Minimum Wage as Minimal Government Intervention?

Category: Blog

January 29, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As these two cartoons, by Henry Payne of the Detroit News and Milt Prigee, respectively, illustrate, the issue of the minimum wage continues to be hotly debated.  President Obama, in his annual State of the Union address on January 28, 2014, made several proposals regarding the minimum wage.  These include an executive order to require that businesses with contracts with the federal government pay their employees at least $10.10 per hour, a request to Congress that they pass legislation raising the federal minimum wage for all employers across the country, and an entreaty to private business owners to voluntarily raise the wages of their lowest-paid employees to reduce poverty, promote equality, and boost economic growth.

These proposals raise deep and important questions about the proper role and scope of government overall, the federal government in the United States in particular, and the role of the presidency in the context of a system of separation of powers.  In addition, economists and policymakers have debated the policy implications of minimum wage laws for decades: some argue that the minimum wage offers a way to promote equality and reduce poverty with no direct cost to the government and no impact on the deficit and debt, while others argue that the indirect costs are high in that raising the minimum wage increases unemployment and can hurt the very people it purports to help.

Several articles offer a range of interesting perspectives on the minimum wage, both on the political questions (questions of governance and power) and the policy questions (empirical questions about the economic effects of the policy).  Encourage students to examine these perspectives and, rather than taking a firm position on the issue, consider the various questions and issues raised and the extent to which those questions are fundamentally questions about governance.

Five Reasons We Should Raise the Minimum Wage, according to Salon’s Marhall Auerback

Marc Adams argues that Raising the Minimum Wage Hurts the Poor at U.S. News and World Report

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Holiday Cartoon Roundup

Category: Blog

December 2, 2013

As the end of 2013 draws near, and students and teachers alike may become preoccupied with holidays and other outside-school activities, we present an opportunity to bring some additional cheer into the classroom in the form of political cartoons.  Rather than commenting on a specific issue, this round of cartoons samples across many different areas of government spending (and thus, areas of priority).  Collectively, they offer an opportunity to question how the government sets public priorities through its spending choices, how those decisions are made, what factors must be considered when making a spending decision, and the range of opinions on the appropriateness and efficacy of a number of government programs.

A reminder, from our October 8 blog (which we recommend consulting for additional suggestions on how to use cartoons in the classroom and why they can be so valuable), of a suggested line of inquiry to help students tackle the sometimes-complex issues embedded in a political cartoon:

  • Ask students to study the cartoon carefully on their own, and before leaping to any conclusions about what the cartoon means, ask students what they notice about the cartoon and the details of the drawing.
  • Once students are clear on what’s in the cartoon, ask them what the cartoon means – what the specific context of the cartoon is, and why it is supposed to be funny. What issue, dilemma, or inconsistency in current events is the cartoonist exploiting?
  • Finally, ask students to consider the cartoonist’s point of view. What does the cartoonist think about the dilemmas he or she is depicting? What view does the author have of the way current political leaders are tackling the nation’s dilemmas? What more would they need to know to answer these questions?

 

In addition, for this particular set of cartoons which deal with a hodgepodge of issues all loosely connected to government spending priorities, ask students to consider why the cartoon is included in this collection – what’s the connection?  How does this cartoon illustrate some point about governmental priorities and spending?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adam Zygus, The Buffalo News

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John Cole, The Scranton Times-Tribune

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steve Sack, Star Tribune

 

 

Matt Davies, RemappingDebate.org

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To the Polls!

Category: Blog

November 12, 2013

Last Tuesday, as is customary each first Tuesday after the first Monday in November, was Election Day.  As 2013 is an odd-numbered year, there were no federal elections for President or Congress.  Still, there were several significant state and local races on the ballot across the country, including elections for mayor of New York City and governors of New Jersey and Virginia.

