Category Archives: Folbre

Folbre: Stay-at-home spouse work contributes to family well-being but not GDP

Nancy Folbre

Nancy Folbre

In this Economix blog post, UMass Amherst professor emeritus Nancy Folbre discusses the lack of measured value of housework in our economic indicators. A stay-at-home spouse’s work is not counted towards GDP, but, at equal income levels, a single-income household where the other spouse performs 20 hours of housework per week is better off than a dual-income household where there is no stay-at-home spouse. (New York Times, 9/9/13)

Valuing Houses but Not Housewives
by Nancy Folbre

“Home ownership allows people to invest in an asset they own, enjoying the services of that asset rather than paying rent to somebody else. That’s why imputed rent is calculated as a component of personal income in national income accounts – an important exception to the rule that only monetary transactions are included.

A stay-at-home spouse who specializes in unpaid work also increases household living standards, by reducing the need to purchase services like child care, housekeeping, gardening and meals away from home. Imputations of the value of this work are included in some experimental national income accounts but are largely ignored in discussions of public policy, with some perverse consequences.

[…]

The same double standard is applied to married housewives, who are typically described as “not working,” although on average they spend more than 40 hours a week in activities that someone else could be paid to perform. Of course, lots of people do unpaid work, not just stay-at-home spouses. And when married women engage in paid employment, they don’t reduce their hours of unpaid work enough to compensate, working longer hours overall.

Still, a comparison of the unpaid work hours provided by married women with children under 18 when they work full-time for pay and when they are not employed shows that the latter – the “housewives” – provide more than 20 hours extra a week of unpaid work.

So there is a real difference in living standards between a family in which both parents are working, each earning disposable income of $25,000 per year, and one in which one parent earns disposable income of $50,000 a year and the other stays home providing those extra 20 hours of household services.

Yet the rules governing access to benefits like the earned income tax credit are based on money income, regardless of the number of adults working for pay or the level of unpaid family work.”

Folbre: McDonald’s a monument to low-wages for workers

This post by UMass Amherst Department of Economics Professor Emeritus Nancy Folbre was originally published on July 22, 2013 by The New York Times.

The 300 Billionth Burger
by Nancy Folbre

Nancy Folbre

Nancy Folbre

The monument is a towering one. Only ballpark estimates are available, because McDonald’s stopped posting estimates of its cumulative burger sales when they reached 99 billion in 1994. But the company is on track to hit the 300 billion mark in the near future, if it hasn’t already.

With total revenue that exceeds the gross domestic product of Ecuador, McDonald’s is virtually a culinary country of its own. Not surprisingly, it has become a recurrent focus of political contention.

This year’s protests against the low pay of its employees reflect larger concerns about the decline of good jobs in the United States, and the company’s recently published personal budgeting advice reflects remarkably widespread disregard for people trying to get by on poverty-level wages.

A company that can sell 300 billion burgers clearly knows how to respond to consumer concerns. As Eric Schlosser explains in “Fast Food Nation,” McDonald’s moved relatively quickly to improve standards of humane treatment for the (nonhuman) animals in its supply chain. In the wake of bad publicity from Morgan Spurlock’s film “Supersize Me,” the company made significant efforts to improve the nutritional value of its menu. Last year, the company took the lead in a commitment to post calorie counts for every item.

Of course, the company’s nutritional impact is influenced by policies over which it has little direct control. In the United States, Big Macs cost less than a salad largely because our agricultural policies subsidize the price of meat far more generously than the prices of fresh vegetables and fruits.

Professors Randall Bausor and Nancy Folbre retire

The UMass Amherst Department of Economics announces the retirements of Professors Randall Bausor and Nancy Folbre.

r_bausor_nov2011_cropped_smaller

Randall Basuor

Randall Bausor earned his PhD from Duke and joined the department 1979. He served as Undergraduate Program Director from 2000-2009. He most recently coordinated a newly implemented Undergraduate Research Assistantship program, partnering undergraduate students with faculty members to research topics such as Allison Glass’ work with Diane Flaherty on the garment industry in developing countries. Professor Bausor regularly taught History of Economic Thought and his research interests include mathematical economics.

