EconomistMom.com
…because I’m an economist and a mom–that’s why!

EconomistMom.com

Walking and Chewing Gum (Creating Jobs and Reducing the Deficit)

May 15th, 2012 . by economistmom

This is an old theme  here, but the issue and the confusion persists, as I have just come from attending the Peter G. Peterson Foundation’s fiscal summit today, complete with a protest/press conference  on the front steps of the summit venue, with the protesters arguing against the “austerity” measures they think the summit participants and attendees advocate.

Just coincidentally, here is a blog post I wrote on Concord’s blog today.  In it, I say deficits can sometimes be good, and deficits can sometimes be bad, depending on the condition of the economy (emphasis added):

In a recovering economy still below “full employment” level, the binding constraint is lack of demand for goods and services. Increasing the supply of productive resources won’t increase GDP if there is already excess supply, or idle capacity, in the economy. It will only increase unemployment. In such an economy, fiscal policy can increase GDP by stimulating consumption — either through the government’s direct purchases of goods and services, or through tax cuts or transfer payments that indirectly increase private spending. Deficit spending can be effective at increasing demand and GDP immediately; how effective it is depends on how well targeted the policies are toward households and businesses most likely to spend additional funds on goods and services, and on how much the industries that produce those goods and services respond by hiring additional workers.

Sudden fiscal consolidation or deficit reduction, on the other hand, can jeopardize an economic recovery if it substantially reduces the net incomes of households that spend most of their income. (Such “austerity” measures can also spur a political backlash, as we are seeing now in Greece and France.)

In contrast, in a fully-recovered, full-employment economy, the size of the economy is limited by the level of productive capacity, or the aggregate “supply side” of the economy. Increasing demand without increasing supply only creates inflationary pressures. Under these conditions, higher private and/or public saving will most effectively expand the economy.

Deficits harm economic growth by reducing national saving (public plus private saving), which reduces the capital stock, labor productivity and household incomes. So deficit financing of tax cuts or spending designed to encourage the supply of productive resources handicaps the likely payoff. If policies can be structured to preserve the positive incentive effects on the supply of labor and capital while avoiding deficit financing, then those policies are much more likely to increase GDP.

As the economy gets closer to full employment and there is less need to stimulate demand, fiscal policy should transition from deficit-financed policies that encourage consumption, to paid-for policies that increase national saving.

And just because deficit spending in general can be helpful in a recession and recovery and harmful in general in a recovered economy, doesn’t mean all deficit spending is equally good in a recession and recovery, or all deficit spending is equally bad in a full-employment economy.  There are benefits and costs in either situation that should be evaluated as thoughtfully as possible in order to maximize the net benefits of the policy.

So I don’t support “austere” fiscal policy, but I do keep hoping for “smarter” and (net) beneficial fiscal policy.  It is not at all hard to do in economic theory.  The difficulty lies mostly in political practice.  I’ll explain more on that soon when I write more about what happened at today’s fiscal summit.

61 Responses to “Walking and Chewing Gum (Creating Jobs and Reducing the Deficit)”

  1. comment number 1 by: Ralph Musgrave

    “Deficit spending can be effective at increasing demand and GDP immediately; how effective it is depends on how well targeted the policies are toward households and businesses most likely to spend additional funds on goods….”.

    The above “targeting” is actually a waste of time, and for the following reasons.

    It’s true that in order to get best value for money from a deficit (or to maximise the multiplier) the deficit should be targeted at areas with a good multiplier. However, deficits cost nothing in real terms. Or as Milton Friedman put it, “It need cost society essentially nothing in real resources to provide the individual with the current services of an additional dollar in cash balances.” Put another way, printing extra dollars and distributing them costs virtually nothing.

    So if there are groups of people who tend to store up extra dollars and do nothing with the relevant money, who cares? It doesn’t cost the country anything in real terms to let them engage in this hoarding.

  2. comment number 2 by: Brooks / Gordon

    Every time I see/hear from many/most economists the mantra that Keynesian stimulus (via spending, tax cuts, or both) is good policy in a recession (or weak recovery), either generally or when the relatively effective choices are made for this stimulus, I still have the same question that seems never to be answered: Are they saying that the fiscal policy they are advocating will actually improve the long-term outlook for the fiscal and economic health of the nation, or merely that it will mitigate the current suffering at an acceptable cost in the future?

    I’m not sure which metrics are best to put the above question in technical terms, but are these economists saying that long-term debt/GDP will be lower or higher if we incur the higher deficits per the policies they advocate? Are they saying that some broader measure of long-term impact would be better, such as a lower ratio of federal (or total govt + private) debt to some measure of public + private assets or net worth?

    For the past several years I’ve read/heard from economists more or less the same thing over and over and over again, and not just from economists on the left or center. All at least saying matter-of-factly that austerity would not be wise policy amid recession. Throughout the weak recovery in the U.S. some divergence of opinion has emerged, but still many economists (and not just the Paul Krugmans of the economics world) emphasize that in a weak economy, large deficits are — or at least can be — much wiser policy than deficit-reduction. Yet they never say if they are actually saying this is an all-gain, no-pain proposition (which I suppose they would then have to back up with economic analysis or reference to such analysis), as opposed to some arguably preferable “smoothing out” option that reduces pain now at a cost bringing some less-painful sacrifice in the future.

    Any help on this one?

  3. comment number 3 by: Vivian Darkbloom

    Brooks,

    You are asking entirely the right question. But, I can’t help you. My current thinking is that this is, ultimately, and I mean ultimately, a zero sum game. Timing is, however, everything—for most folks, at least. I think the prevailing wisdom is that whatever gets you past the next election is good policy. You know what Keynes said–”in the long run, we’re all dead”. I’m not sure he had any kids—-and, Krugman apparently doesn’t have any, either.

  4. comment number 4 by: Brooks / Gordon

    Vivian,

    Re: the longer-term perspective one may have if he/she has children, I’ll paraphrase Jack Handey: “I believe in making the world better for our children, but not for our children’s children, because I don’t think children should be having sex.”

    If anyone wants more of that bent humor, http://www.jokes2go.com/lists/list22.html (my favorite isn’t on the list there: “It’s a shame families have to be torn apart by something as simple as wild dogs.”)

    Back to my serious point, it’s amazing to me that, with so much discussion of the merits of stimulus, and with gazillions upon gazillions of times that economists have advocated stimulus (or at least against substantial deficit-reduction amid recession and/or weak recovery) across all forms of media, my question is never (to my knowledge) addressed. I don’t know what is more disturbing — that economists seemingly universally (or nearly so) choose not to address the question, or that journalists seemingly universally fail to ask and press for an actual answer from the economists.

    IIRC a while back I found in my searching some anti-stimulus opinion pieces by Robert Barro in which he estimated negative middle/long-term multipliers, and also IIRC some CBO projections have indicated something similar. But it’s just unbelievable that it requires research to (maybe) track down an answer to a question that so obviously should so often be asked and addressed/answered in the mass media.

  5. comment number 5 by: Jim Glass

    Are they saying that the fiscal policy they are advocating will actually improve the long-term outlook for the fiscal and economic health of the nation, or merely that it will mitigate the current suffering at an acceptable cost in the future?

    CBO has said in its analysis all along that the extra debt created by the stimulus will reduce the long-term growth rate somewhat, unless it is offset by later comparable debt reduction measures.

    E.g.: My first hit on a quick Google search:

    http://www.washingtontimes.com/news/2011/nov/22/cbo-stimulus-hurts-economy-long-run/

    The real argument is over how much it was worth in the short run.

  6. comment number 6 by: SteveinCH

    There are so many things wrong with the “stimulus and more stimulus” argument, it’s hard to know where to begin.

    My personal favorite though is the failure to recognize the decreasing marginal utility of stimulus. Regardless of what you think the short term and long term multipliers may be, you know that the short term one goes down as more stimulus is applied and the long term (negative) one goes up.

  7. comment number 7 by: Brooks / Gordon

    Thanks Jim. Out of curiosity, what search terms did you use for Google that produced that first result?

    Re: CBO’s estimate that ARRA “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016,” I’m not sure what is meant by “after 2016″. Do they mean, other things equal, that will be the impact year after year indefinitely?

  8. comment number 8 by: Brooks / Gordon

    Jim,

    By the way, here’s something you may want to add as an update to your post years ago re: Krugman’s hypocrisy:

    In 2003, as you’ve noted, Krugman wrote in the NYT (elipses mine):

    Bush’s] push for big permanent tax cuts is completely crazy…[T]he conclusion is inescapable. Without the Bush tax cuts, it would have been difficult to cope with the fiscal implications of an aging population. With those tax cuts, the task is simply impossible. The accident — the fiscal train wreck — is already under way.

    How will the train wreck play itself out?…my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.
    And as that temptation becomes obvious, interest rates will soar.

    But today, on Fareed Zakaria GPS, Krugman claims to find it hard to imagine how a debt crisis could occur, since our debt is in our own currency:

    First of all, a country that borrows in its own currency, even to think about how exactly does that debt crisis happen? I mean, does it mean — the U.S. federal government can’t run out of cash, because the Federal Reserve can print cash, and actually it’s quite hard to tell the story. And we are not Spain because we have our own currency, we borrow in our own currency, so it becomes a quite hard story to tell about how this can go wrong. http://transcripts.cnn.com/TRANSCRIPTS/1205/20/fzgps.01.html

    Krugman also claimed that inadequate stimulus is “actually going to make our debt position worse.”

