Archives: 12/2013

The Influence of Policy Advocacy — Findings and Caveats

A new Brookings study looks at the influence of different education advocacy groups on the passage of Louisiana’s state-wide school voucher bill. In a clever twist, Russ Whitehurst and his co-authors added a fictitious advocacy group to the survey form as a placebo, to calibrate the rankings. After acknowledging that Governor Bobby Jindal was far more responsible for the enactment of the voucher program than any advocacy group, the paper concludes that the Louisiana Association of Business and Industry was the next most influential player. That’s not surprising given that its political contributions topped three quarters of a million dollars in the last state election cycle. Second and third places went, respectively, to the Black Alliance for Educational Options and the Louisiana Federation for Children.

This is useful information but it should be digested with two important caveats in mind. First, enacting a particular bill is an imperfect measure of long-term impact on policy, as the case of Utah illustrates. In February 2007, Utah enacted a universal voucher program. Less than a month later, teachers’ union opponents began a petition to put the voucher bill to a referendum vote and campaigned aggressively against it. By November, before a single child had ever received a voucher, voters struck the program down by a 3 to 2 margin. The lesson? If reform advocates don’t win over the public, their influence with state legislators can’t protect a program from ultimately being hobbled or overturned.

The second point is that, to the extent advocacy organizations do exert a lasting impact, they have a responsibility to ensure that their recommendations can deliver on their promises. “School choice” is a catchall phrase, encompassing reforms as disparate as public school open enrollment, charter schools, vouchers, and education tax credits. Even within each of these policy categories, details between programs vary substantially. But expertise in advocacy does not automatically confer expertise in policy (or vice versa). Will a particular policy perpetuate social conflicts over what is taught, or help to end them? Will it ultimately suffocate educators with regulatory red tape and limit parental choices, or preserve freedom in the long term? Will it allow brilliant educators to reach masses of students while limiting the growth of inferior schools? There are already at least tentative answers to these questions, though much remains to be learned. The more deeply advocacy organizations explore these questions before pushing through legislation, the more successful they will ultimately be.

Federal Sugar Program and Chicago Jobs

The Washington Post has great reporters, but there may be room for improvement in sharing research and reviewing past stories by colleagues.

An article on Sunday discussed how candy factories “had laid off thousands of workers” in a Chicago neighborhood where a new Wal-Mart has located:

“When Chicago was at its peak as America’s candy-making king, the sweet smells of Starbrite mints, Milk Maid caramels and Maple Nut Goodies wafted down North Cicero Avenue. The Brach’s plant, first opened in 1924, grew into one of the world’s largest candy factories, home to thousands of union workers pumping out 200 varieties of chocolates and hard candies. But in the 1990s, as American manufacturing moved overseas, the stream of departing blue-collar jobs here turned into a tidal wave. In 1993, Leaf Candy closed its factory, laying off 500 workers who used to make Whoppers malted milk balls. After dropping 2,800 jobs in 15 years, Brach’s moved its final 1,100 jobs to Mexico in 2003.”

The story features a sad photo of the abandoned Brach’s factory, but it does not report why all the candy businesses had departed.

Meanwhile, a different article in Sunday’s Post described how special-interest lobbying trumps ideology when it comes to the federal sugar program. Left-wing Democrats—who often claim to champion the poor—side with rich sugar barons, such as the Fanjuls of Florida. Conservative Republicans—who often claim to support free markets—support Soviet-style government controls on sugar markets.

The controls raise the domestic price of sugar and make the United States a lousy place to manufacture candy and other types of food. The Post article describes how candy manufacturers lobby against the sugar program, but that their efforts are no match for the remarkable influence of the Fanjuls and other Big Sugar crony capitalists. Who but Alfy Fanjul could have been patched through directly to the Oval Office right in the middle of a Clinton-Lewinsky “private encounter,” as the Post calls it?     

In sum, one Post story missed the economic damage done by the sugar program to Chicago, while another Post story just focused on sugar politics. But a 2006 Post story puts it all together. It accurately identifies the culprit in Chicago’s job losses, and the cause of that empty Brach’s factory:

“Producers of hard candy, such as Primrose and Brach’s, which closed its Chicago plant in 2004 to move its operations to Mexico, blame their shifting production strategies on one culprit: U.S. sugar subsidies that keep prices of domestic sugar much higher than prices on the world market. In addition, tight import quotas make it hard to import cheaper foreign-produced sugar.”

For more on the federal sugar program, see this backgrounder.

“We wouldn’t file a complaint against someone who doesn’t have liability”

A group called the National Fair Housing Alliance has taken the lead in levying sensational bias charges against mortgage lenders, claiming that neglect of REO (real-estate-owned) properties following foreclosure has followed racially discriminatory patterns. It helped negotiate the extraction of $42 million from Wells Fargo, and is pursuing tens of millions in claims against Bank of America and other lenders. NFHA’s claims have routinely been given unskeptical circulation in the press, but now an investigation by Kate Berry and Jeff Horwitz in the American Banker is bringing overdue scrutiny:

The group has disclosed addresses for only a fraction of the properties it alleges the banks have neglected, but a review of those it has released indicates that NFHA regularly misidentified the institution legally responsible for maintaining specific homes. In some cases, it conflated the banks responsible for maintaining properties with those that were simply serving as trustees for mortgage-bond investors. In others, it faulted banks for damage that occurred before they took possession of properties.

