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Friday, April 24, 2020

Friday, April 24, 2020

Our Converging Crises III: For the Recovery, We Need to Spend Like Our Lives Depended On It

In mid-April, the U.S. shifted from "will shutdown work?" to "how do we open up?" The answer is that we can't--at least not yet, if we want to avoid the further spread of SARS-CoV-2 and a "second peak."   Georgia, Florida et al. are running an experiment in premature opening, using their local populations as guinea pigs. If bowling is an essential service for you, you know where to go to participate, for science and the greater good.

There's another problem. We aren't yet willing to spend the massive funds that reopening will take.  It's not about more frequent sanitizing of the bowling balls.  We're not yet willing to construct a complete program and ask for the full funding for the public systems we obviously need.  Higher ed, along with state leaders in general, haven't gotten their heads around the scale of the ask. 

In fact, it's been looking this month like higher ed will go quietly to the slaughter. There are now daily announcements from colleges and universities of layoffs, furloughs, financial cuts, and contemplations of permanent downsizing. You can read similar notices from diverse institutions like the University of Arizona, Emory University, the Pennsylvania state system,  the University of Tulsa, Michigan State, Minnesota State-Moorhead, Vermont, etc. New Jersey suspended nearly a billion dollars of expenditures in the current fiscal year, of which $122 million was for state colleges.  Austerity is the default reflex everywhere.  2008-10 is repeating itself.

I see one big reason as the right-wing political training that higher ed and other public services have absorbed all too well.  Knowledge types have been bullied, over decades, out of asking for what their jobs require. The training continues: The higher ed portion of last month's bailout was $14 billion on a $50 billion request, and only half of that went to colleges themselves. (The half to support students has mostly not arrived.) Universities' share, $7 billion, is around 1 percent of annual college expenditures, obviously far short of the 20 percent losses that many are projecting. In research, universities got 10 percent of what they asked for (which was $13 billion). More recently, some higher ed leaders asked for another $46.6 billion to cover Covid-related losses, but this week's federal bailout bill gave them nothing.

Last week, University of California president Janet Napolitano wrote to state leaders to report University losses of $550 million - for the month of March. The campus share of these losses came to about 40% of normal revenues. Teresa Watanabe's LA Times piece had the fitting title, "UC reeling under staggering coronavirus costs."  In her letter, Napolitano noted that "the $260 million in direct assistance that UC campuses will receive through the CARES Act will not be sufficient to cover even the first month of our COVID-19 response." Informal estimates of total system losses are in the $2.0 - 2.5 billion range.  I'd guess it will be a 15 percent hit to annual core expenditures.

But the Napolitano letter doesn't actually ask for an amount of money.  There's this: "As you consider the 2020-21 State budget, providing funding for UC to cover some of our COVID-19 response costs will help UC provide students the education they were promised, treat our employees with fairness, and provide our communities with compassionate care." That's all very important.  But doesn't UC need another $2 billion just to maintain current levels of service?  Where are they going to get it if they don't ask for it?

I would much rather develop a reconstruction plan than a bailout.  But we're not even getting that.  Where is the quantified financial plan?

In contrast, the Right has no inhibitions about making its biggest possible ask.  Trump needs a 2017 rating bump? The Senate's majority leader, Mitch McConnell, gets him a $1.5 trillion tax cut. McConnell doesn't like public employees or their pensions?  He lards this week's stimulus with the statement thata he'd rather the states declare bankruptcy than get federal pension help.  Trump is using shutdown frustration to cast competent government as a Democrat attack on personal liberty.  This is very successful business as usual: Republicans long ago shifted the zone of the possible by taking Barry Goldwater's old line about "extremism in the pursuit of liberty is no vice" and applying it to everything, particularly the pursuit of tax cuts, which require discrediting all government-coordinated forms of common action and mutualized costs. The political Right has made it all possible by demanding the whole thing that they want and more, and never accepting 10 percent, not ever.  The knowledge party should be no less determined.