It may be tempting to dismiss these “off-year” elections as relatively minor compared to the frenzy that surrounds presidential elections, but state and local governments are responsible for a wide range of public policies and services that, in many cases, affect people’s daily lives even more directly than the federal government does.  In 2011, state and local governments collectively spent $3.2 trillion (Source: http://www2.census.gov/govs/local/summary_report.pdf), nearly as much as the federal government did and about 20% of GDP, or one fifth of the nation’s economy.  State and local governments are primarily responsible for several services that many would consider to be the core functions of government, including public safety, education, and public health.

One reason state and local elections can be so important is that they offer an opportunity for individuals to weigh in directly on a particular issue through a referendum.  A referendum asks voters to directly weigh in on a law or change in policy, as opposed to the traditional process (which still holds for most laws; referenda are the exception) of selecting representatives in a legislature to make laws.  Referenda are often required for major changes, such as amendments to state constitutions, and often require legislative approval before being placed on the ballot.  While they offer an opportunity for direct democracy, they can also be controversial, with critics suggesting that voters often lack expertise in the relevant policy areas and can be easily swayed by interest group media campaigns.

This article from the Denver Post discusses one significant referendum that did not pass in Colorado last Tuesday.  The proposal would raise additional revenue for public schools in Colorado, which are among the lowest-spending in the nation, by raising income taxes and creating for the first time a progressive tax system in which higher income would be taxed at a higher rate.  The proposal also included several changes to the way funding is allocated to schools, as well as support for certain specific policy changes; opponents appear to be split on whether they opposed the proposal because of the increase in taxes, because they did not believe that extra funding would help schools, or because they did not agree with the way the money would be spent and the policy changes associated with the new funding.

Teachers may wish to read and discuss this article with students in conjunction with Civics lessons 2.4 and 2.5, on political beliefs and rhetoric, respectively, or Economics lesson 1.4 on taxation.  This topic raises a host of issues closely linked to the themes of the Understanding Fiscal Responsibility curriculum, including the way budgets represent priorities, the way voters express their values and preferences, the costs and benefits of various government programs, and the importance of questions regarding how we pay for services.

As students read, the following discussion questions may help them more fully understand the article and the various issues it raises:

  • What did Amendment 66 aim to do?  What are some of the reasons cited in the article for why people supported and opposed these policy aims?  What more would you need to know to determine whether you would have voted for or against the proposed amendment?
  • Based on the article, how would you characterize the political beliefs of supporters and opponents of the proposed amendment?  Why?  What might make this characterization difficult?  Specifically, where would you like to know more, and where do voters and interest groups not neatly fit into ideological categories?
  • What do you think about referenda as a way of setting policy and expressing budgetary priorities, based on this example?  What more would you want to know in order to make a more fully informed judgment?

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The Obamacare Launch: What’s Really at Issue?

Category: Blog

November 1, 2013

With the threat of immediate crisis off the table, public attention has shifted in the past few weeks to the somewhat problematic launch of the Patient Protection and Affordable Care Act, or Obamacare.  Students may be wondering what all the buzz surrounding Obamacare is about, how the program is intended to work, what is going wrong or could potentially go wrong, and what its prospects for ultimate success are.

Much media attention has focused on the problematic launch of the healthcare.gov website, which has suffered from a number of technical glitches including an inability to meet demand.  As Matthew Yglesias of Slate points out, while the technical flaws of the site are likely to be minor inconveniences in the grand scheme of things, and should not be interpreted as an example of a more general failing of government, there are other ways that the website launch failure could signal and even contribute to a larger failure of the law.

As the new healthcare law unfolds, it will be an exciting time to explore questions of governance, national priorities, and the politics and economics of healthcare specifically and social service provision more generally.  While the Obama administration works to iron out issues with the website, there will be many opportunities to see firsthand the interaction between questions of the role of government, freedom of choice, national priorities, and the federal budget.

