UNC Everywhere

A friend of mine -- a student at the Kenan-Flagler Business School -- is profiled in the Financial Times.

UNC Everywhere

One of my fellow graduates students, John Cluverius (whom I still owe some drinks for proctoring an exam for me last semester... I haven't forgotten, John) has a post at the Monkey Cage on the American public's support for social spending across time. Using the "policy mood" data created by UNC Prof Jim Stimson, he shows a different result to that being bandied about in the press recently. It's an interesting post. Check it out.

UNC Everywhere

Right at the middle of the budget negotiations:

“There’s a standoff, and the staff hasn’t gotten anywhere. Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s you guys’ ask on the entitlement side?’ And [the House Republicans] keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.”

Rob Nabors received his M.A. in political science from UNC before going to work in D.C. at the Office for Management and Budget. He was also the co-author of Thomas' most-cited paper (per Google Scholar).

Room to Move (Redux)

Layna Mosley, one of my professors at UNC, has a piece in Foreign Affairs on the European sovereign debt crisis. In a sense she's come back around to her dissertation work, in which she argued that international investors care much more about outcomes than the particular policies used to generate those outcomes, or things like the partisan composition of governments. Turns out that she was pretty much right about that, at least in the case of Europe.

She has two primary points. The first is that the composition of debt maturity matters quite a lot; a lot of short-term debt means a lot of servicing, which means a greater sensitivity to short-run developments. The second is that investors don't have nearly as much influence on government policies as most commentators ascribe to them. What influence they do have is, again, over outcomes rather than the particular decisions used to reach them. So yes, investors prefer lower debt levels, but they don't particularly care whether fiscal probity is achieved via spending reductions or taxation. Mosley previously referred to this relationship as giving governments "room to move": so long as they stay within certain parameters -- mostly relatively low/stable inflation and relatively low/stable debt levels -- governments have quite a lot of latitude to pursue other policies without being punished by investors.

It's a good piece with valuable lessons. Read it.

Winning the Future

Thoughts on an Article I Haven't Read

That would be this one, which tells me in the headline and subtitle that North Carolina "grooms its best students to be good teachers". I strongly suspect that this is not true empirically, and I certainly hope it is not. Teaching requires basic competence of the subject material plus the ability to lesson-plan effectively and communicate well. While this is not an easy job relative to many other tasks, it's not on the same level of difficulty of oh, say, developing new medical procedures, inventing new technologies, or devising and testing new theories of human interaction.* Given that, I'd rather our best students focus on the most difficult tasks and/or those with the highest social benefit, while our capable-but-definitely-not-the-best students focus on getting first graders to color inside the lines or getting eighth graders to dissect a frog without vomiting.**

*The inclusion of the latter is me puffing out my chest, in case you couldn't tell.

**Not sure if I have those activities assigned to the proper class because I skipped 8th grade and never dissected a frog, so I assume that's when that happened.

Universities Are Not (Only) About Education

Angus writes:

College football is a mess, with Ohio State and The U providing the latest "scandals" and with the pattern of conference jumping we've seen lately.

I think it's time to split big time football from academics. Dissolve the NCAA. Pay the players. Don't even force them to be students if they don't want to be students. Treat college football like an age 21 and under pro league. The schools rent out their facilities, names, supporters, etc. and the football program is separate from the school itself, just like the food service program.

I've long viewed college football, and college athletics in general, as a sort of "loss leader" for the university. A prominent sports program raises the university's status. Saying that it doesn't do much for the university's core mission only makes sense if you think the core mission is efficiently allocate resources towards the best educational environment possible.

But it clearly isn't. Universities exist for a host of reasons, most related to status and social networking rather than actual education. Which is why so many people are willing to pay huge premia to go to 4-year universities for basic classes rather than 2-year colleges, even though the class quality will usually be comparable or even better at the 2-year schools (b/c of smaller class sizes, professional teachers rather than researchers teaching those classes, same texts and curricula, etc.). And why many people are willing to pay even higher premia to go to flagship 4-year colleges rather than Eastern Small Town State, even though the actual education will be very similar.

So having high-profile sports programs does serve universities' core mission: it raises the university's status, and that attracts students and other sources of funding.

Why Hasn't Academic IPE Had Anything to Say About the Crisis?

Thomas Oatley, who started this blog and still contributes every other month or so, has a guest-post at the Duck of Minerva answering Dan Nexon's question of why no articles of relevance to the global financial crisis have been published in International Organization, the flagship IPE journal. Here's his conclusion:

In short, I would argue that no articles directly relevant to the financial crisis have appeared in IO because the field attaches little value to studying the US crisis in isolation, and the banking crises with which it might share common properties are so infrequent that statistical techniques are unlikely to identify general relationships. As a result, an event of supreme global importance gains very little attention from American IPE scholars.

