Why Community Schools Are The Key To Our Future
by Kyle Serrette, Director of Education Justice Campaigns, Center for Popular Democracy John H. Reagan High...
by Kyle Serrette, Director of Education Justice Campaigns, Center for Popular Democracy
John H. Reagan High School is located in northeast Austin. In the late 1990s and early 2000s, Reagan’s student body became increasingly poor as middle-class families left the area. In 2003, a student was stabbed to death by her former boyfriend in a school hallway. The incident made headlines and scared away neighborhood families. Students left Reagan in droves. Enrollment dropped from more than 2,000 students to a new low of 600, and the graduation rate hovered just below 50 percent. In 2008, the district threatened to close Reagan. In reaction, a committee of parents, teachers, and students, brought together by Austin Voices for Education and Youth, formulated a plan to turn Reagan into a community school. The district accepted their plan.
Today, five years after adopting the community school strategy, Reagan is graduating 85 percent of its students, enrollment has more than doubled, and a new early college program has made it possible for Reagan’s students to earn two years of college credits from a nearby community college while still attending high school.
Reagan High School, or any community school for that matter, doesn’t immediately look different than any other school — that is, until you spend some time there.
At 3.8 million square miles, the United States is a big place, with almost 50 million primary and secondary students attending more than 98,000 public schools in 14,000 school districts.
Many things unite our vastly different 50 states, but our approach to education is not one of them.
It is fair to say that the United States does not have one approach to education. Rather, it has thousands of pedagogical approaches that fit into roughly the same structure (elementary, middle, high school).
If the universe of poorly funded public schools in the United States were the night sky on a clear night, you would find some really bright stars and a lot of jarring empty space. The problem with a scattershot approach to education in such a vast country is that there’s no effective way to share successful practices.
Thousands of schools in poor neighborhoods fail generation after generation, while other schools with the same demographics and challenges have found ways to succeed and break the cycle of failure. Today, if you are a business, nonprofit, or any type of entity, it is quite hard to figure out if a school wants help or what kind of help it needs. Most schools lack a clear analysis of what they need to help improve outcomes, and if they do have a clear understanding of needs, most lack a point person to manage partnerships.
Unfortunately, there is also no sound system for sharing successful strategies from schools that are getting it right. This is analogous to a heart surgeon developing a revolutionary life-saving approach and only telling people she bumped into about it. Yet that’s basically how our education system works in the United States.
While poor schools have taken many paths to transform themselves into successful schools, one particular path has worked again and again. There are 5.1 million children enrolled in approximately 5,000 community schools in the United States, and those numbers are growing quickly. In New York, mayoral candidate Bill de Blasio promised to create 100 community schools. As mayor, he has fulfilled that campaign promise and recently announced a plan to grow that number to 200 by 2017.
Philadelphia mayoral candidate Jim Kenney announced a plan to open 25 new community schools during his first term. This past December, Ras Baraka, mayor of Newark, announced a plan to scale up community schools with a tentative commitment of $12.5 million from the Foundation for Newark’s Future, the organization created to manage the $100 million that Facebook founder Mark Zuckerberg donated to the city in 2010 to reform the city’s floundering school system.
Community schools are not a new concept. John Rogers, community schools historian at UCLA, tells us they have existed at least since the turn of the 20th century in many forms, but always with the same objective of addressing inequities at both the school and community levels. Jane Addams’s Hull House in the 1890s is an early example: “There were kindergarten classes in the morning, club meetings for older children in the afternoon, and for adults in the evening more clubs or courses in what became virtually a night school. The first facility added to Hull House was an art gallery, the second a public kitchen; then came a coffee house, a gymnasium, a swimming pool, a cooperative boarding club for girls, a book bindery, an art studio, a music school, a drama group, a circulating library, an employment bureau, and a labor museum.”
Long before Reagan became a community school, it housed a daycare for the babies of student mothers so they could continue their education. That daycare still exists today with approximately 20 babies enrolled, but there’s more. When school social workers noticed that student moms at Reagan were missing classes to take their babies to doctor appointments, the social workers applied for and won a grant to have a mobile clinic visit the campus once a week. Now student moms can make appointments for their babies to receive checkups without leaving school. Reagan also allows parents to eat lunch with their babies in the daycare and attend parenting classes. Students in Reagan’s Pregnant and Parenting Teen Program now have a remarkable 100 percent graduation rate.
