Housing crunch

If Philip Mangano, Bush's homelessness czar, has some clever ideas for alleviating homelessness, I say go right ahead:

The Bush Administration proposes to solve the problem by beginning with the hardest cases: the 10 percent who are severe addicts or mentally ill, and consume half of all resources devoted to homeless shelters. Mangano believes that by moving these chronic cases into "supportive housing"—a private room or apartment where they would receive support services and psychotropic medications—the government could actually save money, and free up tens of thousands of shelter beds.

Douglas McGray-- the author of the article-- wonders whether liberals will oppose this strand of compassionate conservatism. I see no reason to. Andrew Cuomo, apaprently, has protested that the administration is focusing on only a special subclass of homeless people. But this sort of discrimination makes perfect sense-- as Ken Auletta showed in The Underclass, there exists a core group of intractable persons below the poverty line, those who need much more than the usual handout.

On the other hand, Mangano's strategy doesn't redeem Bush's proposal to slash $1 billion from the Section 8 rent assistance program. It's possible to focus on the hard core homeless and help those struggling on the poverty line. There's no need to squelch the latter to pursue the former; the two groups are entirely separate. In general, families that qualify for Section 8 vouchers pay 30% of their rent, and the program usually gives priority to single mothers and battered women.

So, y'know, it makes sense to take shelters away from the intractables and give them supportive housing. That balances out. It doesn't make sense to take housing away from a completely unrelated group of people. Yeah?

New Deal, Iraq-style

With all due respect to Wesley Clark and Zbigniew Brzezinski, the whole idea of bringing international support into Iraq still sounds like a hollow ruse. Are the militias planning to relinquish their weapons if the UN takes control of the occupation? Will ethnic tensions suddenly disappear? Doubtful. Without directly addressing some of the very real and very concrete problems in Iraq, "international support" is ephemeral at best.

Hassan Fattah gets it, and offers a clear, sensible solution: social spending. (Well, it was bound to come up eventually.)

Instead, the CPA needs to launch massive, New Deal-style programs that would employ hundreds of thousands of Iraqis, put money in average people's hands, and jump-start the economy. Besides providing work, these programs, as they did during the Great Depression, would help mold a new Iraqi identity. Iraq is ripe for just such a project. Last year, for example, the CPA instituted a Baghdad city cleanup that put thousands of Iraqis to work sweeping and unclogging drains. Baghdad became cleaner, and the notable quiet during and after the program underscored its success as Iraqis welcomed the massive public works effort.

In addition to repairing roads and sewers, the United States should put thousands of Iraqis to work conducting a census. As various political parties discuss their constituencies and economists make plans for the country, no one has any evidence of whom politicians represent or of where Iraqis live. Iraq has long had a tradition of community representatives in each neighborhood who are responsible for local information. Each community representative typically has the name of each family in the neighborhood; today, they could serve their communities by helping develop this census. As with the Baghdad cleanup, a census would help the economy and also build political unity--all of which would keep people from reaching for their guns.

How does that saying go-- infrastructure speaks louder than words? Regardless of all the heartening news coming out of Iraq, reconstruction is still proceeding at a grudging pace, and infrastructure is still shabby. Any government, however legitimate, is going to find the going tough amidst these conditions.

Now, massive public works projects don't amount to much as long as Iraq lacks basic security. But it's entirely possible that we could somewhat bypass the entire security issue if we committed ourselves to large-scale infrastructure financing. Basically, we cordon off towns like Fallujah and Najaf, surrending those areas to Sadr and other militia leaders. It's unpalatable, yes, but absent the continuation of full-scale conflict and/or the demolition of entire towns, there doesn't seem to be much we can do to disarm the insurgents. At any rate, the point of an Iraqi New Deal would be to staunch the bleeding in areas still under our control, by putting restless and discontent Iraqis to work. The hope is that we could prevent unemployed Iraqis from joining up with the insurgents, and give them a stake in the continued stability of Iraq.

On the international front, a public works program could possibly lure Europe into the fray, especially if we started handing out lucrative reconstruction contracts (or hell, let the "fully sovereign" Iraqis manage those contracts, as opposed to the Pentagon).

