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Institutional Reforms to Address Homelessness

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

Over the past month, associates of the Reg Murphy Center for Economic and Policy Studies have examined many aspects of homelessness from a range of interdisciplinary perspectives. In my article that kicked off our endeavor, I identified a range of institutional conditions that result in homelessness, including housing costs, poverty, the decline of marriage, the weakening of family bonds, and dysfunctions of our healthcare, education, and criminal justice systems. Dr. Melissa Trussell discussed how certain populations are at heightened risk of homelessness, such as teens in foster care. Dr. Heather Farley outlined how our changing climate impacts homelessness. Dr. Don Mathews highlighted how Capitalism has improved living standards over time, which paints an optimistic future for reducing homelessness.

This final article in our series identifies some policy recommendations to address homelessness. Are eviction moratoriums or “tiny home” initiatives practical solutions to keep folks from sleeping on the street?

Most policymakers, religious organizations, and philanthropists adopt individualistic approaches to address homelessness. I argue that these strategies treat the symptom of homelessness, but fail to mitigate the root causes of homelessness. There is no one silver bullet solution to social problems with manifold institutional causes. The range of solutions to homelessness must include both public and private solutions.

Numerous public solutions are necessary to end homelessness. Local governments could require that new housing developments include affordable housing options to ensure housing for low-income populations. In addition, it is necessary to fund supportive housing programs. Supportive housing provides low-cost housing and on-site job training, alcohol and substance abuse disorder treatment, and other support services. Supportive housing programs provide stability and key support services that empower residents to secure and maintain employment.  

Ensuring access to mental health services is key to ending homelessness. Additionally, drug interdiction efforts should be paired with increased access to addiction treatment, counseling, and other mental health services. Expanded access to healthcare, especially mental health services, can address many underlying causes of homelessness. An expansion of Medicaid and greater benefits for those with permanent disabilities promises to provide income that reduces rates of homelessness.

Reforms that go beyond accessing housing and healthcare can also reduce rates of homelessness. Public schools should teach about mental health, revise their drug education curriculum, and teach personal finance. Antivagrancy laws should be reformed. Many existing laws that address homelessness do little more than criminalize the homeless for sleeping in public, panhandling, public urination, or other statute violations.  

In addition, private solutions can also reduce rates of homelessness. Religious organizations and non-profits have long sought to alleviate the hardships faced by vulnerable populations. These efforts must continue or be expanded. Marriage and strong family bonds provide a robust safety net against homelessness. Marriage and cohabitating partners can provide financial and social support that prevents homelessness. Similarly, parents, grandparents, adult children, extended family, and friends can offer support that protects one from ending up on the street.

Structural reforms are necessary to eliminate the institutional conditions that cause homelessness. Individual solutions cannot solve social problems. Individual solutions only treat symptoms of social problems.

Providing emergency shelter, especially for the chronically homeless, can make a huge difference in the outcome of an individual. Eviction moratoriums keep roofs over people’s heads, albeit temporarily. Meanwhile, building tiny homes puts roofs over a few people’s heads. These programs reduce rates of homelessness, but these approaches do not address the root causes of homelessness, only the symptoms. Metaphorically, this is like doctors treating the symptoms of a disease. Therapies can provide relief for those who are sick, but vaccination and preventative care can often avert the onset of disease. Treating the symptoms of homelessness is a start. Institutional reforms to mitigate the causes of homelessness should be the goal.

Roscoe Scarborough, Ph.D. is an assistant professor of sociology at College of Coastal Georgia and an associate scholar at the Reg Murphy Center. He can be reached by email at rscarborough@ccga.edu.

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Climate Change Poses a Risk for the Homeless

Written by Heather Farley on . Posted in Heather Farley, Reg Murphy.

Over the course of the last month, associates of the Reg Murphy Center for Economic and Policy Studies have been exploring the dimensions of homelessness from multiple interdisciplinary perspectives. We have explored the causes of homelessness, the changes in the economic conditions around homelessness historically, and the risk of homelessness to teens in foster care. In this segment of the series, I want to expand on the themes of risk and vulnerability in homelessness as they relate to climate change. 