Discipline problems historically have plagued Reagan. Students were frequently suspended, and chronic attendance issues landed students and families in court, which then imposed fines that families could not afford. Dropout rates were high.
Today, a full-time bilingual social worker works to diagnose chronic attendance problems and connects students and their families with supports, with service referrals rather than fines. A student-led youth court has been developed in partnership with the University of Texas–Austin Law School. The youth court and a restorative justice program together have dramatically reduced discipline issues. Today, Reagan is a top Title I high school in Austin.
While there is a fair amount of variability within schools that have implemented this strategy, thousands of schools have gotten it just right. We wanted to understand what distinguished them from the others.
Here’s what we found those schools shared in their strategic plans: 1) culturally relevant and engaging curricula; 2) an emphasis on high-quality teaching, not high-stakes testing; 3) wraparound supports, such as health care and social and emotional services; 4) positive discipline practices, such as restorative justice; 5) parent and community engagement; and 6) inclusive school leadership committed to making the transformational community school strategy integral to the school’s mandate and functioning.
It all seems intuitive. Schools that form strategic partnerships with businesses, nonprofits, local and federal governments, universities, hospitals, and other organizations to meet core unmet needs are usually successful over time. In most strapped schools, a principal doesn’t have time to find the appropriate partners, let alone conduct an analysis of needs. This leaves schools with a random partner strategy, which is no strategy at all. The community school strategy puts one person in charge of determining the school’s ever-evolving needs. The cost incurred to create this position and the work it supports — around $150,000 — pays for itself and then some.
Nine years ago, when Baltimore’s Wolfe Street Academy elementary school became a community school, 90 percent of its students were living in poverty, 60 percent spoke a language other than English at home, and its mobility rate was high at 46.6 (less than half of its students attended for more than three years). Wolfe Street Academy ranked 77th in the district in academic measures, and only half its children reached reading proficiency by fifth grade. It had no library and only sporadic parent or community engagement.
Today, Wolfe Street ranks second in the city academically, its mobility rate has dropped to 8.8 percent, 95 percent of fifth-grade students are reading proficient, and its average daily attendance rate is 95 percent. It has a library, a book club, and volunteer help from a retired librarian. Forty parents attend a morning meeting every day before school while the students eat breakfast. They share school and community news, both good and bad. This transformation at Wolfe Street has taken place even as more students living in poverty have arrived and as the number of students speaking a language other than English in the home has grown.
During one of Wolfe Street’s annual needs assessments, it determined that its curriculum was not dynamic enough to give the school a chance to achieve its academic goals. In response, Wolfe Street formed a partnership with the Baltimore Curriculum Project, which now provides staff with professional development and supports the school with teacher recruitment and retention.
When the assessment revealed that many of its students had never visited a dentist the school partnered with the University of Maryland Dental School to hold free oral health screenings for all the students. A partnership was formed as well with the University of Maryland’s School of Social Work as a way to respond to what the assessment revealed about the daily impact of trauma on their students’ lives. Now licensed social workers and multiple social work interns are available and offer case management and referrals.
We are in the enviable position of knowing what works. And now, with the recent passage of the federal education legislation Every Student Succeeds Act, funds are explicitly available for the essential elements of community schools, such as community school coordinators, needs assessments, and after-school programming.
A United States where every public school is a community school would be a very different place — it would be a school with the community inside it. Your bank, local architect, grocery store, hospital, and other institutions we associate with being part of the broader community outside our schools would be deeply integrated into them. The tax code could be designed to accelerate and incentivize partnerships with schools. The lines between the inside and outside of schools would blur.
And if you imagine a United States in 2050 where all 98,000 schools have a clear sense of their individual needs and are able to communicate these needs effectively to potential partners, this might be a game changer.
With a new granular understanding of every school’s needs, we could scale partnerships and connect schools with similar needs or pair schools that could benefit from each other’s strengths. We could analyze needs and assess intervention strategies between schools and across districts, cities, states, and the nation.
If you can imagine the world back when it wasn’t connected by the internet and experience again how everything changed when we finally were connected, that is the level shift our schools would experience if every school were a community school. A networked school system would exist, and our atomized system of disparate schools would fade away as a relic of the past.