Kate Weaver -- editor at RIPE -- posted Thomas' contribution at DoM and had some good thoughts of her own. Mark Blyth also had a response. Gist:

Others can talk about intellectual hegemony and the like, but as someone who has sat on a board for many years, I can say its the submissions or lack thereof the is the real killer. Why aren't IPE journals publishing crisis work? Possibly because no one is submitting it? Or because its much more bang for the buck and much faster to publish in Foreign Affairs or on line? ...

The fundamental problem is that IPE imagines a world quite unlike the one we actually inhabit much of the time. As a consequence when we are asked to comment on the world we actually inhabit, we have little to say.

My comment on Nexon's original post was basically what Blyth said: according to Louis Pauly, one of IO's editors speaking at this year's ISA meeting, there haven't been any submissions related to the GFC. It's hard to publish on a topic when you don't have any submissions. In comments to Nexon's original post, Len Seabrooke -- also an editor at RIPE -- said that the lack of submissions is self-selection, and that academics interested in influencing policy are unlikely to look for publication in an academic outlet like IO first.

More generally, this is a marked shift from IPE's early days when the field was focused around questions of complex interdependence. The shift away from that sort of research has been mostly pragmatic and for mostly good reasons, but it isn't unreasonable to think that something has been lost. Robert Keohane called this the "suppression of the 'I' in IPE", and views it with a "gnawing sense of dissatisfaction". It seems that a growing number of scholars feel similarly.

S&P and Exorbitant Privilege

Layna Mosley, one of my professors here at UNC, has a guest-post at the Monkey Cage on the sovereign debt downgrade. I'm not going to excerpt much as it's worth reading in full, but I want to highlight a few things. First:

[O]n the basis of just its fiscal statistics, the U.S. would have been under pressure to accept an IMF program long ago. Of course, there are many differences between the US and the typical IMF borrower; the broader point is that the US can’t necessarily expect its “special” status vis-à-vis markets to persist indefinitely.

I think the "many differences" part is really key here, as Layna gets to a bit further down:

In the U.S. case, the fact remains that Treasury securities are a favored “flight to safety” instrument for investors worldwide. When risk acceptance and global liquidity is high, investors look for high-risk, high-return assets – equity offerings in emerging or frontier markets, for instance. But when risk aversion is high, investors seek out safe havens. Treasury bonds have long been such a haven, both for domestic and foreign investors. Many holders of U.S. government securities are official entities (such as foreign central banks), while others are private investors.

What other options do these safety-seeking investors have? There’s the Swiss franc. And there’s gold. Both have experienced surges in prices that come from the search for safe investments. But where else might investors go? Certainly not into euro-denominated instruments, given the continuing crisis in the euro-zone. And probably not into renminbi-denominated instruments; for all of the speculation that the dollar’s “exorbitant privilege” is reaching its end, don’t expect it just yet.

The US is different from other countries that might go on to a IMF program in a lot of ways, but most importantly because it can create the most important store of value in the world, and it can do so whenever it pleases. Ireland, for example, cannot. Neither can Greece or Thailand or Malaysia or even Japan. Gold is limited by quantity, which is why prices are through the roof. Swiss francs are limited by the small size of the Swiss economy and its lack of centrality in the global economic system. The dollar is not only the most-used and most-traded currency in the world, it is also embedded in the global economy in ways that other currencies are not.

The graph above was constructed with BIS data. (Just ignore the isolates like "OtherEMS" and "FRF", which aren't actually in the currency system anymore; I was too lazy to take them out before making the graph.) Node size represents the % of total global currency exchange in a country's currency, and tie thickness represents the (bilateral) size of currency exchange between two currencies. The US is obviously the most central node and is also the largest by far; Swiss francs ("CHF") are much smaller and only has ties to Europe and the US. For the rest of the world shifting out of dollars into the Swiss franc isn't even really an option. For that matter, neither is the euro or yen. Only the US dollar has a truly global reach.

Network externalities can be very powerful. If everyone in the world is using dollars as a medium of exchange, it makes sense for you to use dollars as a medium of exchange. And if you use dollars, then your trading partners and counterparty investors benefit from using dollars. This effect reinforces itself as it spreads through the international economic system. Self-reinforcing patterns are path-dependent in complex networks; it usually takes the destruction of the entire system to reverse them.