Not in dispute is the leverage the NFHA has gained in its dealings with banks from its close ties to supporters in the federal government. Unusual among Washington agencies, the Department of Housing and Urban Development both funds housing discrimination investigations by nonprofits, including by the NFHA, and provides the venue for them to negotiate their claims.

Grants from HUD and Fannie Mae helped get the NFHA and its leader, Shanna Smith, into the profitable business of investigations in the first place. Banks complain without success about Smith’s practice of demanding a deal while withholding the actual identities and addresses of the properties said to be suffering from bank neglect. Now the HUD-brokered Wells Fargo settlement has paid off richly with $30 million+ for the NFHA and its affiliates, the better with which to stir up more complaints. And watch the revolving door spin, amid few qualms arising from conflicts of interest: “Sara Pratt, the HUD official responsible for investigating and resolving the NFHA’s complaints, and who oversaw its settlement with Wells Fargo, is a former NFHA staffer and consultant.” [cross-posted from Overlawyered]

10-Year-Old Faces Expulsion Over Imaginary Weapon

We’ve already noted that zero tolerance means zero logic, but this story ranks among the most asinine. The Rutherford Institute is representing the parents of a 10-year-old child who was threatened with expulsion and eventually suspended for playfully firing an imaginary “arrow” from an imaginary “bow” at another student “armed” with an imaginary “gun”:

As we understand the facts of Johnny’s case, during the week of October 14th, Johnny asked his teacher for a pencil during class. He walked to the front of the classroom to retrieve the pencil, and during his walk back to his seat, a classmate and friend of Johnny’s held his folder like an imaginary gun and “shot” at Johnny. Johnny playfully used his hands to draw the bowstrings on a completely imaginary “bow” and “shot” an arrow back at the friend. The two children laughed.

Seeing this, another girl in the class reported to the teacher that the boys were shooting at each other. The teacher took both Johnny and the other boy into the hall and lectured them about disruption. This is exactly where the story should end.

Instead, however, the teacher sent an email to Johnny’s mother, Beverly Jones, alerting her to the seriousness of the violation because the children were using “firearms” in their horseplay, noting that Johnny was issued a referral to the Principal.

Principal John Horton contacted Ms. Jones soon thereafter and asserted that Johnny’s behavior was a serious offense that could result in expulsion, although Mr. Horton offered to “merely” require that Johnny serve a one-day in-office suspension.

When Ms. Jones asked Mr. Horton what policy Johnny had violated, Mr. Horton replied that Johnny had “made a threat” to another student using a “replica or representation of a firearm,” through his use of an imaginary bow and arrow…

Shouldn’t school officials just be glad that, instead of using play swords, these kids are safely “killing” each other from across the room?

(Hat tip: Michael Graham.)

 

Minimum Wage and Unemployment

I was surprised to read this assertion about the minimum wage by labor analyst Harry Holzer in the Washington Post today:

“The biggest concern among economists is that imposing pay increases on employers will reduce the hiring of low-wage workers and raise unemployment. But in four decades of research by economists, this appears to be a small or nonexistent effect.”

I was even more surprised that the online version of Holzer’s oped linked to an NBER study by Neumark and Wascher that concluded roughly the opposite. You can judge for yourself: here is the abstract from the Neumark-Wascher study linked by Holzer in support of his “small or nonexistent” claim:

“We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.”

Reducing employment is only one of the negative effects associated with the minimum wage. In this study, Mark Wilson discusses some of the other harms that may occur depending on the situation in particular markets.

Unfortunately, too many policymakers believe in the free lunch theory of government intervention. The reality is that unless a clear market failure is occurring, when the government shoves its way into markets and destroys voluntary exchanges, it invariably causes more harm than good.      

As with many things, Milton Friedman said it best: “The minimum wage law is most properly described as a law saying employers must discriminate against people who have low skills.”

For more on minimum wage economics, see this Downsizing Government essay.

Ohio Backs off of REAL ID

Sometimes there are setbacks to the efforts of the Department of Homeland Security, the American Association of Motor Vehicle Administrators, and state motor vehicle bureaucrats to quietly knit together a national ID. If this story is true, Ohio appears to be breaking with the national ID plan.

What’s remarkable about this case is Ohio’s recognition that the federal government will never act on the threat that TSA will refuse drivers’ licenses and IDs from states that decline to implement the REAL ID Act.

Ohio is among a growing number of states that are refusing to comply with federal standards intended to toughen access to driver’s licenses. … The states are betting that federal officials do not implement plans to accept only “Gold Star” licenses as proof of identity to fly on commercial flights or to enter federal buildings and courthouses. “We’re not so sure the federal government” will only honor IDs that meet its requirements, [Ohio Department of Public Safety spokesman Joe] Andrews said.

Time was when states fell in line at the suggestion of this federal government threat. Eight-and-a-half years after REAL ID became law, the states may be recognizing the inability of the feds to coerce them into implementing their national ID.