I saw a variety of headlines about Howard Schultz, former CEO of Starbucks, running for President as an independent in 2020, which has produced negative reactions in many quarters. This piece is representative of those reactions.
The thing is, it is possible to be more effective on the goals that Howard Schultz has articulated, by operating outside of government, and apart from the ego rewards with being the Commander In Chief, it is also possible to start down this path now, rather than wait two years for the next inaugural.
So I encourage Howard to read my previous post about having an NGO for doing Robin-Hood-like income transfer and for convincing upscale Americans that donating to this effort is a way to practice good citizenship. Indeed, marketing-wise the effort should be called The Good Citizen Project.
Getting that rolling and functional would be a huge work in itself and, once achieved, might be more emotionally rewarding than politics, as there would be none of the sniping, infighting, and gridlock. Further, if the effort did work, then it might be a way for Schultz, or really anybody who led this project, to establish their bona fides for holding high political office.
In Illinois, where I live, we now have our second billionaire governor in a row, J.B. Pritzker. I wish him well, but I wonder if being a wealthy businessperson is good preparation for holding high political office, with you-know-who as the case in point.
So, a Robin Hood income transfer project might remain out of the limelight for some time - at least till it really catches on - but in terms of producing results for the recipients of those income transfers it is apt to do more good and do it sooner.
Why not give it a try?
Monday, January 28, 2019
Monday, January 14, 2019
Socialism Reconsidered Part 6 - A Shadow Government for Income Redistribution....
....Until the Real Government Starts Doing the Job Effectively.
This is Part 6 in an occasional series. In this essay we recapitulate some of the discussion from earlier posts in this series as we take on three issues that are new. One is about learning to be socially responsible (and willingly accept a substantially higher tax burden for the good of the order). The next is about regulatory capture theory. A good case can be made that Congress is captured by certain lobbyists, which prevents Congress from acting in the general interest. A shadow government may then be necessary until this capture can be undone, if indeed it can be undone. The third idea is to reconsider the politics of income redistribution. In the prior essays it was assumed Republicans would shy away from income redistribution and only Democrats would embrace it. It may be time to reconsider this view for the following alternative. Republicans who are tired with Trump might look for ways out of a second term for him. Pursuing an income redistribution agenda might then be a way to achieve that end.
* * * * *
This piece is mainly a reaction to Thomas Edsall's column from last week, The Lobbyists Blocking Nancy Pelosi and Her New Majority. Of course, that majority is in the House only. The Republicans still have a majority in the Senate. So getting progressive legislation passed in the next two years will be a tall order, without taking into consideration lobbyist block behavior. But bills that get out of the House may set an agenda for the next Congress, potentially with full Democratic control. So there clearly is a desire by House leadership to produce a set of aggressive pieces of legislation that will define the near future. Edall's column is meant as a warning shot across the bow for those euphoric Democrats who think that control of the House will itself reverse the direction of Congress, because the lobbyists may hold sway and, if so, it means inaction will continue to be the rule of the day.
But before taking on that argument, I want to get at something else that the piece also argued, that a high-tax agenda on wealthy taxpayers, including many who contribute to the Democratic Party, may be hard to implement. The segment below is taken from Edsall's column. I don't know that what Jesse Rhodes says is perfectly true or not, but here I want to treat it as if that's the case. I've highlighted the parts that are especially relevant.
This makes it appear that the Democrats are stuck in moving ahead on an agenda of income redistribution, even if we disregard the lobbyists. Is there a way to get unstuck? I believe there is. I'm going to sketch some thoughts about how this might be done.
What Is The Ethos?
Where Are We Now?
For the most part, outside of political campaigns people don't talk about their beliefs on matters like personal responsibility, good citizenship, and paying taxes. So at the outset would be some fact finding as video interviews - with the person on the street who is willing to stop and talk with the interviewer, with focus groups chosen for their demographics, and with well known personalities who, because of their name recognition, might attract others to hear their views.
For this to work the interviewer needs a script of questions. Here are some possibilities for the person on the street interviews.
On being a responsible adult:
1) What does it mean to be a responsible adult?
2) Can you give an example where you've behaved as a responsible adult?
3) Does that example typify your behavior or do you often act irresponsibly? You don't have to give an example of where you've behaved irresponsibly if that helps you answer the question.
4) What about other people? Is your impression that they mainly act responsibly or not?
On being a good citizen:
1) Where does good citizenship take place? Is it mainly exercised through voting? Can it happen in the workplace? Or at the school your kids attend? Or in some other social setting?
2) Are you a good citizen? In some particular settings? Why there and not in other settings?
3) What about others in the same settings as you have described? Are they also good citizens?
4) Are you familiar with the terms "free rider" and "shirker"? Do you have some theory as to why others might be a free rider or a shirker?
In a focus group or with a well known personality, where the duration of the conversation might be substantially longer than with the person on the street, one would want to get more depth. So the interviewer would ask both about being a responsible adult and about being a good citizen. Then an obvious follow up would be about the overlap between the two ideas. After that the interviewer would get into learning to be responsible and learning to be a good citizen. Where is that taught? How is it taught? Can the learning continue to happen after we're already adult?
On taxes, the approach needs to be a little different. My guess is that people who would be interviewed have records of their income taxes paid, stored on their computers or in the cloud, but off the top of their heads can't say how much they paid in income taxes or what their average tax rate was. (TurboTax, for example, provides that information in summary form for the previous 5 years.) So getting at specific quantitative information won't work. It is attitudinal information that can be elicited along with some very basic facts about tax payment.
On paying income taxes:
a) Did you file a Federal tax return last year? Assuming the answer is yes, the follow up is: did you prepare the return yourself, did another member of the household do it, or did you hire somebody to do it?
b) Do you keep records of your tax returns?
c) Do you think the tax system is fair? What would make the system fair or unfair?
d) Do you know anything about the taxes paid by others? Those households that are similar to your own? Those who are very rich? Those who are middle class, defined here as those households with income close to the median for the U.S. (The interviewer can give a number for median household income and then suggest that depending on location and cost of living the number should be adjusted somewhat.)
It's a bit difficult to write this part because on the one hand I don't want to anticipate what those people who are interviewed will say, while on the other hand I think there are some basic notions of fairness and privacy that will come out in these conversations. Fairness requires households that are alike to pay similar amounts in taxes - equal treatment. Fairness requires the rich to pay more. I would guess that people will talk about paying their fair share. If they come up with an example where the average tax rate of a rich person is lower than that of somebody else of more ordinary means, they'll surely say that is unfair. The rich person is playing the system some. The other point is that they won't want to share their own tax returns with others, so projecting that outward they will largely say they don't know about the taxes paid by others. Some might then speculate, while others will be reluctant to do so.
Now let me say what I hope to hear. Among those who are reasonably well off, they identify fairness entirely with reference to equal treatment with others and not at all with reference to the absolute amount of taxes they pay. This rules out interviews with "Sonny Capps" type of taxpayers. The reason for this is not that there are no such taxpayers in society. Rather, it is because it's hard to imagine why such taxpayers would willingly participate in a video interview.
The actual production and dissemination of the interview information is beyond me. My hope is that the information would be widely viewed and people will become comfortable with hearing and seeing this information. But I surely lack the expertise for how to achieve this goal. So to make this work others who do have the expertise would need to be brought on to deliver on this.
Are There Some True Believers In The Population?
By true believer in this context I mean people who openly are willing to have their taxes raised substantially now, prior to any educational effort to encourage people in this direction. I'm a true believer this way. I had a strong negative reaction to the Tea Party and started to write blog posts expressing this disapproval beginning in April 2011. The first of these was a tongue in cheek post called Raise My Taxes --- PLEASE! But then I wrote many different pieces on the same theme, though I want to note here that it is not just modifying the tax system, but also modifying the employment relationship and retirement pensions. The most comprehensive piece on this general theme is a rather long essay entitled Rethinking The Social Contract, with the most relevant section of the piece called Social Attitudes and the Social Problem, beginning on page 12. In effect, the emphasis here on income redistribution through the tax system is because some of the other avenues for possible redistribution aren't in place and likely won't be in place for some time to come. True believers understand that and are ready and willing to do their bit to make the system work better.
At around the same time, April 2011, I started a Facebook group called For A More Compassionate And Saner America. I invited a bunch of people I knew to join the group. A good number of them did join. Some invited people they knew. But the friend of a friend chain soon stopped and membership in the group plateaued. We had interesting discussion for a while, but as a way to disseminate these ideas it was not the right vehicle. Several months later, Occupy Wall Street began. In terms of getting people's attention to the inequities of the system, Occupy Wall Street was infinitely better than my Facebook group. But it made common cause among the 99 percent. While shining a light on the uber rich has some benefit, as I've written elsewhere, many of the true believers might not be in that category, yet Occupy doesn't give a mechanism for identifying these true believers, because the entire focus is on what the 1 percent pay in taxes. The hope is that this shadow government approach will identify those true believers early on in the process.