And since the US is the only country that can create dollars, it has a very important capability that countries on IMF programs do not: the ability to service its debts with paper, with a strong presumption that it will not be punished for doing so as long as network dynamics remain self-reinforcing. So far the lesson from the S&P downgrade is that those externalities are not only still in effect, but are intensifying.

In other words, the US's peers are not Greece and Ireland, or the countries involved in the 1990s Asian flu. The US's peers are not even France and Germany, which are large industrial countries but do not control the printing press. Nor even Japan, which is sustaining a debt/GDP of nearly 200%. The US has no peers, and this shows up in the bond market data (to be discussed in a future post).

Several times in her post Layna explicitly or implicitly references Barry Eichengreen, who has written a lot on capital, debt, and currency. In a recent column, Eichengreen argues two things. First, that the argument of his recent book Exorbitant Privilege is essentially wrong: the global currency system will not move to a USD/euro condominium in the near term, because "a pox has been cast on both their houses". Second, that there are no other viable alternatives in the form of national currencies -- he explicitly mentions the Swiss franc, Canadian dollar, Chinese RMB, and Australian dollar as being insufficient, despite being the main contenders -- and international baskets like the IMF's SDRs suffer from a lack of liquidity and over-exposure to the USD and euro. So he suggests moving to global GDP-indexed bonds. But this ignores politics. If Europe can't even issue Euro-bonds, and if SDRs are unattractive for a number of reasons, why should we think that a global effort will be more successful?

So I agree with Layna: the era of "exorbitant privilege" is not only not over, but this crisis has seemingly reinforced it. You don't hear much talk about "decoupling" these days.

UNC Everywhere

UNC poli sci prof Frank Baumgartner and co-authors introduce a special issue of CPS:

Abstract: Major new understandings of policy change are emerging from a program to measure attention to policies across nations using the same instrument. Participants in this special issue have created new indicators of government activities in 11 countries over several decades. Each database is comprehensive in that it includes information about every activity of its type (e.g., laws, bills, parliamentary questions, prime ministerial speeches) for the time period covered, typically several decades. These databases are linked by a common policy topic classification system, which allows new types of analyses of public policy dynamics over time. The authors introduce the theoretical and practical questions addressed in the volume, explain the nature of the work completed, and suggest some of the ways that this new infrastructure may allow new types of comparative analyses of public policy, institutions, and outcomes. In particular, the authors challenge political scientists to incorporate policy variability into their analyses and to move far beyond the search for partisan and electoral explanations of policy change.

Trouble in Egypt

Or is this "UNC Everywhere"? Poli-sci professor Andy Reynolds is not optimistic about Egypt's coming election:

“This is the most opaque process we’ve seen,” said Andrew Reynolds, an associate professor of political science at the University of North Carolina at Chapel Hill who studies and advises on electoral systems in new democracies. “No one, not the political parties, the United Nations” or non-governmental organizations “knows who’s even writing the law,” he said. ...

The bottom line is that this system advantages the old parties,” he said. “The people who are going to lose out are the Tahrir Square groups and the liberal movements.”

The rest of the article is also good. The consensus (from the article) seems to be that the election should be postponed to give time for groups/parties to organize properly and for mechanical electoral institutions (rules, monitors, logistics) to be constructed, but the article cites a poll in which 75% of the population think the elections should go ahead as scheduled. This certainly bears watching. I'm not especially optimistic.

(ht: Layna)

Karl Smith on Fire

First:

The Masonomic taxonomy is:

- The Chicago school says markets work so lets use markets
- The Cambridge School says markets fail so lets use government
- The George Mason School says markets fail so lets use markets

I have tried to push the notion that sometimes markets and government simultaneously fail, so lets get drunk.

Second:

Though, I do enjoy saying “If you are selling Treasuries then what are you buying? Ammunition and Water Purifiers?”

However, that line often doesn’t go over well with a certain class of business folks who are under the mistaken impression that all of them can simultaneously run to gold despite the fact that only 5 billion ounces have ever been mined in all of human history and over half of that is currently being used as jewelry.

UNC Everywhere

UNC Poli Sci Prof Graeme Robertson has a nice article in FP on the politics of dictatorship and revolutions. I have a few minor quibbles, but in general it's very good (and he knows much more about this than me, so my quibbles are likely wrong). Those interested in the Mideast revolutions, or the politics of authoritarianism, will likely learn a thing or two from it. For more depth, see his recent book (but maybe wait for the cheaper paperback release).