  9. comment number 9 by: Brooks / Gordon

    Link to that 2003 column http://www.nytimes.com/2003/03/11/opinion/a-fiscal-train-wreck.html?pagewanted=print&src=pm

  10. comment number 10 by: Arne

    “My current thinking is that this is, ultimately, and I mean ultimately, a zero sum game.”

    My take is that if deficit spending were balanced with surpluses that we would come out ahead. The integral under an a sinusoid is zero, but the intregral under a sinusoid multiplied by a growing exponential is lower than that under the exponential by itself. This is fairly analogous to the inefficiencies of varying pressure on the gas pedal. However, it is a second order affect and there are other second order affects that work the other way.

    I think Diane glosses over the fact that the balance to deficit spending in a downturn is running surpluses in the upturn. The number of adherents to starve the beast makes that politcially impossible.

  11. comment number 11 by: Vivian Darkbloom

    Arne,

    That is an interesting mathematical thought experiment which, unfortunately, has nothing to do with reality.

    First, in order for us to test the validity of your theory, we would have to unfold our magic carpets and travel back to a time when we had zero debt rather than debt approaching 100 percent of GDP. Perhaps you disagree, but the weight of authority seems to be that one’s starting point on the debt scale is relevant.

    Second, whether deficit spending in recessions will outweigh long-term costs is not alone a question of mathematical formulae. Perhaps this is what you meant (twice) by “second order affects” (I think you meant “effects”), but it really does matter what that money is spent on. Your model appears as idealized as the fictional “Julia”, for it seems to assume that that deficit spending is always on worthwhile investments and not just spending for the sake of spending (or do you subscribe to the Krugman Doctrine of Alien Warfare?). It has been my general observation that stimulus spending has a very poor track record as far as investment decisions are concerned and that, I submit, has something to do with the longer-term rate of return, if any.

    To borrow from your metaphor, it is my experience that the gas mileage of that vehicle is considerably lower when money is spent as “stimulus” when going uphill than when the vehicle is going downhill, or even on level terrain. Perhaps it has something to do with the skill of the driver.

    As far as “starving the beast”, you may have a point. However, it is also my experience that that beast has a nasty habit of consuming everything on his plate, and second helpings to boot when the all- you- can- eat buffet is open. None of this is explained by arithmetic alone.

  12. comment number 12 by: Arne

    “None of this is explained by arithmetic alone.”

    I believe I was suggesting calculus, not arithmetic.

    The metiric Brooks would like to see (as I would) is the difference between two (or many more) second order effects. For those who believe that government is inherently less efficient than private industry, it seems to boil down to easy arithmetic, but it really is not that simple. Round up some data with government screwups and you get one answer. Round up data with private industry screwups and you get the other. As endlessly observed, economics is not a laboratory science.

    I would not suggest that the government could achieve some idealized elimination of peaks and valleys, but I believe my thought experiment does suggest that “you can pay for it now or you can pay for it later” is an oversimplification.

  13. comment number 13 by: Arne

    Consider stimulus to help states hire more teachers. If they were going to fire them now and hire them back later (when the economy rebounded) this would be good stimulus because it would prevent the costs of firing and rehiring. If it just allowed them to keep X number of teachers for 2 more years and then fire them, then not so good.

    In my community it was most like the first case, but (because it cut off rather than ramping down) it had an element of the second case.

  14. comment number 14 by: Arne

    should be stimulus to help states retain more teachers

  15. comment number 15 by: Steveinch

    Arne,

    There’s no such thing as stimulus to hire teachers. There’s just giving money to states. If the states want more teachers at any moment in time,there is a simple solution, raise the money to pay for it

  16. comment number 16 by: Vivian Darkbloom

    Arne,

    About those teachers and second order effects:

    I wonder what the net return would be if, rather than using stimulus money to “retain” those teachers, state and local governments took the opportunity to lay off (permanently) the 5 percent of the teacher body who were the least effective in the classroom and transferred those students to classrooms of teachers who were in the top 5 percent. Of course, we could give the top 5 percent merit raises to account for their good performance and additional workload. This would not only reduce current deficits, but studies indicate that this would very substantially increase the lifetime earnings of those students and therefore long-term GDP, tax receipts, etc. Measuring teacher effectiveness is, unfortunately, not a perfect science; however, I think it is perfect enough that we can conclude the top 5 percent are better than the bottom 5 percent using existing methods.

    http://educationnext.org/valuing-teachers/

    “You can pay for it now, or you can pay for it later” were not my words; however, I agree with you that it is an oversimplification—-every generalization is. Nevertheless, if I had the opportunity to re-write what I did write, I would say that the stimulus game, as it inevitably is executed, is less than a zero sum game, particularly when the starting point is current levels of public and private debt. That is an oversimplification, but it is, I believe, more often true in practice than not.

  17. comment number 17 by: Vivian Darkbloom

    Here’s Alan Blinder making the best case for stimulus spending in today’s Wall Street Journal:

    “There is an important exception, however, which is highly germane to today’s situation. Suppose government borrowing is used to finance productive investments in public capital—such as highways, bridges, and tunnels. Right now, the U.S. government can borrow for 10 years at under 2% per annum. At these super-low interest rates, you don’t have to be a genius to find many public infrastructure projects with strongly positive net present values. Borrowing to make such investments will enhance long-run growth, not retard it. And I can’t, for the life of me, understand why we are not doing more of it.”

    http://online.wsj.com/article/SB10001424052702303360504577408490648029470.html?mod=WSJ_Opinion_LEFTTopOpinion

    I actually agree with this on a theoretical level. But, how much of the $850 billion or so in stimulus funds already spent were actually used to finance infrastructure projects with strongly positive net present values? Even money spent on infrastructure tends to be badly spent. That is the reality and people who defend deficit financed stimulus on this level of theory want us to ignore reality.. Are these strongly positive net present value projects any more “shovel ready” than they were three years ago?

    I agree with Blinder that you don’t have to be a genius; however, what does that say about the people now in government and how the system, whoever is in charge, obliterates that theoretical case? The low level of intelligence it allegedly takes to make this work has not been recently on display.

    I also question the reality of using a 2 percent interest rate. The money will never be repaid. If Blinder believes the stimulus will return the economy to normal growth, interest rates will rise. Money, and debt, are fungible. If he thinks interest rates will stay at 2 percent, then he doesn’t think stimulus will work.

  18. comment number 18 by: economistmom

    Hi, everyone! This thread of comments from you all has been fascinating; I am trying to catch up. My take on it is that we should assume that typical deficit spending done in the name of stimulus must first be taken as a “zero sum” game, in that there is the cost of higher debt to contend with in the future. It is the “smoothing” effect that Brooks/Gordon suggested. The reason to avoid permanent, deficit-financed stimulus policies that last beyond the need for stimulus is that you increase the costs without increasing the benefits–so that the zero-sum game turns into a negative-sum one. How do you make it a positive-sum game? By doing the kind of stimulus spending that actually makes the difference in terms of the economy’s longer-term productive capacity: investments that would not have been possible otherwise (were we not able to deficit-finance them). (This is basically Blinder’s point that Vivian noted.) I’ve always thought of this as quite analogous (but not perfectly) to the difference between a household borrowing to simply smooth consumption between good times and bad (like taking a vacation or buying a flat-panel tv now even though I am unemployed, because I am perhaps overly confident I will be earning income again in the future), and a household borrowing to actually finance things that will increase their resources in the future (such as a college education, proper health care, or business or even housing investments that actually have a hope of increasing in value over time) because there is no other way I can now do something to insure my income will be higher (net of the costs of the added debt) in the future.

  19. comment number 19 by: Vivian Darkbloom

    Welcome back, Mom.

    “How do you make it a positive-sum game? By doing the kind of stimulus spending that actually makes the difference in terms of the economy’s longer-term productive capacity: investments that would not have been possible otherwise (were we not able to deficit-finance them).”

    It is hard to disagree with such a proposition as a matter of theory; however, I fear that your prescription for making it a positive sum proposition is woefully inadequate.

    First, why restrict this type of “investment” to recessionary periods? If the investment is worthwhile from the perspective of net returns, why wait until recession hits?

    I could think of three possible reasons:

    1. Because we want to smooth out the business and employment cycle. I could give this a mild nod, but if an investment is really worth making, I would still have to ask—what are (were) we waiting for?

    2. The cost of financing is lower in recession because interest rates are normally (as now) lower. Again, I could agree with this in theory; however, this seems to assume that the debt incurred from those “investments” will be paid off. I find it hard to believe that that would happen. For reasons referred to in my earlier comment, Blinder (and others) vastly overstate this case (which results in making bad judgements as to what the real cost of those “investments” are). If you want to convince me otherwise, come up with a fail safe plan to amortize the financing on that “investment” rather than what actually happens—squandering those “returns” on other wasteful projects;

    3. Labor costs are (read *should be*) lower. Actually, this is the strongest argument because unlike financing costs the savings are permanent. But, why don’t I hear stimulus advocates proferring this as an argument? I guess it is because the same folks that are arguing for stimulus are also using it to reward unions and protect union wages. Why not repeal the David Bacon Act and/or minimum wage laws or at least suspend them for stimulus projects? When labor is in abundant supply, we should not only expect lower wage costs for these “investment” projects, we should demand them. That increases the net returns on “public investment projects”.

    As I said previously, there is a very extreme gulf between the theory of non-cyclical deficit financed stimulus on “investment projects” and reality. When the advocates of deficit financed stimulus start to take action to match their theory with practice, I’ll consider changing my stance.

