Macro Roundup

Mike Gonzalez, "Carranza’s ideology insults the people he claims to help,"New York Post, June 17, 2019, https://nypost.com/2019/06/17/carranzas-ideology-insults-the-people-he-claims-to-help/

Carranza’s ideology insults the people he claims to help

The academic achievement gap in education in New York City has a face: the goateed visage of Chancellor Richard Carranza. He personifies the damage the ideological radicalization of education schools does to our children.

To be sure, black students and those with Latin American ancestry lagged their white and Asian peers long before Carranza arrived. Cultural factors, such as rates of divorce and out-of-wedlock birth, partially account for this. Compounding these factors are lousy classroom discipline, unaccountable teaching and other failures that plague inner-city school systems.

But Carranza has no time for all that. He pins most of the blame on “structural racism.” And if racism is solely to blame, then the solution is ideological, not a matter of better family models, teaching or school leadership.

Thus, Carranza would destroy the city’s eight selective high schools by removing colorblind exams. Instead of the much tougher work of uplifting minority children to standards of ­excellence, he wants to banish excellence itself.

Plus, he is submitting teachers to re-education sessions to stamp out the “white-supremacy culture” he sees lurking behind every subconscious corner.

One of the consciousness-raising exercises that Carranza has forced principals to sit through identifies several “white-supremacy” hallmarks that educators in New York City are to avoid henceforth. Among these are “perfectionism,” “worship of the written word,” ­“either/or thinking,” “individualism,” ­“objectivity” and a “sense of ­urgency.”

With the zeal of a modern-day Thomas Cromwell, Carranza says of the struggle sessions: “It’s good work. It’s hard work.” Its critics, he maintains, need re-education the most.

One has to have years of indoctrination at a teachers’ college to miss the enormity of the insult.

Believing American students with ancestry in Indonesia, ­Nigeria or Uzbekistan can’t develop a love of poetry, petrochemical engineering or natural law marks a return to Jim Crow thinking. Perfectionism and love of reading are human traits, as evidenced by the fact we have all perfected our way from the Stone Age and now read on hand-held tablets.

All of these traits contribute to academic and lifetime success. Without striving for perfection, a person will accept shoddy work; love of reading will lead to learning; linear thinking makes a person try to work through contradictions.

Sadly, Carranza isn’t an outlier. Many aspiring educators have had leftist agitprop drilled into them at schools of education, and Carranza got his woolly beliefs at the University of Arizona’s College of Education, where he graduated in 1991.

“I remember the lessons I learned about bilingual education, equity and access for all students, lessons I draw upon in my day-to-day work as a superintendent,” he told the school’s alumni publication. “It is fundamentally what shaped me as an educator.”

That’s the problem. In a major report released earlier this year, the James G. Martin Center for Academic Renewal found that the colleges that teach our teachers have become veritable factories of leftist indoctrination.

“Teacher education has become one of the most politicized corners of academia, an institution that is already out of step with the rest of the country politically,” said the report. ­“Education schools are leading the charge to ‘transform’ the nation, and that transformation is not leading us to a better, freer, more prosperous, more humane society.”

The Martin Center study found that “faculty and authors who are on the fringes of political thought in the general public and who advocate that the purpose of education is to transform society according to their radical visions are the most frequently assigned writers in some of the most prominent schools of education.”

Abandoning respect for the written word would certainly go a long way toward transforming a republic based on written documents and a society grounded on sacred scripture. But Carranza’s job is to shrink the achievement gap in a massive school system that is 41% Hispanic, 26% black and 16% Asian. Developing a love of the written word could only help elevate those lagging behind.

Discrimination is an unfortunate reality everywhere, and it stings those on the receiving end. The success of Chinese Americans and Indian Americans means, however, that racism alone can’t explain the achievement gap. But discrimination is all Carranza sees; none of Carranza’s initiatives will thus improve students’ educational attainment. They will only hold them back further.