Source
El premio de la diáspora boricua
El premio de la diáspora boricua
“En el noreste, grupos de poder inmigrante como Make the Road, afiliadas al Center for Popular Democracy, organizan a...
“En el noreste, grupos de poder inmigrante como Make the Road, afiliadas al Center for Popular Democracy, organizan a estas comunidades en Nueva York, Connecticut, Pensilvania y Nueva Jersey para crear un poder amplio en las minorías de esa parte de los EE.UU. Por otro lado, se han formado coaliciones nacionales como Power4Puerto Rico, que agrupan a muchos de estos grupos, incluyendo al Hispanic Federation, para cabildear por políticas públicas que tendrán un impacto directo en los puertorriqueños viviendo en la diáspora.
Lea el artículo completo aquí.
Group Blasts Fed for Lack of Diversity in Leadership
Source:...
Source: Wall Street Journal
Federal Reserve leadership is overly male, almost entirely white and drawn too frequently from the banking community, according to a group critical of the central bank.
A new report from the Center for Popular Democracy’s Fed Up campaign analyzes the types of people populating the Fed’s Washington-based board of governors, the regional bank presidencies and the regional bank boards of directors.
The report notes that all voting members of the central bank’s rate-setting Federal Open Market Committee and nearly all the regional bank presidents are white. Just two of the 12 presidents and two of the five governors are women.
“These key decision-making bodies remain dramatically unbalanced and unrepresentative of the vast majority of people who participate in the economy,” said the group, which has called for more public input into the selection of regional bank presidents and their performance evaluations.
The center said the composition of the Fed’s leadership bodies violates the spirit of the law that created the central bank, which calls for membership drawn from many different industries and interests.
A Fed spokesman responded to the criticism about the regional bank boards by saying the central bank has “focused considerable attention” to finding directors “with diverse backgrounds and experiences” that represent agriculture, commerce, industry, services, labor and consumers, as the law requires.
“We also are striving to increase ethnic and gender diversity,” the spokesman said, noting a rise in minority representation on the boards from 16% in 2010 to 24% today. Female representation has risen from 23% to 30% over the same period, and all told, 46% of regional directors now are either a woman or a member of a racial minority, the spokesman added.
Fed Chairwoman Janet Yellen is the central bank’s first female leader.
The Fed Up group, with a membership drawing heavily from labor unions and community organizations, is a regular critic of the central bank. It has argued in recent months that the Fed shouldn’t raise short-term interest rates and has pressed its case in private meetings with Fed officials. Several of its members appeared outside the central bank’s research conference in Jackson Hole, Wyo., last year to call attention to their views.
The group’s concern about a dearth of diversity at the Fed has been echoed by former Minneapolis Fed chief Narayana Kocherlakota. He argued in a blog post last month the central bank has appeared to give short shrift to racial concerns in part because there have been almost no African-Americans in its policy-making ranks. He wrote that the concerns of racial minorities have been “underemphasized” at the Fed.
The last African-American to serve on the Fed board was Roger W. Ferguson Jr., who served as a governor between 1997 and 2006 and as vice chairman from 1999 to 2006. The first African-American to serve as a Fed governor was Andrew Brimmer, from 1966 to 1974.
The report showed particular concern about the directors on the regional Fed bank boards, which are drawn from the private sector. It said 83% are white, compared with around two-thirds of the total U.S. population.
“The diversity of regional board members is meant to inform the bank presidents, who in turn, participate in discussions and vote at the FOMC,” the report said. “However, the boards, the presidents, and the FOMC fail to represent their region’s racial diversity.”
The report also said its analysis found that representatives of banking and what it calls commercial interests have increased their share of regional Fed board seats in recent years. Representatives of community groups and labor unions account for fewer than 5% of the available board seats, according to the center.
Among the regional Fed bank boards’ most high-profile roles is selecting their bank presidents. Recent regulatory changes now bar directors from participating in that process if their firms are regulated by the bank.
The directors also provide information to bank officials about local economic conditions and give advice on running the banks.
Walter Isaacson to sit on City Planning Commission, and other area political news
Walter Isaacson to sit on City Planning Commission, and other area political news
Isaacson to sit on City Planning Commission Author and former CNN CEO Walter Isaacson may be only a part-time resident...