There are studies upon studies measuring and describing the impacts of climate change and the associated approaches to mitigation and adaptation. I was interested, however, to learn about the challenges of climate change in the specific context of homelessness.

If you’re versed in climate change language, feel free to skip this part, otherwise I want to briefly lay out the difference between weather and climate. Climate is made up of the weather conditions (like temperature, humidity, rainfall, windspeed, etc.) that occur in a given place over a given period of time. Climate change, therefore, is the change in long-term weather averages. Scientists around the world have studied these averages and concluded that the rate at which the global climate is changing has increased significantly since the advent of the industrial revolution, and some of the outcomes of that rate change are more extreme weather events and natural disasters.

You can infer pretty readily that since climate change leads to more frequent and more extreme weather events and natural disasters, it would follow that those who are exposed to this extreme weather would be at greater risk of its impacts. The literature shows that extreme temperatures (both hot and cold), coupled with humidity levels, impact mortality rates, illness morbidity (such as respiratory or cardiovascular conditions), and vector-borne disease transmission among the homeless and marginally-housed individuals.

This exposure risk to homeless populations is not where the story of vulnerability ends, however. Dr. Allison Gibson of the University of Kentucky explains that “there is a growing field of evidence that individuals experiencing homelessness are disproportionately impacted by disasters due to factors such as exposure to the elements, lack of resources and services, as well as disenfranchisement, and stigma associated with homelessness, all while experiencing greater occurrences of environmental injustice.” Climate change vulnerability lies not only in physical exposure, but also intersects with social and mental health. There is a compounding risk that exists here. For instance, the risk of death from heat increases for those with psychiatric disabilities, alcoholism, and cognitive impairment. These are all conditions that are more prevalent in homeless individuals compared to home-secure individuals. 

Likewise, homeless individuals are less likely to be able to escape extreme weather conditions or natural disasters and they cannot access social resources during emergencies as readily. Because homelessness is often marked by isolation and transience, there is also a risk of not receiving assistance when they are in physical distress. When extreme weather events occur, homeless service providers found that clients not only face physical health challenges (18% of clients), but mental health declines (37%) and drug/alcohol consumption increases (26%) as a result of restricted movement and disrupted social connections due to loss and evacuation. In other words, simply having someone else looking out for your physical health helps to reduce your risk of death from things like extreme temperatures.

Finally, homeless individuals often face social discrimination, which may decrease their access to assistance for the negative outcomes of climate risks.

Together, all of these studies and the data they present point to the need for systematic risk mitigation and response planning. This is a social imperative that can be taken up by a combination of government agencies, non-profit entities, and the private sector. Effective response, however, will depend upon these stakeholders’ ability to understand the unique challenges and vulnerabilities that exist for the homeless.

Dr. Heather Farley is Chair of the Department of Criminal Justice, Public Policy & Management and a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies.

Foster Care as a Highway to Homelessness

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

A couple of weeks ago for this column, my colleague Dr. Roscoe Scarborough wrote the first piece in a collaborative Murphy Center series on homelessness. Dr. Scarborough wrote about the many institutional contributors to the problem of homelessness. From among those contributors, the one that stands out to me, as it intersects with my work in child welfare, is that “Homelessness is often a direct result of lacking strong ties to relatives or a family of affinity.”

For this reason, teens in foster care are at significant risk of homelessness and other economic and healthcare crises if they age out of the child welfare system without being placed with a forever family. According to the National Foster Youth Institute (NFYI), 20 percent of teens who age out of foster care become homeless immediately upon leaving the system. A study published in the American Journal of Public Health found that 31-46% of young adults who age out of foster care have been homeless at least once by their 26th birthday. And, NFYI report that fully half of the homeless population in the US were at one time in foster care. They describe the child welfare system as a “highway to homelessness.”

This is no doubt a large contributor to youth homelessness more generally. We know that not only are former foster youth at increased risk for homelessness, but they also are at increased risk for teen pregnancy. A study in Children and Youth Services Review found that among former foster youth, 55% of females and 23% of males had become parents by age 19. This is in contrast to about 20% of females and, from the best data I can find, 7-9% of males in the general population.

When homeless young adults are also parents, we begin to see cycles of generational homelessness, poverty, and involvement with the child welfare system.

