put up money for a business operating without legal permits. Without property rights, the taxi drivers and fruit-stall vendors and the rest of the mini-entrepreneurs of Peru’s informal sector can’t execute contracts, employ other workers or use virtually any tools of a modern economy.

Their twilight existence is not a consequence of capitalism, as Peru’s Marxists argued (the title of de Soto’s book was a jibe at Shining Path, the country’s cold-blooded communist insurgency), but of stifling government rules and bureaucracy. De Soto’s researchers (four law students working under the direction of a veteran attorney) discovered it took them nine months to legitimately open a simple sewing business. And though Peruvian law supposedly allowed squatters to claim unowned land on which they lived, it took de Soto’s team six years and 207 separate legal procedures to obtain a deed.

The bureaucratic tangle that chokes property rights is not unique to Peru, de Soto argues in The Power of the Poor, but a common problem across the developing world. And by preventing as much as two-thirds of the world’s population from either creating wealth or spending it, they victimize the rest of us as well.

“They’re also the world largest market,” de Soto says of the poor. “We need them as much as they need us.”

Commentary: Funny math and the Obama Administration

• On the Web | More columns by Glenn Garvin at The Miami Herald

By Glenn Garvin | The Miami Herald

Nov 5, 2009

Abajo encontrará el artículo en español

We used to hear quite a bit about the Bush administration’s supposed “war on science.”

What about the Obama administration’s war on mathematics?

Every time somebody tries to test the logic of the president’s economic policy using actual numbers, the White House starts screaming about space aliens.

You think I’m exaggerating? When the automotive consumer researcher Edmunds.com released an economic study last week concluding that the government’s cash-for-clunkers giveaway cost taxpayers $24,000 per vehicle sold, the White House accused Edmunds of relying on statistics “covering car sales on Mars.” (Who says we don’t get bang for our NASA buck?)

The Edmunds study compared historical auto sales trends with sales figures during the recession to conclude that the $3 billion cash-for-clunkers program generated only 125,000 sales that wouldn’t have occurred anyway. The Obama administration rebuttal didn’t include a single number, just some hopeful rhetoric about (conveniently unmeasureable) “excitement” generated by cash-for-clunkers.

But even that response was a paragon of math wizardry compared to what the White House had to say when ABC reporter Jake Tapper asked about the cost of the jobs the Obama administration claims to have created with its stimulus programs.

This one started when the White House last week issued a report saying that it created or “saved” 640,000 jobs (economists say there’s no way to measure the latter, but never mind), then immediately contradicted itself and said the real number was probably more like one million.

Tapper, using the more generous figure, divided the one million jobs into the $160 billion allocated by Sept. 30, then asked what seems like a reasonable question:

“Does that mean the stimulus costs taxpayers $160,000 per job?”

An outraged Jared Bernstein, chief economist and senior economic advisor to Vice President Biden, promptly accused the reporter of “calculator abuse.” Janet Reno is no longer attorney general, so that may not be a jailable offense, but it seems certain that Tapper can expect to have all his calculators seized and placed in foster homes.

In case you’re wondering where Tapper went wrong, the Obama administration has not repealed the arithmetical rules of division. (Yet.) Bernstein merely said that the reporter should have included all the jobs the White House hopes to have created or saved by the end of next year.

The White House didn’t even respond to the other interesting bit of stimulus math that was revealed last week. The National Association of Realtors, lobbying fiercely for a renewal of Obama’s $8,000 tax credit for first-time home buyers, said around 1.9 million will receive it this year — and some 350,000 of those buyers couldn’t have purchased a home without it.

Ahem, said the respected economics blog CalculatedRisk.com. Multiplying 1.9 million tax credits by $8,000 equals $15 billion in government subsidies. Divide that by the 350,000 sales generated by the tax credit and it turns out the Obama administration is paying $43,000 per house to stimulate sales.