Isaacson to sit on City Planning Commission
Author and former CNN CEO Walter Isaacson may be only a part-time resident of New Orleans, but Mayor Mitch Landrieu has appointed him to the City Planning Commission.
Isaacson, 64, who now heads the Aspen Institute in Washington, D.C., will replace lawyer Alexandra Mora in January.
The City Council approved the appointment Thursday.
“I'm deeply honored and excited about the prospect of helping to protect the city and plan for its future,” said Isaacson, who splits his time between New Orleans and Washington.
Isaacson, a New Orleans native, is also a former editor of Time magazine and the author of books about Steve Jobs, Albert Einstein, Benjamin Franklin, Henry Kissinger and the "group of hackers, geniuses and geeks (who) created the digital revolution."
He was vice chairman of the Louisiana Recovery Authority, the agency that oversaw the state’s rebuilding after Hurricane Katrina. He is also on the boards of Tulane University and the New Orleans Tricentennial Commission.
Landrieu also appointed Jason Hughes to the commission to fill the unexpired term of Nolan Marshall III, who left New Orleans in October for a job in Dallas.
Hughes’ tenure will end in 2021, while Isaacson's will end in 2023.
City Council condemns anti-Muslim rhetoric
At the end of a heated election season that has included calls from Republican presidential nominee Donald Trump to ban Muslims from entering the country, the New Orleans City Council approved a resolution Thursday condemning anti-Muslim rhetoric.
The resolution is part of a national effort by the liberal group Local Progress to get similar measures passed across the country
"We have seen dangerous levels of anti-Muslim and racist rhetoric as well as a rise in hate crimes," said Councilwoman LaToya Cantrell, a board member of Local Progress. "This rhetoric and violence is not only a threat to our communities but also a direct threat to us as U.S. citizens."
The resolution passed 6-0, with Councilman Jason Williams absent.
"Love really does trump hate," Cantrell said, echoing a slogan used by Democratic presidential nominee Hillary Clinton.
The resolution says the council "condemns all hateful speech and violent action directed at Muslims, those perceived to be Muslims, immigrants and people of color," "categorically rejects political tactics that use fear to manipulate voters or to gain power or influence" and "reaffirms the value of a pluralistic society, the beauty of a culture composed of multiple cultures, and the inalienable right of every person to live and practice their faith without fear."
Clinton is expected to easily carry New Orleans in Tuesday's election.
Jeff council backtracks, OKs disputed contract
The Jefferson Parish Council on Wednesday suspended a disputed ordinance in order to keep the parish's Carnival parades rolling in 2017, hiring a company owned by a local political consultant to build the grandstands from which revelers will cheer on the annual spectacle.
The council voted 7-0 to suspend a ban passed a year ago that would prevent parish contracts from being awarded to any firm partially owned by a consultant who had represented an elected official during a prior election.
That ordinance, which was proposed by Councilman Chris Roberts last November, is under challenge in federal court.
Buisson Creative, a firm owned by political consultant Greg Buisson, was the only firm to respond to the most recent request for proposals to provide the grandstands for the upcoming Carnival season.
Because of the pending legal challenge and the fact that no other proposals for the work were submitted, the council suspended the ban and also voted 6-0 to negotiate a contract with Buisson Creative. Roberts abstained from that vote.
The ordinance was controversial because some saw it as being aimed specifically at Buisson, who had just worked for Roberts’ political opponent in the prior election cycle.
Roberts dismissed the criticism, saying the ordinance was a good-government measure designed to prevent conflicts of interest by making sure those who worked on political campaigns did not then get contracts with parish government.
BGR: Its report to save taxpayers millions
The Bureau of Governmental Research put out a release last week taking credit for uncovering an issue that it said is "expected to yield millions in savings to taxpayers."
On Oct. 27, an Orleans Parish Civil District Court judge ruled in the city's favor on how to apply the formula for calculating pension benefits for city firefighters. The BGR release said the "matter stemmed from a 2013 report in which BGR revealed that the New Orleans Firefighters' Pension and Relief Fund was applying the benefits formula on more generous terms than those spelled out in state law."
The court order directs the fund "to apply the formula as set forth in law," the research group said.
"According to a pension consultant's estimate, if the formula were properly applied to current employees alone, taxpayers would save roughly $1.3 million per year. But under the judgment, the formula is to apply to current retirees as well, increasing the potential savings," BGR said.