Yet up front, one wonders whether it's possible to identify a sufficiently large group of them to get the shadow government approach up and running. Here's one possibility. There is a group of very rich people who have taken The Giving Pledge, where they promise to give at least half their fortune to philanthropy. If some of them might be convinced that this shadow government approach is philanthropic in spirit, then they might be the ones to jump start the activity. There are some paradoxes here, regarding the difference between giving to charity and paying one's taxes that would need to be addressed, if not totally reconciled. I wrote about this in a post called Mattering Bias. This is a discussion of the issues from that piece, though not a resolution of them.
The pledge itself is rather mild. It specifies neither the recipients of the giving nor the purpose of the gifts. Implicitly, then, it embraces the notion that all such gifts are equally valuable, so the donor is free to choose from among the possibilities. But that might be quite wrong. Suppose, instead, that by coordinating donations and acting in concert the givers can achieve much greater than is the sum of the benefits achieved when they make donations individually in an uncoordinated manner. I will illustrate with a few examples below. But before I do I want to note this issue. If they do act in concert might it be that each individual gift matters less in that case? In other words, if 168 out of the 169 listed on the pledge site acted in concert, could they then achieve the anointed purpose? If so, it doesn't seem that the giving of the 169th donor matters much if at all.
There is thus a kind of free rider problem with getting the group to act in concert, though it is a different sort of free rider problem then is usually described in the public finance literature. Here it is not tax avoidance per se which is the issue. The person is willing to give, as long as the donor can see that the gift matters in an overt way. The person only wants to avoid those gifts where it is not possible to determine that the individual gift matters or where, even if possible, it appears that the individual gift doesn't matter, although the aggregate gift does.
Changing The Ethos
The Shadow Government Program Itself
Here only a very brief overview will be given as the spending side of the program is well described in the previous post in this series, Wage Subsidies and Confounding Expectations, while a basis for the revenue side of the program is given in the post before that's called, Thoughts on Income Redistribution.
Groups of between 500 and 1000 workers who live and work in the same community will be targeted for wage subsidies that will bring their hourly wage up to at least $15/hour and possibly higher. These subsidies will endure for the life of the program - until the Federal minimum wage is raised to $15/ hour (perhaps by continuing to subsidize the work done at companies that are not making huge profits). Groups will be selected via an application process that emphasizes diversity of the various groups - urban/rural, age, occupation, small business or big companies, plus with some sense that there can be local supervision of the program, where the funds ends up with the right people and are not pilfered in route. The total number of groups obviously will be linked to the volume of contributions, but the hope is to get at least one in each state, red or blue, and to have more where there are large communities of people struggling to make ends meet. Some additional funds may be allocated to help recipients with debt relief, out of fear that creditors who are owed by the recipients will swoop in and appropriate the entire amount of the subsidies. That outcome must be prevented for the program to have good effect.
The recipients will be studied regarding how the subsidies impact their quality of life and how they spend the funds. Video interviews with some of the recipients will be done so the public will get a sense of how the program is helping them. To the extent that the program is successful, the hope is that not just donors who participate in the program but also potential donors who might participate will experience the warm glow of giving, as termed by James Andreoni. It is experiencing this feeling, which will change the ethos the most.
On the revenue side, of course the organization will accept all donations, but the idea is to educate well heeled potential donors about how much their taxes would increase if the program were fully taken over by the government (and other government spending, such as a Green New Deal gets supported as well). So it is hoped that the potential donor will report their household income, after which they will learn the amount their taxes would go up. (And the full schedule of income versus tax increase would also be published for those who want to study it.) Then it is hoped, in addition, that they willingly donate the full amount of the recommendation.
The goal would be to produce a virtuous cycle where the good works the program does attracts more donors and where prior donors persist for additional years with program, so the number of donors, and the volume of donations both grow. In turn this would mean the number of groups that are supported also grow and/or there is some within group growth of people receiving the subsidies.
A Related Educational Effort on Windfalls for High Earners
Certain sectors of the economy, most notably healthcare and higher education, have witnessed hyperinflation (prices rise faster than the rate of inflation) in costs over a very long period of time. Those who work in these sectors, and elsewhere in the economy as well, may very well have received a windfall in their earnings as a result. People who work hard at their jobs typically feel they are entitled to their earnings as the fruits of their labor. But thy tend not to acknowledge this windfall effect. If the windfall issue was made more overt to them, they might recognize that some of their compensation is an "economic rent," which means a payment in excess of what is necessary to elicit their participation. If all people doing like work were paid a bit less, so the taxing of the windfall was not viewed as punitive of a particular individual in any way, then people might come to understand that it is reasonable for their tax burdens to be higher.
I wrote about something like this in a post called The Higher Education Salary Compression Function - A Fantasy. The thought there was that highly visible academics, such as Nobel Prize winners and MacArthur Genius Award winners would form a vanguard to make salary compression something others would be willing to follow in. Likewise, I envision finding leaders in the various sectors who willingly will talk about their own compensation, how even after adjusting for inflation it is greater than those who did like work 20 or 30 years earlier, so they are willing to pay more in taxes as a result. This message would seem novel, as there has been so much anti-tax rhetoric that the normal expectation would be everyone wants to lessen their own tax burden. The purpose of the education effort would be to confound those expectations.
A Different Appeal - Changing Our National Politics
Until this post in the series, I assumed that it would be Democratic voters who would participate in any voluntary income redistribution program and only they would vote for converting such a scheme into a permanent government program. But I now wonder if there are many business types who have been loyal Republicans yet are completely burnt out on Trump that they might be willing to contribute as a donor if they thought it would help to defeat Trump in the 2020 election.
So, among those who are part of one of the groups that receive subsidies, might the subsidies impact their views about national politics? Low wage earners tend to have low voting participation, which would be an argument that this won't matter much directly. This is an argument that says the program will have little political consequence. Here is an alternative argument. If many Trump supporters are in his corner because of a grievance - the system is rigged against us and the elites either don't care or they're the ones who are rigging the system - then if the program is highly visible and is evidently growing, it would confound that belief. If so, some current Trump supporters might switch their allegiance. In turn, upscale voters might then willingly donate to the program, not because they feel the warm glow of giving, but because they want somebody else in the White House.
I came at these ideas with the more pure motives described in the previous sections and the earlier pieces in this series. But we seem so focused on the horror that is our national politics now, that helping to end this melodrama might serve as a more immediate motivation for many well heeled voters, of either party, even if pointing it out is rather opportunistic of me.
What of Lobbyists And Politics as Usual?
Even if in the 2020 election the Democrats take control of both Houses of Congress and the White House too, the shadow government program might stay in the shadows for quite a while thereafter, for fear the legislators will get captured by the lobbyists, regardless of party affiliation, and thus legislation to make the program a fixture of government will stall. In looking back at the history of passage of the Affordable Care Act, it faced this same issue and it was a huge lift to get it done. But they had to throw out the public option in the process. This shadow government program, if it is absorbed by the government, is all pubic option. That would make it seem even harder to get it passed.
At issue, then, is whether lobbying reform is possible first. The little I know about this is from watching Season 7 of the West Wing, where it is an issue in the episode called Requiem. Edsall's column makes lobbying reform seem essential, but students of real politic need to be skeptical that strong reforms would be put in place. I have no sense of this now other than to argue that it seems a necessary intermediate step.
But maybe, just maybe, the lobbyists also have been shaken up by Trump and they might reasonably conclude they brought this on themselves. The system is broken, yes, and they are the ones who broke it. Does that realization lead to self-reform even in the absence of legislation? One can only hope.
Wrap Up
The intent of this post was to sketch how a shadow government for income redistribution might work and be used not just to benefit recipients but also the change the minds of the potential donors regarding their willingness to be taxed. This sketch is still quite far from a plan for implementation, which would require a lot more detail, charismatic leadership to get the ball rolling, a great communication and marketing strategy to keep the program in the public eye, and a substantial amount of good luck that the early groups end up being successful.
I want to note that our national politics does talk about income redistribution in a Robin Hood manner, so it is meant to be coercive. This is why there is such focus on the 1% or even just on the 0.1%. That focus very much makes it them against us, class warfare if you will. The possibility of voluntary income redistribution winning the day will seem like a pipe dream to many folks as a consequence. Yet a different purpose of this piece is to get readers to entertain the idea that voluntary income redistribution is plausible.
In my mind, voluntary income redistribution is also preferable to the coercive form because, to use a Star Wars metaphor, even if the Force is with you, the Empire will strike back. If we can avoid the tit-for-tat cycles that will be inevitable under a coercive approach and produce a stable form of income redistribution, that would be much better. My hope then is that this pipe dream might become a reality as some others who are in a position to make it work come to see things the same way I do.