In the 2019-2020 school year, Glynn County schools served 234 homeless students. This is 1.5% of all school-aged children in Glynn. This is slightly lower than the state-wide figure of 1.71% of school-aged children living in homelessness (36,678 homeless children in Georgia). In Camden County, 0.63% of school-aged children (68 children) are homeless. McIntosh County seems to have a much greater problem, with 3.19% of school-aged children (69 children) reported as being homeless.

The Department of Education classifies a student as homeless if they “lack a fixed, regular, and adequate nighttime residence.” In Glynn County, many of our homeless students are living in hotels or camping trailers. Though they do technically have roofs over their heads, the volatility of their living situations qualifies them as homeless and puts them at increased risk for involvement in the child welfare system, which, in turn, increases their risk of returning to homelessness and poverty.

Regardless of whether one approaches the causes of homelessness in terms of individualistic problems or institutional problems, as described by Dr. Scarborough, I believe we all can agree that youth homelessness is a tragedy, and it is a tragedy occurring far too frequently in Coastal Georgia.

I encourage readers to consider how you can get involved in transforming child welfare and ending the highway to homelessness. One organization I work with that is making significant strides in this area is Hope 1312 Collective. Check out their website (www.hope1312co.org) for some practical ways to join efforts to rewrite the story of child welfare in Coastal Georgia.

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Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.

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There Are No Quick Fixes to Poverty or Homelessness

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Last week’s column on homelessness by my colleague, Professor Roscoe Scarborough, has left me wondering whether homelessness is an intractable problem.

Dr. Scarborough listed conditions that cause or contribute to homelessness. The list took up the entire column. He had no space left to elaborate or provide details.

Research on homelessness is new to me, but research on poverty is not. Studying poverty will knot up your guts but give you hope. The gut knots come from realizing that the problem is much more difficult than we social scientist policy wonks think it is. The hope comes from history.

Most poverty studies focus on present circumstances: low-paying jobs, factories moving or shutting down, inadequate access to health care, etc. The list of circumstances that cause or contribute to poverty is long and looks much like Dr. Scarborough’s list of conditions that cause or contribute to homelessness.

An exclusive focus on present circumstances can understandably lead one to conclude that, with so many shortcomings, something must be fundamentally wrong with the country’s economic system. A historical perspective yields a different assessment.

In 1900, 3 percent of U.S. homes had electricity, 15 percent had flush toilets, 24 percent had running water. No homes had central heating, a refrigerator or a washing machine. Today, a home without electricity, running water, a flush toilet and central heating would be condemned as unfit to live in.

In 1900, life expectancy at birth in the U.S. was 46 years; today it’s 79. Of every 1,000 babies born in 1900, 165 died before their first birthday, 239 died before their fifth. In 2019, the figures were 5.6 and 7.

Children under age 5 years accounted for 30 percent of all U.S. deaths in 1900; they accounted for 0.86 percent in 2019. Infectious diseases accounted for 46 percent of U.S. deaths in 1900 but 2 percent in 2019.

The fact is, for all its flaws – and there are plenty – our type of economic system has delivered an increase in living standards over the past 150 years that is utterly without precedent. Nothing in human history comes even remotely close to the increase in living standards that this type of economic system has brought, and the primary beneficiaries have been not the rich but the poor.

This type of economic system – capitalism is a stupid word for it, but that’s the word we use – has turned things such as the innovations that have reduced the infant mortality rate from 165 to 5.6 and the child mortality rate from 239 to 7, things that but a few generations ago the richest of the rich could only dream of, into things that all of us, including the poor among us, now consider basic. 

Capitalism may look like a dog’s breakfast in the here-and-now, but nothing in human history has done more to improve the living standards of the poor. 

The point is not to downplay the difficulty of living in poverty or to distract from the subject at hand, homelessness. Just the opposite.

People live in the here-and-now. A family in poverty doesn’t have several generations to wait for capitalism to do its thing. But that’s as fast as an economy can deliver.

Public policy has made a dent in mitigating poverty, but only a dent. That’s no wonder. Every family is unique, with their own unique circumstances. Public policies devised to help poor families are devised by people who know nothing about those families or who they even are.