By Jessica Williams, Jeff Adelson, Chad Calder and Bruce Eggler
Source
Scarlett Johansson recauda medio millón para Puerto Rico
Scarlett Johansson recauda medio millón para Puerto Rico
Las compañías Marvel y Disney donaron todos los costos de producción al igual que una aportación económica de $350,000...
Las compañías Marvel y Disney donaron todos los costos de producción al igual que una aportación económica de $350,000 dólares los cuales estarán destinados a la ayuda a Puerto Rico organizados por el Hurricane María Community Recovery Fund.
Read the full article here.
Toys 'R' Us owners will hand out $20 million severance to employees
Toys 'R' Us owners will hand out $20 million severance to employees
The fund was set up following negotiations between the private equity firms and various public interest groups that...
The fund was set up following negotiations between the private equity firms and various public interest groups that organized the employees, including Organization United for Respect, Private Equity Stakeholder Project and Center for Popular Democracy. "This Fund begins to ensure the hard-working people who spent their lives building Toys 'R' Us and making children happy are not left out in the cold," said Marilyn Muniz, a New York-based Toys "R" employee for nearly 20 years.
Read the full article here.
Activists offer ideas to police charter schools
A pair of activist groups, the Alliance for Quality Education and Center for Popular Democracy, is out with a guide —...
A pair of activist groups, the Alliance for Quality Education and Center for Popular Democracy, is out with a guide — or rather suggestions — for better policing and monitoring finances of the state’s charter schools, which serve some 90,000 students, mostly in New York City.
The report states that since charters aren’t subject to all the reporting requirements required of public schools, there has been waste and abuse.
It contends the state could lose $54 million to fraud at charter schools this year, based on an accounting system used by fraud examiners that assumes 5 percent of that kind of mismanagement and tomfoolery.
To be sure, these groups are not exactly charter-friendly: AQE is funded in part by the state teachers union; the Center for Popular Democracy is also aligned with the national teachers union, AFT, among other groups.
They want a moratorium on charter expansion — which could become a high-profile issue during the next legislative session.
Here is their release and report: One note: some of these problems outlined below including the issues at Harriett Tubman Charter School occurred several years ago and under different administrations.
Today, the Center for Popular Democracy and Alliance for Quality Education released a report titled Risking Public Money: New York Charter School Fraud that reveals vulnerabilities in the state’s charter oversight system that could potentially cost New York state taxpayers as much as $54 million in charter fraud this year alone.
“Our governor and other school privatization advocates have pushed relentlessly to expand the charter industry at the expense of public school communities in New York State,” said Billy Easton, Executive Director of the Alliance for Quality Education. “But the proliferation of charters hasn’t been matched by the oversight needed to ensure that public money intended for students doesn’t instead get lost to fraud, waste and abuse.”
The report finds that state agencies have audited just a quarter of New York’s more than 250 charter schools since 2005, largely relying on them to police themselves instead. Yet in a startling 95 percent of the charters examined, auditors found mismanagement and internal control deficiencies that have occasioned $28.2 million in known fraud, waste, or mismanagement. Recognizing that the industry cannot be trusted to monitor itself for problems, the report’s authors have offered common sense interventions to remedy the problem, and have called for a moratorium on charter expansion until meaningful public oversight has been put in place.
“We can’t afford to have a system that fails to cull the fraudulent charter operators from the honest ones.” said Kyle Serrette, Education Director at the Center for Popular Democracy. “Given that New York spends over $1.5 billion on charter schools and more than 90,000 children are enrolled, a lot is at stake. We can’t afford to wait for tens or hundreds of millions more dollars to be lost before policymakers address this glaring issue.”
Here are only a few statewide examples among the dozens in the report:
IN NEW YORK CITY: Harriett Tubman Charter School issued credit cards to its executive director and its director of operation. They charge more than $75,000 in less than two years. The charges were never approved or explained.
IN LONG ISLAND: Roosevelt Children’s Academy Charter School paid four vendor a total of $521,197 for significant public work and purchase contracts without fair competition.
IN ALBANY: Albany Commuity Charter School lost between $207,000 to $2.3 million by purchasing a site for its elementary school rather than leasing it.
IN ROCHESTER: Eugenio Maria de Hostos Charter School failed to enter into a competitive bidding process for several instructional contracts. Instead the school awarded contracts to board members, relatives and other related parties.