And for what? The vast majority of these homes have already been built. Their sale won’t put anybody to work.

The only addition they’ll make to the U.S. workforce will be the additional auditors the IRS will have to employ to check the paperwork when the buyers ask for the tax credit on their returns this spring.

That’s why the Obama White House has declared war on math: Because it’s a nettlesome reminder of how balky, inefficient and generally useless its various stimulus programs have been. For the $24,000-per-vehicle cost of the cash for clunkers program, the government could have presented every single one of those new buyers with a brand new Smart Car plus two years’ worth of gasoline to run it. For that matter, why not just draw the names of 125,000 random Americans out of a hat and give each one a check for $24,000?

The answer is that the American economy is not the real target of the stimulus; the American government is.

How many new inspectors and bookkeepers and red-tape-sniffers of all types did the U.S. Department of Transportation add to implement the cash for clunkers program?

How many otherwise unemployable policy wonks have been surgically attached to the open veins of taxpayers to help the government administer its new stakes in the banking and automotive industries?

How many economic planners do we have in Washington these days applying their social-engineering skills to make sure we spend our money in ways that benefit the government’s favored beneficiaries? “Pure mathematics is, in its way, the poetry of logical ideas,” Albert Einstein once said.

Obamamath, on the other hand, is the poetry of pork.

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GLENN GARVIN: En guerra con las matemáticas

By GLENN GARVIN

El Nuevo Herald

Publicado el viernes 06 de noviembre del 2009

http://www.elnuevoherald.com/opinion/story/581670.html

Cada vez que alguien trata de probar la lógica de la política económica del Presidente usando números reales, la Casa Blanca habla de extraterrestres.

¿Creen que exagero? Cuando la firma investigadora de automóviles Edmunds.com divulgó un estudio la semana pasada en el que llegaba a la conclusión de que el programa gubernamental Dinero por Cacharros le costó a los contribuyentes $24,000 por vehículo vendido, la Casa Blanca acusó a Edmunds de confiar en estadísticas “que cubren las ventas de autos en Marte” (¿quién dice que el dinero de los contribuyentes invertido en la NASA es un malgasto?)

El estudio de Edmunds comparó tendencias históricas de ventas de autos con cifras de ventas durante la recesión para concluir que el programa Dinero por Cacharros, con un costo de $3,000 millones, sólo generó 125,000 ventas que de todos modos habrían ocurrido. La respuesta del gobierno de Obama no contenía una sola cifra, sólo una retórica optimista sobre la “emoción” (que convenientemente no se puede medir) generada por el programa.

Pero aun esa respuesta fue un modelo de magia matemática comparada con lo que la Casa Blanca dijo cuando Jake Tapper, reportero de ABC, preguntó sobre el costo de los empleos que la administración de Obama afirma haber creado con sus programas de estímulo.

Esto empezó cuando la Casa Blanca emitió un informe la semana pasada en el que afirmaba que había creado o “salvado” 640,000 empleos (los economistas dicen que no hay forma de medir lo último, pero no importa) e inmediatamente después se contradijo y dijo que la verdadera cifra era probablemente un millón.

Tapper, usando la cifra más generosa, dividió el millón de empleos entre los $160,000 millones asignados el 30 de septiembre, y luego hizo lo que parece una pregunta razonable: “¿Eso significa que el estímulo les cuesta a los contribuyentes $160,000 por empleo?”

Furioso, Jared Bernstein, principal asesor económico del vicepresidente Biden, acusó rápidamente al reportero de “abuso con la calculadora”. Janet Reno ya no es secretaria de Justicia, de manera que eso quizá no sea un delito punible con la cárcel, pero es posible que Tapper pueda esperar que todas sus calculadoras sean confiscadas.

En caso de que usted se pregunte en qué se equivocó Tapper, la administración de Obama no ha abolido las reglas aritméticas de la división. (Todavía.) Bernstein tan sólo dijo que el reportero debió haber incluido todos los empleos que la Casa Blanca espera haber creado o salvado para fines del año próximo.