    I would want to see a list of counter cyclical “public investment” projects prioritized by the expected rate of return and perhaps scored by a non-partisan investment council to reduce the pork. If these are infrastructure projects Congress could approve a budget for vetting them and perhaps even for a certain amount of planning to make them “shovel ready”. The projects could then be financed when employment falls below a certain level, provided that the cost of that labor used for these projects is adjusted (downwards) for supply. Like business, the projects should only be approved if there is a fail safe plan to amortize that financing over a reasonable term (say 10 years).

    As Blinder says, it does not take a genius to figure this out. What it does take is the courage to do it and that is in very short supply. Unless theory is matched with practice, the former is not worth anything—in fact, it is detrimental to our health.

  20. comment number 20 by: Vivian Darkbloom

    Make that “Davis Bacon”, but of course you knew that. I often get a chuckle over the self-serving and inaccurate popular names Congress comes up for its legislation. This one is funny precisely because it is true.

  21. comment number 21 by: SteveinCH

    To pile on Vivian’s point, my disagreement is more fundamental. According to the CBO, total infrastructure spending in the US was $356 billion in 2007 (2009 dollars). That’s about 6% of total government spending in 2009.

    It also happens to the be the case, based on the historical data that real infrastructure spending growth has pretty dramatically exceeded the growth of population with the exception perhaps of the last 5 years or so but the long term trend line is sharply higher for infrastructure spending.

    That leads me to ask a couple of questions.

    1. Why should infrastructure spending increase faster than population?

    2. Why should proponents of infrastructure spending be freed from any kind of budget constraints? In a world where we could increase infrastructure spending by 50% by reallocating 3% of the budget, why wouldn’t we be doing so at all moments in time?

    3. Why is the incremental return on “more” infrastructure spending deemed to be positive? Certainly, a company that did analysis the way the government does analysis of infrastructure spending would go bankrupt. Let’s see, we have a positive average ROI on our capital spending historically, therefore we should spend infinitely because it will have a positive ROI?

    And the notion of positive ROI is an interesting one…positive ROI to whom? How is R calculated?

    I’ve always had a suspicion that I’ve never been able to prove…that the number of people who are saved from death or illness by government regulation actually exceeds the number of people who live in the country. There’s this issue around double counting that I suspect government doesn’t pay much attention to.

    In short, before spending more on government investment, should we not be required to

    1. Ensure that all existing investments are positive ROI (really ROI above the hurdle rate which should be nonzero), that is that we cannot internally reallocate to increase ROI?

    2. Ensure that there is no reallocation opportunity within government spending? Could mole hair subsidies be used to fund infrastructure as an example?

    3. Ensure that the incremental projects themselves are actually positive ROI projects?

    If government did all these things, I for one would happily pay more taxes (or borrow) to fund infrastructure. But, of course, it does none of these things. It simply asks for more money because, at a high level, infrastructure investment, done perfectly in an imperfect world, might have a positive ROI

  22. comment number 22 by: Brooks / Gordon

    On this topic I was referred by a prominent economist (by email, so I won’t give name) to this paper by Brad DeLong and Larry Summers in which they conclude that, under what they “defend as plausible assumptions”, fiscal stimulus in “severely depressed economies” “may well reduce long-run debt-financing burdens”.

    http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2012_spring_bpea_papers/2012_spring_BPEA_delongsummers.pdf

    Whether or not their assumptions are indeed plausible is above my head, but the economist who referred me to the paper indicated that he considers the assumptions needed to make stimulus a free lunch unrealistic.

    Diane — thanks for your response to my question upthread.

  23. comment number 23 by: Vivian Darkbloom

    Harvey Golub in today’s WSJ:

    “There’s little doubt that this level of spending—$5 trillion in an economy with an annual GDP of about $15 trillion—has a temporary stimulative effect. The question is, was it a good investment? For the most part the money was spent poorly and we will get very little future value from it. Billions were spent to reward favored constituencies like government employees and the auto industry. Billions more were spent on training programs that don’t work and unemployment insurance that reduces incentives to actually find work. Little went toward building infrastructure or other assets that will help the nation create wealth over time.”

    http://online.wsj.com/article/SB10001424052702304019404577418311631098508.html?mod=WSJ_Opinion_carousel_2

    Yes, there is the theory—and then there is the reality. Is there any reason to think the next time will be different?

  24. comment number 24 by: Arne

    “Why should infrastructure spending increase faster than population?”
    Because GDP increases faster than population. Infrastructure spending has grown slower than GDP.
    “Why should proponents of infrastructure spending be freed from any kind of budget constraints?”
    It should not, but then, nobody claims that anyway. The claim is that you should pull those projects up, spending more now and less later.
    “Why is the incremental return on “more” infrastructure spending deemed to be positive?”
    With adequate evidence that useful projects are going undone, the assumption is that the next project in line is worth doing.

    Another explicit point is that you can hire some of the out-of-work construction workers without competition that increases wages. Because the multiplier is assumed to be above 1, that means hiring less than all of those workers.

  25. comment number 25 by: Arne

    “lay off (permanently) the 5 percent of the teacher body who were the least effective in the classroom and transferred those students to classrooms of teachers who were in the top 5 percent”
    You just doubled the class size of the good teachers. And that is not going to affect performance?

  26. comment number 26 by: Arne

    “There’s no such thing as stimulus to hire teachers.”

    I was involved in budget discussions about how to use ARRA money to save teaching positions. You either have skewed definitions, or are simply misinformed.

  27. comment number 27 by: Vivian Darkbloom

    “You just doubled the class size of the good teachers. And that is not going to affect performance?”

    I did not allege that increased class size would not affect (student) performance. Implicit, though, in my comment was the idea that any offset due to class size would be more than compensated by having a better teacher. If you want to change the calculus, feel free to distribute those students over the remaining 95 percent teacher population. I’m pretty confident that in either case students would still benefit and their performance would still increase—and budget deficits (both current and future) would definitely decrease as a result.

    As far as the bottom 5 percent are concerned, my suspicion is that this teacher might be one of them:

    http://radio.foxnews.com/2012/05/21/nc-teacher-suspended-for-obama-tirade-video/

    Do you disagree? If so, why?

  28. comment number 28 by: SteveinCH

    Arne,

    I don’t much care. The stimulus was basically an increase in the money given to states. The states did not have to use that money to hire teachers. There was not a constraint on the use of the money, it was simply assumed or maybe tacitly agreed that the money would be used for this purpose.

  29. comment number 29 by: SteveinCH

    Arne,

    There’s no logical reason why infrastructure spending should increase with GDP that I can think of. Your asserting that it should does not make it so.

    Really, spend more now and less later? I’ve never seen the less later part of that proposal. Perhaps you can point me to where you’ve seen the less later part spelled out.

    There’s a difference between “useful” and “positive incremental ROI.” A project can be both useful and have a negative ROI. Indeed, in the private sector, there are a very large number of such projects. That you assume there aren’t any in the public sector is quite instructive.

    Because the multiplier is assumed to be more than 1????? On what basis. I’d love to see the assessment that shows the marginal multiplier for spending on average. Feel free to point us to it.

  30. comment number 30 by: Arne

    “Feel free to point us to it.”
    http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/100xx/doc10008/03-02-macro_effects_of_arra.pdf

    I am far from perfect at getting my point across in blog posts, but that you choose to interpret what I said to mean there are no projects with negative ROI is quite instructive. In the same vein, I never said anything about “the marginal multiplier for spending on average”. Remember that we were talking infrastructure when you look at that CBO document.

    Since the point about the multiplier did not come across the first time, let me make it more clear. If there are 100K contruction workers out of a job, stimulus projects should not attempt to create jobs for all of them.

    There are probably people who see stimulus as an opportunity for the grovernment to do more, but the original post is fairly obviously about counter-cyclical spending policy - more during a downturn, less in a recovered economy. Spelled out or not.

  31. comment number 31 by: Arne

    Vivian,

    When you use “suspicion” and “might” it is impossible to disagree with you. I don’t think I would want to anyway; I hope that teachers who get themselves suspended are in the bottom 5 percent.

    Getting rid of the deadwood is a constant issue in any enterprise, whether teachers or engineers. In any group of 20, there will be one person in the bottom 5 percent. That does not mean that person is deadwood.

    Unless your bottom 5 percent teachers are deadwood, I do not believe getting rid of them is a good system choice. If you had 20 teachers each with 19 students (not real, but easy math) and laid off your choice for bottom, and gave every remaining class 1 more student, you would be worse off overall. The one student who moved from the bottom to the top would be better off, but the other 19 in that class would be worse off. The student who moved from the bottom to the second, would not be better off (proprietary calculations not included :-), but all 19 of his new classmates would be worse off.

  32. comment number 32 by: Steveinch

    Arne

    That CBO link is just a multiplier analysis. Basically meaningless

    If there are projects with negative ROI, those projects should not be done and we can reallocate to the projects with positive ROI. Let’s maybe do that first and see how far we get

  33. comment number 33 by: Steveinch

    Arne

    Let me clarify. I asked for an analysis of the marginal project. Neither you nor the CBO has provided one. Remember, we are already applying fiscal stimulus of about a trillion dollars relative to the historical average. So I’d like to see an analysis of multipliers on the second trillion in stimulus.

  34. comment number 34 by: Vivian Darkbloom

    Arne,

    Take another look at that study I linked to earlier in this thread:

    http://educationnext.org/valuing-teachers/

    My “suspicion” is not based merely on superstition.

    Most of the time these studies on the economic effect of teacher effectiveness compare a better than average teacher with an average teacher.

    You wrote:

    “Unless your bottom 5 percent teachers are deadwood, I do not believe getting rid of them is a good system choice.”