Universities have a massive recovery role to play through education, research, and sustained employment. Making the negative version of this point in the Chronicle of Higher Education, Paul Friga observed,
If 20 percent of colleges really face closure, as some experts predict, local college communities across the nation would be devastated. Estimates of the economic impact of higher education vary from $2 to $7 per $1 invested. Every year, colleges spend around $584 billion. If the industry contracted by, say, a quarter, this could translate to a hit to the economy of anywhere from $292 billion to over $1 trillion.
We get to the scale of $1 trillion very quickly.  That's fine: the feds are now spending trillions of dollars every couple of weeks. The reason is simple.  The shutdown is leading the world towards another Great Depression.  As one symptom, we may already have a real unemployment rate of 23 percent.  We need to do every possible thing to get out of it.  Opening up and then recovering is going to take a new order of magnitude of public expenditure.

Serious reopening plans have now been announced in Germany, in the UK (which requires "no risk of a second peak"), in New York (exemplified by Governor Andrew Cuomo's remarkable stay-the-course press conference April 13th), in California (where Gov. Gavin Newsom's reopening plan is very rigorous), and elsewhere. The common features of the strong plans are:
  1. testing everybody--the sick, the well, the in-between--and also more than once.
  2. contract tracing of all positive cases
  3. isolating of the ill and the maybe-ill, meaning taking lots of people out of the workforce for two to four weeks--perhaps more than once
  4. treating everyone, immediately and completely, without overwhelming people and equipment
  5. having personal protective equipment for same. 
  6. social distancing after opening, basically everywhere (Newsom mentioned "businesses, schools, and child care facilities," and I would add parks, beaches, food shops, liquor stores, subway trains, buses, sidewalks, restaurants, playgrounds, classrooms . . .)  Six feet? 12 feet? 
  7. renewed "stay-at-home" orders from time to time (If you see infection rates "tick up," Cuomo said, "you've opened the value too fast" and you have to close it down again (0'13"). See Singapore.
  8. the cultural capability to deal with uncertainty, new conditions, complex information, negative affects, sociocultural differences, opening-closing cycles, app-based medical surveillance, systemic regulation, and big government.
That's the first order stuff.  But with our many little, bullied governments, we don't have the infrastructure, the people, the PPE, the cultural intelligence. And yet we must have them.  We must work on a bigger scale with more massive systems than we've ever done.

For example: (1) requires reagents, swabs, machines, technicians, and accurate testing. And volume: Paul Romer tweeted "do the math: discover that you need millions of tests a day."  Leana Wen wrote, "Testing should also be available to everyone who needs or wants it. . . . Reasonable reopening scenarios include testing of employees and students before they return to work and school. This means millions of tests must be available every day so that there can be a staggered return for the most essential workers, followed by gradual return of other employees and students."  A Harvard report quantified the most effective regime at 10 million tests a day. with "precise tracing' requiring 2.5 million tests a day.  But so far, the U.S. has administered 4.9 million tests since the pandemic began. Daily averages have hovered around 150,000, or 1.5 percent of the full program (and are up to about 200,000 in the last several days). "Testing falls woefully short" more or less everywhere in the U.S. Last week, Politico had reported that testing numbers had in fact been falling.

Or (2), contact tracing: this will require a workforce of 300,000 people.  Think a 2nd Census on top of the first one.  Testing and contact tracing could easily cost $100 billion a year, and as much as $500 billion if done piecemeal (see pp 15-16).  Congress did just allocate $25 billion for testing.

Or (5): market free-for-alls have grossly undersupplied personal protective equipment, made worse by Trump family private-sector arbitrage of essential medical supplies.  (6), modified social distancing, is a huge unknown. At universities, it may end the large lecture for a year or two if not forever, turn every double- or triple-occupant dorm room into a single, eliminate half to two-thirds of desks in every classroom, cover campus grounds with tent classrooms, half-empty dining halls, require thermal-imaging machines at the entrances to all major buildings, cut capacity in every bar in every college town, etc. And universities are an easier case than Georgia governor Brian Kemp's first-to-reopen esseential businesses: "gyms and fitness centers, bowling alleys, body art studios, barbershops, cosmetologists, and hair designers, nail care artists, estheticians and their respective schools, massage therapists."