Sunday, January 06, 2019
My Wish List for How Democrats Should Talk About Taxation and Income Redistribution
I have been slowly reading Hillary Clinton's book, What Happened, and will probably finish it later today. The stuff that I want to talk about is in the first half of the book, so I'm ready to talk about it now. More or less at the same time I've been reading through the essays that are Sidney Award winners, David Brooks annual suggestions for interesting pieces to read. I'm done with Part I and still have a couple to go in Part 2. But I've read all the essays that are relevant for this post. And I've been reading other pieces as well, from the NY Times and the New Yorker for the most part, with a few that catch my eye which are recommendations from Pocket, and maybe something that a Facebook friend posts. I also want to specifically react to Paul Krugman's latest column, which I had some issues with.
Let me begin with a very high level and over simplified version of things, just to get us started. Many people in America are hurting, a big part of which is lack of economic opportunity, and that is compounded by adverse social consequences (opioid addition, for example) that are at least partly caused by the lack of economic opportunity. To remedy the situation, the rich need to contribute more in taxes to help provide economic opportunity for those who are hurting. I believe most Democrats can agree with this much. Getting more depth and detail is where a variety of issues arise.
1. Income redistribution is inherently ethical. Don't hide the ethical discussion. Bring it front and center.
Let me take on Krugman's piece here, which seems to offer a simple way to consider income redistribution without getting stuck in messy ethical questions. The problem is that the approach he used, based on marginal utility of income, is bogus in my view. When I was in grad school, we were taught that interpersonal comparisons of utility are not possible. For the moment, let's say otherwise. If you and I are allowed to have different utility functions and I'm richer than you, diminishing marginal utility in itself doesn't guarantee that my marginal utility of income is lower than yours. It could go the other way, in which case would we really want you to make an income transfer to me? Alternatively, if we all have the same utility function, then that would imply we should have equal incomes after the transfer. Do we really believe that?
Now it is true that the paper by Diamond and Saez that Krugman cites uses a social welfare function that does add up the individual concave utility functions. This is part and parcel of what the literature on optimal taxation does and Diamond and Saez are both eminent economists, so we shouldn't dismiss what they do lightly. I will get back to this below.
In my view of things, if people are hurting then you try to help them, but the motivation to help others is better conceived from other than an economic perspective. I like to talk about social conscience. Social conscience means that you help others who are in trouble. But, and this is where it differs from the optimal tax stuff, if you and I both agree that you are doing okay and my income is higher than yours, then I have no reason to give income to you. You should do fine on your own without the income transfer.
Now let's go a step or two backwards and consider the process by which the incomes are determined.
Philosophers may talk about designing a system and then appeal to something like Rawl's Veil of Ignorance to get at what is fair. If the process is fair, who then should quibble with how the income distribution turns out? Do note that the Rawls approach is maximin - it makes the worst off in society as well of as possible. If that worst off person is not in trouble, then social conscience would say leave well enough alone - no income transfers here. But if that worst off person is hurting, then there is case for income redistribution, even with a fair process.
Many conservatives believe in something more extreme, the just-world hypothesis, where the process is assumed fair (without testing whether that is true or not) and the outcomes are fine, no matter how badly the worst off person is doing. It's unclear how people who subscribe to the just-world hypothesis can have their world view changed. But let me offer this. Since I accept Daniel Kahneman's precept WYSIATI (What You See Is All There Is), it would be necessary not just to amass evidence of the unfairness of the process or that the worst off are hurting, but to make that evidence sufficiently visible that these people do see it. This seems like a tough sell to me, as it is far too easy for them to turn a blind eye.
Now let me get back to Diamond and Saez and optimal taxation. The methodology with a social welfare function that is maximized, subject to various incentive constraints, is useful for cases where the worst off definitely will be hurting, to elucidate other reasons for not equalizing income (to provide incentives for income generation). The methodology is something that economists are comfortable with. But the general public is not and I believe making the methodology evident to the general public is not helpful.
Let me illustrate. Occupy Wall Street gave us the language of the 1% at the top of the income distribution versus everybody else. In What Happened, Hillary Clinton talks about taxing the 1% (I don't believe she said by how much) and then use the proceeds to fund the various policy proposals (infrastructure investment, for example) that she discusses. But some policy suggestions she dismisses because "she couldn't make the numbers work." So, one wonders whether the rates on the 1% should go up even more, or if maybe it should be the 5% or the 10% who see their taxes raised, so other policy initiatives would become affordable. Indeed, if the redistribution is justified along ethical lines, then the right thing to do would be to identify the minimum income where households are not hurting and then raise taxes on all households about that minimum. Elsewhere I've suggested that boundary is about the 20%, where household income is roughly double median household income.
2. This is more than just ethics, however. This requires leadership from the politicians to get voters to accept the redistribution as a good thing, even if they pay more in taxes.
I believe that upscale Democrats have been co-opted by all the right wing anti-tax rhetoric, so one reason why Hillary Clinton talked about only taxing the 1% is that most of us voters aren't in that segment of the income distribution. It doesn't take much to support Robin Hood income redistribution if you're on the sidelines as neither a donor nor as a recipient. It takes more character to willingly participate if you're being asked to be a donor. This is the ethical argument I really wish Democrats would advance. Above that minimum threshold, the increase in taxes can follow standard progressive taxation principles, but now we're talking about a much greater number of households who will see their tax burden raised somewhat. There is clearly a political risk in advocating for this, as some of those households may not base their votes on social conscience, but instead focus solely on selfish considerations. In effect, what I'm arguing is that Democrats have to openly denounce such selfishness among the very comfortable, as well as among the uber rich. Real leadership would deliver that message in an effective manner.
3. There is a different issue with the optimal tax literature about defining the population that gets aggregated into the social welfare function.
Consider these two possible populations. The first is all households. The second is only those households who vote. If there were universal voting, these populations would be identical. But we are nowhere close to universal voting at present and household income is a predictor of who votes now. So instead of a Rawls solution, we get something like - maximize median household income. If you look at Democratic Party rhetoric, it champions the middle class, but says little about the poor. At present many in the middle class are hurting, which is why there is this urgency towards aggressive policies to help them. If and when the Democrats are able to produce consistent majorities, maybe then we'll be able to return to LBJ's War on Poverty. Now, perhaps it is possible to implement policies that help both the poor and the middle class. Beyond that, political feasibility rules out further income redistribution.
4. A different political reality is that the electorate seems to swing one way, then another. Even if the Democrats gained control of both houses of Congress and the White House too in 2020, how long will it last?
Obamacare passed without a single Republican vote, and the Republicans have worked hard to undo it since. Should it be anticipated that whatever the Democrats do when they have control will be undone when the Republicans are next in power? Or might there be a way to provide for some durability of policy even in the event of regime change?
I confess not to know the answer here. But the optimal tax literature doesn't worry about this sort of thing. It might be argued that less drastic changes in tax policy have a better chance to endure party regime change. At a minimum, I think this sort of thing should be argued out. Stability of a policy is a good in itself. The regime changes that induce cycles in policy are to be discouraged.
5. Finally, and I don't believe this is controversial at all, while it is fairly easy to find information about household income distribution online, for example Wikipedia provides data from 2014, and this site provides more recent and more granular data, I don't believe you can find similar information that includes after tax income as well. Note that these sites rely on data provided by the Census, while the after tax income data would have to be provided by the IRS. If we're going to talk about tax policy, we really should see what the current situation looks like.
Warren Buffet famously had a lower average tax rate than his secretary, who had orders of magnitude lower income. The marginal tax rates have progressivity to them, but long term capital gains are taxed at a lower rate than earned income and the fraction of income that is unearned rises with income. Also note that capital gains are taxed only when the asset is sold. If the household retains the asset but the value goes up, there is income generated but no tax at all. Rich people time the sale of their assets to minimize their tax burden. Likewise, rich people may have access to a wide variety of tax deductions that the rest of us can't claim.
So there is a policy discussion that needs to occur about these issues and the best way to raise taxes on the rich. This issue should be considered in light of the discussion in point (1). Any such discussion should be informed by knowledge of where we currently stand. There is a sense that the current system is unfair, but that belief is supported by anecdotal information only. Lets get better data so we understand the situation more clearly.
Conclusion
One reason I wrote this post is that a friend from high school posted a link to Krugman's piece in Facebook and because he is Nobel Prize winner, implicitly asserted that everything he says must be true. Usually I think Krugman is good on taking economic issues and making them understandable to non-economists. But equating marginal utilities in a social welfare function is not the way to get non-economists to think about income redistribution. Talk about the ethical imperatives directly. People will understand this on an ethical dimension. That brings in philosophy as well as economics.
Then, politics matters too. It matters quite a lot. So while an economic analysis a la Diamond and Saez can be helpful, it should not be taken as the last word. The issues need to looked at from several different perspectives.