    So, your “belief” is more valid than my “superstition” and the evidence I’ve cited to support it? Your arithmetic might be fine, but your assumptions are, as in the ROI case, pretty arbitrary. Why do you assume that the net loss to the other 19 in those classes more than outweighs the gain to the student who is allowed to move up the ladder? Simply because there are more of them? Older students, who are allowed to choose, typically end up in classes with hundreds of students because they know that the teachers are the best, irrespective of class size. Funny how the market works when personal choice is permitted.

    Now, take a look at the graph in the link I provided. From eyeballing that graph, one can get an idea of the difference in expected lifetime earnings of students of the bottom 10 percent compared with the students of teachers of the highest 10 percent. It looks like it is over $1.5 million. I don’t know how you define “deadwood” here, but when it comes to teaching, those substandard teachers can not only be pretty worthless, but do a lot of damage as well. It is not merely a question of being “deadwood”; it is a question of being much, much less effective than the rest.

    This is just one example of how the second order effects of cutting spending can actually be a “good investment”. I hope this is kept in mind the next time someone proposes using “stimulus money” to “save” teaching positions. Better thought should be given to *whose* positions are saved, if any, and why.

  35. comment number 35 by: Jim Glass

    SteveinCH:
    My personal favorite though is the failure to recognize the decreasing marginal utility of stimulus.

    Yes, this is a very relevant point. In Summers’ planning memo to Obama about the stimulus, he said preferred-quality stimulus “totals only about $225 billion over two years and nearly $300 billion when it fully spends out. We do not believe it is feasible to design sensible proposals along these lines that go much beyond this total size” with additional measures being “not as effective as stimulus”.

    Of the $800 billion stimulus, consider the masses that went on spending scored by CBO as low-multiplier, and the modest amounts that went to purported high-multiplier. As Obama wound up saying, it turns out “There’s no such thing as a shovel-ready project”.

    Now they are lamenting not being able to do trillions.

    But beyond that, here’s the ultimate thought on “diminishing returns” to stimulus: the “Sumner Critique”, which has been standard in textbooks for decades, then forgotten during the crises, but now is being recalled by economists under the incessant prodding of Scott Sumner — even Krugman admitted it recently.

    That is, to the extent the central bank can affect the economy and has a policy objective, the fiscal multiplier is zero, fiscal stimulus is a costly pointless waste.

    Bernanke and the Fed have repeatedly said they have plenty of power to move the economy even with rates near 0% — and they proved it amply with QE1 which they enacted quickly to stop a 13% annually-rate deflationary plunge ongoing at the time, the worst since the worst days of the Great Depression. They were so effective at stopping it on the proverbial dime, most people have no idea it even happened.

    OK, so the Fed apparently has plenty of power like this, and it has clearly stated and shown it won’t allow deflation, and pretty much as clearly shown it won’t accept inflation over 2%. Now to keep within this range, the Fed will actively or passively *offset* the effect of any stimulus.

    E.g., A big new stimulus starts moving the economy above 2% inflation, the Fed says “now is a good time to unwind all that QEing we did”, which is contractionary, it increases the interst rate on reserves correspondingly with inflation, which is contractionary, etc. … Or the economy starts slipping back and the politicians feel heat to boost it, so they enact a big new stimulus. The Fed says “Good, we would have done QE3, but now we don’t have to, we can keep our powder dry.”

    Net effect of stimulus then: zero. The economy goes to where the Fed would have sent it anyhow.

    There’s diminishing returns from stimulus spending for you!

    There’s no doubt that this is true in “normal” times, when the Fed can lower short-term rates, which is why there hasn’t been any demand for fiscal stimulus to counter recessions since, oh, the 1960s? But when short rates hit the zero bound masses of people suddenly rushed to the conclusion that the Fed was impotent. Thus, big-time fiscal stimulus.

    But, *if* the Fed in reality has had ample power to move the economy all along — as Bernanke has repeatedly stated, and QE1 demonstrated — *then* all that the stimulus has accomplished is to let the Fed keep a comfortable low political profile, avoiding many nasty fights with the Ron Paulers and conservative “hard money” nutters, by enabling ti to not do its job.

  36. comment number 36 by: Jim Glass

    Brooks / Gordon:
    Thanks Jim. Out of curiosity, what search terms did you use for Google that produced that first result?

    To be candid, at this point I don’t remember. But I think I typed in “stimulus long term…”, the Google auto-fill function produced a list and I hit the most promising one. I was looking for a USA Today story I know exists that was just about this interviewing various people, but didn’t see it, though I stopped looking after finding what I did.

    As a matter of principle I don’t think anyone doubts that big national debts hurt growth. Reinhart and Rogoff have shown this throughout history. How could they not? In good times debt service on them requires large tax collections, and taxes have deadweight cost. And when bad times arrive they can suddenly become a whole *lot* worse than before.

    As accumulated debt grows towards “big”, the effect is a question of degree. Pretty much QED.

    By the way, here’s something you may want to add as an update to your post years ago re: Krugman’s hypocrisy:

    Ah, yes, PK has been very coyly admitting “error” about that column he wrote in the Bush years predicting fiscal doom from the impossible to manage debt, in order to support running up far far bigger additions to the debt without a qualm now.

    But he is being less than honest about what his error was. He says it was believing the deficit would increase interest rates back then, and rates have gone down so he was wrong. But that is not true. What he actually said was that he paid more to lock in a long-term fixed-rate mortgage because by the *end* of his mortgage term — circa 2030 — the “train wreck” of fiscal collapse will be driving inflation and rates skyward, because the task of managing exploding entitlement liabilities on top of the accumulated regular debt “is simply impossible”.

    Hey, that was *not* an error in my mind, that was the truest column he ever wrote!

    But *now* he is saying none of that is true, the debt is no bigger than after WWII, that shrank with growth, this one will too. Eh, what, there was no entitlement cost explosion after WWII? Forget entitlements, the formerly “simply impossible” task of financing them now is easy — done already, even, since Obamacare says a future committee will slash Medicare costs. We can consider it already done. So what’s to worry about 2030? More debt please!

    Though before putting too much trust in his ability to predict the future, consider how that was one heck of a terrible move he made on his mortgage, paying more to lock in a higher fixed rate just before rates took their historic plunge!

  37. comment number 37 by: Jim Glass

    Consider stimulus to help states hire/retain more teachers.

    Why? State and local revenue has increased consistently throughout the recession, when Federal stimulus aid sent to states and localities is included. It’s never fallen yet.

    http://research.stlouisfed.org/fred2/graph/?chart_type=line&s1id=ASLRECPT&s1range=10yrs

    Private sector employment has been savaged. Masses who haven’t lost their jobs have taken pay cuts to keep them.

    What’s the sanctitude of teachers? Why are they above this? I mean, apart from the obvious “it’s for the children!” ploy.

    Name me a teachers union that has said “To retain teachers, avoid layoffs, we’ll give up the raise and increase in benefits our contract gives us this year. We’ll do it for the children.”

    Why are the teachers unions so special? You know, it is creating anger and resentment across voters. Tyler Cowen suggests this is the reason teacher cuts are being imposed by localities in spite of the *lack* of declining local revenue.

    I don’t know about that as a general proposition, but I *do* know it is true in my home town in Westchester NY. This area came through the recession about as well as anywhere outside of Texas. But I’ve never seen the public angry at the local school district like it is now. There are flyers and handouts attacking the school budget in every store in town: “We are in a recession! In a town of only 25,000, *why* are there a dozen school administrators averaging $200k in pay? *Why* are teachers with compensation of over $100k — plus iron tenure, plus summers off — getting a *raise*???… Vote NO!!”

    With state and local revenue up, maybe if teachers are getting laid off its for other reasons.

    The disingenuousness of the whole argument about payments to the states being needed to increase employment is summed in the words “Davis Bacon”. If the stimulus payments to states were meant to save jobs and increase employment, they would be tied to raise give-backs, eliminating Davis Bacon rules, and loosening work rules, as in the private sector. To the extent the opposite is true, these payments are just meant to increase the wages of them’s that got. And there ain’t much multiplier than that.

  38. comment number 38 by: Jim Glass

    “Suppose government borrowing is used to finance productive investments in public capital—such as highways, bridges, and tunnels.”

    Suppose pigs had wings. See my comment above replying about the diminishing returns of stimulus spending, the amount of “good” stimulus Summers said was available, Obama’s realization that “there is no such thing as a shovel ready project”, etc.

    I actually agree with this on a theoretical level. But, how much of the $850 billion or so in stimulus funds already spent were actually used to finance infrastructure projects with strongly positive net present values?

    Good question. Answer: Next to none was spent on infrastructure, period, return good or bad.

    Out of the $862 billion, federal infrastructure spending was $5.6b, 0.65%

    The population of flying pigs is very, very small.

    More info with nice charts:
    http://media.hoover.org/sites/default/files/documents/2009-Stimulus-two-years-later.pdf

    Also, FWIW, here is an economics article in the NY Times (of all places) very critical of the claims about both the supposed underinvestment in infrastructure in the US, and the efficiency of infrastructure spending.

    http://www.nytimes.com/2008/11/19/business/economy/19leonhardt.html

    “Piling Up Monuments of Waste”

  39. comment number 39 by: Jim Glass

    “You just doubled the class size of the good teachers. And that is not going to affect performance?”

    That smaller class size improves educational performance is the greatest Urban Legend in educational politics. Like all good urban legends it sounds like it ought to be true, and so is very believable. (And it sure is marketed by the teachers unions!) But, as with other urban legends, if you *think* about it … there is precious little logic in it. Logic is against it! And so are the data.