Switching to offense

I just finished Jagdish Bhagwati's In Defense of Globalization and the short summary is: don't bother. If you want a smart, detailed defense of globalization, you'll have to go elsewhere-- Paul Krugman's Peddling Prosperity springs to mind. Bhagwati's book is too thin and too glossy.

On a stylistic level, Bhagwati writes atrociously. Not only does he consider Kevin Costner a "gifted actor", but he lacks all ability to deploy metaphors: "Japan comes at us like images of a kaleidescope" (It does not). On top of it all, we have to deal with his "witticisms." Oy. Apparently Bhagwati (or his editors) decided that rigorous citation and facts would only confuse his dim-witted readers, so he opts for lame jokes to make his case:

Too often, US proponents of aid to poor countries have tried to hide the altruism and sought to justify aid flows on grounds of enlightened self-interest, arguing that it is good not only for our souls but really for our material well-being. This rationale is amusingly illustrated by the story where a rich man a poor one are praying in a church. [The rich man wants a million dollars to pay off a loan; the poor man wants a buck to buy bread.] The rich man pulls out a hundred dollars from his wallet and gives the money to the poor man, saying, "Buy as much bread as you want with this hundred dollars, but get out of here. I need the Lord's undivided attention!" Now there is enlightened self-interest for you.

That's cute, and I'm sure this joke earns yuks at dinner parties, but couldn't this space be better spent making actual arguments? Someone should really point out the vast-- usually painful-- difference between citing a few witticisms and actually being witty.

But okay. Literary fulminating aside, the book revisits a few interesting globalization issues, and raises a few provocative questions.

1) Bhagwati brings up the idea of "ladders of comparative advantage", a theory suggesting that countries specializing in labor-intensive goods-- such as toys or textiles-- eventually shift to more capital-intensive industries, such as computer production. The upshot is that the world market is never flooded with labor-intensive products, and prices are never unduly depressed. As Bangladesh gets into the textile market, South Korea moves on to bigger, flashier things.

Thus far, empirical evidence supports that theory. Most of Asia has withdrawn from labor-intensive exports just as China has become the world manufacturing center for textiles, toys, etc. But the question is: will China decline anytime soon? A billion people is a lot of people, and it seems to me that as China shifts into capital-intensive industries, labor migration from the countryside will keep the textile and toy factories thriving for decades to come. This presents a problem if, say, Africa and other excessively Third World countries start to develop into serious industrial economies. There's no reason to assume that ladders of comparative advantage will continue to hold.

2) Bhagwati argues that trade liberalization should happen as rapidly as possible. He quickly dismisses economists like Joseph Stiglitz who worry about the unemployment problems that might ensue. Basically, Stiglitz correctly supposes that domestic industries will quickly start firing workers once the arrival of cheap imports depresses prices. Bhagwati simply shrugs and says that these unemployed workers will quickly find jobs in the newly created export sectors.

In theory, of course, this should hold. Lowering tariffs will allow a country-- blessed by comparative advantage-- to create more jobs, especially in export industries. But that's just the theory. In reality, can often prove quite difficult for workers to adapt to new industries, especially if they need to learn new skills or travel long distances to find the new jobs. Stiglitz' concerns are certainly valid, and demand more attention than a glib retort.

3) That said, Bhagwati sensibly notes that, regardless of what you think of rapid trade liberalization, it is rarely prudent to quickly loosen a country's capital controls.

4) Is it really the case that unmanaged, caution-to-the-wind trade liberalization always works best? To take the very broad view, of course it is true that export-promoting (EP) trade strategies will benefit a country more than import-substitution (IS) strategies. No sensible economist believes that protectionism is more beneficial than trade in the long run. But that doesn't mean the short-run details are negligible.

Take a closer look at, say, the East Asian "tigers" that deftly employed export-promoting strategies. Most of these countries did well by subsidizing and nurturing their high-tech manufacturing and information-based service industries. Taiwan, for instance, doubled public spending on research and development from 1985 to 1990, as evidenced by its famous Hsinchu Science-Based Industrial Park. The authoritarian South Korean government used the financial sector to steer credit to targeted industries, socialized risk, and fostered a number of state-owned enterprises. On the tariff front, let's not forget that, until about 1986, Taiwan and South Korea both had average tariffs hovering around 25%. For optimal effect, it seems, export-promotion needs a measured dose of smart government policy.

