Austerity economics will undermine recovery

A month ago the Milwaukee Journal Sentinel ran a column by Sheldon Lubar arguing:" The Age of Austerity is also what lies ahead for all of us today, not our grandchildren. This is the painful reality."

Putting aside the fact that tens of millions of working and middle class Americans, including the fifteen million who are unemployed and fifty million without health care insurance, have already been subject to the austerity of declining real wages, stagnate family incomes and soaring medical, education and real estate prices (until recently), Lubar is prescribing exactly the wrong medicine for what ails the U.S. economy.

Nobel Prize winning economist Paul Krugman repudiates Lubar and the austerity crowd:

For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.

Krugman concludes:... the next time you hear serious-sounding people explaining the need for fiscal austerity, try to parse their argument. Almost surely, you’ll discover that what sounds like hardheaded realism actually rests on a foundation of fantasy, on the belief that invisible vigilantes will punish us if we’re bad and the confidence fairy will reward us if we’re good. And real-world policy — policy that will blight the lives of millions of working families — is being built on that foundation.

Krugman's column is worth reading and is linked here.

The Milwaukee Journal editorial Board also weighs in today with an editorial that explains why focusing on deficit reduction is not only wrong, but likely to undermine the recovery and revive the worst recession since the Great Depression.

Milwaukee Philanthropist wrong about MPS

Sheldon Lubar is a successful investor.

It's great that he's giving half a million dollars to Whitefish Bay High School to renovate its stadium. Generations of suburban athletes will benefit from Mr. Lubar's largess.

But isn't this what wealthy businessmen do-make large donations to their alma maters that name bricks and mortar after them? Nothing really unusual here.

But I don't understand how making a lot of money or even donating some of it makes Mr. Lubar an expert on urban education or public school governance. Yet Mr Lubar used the announcement of his gift to praise Whitefish Bay as a model in successfully educating black students and attack the Milwaukee Public Schools (MPS) as "structured to fail." All of this was dutifully reported in the Milwaukee Journal Sentinel.

We have a long history in this country of folks who made a lot of money in business-Henry Ford comes to mind- who stumble badly when they venture beyond their area of expertise.

Ford mastered the art of mass production in designing and producing the Model T. He even doubled his workers wages, something that would help address the labor shortage today, to solve his turnover problem. But his manufacturing and managerial insights did not prevent him from supporting German fascism, being an overt anti-Semite or hiring criminals to spy on his employees.

Mr Lubar has evidently been a savvy investor, but that doesn't make him an expert on how to educate Milwaukee's predominantly poor, inner city children. Nor does it make him an expert on urban school governance, a topic of considerable research and debate.

Whitefish Bay, contrary to Mr Lubar's assertion, is not a "model" for successfully educating black children. An examination of testing data suggests that despite having a much more affluent student population than the Milwaukee Public Schools, Whitefish Bay still has a significant racial achievement gap.

On the 10th grade reading test, 83% of Bay's white students recorded advanced scores and 14% were proficient. Yet only 33% of its black students were advanced and 29% proficient. On the 10th grade math test, 57% of white students were advanced and 36% proficient, while only 17% of black students were advanced and 33% proficient.

These results shouldn't surprise anyone with a serious interest in urban education since the racial achievement gap is a national dilemma. But it is a clear refutation of Mr. Lubar's contention that Whitefish Bay is worthy because it has solved the challenge of successfully educating poor black children and MPS is not and should be taken over and dismantled.

Mr Lubar certainly has a right to his opinions. This is America after all. But making lots of money doesn't make one on expert in other areas. And the Journal shouldn't allow its pages to be used as a megaphone by rich, but misinformed donors.