La Casa Blanca ni siquiera respondió a otro interesante caso de matemática del estímulo que se reveló la semana pasada. La National Association of Realtors, que cabildea ferozmente por una renovación del crédito fiscal de Obama de $8,000 para los que compran casa por primera vez, dijo que 1.9 millones lo recibirán este año, y que unos 350,000 de esas personas no podrían haber comprado una vivienda sin el crédito.

No es así, dijo el respetado blog de economía CalculatedRisk.com. Multiplicar 1.9 millones de créditos fiscales por $8,000 da $15,000 millones en subsidios del gobierno. Si se divide eso por las 350,000 ventas generadas por el crédito fiscal, resulta que la administración de Obama está pagando $43,000 por casa para estimular las ventas.

¿Y para qué? La inmensa mayoría de esas casas ya están construidas. Su venta no le dará trabajo a nadie.

La única adición que harán a la fuerza laboral serán los auditores adicionales que el IRS tendrá que emplear para revisar el papeleo cuando los compradores pidan el crédito fiscal al declarar sus impuestos la próxima primavera.

Por eso es que la Casa Blanca de Obama le ha declarado la guerra a la matemática: porque es un molesto recordatorio de lo ineficientes y en general inútiles que han sido sus diversos programas de estímulo. Por el costo de $24,000 por vehículo del programa Dinero por Cacharros el gobierno podría haber regalado a cada uno de esos compradores un auto Smart nuevo, aparte de más gasolina por dos años. O si no, ¿por qué no haber elegido al azar a 125,000 norteamericanos y darle a cada uno un cheque por $24,000?

a respuesta es que la economía norteamericana no es el verdadero objetivo del estímulo, sino el gobierno norteamericano.

¿Cuántos nuevos inspectores y contadores y burócratas de todo tipo añadió el Departamento de Transporte para implementar el programa Dinero por Cacharros?

¿Cuántos especialistas que no se habrían empleado de no ser por el programa se han adherido a las venas abiertas de los contribuyentes para ayudar al gobierno a administrar su nueva participación en la banca y la industria automotriz?

¿Cuántos planificadores de la economía tenemos en Washington en estos días aplicando sus conocimientos de ingeniería social para garantizar que gastemos nuestro dinero en formas que favorezcan a los beneficiarios del gobierno? “La matemática pura es, a su manera, la poesía de las ideas lógicas”, dijo Albert Einstein. La matemática de Obama, en cambio, es la poesía de la prebenda.

by Jeff Jacoby

The Boston Globe – link to original article

November 4, 2009

Second of two parts (Read Part 1 here).

“MY GUIDING PRINCIPLE is and always has been that consumers do better when there is choice and competition.” So said President Obama in his address to Congress on health care, making an argument for a government-run “public option” to sell health insurance that many Democrats have echoed.

In 34 states, Obama noted, three-fourths of the insurance market is controlled by five or fewer companies. “Without competition, the price of insurance goes up and the quality goes down.” But add a public option “administered by the government just like Medicaid or Medicare,” he said, and competition would revive.

No, it wouldn’t.

A government-run health insurer would radically tilt the health-insurance playing field. It would amount to a new entitlement program, able to undercut the price of private insurance by squeezing hospitals and doctors, reimbursing them at below-market rates. “Just like Medicaid and Medicare,” which also underpay medical providers, the public option would force hospitals and doctors to charge private insurers more. Those insurers, in turn, would be compelled to raise their premiums, eventually losing millions of customers to the government plan.

Obama and other Democrats insist that any public option would have to be self-supporting, properly balancing its premiums and risk and not expecting the government to cover its losses. Sound familiar? The same assurances were made about Fannie Mae and Freddie Mac.