Blinkered

Wow, I stop reading the news for a few days and now even Jim Hoagland is throwing his hands up over Bush's "strategy" for Iraq:

Both documents betray a willingness to see the world as you would like it to be rather than as it is, and a readiness to hope that the gap goes unnoticed or unexamined. With all respect, sir, that is not leadership. Leaders address inconvenient reality and then seek explicit and reasoned support from the nation for dealing with it.

Agreed; though I'm not sure an appeal to reality will do the trick. To quote Marcel Proust: "The facts of life do not penetrate to the sphere in which our beliefs are cherished; as it was not they that engendered those beliefs, so they are powerless to destroy them."

An ounce of prevention...

We haven't yet heard the last word on Africa policy, but at least Jeffrey Sachs has the first word:

In every aspect of Africa's complex plight an ounce of prevention will be worth a ton of treatment. In recent years America gave a negligible $4m a year to Ethiopia to boost agricultural productivity, but then responded with around $500m in emergency food aid in 2003 when the crops failed. In the 1990s America gave less than $50m a year for Africa to prevent AIDS, so now will spend $3 billion per year to treat the disease after it has spread to more than 50m Africans—20m dead and 30m currently infected.

Well, uh, yeah. Good liberals know that this prevention/treatment discrepancy holds for almost every issue. We can pitch pennies to subsidize nurse visitation programs, or we can spend millions to swell our prisons. We can spend a little on preventive health care, or a lot on treating full-blown diseases. And so on.

In hiding

To all my concerned and loyal readers: This blog hasn't so much crashed as stalled out for a bit. My laptop frazzled-- I'm getting the motherboard replaced three days before the warranty expires-- and I'm in the process of moving from Boston to San Francisco. In a few weeks I'll start work at Mother Jones, doing who knows what incalcuable damage to the world of journalism. Once I'm settled and sane, I'll start posting again.

Back in black

The Washington Post takes a survey of states who have raised taxes and fees to get rid of onerous budget deficits:

So in Virginia and many other states, taxes will continue to go up next year. The budget officers' group notes that more than half the governors have called for tax and fee increases for fiscal 2005, which begins July 1 in most states. Only four governors have called for tax cuts. Many cities also are raising taxes, and seeking to boost revenue from sources such as parking meters and library fines.

The real story though—or in this case, the overlooked story—is what kind of tax increases are being rolled through state legislatures. In the case of Texas, Gov. Rick Perry's highly regressive 'sin taxes' will shift state tax burdens onto the backs of the lower classes. Some local fees—like those on parking meters—can work to similar effect. On the other hand, Nevada's idea of a "transfer fee" on every real estate purchase is a great idea—if housing speculators are benefiting from a splurge-happy housing market, why not tax them for it?

(In fairness to the noble questers at Heritage, the Post also neglects to mention that some governors are getting rave reviews for making difficult program cuts.)

At this point, it's difficult to assess Bush's strategy of making states pay their own way, without massive federal grants. As Gregg Easterbrook noted long ago, it's certainly a more honest and transparent means of budget bookkeeping, and prevents wealthy states from subsidizing states that run deficits. But if the result is that some states end up heaping forth monstrously regressive fines and taxes, suddenly this doesn't look like such a spiffy idea.

The REAL problem in Iraq



Have you ever noticed how, in all the pictures of violence in Iraq, the belligerent young kids— you know, the ones throwing rocks and ululating over burning car wreckage— are all wearing collared polo shirts?

Uh. Maybe this is the problem. When i was a kid, I used to hate wearing collared polo shirts, especially if they had the little alligator on the front. My mom said, "Oh, you'll looks so nice for the guests," but really, it just pissed me off. Enough to set fire to a Humvee? I don't know...