Encourage students to read through several resources on Obamacare, expressing a range of points of view on the law, from optimism that it will be highly successful, to support for the intent but skepticism about its success, to outright disagreement with the aims of the law and the ways in which it achieves them.  As students read, they should consider the following:

  • What are the major objectives of Obamacare?  What are the ways it tries to achieve those objectives?
  • Why do some people argue that Obamacare is doomed to failure?  What is the “death spiral” and what are some ways it might occur?
  • Do you agree with critics of President Obama who, regardless of whether or not they support the law, argue that he misrepresented how it works?  What more would you need to know to fully answer the question?  How big of a problem do you think this is?
  • Many critics of the law, both on the right and the left, argue that the law does not go far enough in terms of more radically altering the healthcare system in the United States, either by doing more to contain costs, doing more to improve access to healthcare, or both.  Some critics argue that the law amounts to little more than a large subsidy to the health insurance industry.  What do you make of these criticisms, based on what you know about the law so far?  Do they seem valid?  What more would you need to know in order to more fully evaluate them?

There are many different resources across the web that represent a wide range of points of view on Obamacare, as well as more objective news articles that chronicle how the law works and how the roll-out is going.  To help teachers get started, we suggest considering two articles from Forbes Magazine and the New York Times as starting points for exploring some of the potential issues with the law.  We also encourage students to examine this issue as a possible extension of lessons 1.2 and 2.2 on the economics and civics, respectively, of Medicare, and to discuss how the issues that arise with Obamacare are similar to and different from those of Medicare.

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The Aftermath of the Shutdown

Category: Blog

October 22, 2013

Last week, after a 16-day government shutdown, the Senate and House of Representatives reached a deal to reopen the government, raise the debt ceiling, and set up negotiating structures to attempt to avoid similar crises in the future; given that a new bill to fund the government will need to be passed in January and the debt ceiling will need to be raised again soon after, the threat of repeated crises is significant.

As this cartoon by Gary Varvel of the Indianapolis Star illustrates, however, there is a sense that the consequences of the shutdown may have been considered to be high enough to mitigate the risk of repeated governance by crisis in the near future.  Students should analyze this cartoon and consider Varvel’s point of view on the costs of the shutdown and who he believes to be responsible as they consider what questions they have about the shutdown.  Their questions may include why the shutdown happened, what the effects of the shutdown were, how it ended, and how future shutdowns and standoffs may be prevented.

To that end, students may read CNN’s take on “Four Things We Learned From the Government Shutdown,”  an opinion and analysis piece that summarizes the author’s takeaways from the events of the last several weeks.  The article links to several additional articles that discuss in more detail the effects of the shutdown and the political fallout in terms of public opinion and future negotiating leverage that students may also find helpful to gain a more complete understanding of the causes and effects of the shutdown. Students may find the links on “9 Things We Missed During the Shutdown” and the $24 billion in forgone economic activity due to the shutdown particularly helpful.  Other resources to help students understand the issue include:

Students might also wonder about the causes of the shutdown, the objectives of the various key players, and how to sort out competing claims about who is to blame.  Senator Ted Cruz, who led the initial efforts to eliminate funding for the Affordable Care Act (Obamacare) as part of the budget negotiations, explains what he thinks was gained in terms of ongoing political negotiations in this memo, published on the conservative opinion site The Daily Caller.  Students should also note that there are some common misconceptions about the shutdown and the related battle over raising the debt ceiling; in particular, as President Obama has noted and blogger Matthew Yglesias of Slate argues, raising the debt ceiling simply enables the government to pay for existing obligations, rather than adding any new spending.

Students might read and discuss these resources in conjunction with Civics Lesson 2.4, Political Beliefs and the Federal Budget, or Economics Lesson 1.5, Balancing the Budget.  In either case, students could discuss how the shutdown and its aftermath are examples of how the federal budget is a way to express national values and priorities.