Poverty is a difficult problem. But homelessness makes poverty look like a walk in the park. I look forward to learning more from Dr. Scarborough.

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The Manifold Causes of Homelessness

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

The CDC’s eviction moratorium has ended. The cost of housing keeps going up. The prices of goods and services are rising due to inflation. For many, homelessness is coming for the holidays.

According to HUD data, more than 580,000 people are homeless on a single night in the US. 61% are in sheltered locations and 39% are in unsheltered locations. Rates of homelessness are higher among men and African Americans. Nationally, the number of homeless persons has increased in recent years, but Georgia has experienced a significant decline in homelessness over the past decade. Conversely, Georgia has high rates of rural homelessness and unsheltered veteran homelessness.

But, why does homelessness persists? Americans tend to think in individualistic terms, focusing on character, motivations, personality, or mental illness. As a sociologist, I strive to transcend individualism and examine how social institutions shape behavior. If one individual in a city is homeless, it’s likely the result of a personal failing. If many people in a city are homeless, there are structural conditions that cause homelessness.

Housing costs, poverty, and the economy impact rates of homelessness. Many people are priced out of the housing market by the high cost of homes or a lack of affordable options. Meanwhile, wages have stagnated since the 1970s. Many local economies do not provide enough careers with incomes that cover the costs of housing. Our modern economy offers many opportunities for part-time and service-industry work, but this work often pays less than a living wage and often does not provide health insurance. Poverty and reduced labor market participation increases one’s chances of homelessness.

Declining marriage rates and weakening of family bonds put individuals at risk of homelessness. Spouses, parents, grandparents, and adult children provide a social safety net that keeps people off the streets. Homelessness is often a direct result of lacking strong ties to relatives or a family of affinity.

The cost of medical care, a lack of emphasis on preventative medicine, and insufficient access to mental healthcare contribute to homelessness. 28 million Americans did not have health insurance at all in the past year. Many millions more had gaps in insurance coverage or were underinsured. In particular, deficient access to counseling, mental healthcare, or addiction treatment services perpetuates chronic homelessness.

The criminal justice system contributes to homelessness. Anti-vagrancy laws and similar statutes criminalize homelessness in many communities. Homeless people who have run-ins with the law develop criminal records that create a barrier to employment, resulting in a cycle of homelessness.

Low quality education increases rates of homelessness. Our schools offer deficient health, drug, and personal finance education. In the U.S., 1 in 5 adults in the U.S. are functionally illiterate. Many Americans lack basic quantitative reasoning skills. Those who attend low quality schools or fail to graduate are at heightened risk of poverty and homelessness.

Other structural conditions play a role, such as underfunded public health departments, inadequate support programs for veterans, political alienation, ineffective drug interdiction efforts, and weak government responses to climate change. Taken together, these are some of the manifold institutional causes of homelessness.

Sociology challenges us to transcend individualistic explanations of behavior. Personal troubles can lead to homelessness, but these are often symptomatic of institutional conditions. For example, an individual may experience homelessness due to a substance abuse disorder. Americans tend to think about this as a personal problem, but addiction is also a product of deficient health education, underfunded public health, failed drug interdiction efforts, and poor access to mental healthcare.

If we ever hope to end homelessness, it’s essential to transcend individualism and identify the manifold institutional conditions that cause homelessness. This is a prerequisite to developing practical policy recommendations to mitigate homelessness.

Roscoe Scarborough, Ph.D. is an assistant professor of sociology at College of Coastal Georgia and an associate scholar at the Reg Murphy Center. He can be reached by email at rscarborough@ccga.edu.

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Bitcoin, Cigarettes, and Money

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

I think to get our collective heads around this, I should start at the end. Bitcoin is one form of digital money and the blockchain is a digital ledger. Clear? Now, let’s start at the beginning.

Money is anything that performs the functions of money. Money, then, is anything that is (1) a medium of exchange, (2) a standard of value, and (3) a store of value. Please note that this does not include a required role for government.

Richard A. Radford was a flyer for the Royal Air Force during World War II. He was shot down over France and spent the rest of the war trying to escape from prison camps. At war’s end, he wrote a classic article called ‘The Economics of a POW Camp’ where he described the economic system that arose and developed in a camp of prisoners. It is fun to read.