    Edward Hanusheck of Richmond (now Stanford) did a meta-study of all the studies (hundreds) on the effect of class size and found 20% reported that reducing class size worsened educational outcomes, only 13% said it helped, and 67% reported no difference (with the strongest studies finding the worst results for reducing class size).

    This is entirely sensible and logical and to be expected.

    Question: “Would you rather have your child schooled in a class of 12 per teacher or 24 per teacher?” Probably 19 of 20 people would say “12, of course” — making the whopping assumption of “other things being equal”, when in fact other things must be *hugely* unequal.

    Every school system has a finite budget. Big or small, it doesn’t matter. So you can’t just reduce class size — you have to do it **at the cost of something else**.

    Let’s say you drop class size by half, as a stark example of the process. Here are three of the things that are unequal:

    (1) Say a teacher costs $80,000 per year in salary and benefits. (In NYC salary alone goes over $100,000, and higher than that in the suburbs like Westchester.) The cost of a teacher is fully consumed per year. But that $80,000 alternatively could be invested in lasting assets that accumulate — books, computers, better furniture, air conditioning, educational software, etc. etc., whatever. Assume they have an average useful life of five years.

    Then you have a *choice* of having either a teacher *or* $400,000 in assets per classroom.

    (2) If you double the number of teachers then you have to go way further down the list of applicants, to those with poorer and poorer qualifications, to fill all the slots. The average quality of teachers falls.

    (3) When you double the number of classes you double the number of classrooms needed — this means more bigger schools, the capital cost of which is hugely expensive. (Or you are going to be converting shower rooms and closets to classrooms, which I’ve seen in NYC schools)

    So the *real* question is: “Would you rather have your child schooled in a class of 12 per teacher, the class held in a bare-bones trailer classroom, with an inferior teacher; or in a class of 24 with a plush $400,000 of supporting educational equipment in a nice full-service school building, with a better teacher?”

    Now the answer is … not obvious.

    In some cases close personal teacher-student contact pays off, especially for very young students, and troubled students. But if students are well behaved and well motivated, then putting them in large classes finances great amounts of resources for them to use, while shoving them into ever smaller classes on the ideological belief that “smaller is better” is an awful blunder. Harvard hasn’t hurt its reputation any by having classes with *hundreds* of students in them.

    Now, if you don’t double or halve class size, but just change it moderately, the *same* effect applies — the teacher is hugely costly in other resources on the corresponding scale.

    So one cannot accurately say: “increasing class size by 3 students by losing a teacher must self-evidently hurt educational results”, because the correct answer depends on what hurts *most*, that or keeping the teacher and losing $80,000 of other school resources in year one, losing $160,000 in year two, losing $240,000 in year three… (And of course the same is true if the budget increases — the question is what helps *more*, adding a teacher to reduce class size or maintaining class size and accumulating educational resources for the class).

    Capable administrators of a well-run school will adjust their inputs to get equal marginal returns from the ratio of teachers/other resources they use in their particular circumstances. If their budget changes they will try to keep that ratio, so there won’t be a big impact on final results.

    But it is easy to see how if smaller class size is politically forced on them as “reform”, or as a political job protection priority, it can hurt educational results … and also how in the face of budget constraints, cutting a couple teachers can be the *best* option. That is, if the school district budget must be cut, special “job protection for teachers” far from being a good thing can gut schools.

    In fact, cutting excess teachers can be a constructive “reform” that enriches a school by increasing its physical and training resources — $400,000 per classroom is a lot of money!

    To assure this isn’t just my fantasy, I quote from a book on my shelf, so I can’t link to it. From _Assessing Educational Practices_, edited by William E. Becker and William J. Baumol, MIT Press:

    The case for general reduction in class size is weak.

    Stevenson & Stigler suggest a better way to use additional funds than reducing class size. After examining international practices, and citing evidence that academic improvement can be achieved more effectively through improving teacher training and increasing academic rigor in the classroom, they propose increasing class size somewhat and investing the savings in schools, in teacher training, and in giving teachers’ more time out of the classroom to interact with other teachers.

    Whatever the merits of the Stevenson-Stigler approach, legislators and school boards need to find better ways to use additional money as it becomes available than simply reducing the number of students in each classroom.

  40. comment number 40 by: Brooks / Gordon

    Jim,

    Scanning your comment, it seems that you taking some particular school budget as a given (i.e., fixed), and proceeding from there to discuss the impact of reducing class sizes. But I think the point many make (and I’m not addressing the merits or motivations) is that we shouldn’t cut school budgets (or cut “too much”) because it would result in smaller class sizes, which they argue produce inferior educational results to larger class sizes, other things equal, with a larger budget (due to no/smaller budget cuts) accommodating that scenario.

    Now, ultimately, whatever the budget ends up being is what it is, and then there is a different question of optimal class within that budget constraint. And I think the teachers unions will advocate for both higher budgets and for smaller class sizes within any budget. But again, I think many/most are emphasizing the matter of budget cuts (the size the budget will be) more than allocation of resources within a given budget.

  41. comment number 41 by: Vivian Darkbloom

    “But I think the point many make (and I’m not addressing the merits or motivations) is that we shouldn’t cut school budgets (or cut “too much”) because it would result in smaller class sizes,…”

    Brooks,

    I’m not ruling out the possibility that some (many?) might make this argument, but I’m trying to figure out how cutting school budgets would result in *smaller* class sizes as your comment suggests.

    Could you elaborate on this?

  42. comment number 42 by: Brooks / Gordon

    Vivian,

    Sorry — I meant to say larger class sizes. Thanks for pointing that out.

  43. comment number 43 by: Jim Glass

    Brooks, yes of course people make that argument all the time.

    But surely if one opposes school budget cuts it should be because one believes they will hurt educational outcomes — not because they will unemploy teachers.

    If budget cuts are averted, fine, no problem.

    But if a budget cut arrives, then if education outcomes are your priority you do want teachers to bear a share of their cost. The reason is basic economics:

    In education — as in all other productive endeavors — capable managers use inputs in a ratio that produces equal marginal returns. I.e., if a marginal $1 spent on technology produces more return than one spent on personnel then it will be spent on technology, while if it produces more when spent on personnel than on technology then it will be spent on personnel.

    The optimum is when the return from both is equal. Otherwise, productivity can always be improved by moving funds from being spent on one to the other.

    OK, in a school with capable management say this optimum ratio is 50% spent on teachers and 50% spent on everything else. Then comes a budget cut.

    To keep the optimum ratio, each input should absorb 50% of the cut — that is, you want the number of teachers to be cut by the corresponding amount, and class size to increase accordingly. That produces the best result possible.

    If instead one just “locks in” the number of teachers, then the other inputs which are just as important as teachers bear 100% of the cut, and the way marginal returns works the final result will be worse — as the school is pushed away from the optimum 50%-50% spending split.

    Again, the fallacy is thinking of class size “other things equal”, but other things can’t be equal. The real choice is class size versus other resources. And given the way that funds spent on teachers are consumed while those spent on other resources may accumulate, it can be a teacher versus a lot of resources: such as the $80,000 teacher v $400,000 of resources.

    So “teachers must be saved above all other things” is not just plain wrong, it is overtly bad.

  44. comment number 44 by: Brooks / Gordon

    Jim,

    I understood your point. But again, I’m speaking of a different argument that I hear much/most of the time, which is not the argument you are addressing.

    Again, I’m speaking of the argument — made by those advocating against school budget cuts — that budget cuts will lead to larger class sizes (by laying off teachers) and that larger class sizes will yield inferior educational results vs. smaller class sizes with all else (other educational resources) equal, which is presumably the non-budget-cut scenario they are advocating. I don’t think you’ve disputed those premises (you’ve just argued that reducing non-teacher educational resources could have even more adverse impact, if we are choosing how much to cut of each within a given budget). And assuming you don’t dispute them, it is not at all a “fallacy” to think of class size “other things equal.”

    Again, you are referring to the argument that class sizes (i.e., teachers) must be preserved amid budget cuts even at the expense of other educational resources within a given budget, and I’m referring to the argument against budget cuts on the basis that budget cuts would lead to larger class sizes and inferior outcomes vs. the non-budget-cut scenario. Two totally different arguments. So, while your argument addresses the former, it is a straw man if offered as a response to the latter, and it surely cannot be a refutation (since it’s not even a contrary assertion) to the claim that larger class sizes yield inferior results, unless you are speaking of your particular scenario of a given reduced budget within which maintaining class sizes implies reductions in other resources, which again is not the case if one is advocating against budget cuts.

  45. comment number 45 by: Vivian Darkbloom

    Brooks,

    I’m sure that Jim will check back in with a “shock and awe” response; however, I have trouble following the argument about budget cuts and class sizes you’ve relayed.

    First, if there is a budget cut, something will have to happen. But, that “something” is *not* inevitably an increase in class size. For example, it might be a cut in extracurricular activities that have little to do with student performance. Or, it could be some other area that does not affect performance or class size.

    If the above sources of cuts have been depleted, then, and only then, do you face a choice between class size and other performance sensitive expenditures. I think even teacher unions would agree to that, if put to the test.

    Jim has previously addressed the issue from the perspective of *increases* in budgets, but I think the same logic applies to *decreases*. In other words, with respect to the latter, a choice would have to be made between 1) eliminating some positions and increasing class sizes; and 2) reducing other expenditures not associated with class size but that also affect outcomes. Jim has argued, persuasively I think, that the latter likely has a larger impact on performance than the former.