After students have had a chance to explore all of these resources, they may consider the following questions for ongoing discussion:

  • How is the shutdown an expression of national priorities?  What do you make of what is considered essential and non-essential among government services?  Does reading about the impact of the shutdown on people’s daily lives change your opinion?  What more would you need to know to more fully develop an opinion on this question?
  • Based on all of the resources listed here, in particular focusing on the illustrated timeline of the events of the shutdown, write your own account of what happened, what caused the shutdown, how the crisis was resolved, the role of the debt ceiling, and the effects and aftermath of the crisis.  Consider discussing any or all of the following in your account: what was the role of political beliefs in this sequence of events?  Do you see this as an example of a failure to negotiate or compromise, or an effective and appropriate tactic for advancing a particular agenda and set of beliefs about the appropriate role of government?  Do you believe it is relevant to discuss who is to blame and who gained and lost politically?  What more would you need to know to fully understand the sequence of events and to understand why it occurred?

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Cartoon Blog: The Government Shutdown

Category: Blog

October 8, 2013

 

Teaching with cartoons

 Political cartoons are a great way to teach about the budget-driven dilemmas we face as a nation. Not only are they fun and funny, but they teach complex ideas in a quick and intuitive way. We are so convinced of their value that, not only do we try to include a cartoon with many of our blogs, we also feature blogs that are all cartoons. This is the first such blog for this year. In addition to their value as content, using cartoons is an opportunity to teach students how to read them as they would any media. That is, in addition to reading for understanding, students must learn to ask questions that address the cartoonist as an author, as a person with a point of view. As a sequence, we strongly recommend the following:

  • Ask students to study the cartoon carefully on their own, and before leaping to any conclusions about what the cartoon means, ask students what they notice about the cartoon and the details of the drawing.
  • Once students are clear on what’s in the cartoon, ask them what the cartoon means – what the specific context of the cartoon is, and why it is supposed to be funny. What issue, dilemma, or inconsistency in current events is the cartoonist exploiting?
  • Finally, ask students to consider the cartoonist’s point of view. What does the cartoonist think about the dilemmas he or she is depicting? What view does the author have of the way current political leaders are tackling the nation’s dilemmas? What more would they need to know to answer these questions?

 

This week’s collection of cartoons addresses the government shutdown and can be read in conjunction with the blog entitled Teaching the Shutdown: Suggested Resources.  This blog uses clips from a variety of sources to engage students in a discussion of the shutdown, its implications and some of the ways it might be resolved.

 

 

 

 

 

 

 

 

 

 

 

 

 

Mike Luckovich, Atlanta Journal Constitution

October 4, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marshal Ramsey, Clarion-Ledger (Gannett)

October 5, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bruce Eric Kaplan, The New Yorker

October 14, 2013

 

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Teaching the Shutdown: Suggested Resources

Category: Blog

October 8, 2013

As the federal government shutdown enters its second week, teachers may wish to engage in classroom discussion about the causes of the shutdown, its implications, and possible paths to resolution.  In particular, students may be confused by some of the terminology – what does it actually mean for the government to “shut down”? – and curious about what political maneuvers led to such an apparently drastic measure.  To that end, we suggest the following resources as useful tools for instruction and discussion:

  • For some guidance on the basic mechanics of what a shutdown is, what led to this shutdown, and how it works, consider this Q&A from the Clarion Ledger of Jackson, Mississippi.
  • The designation of personnel as “essential” (whose pay is delayed during the shutdown, but who are still required to show up for work) and “non-essential” (who must take mandated, unpaid leave during the shutdown and who are forbidden from working) offers an unusual glimpse into how the nation sets priorities.  In many cases, this designation is relatively blunt, and Matthew Yglesias of Slate argues that prioritizing national security, broadly speaking, represents a narrow view of what the government does and ought to do, and reveals some priorities that he finds unusual.
  • Ending the shutdown is complicated by its timing; the shutdown coincides, roughly, with an upcoming vote to, once again, raise the nation’s debt ceiling.  President Obama would like to accomplish both reopening the government and raising the debt ceiling without making concessions, arguing that it sets a poor precedent to essentially hold the operations of the government and paying of the nation’s bills hostage as a negotiating tactic; on the other hand, House Republicans would likely wish to wait until the debt ceiling vote draws near as an attempt to force concessions.  Therefore, teachers may wish to use the L.A. Times’ very helpful Q&A about the relationship between the shutdown and the debt ceiling vote to discuss this somewhat complex connection.