Nancy Folbre

Nancy Folbre

Nancy Folbre earned her PhD from UMass Amherst. After receiving her doctorate, she taught at Bowdoin College and the New School for Social Research before joining the department as associate professor in 1984. Professor Folbre describes her research interests as the “interface between feminist theory and political economy, with a particular interest in caring labor and other forms of non-market work.” She is a weekly contributor to the New York Times Economix blog and is the author of over a dozen books including Greed, Lust and Gender: A History of Economic Ideas (2009), Saving State U: Why We Must Fix Public Higher Education (2009), and Valuing Children: Rethinking the Economics of the Family (2008).

Folbre: End of golden age for human capital

This post by UMass Amherst Department of Economics Professor Emeritus Nancy Folbre was originally published on June 10, 2013 by The New York Times.

The Once (but No Longer) Golden Age of Human Capital
by Nancy Folbre

Nancy Folbre

Nancy Folbre

The evolution of the global human capital market has momentous political implications. Like many Democrats, President Obama is bullish on human capital. He favors increased public investment in education, ranging from early childhood to post-secondary programs. The assertion that such spending will generate a high individual and social rate of return is based on the optimistic expectation that demand for better-educated workers will remain strong.

On the other hand, many critics of public-education subsidies are bearish on human capital. The economist Richard Vedder, for instance, warns against both private and public overinvestment in education, pointing to the growing tendency for college graduates to land in jobs that don’t actually require the credential they hold.

If the bears are right, we may be moving toward a stage of capitalism less dependent on a growing supply of home-grown human capital. In that case, many of those bullish on higher education investments in the United States could end up as red meat.

Those who believe, as I do, that education has intrinsic value both to individuals and to society as a whole should reconsider their habit of relying on market-based private rate-of-return rhetoric.

Rather than bowing to market forces, an intelligent, well-educated citizenry would bend those forces toward better ends, including the best possible development of human capabilities.

Folbre’s post was also mentioned by Felix Salmon of Reuters opinion blog Counterparties:

The skills that pay fewer bills – Reuters
6/11/13

 

Folbre: Government policies forcing students to mortgage college diplomas

This post by UMass Amherst Department of Economics Professor Emeritus Nancy Folbre was originally published on June 3, 2013 by The New York Times.

Mortgaged Diplomas
by Nancy Folbre

Nancy Folbre

Nancy Folbre

Current and prospective college students are receiving real-world instruction in the dismal political economy of public finance.

Unless Congress can overcome its partisan differences, interest rates on federally guaranteed Stafford loans, an important means of paying for college, will double to 6.8 percent in July.

With the Bank on Students Loan Fairness Act, Senator Elizabeth Warren, Democrat of Massachusetts, proposes to reduce this interest rate to the same level that large banks pay for loans from the Federal Reserve Bank — 0.75 percent — for at least one year, during which longer-term remedies could be explored.

The bill, one of many aimed at addressing the scheduled interest-rate increase, seems unlikely to win passage. But it highlights the double standard that puts the interests of banks and other businesses well ahead of those of students and ordinary people when it comes to debt relief.

As Robert Kuttner explains (both in The New York Review of Books and in his new book “Debtors’ Prison”), bailouts and bankruptcy proceedings both provide a means for businesses to get out from under bad debt. The obligations of a college loan, by contrast, “follow a borrower to the grave.”

The rolling thunder of accumulating student debt sounds a lot like the perfect storm of mortgage liabilities that threatened major financial institutions and precipitated the Great Recession in 2007.

According to a recent study by the Federal Reserve Bank of New York (nicely summarized in a publication by the Federal Reserve Bank of St. Louis), the dollar value of college loan debt in the United States now surpasses both auto loan and credit card debt. Read more…

Department Profiled in The Washington Post

In the wake of the Herndon paper, The Washington Post profiled the UMass Amherst Department of Economics, providing a detailed history of the department’s growth and development over the last 40-plus years. Interviewed for the piece were Professors Richard Wolff, Gerald Epstein, Nancy Folbre, Arindrajit Dube and Robert Pollin.

