This is a follow-up to a post taking a rough look at data about energy use and economic activity.
The first one showed the strong correlation between energy use and wealth, and ended with the question of which direction the causality went: does using more energy cause countries to be rich, or does being rich cause countries to use more energy?
Either one is theoretically plausible.
Rich countries eat more food per capita (measured in calories) and they eat more expensive food (measured as a greater portion of their food coming from animal sources—meat and dairy). It’s unlikely that they’re rich because they eat more food and eat more animal-based foods. Rather, they eat the way they do because people like to eat more, people like to eat animal-based foods, and people in rich countries can afford to do those things.
The analogous argument would run that people like doing things that use energy, and people in rich countries can afford to do more of those things, so they use more energy.
I’m inclined toward the opposite causality, that rich countries generally get that way by using more energy.
The theoretical basis for that view is that every economic activity requires energy. Some require more than others (earning $40,000 cutting hair takes less energy than earning $40,000 making steel). And the energy requirements of a given activity can change over time as technology changes. But every economic activity requires some energy, so at some level, having more economic activity (a higher GDP) should require more energy.
Faced with a theoretical argument pointing in each direction, it would be good to have some empirical indication of which force is more likely in play.
A test suggests itself from the fact that energy prices have shown significant volatility over the last 45 years, with oil spikes in 1973 and 1979, a crash in 1986, a trough in 1998, a new peak in 2008 and then continued ups and downs more recently.
If rich countries are buying energy sort of as a luxury, because they can afford it, we should see them buying less energy when prices go up, and more energy when prices go down. We should see more energy use per GDP in times of low energy prices, and less energy use per GDP in times of high prices.
If countries are getting rich because they’re using lots of energy, then we should see no particular connection between the energy/GDP relationship and energy prices. High energy prices may cause countries to buy and use less energy, but that will also be reflected in reduced economic activity, rather than in decreased energy per unit of GDP.
Saturday, March 31, 2018
Friday, March 30, 2018
Why is climate change hard to solve?
The question in the title has a pretty obvious answer:
It arose from a short module I did here at the Faculty of Economics and Management at the Czech University of Life Sciences (Provozně ekonomická fakulta České zemědělské university), concerning energy economics.
The field is huge, and there’s no way to cover everything that should be covered in the time allotted, so I thought I’d lay a foundation by looking at big-picture connections between energy and the economy. Toward that end, I decided to milk two particular data sets and see how much insight I could squeeze out of them without any fancy techniques. The result is a series of data images that I think tell a story accessible to a broad audience, so I’m posting them here.
The energy data are from the 2017 edition of the Statistical Review of World Energy put out by British Petroleum. They supply data on the extraction and use of all the major and semi-major forms of energy, not for every country in the world, but for many of them (if your country is big and/or rich and/or produces a lot of oil, you’re likely to be in the dataset).
The economic data are from the Penn World Tables, an ongoing project that attempts to present basic economic data from every country in the world, in a way that is methodologically consistent across all countries, so that you can make meaningful comparisons among countries.
More information about the underlying data is in the accompanying post on data.
The first set of images is simply a comparison of GDP per capita and energy use per capita—in other words, we’re looking for a connection between the level of energy use and the level of economic activity.
In Figure 1, each dot is a country, and its position on the graph shows its GDP per capita (further to the right is richer) and its energy use per capita (further up is using more energy).
The most obvious feature is that almost every country is bunched to the left, with wealth less than $50,000 per capita. The two exceptions are Qatar and—to an astonishing degree—United Arab Emirates. In other words, our outliers are two small states whose economy is founded on extracting and exporting oil.
Figure 2 does the same thing for 2014, and again we have a couple of outliers, with Qatar in the far upper right (very wealthy and using a lot of energy) and Trinidad & Tobago toward the upper left (not that wealthy, but using a lot of energy).
This pattern repeats itself in intervening years, where outliers are very small countries, and/or economies based on oil exports.
- Preventing the worst climate-change outcomes means using less fossil fuel
- Fossil fuels make us rich
- We don’t want to be less rich than we are
It arose from a short module I did here at the Faculty of Economics and Management at the Czech University of Life Sciences (Provozně ekonomická fakulta České zemědělské university), concerning energy economics.
The field is huge, and there’s no way to cover everything that should be covered in the time allotted, so I thought I’d lay a foundation by looking at big-picture connections between energy and the economy. Toward that end, I decided to milk two particular data sets and see how much insight I could squeeze out of them without any fancy techniques. The result is a series of data images that I think tell a story accessible to a broad audience, so I’m posting them here.
The energy data are from the 2017 edition of the Statistical Review of World Energy put out by British Petroleum. They supply data on the extraction and use of all the major and semi-major forms of energy, not for every country in the world, but for many of them (if your country is big and/or rich and/or produces a lot of oil, you’re likely to be in the dataset).
The economic data are from the Penn World Tables, an ongoing project that attempts to present basic economic data from every country in the world, in a way that is methodologically consistent across all countries, so that you can make meaningful comparisons among countries.
More information about the underlying data is in the accompanying post on data.
The first set of images is simply a comparison of GDP per capita and energy use per capita—in other words, we’re looking for a connection between the level of energy use and the level of economic activity.
In Figure 1, each dot is a country, and its position on the graph shows its GDP per capita (further to the right is richer) and its energy use per capita (further up is using more energy).
 |
| Figure 1. Data from BP Statistical Review and Penn World Tables |
The most obvious feature is that almost every country is bunched to the left, with wealth less than $50,000 per capita. The two exceptions are Qatar and—to an astonishing degree—United Arab Emirates. In other words, our outliers are two small states whose economy is founded on extracting and exporting oil.
Figure 2 does the same thing for 2014, and again we have a couple of outliers, with Qatar in the far upper right (very wealthy and using a lot of energy) and Trinidad & Tobago toward the upper left (not that wealthy, but using a lot of energy).
 |
| Figure 2. Data from BP Statistical Review and Penn World Tables |
This pattern repeats itself in intervening years, where outliers are very small countries, and/or economies based on oil exports.