I want to bring up one more point and then close. When I read about Hillary Clinton's proposals during the campaign, I had a sense that they were right in the type of programs she came up with, but they were insufficient in their intensity to address the issues at hand. This issue of intensity of programs is related to how much taxes are raised on the rich. Recently Krugman had a different column where he argued we shouldn't rule out deficit finance of some programs and I agree with that. Clinton never proposed deficit financing at all. But, truthfully, we don't know how intensive the programs need to be to get all the people who are hurting now to be functioning well again, and we're in this odd world where unemployment rates are low, but so is labor force participation, so I believe there needs to be learning by doing in program implementation to find out what works. That will require some patience, especially for those households who have seen their taxes go up. I hope that people don't conclude that a quick fix is out there, but I'm afraid the political rhetoric encourages that.
Let me begin with a very high level and over simplified version of things, just to get us started. Many people in America are hurting, a big part of which is lack of economic opportunity, and that is compounded by adverse social consequences (opioid addition, for example) that are at least partly caused by the lack of economic opportunity. To remedy the situation, the rich need to contribute more in taxes to help provide economic opportunity for those who are hurting. I believe most Democrats can agree with this much. Getting more depth and detail is where a variety of issues arise.
1. Income redistribution is inherently ethical. Don't hide the ethical discussion. Bring it front and center.
Let me take on Krugman's piece here, which seems to offer a simple way to consider income redistribution without getting stuck in messy ethical questions. The problem is that the approach he used, based on marginal utility of income, is bogus in my view. When I was in grad school, we were taught that interpersonal comparisons of utility are not possible. For the moment, let's say otherwise. If you and I are allowed to have different utility functions and I'm richer than you, diminishing marginal utility in itself doesn't guarantee that my marginal utility of income is lower than yours. It could go the other way, in which case would we really want you to make an income transfer to me? Alternatively, if we all have the same utility function, then that would imply we should have equal incomes after the transfer. Do we really believe that?
Now it is true that the paper by Diamond and Saez that Krugman cites uses a social welfare function that does add up the individual concave utility functions. This is part and parcel of what the literature on optimal taxation does and Diamond and Saez are both eminent economists, so we shouldn't dismiss what they do lightly. I will get back to this below.
In my view of things, if people are hurting then you try to help them, but the motivation to help others is better conceived from other than an economic perspective. I like to talk about social conscience. Social conscience means that you help others who are in trouble. But, and this is where it differs from the optimal tax stuff, if you and I both agree that you are doing okay and my income is higher than yours, then I have no reason to give income to you. You should do fine on your own without the income transfer.
Now let's go a step or two backwards and consider the process by which the incomes are determined.
Philosophers may talk about designing a system and then appeal to something like Rawl's Veil of Ignorance to get at what is fair. If the process is fair, who then should quibble with how the income distribution turns out? Do note that the Rawls approach is maximin - it makes the worst off in society as well of as possible. If that worst off person is not in trouble, then social conscience would say leave well enough alone - no income transfers here. But if that worst off person is hurting, then there is case for income redistribution, even with a fair process.
Many conservatives believe in something more extreme, the just-world hypothesis, where the process is assumed fair (without testing whether that is true or not) and the outcomes are fine, no matter how badly the worst off person is doing. It's unclear how people who subscribe to the just-world hypothesis can have their world view changed. But let me offer this. Since I accept Daniel Kahneman's precept WYSIATI (What You See Is All There Is), it would be necessary not just to amass evidence of the unfairness of the process or that the worst off are hurting, but to make that evidence sufficiently visible that these people do see it. This seems like a tough sell to me, as it is far too easy for them to turn a blind eye.
Now let me get back to Diamond and Saez and optimal taxation. The methodology with a social welfare function that is maximized, subject to various incentive constraints, is useful for cases where the worst off definitely will be hurting, to elucidate other reasons for not equalizing income (to provide incentives for income generation). The methodology is something that economists are comfortable with. But the general public is not and I believe making the methodology evident to the general public is not helpful.
Let me illustrate. Occupy Wall Street gave us the language of the 1% at the top of the income distribution versus everybody else. In What Happened, Hillary Clinton talks about taxing the 1% (I don't believe she said by how much) and then use the proceeds to fund the various policy proposals (infrastructure investment, for example) that she discusses. But some policy suggestions she dismisses because "she couldn't make the numbers work." So, one wonders whether the rates on the 1% should go up even more, or if maybe it should be the 5% or the 10% who see their taxes raised, so other policy initiatives would become affordable. Indeed, if the redistribution is justified along ethical lines, then the right thing to do would be to identify the minimum income where households are not hurting and then raise taxes on all households about that minimum. Elsewhere I've suggested that boundary is about the 20%, where household income is roughly double median household income.
2. This is more than just ethics, however. This requires leadership from the politicians to get voters to accept the redistribution as a good thing, even if they pay more in taxes.
I believe that upscale Democrats have been co-opted by all the right wing anti-tax rhetoric, so one reason why Hillary Clinton talked about only taxing the 1% is that most of us voters aren't in that segment of the income distribution. It doesn't take much to support Robin Hood income redistribution if you're on the sidelines as neither a donor nor as a recipient. It takes more character to willingly participate if you're being asked to be a donor. This is the ethical argument I really wish Democrats would advance. Above that minimum threshold, the increase in taxes can follow standard progressive taxation principles, but now we're talking about a much greater number of households who will see their tax burden raised somewhat. There is clearly a political risk in advocating for this, as some of those households may not base their votes on social conscience, but instead focus solely on selfish considerations. In effect, what I'm arguing is that Democrats have to openly denounce such selfishness among the very comfortable, as well as among the uber rich. Real leadership would deliver that message in an effective manner.
3. There is a different issue with the optimal tax literature about defining the population that gets aggregated into the social welfare function.
Consider these two possible populations. The first is all households. The second is only those households who vote. If there were universal voting, these populations would be identical. But we are nowhere close to universal voting at present and household income is a predictor of who votes now. So instead of a Rawls solution, we get something like - maximize median household income. If you look at Democratic Party rhetoric, it champions the middle class, but says little about the poor. At present many in the middle class are hurting, which is why there is this urgency towards aggressive policies to help them. If and when the Democrats are able to produce consistent majorities, maybe then we'll be able to return to LBJ's War on Poverty. Now, perhaps it is possible to implement policies that help both the poor and the middle class. Beyond that, political feasibility rules out further income redistribution.
4. A different political reality is that the electorate seems to swing one way, then another. Even if the Democrats gained control of both houses of Congress and the White House too in 2020, how long will it last?
Obamacare passed without a single Republican vote, and the Republicans have worked hard to undo it since. Should it be anticipated that whatever the Democrats do when they have control will be undone when the Republicans are next in power? Or might there be a way to provide for some durability of policy even in the event of regime change?
I confess not to know the answer here. But the optimal tax literature doesn't worry about this sort of thing. It might be argued that less drastic changes in tax policy have a better chance to endure party regime change. At a minimum, I think this sort of thing should be argued out. Stability of a policy is a good in itself. The regime changes that induce cycles in policy are to be discouraged.
5. Finally, and I don't believe this is controversial at all, while it is fairly easy to find information about household income distribution online, for example Wikipedia provides data from 2014, and this site provides more recent and more granular data, I don't believe you can find similar information that includes after tax income as well. Note that these sites rely on data provided by the Census, while the after tax income data would have to be provided by the IRS. If we're going to talk about tax policy, we really should see what the current situation looks like.
Warren Buffet famously had a lower average tax rate than his secretary, who had orders of magnitude lower income. The marginal tax rates have progressivity to them, but long term capital gains are taxed at a lower rate than earned income and the fraction of income that is unearned rises with income. Also note that capital gains are taxed only when the asset is sold. If the household retains the asset but the value goes up, there is income generated but no tax at all. Rich people time the sale of their assets to minimize their tax burden. Likewise, rich people may have access to a wide variety of tax deductions that the rest of us can't claim.
So there is a policy discussion that needs to occur about these issues and the best way to raise taxes on the rich. This issue should be considered in light of the discussion in point (1). Any such discussion should be informed by knowledge of where we currently stand. There is a sense that the current system is unfair, but that belief is supported by anecdotal information only. Lets get better data so we understand the situation more clearly.
Conclusion
One reason I wrote this post is that a friend from high school posted a link to Krugman's piece in Facebook and because he is Nobel Prize winner, implicitly asserted that everything he says must be true. Usually I think Krugman is good on taking economic issues and making them understandable to non-economists. But equating marginal utilities in a social welfare function is not the way to get non-economists to think about income redistribution. Talk about the ethical imperatives directly. People will understand this on an ethical dimension. That brings in philosophy as well as economics.
Then, politics matters too. It matters quite a lot. So while an economic analysis a la Diamond and Saez can be helpful, it should not be taken as the last word. The issues need to looked at from several different perspectives.