Two things are of interest. Every so often, the Swiss Red Cross would bring packages to the prisoners that contained assorted items. The first thing that would happen as the boxes were being distribute, is that each prisoner would look in their box and then start trading with others. Apparently, barter is basic to the human condition. Next, with time, the cigarettes that came with the Red Cross packages began to serve as money, replacing barter. Barter requires a coincidence of wants – to get what I want from you, I must have something you want. It is costly and difficult. With cigarettes as money, I can get what I want from you by giving you cigarettes because you know that those cigarettes will be accepted in exchange by others. All we need to agree on is the price – the number of cigarettes. With time, every item, like blankets, had prices expressed in cigarettes.

Cigarettes became a medium of exchange and shows the fundamental reason that makes something money —- others accept it. I accept money – whatever the form – because I know that you will accept it. Nothing is said of government. The key is acceptance.

The Radford article is cool. All of what we call monetary theory, was found in cigarettes. When the Red Cross brought a new supply of cigarettes, prices in terms of cigarettes would rise (inflation). As the supply of cigarettes decreased (by smoking for example), the money supply declined and prices in terms of cigarettes fell.

There two types of money in our economy – private and government: coins and currency (cash) are government money and checking accounts are private money created by commercial banks through the system of fractional reserve banking.

The largest part of the money supply is in privately produced checking accounts. As private money is used in transactions, it goes through third parties like commercial banks, other financial institutions, and the Federal Reserve. If you want to keep your transaction private, you need to use cash. Cash transactions are only between a buyer and a seller and no one else need to know about it. (We have been binge watching The Sopranos so I will leave out rat informants.)

Where does government fit in? The creation of money needs to be guided by a rule, a monetary regime. Excessive money creation reduces the value of each monetary unit and impacts whether it will be accepted by others. A gold standard, a silver standard, the Federal Reserve are examples of monetary regimes. Yet, a government presence is not necessary for value in acceptance. It is just one way.

Bitcoin was created, it is claimed, by Satoshi Kakamoto. This may be a pseudonym for several founders wishing to be anonymous. Remember that cash transactions are only known between a buyer and a seller and can be secretive (again, see The Sopranos). This is cumbersome. For example, coins and bills must be carried around. But what if the coins and currency could be represented digitally? Things would become much easier. This is the idea behind Bitcoin. It is a digital money that can be traded directly between buyers and sellers and avoid the third parties present in traditional check transactions.

For Bitcoin to become money, it simply must be accepted by others and be subject to a monetary regime. The Bitcoin regime is very simple. Bitcoins cannot increase (referred to as mined), and the supply of coins is limited to 21 million units. The blockchain is a ledger – an accounting book – that keeps track of Bitcoin transactions. This ledger is observable by everyone and validates Bitcoin acceptance. There must also be on and off ramps. These are places where Bitcoins can be exchanged for more traditional forms of money, like dollars. These ramps form the marketplace which creates a dollar value to a single Bitcoin, like $61,000 per coin unit recorded while I was typing this article. Ramps are everywhere. A few weeks ago, I saw a Bitcoin ATM machine outside of Metter in a run-down gas station, but I could not tell if it was better than other ATMs (Get it?).

These are the principles for Bitcoin to be money. But can it really be money? I think it is true that before anything can really be money it must have stable and relatively predictable value. The volatility of the dollar price of a single Bitcoin coin would suggest that they will not truly be acceptable in exchange. Also, these price fluctuations compromise the ability of Bitcoin’s to be a standard of value and as a store of value. In theory, Bitcoin may be money but in practice not so much.

While there is much more to discuss, there is nothing new about Bitcoin other than they are new. What is interesting, however, is that the digital world is allowing the development of alternative forms of money. As a result, there will be competition between them. This competition to me —- someone whose intellectual development has not moved too much beyond the Scottish Enlightenment —– will be, in the long run, a good thing.

Dr. Skip Mounts is the Dean of the School of Business and Public Management at the College of Coastal Georgia, an economist, and an associate of the Reg Murphy Center for Economic and Policy Studies.