Inclusion-Exclusion

Juan Cole notes reports of growing discontent among high-level US military commanders. "Winning the battles, losing the war" seems like the general sentiment here. But I'm not sure I agree with Cole's assessment of what we might have done differently:

The US has lost ground in Iraq by being exclusionary rather than inclusive. Radical debaathification and a punitive attitude toward Sunni Arabs pushed them into insurgency. The Americans excluded the Sadrists early on, and are now having to fight them everywhere in the South. If they actually do kill or capture Muqtada al-Sadr, it will be Americans killing or holding a descendant of the Prophet Muhammad, husband of the daughter of revered Ayatollah Muhammad Baqir al-Sadr, and beloved son of Ayatollah Muhammad Sadiq al-Sadr. A lot of Shiites who are now on the fence will turn against the US, maybe radically.

Contrast these policies to Afghanistan, where the US has been inclusive, even of the Pushtun cousins of the Taliban, and where there is much less anger toward the US and much less in the way of violence against US troops. That is a remarkable comparison. Afghanistan was supposed to be the graveyard of empires, and Iraq was supposed to be a cakewalk, according to the Bushies. The answer to the puzzle is that situations are fluid, and are what you make of them. If you screw up, you create disasters.

I'm not sure Cole gets Afghanistan right. In the current Foreign Affairs, Kathy Gannon notes that, if anything, we haven't reached out to the Pashtun majority enough. Instead, we've relied too heavily on elements in the Northern Alliance--essentially the same warlords who laid waste to Afghanistan before the Taliban came to power:

The warlords have now ruled the country for two years, and Afghanistan seems to be degenerating into a sort of narco-state, which could spin out of control. Not only are the warlords complicit in drug-running and corruption, but according to Afghanistan's Human Rights Committee, they are also guilty of abusing and harassing the population. The warlords have stolen peoples' homes, arbitrarily arrested their enemies, and tortured them in private jails.

Gannon also notes that the warlords have done very little to capture or kill Taliban and al Qaeda holdouts. Much of this abuse stems from the fact that no one's watching the watchdogs—NATO security forces have either left the country or withdrawn to Kabul. But the real problem is that we've relied heavily on people who have no loyalty to us, who, if anything, are hostile to our stated interests in Afghanistan.

There's every reason to think that an "inclusionary" strategy in Iraq could have backfired in similar ways. If we had kept the Baathists in power, if we had brought Moqtada Sadr under our wing, we might have set the stage for Iraqi warlordism, of sorts. If not now, then after we withdrew. Some sort of exclusionary principle is needed. As a math major, I can really only recommend that Bremer and Rumsfeld study this.

Iraqi press on torture

Iraqi editorials have their say:

We want to see, soon, how the United States will punish those who tortured the Iraqi prisoners and took photographs of their pain and suffering. We want to see Tony Blair, who speaks of human rights with tearful eyes like a crocodile chewing its prey. We want see, hear and feel the punishment of those who committed these abuses. Their punishment should be exemplary, first to atone for the injustice done to the prisoners, and second to clear the reputation of the two superpowers that have long claimed to be staunch advocates of human rights.

Al-Manarah - from commentary by Khalaf al-Munshidi
--------------

The Iraqis believe - by this scandal and their [the Americans'] disgraceful way of dealing with the Iraqis that preceded this scandal - that the Americans have tarnished the great achievement they attained for the Iraqi people and for the whole world when they toppled forever a tyrant and a hostile dictatorial regime and saved the regional states from its evil.

Al'Ayn - as cited by Qatari Al-Jazeera satellite TV
---------------

The question is: What will the members of the Interim Governing Council do now that the news of the scandal has spread and they have discovered that the people they supposedly represent are being tortured in this brutal way?

Al-Sharq al-Awsat - from article by Fahmi Hwaydi
---------------

What justification is there for the double standards being used in dealing with the people of Iraq? Don't you see that vile cohorts of the toppled regime have been set free although their hands are stained with the blood of mass grave victims everywhere in Iraq? And at the same time the US has mobiliaed its full military and political might to increasingly tighten the noose on Moqtada Sadr and his supporters, killing and arresting so many and persistently refusing any offer of a peaceful solution to the standoff.

Al-Shira - from commentary by Ja'far Abd Ali
---------------

Thanks to Moqtada Sadr, Iraqis now can raise their heads high in the sky among the other nations of the world.