I want to bring up one more point and then close. When I read about Hillary Clinton's proposals during the campaign, I had a sense that they were right in the type of programs she came up with, but they were insufficient in their intensity to address the issues at hand. This issue of intensity of programs is related to how much taxes are raised on the rich. Recently Krugman had a different column where he argued we shouldn't rule out deficit finance of some programs and I agree with that. Clinton never proposed deficit financing at all. But, truthfully, we don't know how intensive the programs need to be to get all the people who are hurting now to be functioning well again, and we're in this odd world where unemployment rates are low, but so is labor force participation, so I believe there needs to be learning by doing in program implementation to find out what works. That will require some patience, especially for those households who have seen their taxes go up. I hope that people don't conclude that a quick fix is out there, but I'm afraid the political rhetoric encourages that.
Saturday, January 05, 2019
Ageism
I am writing this post mainly from seeing a headline about a potential pending crisis - birthrates have been declining in the U.S. at a time when they are already below the replacement rate. The implied issue is about Social Security, Medicare, and other "pension systems" (such as the one for public employees in Illinois), which have mainly a pay as you go aspect, where the recipients benefits, in aggregate, line up more or less with the contributions from working people. This works beautifully in theory, as articulated by Samuelson, when we are in a steady state, so the relative population weights of retirees and workers remain constant, as do the benefits for retirees and the earnings of workers. The decline in birth rates seems to muck up this balance, putting an increasing burden on current workers to contribute, so higher FICA taxes for them, and/or the system itself ends up going into deficit and eventually goes belly up.
To this doom and gloom scenario, one wonders whether there are accommodations that can be made to keep things in balance. Some might recall that in the early Bush II years there were plans to privatize Social Security, to make it more like a glorified 401K plan and less like a defined benefit pension. There was also discussion of raising the retirement age. Both of these proved to be too bald as solutions, so ultimately were defeated.
Yet that those particular suggestions failed doesn't mean there aren't other potential accommodations that might succeed. If so, then it is incumbent on us to do social experiments to learn about what might work. Pretty early on in this blog I wrote about one such hypothetical that intrigued me at the time. The post was called Second Careers and K-12. The underlying idea is that those who had been mid to high level executives in their first career, but have since plateaued in that work, might reinvent themselves by teaching (the students and/or their teachers), and this would be an interesting way to attract high caliber talent into teaching and also to combat relatively low teacher pay, as these second careerists might be drawing some sort of pension from the first job, so their pay as teacher might be thought more as recognition than as compensation. I am still intrigued by this idea, but I want to note that it hasn't gone anywhere since I wrote that post, more than a dozen years ago. And I'm intrigued by other potential suggestion of the same ilk. More on that will follow.
But the type of experimentation that is needed here doesn't seem to be happening and indeed, if my own experience since retiring from the University of Illinois in summer 2010 is any indication, there are blockages in place to prevent such experimentation. Those blockages are what I mean by ageism in my title. Further, recently things seem to be getting worse. I will gripe a little about that, but mainly want to suggest some alternatives as to how things might improve.
Now a little aside to consider service work, where there is no evident output (i.e., no widgets to count) for measuring productivity but where the recipients of the service have some sense of its value for them. Teaching fits here. How much students learn, particularly in upper level college classes where there is no standardized exam to gauge learning, is difficult to measure by those outside the class. Indeed, outsiders to the class may not be able to measure the teaching input - how well prepared the instructor is, how much time the instructor spends interacting with students, and how flexible the instructor is when a student poses an idiosyncratic need as to whether that need will be accommodated. In practice, service work when well done has a strong element of gift exchange to it. (See Akerlof's paper Labor Contracts as Partial Gift Exchange. I've explicated this model so it is intelligible to the non-economists in a blog post called The Liberal View of Capitalism.) Since gift exchange may be alien terminology to most people, you can think of it as volunteer work. With service work, the paid work and volunteer work get jumbled together.
To this I want to add the following. While it is difficult to measure the teaching input, it is not impossible. One way to do that would be to have focus groups with some students in the class during the semester, this so the students could opine about how the class influences their own learning. In my case, where I have students blog out in the open, I comment on those posts, and the students respond to those comments, reading that would be informative about my teaching input. But it is my experience that we don't do measures like this at all. Some shirking in teaching does get monitored - so if an instructor is very late for a class or chronically late for several classes, that might be reported to the department head. But other shirking (using a publisher's test bank and not writing exam questions of the instructor's own creation) goes completely unnoticed. The point here is that if you wanted to encourage the volunteer component to the work, you'd likely need to do some monitoring that is not present in the current way we go about things.
Now, cycling back to the original issue, if more mature employees partially did paid work and partially did volunteer work, with the latter compensated with some sort of pension payment accrued from when the employees were more junior and were doing full time paid work, then the contributions to the retirement system that we associate with paid work might be brought into balance if the fraction of paid to volunteer work adjusts gradually as workers mature. Arithmetically, it is clear this can happen. Functionally, it is less obvious that this is do-able, with the volunteer part evidently being productive. This is precisely where we need experimentation to reveal what is possible.
I want to close this section by flipping the discussion from the needs of mature employees to the needs of students. The type of experimentation mentioned above should happen where there is a double-coincidence of needs and where those needs aren't otherwise being addressed. One prominent example, students need to develop soft skills. An argument being increasingly made is that this generation of students, with their heads always focused on their phones and computer screens, need lots of practice with face-to-face interaction. Students, particularly in their first year when they take mainly large lecture classes, need a sense that the institution cares about them. Many students I've taught since retiring believe the exact opposite. They develop a nihilistic personal philosophy as a consequence and become quite cynical about life. We should want to combat that, if we can. Further, most students want to have a personal relationship (on an intellectual level) with some professor. Private universities exist, with their much higher tuition, in good part because of an increased likelihood of that type of personal interaction. Public universities, facing budget pressure, should nevertheless try to provide those opportunities where they can.
* * * * *
Now I want to talk about some blockages that I've experienced at Illinois and what I'd like to have seen as an alternative.
I have twice volunteered to teach a class for free. In each case I was turned down. In both cases it was a first-year seminar class. One was Rhet 105, which satisfies the Composition I Gen Ed requirement. The other was a class in Economics, the topic to be determined, perhaps a small section version of principles or maybe a special topics class. My offers to teach for free were too out of the box, so were readily dismissed. I should add that I have a colleague who was a high level administrator at another university and when she was dean of their college of arts and sciences she did teach freshman rhetoric. So that idea I got from her. I had taught a Discovery Section of Econ 102 way back when, I believe in 2002, but at the time I didn't have it in my head to use the course to shape how the students go about their learning in the rest of their studies. The reason for wanting to try it this time around would be to do exactly that.
Having been an administrator for some time, I can imagine these sort of out of the box requests difficult to manage. What sort of precedent would they set? Could that create problems down the road? Also, in the Rhet 105 case, the instructors are all graduate students in Writing Studies and they are taking a graduate seminar concomitantly with teaching the introductory rhetoric class. I didn't want to take that graduate seminar, so that might have created some issues then and there for the course director.
As one-offs it is hard to make a case for doing what I proposed. As a more regular practice, however, it might be something for the institution to consider, having faculty teach first-year classes that they don't regularly teach, as an unpaid overload, or getting retirees to do likewise on a volunteer basis. For the rhetoric class in particular, I consider myself an intelligent amateur. I never took courses on writing when I was in college, yet I care about writing a lot, and I've now gotten quite a lot of experience in teaching with blogs, so can report it is definitely not just about the writing but also how students learn to make personal connections to the subject matter they are studying. So, perhaps arrogantly, I believe that if I had been given this opportunity my section would be better than the typical section.
I've had a different experience, while I was still working full time, of teaching a special topics class for the Campus Honors Program. The class was called Designing for Effective Change. The class was listed as either CHP 395 or CHP 396, with the latter section approved to fill the Composition II requirement. I learned then that these CHP classes have to at least give the option of filling some Gen Ed requirement for the students, in order for them to be able to fit the course into their schedules. In this case the Director of CHP ran some interference to get the course approved for Comp II. Based on that experience, my belief is that the type of experimental teaching I wanted to do is possible, but requires some high level person in the middle to enable it.
Let me turn to the other blockage, which appears far more systematic and to me is far more insidious. It seems that the College of Liberal Arts and Sciences and maybe the entire Campus is moving away from hiring retirees for teaching. The reasons for this, as far as I can tell, are two-fold, both financial. One is the matter of double dipping. If the retiree is already getting an annuity from the state, getting paid some salary in addition is bad form. There are already limits in place to the magnitude of the double dipping. Now it appears it is being eliminated altogether, which is why I didn't teach this past fall.
The other issue, one I'm more sympathetic too, is that when hiring a retiree, that person doesn't contribute to the retirement system. In contrast, full time employees have 8% of their salaries withheld as contribution to the retirement system. So teaching with a retiree under contract limits contributions to the retirement system that would have occurred if a full time instructor were teaching the course instead. Note that this issue is also there when a doctoral student ends up teaching a class under contract or when a visiting faculty member teaches. Here I want to consider a possible work around that makes sense to me.