Fighting Grade Inflation at UNC

UNC will institute a new policy to combat grade inflation, beginning in 2012. The plan hinges on qualifying grades based on contextual factors, so transcripts will now contain summary course statistics alongside grades, and a "scheduled point average" will replace the traditional GPA. In other words, an 'A' in a class where 50% of students receive 'A's will now be worth less than an 'A' in a class where 15% of students receive 'A's.

This plan has been in discussion for quite some time. See, for example, this December NY Times article about a UNC sociology professor Andrew Perrin's push for such a system. And Michael Bérubé wrote an op-ed back in 2004 proposing something similar. I am in full support of this plan, and I hope more colleges and universities adopt a comparable scheme.

But there is one thing that I disagree with. Perrin says:

“I don’t think it’s fair to say it punishes or undermines students,” he said.

“For every student that it seems to harm because it shows their high GPA was earned in relatively easy classes, it helps another student whose low GPA was earned in relatively difficult classes.”

This isn't really true. Some students will benefit from this, yes, but if the problem is grade inflation rather than grade inconsistency, more students will suffer than will benefit. That's because the new "contextual" grades will send a clearer signal of a student's ability (or, at least, her performance in classes). This will help strong students, but it is unlikely that they needed the help: they likely had high GPAs under the traditional grade-inflated system. It will hurt mediocre students, who previously benefitted from the extra noise. A clear signal reveals their mediocrity, where the previous noisy signal masked it. A low GPA in difficult classes will become a mediocre GPA, but will still sort those students into a lower tier than the strongest students.

As I understand it, that's the whole point: rewarding good students for their good work. Like Perrin, I don't think of this as "punishing" mediocre students, but as removing rents. In other words, if the system works the way it's intended, it should hurt some students on the job market*. Which means parents are going to complain. Which means the system might not stay intact for very long. Of course, if this sort of practice becomes widely-adopted, then that pressure will go away. So I hope that's what happens. But there are reasons for schools to not participate: a noisy signal is better for the majority of their students than a clear signal would be.

*Unless it raises the status of a UNC degree at any GPA sufficiently high that a "contextual B" at UNC is equivalent to a "likely-inflated A" at UVA, or wherever. But because the 'A' is a noisy signal while the 'B' is a clear signal, I doubt that will happen.

UPDATE: See Phil's thoughts on how he, as a professor at a different university, would respond to this type of system. He likes it, and would change teaching strategies, but the students are likely to be angry.

George Rabinowitz

I just wanted to pass along a few links memorializing George. Here is the original Daily Tarheel report of his death, and here is their obituary. An undergraduate student pays tribute here. John Sides and Eric Voeten paid their respects at The Monkey Cage here and here. Here are the Twitter results for "Rabinowitz". Lots of former students and colleagues have posted tributes there, as well as in comment threads and Facebook posts across the web. My previous post on George's passing is the most-visited in this blog's history, just one small testament to the impact he had on his students, the university, and the broader discipline.

RIP, George Rabinowitz

The UNC political science department lost a valued faculty member, colleague, and friend this weekend. George Rabinowitz, Burton Craige Distinguished Professor, died suddenly of a heart attack on Friday in Norway, where he was spending a semester. (Prof. Rabinowitz was elected member of the Royal Norwegian Society of Science and Letters in 2003, and frequently spent time teaching and researching in that country.)

I TA'd for Prof. Rabinowitz last semester, and can testify to his dedication to rigor in his teaching. He had a similar discipline in his research. He is probably best known for developing the directional model of issue voting, which complicated traditional proximity voting models, but contributed many other notable works as well. He served on the editorial board of AJPS and JoP. Here is his CV. Here is his seminal APSR paper on directional theory, with Stuart Macdonald. Here is a Google search on directional theory, which gets 163,000 hits.

He is survived by his wife Stuart Macdonald, also a UNC political science professor, and several children.

Just Sayin'

UNC Everywhere

Graeme Robertson, assistant professor in the political science department, explaining how protests succeed and fail on NPR's "The Takeaway".



UPDATE: The audio embed doesn't show up in some RSS feeds, so either click through to IPE@UNC or go to The Takeaway's site here.

TAR!

Fire it up, folks. It's time to fly the flag. Tough game of course, but we're on the upswing. Should be good.

#1. Again.

Today is the first day of class (unless we get snowed in), so here's a nice reminder for students and staff:

Kiplinger’s Personal Finance magazine ranks UNC-Chapel Hill the best value in American public higher education for a “remarkable” 10th time in a row.

Kiplinger’s started ranking the best values in public universities in 1998; Carolina has been number-one every time. The ranking appears in the magazine’s February issue.

Kiplinger’s editors say their top 100 public campuses deliver “a stellar education at an affordable price.”

More at the link.