Why is climate change hard? - Data note
This is a post to accompany Why is climate change hard to solve?.
The GDP and population are from the Penn World Tables, while the energy use is from the 2017 edition of the Statistical Review of World Energy put out by British Petroleum.
The GDP and population are from the Penn World Tables, while the energy use is from the 2017 edition of the Statistical Review of World Energy put out by British Petroleum.
Wednesday, March 28, 2018
A Russian interlude
A week ago a friend asked on Facebook if I had any recommendations for what to read on Russia. I came up empty because my reading on the subject lately has generally been from the Czech press, and while this friend happens to speak Czech, she was asking for her circle of generally American FB friends.
But I remembered her query when I was reading this week’s issue of the newsmagazine Respekt, with its cover article on “Putin the Conqueror: The Russian president is successfully building an alternative to the Western world,” by Jiří Sobota, Ondřej Kundra, and Petr Horký.
The authors draw in part on Timothy Snyder’s book The Road to Unfreedom, in particular his point that Putin’s view of the world differs from the West’s.
The West (in Respekt’s summary of Snyder’s argument) sees history as flowing inevitably toward a better future through international connection and cooperation. There will be steps backward and other problems, but they can’t change the course of the powerful river of history.
But I remembered her query when I was reading this week’s issue of the newsmagazine Respekt, with its cover article on “Putin the Conqueror: The Russian president is successfully building an alternative to the Western world,” by Jiří Sobota, Ondřej Kundra, and Petr Horký.
The authors draw in part on Timothy Snyder’s book The Road to Unfreedom, in particular his point that Putin’s view of the world differs from the West’s.
The West (in Respekt’s summary of Snyder’s argument) sees history as flowing inevitably toward a better future through international connection and cooperation. There will be steps backward and other problems, but they can’t change the course of the powerful river of history.
Monday, March 26, 2018
The apotheosis of individualistic idiocy
Rick Santorum thinks the students should be looking to solve their problems themselves, rather than asking legislator to solve the students’ problems for them.
Among his helpful bits of advice is to learn CPR—because that’s a really useful skill for helping someone who has an internal organ that “looked like an overripe melon smashed by a sledgehammer, and was bleeding extensively.”
There’s plenty of idiocy in what he’s saying, and he’s getting plenty of well-deserved derision for it.
But this particular exchange gets at the dead-end that American conservativism has become.
Among his helpful bits of advice is to learn CPR—because that’s a really useful skill for helping someone who has an internal organ that “looked like an overripe melon smashed by a sledgehammer, and was bleeding extensively.”
There’s plenty of idiocy in what he’s saying, and he’s getting plenty of well-deserved derision for it.
But this particular exchange gets at the dead-end that American conservativism has become.
“How are they looking at other people?” host Brianna Keilar interjected. “They took action.”
“They took action to ask someone to pass a law,” Santorum said.
“They didn’t take action to say ‘How do I as an individual deal with this problem? How am I going to do something about stopping bullying within my own community? What am I going to do to actually help respond to a shooter?’”
He said students should articulate “how I’m going to help the situation instead of going and protesting and saying, ‘Oh, someone else needs to pass a law to protect me.’”Santorum’s position only makes sense if you think that government action is inherently, fundamentally illegitimate.
Sunday, March 25, 2018
Tearing up the script
Jennifer Rubin remarks on how quickly the teens—not just from Parkland, but from all over—have engineered a shift in attitudes that adults have been trying and failing to accomplish for years. (H/T Jason Antrosio)
It hit me earlier today that while the teens pushing this are certainly savvy (and I mean that in a good way), they're not being coyly tactical about their core message itself.
They're not wondering if they're asking for too much.
They're not second-guessing whether they might be losing "moderates" by being too "radical."
They're not afraid of the NRA and they're not backing down when gun folks belittle them as Tide-pod-eating morons or even call them "crisis actors."
They’re clever, but their savvy has been in how to get their message out and bring people to their side by the force of their argument (and their lived experience), rather than in trimming their sails and trying to tweak their message to make it acceptable to existing opinion and avoid stepping on big, scary toes.
If the teens truly have shifted the conversation, maybe it’s because they haven’t fallen into the trap of being too clever by half.
It hit me earlier today that while the teens pushing this are certainly savvy (and I mean that in a good way), they're not being coyly tactical about their core message itself.
They're not wondering if they're asking for too much.
They're not second-guessing whether they might be losing "moderates" by being too "radical."
They're not afraid of the NRA and they're not backing down when gun folks belittle them as Tide-pod-eating morons or even call them "crisis actors."
They’re clever, but their savvy has been in how to get their message out and bring people to their side by the force of their argument (and their lived experience), rather than in trimming their sails and trying to tweak their message to make it acceptable to existing opinion and avoid stepping on big, scary toes.
If the teens truly have shifted the conversation, maybe it’s because they haven’t fallen into the trap of being too clever by half.
Saturday, March 24, 2018
The pessimist's paradox
If you engage in political discussion these days, you’ve almost certainly encountered a particular brand of pessimism.
I’m not talking about a general tenor of, “Everything is bad.”
Nor the pessimism in the Russian joke where you ask, “How are things?” and the pessimist answers, “Worse than yesterday,” while the optimist answers, “Better than tomorrow!”
And it’s not the pessimism of looking at climate change and saying, “We’re screwed. There’s too much CO2 in the atmosphere already, feedback loops have been triggered, and our societies don’t seem to be all that interested in doing anything serious about it anyway.”
(I’m temperamentally unable to live in that particular pessimism, but I can’t prove that it’s wrong.)
The one I’m talking about is, “It’s over. The oligarchs have won. What Cambridge Analytica showed is that with enough money, you can buy not just people’s votes, but their minds. Now that the transnational elites have that power, democratic elections can’t fix the problem.”
