The Real Reason for College Tuition Increases

The past year has seen a wave of protests by California’s public university students against tuition increases. These students have often been encouraged by their professors. But maybe the people encouraging them are the people they should be protesting against. Tuition increases are necessary because of increasing expenses, and the single most significant source of expenses in California’s university system are the personnel costs. So how much does a professor make? Could the solution to California’s higher-education budget crisis be not to raise tuition, but instead to lower rates of compensation?

It isn’t hard to get an idea what taxpayers and students end up paying our college personnel. One can refer to the Sacramento Bee’s “Search for State Worker Salaries” link, where you can enter the first and last name of a full time state university system employee and it will display their salary for the most recent year. For this analysis, I went to a department website and got the name of an associate professor with one of the social sciences at U.C. Davis, and learned that this individual earned a salary of $89,467 last year. According to the department website, this associate professor earns $89K per year in return for teaching (this spring quarter) one class, that meets for two hours on one afternoon per week. The professor is also obligated to be available to his students for office hours for one hour per week, immediately after class.

Clearly there is [...] Read More

An Environmentalist Agenda for Earth Day 2010

Back in 1970 when we celebrated the first Earth Day, what would we have thought if we had known what environmentalism would become by 2010? Back then I was in 7th grade, and an avid member of my Junior High School’s “ecology club.” We planted trees, collected litter, and painted all the garbage cans on campus green, among other things. And back then, as now, the teachers were enthusiastically encouraging the students to care about the planet.

The results ensuing in the 40-50 years since “Silent Spring” was written and the first Earth Day was celebrated are impressive. When I grew up in California’s Santa Clara Valley in the 1960′s, on a bad air day you couldn’t see the Santa Cruz Mountains five miles away. Then we got rid of unleaded gas and mandated catalytic converters and today, with ten times as many people living in what we now call the Silicon Valley, there is never more than a faint wisp of smoggy haze, even on the worst days. We cleaned up our rivers, got rid of acid rain, saved the Condor and countless other magnificent wildlife species, and on and on and on. And then we went too far.

Today environmentalism is run amok. It is the creator of artificial scarcity, the enabler of the very corporate greed its denizens naively decry, it is a faith and a religion, an ideological smokescreen for statism and socialism, and it has lost most of its connection to the original values we [...] Read More

Fiscal Conservatism is Social Justice

Back in the 1980′s I listened to a speech by Art Laffer, who at the time was still a USC professor of economics, and was considering a run at one of California’s U.S. Senate seats. He said something that needs to be said more today, in reference to the running argument between liberals and conservatives over the role of government – he said “we both want the same thing.” Liberals and conservatives both want increased prosperity, and both want social justice. While a cynic might dispute this assertion, most of us probably agree. Well-intentioned people on both sides of the political divide want the same positive outcomes, they only disagree on how to get there.

The problem for fiscal conservatives today to convince voters they really mean this (notwithstanding the fact that few of them have the courage of their convictions, as the Bush II administration amply demonstrated) is mainly because it’s a harder rhetorical argument to express. After all, isn’t the role of government to redistribute wealth? And therefore, of all things, shouldn’t this redistribution be designed to help the less fortunate? The communist extreme, “from each according to their ability, to each according to their needs” is a much easier rhetorical argument to make. It is virtuous to suggest that government should help people in need, and it is easy to assail anyone who argues against further empowering government to perform this role.

One would think the complete collapse of communism in Russia and China would provide a [...] Read More

Implementing California’s Global Warming Act

In 2006 California’s legislature passed AB32, the “Global Warming Solutions Act,” a measure that was touted as a trailblazing breakthrough in the dire challenge to avoid catastrophic climate change. Enthusiastically signed by Republican Governor Schwarzenegger, with “early action” measures diligently enforced by Attorney General Jerry Brown, praised by climate crusader Al Gore, this legislation became the model for the world to follow. But the devil is in the details.

In the Spring of 2007 California’s Air Resources Board (CARB) got to work on an implementation plan, in order to fulfill the legislative mandate to have AB32 fully enforced by 2012. Three years later, after countless public hearings, meetings with industry leaders, and endless legal, economic, and scientific analysis, CARB has a lot to show for their effort. CARB has produced so much material, in fact, that it is impossible to briefly summarize the myriad regulations that AB32 has already spawned. Implementation of AB32 will dramatically impact pretty much every aspect of human activity.

The premise behind AB32 is that CO2 is a dangerous pollutant, and that virtually eliminating CO2 emissions is necessary to prevent the planet’s climate from overheating, with all the apocalyptic consequences; rising oceans inundating coastal regions, epic droughts cascading through the world’s fragile forests and killing them, extreme storms, acidic oceans, collapsing agriculture – the end of life as we know it.

If you accept this premise, than the goals AB32 sets forth are perfectly [...] Read More

Will California’s Voters Reject their Global Warming Act?

A citizen’s initiative that looks likely to make it onto the November ballot this year is the aptly named “California Jobs Act,” which would suspend implementation of AB32, California’s Global Warming Act, until unemployment in the Golden State drops down to 4.8%. Passed in 2006, AB32 calls for California’s Air Resources Board (CARB) to write new regulations designed to lower, by 2020, California’s greenhouse gas emissions to 1990 levels. According to CARB’s report “California 1990 Greenhouse Gas Emissions Level and 2020 Emissions Limit,” in 1990, Californian’s emitted 433 million metric tons of “CO2 equivalents” in 1990, and by 2004 these greenhouse gasses had increased to an estimated 484 million metric tons.

Back in 2006, when AB32 was passed by California’s State legislature, and signed by Governor Schwarzenegger, California’s economy was at the crest of the debt-fueled housing-bubble boom. Now that California’s unemployment rate is nearly 13%, the highest in the nation, it is dawning on California’s voters that schemes to go it alone and adopt the bleeding edge of climate mitigation policies may not be the best prescription for economic recovery. Notwithstanding promises of abundant “green jobs,” and visions of a prospering “green economy,” what is most likely to be the economic outcome if California fully implements AB32 by 2012 as planned?

There are several examples surfacing that suggest CARB’s original economic assessment was overly optimistic. An [...] Read More

Pension Funding & Rates of Return

In a March 18th interview (view video), California Gubernatorial candidate Meg Whitman expressed the problem with pensions quite accurately, stating “there is a current period cost of pensions, and that cost is only going to increase.” Whitman went on to say that CalPERS may lower the long-term rate of return they use for their pension fund earnings projections. One of the solutions Whitman offered to California’s pension crisis was to suggest California’s non-safety employees defer retirement from the current age 55 to age 65, and also for California’s non-safety employees to contribute 10% of their salary to their pension fund instead of 5%. How much will this help?

If we assume these reforms are applied at the local level as well – since most public employees in California work at the local level – the calculation of savings based on doubling the average employee contribution from 5% to 10% is fairly straightforward. There are about 1.6 million non-safety, non-federal public employees in California, and their average salary is $60,000 per year. If you take 5% of that, $3,000, and multiply by 1.6 million, you get nearly $5.0 billion per year in savings to the taxpayer. Is this significant? Will this help?

To answer this question, the biggest variable by far is what rate of return you calculate for the pension funds themselves. To illustrate this, consider the impact of Whitman’s other proposal, to raise the retirement age from 55 to 65 years old. As the table [...] Read More