    And, *I* would argue, that *increasing* class size could actually be a very good thing, if that means that teachers at the low end of the performance scale are eliminated in the process, for reasons I previously explained to Arne.

    I would be the first to admit that the *reality* is this that is difficult to do, primarily due to the obstruction to be expected from teacher unions. However, it is that reality we also need to address.

  46. comment number 46 by: Brooks / Gordon

    Vivian,

    Yes, of course budget cuts don’t necessarily mean cuts in teachers and larger class sizes. That’s beside the point. I was addressing Jim’s argument, which he seemed to be offering as a rejection of the premise that larger class sizes hurt outcomes, but was not really such a rejection (let alone refutation). Rather, he was merely arguing that, within the constraint of a smaller budget, cutting more of other educational resources to favor preservation of class sizes can yield worse outcomes than would preserving more of those other resources and allowing class sizes to increase more. I was merely pointing out that many/most who make the “class size” argument are advocating against budget cuts that they assert will lead (or have led) to larger class sizes, not advocating that, in the context of a smaller budget, class sizes should be preserved at the expense of greater cuts in other educational resources. As I said, some make that latter argument, too, but that is a different argument, and while Jim’s point addresses that argument, it is a straw man if offered as some sort of rejection or refutation of the assertion that larger class sizes will hurt outcomes, unless we are speaking of the particular context of a given budget. Again, that’s not the context in which the argument I’m referring to is made. Rather, that argument is all about what the size of the budget should be, not about how to allocate resources within some reduced budget (i.e., how much to cut of which categories of resources, teacher vs. non-teacher).

    And yes, it’s possible that larger class sizes could yield better outcomes due to more kids with the better teachers, if that more than offsets the reduction in teacher time per student. I have no idea what the net effect is under what conditions and over what class size ranges, but if I had to guess I’d tend to think smaller class sizes generally yield better outcomes, other things equal (and Jim’s rejection of “other things equal” is invalid if the size of the budget is still an open matter — the matter one is advocating about).

    I don’t know if the above makes my point any clearer to you, because I don’t see what is unclear about what I said previously (other than my accidental use of “smaller” when I meant “larger”, which you enabled me to correct).

    Jim is essentially saying that when there’s a budget cut, greater preservation of teachers and thus class size must mean greater reduction of other resources (assuming compensation per teacher isn’t reduced), so we can’t just ask about the effect of class size “other things equal” as if the answer indicates whether or not preserving class size is better for outcomes, because that means greater cuts in other resources that are also factors in those outcomes, and the net effect may be suboptimal. That’s obviously true. That’s generally true about some particular resource that affects results vs. all other resources that affect results, all within a budget constraint.

    But his point about optimal allocation of resources within a given budget addresses a completely different argument from the argument that we should avoid cuts in ANY of those resources by not cutting the budget, to avoid increase in class sizes (if that would likely result from a budget cut, as may often be the case).

    I’m really not sure why there is confusion so I’m not sure how to be any clearer.

  47. comment number 47 by: Brooks / Gordon

    Vivian,

    If it helps, I can put this in dialog form:

    Advocate: Don’t make the proposed cut in the total school budget. Cuts of that size will mean laying off teachers and larger class sizes, and that will hurt educational outcomes.

    Jim’s argument: If the total school budget IS cut, larger class sizes will yield BETTER outcomes than preserving class sizes, because doing the latter would mean greater reductions in other resources that will result in a suboptimal mix (proportions) of resources within that new budget constraint.

    Advocate: But my point is that if we don’t make this budget cut, we won’t have to cut those other (non-teacher) resources or have larger class sizes. We won’t have to cut either. Those other resources stay the same as they are now — i.e., “other things equal.” And we won’t have larger class sizes, which I assert would harm outcomes, other things equal, regardless of whether that harm would be greater or less than the harm done by cutting only non-teacher resources to fit the smaller total budget. Even if increasing class sizes to fit a smaller budget were optimal within that new constraint (i.e., better than cutting only elsewhere), that outcome is still inferior to no-budget-cut (or lesser budget cut) scenario in which class sizes don’t grow (or don’t grow as much).

  48. comment number 48 by: Jim Glass

    I’m really not sure why there is confusion so I’m not sure how to be any clearer.

    Me too.

    Advocate: But my point is that if we don’t make this budget cut, we won’t have to cut those other (non-teacher) resources or have larger class sizes. We won’t have to cut either.

    Right. Of course.

    My “shock and awe” answer:

    If there’s no budget cut there’s nothing to talk about.

    If there is a budget cut then cutting teachers should be on the table on equal terms with cutting anything else.

    That it all.

    (I’m awed that I was able to keep it so short.)

  49. comment number 49 by: Brooks / Gordon

    Jim,

    Actually you could have saved both of us some time (and space on the thread) by simply acknowledging that, as I’ve said from the start, you were addressing only one of two common arguments regarding class size, thereby inadvertently making a misleadingly broad statement when you said “That smaller class size improves educational performance is the greatest Urban Legend in educational politics”, among other things.

    You were addressing those advocating against larger class sizes within the context of a given, reduced budget, but you were not addressing the other argument very often made by those warning of larger class sizes, which is that the budget should not be cut because that would likely lead to larger class sizes and thus probably inferior results.

    And, notwithstanding your sweeping remark about this supposed “greatest urban legend in educational politics”, you’re not really disputing that larger class sizes yield inferior results, only that cutting other resources rather than allowing larger class sizes (i.e., cutting teachers) can yield even worse results than would larger class sizes, and that if the budget IS cut, we have to make that choice of where to cut how much. Again, many (perhaps most) people warning against the adverse effects of larger class sizes aren’t advocating within the context of a given budget (i.e., implicitly advocating preserving class sizes at the greater expense of other resources), but rather advocating against the budget cut itself — the “other things equal” that you referred to as a “fallacy”, which is is not at all a fallacy except within your particular context, which isn’t applicable to those advocates.

    As for:
    If there’s no budget cut there’s nothing to talk about.

    Oh come on. You know what I’m talking about: People warning of the effect of larger class sizes while advocating against a budget cut, i.e., when the budget is not a settled matter, so it’s odd for you to respond that “if there’s no budget cut there’s nothing to talk about”. I think you know what I’ve been saying, and as far as I can tell, you have no disagreement, but apparently you don’t want to just say so.

    You implied that larger class sizes don’t have an adverse effect on outcomes, even though that’s not really what you’re saying, and you called the larger class size claim “the greatest urban legend in educational politics” and portrayed those who warn of this effect as irrational because (you imply) they aren’t considering that preserving class sizes means greater cuts in other resources, if within the context of a given, reduced budget. But again, you are not acknowledging that your context doesn’t apply to many who are making the larger class size claim that you are ridiculing (but not really even disputing), because they are advocating against the budget cut in the first place.

  50. comment number 50 by: Vivian Darkbloom

    Brooks,

    Thanks for the additional explanation. In retrospect, you were clear; however, frankly, I don’t think there should be any argument that *all things being equal* smaller class sizes are better than larger ones. I’m surprised there would be much argument about that as a very general theoretical proposition. I suppose there could be a good discussion as to whether participation in a certain class size might be better than a one-on-one tutoring situation and, within those parameters it might be debatable at the theoretical level.

    In my view, though, all things are *never* equal. All items within a particular budget never have equal value, all teachers are never of equal quality, etc. But, if you want to look at it from that theoretical perspective, I don’t thnk there is any question that it can matter and that, generally, smaller (but perhaps not too small) is better.

    You will note that in my original reply to Arne I basically conceded that class size can matter to outcomes; however, I was very skeptical that in the context of existing budgets and declining budgets and the need to allocate resources within a constrained budget, a modest increase in class size would lead to worse outcomes (much less higher long-term ROI of our entire budget outlays). I set up the easy case of eliminating 5 percent of the worst teachers as a trade-off for larger class sizes. I still think that case is rather “easy” and that it is a realistic one in the current reality we now face. If you want to cut 30 or 40 percent of teachers, that might well be another story altogether.

    Here, for example, is a study that indicates, not surprisingly, that all things being equal* smaller class sizes should result in better results. However, one of the problems listed in this all things being equal theoretical scenario is that there are simply not enough quality teachers available to make the theoretical case work. Larger class sizes mean that one needs to find more teachers who are at least as competent as the existing average, etc:

    http://www.psychologicalscience.org/journals/pspi/pdf/pspi2_1.pdf

    “Class-size reduction initiatives presuppose the availability of teachers who are equivalent in quality to existing teachers to staff the extra classrooms. Leaving aside for a moment how one might measure teacher quality, if students’ learning is re- lated to the quality of their teachers and if the teachers hired to staff the new classrooms are of lower quality than existing teachers, student learning is unlikely to increase by as much as the experimental evidence predicts it will.”

    Class size does, of course, need to be weighed against other real life factors.

    Jim,

    The “shock and awe” comment was intended to be a major compliment. I always find your comments well reasoned, well written and strongly supported by both logic and facts. I was thinking of those poor Iraqi’s under a massive and precise barrage.

    That said, I think your reply to Brooks’ query might be talking around the issue, particularly if you understood it completely the first (and second) time around. “If there is no budget cut, there’s nothing to talk about” is not entirely true. There would be plenty to talk about before arriving at that “if” point of departure. One first needs to decide *whether* there is to be a budget cut (perhaps non-educational items such as highway construction should come first; perhaps additional or alternative means of financing should be sought, etc.) Then, one needs to decide within an education budget what might be cut and what the effects of that would be. Step two here is going to, or at least should, influence the decision as step 1 and that implicates the class size discussion, among many other things.