I appreciate the sentiment, and it sometimes crosses my mind.
But it also contains a paradox.
I’m not talking about a general tenor of, “Everything is bad.”
Nor the pessimism in the Russian joke where you ask, “How are things?” and the pessimist answers, “Worse than yesterday,” while the optimist answers, “Better than tomorrow!”
And it’s not the pessimism of looking at climate change and saying, “We’re screwed. There’s too much CO2 in the atmosphere already, feedback loops have been triggered, and our societies don’t seem to be all that interested in doing anything serious about it anyway.”
(I’m temperamentally unable to live in that particular pessimism, but I can’t prove that it’s wrong.)
The one I’m talking about is, “It’s over. The oligarchs have won. What Cambridge Analytica showed is that with enough money, you can buy not just people’s votes, but their minds. Now that the transnational elites have that power, democratic elections can’t fix the problem.”
I appreciate the sentiment, and it sometimes crosses my mind.
But it also contains a paradox.
Wednesday, March 21, 2018
The CA virus
Over on the Blue Satan (uh, I mean Facebook), Jason Antrosio links to a blog post by Greg Laden, suggesting that people not rush headlong off of Facebook. Laden talks about the work he does trying to sustain civilization, and how Facebook is a key organizing platform for it that can’t easily be replaced.
I see the point, so I’ll notch down the enthusiasm for leaving that I expressed in an earlier post (not that I’ve made any actual moves toward the door myself).
But if we’re not getting off Facebook, we still have to think through what we are going to do about it.
Increasingly, I tend to think about social questions in evolutionary terms, and what keeps coming to mind here is the race between an infectious agent and the antibodies to it, or an antibiotic and the germs’ ability to resist its effects.
Many people—myself included—are vulnerable to a notion of an Edenic past which at some point became corrupted. For Americans, a natural repository of this vision is the early Republic, with wise, far-sighted men, leading the nation with an inner nobility that didn’t need fancy titles to make itself felt. Or even the colonial era with its direct democracy (for White, male landowners).
But when you read the history of the era, you find it had its own portion of venality, pettiness, jealousy, etc. With people like Steve Bannon egging on the White nationalists, it can feel like we’re in a uniquely dark place, wrestling with particularly frightening demons. But the Founders included people who owned other humans as slaves, and who at best felt bad about that. The whole constitutional structure under which we live arose out of compromises necessary to keep the slaveholders IN.
That tension wound its way through the country’s history for the next decades, simmering over in Bloody Kansas before fully erupting in the Civil War.
The North won and slavery was abolished, but of course the issue still didn’t go away. White society quite broadly assumed that Blacks were inferior, but there were meaningful differences in this bigotry, and political leaders continued to view it as necessary to make compromises with the most virulent, violent forms of racism, in order to advance other policy goals. FDR’s coalition behind the New Deal included the political arm of the KKK.
And it continues to this day.
I see the point, so I’ll notch down the enthusiasm for leaving that I expressed in an earlier post (not that I’ve made any actual moves toward the door myself).
But if we’re not getting off Facebook, we still have to think through what we are going to do about it.
Increasingly, I tend to think about social questions in evolutionary terms, and what keeps coming to mind here is the race between an infectious agent and the antibodies to it, or an antibiotic and the germs’ ability to resist its effects.
Many people—myself included—are vulnerable to a notion of an Edenic past which at some point became corrupted. For Americans, a natural repository of this vision is the early Republic, with wise, far-sighted men, leading the nation with an inner nobility that didn’t need fancy titles to make itself felt. Or even the colonial era with its direct democracy (for White, male landowners).
But when you read the history of the era, you find it had its own portion of venality, pettiness, jealousy, etc. With people like Steve Bannon egging on the White nationalists, it can feel like we’re in a uniquely dark place, wrestling with particularly frightening demons. But the Founders included people who owned other humans as slaves, and who at best felt bad about that. The whole constitutional structure under which we live arose out of compromises necessary to keep the slaveholders IN.
That tension wound its way through the country’s history for the next decades, simmering over in Bloody Kansas before fully erupting in the Civil War.
The North won and slavery was abolished, but of course the issue still didn’t go away. White society quite broadly assumed that Blacks were inferior, but there were meaningful differences in this bigotry, and political leaders continued to view it as necessary to make compromises with the most virulent, violent forms of racism, in order to advance other policy goals. FDR’s coalition behind the New Deal included the political arm of the KKK.
And it continues to this day.
What's an education worth - Part II
In his comment on an earlier post, Jason Antrosio referenced this piece by Justin Stover, “There is no case for the humanities.”
At first I thought it was going to be attacking them as unimportant, but Stover is actually making a quite different point.
When people make a “case” for humanities—why students should still consider majoring in English, or philosophy, why colleges and universities should continue having departments in the disciplines of the humanities—they are making an instrumental argument. The humanities are good because they help you think better, they develop moral, they’re about ethics, they’re about truth, they unleash creativity.
In the end, he says the humanities are important because they are precisely what makes something a university rather than being a polytechnic or an advanced high school.
Nobody is surprised that a country with a per capita gross domestic product of $2,000 can’t allow itself the luxury of people becoming experts in the contemporaries of Chaucer, but that is distinctly not our situation.
50 years ago, our GDP per capita (measured in dollars with the purchasing power of 2016) was $25,800 and we had robust humanities departments as a matter of course.
In 2016, our GDP per capita (measured in those same 2016 dollars) was $58,500, and we’re claiming that it’s just too expensive for us to afford these fields of study, unless someone can show that they’re actually “good for something.”
If we somehow cannot find the money for the humanities, the issue is not that we can’t afford them, but that we have decided we do not value them in themselves.
Stover offers another explanation of what the humanities are “for,” and it’s a reason that reaches back to ancient Rome with the teaching of the grammaticus and the middle ages with the reading of Virgil. Knowing how to comment on Aristotle didn’t really make you a better bureaucrat, lawyer, or estate manager, but it marked you as part of a class, and an international one at that.