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A Surprise, From a Surprising Source

Category: Blog

September 29, 2013

When discussing the Federal Reserve, words like “stunned” are seldom the first to come to mind.  Last week, however, the Fed surprised economists and many others by choosing to continue its bond-buying monetary stimulus program after previously signaling its intent to begin phasing out the program this fall.

As this cartoon by Daryl Cagle illustrates, the Fed attempts to stimulate the economy by cutting (quite literally in this visual metaphor) interest rates, spurring greater investment.  In doing so, the Fed aims to strike a balance between unemployment, which increases as the economy slows down and generally calls for lowering interest rates, and inflation, or general increases in prices, which tends pick up when the economy grows too fast, and calls for raising interest rates.

Ordinarily, the Fed sets monetary policy by buying and selling short-term government bonds to lower or raise interest rates, in addition to more radical and less-used policies such as setting the rate at which banks can take emergency loans from the Fed and changing the amount of deposits banks need to keep on hand as reserves.  When interest rates are extremely low, such as the near-zero rates that we have currently, the Fed has more limited capacity to influence the economy through this traditional monetary policy. Therefore, the Fed has decided to continue its unorthodox policy of buying longer-term government bonds and mortgage-backed securities to keep borrowing costs down in the face of persistently high unemployment and relatively low inflation.

Encourage students to read this New York Times article on the Fed’s surprise action, its rationale, and various reactions to it.  As they read, students should consider why the Fed took this action, why the action was unexpected, and the possible consequences of this action.  In particular, students should remember the distinction between monetary policy, which is the purview of the Federal Reserve and the subject of this article, and fiscal policy, which is the setting of the budget, government spending, taxes, and deficits and debt by the President and Congress.

Even though the Understanding Fiscal Responsibility curriculum primarily deals with fiscal policy, the Federal Reserve and monetary policy are also critically important to understanding the federal budget, the nation’s economy, and the way we set national priorities.  More directly, while the Federal Reserve is an independent, quasi-governmental agency, fiscal and monetary policies do very much affect each other in a political environment, and one can enhance or counteract the effects of the other, depending on whether Congress, the President, and the Federal Reserve agree on the direction in which the economy is heading and the appropriate governmental response.

Teachers may wish to use this article in conjunction with U.S. History lesson 3.3 on the Federal Reserve or Economics lesson 1.5 on balancing the federal budget.  In either case, teachers may wish to explicitly discuss with students what this article has to do with the themes of the curriculum, and why it might be read and discussed in the context of the federal budget, deficits, and debt.

After students have read, the class may wish to consider the following questions for discussion:

  • What is the Federal Reserve’s rationale for taking this action?  Why was this action unexpected?
  • What economic evidence did the Fed consider when choosing to continue its bond-buying program?  How is the evidence different from expected?  What more would you need to know to determine whether or not you agree with the Fed’s action?
  • What would you ask Esther George, President of the Kansas City Federal Reserve, to learn more about why she opposed this action?
  • The article says that “Fiscal policy ‘is restraining economic growth,’ the Fed said in a statement after a regular two-day meeting of the Federal Open Market Committee. It added, ‘The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and the labor market.’”  What does this tell us about the interaction between fiscal and monetary policies?
  • Many political and economic commentators have remarked upon the uncertainty about the state of the economy, its future trajectory, and the policy response by Congress and the President as a cause for persistently low expectations and a weak recovery.  What more would you need to know to determine whether this is a compelling argument for why the economic recovery has been so slow?

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Indications… of What?