Departments who hire under contract a person to teach a course would face a tax that they have to pay the campus. The tax would be .08/.92 of whatever they are paying that person. The campus would then contribute that tax to the retirement system - on a voluntary basis as this is not mandated by law. This would make the contribution to the retirement system not depend on who is doing the teaching, so that could be determined by other more relevant criteria (like who would teach the class well). Invariably retiree pay for teaching would go down, but might still be enough to induce the person to teach. To me this makes more sense than a total prohibition on retiree teaching, especially given my discussion earlier about voluntary work being bundled with paid work.
Let me add something here that may not be possible, but I'll mention it, because it counts in with the type of experimentation I'd like to see that I discussed in the first section. That is, retirees themselves might voluntarily opt to have their retirement pay taxed (rebated to the retirement system). There are two reasons why this might make sense, and I'm using myself as an example in each case. I retired early, at age 55. My pension benefits depend on my years of service and my salary near when I retired, but not my age. It is reasonable to think that pension benefits should be lower for people retiring early. Second, I was a reasonably well paid administrator in the College of Business when I retired and there is a COLA on my pension benefits of 3% per year, more than the rate of inflation in that time period and more than the rate at which the campus gave salary increases to those still working. This is a different imbalance that might be at least partially corrected. And if these imbalances were corrected, then the double dipping issue might not seem so dire.
Would there be some headaches in trying to move to these alternatives? Of course there would be. And they are not my headaches, to be sure. So, on the one hand, I'm reluctant to be too critical about these decisions. But my sense of these things is that these decisions are being driven by budget concerns for the university - the funding from the state will never get back to what it once was - but not at all about the need for the university to be a leader in solving the larger demographic issue for society overall due to declining birth rates. I think we need to get out of the mindset that individual faculty in their labs do research, but administrators don't, they just make the trains run on time. The administrators need some forward thinking about society overall, not just their own institution, and try to come up with solutions that might work for both.
* * * * *
I want to complete this exercise by talking about volunteer activities I've done on campus since retiring and how they relate to teaching.
I've mentored students, some through a campus program called Illinois Promise, where the mentee is matched to mentor at the outset, and I've also done mentoring where the mentee previously took a class from me and the mentoring was arranged informally near when the course was over. In the latter case, in fact, I aimed to have a discussion group, with a few students, which if there is critical mass is more satisfying to me than the one-on-one mentoring, because the students get a boost from each other as well as from me and they tend to relax more readily as a result. Even when there is only one student, it is easier when the student has already had my class. The prior knowledge means many implicit assumptions have already been validated.
Of course, it is possible to have a successful relationship with a mentee in Illinois Promise. And the social need may be greater there - the mentoring might increase student retention for first year students, especially the I-Promise scholars who are from low income families. But I've found that after a while those relationships tend to hit a wall. The discussion gets repetitive. And I seem to be like a broken record on the same point - go to office hours for your courses and let the instructor get to know you. I don't want to be their mother, but segueing to philosophy of life discussions is hard to do, so being a surrogate mother is the likely outcome after a while.
I have also supervised some students in independent study classes, which the university treats as a volunteer activity. Where this has worked reasonably well, the students had performed quite well in the class they took from me. I had one experience where I accepted a middling student of mine for an independent study. I was quite critical of the first piece of work he showed me, as I felt he entirely misread (really ignored) the article I had him read. He dropped the class soon after that. I have gotten multiple requests from students I had never met to supervise them in some independent study. I declined in each case. It's simply too much to ask that we learn about each other's capabilities and expectations this way when starting from ignorance. I don't have the inclination to encourage that.
My point here is that the teaching for pay creates positive externalities where the volunteer work then makes sense. To view volunteer work as entirely severed from the paid alternative is quite restrictive, at least in my experience.
So it is my belief that institutions like the university should be doing experiments blending compensation, work, volunteering, and retirement pay. I don't know whether I'm a good model or an outlier on these things, which is one thing experiments might reveal. In the meantime, not doing such experiments looks like ageism to me.
To this doom and gloom scenario, one wonders whether there are accommodations that can be made to keep things in balance. Some might recall that in the early Bush II years there were plans to privatize Social Security, to make it more like a glorified 401K plan and less like a defined benefit pension. There was also discussion of raising the retirement age. Both of these proved to be too bald as solutions, so ultimately were defeated.
Yet that those particular suggestions failed doesn't mean there aren't other potential accommodations that might succeed. If so, then it is incumbent on us to do social experiments to learn about what might work. Pretty early on in this blog I wrote about one such hypothetical that intrigued me at the time. The post was called Second Careers and K-12. The underlying idea is that those who had been mid to high level executives in their first career, but have since plateaued in that work, might reinvent themselves by teaching (the students and/or their teachers), and this would be an interesting way to attract high caliber talent into teaching and also to combat relatively low teacher pay, as these second careerists might be drawing some sort of pension from the first job, so their pay as teacher might be thought more as recognition than as compensation. I am still intrigued by this idea, but I want to note that it hasn't gone anywhere since I wrote that post, more than a dozen years ago. And I'm intrigued by other potential suggestion of the same ilk. More on that will follow.
But the type of experimentation that is needed here doesn't seem to be happening and indeed, if my own experience since retiring from the University of Illinois in summer 2010 is any indication, there are blockages in place to prevent such experimentation. Those blockages are what I mean by ageism in my title. Further, recently things seem to be getting worse. I will gripe a little about that, but mainly want to suggest some alternatives as to how things might improve.
Now a little aside to consider service work, where there is no evident output (i.e., no widgets to count) for measuring productivity but where the recipients of the service have some sense of its value for them. Teaching fits here. How much students learn, particularly in upper level college classes where there is no standardized exam to gauge learning, is difficult to measure by those outside the class. Indeed, outsiders to the class may not be able to measure the teaching input - how well prepared the instructor is, how much time the instructor spends interacting with students, and how flexible the instructor is when a student poses an idiosyncratic need as to whether that need will be accommodated. In practice, service work when well done has a strong element of gift exchange to it. (See Akerlof's paper Labor Contracts as Partial Gift Exchange. I've explicated this model so it is intelligible to the non-economists in a blog post called The Liberal View of Capitalism.) Since gift exchange may be alien terminology to most people, you can think of it as volunteer work. With service work, the paid work and volunteer work get jumbled together.
To this I want to add the following. While it is difficult to measure the teaching input, it is not impossible. One way to do that would be to have focus groups with some students in the class during the semester, this so the students could opine about how the class influences their own learning. In my case, where I have students blog out in the open, I comment on those posts, and the students respond to those comments, reading that would be informative about my teaching input. But it is my experience that we don't do measures like this at all. Some shirking in teaching does get monitored - so if an instructor is very late for a class or chronically late for several classes, that might be reported to the department head. But other shirking (using a publisher's test bank and not writing exam questions of the instructor's own creation) goes completely unnoticed. The point here is that if you wanted to encourage the volunteer component to the work, you'd likely need to do some monitoring that is not present in the current way we go about things.
Now, cycling back to the original issue, if more mature employees partially did paid work and partially did volunteer work, with the latter compensated with some sort of pension payment accrued from when the employees were more junior and were doing full time paid work, then the contributions to the retirement system that we associate with paid work might be brought into balance if the fraction of paid to volunteer work adjusts gradually as workers mature. Arithmetically, it is clear this can happen. Functionally, it is less obvious that this is do-able, with the volunteer part evidently being productive. This is precisely where we need experimentation to reveal what is possible.
I want to close this section by flipping the discussion from the needs of mature employees to the needs of students. The type of experimentation mentioned above should happen where there is a double-coincidence of needs and where those needs aren't otherwise being addressed. One prominent example, students need to develop soft skills. An argument being increasingly made is that this generation of students, with their heads always focused on their phones and computer screens, need lots of practice with face-to-face interaction. Students, particularly in their first year when they take mainly large lecture classes, need a sense that the institution cares about them. Many students I've taught since retiring believe the exact opposite. They develop a nihilistic personal philosophy as a consequence and become quite cynical about life. We should want to combat that, if we can. Further, most students want to have a personal relationship (on an intellectual level) with some professor. Private universities exist, with their much higher tuition, in good part because of an increased likelihood of that type of personal interaction. Public universities, facing budget pressure, should nevertheless try to provide those opportunities where they can.
* * * * *
Now I want to talk about some blockages that I've experienced at Illinois and what I'd like to have seen as an alternative.
I have twice volunteered to teach a class for free. In each case I was turned down. In both cases it was a first-year seminar class. One was Rhet 105, which satisfies the Composition I Gen Ed requirement. The other was a class in Economics, the topic to be determined, perhaps a small section version of principles or maybe a special topics class. My offers to teach for free were too out of the box, so were readily dismissed. I should add that I have a colleague who was a high level administrator at another university and when she was dean of their college of arts and sciences she did teach freshman rhetoric. So that idea I got from her. I had taught a Discovery Section of Econ 102 way back when, I believe in 2002, but at the time I didn't have it in my head to use the course to shape how the students go about their learning in the rest of their studies. The reason for wanting to try it this time around would be to do exactly that.