IN BUFFALO: Oracle Charter High School entered a 15-year building lease with Oracle Building Corporation, agreeing to pay them more than $5 million at a 20 percent interest rate.
Source: Times Union
How Trump’s Pick To Police Wall Street Endangers The Economy
How Trump’s Pick To Police Wall Street Endangers The Economy
As the country reeled from news that Donald Trump Jr. apparently tried to collude with Russia against former Democratic...
As the country reeled from news that Donald Trump Jr. apparently tried to collude with Russia against former Democratic presidential contender Hillary Clinton, his father, President Donald Trump, announced a decision that will have ripple effects on the American economy for years to come.
Trump, distressing advocates of tough financial rules and pro-worker monetary policy, on Monday nominated veteran Wall Street lawyer Randal Quarles to serve as the Federal Reserve’s top finance regulator.
Read the full article here.
Bill Would Make Maryland Employers Set Work Schedules Earlier
As Labor Day approaches, advocates in Maryland are pushing for a change in how workers receive their schedules....
As Labor Day approaches, advocates in Maryland are pushing for a change in how workers receive their schedules.
Take Hilaria, who lives in Gaithersburg and works at a fast food restaurant. (That's all she'll say on the record, fearing potential reprisal from her employer.) Hilaria says she often doesn't receive her weekly work schedule until right before she has to start it.
"Sometimes it three to four days before the schedule [starts]," Hilaria says. "So we don't have enough time for activities — like for my daughter in school, or for my appointment with a doctor."
Advocates for workers argue Hilaria's story is not uncommon for those in the restaurant and hospitality industries. They're pushing the Maryland General Assembly to approve a measure next year that would make employers issue schedules three weeks in advance. It's called the Fair Work Week Act.
Del. David Moon of Montgomery County says it would provide protections for workers who don't have many.
"Schedules change. You're asked to fill in for people at the last second. It's a busy night and all of the sudden you have to jump in and completely alter your schedule. And if you can't, you're often made to find a replacement yourself," Del. Moon says.
A similar bill never received a vote during this year's session in Annapolis. Nationwide, Fair Work Week bills have been more successful at the city and county level. San Francisco approved a similar measure last year, and Albuqueque, New Mexico, is currently debating one.
Source: WAMU 88.5
Fed official explains why he stopped trying to predict the future
Fed official explains why he stopped trying to predict the future
JACKSON HOLE, WYO. -- The world's economic elite gathered here for an annual symposium sponsored by the Federal Reserve...
JACKSON HOLE, WYO. -- The world's economic elite gathered here for an annual symposium sponsored by the Federal Reserve Bank of Kansas City last week to debate the strategies central banks should employ to safeguard the global economy. We sat down with St. Louis Fed President James Bullard to chat about when he might be ready for a rate hike, the limits of his powers and why predicting the future is futile.
The transcript below has been edited for length and clarity.
Wonkblog: Let’s start with the question of the day: Which month looks good to you for a rate hike?
Bullard: Actually, I’m agnostic on this. Our new framework calls for one, and only one, and then we go on pause for a bit. It’s not critical to me exactly when we make that move, so we wouldn’t have to go at any particular meeting.
I do like to move on good news, so if we have good information, and we’re at a meeting, it might be a good opportunity to go ahead and make that move. But what’s different about what I’m saying is I’ve got a real flat interest rate path — much closer to the markets’ interest rate path. I don’t have this march upward of 200 or 250 basis points.
If only one more rate hike is really needed to get to the Fed’s neutral stance, why does it matter if you move in September, December or next year? You would be willing to wait until 2017?
Certainly, I just don’t feel that there’s any urgency when you’ve got the framework I’m talking about.
[The Federal Reserve is debating how to fight the next recession]
So explain your framework for us.
What we wanted to do is break down this idea that we’re really certain about where the economy is going in the medium- and long-run. What most models do is they have something called a steady state, which is really an average of all the variables in the past: You look at the unemployment rate, and you take the average unemployment rate. You look at interest rates and take the average past interest rate. You look at inflation, growth — you take averages of the past, and you call those your normal values.
As you go along, you expect all your variables to go back to their normal values. That’s what we’ve been doing. That’s the old framework. And what we’re saying is we don’t like that framework anymore because it suggests we have a lot more certainty about where the economy is going than we really do.