Ishraqat Al-Sadr
--------------

The people of Iraq should... hold on to their political line and peaceful resistance. Other means have proved only to prolong the occupation.

Al-Adalah - from editorial
--------------

More than one US official has been cited referring to the upcoming caretaker government as having incomplete sovereignty or enjoying limited power, which implies that there is a political showdown ahead with the occupying forces, a battle that has to be fought to snatch sovereignty back from the grip of the occupiers. We are very doubtful that a government of mere technocrats will be up to so big a job.

Al-Bayan - from editorial
--------------

Some of these voices are harsh and can never be appeased, but note that some of these editorials sound quite reasonable. Granted, these are excerpts, but the general sense is that the fallout from Abu Ghraib is containable-- if, of course, the right measures are taken. The right measures include throwing open the prison to international inspectors, demolishing Abu Ghraib, conducting a full and open investigation, and firing those in charge. The heartening thing is that some editorials, like that in Al-Manarah, seem to genuinely believe that such measures would help "clear the reputation" of the occupiers. Not all Iraqis hate us--not yet, at least--so it's high time to pay heed to those moderate voices.

NATO's out

Well, fuck.

The Western military alliance had expected to announce at a June summit that it would accept a role in the country, perhaps by leading the international division now patrolling south-central Iraq. But amid continuing bloodshed and strong public opposition to the occupation in many nations, allies want to delay any such major commitment until after the U.S. presidential election in November, officials say.

Why wait until after the election? Either NATO leaders are hinting that they'll only play in the sandbox if Kerry's elected, or they simply realize that the US won't get serious about Iraq until after the election, regardless of who's elected.

The second line of thinking makes sense, at least in theory. If Bush does win in November, he can take a deep breath, banish Rove, stop worrying about polls, and do whatever it takes to redeem the occupation, politics be damned. This could possibly improve things. After all, some of the most practical ideas for salvaging this war-- groveling before the UN, splitting up Iraq, allowing for a Shiite theocracy in the South-- also happen to be politically dodgy. And vice versa, some of the shrewdest political tactics surrounding the war-- low-balling cost estimates, forcing opportunistic funding votes, pushing overly optimistic strategies-- have been disastrous from a strategic standpoint.

Obviously I hope Bush gets voted out. But now matter how the election turns out, January '05 will be the best time to finally get serious about the occupation.

Decline and Fall

GQ, of all places, just put out a fascinating profile of Colin Powell. Read it. Not only does it offer a cute little anecdote about island disputes in Morocco, but it really describes quite nicely some of the tensions brewing in the Bush administration. For those much fogged by hindsight, the article reminds that, prior to 9/11, Powell was the undisputed heavyweight in the Bush administration:

Sure enough, from the early days of the Bush term, Powell cut a wide swath. When an American spy plane went down in China just two months into his tenure, when the air crew was taken into custody and the neocons at the Pentagon went ballistic, acting as if it were proof positive that China was the next Soviet Union, it was Powell who worked the phones night and day, negotiating, soothing, nudging, assuring the Chinese that although the United States would not formally apologize for the spies or the plane, he was willing to use the word sorry in a formal statement, and when that wasn't good enough, offered the words very sorry, which, almost unbelievably, worked, becoming the key to the lock that opened the door and brought the prisoners home eleven days after the crash. Powell kept on. By August his stature was difficult to deny; you could measure his influence in direct proportion to that of his counterpart in the Defense Department, a geezer named Rumsfeld whose last significant job in government had been under Gerald Ford and who had spent the first eight months of the new administration fading into oblivion, harping about the need for a missile-defense shield.

After 9/11, as we know, it was all sidelines, all the time for Powell. Nothing new there. Still, the GQ article really highlights just how alienated from the rest of the administration Powell has become. When his closest aides will happily go on record and heap imprecations on Rice and Cheney, we can safely say things are falling apart. Here's Powell's chief of staff, Larry Wilkerson:

"I call them utopians," he said. "I don't care whether utopians are Vladimir Lenin on a sealed train to Moscow or Paul Wolfowitz. Utopians, I don't like. You're never going to bring utopia, and you're going to hurt a lot of people in the process of trying to do it."