The Washington Post
Inside the offbeat economics department that debunked Reinhart-Rogoff
Posted by Dylan Matthews on April 24, 2013 at 4:00 pm

It was surprising to learn last week that Harvard professors Kenneth Rogoff and Carmen Reinhart’s argument for austerity is based in part on an Excel blooper. What’s not surprising is who found it out.

The rebuttal came in the form of a paper released by the Political Economy Research Institute, a group at the University of Massachusetts – Amherst with close ties to its economics department. Two of its authors, Michael Ash and Robert Pollin, are UMass professors, and the other, Thomas Herndon, is a grad student in the department. No one who knows the UMass department was surprised they’d trained their considerable analytical firepower on Reinhart and Rogoff. Amherst has, over the past 40 years, developed a reputation as perhaps the single most important heterodox economics department in the country.

It wasn’t always that way. In the 1960s, it was a fairly mainstream department, with a moderately conservative inclination, according to emeritus professor and influential Marxist economist Richard D. Wolff. It employed Vernon Smith, a noted libertarian who shared the 2002 Nobel, from 1968 to 1972, and Hugo Sonnenschein, who would go on to be president of the University of Chicago, from 1970 to 1973.

That was when things started to change. The tipping point, Wolff says, was the denial of tenure for Michael Best, a popular, left-leaning junior professor. “He had a lot of student support, and because it was the 1960s students were given to protest,” Wolff recalls. That, and unrelated personality tensions with the administration, inspired the mainstreamers to start leaving. Read more…

Boyce explains Econ4 in Valley Advocate

James Boyce

James Boyce, UMass Amherst economics professor, is interviewed by the Valley Advocate about Econ4, a new initiative focused on economics for people, for the planet, and for the future. The organization supports the Occupy Wall Street movement and opposes what it calls “the ideological cleansing of the economics profession” and the “political cleansing in the vital debate over the causes and consequences of our current economic crisis.” (Valley Advocate, 12/22/11)

“We can’t just write on our computers,” Boyce says. “We need a strategy for communicating ideas. We aim to do an end run around the corporate-controlled media and its talking heads by using new information technologies.”

By contributing Internet-friendly teaching materials and creating a collaborative space for an online community of dissident economists—their Network for Innovative Economics Teaching—Econ4 hopes to change the study and implementation of economics.

“Part of the problem is economics itself, in the research being done and the economics being taught,” Boyce continues. “We want to change the public understanding of how the economy works, and, more importantly, how it should work.”

Econ faculty featured in Chronicle of Higher Ed

UMass Amherst Economics Professors James Boyce, Gerald Epstein and Nancy Folbre and Econ4, a collaborative organization which originated at UMass Amherst earlier this year, are featured in a Chronicle of Higher Education article which discusses the effort to expand viewpoints and teaching methods in the field of economics. Boyce, Epstein and Folbre argue alternatives to the orthodox approach. (The Chronicle of Higher Education, 12/13/11)

 

James Boyce

The founders of Econ4 want the economy, and the study of economics, to pay more attention to such issues as the fair distribution of opportunities; to emphasize minimizing vulnerability in the economic system instead of maximizing efficiency; and to strive to give a fuller accounting of the costs and benefits of market and government decisions, including consequences for the environment and the value of caring for dependents.

“Our basic aim is to try to produce a change in economics in the United States,” said James K. Boyce, professor of economics at UMass-Amherst, and a founder of the group. “We see a connection in how the economy is such a mess and what has happened in the economics profession over the last two decades.”

The continuing political debate over whether the government should intervene in the markets, or whether they should be left to themselves, also needs to be reframed, Mr. Boyce said. “The central question is the distribution of wealth and power,” because the two are increasingly correlated.