    In this respect, I think that educational budgets, and more specifically within that, the class size issue, is always something to talk about. It is a continuous process, just like public budgets are. Nevertheless, I’m in complete agreement with you on the more realistic side of the discussion—what should happen given the typical real life situation today.

  51. comment number 51 by: Brooks / Gordon

    Vivian,

    Yes, as I agreed to earlier, it seems to me at least theoretically possible (and plausible practically too) for larger class size to yield better outcomes IF that would mean a higher average quality of teachers. So if the premise is/were that that would occur amid cuts in teachers, then you are/would be correct that all else is not equal re: the effect of class size. And if that is/were the premise, it would be something we’d want to do even if budgets were not cut, because it would improve outcome without additional cost (actually negative cost, i.e., savings, which would be nice, but incidental to the primary rationale of improving outcomes at no additional cost).

    I was merely making the point of “other things equal” to contrast the scenario of no cuts in anything (presuming that cuts in any resource would have some adverse effect) to Jim’s scenario of a budget cut.

    By the way, I dislike and resent teacher’s unions because I have much the same view that I assume Jim has — that whatever their ostensible arguments, they are singularly (or close to it) focused on the objective of maximizing employment, job security, and compensation, of public school teachers, even when at the expense of educational outcomes. So emotionally and politically, I think I’m with Jim. I was just pointing out what I saw as a potentially misleading oversight and excessively broad statements in his argumentation.

    Although I am not very knowledgeable on the education issue, based on the bits I’ve picked up on over the years, and on my general sense, I’m a big fan of Michelle Rhee. I haven’t seen “Waiting for Superman”, but it’s on my list to see.

  52. comment number 52 by: Brooks / Gordon

    Vivian,

    Just a note, as follow up.

    I wrote:
    So if the premise is/were that that [an improvement of average teacher quality] would occur amid cuts in teachers, then you are/would be correct that all else is not equal re: the effect of class size.

    We could say, alternatively, that with that premise, “all else equal, larger class sizes would improve outcomes”. Just a different way of expressing it, but either way, I agree with your point.

  53. comment number 53 by: Brooks / Gordon

    Follow-up to follow-up:

    but we could only say “would improve” if we assumed that the improvement in average teacher quality more than offsets the negative effect of larger class size per se. If we don’t know which way it would net out, we’re back to being unable to use “other things equal”, to your point.

  54. comment number 54 by: Vivian Darkbloom

    Brooks,

    I totally agree (how could one disagree?). The net improvement in outcomes from higher quality teachers needs to be offest by the lower outcomes (if any) due to larger class sizes.

  55. comment number 55 by: Jim Glass

    a misleadingly broad statement when you said “That smaller class size improves educational performance is the greatest Urban Legend in educational politics”

    I cited a meta-study of hundreds of studies on reducing class size which reported that 20% found reducing class size worsened educational results, 67% found it made no difference, and a mere 13% found it improved outcomes.

    Note well, these studies were not of budget cut results — they were tests of reducing class size, many providing full additional funding needed to do so while keeping other things equal.

    The near universal assumption that smaller class size improves educational performance is the greatest Urban Legend in educational politics. The facts say so.

    You were addressing those advocating against larger class sizes within the context of a given, reduced budget…

    All budgets are given. I made it very clear that the analysis is marginal — repeatedly using the word “marginal” — and marginal analysis applies whether the budget a stable, being increased or being cut.

    BTW, the marginal analysis I discussed is the explanation for the data results that is most sympathetic towards the public schools. Charitable, even. I use it when discussing the issue with public school teachers. There are other very plausible explanations of that data…

    you’re not really disputing that larger class sizes yield inferior results, only that cutting other resources…

    My citing the meta-study above doesn’t dispute that? My quoting Stevenson & Stigler proposing reform by increasing class size doesn’t dispute that? My statement that Harvard doesn’t hurt its reputation any by having classes with hundreds of students in them doesn’t dispute that?

    Brooks, before declaring what I really wrote, read what I really wrote.

    I am absolutely disputing each and every assumption that reducing class size will increase educational outcomes, and that increasing class size will hurt it.

    An Urban Legend is something that on first thought so seems that it ought to be true that masses of people believe it actually is true — even though, on second thought both facts *and* reason clearly indicate it is not true.

    This extremely widely-held assumption about the effect of class size on educational outcomes meets the definition of Urban Legend perfectly.

    Again, I’m speaking of the argument — made by those advocating against…

    I can only respond to what you actually wrote. That consisted of an example exchange which concluded, with my response…

    Advocate: “But my point is that if we don’t make this budget cut, we won’t have to cut those other (non-teacher) resources or have larger class sizes. We won’t have to cut either. Those other resources stay the same as they are now — i.e., “other things equal.” And we won’t have larger class sizes, which I assert would harm outcomes, other things equal, regardless of whether that harm would be greater or less than the harm done by cutting only non-teacher resources to fit the smaller total budget. Even if increasing class sizes to fit a smaller budget were optimal within that new constraint (i.e., better than cutting only elsewhere), that outcome is still inferior to no-budget-cut (or lesser budget cut) scenario.”

    Right, of course. If there’s no budget cut there’s nothing to talk about. If there is a budget cut then cutting teachers should be on the table on equal terms with cutting anything else.

    What else do you want me to say? After “Advocate” gives that speech to the voters pleading not to cut the budget there are only two possibilities: (1) The voters decide not to cut the budget, or (2) The decide to do it. What else is there?

    I’m sorry to disappoint you, but if you want me to give a different kind of answer then help me, give me a clue. “Jim, I imagined you might say something like ______ .”

    Again, many (perhaps most) people warning against the adverse effects of larger class sizes aren’t advocating within the context of a given budget (i.e., implicitly advocating preserving class sizes at the greater expense of other resources), but rather advocating against the budget cut itself

    Of course, and I never said otherwise. So what?

    If they decide not to cut the budget because they don’t want to cut the budget then the whole issue of class size is moot.

    they are advocating against the budget cut in the first place.

    Yes. Point?

  56. comment number 56 by: Jim Glass

    Vivian writes:

    I don’t think there should be any argument that *all things being equal* smaller class sizes are better than larger ones. I’m surprised there would be much argument about that as a very general theoretical proposition.

    …and…

    In my view, though, all things are *never* equal.

    That’s right, which makes the two statements contradictory - and the second trumps the first.

    The first is “Assuming the impossible…”, which is a bad idea in any policy discussion. I’ll try a comparison:

    *All things being equal* increasing the minimum wage by $100 per hour would make most everybody far, far better off by receiving a big increase in pay. But wait — even the most liberal of liberals know that would be a fiasco because other things can’t be equal. People priced out of jobs, unemployment, mass business bankruptcies, etc. There is no way to keep the other things equal and everybody knows it.

    Yet, curiously, when the minimum wage increase is limited to say $3 an hour, suddenly masses of people believe other things can be equal. The associated costs disappear. If enacted on a big scale it has a big cost, so in enacted on a small scale it should have a small cost — but psychologically that somehow becomes no cost at all, so millions of people assume the increase is good.

    Well, maybe it is or it isn’t. But given the known costs that come with it and all the other things that can’t be kept even, that surely is something not to be assumed but to be proven on the facts in each particular case.

    ISTM that it’s the exact same thing with the class size argument, only even more so.

    Harvard’s Ec 10 taught by Mankiw has 640 students. Say a public high school has an average class size of 25, using the best teachers it can get. Now they both decide to go to a 1-to-1 teacher student ratio, Harvard hires 639 more teachers for Ec 10, the high school goes out and hires 24x more teachers.

    *All things equal* surely they both greatly increased the quality of the education they produce! No argument possible. But … wtf? How could other things possibly be equal??

    The money cost would be … nuclear, the schools would be destroyed. But forget that — what would the quality of the 649th instructor hired by Harvard be compared to Mankiw? The high school would be recruiting teachers from the unemployment office and behind the Burger King counter. Put together, the money cost plus the quality-cost of hiring fries-sellers to teach, the result would be beyond a disaster. And everyone sees it.

    Yet make the change in class size from 26 to 23 and somehow almost nobody sees the cost that comes out of resources and teacher quality — somehow, everything else now can be equal and near everyone assumes the result will be good. Go figure.

    But it is just the same. There is zero reason to assume smaller class size helps rather than hurts. No ground for that assumption at all, and the data back that up.

    Look at examples to the contrary. Harvard classes up of up to 640, in law school I had huge classes, NYC’s top selective public high school (Stuyvesant) has classes of 40+, the Gates Foundation just revoked its endorsement of small schools, etc.

    With a moment’s thought it is at least as obvious that increasing class size can improve educational results. If students are competent and capable of learning on their own from capable classroom instruction, then larger class sizes that result in better teachers and far more resources per student can pay off hugely. While giving closer personal attention to these students who *don’t need it* is a hugely expensive waste. How many students like this are there in America? I say, a great many.

    But without that moment’s thought, even for those students, 90% of people assume smaller class size would be better, when it would be worse. That’s how Urban Legends work.

    BTW, all this is giving the benefit of the doubt to public schools — that they actually are managed competently and allocate resources efficiently. There’s ample reason to question that: Catholic schools that outperform public schools with 5 times the per-student budget, endless increases in public school expenditures with no matching rise in outcomes, the general historic record of how politically managed organizations operate so economically inefficiently. They give an entirely different grounds to reject any assumption that smaller call sizes improve outcomes.