Having been an administrator for some time, I can imagine these sort of out of the box requests difficult to manage. What sort of precedent would they set? Could that create problems down the road? Also, in the Rhet 105 case, the instructors are all graduate students in Writing Studies and they are taking a graduate seminar concomitantly with teaching the introductory rhetoric class. I didn't want to take that graduate seminar, so that might have created some issues then and there for the course director.
As one-offs it is hard to make a case for doing what I proposed. As a more regular practice, however, it might be something for the institution to consider, having faculty teach first-year classes that they don't regularly teach, as an unpaid overload, or getting retirees to do likewise on a volunteer basis. For the rhetoric class in particular, I consider myself an intelligent amateur. I never took courses on writing when I was in college, yet I care about writing a lot, and I've now gotten quite a lot of experience in teaching with blogs, so can report it is definitely not just about the writing but also how students learn to make personal connections to the subject matter they are studying. So, perhaps arrogantly, I believe that if I had been given this opportunity my section would be better than the typical section.
I've had a different experience, while I was still working full time, of teaching a special topics class for the Campus Honors Program. The class was called Designing for Effective Change. The class was listed as either CHP 395 or CHP 396, with the latter section approved to fill the Composition II requirement. I learned then that these CHP classes have to at least give the option of filling some Gen Ed requirement for the students, in order for them to be able to fit the course into their schedules. In this case the Director of CHP ran some interference to get the course approved for Comp II. Based on that experience, my belief is that the type of experimental teaching I wanted to do is possible, but requires some high level person in the middle to enable it.
Let me turn to the other blockage, which appears far more systematic and to me is far more insidious. It seems that the College of Liberal Arts and Sciences and maybe the entire Campus is moving away from hiring retirees for teaching. The reasons for this, as far as I can tell, are two-fold, both financial. One is the matter of double dipping. If the retiree is already getting an annuity from the state, getting paid some salary in addition is bad form. There are already limits in place to the magnitude of the double dipping. Now it appears it is being eliminated altogether, which is why I didn't teach this past fall.
The other issue, one I'm more sympathetic too, is that when hiring a retiree, that person doesn't contribute to the retirement system. In contrast, full time employees have 8% of their salaries withheld as contribution to the retirement system. So teaching with a retiree under contract limits contributions to the retirement system that would have occurred if a full time instructor were teaching the course instead. Note that this issue is also there when a doctoral student ends up teaching a class under contract or when a visiting faculty member teaches. Here I want to consider a possible work around that makes sense to me.
Departments who hire under contract a person to teach a course would face a tax that they have to pay the campus. The tax would be .08/.92 of whatever they are paying that person. The campus would then contribute that tax to the retirement system - on a voluntary basis as this is not mandated by law. This would make the contribution to the retirement system not depend on who is doing the teaching, so that could be determined by other more relevant criteria (like who would teach the class well). Invariably retiree pay for teaching would go down, but might still be enough to induce the person to teach. To me this makes more sense than a total prohibition on retiree teaching, especially given my discussion earlier about voluntary work being bundled with paid work.
Let me add something here that may not be possible, but I'll mention it, because it counts in with the type of experimentation I'd like to see that I discussed in the first section. That is, retirees themselves might voluntarily opt to have their retirement pay taxed (rebated to the retirement system). There are two reasons why this might make sense, and I'm using myself as an example in each case. I retired early, at age 55. My pension benefits depend on my years of service and my salary near when I retired, but not my age. It is reasonable to think that pension benefits should be lower for people retiring early. Second, I was a reasonably well paid administrator in the College of Business when I retired and there is a COLA on my pension benefits of 3% per year, more than the rate of inflation in that time period and more than the rate at which the campus gave salary increases to those still working. This is a different imbalance that might be at least partially corrected. And if these imbalances were corrected, then the double dipping issue might not seem so dire.
Would there be some headaches in trying to move to these alternatives? Of course there would be. And they are not my headaches, to be sure. So, on the one hand, I'm reluctant to be too critical about these decisions. But my sense of these things is that these decisions are being driven by budget concerns for the university - the funding from the state will never get back to what it once was - but not at all about the need for the university to be a leader in solving the larger demographic issue for society overall due to declining birth rates. I think we need to get out of the mindset that individual faculty in their labs do research, but administrators don't, they just make the trains run on time. The administrators need some forward thinking about society overall, not just their own institution, and try to come up with solutions that might work for both.
* * * * *
I want to complete this exercise by talking about volunteer activities I've done on campus since retiring and how they relate to teaching.
I've mentored students, some through a campus program called Illinois Promise, where the mentee is matched to mentor at the outset, and I've also done mentoring where the mentee previously took a class from me and the mentoring was arranged informally near when the course was over. In the latter case, in fact, I aimed to have a discussion group, with a few students, which if there is critical mass is more satisfying to me than the one-on-one mentoring, because the students get a boost from each other as well as from me and they tend to relax more readily as a result. Even when there is only one student, it is easier when the student has already had my class. The prior knowledge means many implicit assumptions have already been validated.
Of course, it is possible to have a successful relationship with a mentee in Illinois Promise. And the social need may be greater there - the mentoring might increase student retention for first year students, especially the I-Promise scholars who are from low income families. But I've found that after a while those relationships tend to hit a wall. The discussion gets repetitive. And I seem to be like a broken record on the same point - go to office hours for your courses and let the instructor get to know you. I don't want to be their mother, but segueing to philosophy of life discussions is hard to do, so being a surrogate mother is the likely outcome after a while.
I have also supervised some students in independent study classes, which the university treats as a volunteer activity. Where this has worked reasonably well, the students had performed quite well in the class they took from me. I had one experience where I accepted a middling student of mine for an independent study. I was quite critical of the first piece of work he showed me, as I felt he entirely misread (really ignored) the article I had him read. He dropped the class soon after that. I have gotten multiple requests from students I had never met to supervise them in some independent study. I declined in each case. It's simply too much to ask that we learn about each other's capabilities and expectations this way when starting from ignorance. I don't have the inclination to encourage that.
My point here is that the teaching for pay creates positive externalities where the volunteer work then makes sense. To view volunteer work as entirely severed from the paid alternative is quite restrictive, at least in my experience.
So it is my belief that institutions like the university should be doing experiments blending compensation, work, volunteering, and retirement pay. I don't know whether I'm a good model or an outlier on these things, which is one thing experiments might reveal. In the meantime, not doing such experiments looks like ageism to me.
Wednesday, January 02, 2019
Juxtaposing Different Views of IT and Its Effect on Young People
A friend in Facebook posted a link to this piece in Educause Review, Strategic IT: What Got Us Here Won't Get Us There, by John O'Brien, who is President and CEO of Educause.
Findings from the 2016 EDUCAUSE Center for Analysis and Research (ECAR) studies of undergraduate students clearly demonstrate that students desire more technology and that technology helps them learn (see figure 1). In the 2017 study, at least 80 percent of students report that each of the student success technologies listed in the survey is at least moderately useful. About 6 in 10 students wish their instructors used lecture capture, early-alert systems, and free, web-based supplemental content more often.16 Technology offers perhaps the brightest hopes for moving some of the hardest-to-move needles in higher education, including student engagement and (timely) success. For this reason, among others, student success was the #2 issue in both the 2017 and the 2018 EDUCAUSE "Top 10 IT Issues" lists, behind only information security in both years.
Unambiguously, the message is that students want IT and IT is good for them.
I'd like to contrast this with a passage from quite a different piece, one of David Brooks' Sidney Award Winners, Why Are Young People Having So Little Sex? by Kate Julian. I have made it a habit over the winter break to read the pieces that Brooks recommends. They are not all to my liking, but the batting average is higher than what I get out of my normal magazine reading. Julian's piece makes for quite a compelling read, even though it is somewhat graphic in places.
Anna, who graduated from college three years ago, told me that in school, she struggled to “read” people. Dating apps have been a helpful crutch. “There’s just no ambiguity,” she explained. “This person is interested in me to some extent.” The problem is that the more Anna uses apps, the less she can imagine getting along without them. “I never really learned how to meet people in real life,” she said. She then proceeded to tell me about a guy she knew slightly from college, whom she’d recently bumped into a few times. She found him attractive and wanted to register her interest, but wasn’t sure how to do that outside the context of a college party. Then she remembered that she’d seen his profile on Tinder. “Maybe next time I sign in,” she said, musing aloud, “I’ll just swipe right so I don’t have to do this awkward thing and get rejected.”
