These are America’s least valuable college degrees

I just came across an amusing-verging-on-horrifying list at The Atlantic (channeling PayScale) about the least valuable colleges and majors in the United States. Put simply, the chart below shows how much students pursuing these majors at these colleges can expect to have earned, on average, twenty years after graduating.

Least Valuable Colleges + Majors list

Least Valuable Colleges + Majors

Clearly, college is not always a great investment. That’s not to say education is worthless in and of itself, or that studying Arts at Murray State University is a waste of time, or even that growing one’s income potential is the most important reason to go to college. But at the very least, students should inform themselves about how others have fared after graduating from their college or, more specifically, their academic program — especially if they are financing their education with student loan debt or have no concrete plans for employment after graduation.

Is American entrepreneurship dying?

The Brookings Institution reported on Monday that the American economy is less entrepreneurial than at any point in the last three decades. See chart below:

Washington Post Chart


The report continues:

…recent research shows that dynamism is slowing down. Business churning and new firm formations have been on a persistent decline during the last few decades, and the pace of net job creation has been subdued. This decline has been documented across a broad range of sectors in the U.S. economy, even in high-tech… if it persists, it implies a continuation of slow growth for the indefinite future, unless for equally unknown reasons or by virtue of entrepreneurship-enhancing policies (such as liberalized entry of high-skilled immigrants), these trends are reversed.

Given the Bush and Obama administrations’ insistence on trickle-down, faux-recovery policies that inflate asset prices at the expense of small-time entrepreneurs, these results are not surprising. But the authors of this report don’t seem privy to this elementary insight when they write:

Whatever the reason, older and larger businesses are doing better relative to younger and smaller ones.

“Whatever the reason”…not that a steady piling on of regulatory compliance costs (a la Obamacare) has anything to do with keeping young firms out of the market. But of course, these authors don’t cite such costs a single time in their report. Instead, they blame tough immigration laws (go figure). If only we had more entrepreneurial immigrants, they say, our problem would be solved. But of course, this doesn’t address the problem — it’s like your mechanic proposing a new car as a fix for your broken old car, which shouldn’t be broken in the first place.

Thoughts on the White House Climate Change Report

The White House released a big climate change report today. I’m skeptical. But I’m also skeptical of climate change skeptics. I really don’t know what to think about all this.

Some highlights from the report:

  • A regional breakdown of climate change’s effect on different parts of the United States.
  • Explicit blame for drastic climate change on “human activities, predominantly the burning of fossil fuels.”
  • Special emphasis on water quality, water supply reliability and agriculture as potential victims of climate change.
  • Of course, the inadequacy of current “adaptation and mitigation” and the need for better preparedness via federal laws regulating emissions for vehicles, appliance and building efficiency and financial incentives for alternative fuels and technology.

The report uses temperatures from 1895 onward. This seems like a pretty small sample size to me. 100 years is a long time, but the climate has been changing since the planet was formed. That said, the report states temperatures were not recorded until 1895…oh well.

Another recurring question I have in response to news of climate change regards the possible benefits of a warmer planet — more farmable land, longer frost-free growing seasons, etc. Climate change poses a threat to the status quo, but what are the possible benefits of “global warming”? Maybe the benefits pale in comparison to the dangers, but aren’t they at least worth mentioning in a “scientific” report?

I’m a beginner when it comes to climate change. I know that anything resembling an “objective” analysis is almost impossible to find given the political ramifications inherent in the issue. But I’m also hesitant to dismiss evidence of global warming considering the disastrous outcomes its proponents predict.

Quote of the Day: Doug French

From Doug French, writing in The Freeman:

With a sound currency a person could put a few bucks away in a savings account each month, confident its purchasing power would keep pace and the interest earned provide an adequate nest egg, all the time being blissfully unaware of what was happening on Wall Street. But in the modern world, Hulsmann writes, people “become dependent on intermediaries and on the vagaries of stock and bond pricing.”

This is great for Wall Street players and bad for everyone else.

Quote of the Day: Henry Hazlitt

From Chapter 1 of Hazlitt’s Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. Nine tenths of the economic fallacies that are working such dreadful harm in the world today are the result of ignoring this lesson.

Tyler Cowen predicts the future

Tyler Cowen, writing in the New York Times on July 20, 2013, accurately predicts the future:

If you’d like to know where American political debates are headed, the data suggest a simple answer. The next major struggle — in economic terms at least — will be over whether taxes on personal wealth should rise — and by how much.

He goes on to cite a study by Thomas Piketty, who was little-known outside of economic circles back then.