At first I thought it was going to be attacking them as unimportant, but Stover is actually making a quite different point.
When people make a “case” for humanities—why students should still consider majoring in English, or philosophy, why colleges and universities should continue having departments in the disciplines of the humanities—they are making an instrumental argument. The humanities are good because they help you think better, they develop moral, they’re about ethics, they’re about truth, they unleash creativity.
Finally, we are most commonly told that the humanities are about skills. There is something valid about this argument: learning to parse Sanskrit undoubtedly entails some general cognitive benefit. But those benefits are always byproducts. No one wants to learn Sanskrit because it will give them a leg up in a fast-moving economy. It will never be a compelling case for the humanities that they are like a gym for the mind. Forget about attracting administrators — that argument will not even get you any students.Stover counters the earlier instrumental arguments as well.
In the end, he says the humanities are important because they are precisely what makes something a university rather than being a polytechnic or an advanced high school.
Still, whatever administrators and legislators might think, the fact that there is no case for the humanities is irrelevant. The humanities do not need to make a case within the university, because the humanities are the heart of the university. Golfers do not need to justify to their foursomes the rationale for hitting little white balls; philatelists do not need to explain to their stamp-collecting societies what makes them excited about vintage postage. So too, for humanists: The university can be many things, but without us, a university it will not be.I would offer another argument for the humanities, which is that we are, by historical standards, an insanely wealthy society. The median income has stagnated for four decades, but taken in aggregate, we have continued to get wealthier.
Nobody is surprised that a country with a per capita gross domestic product of $2,000 can’t allow itself the luxury of people becoming experts in the contemporaries of Chaucer, but that is distinctly not our situation.
50 years ago, our GDP per capita (measured in dollars with the purchasing power of 2016) was $25,800 and we had robust humanities departments as a matter of course.
In 2016, our GDP per capita (measured in those same 2016 dollars) was $58,500, and we’re claiming that it’s just too expensive for us to afford these fields of study, unless someone can show that they’re actually “good for something.”
If we somehow cannot find the money for the humanities, the issue is not that we can’t afford them, but that we have decided we do not value them in themselves.
Stover offers another explanation of what the humanities are “for,” and it’s a reason that reaches back to ancient Rome with the teaching of the grammaticus and the middle ages with the reading of Virgil. Knowing how to comment on Aristotle didn’t really make you a better bureaucrat, lawyer, or estate manager, but it marked you as part of a class, and an international one at that.
Deep down, what most humanists value about the humanities is that they offer participation in a community in which they can share similar tastes in reading, art, food, travel, music, media, and yes, politics. We might talk about academic diversity, but the academy is a tribe, and one with relatively predictable tastes. ...
As teachers, what humanists want most of all is to initiate their students into that class. Despite occasional conservative paranoia, there is not some sinister academic plot to brainwash students with liberal dogma. Instead, humanists are doing what they have always done, trying to bring students into a class loosely defined around a broad constellation of judgments and tastes. This constellation might include political judgments, but it is never reducible to politics.Stover admits that,
The mere existence of a class is, however, not a case for its existence in society as a whole. Telling the state and the public that they should support higher education in order to turn out more people like the professorial class is unlikely to generate any enthusiasm.I wonder how much of the current dudgeon over the humanities is driven by the shift in the structure of how higher education is paid for and the rewards it provides, combined with the notion in the last few decades that “everyone” should go to college.
What's an education worth - Data note
This post is meant to accompany What's an education worth - Part II. I originally intended it to be a note at the end of that post, but the note turned out to be almost as long as the post, so I hived it off into its own write-up.
The data on college completion are from the Census Bureau, via this page.
In addition to the data shown in the main post on college completion among people 25 and older, it's interesting to look at specifically the 25-to-29-year-olds, which gives as close a picture as this dataset allows as to what portion of young people are in college.
In 1947, male and female attendance is pretty much equal. It looks like the war kept men out of college who would otherwise have gone. But then the GI Bill kicks in, and men's rate of college jumps rapidly.
It goes up again in the 1960's, presumably at least in part a reflection of men going to college to avoid the draft.
But women's attendance rises sharply at the same time, and while men fall off in the 1970's, women keep going at higher rates, passing men in the 1990's and not looking back.
For expenditure on higher education, I combined a couple of sources tables available through the National Income and Product Accounts of the Bureau of Economic Analysis, with Congressional Budget Office data obtained from the Federal Reserve Economic Data (FRED) site maintained by the St. Louis Federal Reserve Bank, as well as their Archival Economic Data (ALFRED).
BEA's Table 3.16 gives government expenditure, broken down into various different purposes, and shown as either all government together, or federal vs. state and local. Within the category of “Education,” you can distinguish between “Elementary and secondary” and “Higher.” The data run from 1959 through 2016.
Table 2.4.5 from BEA shows personal consumption expenditures broken down by different things people spend money on, including on “Education services” and, within that, “Higher education.”
I’m not sure whether that captures all the money spent on higher education in the country, but it seems to me it should give a reasonably accurate overall picture. Education is basically paid for by the students (or their families) and the government, and personal consumption expenditures reflect the first, while government expenditure shows the second.
The first question I asked was how important higher-ed spending was within government budgets. This chart shows each of the three groupings (“All levels,” “Federal,” “State/Local”), and each line is higher-ed expenditure by that level of government as a percentage of the total expenditure of that same level of government.
You can see that spending by all levels of government together rose from 1.2% of their expenditure in 1959, to 3.0% in 1977, and has fluctuated between 2.5% and 3.0% ever since.
Most higher-ed spending by government comes at the state level rather than federal (think state universities), so it plays a larger role in State/Local budgets, rising from 3.9% in 1959 to 6.6% in 1976, and falling thereafter.