Jillian's piece makes clear that many young people are uncomfortable with face-to-face interactions. They lack the emotional intelligence about how to read other people. They are very fearful of rejection and just as fearful of mistreatment if not rejected. They are this way because they lack the necessary experience and the learning by doing that comes from the experience. Here IT is depicted as a crutch, reliance on which blocks the acquisition of essential life skills. And the thing is, this is not a new argument. Sherry Turkle has been saying essentially the same thing for a while, for example, Stop Googling. Let's Talk. Further, the concern is more than the issue of developing soft skills. It is also about cognitive development. Young people with their heads always looking at a screen tend to multi-process and manage tasks that way. This critique by Peter Doolittle says they are actually blocking themselves in thinking hard about an issue. Concentration demands focus. So, a reasonable argument can be made that for many young people IT is a crutch, they will express preference for that crutch, but if you are interested in their development you will wean them off of the crutch and require more focused face-to-face interaction, at least some of the time.
Now let me segue to why I'm writing this piece. I've been retired for more than 8 years. During the first year or two of retirement, I wrote a couple of pieces that were critical of the profession and they ended rubbing some people the wrong way. So I decided to let sleeping dogs lie. But now I'm in the middle of reading yet another piece from Brooks' Sidney Awards. This one is called The Constitution of Knowledge and it's by Jonathan Rauch. It's mainly about how trolling and social media are upsetting how we come to believe that things are true. But, before getting to that, he goes through what might be termed the scientific method, coupled with peer review, further debate, new arguments, and new evidence, with the cycle repeating, perhaps many times. And this is done in a distributed way, not in a closed group. So, I wondered if the alternative view of IT that was sketched in the previous paragraph would be brought up in response to O'Brien's piece. Let the Educause community participate in the method that Rauch outlines It definitely would be better for a currently active CIO to be self-critical of the profession this way, than for a has been to do it. But I thought it possible that the self-criticism would never emerge. And I still have some friends who are active in the profession who might read my stuff. If what is being said here is sensible, they could send the link to their friends and it would get some airing that way. If, instead, it is ignored, that certainly wouldn't be the first time.
Getting back to the O'Brien article, he argues that CIOs increasingly don't have a seat at the table where the big decisions on campus are being made. This too is not a new issue. Back in 2005-06 I was on an Educause committee called 2020 and I know we discussed it then, because I was the one who raised the topic with the group. At the time I thought that CIOs needed to be bilingual - they had to be able to talk IT with other IT types, and they had to be able to talk in plain English and be conversant with campus issues that are not framed with an IT component, as well as those issues that are so framed, when talking with other campus leaders.
But it may be more than than that. Most CIOs reading O'Brien's piece might not react this way, but in my reading (I confess I only read up to the start of the section on information security) there is something fundamentally wrong with claiming to take a strategic view of IT, on the one hand, but then not taking on the criticisms regarding IT for young people's learning, on the other. Those criticisms are out there and need to be addressed in a serious way. Not doing so, the piece looks like boosterism for IT. If that is even in the ballpark as an argument, then inadvertently O'Brien may be making the case to keep CIOs from sitting with the grownups in the campus administration. Real strategic thinking, such as in a SWOT analysis, looks at weaknesses as well as strengths.
It's harder to argue in public about weaknesses. Others might cherry pick that part of the report and use it to make cuts in the IT budget. Undeniably, there are attendant risks in taking such an approach. Yet let's not ignore the potential upside. Evidence of a self-critical approach is a more likely way to find a seat at the grownup's table. If that is a prize CIOs are after, this is the most likely way to achieve it.
I'm not saying this is easy. If we're purists, then we're either all in for IT or we're Luddites. My preference is something more nuanced and invariably harder to articulate as a result. I would be delighted if the profession were to agree with me on that.
Findings from the 2016 EDUCAUSE Center for Analysis and Research (ECAR) studies of undergraduate students clearly demonstrate that students desire more technology and that technology helps them learn (see figure 1). In the 2017 study, at least 80 percent of students report that each of the student success technologies listed in the survey is at least moderately useful. About 6 in 10 students wish their instructors used lecture capture, early-alert systems, and free, web-based supplemental content more often.16 Technology offers perhaps the brightest hopes for moving some of the hardest-to-move needles in higher education, including student engagement and (timely) success. For this reason, among others, student success was the #2 issue in both the 2017 and the 2018 EDUCAUSE "Top 10 IT Issues" lists, behind only information security in both years.
Unambiguously, the message is that students want IT and IT is good for them.
I'd like to contrast this with a passage from quite a different piece, one of David Brooks' Sidney Award Winners, Why Are Young People Having So Little Sex? by Kate Julian. I have made it a habit over the winter break to read the pieces that Brooks recommends. They are not all to my liking, but the batting average is higher than what I get out of my normal magazine reading. Julian's piece makes for quite a compelling read, even though it is somewhat graphic in places.
Anna, who graduated from college three years ago, told me that in school, she struggled to “read” people. Dating apps have been a helpful crutch. “There’s just no ambiguity,” she explained. “This person is interested in me to some extent.” The problem is that the more Anna uses apps, the less she can imagine getting along without them. “I never really learned how to meet people in real life,” she said. She then proceeded to tell me about a guy she knew slightly from college, whom she’d recently bumped into a few times. She found him attractive and wanted to register her interest, but wasn’t sure how to do that outside the context of a college party. Then she remembered that she’d seen his profile on Tinder. “Maybe next time I sign in,” she said, musing aloud, “I’ll just swipe right so I don’t have to do this awkward thing and get rejected.”
Jillian's piece makes clear that many young people are uncomfortable with face-to-face interactions. They lack the emotional intelligence about how to read other people. They are very fearful of rejection and just as fearful of mistreatment if not rejected. They are this way because they lack the necessary experience and the learning by doing that comes from the experience. Here IT is depicted as a crutch, reliance on which blocks the acquisition of essential life skills. And the thing is, this is not a new argument. Sherry Turkle has been saying essentially the same thing for a while, for example, Stop Googling. Let's Talk. Further, the concern is more than the issue of developing soft skills. It is also about cognitive development. Young people with their heads always looking at a screen tend to multi-process and manage tasks that way. This critique by Peter Doolittle says they are actually blocking themselves in thinking hard about an issue. Concentration demands focus. So, a reasonable argument can be made that for many young people IT is a crutch, they will express preference for that crutch, but if you are interested in their development you will wean them off of the crutch and require more focused face-to-face interaction, at least some of the time.
Now let me segue to why I'm writing this piece. I've been retired for more than 8 years. During the first year or two of retirement, I wrote a couple of pieces that were critical of the profession and they ended rubbing some people the wrong way. So I decided to let sleeping dogs lie. But now I'm in the middle of reading yet another piece from Brooks' Sidney Awards. This one is called The Constitution of Knowledge and it's by Jonathan Rauch. It's mainly about how trolling and social media are upsetting how we come to believe that things are true. But, before getting to that, he goes through what might be termed the scientific method, coupled with peer review, further debate, new arguments, and new evidence, with the cycle repeating, perhaps many times. And this is done in a distributed way, not in a closed group. So, I wondered if the alternative view of IT that was sketched in the previous paragraph would be brought up in response to O'Brien's piece. Let the Educause community participate in the method that Rauch outlines It definitely would be better for a currently active CIO to be self-critical of the profession this way, than for a has been to do it. But I thought it possible that the self-criticism would never emerge. And I still have some friends who are active in the profession who might read my stuff. If what is being said here is sensible, they could send the link to their friends and it would get some airing that way. If, instead, it is ignored, that certainly wouldn't be the first time.
Getting back to the O'Brien article, he argues that CIOs increasingly don't have a seat at the table where the big decisions on campus are being made. This too is not a new issue. Back in 2005-06 I was on an Educause committee called 2020 and I know we discussed it then, because I was the one who raised the topic with the group. At the time I thought that CIOs needed to be bilingual - they had to be able to talk IT with other IT types, and they had to be able to talk in plain English and be conversant with campus issues that are not framed with an IT component, as well as those issues that are so framed, when talking with other campus leaders.
But it may be more than than that. Most CIOs reading O'Brien's piece might not react this way, but in my reading (I confess I only read up to the start of the section on information security) there is something fundamentally wrong with claiming to take a strategic view of IT, on the one hand, but then not taking on the criticisms regarding IT for young people's learning, on the other. Those criticisms are out there and need to be addressed in a serious way. Not doing so, the piece looks like boosterism for IT. If that is even in the ballpark as an argument, then inadvertently O'Brien may be making the case to keep CIOs from sitting with the grownups in the campus administration. Real strategic thinking, such as in a SWOT analysis, looks at weaknesses as well as strengths.
It's harder to argue in public about weaknesses. Others might cherry pick that part of the report and use it to make cuts in the IT budget. Undeniably, there are attendant risks in taking such an approach. Yet let's not ignore the potential upside. Evidence of a self-critical approach is a more likely way to find a seat at the grownup's table. If that is a prize CIOs are after, this is the most likely way to achieve it.
I'm not saying this is easy. If we're purists, then we're either all in for IT or we're Luddites. My preference is something more nuanced and invariably harder to articulate as a result. I would be delighted if the profession were to agree with me on that.