On a related note, I read this Bloomberg report today contrasting the booming luxury home market with lagging demand for middle-class property. I think this is evidence of faux-recovery — Fed stimulus has succeeded in inflating stock prices (92 percent of the value of directly-held stocks is owned by the top 13 percent of households), but done little to create new middle-class jobs (as yesterday’s jobs report indicates) or bring about any substantial relief for the rest of us.

Quote of the Day: Don Lavoie

From page 16 of economist Don Lavoie’s National Economic Planning: What Is Left?:

…what is wrong with these policy debates is precisely that they do not dare to be utopian enough. That is, they confine their attention to minor modifications in the establishd and badly rusted out political machinery instead of trying to imagine the substitution of a fundamentally different approach altogether. What is needed is a radical perspective, both in addition to a scientific perspective and as a logical consequence of it. We need to locate the root cause of the social maladies we have endured and stop combating their symptoms.

Jobs report gains, LFPR loses

MarketWatch is reporting that the U.S. economy added 288,000 jobs in April. Numbers for February and March were both adjusted up based on new data. The unemployment rate is now 6.3% — lowest since September 2008.

I’ve written before that the Fed had turned reports like this into red flags for markets. Investors feared an end to stimulus more than they rejoiced at news of added jobs. But I expect things to be different this time around, as the Fed dropped their 6.5 percent unemployment threshold (which signaled the beginning of taper) in mid-March, choosing instead to use a more holistic and “qualitative” view of unemployment to gauge the health of the economy and signal an end to stimulus.

Today’s jobs report also revealed that the labor-force participation rate (LFPR) has dropped to a 35-year low. Business Insider’s Sam Ro writes, “Bottom line, the drop in unemployment is not just about job creation; it’s also about fewer people looking for work.”

I’m not saying the economy isn’t actually improving or that today’s good news is nothing to be exciting about. I just want to emphasize the importance of examining other associated metrics when the unemployment rate is published. After all, if the LFPR falls ceteris paribus, the unemployment rate will decrease despite a net decrease in the number of Americans who are employed.

Quote of the Day: Joe Salerno

The Mises Institute’s Joseph Salerno writes about Wednesday’s less-than-exciting GDP report:

…a Bloomberg reporter commented, “American consumers were a lone bright spot as households spent more to heat their homes and access health care.” In other words, if it were not for greater hardships that befell consumers, namely an unusually cold winter and a greater scarcity of health care, the U.S. economy would not have performed as well as it did in the first quarter of 2014. According to this topsy-turvy Keynesian logic, it would have been better for the U.S. economy if the winter had been even more severe and health care even more expensive, stimulating U.S. consumers to spend more trying to stay warm and remain healthy.

Hospital reform = health care consolidation?

My wife sent me this great article by health care reporter Lola Butcher. In it, Butcher explains why the traditional “volume-based” payment system for the general acute care hospital is “in its death throes.” In its place, hospital executives are exploring new business models that incorporate hospitals into a larger continuum of health care services, including both pre- and post-acute services, hospice and palliative care and even patient-centered medical homes that emphasize planned and consistent care over episodic inpatient treatment.

Indeed, regardless of payer mix, bed size or ownership status, the business model for American hospitals is in a time of upheaval. As health care moves from a volume-based payment system to one that rewards value — cost divided by quality — inpatient hospital utilization is no longer the breadwinner it used to be. In fact, emerging pay models discourage hospital use as much as possible.

Among several examples, Butcher cites Mountain States Health Alliance, which is in the middle of a 10-year strategic plan to move away from a “hospitalcentric” business model to one based on managing population health and accepting financial risk. Some components of MSHA’s plan involve increasing outpatient and retail services to offset reduced inpatient revenues, establishing a community-based “accountable care organization” and, of course, reducing operating costs.

This is all interesting, but my question is: Don’t these services already exist elsewhere? Take a look around almost any hospital and you’ll find various clinics nearby delivering the full spectrum of health care services. What hospitals like MSHA are doing, then, is nothing more than consolidating the breadth of health care services under one financial roof.

Maybe I just don’t understand the benefits of this. I know that scale can help reduce costs (think Walmart), but I’m not convinced that this isn’t anything more than hospitals buying into enterprises that might be profitable on their own, but don’t change the fact that inpatient stays have become a moneysuck for hospitals and prohibitively expensive for many people. Think Facebook’s recent $19B buy of WhatsApp — a product Facebook says won’t be integrated with their flagship social networking service and does nothing in the way of solving Facebook’s other problems. In the end, the problems of rising costs and falling demand for inpatient stays remain, and it spells disaster for those of us (that is, all of us) who will need inpatient stays at some point or another.