“I have no interest in putting insurance companies out of business,” the president insists now. As a US Senate candidate in 2003, he sang a different tune: “I happen to be a proponent of a single-payer universal health care program. . . . But as all of you know, we may not get there immediately.” Has he changed his mind? Or only his talking points?

More competition among health insurers is a consummation devoutly to be wished. But there are far better ways to get there than a public option.

Here are three:

? Tear down the barriers to buying health insurance across state lines. Under federal law, states are permitted to regulate “the business of insurance” as they see fit, and most of them have seen fit to allow the sale only of insurance policies licensed by their own state insurance commissions. As a consequence, there is no competitive national market for health insurance; there are 50 state markets instead, most of which are dominated by a handful of insurers. This, says Michael Cannon of the Cato Institute, is the “original sin” of health insurance regulation.

When it comes to almost any other product or service, Americans would find a ban on interstate commerce and competition intolerable: Imagine being told that you could buy a car or a computer only if it was manufactured in your state. Consumers in the market for a mortgage are free to do business with an out-of-state lender; those in the market for health insurance should be equally free to do business with an out-of-state insurer.

? Repeal mandatory benefits that make health insurance needlessly expensive. Compounding the lack of interstate competition is the way states drive up the cost of health insurance by making certain types of coverage compulsory. Consumers and insurers should be free to work out for themselves just how comprehensive or limited a policy should be. But state mandates prevent such flexibility by requiring insurance companies to sell a fixed array of benefits that many customers may not want. Individuals seeking plain-vanilla health insurance — a policy that will cover them, say, in case of major surgery or catastrophic illness — may find themselves forced to pay for a policy that also covers acupuncture, in vitro fertilization, alcoholism therapy, and a dozen additional treatments.

When compulsion takes the place of competition, the result is invariably less choice at higher cost.

? De-link health insurance from employment. Nothing distorts America’s health insurance market like the misbegotten tax preference for employer-sponsored health insurance. Until that preference is removed, tens of millions of Americans will continue to rely on their employers’ health plan instead of buying health insurance for themselves, they way they buy every other type of insurance. Fix the tax code, and no longer could insurance companies routinely bypass employees and deal only with their employers. Instead there would be intensive competition for individual customers — and the lower premiums such competition would yield.

Yes, Mr. President, consumers do benefit from choice and competition. The key to both is not more government regulation and control, but less.

(Jeff Jacoby is a columnist for The Boston Globe.)

“Some troubling questions about our government’s ability to manage a medical bureaucracy.”

by Jeffrey H. Anderson

The Weekly Standard – link to original article

Nov 5, 2009

According to 60 Minutes, cocaine trafficking has now given way to Medicare fraud as the number-one illicit enterprise in South Florida. Both 60 Minutes and the Washington Post report that nationwide Medicare fraud now costs American taxpayers $60 billion a year.

The 60 Minutes story is fully of juicy anecdotes about government incompetence. There’s the criminal who says that stealing from Medicare is so “easy” that “it was ridiculous.” There’s the lady who for six years has been telling Medicare officials that strange and extravagant charges keep showing up on her explanations of Medicare benefits–charges that officials still have yet to prevent from accruing, and from being paid by tax dollars. And there’s the man on Medicare who used his own hands and arms to open up his explanation of benefits, only to read that Medicare had been billed–and had paid–for two new (prosthetic) arms on his behalf.

Even 60 Minutes says that the rampant nature of Medicare fraud raises “some troubling questions about our government’s ability to manage a medical bureaucracy.”

Given all of this, it’s no wonder that since 1970 the costs of Medicare have risen over 25 percent more, per patient, than the combined costs of all other health care in America. And that’s even without counting the Medicare prescription drug benefit.

Sixty billion dollars in Medicare fraud is a lot of money, but how can we really put it into perspective? President Obama talks a lot about insurance companies and their “record profits.” Let’s compare those numbers.

Fortune 500 tallies show that last year’s profits for the ten largest private insurance companies in America were $8 billion–combined. Even the single most profitable insurance company didn’t make five percent as much as what Medicare lost to fraud.