Progressives, which in the U.S. political frame means every single person in higher ed, now need to think in terms of real money, to do the whole job, and all the jobs that actually need doing. This will involve a few elements.  They should be constructed as a package, all five dimensions together. Get one, then another, then keep trying for the others.
  1. Firing Freeze.  Universities must not lay off anyone, and must not cancel hires of early-career scholars either. 
  2. Federal direct paycheck support.  This is not the current "Paycheck Protection Plan" in which forgivable loans are made to businesses. It would be a copy of the British, Danish, or South Korean plans in which the government directly pays 75-80% of a person's pay in their existing job to keep them there -- as cooks, teachers, custodians, accountants, research assistants, stage managers, composers, everything.
  3. Federal grants to state governments to make this possible, covering their deficits and expanded spending so they don't bring on the New Depression by cutting everything we need. 
  4. Government Work Projects.  The Green New Deal comes to mind, and so does the original New Deal's public works. The Executive Director of the Modern Language Association, Paula Krebs, summarized the idea for arts and humanities workers in an article at CNN.  
    The Works Progress Administration (WPA), created with an initial $4.9 billion appropriation in 1935 during the Depression, is commonly associated with the building of roads and bridges. 
    But the WPA also employed writers, researchers, historians, artists, musicians, actors and other cultural figures — and the work they did had as profound and lasting impact on the nation as the bridges and roads built by thousands of laborers.. . . 
    The Federal Music Project, perhaps best known today for folklorists John and Alan Lomax's collections of the music of rural America, commissioned music, hired performers and conductors, and consciously set out to shape public appreciation for music, as the theater and writers' projects did for their disciplines.  . . . 
    The thousands of humanities scholars who are now working as adjunct labor, who have been pushed by the higher education economy into underemployment and unemployment, constitute a labor force that could wade through fast-changing cultural conditions right now and help to shape our national understanding of how our lives are changing and how we are reacting to the shifts. . . 
    How many people are feeling unmoored by their isolation, and are trying to learn how to get their entertainment from a screen instead of through interpersonal interaction? What happens to families when you can no longer visit the grandparents? How does it change what it's acceptable to say or write when a President renames a virus to target another country or an ethnic group? We as a nation must take on these questions as urgently as the question of getting the economy going again.
The model applies to STEM students, researchers, and workers as well.  It would also include the rebuilding of non-academic public infrastructure, like our D-grade roads and bridges, insulate millions of older American houses, and  build social housing for the unhoused with government-funded workers.  It could fix up a lot of faltering colleges.

     5. National Higher Ed Upgrade. Writing in the Chronicle a couple of weeks ago, I described Free College Plus, which, first, buys out tuition in a large network of public colleges, and second, avoids the free-college poverty syndrome by also increasing per-student spending. The idea is to bring per-student expenditures up to an average of $20,000 a year, which is about three times more than most students receive at our thousands of low-income public colleges.  Something similar needs to happen for research, in the arts, humanities, and social sciences as well as in STEM.  The annual new expenditure for the teaching upgrade, not counting debt cancellation, would be about $100 billion, each year.  All things considered, this is cheap.

This all seems so unimaginable as to be embarrassingly ridiculous. But that's my point. We've been trained to feel this about our own needs and visions, and so we ask for pennies on the dollar of real possibility.

Covid-19 is helping us think at the proper scale.  Think a package of a trillion or two.  Covid-19 is showing it's not that much money--especially compared to the alternative.

Image credit: Harry Haysom for the Chronicle of Higher Education


California Policy Issues said...

Too bad we don't have a central bank in California or at UC. The feds do have one, but Mitch McConnell & Co. is busy re-fighting the New Deal.

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