These averages of these variables from the past — they can sometimes be high and sometime be low. You can be in a configuration where these things are low, and then you can switch to another configuration when they’re high. Then they’re high for a while, and you switch back to low. What you have to do is make policy given whatever regime you’re in.
We think that the regime that is dominant right now is a slow-growth regime that is characterized by low productivity growth and very low real returns on short-term government debt around the world. We think these regimes are persistent. These things aren’t changing any time soon. And because of that, we just have to take them as given, for now anyway.
Given that in this framework, it’s difficult to tell when the regime is shifted, how do you know that you’re not setting monetary policy for a regime that’s already expired?
You’re gonna know when the regime switches. These very low real rates of return on government debt, if you look at the ex-post return on one-year Treasurys, it’s about -135 basis points right now. If that starts to go up rapidly, we’re gonna know and we’re going to take note of it. We’re gonna say, “Aha! Our regime has changed, and we’re going to have to change monetary policy accordingly.”
But for forecasting purposes, I wouldn’t say that I’m expecting that to happen all of a sudden. It’s been that way for at least the last three years, and if you look at real rates of return, they’ve declined for the last 30 years. It’s also very clear that we’re in a very low productivity environment.
It’s not that you go to sleep. You stay alert to the possibility that the regime can change in the future, and probably will change at some point in the future. It’s just not good to be predicting that it’s going to change.
Federal Reserve Chair Janet Yellen's speech here laid out the argument that the Fed is not out of ammunition to fight the next recession. Do you agree with that?
I loved the speech. She made the case that we still have quite a bit of bandwidth to handle problems if they arise in the next couple of years, and I very much agree with that. But at the same time, it’s always good to be studying other possibilities. I actually have papers on nominal GDP targeting, so I think that’s an interesting topic. It's probably not ready for prime time, but I’m a believer in research.
What led you to the support for this regime-based framework. Can you talk about the evolution of your thinking?
Maybe some frustration with the dot plot. We were saying we were going to have to raise rates fairly aggressively over the forecast horizon in order to keep the economy on track, and that wasn’t materializing. We had that forecast for several years, and it wasn’t really working. For that reason, I wanted to get a different way to think about what we were doing.
We’ve only moved once on the policy rate, and markets are saying maybe one more move this year. That would only be one move per year — that’s really not normalization. If you’re going to say it’s going to take 10 years to get back to a normal value, you’re really saying we’re not going back there. That’s way longer than any sort of business cycle than you can reasonably talk about.
How do you feel about the division between monetary and fiscal policy currently? Do you feel it’s time to pass the baton here?
I do think that. And I think the regime framework is good for laying that out for people. Part of the story is that the recession has been over for seven years. The unemployment rate has gone down below 5 percent. Inflation is low, but we don’t think it’s that low, and it’s kind of coming up to target.
So the cyclical dynamics are all done. The dust has settled, I guess is the way I would put it.
You might say the dust has settled, and I don’t like what I see. But for that, you can’t solve that with monetary policy. You’ve got to have things that are going to increase productivity in the economy. You’ve got to make the economy more efficient. New ideas, better technology, better diffusion of technology, better human capital, better skills match — I think it’s a lot of small things that you have to do right to get an economy humming. The story of let’s keep interest rates low and that will help us, that’s kind of over for now.
Related to that are the demonstrations by Fed Up and the Center for Popular Democracy that were held Thursday. Any additional thoughts on their point of view, that there’s still more that the Fed can do?
I love the people that come here. I think they’re a really great slice of the American workforce. It’s really nice that they’re willing to take time out of their lives to come out here and talk to us boring central bankers.
They want to talk about low nominal interest rates as solving difficult problems of how our labor markets operate and how our labor markets are unfair to many people. I would like them to think about the German labor market reforms that were done over the last decade. Germany had very high unemployment for a long time. It was an endemic problem, and then they did these reforms and got their unemployment rate cut in half — even though Europe went through a double-dip recession during that period.
It showed to me that there are ways to attack these problems, and I think we could do that in the U.S. I think they should refocus their efforts on the labor secretary, so we could get those kinds of reforms going. People aren’t even talking about that.
By Ylan Q. Mui
Source
2 months ago
2 months ago