"...The yield on 10-year Treasurys has fallen to 2.12% this month from 3.24% in November 2018—perhaps due to the rush of foreign earnings repatriated after the 2017 federal tax cuts, the inflow of foreign capital attracted by the surge in U.S. growth, or the fall in domestic investment triggered by massive trade uncertainty. In the past month banks have increased excess reserves by more than $64 billion at the same time the Fed reduced overall bank reserves by selling $33 billion of assets. To prevent an outright contraction of the money supply and the economic disruption it could cause, the FOMC will be forced at its Tuesday meeting either to reduce dramatically the interest the Fed pays on reserves or end its debt wind-down and begin buying securities in the open market. The Fed will likely also cut the upper limit of the fed-funds rate to signal its goal of further monetary easing. Never in the Fed’s 105-year history has it had less control over market interest rates than it has today. As long as the Fed maintains its bloated balance sheet and the banking system holds massive excess reserves, the Fed will be required to respond to changes in market rates by either adjusting the rate it pays on reserves or using other policy tools to offset the impact market-rate changes have on bank reserve holdings and the money supply. To expect the Fed to hold interest rates above or below the market rate under these circumstances is not only naive but dangerous...."

Phil Gramm and Thomas Saving, "Has the Federal Reserve Lost Its Mojo?,"Wall Street Journal, June 17, 2019, https://www.wsj.com/articles/has-the-federal-reserve-lost-its-mojo-11560813464

The central bank has less control over market interest rates today than at any time in its history.

When the Federal Open Market Committee’s meeting concluded last month, reporters focused on the federal-funds rate, announcing that it would be held constant at 2.25% to 2.5%. Unnoticed by even the financial media, and unmentioned in the lead section of the FOMC’s statement, was its decision to cut the interest rate the Federal Reserve pays on bank reserves—a rate that, unlike the fed-funds rate, still has a direct effect on the money supply. The Fed cut the rate paid on reserves because the market yield on one-year Treasurys had fallen below it, inducing banks to build up excess reserves. When banks expand reserve holdings, the money supply contracts—so the Fed was forced to act.

But it wasn’t enough. Because market rates have continued falling since the last FOMC meeting, even the lower rate that the Fed now pays on reserves is 0.35 percentage point higher than Friday’s yield on one-year Treasurys and 0.25 point above the yield on 10-year Treasurys. The return differential has caused banks to increase excess reserves by 5.5%, or $65 billion, over the past month. The size of these yield spreads and the buildup of excess reserves virtually guarantee that the Fed will again cut the interest paid on reserves at Tuesday’s FOMC meeting.

The rate paid on reserves receives too little attention. As a result of the unprecedented monetary easing of the Obama era, when the Fed bought or offset 45% of all federal debt issued—more than five times the amount it bought to support the World War II effort—commercial banks now hold massive excess reserves. By paying interest on reserves, the Fed effectively converted them into income-yielding assets, giving banks an incentive to hold excess reserves instead of expanding credit and the money supply. As banks became awash in liquidity, they all but stopped engaging in borrowing and lending in the overnight fed-funds market. The fed-funds market has contracted 80% since 2008, meaning the fed-funds rate has almost no direct effect on monetary policy.

The rate the Fed pays on reserves has eclipsed the fed-funds rate as its key monetary tool, with a much more direct influence over the money supply. If the interest rate on reserves is set near the market rate, other things being the same, the money supply will remain unchanged. If market interest rates rise above the rate the Fed pays on bank reserves, banks will expand loans, and the money supply will increase. If the Fed sets the rate it pays on reserves above the market alternative for banks, they will expand their excess reserve holding and the money supply will shrink.

Before the Fed started paying interest on reserves, and before banks held more reserves than they have demand deposits outstanding, the money supply changed when the Fed acted. Now when market rates change, the money supply also changes unless the Fed acts.