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Democracy diluted when threats of violence become the norm

Written by Heather Farley on . Posted in Heather Farley, Reg Murphy.

Liberty and democracy are fundamental values upon which our country was founded and they remain central to the architecture and function of our government. Though both definitions are endlessly debated, our Constitution uses liberty to describe freedom from arbitrary and unreasonable restraint upon an individual. Furthermore, freedom from restraint is not just physical restraint, but also the freedom to act according to one’s own will. And though the word ‘democracy’ does not appear in the Constitution, the Federalist Papers give us plenty of clues as to the fundamentals of what they meant to establish when they set up a democratic republic – a system by and for the people.

Recently, however, both values have been put at risk as a growing number of Americans feel emboldened to use threats of violence and intimidation when elected (and in some cases non-elected) officials make decisions or have opinions that are contrary to one’s particular perspective on an issue.

Last week, U.S. Attorney General Merrick Garland ordered the FBI to investigate harassment, intimidation, and threats of violence aimed at school boards in Georgia (one of several states)  over objections to mask mandates and critical race theory. The Attorney General’s order came after he received a letter from the National School Boards Association citing the need for immediate assistance to protect our students, teachers, staff, and school board members. In response to mask mandates in several Georgia communities, parents and community members have used threats and intimidation in counties such as Gwinnett and Cobb as a form of protest.

Last year, we saw spikes in death threats and plots against those running for office, such as Democratic Senator Raphael Warnock and even elections officials such as Republican Georgia Secretary of State Brad Raffensberger. These threats were not aimed at a single political party – Republican and Democratic figures alike have been subject to these acts of intimidation. Now, a Georgia state oversight panel is rethinking its position on whether home security systems should qualify as a legitimate campaign-related expense. Let that sink in for a moment. In order to run for elected office, it is now expected that you will likely need to invest in additional security to ensure you are not harmed during your campaign.

There are many fine lines in our country when it comes to what we allow under the law. Free speech? Yes, but with exceptions. Protest? Absolutely, but with limitations. Our legal system has dealt with the interpretation of our rights and liberties through cases that have, over time, come to draw the lines for our society as to what is and is not acceptable. But threatening one’s life as a method for extracting your own will? Not acceptable. Inducing fear suppresses free speech and dialogue, it does not foster it. Intimidation keeps people who would otherwise run for office from doing so, thereby constricting the ability for democracy to operate.

Last week Chuck Williams, a reporter with WRBL in Columbus was a panelist on NPR’s Political Rewind discussing this issue of increased threats of violence. During the discussion, he stated that, “people…either have forgotten or don’t know where the line is…and they chose to run for the job, nobody should feel sorry for them, but there needs to be – people need to know where the line is…”. While I concur on his central point, I must disagree with at least part of his statement. When people run for office, they are choosing to run for the job, not threats on their life or the lives of their family. This cannot be a part of how we the people get what we want from our political system. Perhaps the U.S. Attorney General is aiming to remind us of where those lines are that we seem to have forgotten.

Dr. Heather Farley is Chair of the Department of Criminal Justice, Public Policy & Management and a professor of Public Management in the School of Business and Public Management at College of Coastal Georgia. She is an associate of the College’s Reg Murphy Center for Economic and Policy Studies. 

How the U.S. Labor Force Got Well-Educated

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Generally speaking, American workers are well-educated. We got that way through a uniquely American process that began long ago.

Education was valued in America even before there was an America. The colonists valued education. Before the war for independence, schools were present in most communities in every colony.

With independence came a more urgent sense of the importance of education. John Adams, Benjamin Franklin, Thomas Jefferson and many others argued passionately that a republic must have well-educated citizens if it is to survive. Most Americans agreed.

Historians often note that the American ethos has always been an odd and sometimes conflicting mix of individualism and egalitarianism. Early American education manifested both streaks.

Our individual streak showed itself in the organization, control and financing of education. From the beginning, American schools were organized, controlled, and financed locally. The federal and state governments had their roles, but their roles were quite limited. Americans must have wanted it that way, because local organized, controlled and financed public schools spread rapidly.

Our egalitarian streak showed itself in who education was intended for. In virtually every other country at the time, education was the exclusive privilege of the elite. It was centrally controlled, expensive and, with an occasional exception, restricted to males.