“If you don’t have purchasing power, you lose when markets operate. If you don’t have political power, you lose when it comes to how governments operate,” he said. “Do we live in a democracy or an oligarchy?”

 

Gerald Epstein

Higher education is no stranger to complaints of ideological dominance in certain disciplines, but they regularly come from conservative scholars who see a bias against their viewpoints. The irony is not lost on those who want economics to be more intellectually inclusive.

While he acknowledged that political bias probably does sometimes exist in such departments as gender or ethnic studies, the difference in economics is that the bias is not just one of perspective but also of methods, said Gerald A. Epstein, a professor of economics at UMass-Amherst and a founder of Econ4.

“The problem is that their view of how to think like an economist is extremely narrow to the point of being cut off from some of the major questions affecting society,” Mr. Epstein said. “In the end it is a form of indoctrination.”

 

Nancy Folbre

While every discipline is resistant to unorthodox ideas, said Ms. Folbre of UMass-Amherst, this tendency is amplified in economics departments because its scholars study how economic power is deployed. “Whether you favor the current deployment of power has big implications for what kind of resources you can get,” she said. “It’s more subject to ideological bias than sciences that aren’t so embedded in realpolitik.”

Ms. Folbre pointed to the pay that economists earn as proof of the perceived value of the discipline.

Over the past 30 years, economics and business professors have seen their salaries soar in comparison with their colleagues, according to a recent analysis published in The Chronicle. In 1980, a full professor of economics earned 13.9 percent more than a full professor of English. Thirty years later, the economics professor earns 41 percent more. Similarly, business faculty were paid 11 percent more than the typical full professor of English in 1980. Business professors now earn 50.9 percent more. The only gap larger was for law professors.

“The closer you are to the center of power, the better you’re paid,” Ms. Folbre said. The stakes and penalty for acting out, she added, also increase.

 

Faculty support of Occupy Wall Street movement

UMass Amherst Economics Department faculty continue to participate in events and publish information on the Occupy Wall Street movement. The “Occupy” protests started on Wall Street and have spread internationally. Protests have been held locally in Amherst, Boston and Northampton.

UMass Amherst Economics Professor Arindrajit Dube, who is also a research fellow at the Institute for the Study of Labor (IZA) based in Bonn, discussed the Occupy Wall Street movement with his colleague Marta Murray-Close for the UMass Amherst Department of Economics Echoes alumni newsletter. (Echoes, 12/12/11)

In her Economix blog, Nancy Folbre, UMass Amherst economics professor, says concerns about growing economic inequality that spurred the rise of the Occupy Wall Street movement should be the focus of a wider discussion by economists about capitalism and its effects. (New York Times, 11/28/11)

Gerald Friedman participated in an Occupy Wall Street Teach-In at Smith College. His talk can be viewed here. (11/12/11)

More than 350 economists have added their name in support of the Occupy Wall Street movement. Read their statement and watch a video featuring UMass Amherst Professors James Boyce, Nancy Folbre and Mwangi wa Githinji.

Folbre blogs about British austerity measures

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, writes in the Economix blog about how the British government is dealing with its debt problems by imposing strong austerity measures which include cutting pension benefits and strictly limiting wage increases for public-sector workers. She says the cutbacks have stalled the economy and are sparking protests from middle-class and working people there. (New York Times, 12/5/11)

Cuts in public spending seem to reflect a divide-and-conquer strategy. Planned increases in unemployment benefits next year will be paid for by cuts in tax credits for low-income families.

Although the Cameron government insists that it remains committed to a longstanding British campaign to reduce child poverty, it has scrapped its plans to increase the child tax credit. Families with children in the lower half of the income distribution will be hurt most.

Opposition to the austerity program is growing. On Wednesday – just as I was leaving the country – public-sector workers staged the largest strike in a generation, closing more than half of all state schools, as well as many hospitals.

Protesters from Occupy London found their way to the office of the highest-paid chief executive in the country, Mick Davis of Xstrata, to brandish a banner reading “You get £18,426,105, we get austerity.”