Yikes. Also interesting is the fact that Powell-- as one of the few grown-ups in the administration-- really has made himself indispensible, often in very low-key ways. His friendship with Musharraf, for starters, has helped keep Pakistani-Indian relations at a low simmer. His efforts (since before 9/11) to engage Muammar Qaddafi in negotiations were a major factor in Libya giving up its weapons program. Losing Powell really will hurt in a lot of crucial yet hard-to-pin-down ways.

Save your optimism

Dean Baker appends a well-placed cautionary note to the otherwise very good April jobs report:

In keeping with the overall weakness of the labor market, wage growth continues to be slow. While the April figure shows a respectable gain, the average hourly wage has risen at just a 2.1 percent annual rate over the last three months, well below the rate of inflation. The lowest paid segments of the labor force continue to be hit hardest. Over the last year, the wage gains in retail trade and leisure services have averaged 1.8 percent and 1.7 percent, respectively.

If weak wage growth continues, even in the face of surging productivity, it will pose a serious problem for the recovery as consumer debt reaches its limits. With higher interest rates likely to slow the housing sector, a new source of demand will be badly needed.

In 2003, Bush chose not to pass middle-class "stimulus" tax cuts that would have created immediate consumer demand. For this to work, he had to hope-- nay, gamble-- that wages would rise with the recovery, and consumer demand would pick up of its own accord. Now this gamble could still fail, and fail pretty badly. If nominal wages can't keep pace with inflation, say hello to another long economic lull, especially in the face of rising interest rates and a soon-to-be-splattering housing bubble.

What to do with the little one?

An (unidentified) colleague of mine recently had a baby, and her big dilemma at the moment is finding someone to take care of the kid once her three-month paid maternal leave runs out. Her employers offer a daycare service for an ungodly $1800 per month, which is obviously out of the question. (And imagine what low-income mothers go through—the current federal subsidy under TANF amounts to around $475/child.) So that leaves ad hoc arrangements—finding a friend, a babysitter, a relative. Read: chaotic and stressful. Is this honestly the best we can do?

According to The Center for Economic and Policy Research (CEPR), the answer, apparently, is yes. Mothers, especially working mothers, have to juggle their baby among strangers:

More mothers would likely use formal care if they could afford it or if they were provided assistance to pay the high costs of this kind of care. Studies consistently show that formal care is the most reliable and provides the highest quality care, and that mothers report wanting to use it. However, the high costs of care put it out of reach for many low-income mothers. Subsidies provided by the government do not do enough to help most low-income mothers who need help paying for child care. A report by the Department of Health and Human Services found that only 15 percent of children eligible for federal funds for child care assistance received any aid in 1999 (U.S. Department of Health and Human Services 1999) . Thus, most mothers had to find alternative ways of acquiring child care for their children while they are at work, be it looking to relatives, other informal arrangements, or finding more affordable formal daycare, if possible.

In my opinion, we should make formal daycare affordable and easy for all mothers, not just low-income ones—staying within budget constraints, of course. If, like Philip Longman, we fret that not enough people are having kids, then maybe we shouldn't make it such an ordeal to have kids in the first place.

Longman thinks that certain incentives—like slashing the payroll tax for parents—can induce parents to have more kids. This seems questionable, since generous welfare states like Japan and Germany have witnessed a decline in population growth. Still, reducing day care hassles would certainly make bigger families a reasonable prospect.

(Along the same lines, everyone should definitely take a peek at Anne Alstott's ideas on supporting childraising.)

Is our dropout learning?

Via the new and notable Eduwonk, I see that John Kerry is calling for more money to combat school dropout rates. According to the New York Times, his proposals include:

Doubling, to $300 million a year, money to create smaller high schools. The Bush administration had sought to eliminate the $150 million now in the budget for that, Mr. Kerry's advisers said.

Increasing spending by $200 million a year for mentoring middle school students and pairing college students with poor-performing middle schools.

Fifty million dollars a year for tutors and teacher training to improve literacy for lagging middle and high school students.

Supporting state legislation that denies drivers' licenses to dropouts.

The centerpiece of his plan, aides said, was enforcing provisions of No Child Left Behind on reporting graduation rates. They cited disclosures in Houston and New York City that dropout rates were being dramatically underreported because students who had been pushed out of school had not been counted.

