Showing posts with label Jonathan Cohn. Show all posts
Showing posts with label Jonathan Cohn. Show all posts

Monday, February 28, 2011

More big burdens, more small shoulders

From Jonathan Cohn:

Please indulge me while I share some local news: Rick Snyder, newly elected governor in my home state of Michigan, announced this week that he will call for massive cuts in state spending on education.* (*Note: My [Cohn's] wife is a professor at a public university that would lose some funding under Snyder’s plan. I doubt she'll feel much impact from these cuts. But, as you can guess from this item, I think my kids will.) Very roughly, it will result in a reduction of about $470 per student.

I know enough about public education, and public education bureaucracies, to believe that school districts could find ways to reduce spending without hurting the quality of education. And, yes, it would probably mean teachers and staff making more concessions on salaries or, more likely, benefits.

But could they find $470 per student that way? I don't think so. On the contrary, I expect that schools--including the ones that my sons attend--would end up with fewer teachers, fewer courses, and fewer extracurricular offerings if the legislature approves Snyder's plan. And my kids would be among the lucky ones. It would be much worse in places like Detroit, where an ongoing funding crisis is about to swell some classes to 60 students. (No, that’s not a misprint.)

Sunday, February 27, 2011

This round just might go to Eminem

Edward L. Glaeser has been tough on Detroit and the auto industry. Here's how he opened a column last week:
During the Super Bowl, Chrysler and Eminem gave us a chest-thumping, soul-lifting vision of Detroit as a city of character, competence and style. But the Census tells us that per-capita incomes in Detroit are barely half the national average and that one-third of the city lives in poverty.

Michigan was the only state that lost people from 2000 to 2010, and the state’s unemployment rate remains near 12 percent. Is it possible that Detroit will turn the corner despite decades of decline?

It's safe to assume that the answer Glaeser had in mind for his rhetorical question didn't rely too much on the Big Three. Back in June, 2009, here's what he had to say about the bailouts:
Since the collapse of Lehman Brothers, the public sector has spent billions saving the banks. While these decisions are certainly debatable, they are understandable. The US financial industry misbehaved badly,... but it is still a sector with a future. ... After all, every other sector in the economy depends on banks for their financing.

But what about cars? ... Does anyone, other than GM's management, believe that this company can come back? The current treatment, cash infusion and a reduction in corporate liabilities, provides a solution for a company that is broke, not for one that is broken.
Given that analysis, it might be interesting to get his take on this item from the New York Times:
General Motors, which nearly collapsed from the weight of its debts two years ago before reorganizing in a government-sponsored bankruptcy, said Thursday that it earned $4.7 billion in 2010, the most in more than a decade.
It was the first profitable year since 2004 for G.M., which became publicly traded in November, ending a streak of losses totaling about $90 billion.
In addition, G.M. said 45,000 union workers would receive profit-sharing checks averaging $4,300, the most in the company’s history. ...
Globally, G.M.’s sales rose 12.2 percent in 2010, to 8.39 million, coming within about 30,000 vehicles of retaking the title of world’s largest automaker from Toyota. For the first time, it sold more cars and trucks in China, where its sales rose 28.8 percent from 2009, than in the United States, where sales were up 6.3 percent.

Or to see what he had to say about Jonathan Cohn's reaction to the news:

Seriously, though, this is another important milestone for GM. Profits for the final quarter were actually lower than initial expectations. But the company attributed that, in part, to heavy investment in the development of new products, which is a sign of company health. “Their recovery has been fueled by significant cost-cutting, arrival of new products that consumers were seeking along with better management of incentives and supply,” Jesse Toprak, vice president of industry trends and insight at TrueCar.com, told the Times. “The sky is the limit for G.M. after becoming profitable at this low of a sales pace.”

Of course, the usual caveats apply: The two companies could still stumble and Chrysler, in particular, still needs to prove they can cars as good as their television commercials. And it's not as if workers in the auto industry didn't take a huge hit anyway: Many did lose their jobs and new employees are making a lot less money than old ones do.

Still, it looks increasingly like the rescue of the auto industry was an overall success, saving hundreds of thousands (if not millions) of jobs and bolstering the country's manufacturing base for years (if not decades) to come. Maybe it's time to start giving President Obama some credit for it--and recognizing that, when properly managed, the federal government can do a lot of good.