Note the precipitous decline from 2001 to 2003—I don’t have a good explanation for that, and would be curious if anyone either knows why it happened or has a possible explanation.
Federal higher-ed spending rose from less than 0.4% of overall federal spending in the early 1960’s to 0.9% in 1981, holding relatively stable from there until 2008.
The early Obama years saw a marked increase in federal higher-ed spending, with a return back to 1% by 2016.
Another way to look at spending is as a share of GDP. BEA's Table 1.1.5 gives nominal GDP (that is, not adjusted for inflation), which is the correct benchmark, since the government and household expenditure figures from the other two tables are also in nominal terms.
A striking feature of this chart is the jump in spending by government overall from 2007 to 2010, driven primarily by a jump in federal spending. But remember that from late 2007 to mid-2009, real GDP (i.e., inflation adjusted) actually shrank, and it didn't regain its previous peak until early 2011. When you combine increased spending as part of the stimulus package of 2009 with a shrinking GDP, that gives you a result of a large increase in spending as a share of GDP.
In other words, a piece of that jump in spending is an arithmetical artifact of the recession. The easiest way to control for that is to use potential GDP instead of actual.
Potential GDP isn’t something we can observe or measure. It is, rather, a calculation of what the GDP in some sense “should” be, what it “would” be if unemployment were at its “normal” level. And so it should in principle be immune to business-cycle fluctuations.
In reality, when a recession hits, the economists who calculate the potential GDP go back and revise it and say, “Well, potential didn’t fall like actual did, but it did start to rise more slowly during the recession.”
But every estimate of potential GDP from the Congressional Budget Office includes a forecast of potential GDP 10 years into the future. The ALFRED site mentioned above provides older versions of the data currently available through FRED, so you can go see what the CBO potential GDP estimate was in 2006, which includes the forecast to 2016. Once we adjust that from inflation-adjusted to nominal terms, we can compare it with the expenditure items.
The 2006 estimate was made before the recession of 2007-09, so it doesn’t have the slowdown in growth that you see if you use the current estimate. Using those older, higher figures for potential GDP, the increase in spending is a little less dramatic, though it certainly doesn’t go away.
The next chart separates out government and private spending, using the 2006 potential GDP as the point of comparison. You can see the run-up in government spending from 1959 to 1975, the growth in private spending, particularly from 1979 to 2010, and the increasing share of spending done directly by households, as their total spending increases while government's stays flat.
While the data on spending and actual GDP are from the Bureau of Economic Analysis provide the data on expenditures and actual GDP, the potential GDP data are through the data sites of the St. Louis branch of the Federal Reserve.
FRED provides potential GDP in both nominal form (series label NGDPPOT) and real (series name GDPPOT).
ALFRED provides older estimates of real potential GDP. The one I used was from August, 2006, and has the series name GDPPOT_20060817.
There are a few steps involved in making the 2006-vintage real potential GDP commensurable with the 2018-vintage nominal potential GDP, but explaining that would take another page or two. If anyone is curious, let me know in the comments section and I will oblige.
The data on college completion are from the Census Bureau, via this page.
In addition to the data shown in the main post on college completion among people 25 and older, it's interesting to look at specifically the 25-to-29-year-olds, which gives as close a picture as this dataset allows as to what portion of young people are in college.
In 1947, male and female attendance is pretty much equal. It looks like the war kept men out of college who would otherwise have gone. But then the GI Bill kicks in, and men's rate of college jumps rapidly.
It goes up again in the 1960's, presumably at least in part a reflection of men going to college to avoid the draft.
But women's attendance rises sharply at the same time, and while men fall off in the 1970's, women keep going at higher rates, passing men in the 1990's and not looking back.
For expenditure on higher education, I combined a couple of sources tables available through the National Income and Product Accounts of the Bureau of Economic Analysis, with Congressional Budget Office data obtained from the Federal Reserve Economic Data (FRED) site maintained by the St. Louis Federal Reserve Bank, as well as their Archival Economic Data (ALFRED).
BEA's Table 3.16 gives government expenditure, broken down into various different purposes, and shown as either all government together, or federal vs. state and local. Within the category of “Education,” you can distinguish between “Elementary and secondary” and “Higher.” The data run from 1959 through 2016.
Table 2.4.5 from BEA shows personal consumption expenditures broken down by different things people spend money on, including on “Education services” and, within that, “Higher education.”
I’m not sure whether that captures all the money spent on higher education in the country, but it seems to me it should give a reasonably accurate overall picture. Education is basically paid for by the students (or their families) and the government, and personal consumption expenditures reflect the first, while government expenditure shows the second.
The first question I asked was how important higher-ed spending was within government budgets. This chart shows each of the three groupings (“All levels,” “Federal,” “State/Local”), and each line is higher-ed expenditure by that level of government as a percentage of the total expenditure of that same level of government.
You can see that spending by all levels of government together rose from 1.2% of their expenditure in 1959, to 3.0% in 1977, and has fluctuated between 2.5% and 3.0% ever since.
Most higher-ed spending by government comes at the state level rather than federal (think state universities), so it plays a larger role in State/Local budgets, rising from 3.9% in 1959 to 6.6% in 1976, and falling thereafter.
Note the precipitous decline from 2001 to 2003—I don’t have a good explanation for that, and would be curious if anyone either knows why it happened or has a possible explanation.
Federal higher-ed spending rose from less than 0.4% of overall federal spending in the early 1960’s to 0.9% in 1981, holding relatively stable from there until 2008.
The early Obama years saw a marked increase in federal higher-ed spending, with a return back to 1% by 2016.
Another way to look at spending is as a share of GDP. BEA's Table 1.1.5 gives nominal GDP (that is, not adjusted for inflation), which is the correct benchmark, since the government and household expenditure figures from the other two tables are also in nominal terms.