    I set up the easy case of eliminating 5 percent of the worst teachers as a trade-off for larger class sizes

    Yes, that is entirely plausible and sensible. I’ve seen serious reform proposals much like that making exactly this point: the *quality* of teaching is very important — bad teachers can be *very* damaging — and simply eliminating the *worst* teachers significantly improves average quality of teaching for all. (E.g., Stevenson & Stigler saying “fewer, better teachers.”)

    A Budget Director of the NYC Board of Education a few years ago created some furor in the ed world when he wrote a PhD thesis that ended by suggesting the NYC schools budget maybe should just take a good major whacking across-the-board. He documented how the ever-more money pouring in was so politically mal-spent that it only made things worse. He said maybe a bankruptcy-type major slashing of the budget would force pointless programs and the worst teachers to be cut, “rubber rooms” and all — literally improving the system by subtraction.

    Alas, the assumption with both his idea and your “eliminate the 5% worst” is that the unions and politicians would allow the “worst” to be cut, instead of mandating via seniority that the juniors be cut while protecting all the senior worst who created the entire situation.

  57. comment number 57 by: Jim Glass

    Vivian writes:

    Jim, The “shock and awe” comment was intended to be a major compliment. I always find your comments well reasoned, well written and strongly supported by both logic and facts.

    Aw, you make me blush. Thank you for kind words, they are so rare on the internet. Back at ya’.

    I know you, and took the comment as friendly.

    I was thinking of those poor Iraqi’s under a massive and precise barrage.

    Yes, I do overdo it sometimes, pile it on. I just did again I fear.

    I just spent the long weekend all alone in an empty large house in the country, no family, no friends, no neighbors, nobody at all to talk to … just blog comments for companionship … a sad case.

    I’m pretty sure I’m compensating for something here, so forgive.

    That said, I think your reply to Brooks’ query might be talking around the issue, particularly if you understood it completely the first (and second) time around. “If there is no budget cut, there’s nothing to talk about” is not entirely true. There would be plenty to talk about before arriving at that “if” point of departure. One first needs to decide *whether* there is to be a budget cut…

    Maybe I’m dense, but I’m still missing the point.

    When I stepped in people were talking (I thought) about the merits of saving teachers via stimulus funds, etc, from budget cuts. My point was to question any *assumption* that there is any special merit to using stimulus funds to protect teachers.

    I assume that budget cuts are forced. Who cuts budgets but of necessity? *Given* the cuts, should stimulus be used to save teachers as a priority above other things?

    OK, politics may evolve to avoid cuts altogether. But if there are no budget cuts, then teachers aren’t at risk and the budget isn’t being changed and class size isn’t being changed — nobody is doing anything, so what’s the point of talking about what to do?

    Of course one can always talk about the merits of class size as a separate issue on its own — but I wouldn’t do that here. I’ve *done* at lot of that in the past on usenet in the misc.education newsgroup (never was one so appropriately named!) and in education forums. I would *not* bring the fury storms that erupt from that over here to Economistmom’s polite and friendly home.

    Off topic here. And inadequate fire insurance. From the flame wars I went through in those discussions I still have scorched asbestos suits hanging in my closet.

    So my thinking has been: consider class size as related to state budget cuts and using stimulus funds to save teachers, not in terms of general principles or anything else.

    If this has caused me to miss a point, I apologize, I may be being dense but I’m not trying to be obstinate. If somebody wants to dummy-down to me what I’m missing, and it’s still worth discussing…

  58. comment number 58 by: Vivian Darkbloom

    I recalled reading a series of articles in the NYT on the issue of teacher quality and the net present value of future earnings of students. It is a fascinating example of how different people can take exactly the same set of data and come to completely different conclusions.

    Here, David Leonhardt interprets the data as justifying $320K per year for outstanding kindergarten teachers (note the all things equal phrase two-thirds down the column):

    http://www.nytimes.com/2010/07/28/business/economy/28leonhardt.html

    But, here, Catherine Rampell, follows up with an alternative take by Hanuschek:

    “A teacher one standard deviation above the mean effectiveness annually generates marginal gains of over $400,000 in present value of student future earnings with a class size of 20 and proportionately higher with larger class sizes. Alternatively, replacing the bottom 5-8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings with a present value of $100 trillion.”

    Note that “proportionately higher with larger class sizes”.

    http://economix.blogs.nytimes.com/2010/12/21/when-good-teaching-pays-off/

    And here’s Richard Rothstein taking issue with Leonhardt for suggesting that education alone is going to fix the problem of inequality:

    “Policies based on exaggerating school reform’s ability to ameliorate inequality leave most working families and their children unprotected. We need educational improvement, including better kindergarten, but also economic reforms — more job creation, greater protection of union organizing rights, higher minimum wages and more generous earned income tax credits — if we want disadvantaged children to have a fighting chance.”

    And, David agrees!

    “I agree with Mr. Rothstein that education, by itself, is not sufficient to guarantee good living standard for all workers. His recommended list of other policies has some important ideas, including greater protection of union organizing rights.”

    http://economix.blogs.nytimes.com/2010/08/05/does-education-stop-at-kindergarten/

    Yes, raising teacher salaries to $320K and providing greater protection of union organizing rights seems just the right combination of policy actions to improve our childrens’ educations and solve the long-term budget problem!

  59. comment number 59 by: Vivian Darkbloom

    Jim,

    Recent experience has taught me that there can be a lot of reasonable misunderstandings among bloggers and commenters. It is far less important that this misunderstandings occur, than how one reacts to them when they do. It sounds like we are in general agreement there.

    You’re right about the discussion when you “stepped in”; however, I think Brooks changed the direction a bit when he raised his quite theoretical issue of *all things equal* what about class size? That caught me a bit off guard, but it also got me to think a bit more about the issue—that’s one of the advantages of these exchanges.

    I gave an example previously that I think is still valid. When considering budget cuts, the point of departure is the general budget, and then sub-categories within that budget. Thus, a locality might be faced with deciding how to allocate funds among, say, roads and education. So, before one makes *that* choice, one might ask, I think, “what would be the consequences of the latter”? That leads to different questions about class size, teacher numbers, etc. So, it is not only a question of *if*, but *whether*.

    Perhaps I’m not expressing the pont well. In any event, I think we’re closing in on a distinction that approaches semantic silliness, so I won’t belabor the point. Also, I’m a firm believer in the 80:20 rule and the law of diminishing returns. I think you, I and Brooks (and, who knows, perhaps Arne, too) are in greater than 95 percent agreement on this topic, so there is little point in expending a lot of effort to go that final mile, much less the last few meters. When you reach that point, one is better off breaking out the champagne to celebrate.

  60. comment number 60 by: Vivian Darkbloom

    And, so, I would like to add: Cheers!

  61. comment number 61 by: Brooks / Gordon

    Jim,

    When you initially presented the study, you explained the finding as “entirely sensible and logical and to be expected” by anyone not making the “whopping” and supposedly fallacious assumption of other things equal, because..

    in fact other things must be *hugely* unequal.

    Every school system has a finite budget. Big or small, it doesn’t matter. So you can’t just reduce class size — you have to do it **at the cost of something else**.

    That was your argument, not that, holding other resources equal via additional funding, reducing class sizes actually worsens outcomes.

    Only now do you say that “these studies were not of budget cut results — they were tests of reducing class size, many providing full additional funding needed to do so while keeping other things equal.” First of all, that could mean a mix of observed situations, some in which smaller classes came at the expense of other resources, some not, and some various degrees of proportions, which is NOT the same as a study finding that other things equal (other resources constant via additional funding), smaller class sizes worsen outcomes (or even that they don’t improve outcomes). Second, and moreover, given what you argued (repeatedly), it’s unreasonable for you to think it unreasonable of me to think your point regarded only optimal allocation of resources within a given budget, i.e., with smaller classes requiring reductions in other resources, as opposed to the other things equal scenario of a larger budget providing for smaller classes without cutting other resources (or a preserved budget enabling avoidance of larger classes without cutting other resources).

    And my point was simply (1) that you weren’t really saying that it’s some myth that larger classes hurt outcomes, other things equal, (2) you were only saying that avoiding larger classes hurts outcomes when it means greater cuts in other resources amid budget cuts, and (3) many who warn against the adverse effect of larger class sizes are advocating against a budget cut in the first place, not advocating against larger class sizes in the context of a given (reduced) budget.

    If you can’t simply acknowledge that you were only referring to a “given budget” scenario and that it was misleadingly broad of you to use labels like “greatest urban legend” and “fallacy” without that qualifier (or at least acknowledging, after having it pointed out to you, that such labels don’t apply at all in many cases of people warning of the adverse effects of larger class sizes), I don’t know what to tell ya’.

    Yeah, obviously with a given budget to purchase a variety of resources that are factors in any outcome, it’s silly for anyone to overlook the fact that purchasing more of one means less of another, and the negative effect of the latter should be considered along with the positive effect of the former. That’s the point you applied here, and you claim that many either fail to consider that negative effect, or erroneously (per the meta study) think class size generally trumps other factors in outcomes (what the study says about “other things equal” is unclear based on what you’ve said). I’m not disputing any of that. My point is that it just doesn’t apply to the point you are ridiculing as a myth, the “other things equal” point made by those advocating against budget cuts.

    As Vivian pointed out and I agreed, there certainly can be a dilution of quality if more teachers are hired (or layoffs avoided, if we’re assuming inferior teachers are the ones laid off — a big assumption in the current union/system environment), and if we assume that directional dynamic, then we can’t assume “other things equal” even if non-teacher resources were unaffected (meaning budgets cut or remaining teachers paid more), but that is a separate argument vs. the one you presented, and it is still an open question how that nets out vs. the (presumably) positive effect of more teacher time per student.