It may be surprising that you could multiply the profits of America’s ten largest private insurance companies seven-fold and that Medicare would still have managed to lose more money than they make. But try this one on for size: The Washington Post reports that a high-school dropout in Miami submitted false Medicare claims from her laptop across four years, bilking Medicare out of $105 million. Four of the ten largest private insurance companies failed to make $105 million in combined profits. That’s right: A lone criminal grossed more from Medicare fraud than four out of the ten largest private insurance companies collectively netted in profits.

All of this is important because, as everyone knows by now, the Democrats want to grant the federal government far greater control over our nation’s health-care system, while Republicans want to leave that control in private hands. It turns out that the difference in costs between these two approaches is even greater than the difference between the $60 billion that Medicare loses to fraud and the $8 billion that private insurers make in profits.

The massive Democratic bills in the House and Senate would each cost in the range of $1 trillion. The Republican small bill, similar to the small bill proposed in these pages, would cost about $60 billion–about seven percent as much. The Democratic bills would increase taxes and penalties on Americans by over half a trillion dollars. The Republican bill wouldn’t raise taxes at all. The Democratic bill would be paid for largely by siphoning about $400 billion out of Medicare. The Republican bill wouldn’t touch Medicare.

But these tallies aren’t all that is different between the bills. The Democratic approach is to increase access to health care by imposing government mandates, which in turn would raise costs. The Republican approach is to lower costs, which in turn would increase access. Thus, the Republican bill would meet both of the widely stated goals of health-care reform: It would decrease the number of uninsured and lower the costs of health care. The Democratic bills would address the number of uninsured at the expense of exacerbating health costs.

The 1,500-plus-page Democratic bills would result not only in higher taxes but higher insurance premiums. The 219-page Republican bill would make health insurance more affordable for everyone, across the board.

It would do so by allowing Americans to purchase health insurance across state lines and letting them shop for the best values from coast to coast; allowing small businesses to pool together to buy insurance; allowing private entities to follow the Safeway cost-cutting model of offering lower premiums for healthier lifestyles (which the federal government currently–amazingly–limits); and by preventing the runaway malpractice lawsuits that force doctors to practice costly defensive medicine. Despite felling forests of trees, the Democratic bills would do none of these four things.

The Republican bill would “allow” where the Democratic bills would “require.” The former would increase personal freedom; the latter would restrict it.

For the small minority of Americans who are uninsured because they have prohibitively expensive preexisting conditions–last estimated in a federal government survey as well under one percent of the population–the Republican plan would create Universal Access Programs to expand and reform state-run high-risk pools. Such programs would guarantee that all Americans, regardless of preexisting conditions or past illnesses, would have access to affordable care, without needlessly raising health-care premiums across the board.

Furthermore, the Republican bill would start right away. The Democratic bills wouldn’t kick in until after the next presidential election–although their “10-year” costs include the three years during which they would lie dormant. (So the Democrats are really offering seven years for the price of ten.)

The massive Democratic bills would entrust an entity that can’t keep an eye on $60 billion with much greater control over our entire health-care system.

The Republican small bill, on the other hand, wouldn’t dramatically increase government spending or control; wouldn’t raise taxes, deficits, or insurance premiums; and wouldn’t siphon money out of Medicare. Instead, it would keep our privately run health-care system in place, provide sensible and targeted reforms, and adhere to a guiding principle of medicine: first, do no harm.

If anyone doubts whether the Republican tally of $60 billion in new spending is enough to address our nation’s pressing health-care concerns, remember this: That’s seven times more than the combined annual profits of America’s ten largest insurance companies. You can do a lot with $60 billion a year–if you don’t lose it.

Mr. Anderson, director of the Benjamin Rush Society, was the senior speechwriter for Secretary Mike Leavitt at the U.S. Department of Health and Human Services