A striking feature of this chart is the jump in spending by government overall from 2007 to 2010, driven primarily by a jump in federal spending. But remember that from late 2007 to mid-2009, real GDP (i.e., inflation adjusted) actually shrank, and it didn't regain its previous peak until early 2011. When you combine increased spending as part of the stimulus package of 2009 with a shrinking GDP, that gives you a result of a large increase in spending as a share of GDP.
In other words, a piece of that jump in spending is an arithmetical artifact of the recession. The easiest way to control for that is to use potential GDP instead of actual.
Potential GDP isn’t something we can observe or measure. It is, rather, a calculation of what the GDP in some sense “should” be, what it “would” be if unemployment were at its “normal” level. And so it should in principle be immune to business-cycle fluctuations.
In reality, when a recession hits, the economists who calculate the potential GDP go back and revise it and say, “Well, potential didn’t fall like actual did, but it did start to rise more slowly during the recession.”
But every estimate of potential GDP from the Congressional Budget Office includes a forecast of potential GDP 10 years into the future. The ALFRED site mentioned above provides older versions of the data currently available through FRED, so you can go see what the CBO potential GDP estimate was in 2006, which includes the forecast to 2016. Once we adjust that from inflation-adjusted to nominal terms, we can compare it with the expenditure items.
The 2006 estimate was made before the recession of 2007-09, so it doesn’t have the slowdown in growth that you see if you use the current estimate. Using those older, higher figures for potential GDP, the increase in spending is a little less dramatic, though it certainly doesn’t go away.
The next chart separates out government and private spending, using the 2006 potential GDP as the point of comparison. You can see the run-up in government spending from 1959 to 1975, the growth in private spending, particularly from 1979 to 2010, and the increasing share of spending done directly by households, as their total spending increases while government's stays flat.
While the data on spending and actual GDP are from the Bureau of Economic Analysis provide the data on expenditures and actual GDP, the potential GDP data are through the data sites of the St. Louis branch of the Federal Reserve.
FRED provides potential GDP in both nominal form (series label NGDPPOT) and real (series name GDPPOT).
ALFRED provides older estimates of real potential GDP. The one I used was from August, 2006, and has the series name GDPPOT_20060817.
There are a few steps involved in making the 2006-vintage real potential GDP commensurable with the 2018-vintage nominal potential GDP, but explaining that would take another page or two. If anyone is curious, let me know in the comments section and I will oblige.
Tuesday, March 20, 2018
Platform wars?
Over on Facebook, Jason Antrosio mused about ... getting off of Facebook, in light of the way the platform let Cambridge Analytica misuse their data, and their response since, which has been the opposite of reassuring.
I wondered about an alternative platform (for convenience, let’s call it Platform 9-3/4), which had similar capabilities as far as the methods it provided for sharing information—though of course pretty much by definition it would lack Facebook’s dominant position where “everybody” is on the same site.
If a bunch of people moved to this new site, it seems to me that you could end up with a bifurcated population.
Platform 9-3/4 would end up with a relatively large following among people who don’t like Facebook’s role in bringing about the current mess.
But absent that motivation, people wouldn’t have a good reason to move away from the dominant player to the upstart, so Facebook would hold onto people who:
This comparison to gun-control argument and the “good guy with a gun” trope brings out two aspects of the proposed migration, while a third point comes from the observation that only the “bad guys” will be left.
I wondered about an alternative platform (for convenience, let’s call it Platform 9-3/4), which had similar capabilities as far as the methods it provided for sharing information—though of course pretty much by definition it would lack Facebook’s dominant position where “everybody” is on the same site.
If a bunch of people moved to this new site, it seems to me that you could end up with a bifurcated population.
Platform 9-3/4 would end up with a relatively large following among people who don’t like Facebook’s role in bringing about the current mess.
But absent that motivation, people wouldn’t have a good reason to move away from the dominant player to the upstart, so Facebook would hold onto people who:
- Like Trump
- Don’t have particular opinions on the man one way or another (I don’t really understand how that’s possible, but I hear it’s a thing)
- Maybe don’t like Trump, but don’t see the connection to Facebook as being all that important
This comparison to gun-control argument and the “good guy with a gun” trope brings out two aspects of the proposed migration, while a third point comes from the observation that only the “bad guys” will be left.
Monday, March 19, 2018
Disarming the happy medium
The Parkland school shooting seems to have brought more sustained attention to the gun debate than earlier instances of senseless slaughter.
And because the shooter had a history of mental-health issues that were noted by those around him, it has also provided fodder for the idea that the problem isn’t guns, the problem is our mental-health system.
If only we weren’t so incompetent about locking up dangerous people, if only those stupid bureaucrats would act on the information available to them, we could prevent tragedies like Parkland, and we wouldn’t be talking about limiting the access that responsible gun owners have to the weapons they want.
The problem with this argument is in the implicit notion that it is possible to get the mental-health decision-making “right.”
I saw an observation this morning that our current guidelines for involuntary commitment—our reluctance to lock people up on the basis of mental health—has to be seen in the context of earlier practice, under which we were all too willing to lock people up.
When we finally wised up and stopped doing that, we overreacted, and now we are extremely reluctant to commit people who really are potentially harmful to themselves and others.
I would guess that we can do better at that than we’re doing, but we should recognize that where humans are making decisions based on inevitably imperfect, incomplete information, there will be errors.
And because the shooter had a history of mental-health issues that were noted by those around him, it has also provided fodder for the idea that the problem isn’t guns, the problem is our mental-health system.
If only we weren’t so incompetent about locking up dangerous people, if only those stupid bureaucrats would act on the information available to them, we could prevent tragedies like Parkland, and we wouldn’t be talking about limiting the access that responsible gun owners have to the weapons they want.
The problem with this argument is in the implicit notion that it is possible to get the mental-health decision-making “right.”
I saw an observation this morning that our current guidelines for involuntary commitment—our reluctance to lock people up on the basis of mental health—has to be seen in the context of earlier practice, under which we were all too willing to lock people up.
When we finally wised up and stopped doing that, we overreacted, and now we are extremely reluctant to commit people who really are potentially harmful to themselves and others.