Early American education stands in sharp contrast. From the start, Americans wanted education for the masses – the free masses, at any rate. They designed local public schools to be free of charge and coeducational, and they stayed true to the design. 

How did this uniquely American innovation turn out? By the mid-1800s, school enrollment rates in the U.S. far exceeded those in any other country. The gap would not be closed until the mid-1970s.

By the 1880s, free local public education was ubiquitous in the U.S. – even in the south, and even for blacks, though southern schools were segregated.

The 1900s brought another uniquely American innovation: the high school. The public schools that spread at such a rapid rate in the early decades of the 1800s were “common” schools, what we today call primary or elementary schools. The U.S. had secondary schools well before 1900, but they varied considerably from place to place. Many were private and almost all were designed to prepare select students for college. Educators across the land prescribed a standard structure for high schools in 1902, but the institution continued to evolve over the next 18 years.

In 1910, locally controlled and financed public high schools, also free of charge and coeducational, began to spread. They spread even more rapidly than local public primary schools had decades before, and with even less involvement from federal and state governments. The American “high school movement,” as it has come to be called, was an uncoordinated, decentralized effort from below, executed simultaneously by local people in 125,000 independent school districts across the country.

The primary force behind the spread of high schools was another uniquely American innovation: the modern business enterprise. Producing increasingly sophisticated products in increasingly sophisticated ways, and getting those products to a growing population spread far and wide requires sharp, well-educated people. Lots of sharp, well-educated people.

The “high school movement” was a spectacular success. Between 1910 and 1940, the high school enrollment rate increased from 18 to 73 percent, while the graduation rate increased from 9 to 51 percent. 

The success continues. Among Americans age 25-29 years today, 95 percent have graduated from high school, while 39 percent have graduated from college with a bachelor’s degree.

The U.S. is an extremely wealthy country for a number of reasons. Its education history is one.    

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It’s the Federal Reserve, Stupid!

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

James Carville, as head of Bill Clinton’s first presidential campaign, made famous the phrase ‘It’s the economy, stupid’. His purpose was to keep campaign workers, volunteers and probably even Bill Clinton focused on what mattered to the campaign at the time —– the state of the economy. I have paraphrased this today to have us focus on what is, and what is not, important if we are to worry about inflation in our future. Here is some data: the year-to-date change in the Consumer Price Index is 5.4 percent; for just 2021 so far, the CPI has increased by 7.1 percent, while the Producers Price Index increased 10.6 percent between January 2021 and June. In my opinion, we should be concerned, but let’s be concerned about the right things.

Inflation is defined as a continual rise in the general level of prices. In introductory economics, we teach that a price rises when the quantity demanded exceeds the quantity supplied —- when there is excess demand. As the price rises, excess demand diminishes and, eventually, the price stops rising. Inflation requires that excess demand is everywhere and continual even as prices rise.

At present, spokesmen for Fed and others are saying that current inflation is only temporary. They argue that the pandemic reduced supply by disrupting supply chains and that supplemental unemployment compensation discouraged people to return to work. In addition, federal government pandemic relief packages increased demand in many sectors of the economy. With such things going on, demand should be greater than supply and prices should rise. However, with time, supply chain issues will be corrected while enlarged unemployment payments will end along with pandemic relief spending. This will bring excess demand to an end, and prices will stop rising.

For the attentive reader, this is not inflation. The underlying argument is popular in use, but it is wrong. Excess demand is correcting itself, not all prices are rising, and temporary does not mean continual.

Next, contrary to the opinion of many, excessive government deficit spending is, in and of itself, not inflationary. Deficits bring government borrowing. If the Treasury sells new deficit-required debt to private individuals and institutions, then these entities must spend less. So, spending is offset, and prices will not rise, and most certainly, not continually. Some prices may change temporarily as spending moves between the private and public sectors, but not continually.

Inflation requires that there is continual excess demand everywhere, not just somewhere. Reaching back to graduate school, Walras Law (not the relative of the sea lion and ignore the ‘s’) states that excess demand can be everywhere in every market only if there is an excess supply of money. Drawing on Milton Friedman, inflation is purely and simply only a monetary phenomenon.