Faithful readers (!!) of this blog will no doubt recall that I'm a big, big fan of solid, extra-chunky proposals like these, especially when it comes to education. I especially like the idea of a focused effort to create smaller high schools. But all that aside, Kerry is treating the high-school dropout problem much too simplistically. Let me try to elaborate.

First, note that high school dropout rates are related to youth unemployment rates in rather interesting ways. During the 1970s, the Manpower Demonstration Research Corporation (MDRC) ran a pilot program that guaranteed part-time jobs to low-income students, provided that they stayed in school. In their comprehensive 1980 report**, the MDRC found that the program "significantly affected the rate of return to school for out-of-school youths, and the retention in school of in-school youths." (An estimated 62.5% increase in returns, and 3.7% increase in retentions.)

Although these numbers are skewed upwards by the fact that the survey only counted those who stayed in the program—and hence counted only the most self-motivated of students—the numbers still stand, striking and exceedingly promising.

The lesson should be fairly clear: Students will stay in school provided that they can see some tangible benefit to staying in school. For the most part, low-income students grind away through shoddy high schools without much incentive to make it all the way through. Granted, most of us can see that high-school graduates make more money than dropouts, but this fact may not be readily apparent to students, especially poorer students. To borrow a very valid conservative idea, low-income youths need motivation.

None of Kerry's ideas offer this carrot. Hiking up literacy rates will certainly improve the quality of education, but it's unlikely that tutors and better teachers will motivate at-risk dropouts to stay in school. Especially in urban areas, peer pressure and the lure of easy money on the street both can make school seem an inherently valueless prospect. By linking school to employment in a meaningful way, the MDRC was able to create motivation. A real plan to combat dropout rates should unfold along these lines.

And needless to say, stripping away dropouts of drivers' licenses smacks of lunacy. Kids are famously shortsighted and usually don't respond rationally to deterrents. Bogus idea.


**Note: The MDRC is currently running another, more intricate youth training program, although the findings won't be published until 2005.

Worker's welfare

Recently I started subscribing to The Heritage Foundation's PolicyWire, and have actually enjoyed the daily columns pouring in my inbox. Even if I disagree with Heritage's premises—that government deserves extinction, plain and simple—the arguments are usually tightly spun and fun to try to unravel. Take, for instance, Paul Kersey and Tim Kane's three simple arguments against extending unemployment insurance. According to Kersey and Kane, not only is unemployment insurance unnecessary in the face of a booming job market (!!), but such welfare only causes dependency and laziness:

Unemployment insurance (UI) makes unemployment spells last longer. By making unemployment more attractive (or at least less unattractive) than it would otherwise be, UI benefits tend to increase the “reserve wage” of unemployed individuals who are considering new job offers—a possible employer will have to offer a higher wage, or some other inducements, before a new job is accepted.

Research has shown that the likelihood that a UI recipient will find a job rises dramatically as exhaustion nears. Research has also shown that employee recalls increase as benefits near exhaustion, suggesting that some employers may time unemployment spells to coincide with the length of unemployment insurance benefits.

This is a bit muddled. I'd like to know what kind of "research" they've used here—nothing is cited, of course. As the presumably non-partisan Congressional Budget Office found, the length of unemployment has risen for those not receiving unemployment insurance. So nearly everyone is having a tough time finding jobs, not just those supposed welfare junkies.

Moreover, if Kersey and Kane's 'dependency thesis' is correct, then we should have seen a dramatic upswing in employment after the Temporary Extended Unemployment Compensation program ran out in December. All those lazy bums got off the dole, so why didn't they just find jobs? But in fact, long term unemployment rose to its highest levels around that time.

On the other hand, 354,000 workers exhausted their unemployment insurance in March, a one-month record. And then in April, as everyone knows, the country saw relatively huge employment gains.

So who knows? Maybe all those folks actually found jobs, all simply because their federal aid ran out in March. But the evidence doesn't look great for the dependency thesis. It may hold true in normal conditions, but at the moment, we really are facing a bit of an unemployment problem that can't be blamed on mere welfare-induced lethargy.