I would guess that we can do better at that than we’re doing, but we should recognize that where humans are making decisions based on inevitably imperfect, incomplete information, there will be errors.
Saturday, March 17, 2018
A crippled society
It’s hard to compete with the madness that’s been coming out of the White House for the last 16 months, reaching something of a crescendo this last week.
But let this serve as your periodic reminder that the insanity we see in the U.S. is part of a pattern across much of the world, just with a smaller vocabulary, weirder hair, more porn stars, worse lawyers—and nuclear weapons.
The Czech president (Miloš Zeman) was just inaugurated for his second 5-year term and gave not so much a vision of his renewed term as a call to arms against journalists who work at publications not under the control of his allies.
The prime minister (Andrej Babiš) looks like he’s trying to get the right people into place to prevent investigation of his alleged fraudulent use of subsidies from the European Union. Before he became prime minister, he was minister of finance as a junior coalition member of the previous government. There’s evidence he used that position to protect biofuel subsidies that are a tremendous source of profit to him as the country’s largest owner of canola-growing acreage, farm-chemical manufacture, and biofuel processing.
You could say there are two kinds of entrepreneurs. The “productive” type are good at making something, or providing some sort of service, or overseeing others in the efficient provision of goods or services. Their activity makes a country richer.
The other type are good at working the inside angles, using financial tricks to put the competition out of business, assembling an empire through connections and skullduggery. The effects are felt most directly by those who work in the companies they take over, but ultimately, their activities come at the expense of the society as a whole, even as they enrich themselves and their cronies.
I’m reading Žlutý baron (Yellow Baron), a book-length piece of investigative reporting on Babiš, and the authors make a strong case that he is decidedly in that second category of entrepreneur. He doesn’t seem to know much about how to produce a good product with a workforce that is fairly compensated and enjoys their work. Rather, he knows how to take over those kinds businesses, using access to finance and friends in the right places, then squeeze the workers and the product quality to fatten his bottom line.
In last October’s elections, he campaigned on the idea that he would run the government like one of his businesses.
And he got a plurality of Czech voters.
Tomio Okamura campaigned against Islam and foreigners, and ended up 11% of the seats in parliament.
Another 7% went to the communists, who seem to be working behind the scenes with Okamura’s party to keep Babiš’s government in place, even without a formal majority.
The president is bending the constitution by indefinitely leaving in place a government that can’t assemble enough votes in parliament to formally declare it to be the legitimate government.
This dysfunction in so-called “high politics” is linked with some real ugliness in daily life on the ground, as can be illustrated with a sampling of incidents from last November.
But let this serve as your periodic reminder that the insanity we see in the U.S. is part of a pattern across much of the world, just with a smaller vocabulary, weirder hair, more porn stars, worse lawyers—and nuclear weapons.
The Czech president (Miloš Zeman) was just inaugurated for his second 5-year term and gave not so much a vision of his renewed term as a call to arms against journalists who work at publications not under the control of his allies.
The prime minister (Andrej Babiš) looks like he’s trying to get the right people into place to prevent investigation of his alleged fraudulent use of subsidies from the European Union. Before he became prime minister, he was minister of finance as a junior coalition member of the previous government. There’s evidence he used that position to protect biofuel subsidies that are a tremendous source of profit to him as the country’s largest owner of canola-growing acreage, farm-chemical manufacture, and biofuel processing.
You could say there are two kinds of entrepreneurs. The “productive” type are good at making something, or providing some sort of service, or overseeing others in the efficient provision of goods or services. Their activity makes a country richer.
The other type are good at working the inside angles, using financial tricks to put the competition out of business, assembling an empire through connections and skullduggery. The effects are felt most directly by those who work in the companies they take over, but ultimately, their activities come at the expense of the society as a whole, even as they enrich themselves and their cronies.
I’m reading Žlutý baron (Yellow Baron), a book-length piece of investigative reporting on Babiš, and the authors make a strong case that he is decidedly in that second category of entrepreneur. He doesn’t seem to know much about how to produce a good product with a workforce that is fairly compensated and enjoys their work. Rather, he knows how to take over those kinds businesses, using access to finance and friends in the right places, then squeeze the workers and the product quality to fatten his bottom line.
In last October’s elections, he campaigned on the idea that he would run the government like one of his businesses.
And he got a plurality of Czech voters.
Tomio Okamura campaigned against Islam and foreigners, and ended up 11% of the seats in parliament.
Another 7% went to the communists, who seem to be working behind the scenes with Okamura’s party to keep Babiš’s government in place, even without a formal majority.
The president is bending the constitution by indefinitely leaving in place a government that can’t assemble enough votes in parliament to formally declare it to be the legitimate government.
This dysfunction in so-called “high politics” is linked with some real ugliness in daily life on the ground, as can be illustrated with a sampling of incidents from last November.
Sunday, March 11, 2018
Adventures in misgovernment
This Thursday at noon there will be a 30-minute “cautionary strike” by students from several universities in Prague and other Czech cities.
Above all we demand:
1) That the president of the Czech Republic fulfill his constitutional responsibility and names a premier who has support [in parliament] and who isn’t under criminal indictment.
2) That the caretaker government not undertake fundamental or personnel-related steps and that it not create new constitutional arrangements.
3) That the Senate come out strongly against the failure to uphold constitutional traditions.This takes some unpacking.
Thursday, March 8, 2018
What's an education worth?
This morning I listed to an enjoyably provocative interview with Bryan Kaplan, an economist from George Mason University.
He’s got a book out, The Case Against Education: Why the Education System is a Waste of Time and Money, and so he’s making the circuit, including on Radio West.
A major point of Kaplan's is that education today is much more about signaling than about acquiring knowledge that actually makes you more productive. That is, college is good for your income as an individual because doing well in college makes you stand out from the crowd, but college for lots of people is more or less irrelevant to the prosperity of the country as a whole, because college-educated people aren’t better at useful things than people without a college degree.
That’s a well-grounded argument with a body of research behind it, and some interesting implications—not necessarily good implications for people engaged in higher ed like myself.
Another big piece of his argument is that people are learning things they’re never going to use. I can easily imagine that’s true for many students, but I would argue that’s more the fault of the students than of the educational institution.
I was a double major in music and history. I don’t use my music education in any formal sense, but I do draw on it every time I go to a concert, whether it’s the Czech Philharmonic or Phish. And an underlying sense of form probably shapes how I put together my own classes.
I use my history education continually, as it helps ground my understanding of economics.
I took multivariate calculus because it was the easiest way to satisfy my science requirement. Then I decided to go to graduate school in economics, and it was incredibly helpful that I’d already had that material (though I needed some brushing up after six years of not using calculus).
I took art and architecture of ancient Greece and Rome, because I needed an honors class to keep my scholarship, and it still informs how I look at buildings and cities.
I took Russian because my sister suggested I write a senior thesis on the teaching of U.S. history in the Soviet Union. I never wrote the thesis, but I did study in Moscow, and then happened to be back there visiting friends during the putsch against Gorbachev, and I could follow what was going on because I spoke Russian.
And learning Russian set me up for learning Czech, which has exposed me to yet another world of ideas and thought.
Kaplan complains about philistinism, but he pushes the idea that we should focus on learning what we’re going to “use.” That sounds pretty philistine to me.
True, we educators may not be able to make our students find lasting value in the range of things they’re learning in college, but I imagine it doesn’t help if professors are characterizing wide swathes of human knowledge as useless.
But the piece that made me sit down and write this was when he talked about the argument that an education makes you a better voter. He says that merely providing an education doesn’t do it.
He’s got a book out, The Case Against Education: Why the Education System is a Waste of Time and Money, and so he’s making the circuit, including on Radio West.
A major point of Kaplan's is that education today is much more about signaling than about acquiring knowledge that actually makes you more productive. That is, college is good for your income as an individual because doing well in college makes you stand out from the crowd, but college for lots of people is more or less irrelevant to the prosperity of the country as a whole, because college-educated people aren’t better at useful things than people without a college degree.
That’s a well-grounded argument with a body of research behind it, and some interesting implications—not necessarily good implications for people engaged in higher ed like myself.
Another big piece of his argument is that people are learning things they’re never going to use. I can easily imagine that’s true for many students, but I would argue that’s more the fault of the students than of the educational institution.
I was a double major in music and history. I don’t use my music education in any formal sense, but I do draw on it every time I go to a concert, whether it’s the Czech Philharmonic or Phish. And an underlying sense of form probably shapes how I put together my own classes.
I use my history education continually, as it helps ground my understanding of economics.
I took multivariate calculus because it was the easiest way to satisfy my science requirement. Then I decided to go to graduate school in economics, and it was incredibly helpful that I’d already had that material (though I needed some brushing up after six years of not using calculus).
I took art and architecture of ancient Greece and Rome, because I needed an honors class to keep my scholarship, and it still informs how I look at buildings and cities.
I took Russian because my sister suggested I write a senior thesis on the teaching of U.S. history in the Soviet Union. I never wrote the thesis, but I did study in Moscow, and then happened to be back there visiting friends during the putsch against Gorbachev, and I could follow what was going on because I spoke Russian.
And learning Russian set me up for learning Czech, which has exposed me to yet another world of ideas and thought.
Kaplan complains about philistinism, but he pushes the idea that we should focus on learning what we’re going to “use.” That sounds pretty philistine to me.
True, we educators may not be able to make our students find lasting value in the range of things they’re learning in college, but I imagine it doesn’t help if professors are characterizing wide swathes of human knowledge as useless.
But the piece that made me sit down and write this was when he talked about the argument that an education makes you a better voter. He says that merely providing an education doesn’t do it.
Tuesday, March 6, 2018
A taste of November
Last night I stopped in at a demonstration on Wenceslaus Square, as one does on a Monday evening.
The crowd was protesting the fact that a member of parliament named Zdeněk Ondráček had been elected to chair the parliamentary committee overseeing the General for the Inspection of Security Agencies (Generální inspekce bezpečnostních sborů – GIBS).
There are two reasons that’s a problem.
First, his election to the committee chairmanship was supported by the prime minister’s party (ANO). The prime minister has been indicted for fraud in connection with subsidies for Čapí hnízdo (The Stork’s Nest) an organic farm and conference center he owns. As chair of the committee overseeing GIBS, Ondráček will have influence over the investigation of the case against the prime minister.
The second issue is that Ondráček is not merely a member of the communist party, but before November, 1989, was a policeman who took part in suppressing anti-communist protests.
Of course, all of us have done things we later look back on as having been, at best, unfortunate choices, right? But to this day Ondráček doesn’t regret his work with the communist police.
Now you have him in parliament, chosen to head an important committee, and you have thousands in the streets protesting him.
The crowd was protesting the fact that a member of parliament named Zdeněk Ondráček had been elected to chair the parliamentary committee overseeing the General for the Inspection of Security Agencies (Generální inspekce bezpečnostních sborů – GIBS).
There are two reasons that’s a problem.
First, his election to the committee chairmanship was supported by the prime minister’s party (ANO). The prime minister has been indicted for fraud in connection with subsidies for Čapí hnízdo (The Stork’s Nest) an organic farm and conference center he owns. As chair of the committee overseeing GIBS, Ondráček will have influence over the investigation of the case against the prime minister.
The second issue is that Ondráček is not merely a member of the communist party, but before November, 1989, was a policeman who took part in suppressing anti-communist protests.
Of course, all of us have done things we later look back on as having been, at best, unfortunate choices, right? But to this day Ondráček doesn’t regret his work with the communist police.
Now you have him in parliament, chosen to head an important committee, and you have thousands in the streets protesting him.
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