Thus, worries over inflation need to be aimed at Federal Reserve policies, the associated changes to the monetary base and other monetary aggregates, and the issues that are driving central bank policymakers. Here is some more data. Concurrent with the start of the pandemic and continuing today, the Fed is buying $120 billion in Treasury securities and in mortgage-backed securities every month. Since then, the Fed has added $4 trillion to its balance sheet. The Fed is supporting Treasury borrowing and, no doubt, will continue doing so with the proposed $1.5 trillion in new infrastructure spending and the $3 trillion spending in new human infrastructure (whatever that is).

The Fed is in a tight spot. It is using monetary policy to finance unprecedented fiscal policy spending. This has added to the monetary base which is slowly leading to an excess supply of money and to our inflation potential.

So, if you are worried about inflation, worry about the Federal Reserve. Fed Chairman Jay Powell is up for reappointment by the President (with advice and consent in the Senate) and I bet he wants reappointment. What incentive does this create for him? Does the Fed have the courage to lean against the wind of rapidly expanding government deficit spending and stop budget accommodation? Until they do, the words of former Nobel Laurette Thomas Sargent (paraphrasing Milton Friedman) are very appropriate when he said, “Persistent high inflation is always and everywhere a fiscal phenomenon.”

 

Dr. Skip Mounts is the Dean of the School of Business and Public Management at the College of Coastal Georgia, professor of economics, and an associate of the Reg Murphy for Economic and Policy Studies.

Are Markets Correcting Their Own Failures?

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

Two weeks ago for this weekly column, our newest Murphy Center writer, Dr. Roscoe Scarborough, wrote about two conflicting moralities that are dominant in our culture—collectivistic morality and individualistic morality. According to Dr. Scarborough, progressives tend toward collectivistic morality and conservatives tend toward individualistic morality.

Then last week, Dr. Heather Farley wrote about an interesting case in which markets are emerging to help offset carbon emissions by paying firms not to cut down trees.

These two columns by my colleagues are related in a fascinating way.

The standard, modern take on market economics is that markets generate efficient outcomes when players behave in their own self-interest. It is no surprise, then, that American conservatives, with their individualistic morality, are often the loudest opponents of government regulation of markets.

On the other hand, collectivistic American progressives often argue that government intervention in markets is necessary to promote the common good. Their arguments often focus on what a Principles of Economics textbook might call “market failures,” or situations in which individuals’ behaving in their own self-interest do not produce an efficient outcome or, more commonly, do not produce an outcome that is equitable for all groups or individuals.

In this new market that pays firms to leave trees, we see a clash of the two moralities. According to The Journal podcast’s August 23 episode, the carbon offset market got its start due to government regulations, but the market has really begun to soar recently because of pure, free-market pressures. Firms have found that it is good business (good press) to promise to reduce their carbon footprint. This is likely because more Americans have begun to think collectively about sustainability and climate change. As consumers care more about the process by which goods are produced, businesses also begin to care.

And this is the type of situation that makes an economist’s heart flutter! The market is doing something traditional theory says it would never do on its own—internalizing an externality. Environmental impacts are classic examples of negative externalities, or negative impacts of market transactions on individuals not directly involved in that transaction. When everyone involved in a transaction behaves in their own self-interest, the market ignores the interest of third parties, and externalities cause markets to fail to reach an efficient level of production.

But, market demand is derived directly from consumer preferences. And, the fallacy of the standard view of market behavior is that it assumes market participants hold an individualistic morality, so that their preferences are for self-interested behavior.

When individuals begin to think collectively, their preferences change, and market magic takes over! The market Demand curve now shifts to reflect preferences that consider environmental impacts to be important. When Demand shifts, producers maximize profits with a pivot to meet the new consumer preferences. And, without government action, the market begins to consider trees more valuable planted than cut.

Dr. Farley makes a compelling case that, while carbon offset markets are a move in the right direction, they do not do enough to combat climate change, as they do not reflect systemic improvements in sustainability.

But, even this relatively small change for sustainability is a big deal for how we view the power of free markets. Is it possible that markets are now beginning to correct their own “failures” in environmental externalities? I am on the edge of my seat!

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Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu.