Category: Ash

Michael Ash, UMass Amherst Economics Professor and Chair, and Shantel Palacio ’12 CPPA, presented their report, Economic Impact of Investment in Public Higher Education in Massachusetts: Short-Run Employment Stimulus, Long-Run Public Returns, to the Legislature’s Joint Committee on Higher Education on Thursday. Their research finds important short- and long-term economic impacts of investing in public education.

According to Ash, investing $800 million in public higher education can create over 13,000 jobs, more jobs than casinos, health care and tax cuts can generate with the same amount of money. The authors also find that public higher education offers a very high return on investment. According to Ash, if the state spends $50,000 on a 4-year degree, the degree would pay back $100,000 because the person is more likely to land a high quality job, contribute more in taxes and is less likely to apply for welfare or public health benefits.

“What makes this study different and important,” according to Ash “is that we quantify the full range of economic benefits and show that investment in public higher education is more productive in both the short and long term than other kinds of state policies, such as tax cuts.”

>>Full report
>>Press release
>>WWLP 22 News Story (5/10/12)

In a letter to the editor, Michael Ash, UMass Amherst economics professor, defends public-sector employment benefits, including pensions.  The real problem, according to Ash, is “private employers reducing their commitment to their workers while increasing executive salaries and stockholder dividends.”  (The Nation, August 30/September 6)

The Nation
Letters to the Editor

Public Workers—the Gold Standard
Amherst, Mass.

I thank Amy Traub for “War on Public Workers” [July 5]. Isn’t it remarkable that privatization, deregulation and casino capitalism destroy our economy… and public employees are suddenly to blame?

This attack on public employees, their unions and their benefits feels like the final swish down the toilet bowl for the New Deal. Some observations:

(1) Traub notes with disappointment that New York’s Democratic gubernatorial candidate Andrew Cuomo has jumped on the bash-public-employees bandwagon; but he’s not the only Democrat to do so. Massachusetts Governor Deval Patrick has honed the fine art of being seen as a progressive while leading the charge against public workers—reopening contracts and demanding concessions from all state employees, from social workers to librarians to college professors—but not asking for any “shared sacrifice” from the wealthy, and then bragging about it.

(2) Far from being a parasitic drain, public-sector workers provide critical services for everyone—education, public safety, environmental protection—that private enterprise cannot or will not supply.

(3) The public sector sets the standard for quality of employment, and that benchmark serves as a constant reminder of the failure of private corporations to provide adequate compensation and economic security for their workers.

Nowhere is the public benchmark clearer than in the case of pensions, and nowhere has the war been more ferocious. Resentment of public-sector pensions masks the important issue of adequate pensions for all working Americans. There is a pension crisis, but it’s not the overgenerosity of public-sector pensions. The crisis is that the private pension system is collapsing. Companies that still offer traditional defined-benefit pensions—intended to provide a predictable retirement income for life—have underfunded their accounts. Most companies have ceased to offer pensions altogether or provide meager subsidies to roll the dice in the 401(k) casino. The consequences will be ugly. Many “retirees” will never retire. Or they will have to move in with their children, creating deep stresses, which had been eased by the solid pensions of the Greatest Generation.

Reducing public-sector pensions won’t solve that problem. Public- and private-sector workers need to look at each other, recognize friends and demand leveling up, not down. The real problem is not public workers’ pensions but private employers reducing their commitment to their workers while increasing executive salaries and stockholder dividends.

MICHAEL ASH
University of Massachusetts

An opinion column by Michael Ash, professor of economics and public policy, draws upon a 1932 letter by British economist John Maynard Keynes to encourage Amherst residents to mobilize their shared resources to open the town’s War Memorial Pool. (Gazette, 7/17/10)

Keynes’ advice to Amherst? Maybe this: Go jump in a pool
By MICHAEL ASH

AMHERST – As we swelter with a single, distant pool in Amherst this summer, some of us wonder, “Did the great British economist John Maynard Keynes have any advice for Amherst about whether tough times should prevent us from opening War Memorial Pool?”

Well, perhaps not many are wondering. But remarkably, Keynes did – in another time of economic malaise. Here is an excerpt of his letter to The Times of London of Oct 17, 1932, (with fellow economists D.H. MacGregor, A.C. Pigou, Walter Layton, Arthur Salter and J.C. Stamp):

“(I)n present conditions, private economy does not transfer from consumption to investment part of an unchanged national real income. On the contrary, it cuts down the national income by nearly as much as it cuts down consumption. Instead of enabling labour-power, machine-power and shipping-power to be turned to a different and more important use, it throws them into idleness.”

A little background: Keynes discovered the Paradox of Thrift. Worried and anxious about the economy, people feel impelled to cut spending. But that very thriftiness chokes off the economy, aggravating not averting the feared crisis.

Public spending can reverse the slide into recession. This insight guided the U.S. economy out of the Great Depression and through its best years of growth. Washington’s failure to remember it has needlessly extended the current Great Recession.

But does macroeconomic theory offer guidance for Amherst’s pools? Keynes thought so.

“Moreover, what is true of individuals acting singly is equally true of groups of individuals acting through local authorities,” the 1932 letter states. “If the citizens of a town wish to build a swimming-bath or a library, or a museum, they will not, by refraining from doing this, promote a wider national interest. They will be martyrs by mistake,’ and, in their martyrdom, will be injuring others as well as themselves. Through their misdirected good will the mounting wave of unemployment will be lifted still higher.”

As we face a stagnant economy beset by stagnant thinking in a hot, stagnant summer, we should gather the courage to reject martyrdom by mistake and instead to mobilize our shared resources for public comfort and security.

Michael Ash, economics, and Max Page, art, co-authored an op-ed piece for the Daily Hampshire Gazette about budget cuts that call for a “shared sacrificed.”  (Daily Hampshire Gazette, 4/20/10)

The myth of ‘shared sacrifice’
by Daily Hampshire Gazette

AMHERST – “Shared sacrifice.” You will hear the governor say it every time he talks about the budget. It is the phrase used by Charles Murphy, chair of the House Ways and Means Committee, when he unveiled a budget that cuts local aid – schools, police and fire, libraries, parks – by $234 million, and public higher education by $132 million.

It was echoed by Michael Widmer of the Massachusetts Taxpayers Association when he endorsed the House’s budget; “They (cities and towns) need to share in the pain given our fiscal realities.”

“Shared sacrifice” must poll well in focus groups. But it is a lie and a fraud.

There is nothing shared about the pain in the state budget being debated in the Senate. Ask anyone in a position of power this simple question: How are the most fortunate in our Commonwealth being asked to contribute to our common problem, namely an economic crisis and budget deficit?”

We’ll supply the answer: Nothing.

There is nothing in the governor’s budget nor in the House’s that demands any “shared sacrifice” from those most able to share.

Gov. Deval Patrick and Speaker Robert A. DeLeo can repeat this stock phrase all they want, but the reality is that the budget is balanced on the backs of working families, schoolchildren and college students, and the pain is shared only by those millions among us who lack political pull.

For a state that was at the forefront of the American Revolution, the Industrial Revolution and Civil Rights revolution, Massachusetts is falling quickly behind the times. People are waking up to the idea that a robust public sector delivers what we need and cannot buy any other way: clean air and water; education from pre-K through college; health insurance. People increasingly understand that we need fair and reliable taxes to pay for these public goods. Massachusetts and America both expanded h! ealth insurance, but only the federal version pays with progressive taxes.

Voters in Oregon voted overwhelmingly – by an 8 percent margin – to raise the corporate income tax and to assess an income-tax surcharge on the wealthiest citizens. In nearby New York, taxes on the wealthiest citizens are part of the solution to budget deficits.

Consider this: Simply by returning the tax on unearned income – dividends and interest – to 12 percent, where it stood until 1999, we can wipe away all of the local aid cuts passed by the House, all of the cuts to public higher education and all of the cuts to Mass Health, our state’s health insurance program for the poor. The tax on unearned income is paid almost exclusively by people making over $200,000 a year.

The governor and the Massachusetts Legislature have shown spectacular cowardice in the face of anti-tax zealots. Our so-called leaders whisper in hushed tones, “They’ll murder us at the polls if we vote for ta xes. Taxes are off the table.”

It is time for some anger an! d zealotry on our side – the side that believes that we build our common wealth by investing in our schools and universities, by protecting the most vulnerable, by keeping our water clean and our libraries open.

This budget season gives us a chance to show our children that our state has good values – that we value schools and teachers and health care for the poor over continued tax breaks for the rich. That is the choice before our governor and Legislature.

This year provides a critical test of whether any circumstances can push Massachusetts Democrats to stand up for working people and the middle class. If our representatives are prepared to continue the destruction of our Commonwealth rather than asking the Lexus-driving class to help out, then they should expect to share in the sacrifice – at the ballot box this November.

Max Page is a professor of architecture and history and Michael Ash is an associate professor of economics, both at the University of Massachusetts Amherst.