Category: Blog

August 28, 2013

How’s the economy?  Ask ten people and most will likely say some variant of “not good,” but you’ll probably get ten different answers as to how bad it is, if and when it will get better, and why.  Some might point to the stock market (in this case, a summary offered by the Dow Jones Industrial Average), which has generally been trending upward for the past six months, and say that investors are expecting increased corporate profits that will trickle down to more investment, business growth, and more jobs.  Others might point to the unemployment rate, which despite gradually falling, remains stubbornly high, or declining real wages (wages adjusted for inflation), as a sign that the economy remains quite weak for most middle and working class Americans, and is likely to do so for some time to come.

That’s because “the economy” is notoriously difficult to define and measure, and even more difficult to predict.  As the cartoon above, by Mike Keefe of The Denver Post, argues jokingly, the concept of measuring the economy through “indicators” is abstract, but the consequences of a particular economic climate can be very real.  Therefore, it is important for students to be able to make sense of the many different ways to define and measure the economy, the different facets of the economy that each indicator measures, and the limitations of each.  To contribute to this understanding, National Public Radio’s Planet Money has an audio podcast and associated articles on some novel ways to measure the economy, including the tried-and-true “ask your uncle” anecdotal approach, even used by the Federal Reserve.  This discussion complements several lessons in the UFR curriculum, but in particular Math Lesson 5.4, Media, Numeracy, and the National Debt, as well as several of the Numeracy Mini-Lessons.

As students analyze the cartoon, listen to the podcast, and read the supporting materials, they should think about the pros and cons of different economic indicators, from the very official-sounding, like GDP, to the softer approaches like calling up pet stores in New England.  Students may also consider:

  1. Each indicator clearly has limitations and only tells part of the full economic story.  For each indicator students read about and discuss, why is it still useful?  What caveats would students suggest accompany the indicator to help prevent misinterpretation?
  2. Besides the indicators mentioned in this entry and in the Planet Money story, what other indicators would students suggest?  If they worked for the Federal Reserve and were in charge of putting together the “Beige Book,” whom would they call for anecdotal evidence on how the economy is doing?  Why?

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Austerity in Practice

Category: Blog

August 14, 2013

As this cartoon by Clay Bennett of the Chattanooga Times Free Press illustrates, opinions about Representative Paul Ryan’s proposed budget, and austerity policies more generally, run very strong.  Teachers can share this cartoon with students to review the Ryan budget and debates about austerity policies in the United States and around the world. In summary, the debates ask:  should the public sector (government) take a more active role in spurring economic recovery by boosting spending, cutting taxes, and investing in new projects, or do ongoing fears about crowding out of private investment, and the long-term sustainability of deficits and debt (and their effects on interest rates and inflation) justify a significantly reduced role for the public sector through fiscal austerity?

As these debates continue, one key question is how workable austerity budgets really are in practice. Is it politically or practically feasible to scale back the government’s role in the economy so drastically.  The New York Times editorialized that the difficulties House Republicans have faced in enacting the large cuts proposed by Ryan’s budget highlight a potential rift between ideology and practice.  Specifically, although the Ryan budget envisioned large cuts to discretionary non-defense spending, the House Appropriations Committee, which authorizes actual spending, was not able to reach an agreement on how to enact those cuts in the transportation budget.

These debates also raise larger questions about the difference between politics and governance and between rhetorical pledges designed to garner political support and the compromises necessary to actually run the government.  As such, teachers may want to use this cartoon and editorial in conjunction with Economics Lesson 1.5, Balancing the Federal Budget, or Civics Lesson 2.4, Political Beliefs and the Federal Budget.

As students analyze the cartoon and read the editorial, the following discussion questions may help them uncover some important issues:

  1. What is the position of the New York Times editorial board on this issue?  How can you tell from the article?  What more would you need to know to establish your own position?
  2. What questions would you ask Representatives Harold Rogers and Paul Ryan about why the House’s actions on appropriations are different from their proposed budget?  What are some possible reasons for this?
  3. Some have suggested that budget proposals are not meant to be policy, but are strategies for political communication and negotiation.  How might this work?  Do you think this is a plausible argument in this case?  What more would you need to know to be sure?
  4. How, if at all, does this change your opinion about austerity policies more generally?

 

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