As the Fed acquired assets in its three monetary easings, the interest it paid on the reserves induced banks to hold the resulting excess reserves pumped into the banking system. Reserves then earned an average of 0.095 percentage point more than the yield on one-year Treasurys. After quadrupling its balance sheet over eight years the Fed started to sell down the assets on its balance sheet in October 2017. The Fed sold off Treasurys and mortgage-backed securities, and set the rate it paid on reserves so that one-year Treasurys paid 0.43 percentage point more than reserves and 10-year Treasurys paid 1.08 points more.

As a result, banks reduced their reserve holdings enough to offset the effects of Fed asset sales on bank reserves and the money supply. In what was a clear policy success, in the first year of its asset-reduction program the Fed managed to sell $300 billion of assets and induced banks to reduce excess reserves by $467 billion. This expanded the money supply modestly without disrupting prices or spiking interest rates.

The yield on 10-year Treasurys has fallen to 2.12% this month from 3.24% in November 2018—perhaps due to the rush of foreign earnings repatriated after the 2017 federal tax cuts, the inflow of foreign capital attracted by the surge in U.S. growth, or the fall in domestic investment triggered by massive trade uncertainty. In the past month banks have increased excess reserves by more than $64 billion at the same time the Fed reduced overall bank reserves by selling $33 billion of assets.

To prevent an outright contraction of the money supply and the economic disruption it could cause, the FOMC will be forced at its Tuesday meeting either to reduce dramatically the interest the Fed pays on reserves or end its debt wind-down and begin buying securities in the open market. The Fed will likely also cut the upper limit of the fed-funds rate to signal its goal of further monetary easing.

Never in the Fed’s 105-year history has it had less control over market interest rates than it has today. As long as the Fed maintains its bloated balance sheet and the banking system holds massive excess reserves, the Fed will be required to respond to changes in market rates by either adjusting the rate it pays on reserves or using other policy tools to offset the impact market-rate changes have on bank reserve holdings and the money supply. To expect the Fed to hold interest rates above or below the market rate under these circumstances is not only naive but dangerous.

Report you asked about

"....Education school syllabi were obtained from three leading schools of education: the University of North Carolina at Chapel Hill, the University of Michigan, and the University of Wisconsin at Madison. Recommended and assigned reading selections were quantified to discover the most popular authors. The results are unequivocal: the “long march” through the education schools has been successful; the most influential thinkers in our education schools are political radicals intent on transforming the nation to a collectivist, utopian vision.....There were 101 such reading selections in all. Of them, 33 (the first category in the chart) merely used the word “science” but were not,in fact, about science or science pedagogy. One example of a non-scientific work is from Michigan’s ED 516: “Montessori, The Science Behind the Genius.” Of the remaining 68 reading selections, 27 had titles that demonstrated some clear political intent.....The other 41 titles that included a variation of the keyword “science” were straightforward and betrayed little or no hint of politicization, such as a selection from UNC’s EDUC 504, “How Students Learn: History, Mathematics and Science in the Classroom.” While these reading selections’ titles may be apolitical, their contents may not be. One example is a book by Mario Biagioli, recommended in Michigan’s EDUC 830, with the innocuous-sounding title of The Science Studies Reader. The table of contents reveals a lengthy list of contributors, nearly all of whom can be identified as belonging to the political left, including French sociologist and philosopher of power relations Pierre Bourdieu. Many contributors were influenced by other French leftists, particularly Michel Foucault.....

Jay Schalin, "The Politicization of University Schools of Education," The James G. Martin Center for Academic Renewal, February 20, 2019, https://files.eric.ed.gov/fulltext/ED594180.pdf

“…Between 2011 and 2017, most states increased the percentage of 8th graders who met Proficiency. Only eight lost ground in reading, while 30 did so in math. However, if the SSII focused on the marginal students, using the more appropriate Basic benchmark, the picture looks bleaker. In reading, 28 states had fewer students reaching Basic, as did 44 in math. To the degree these 8th-grade tests reflect high school progress, using the “Basic” benchmark that focuses on marginal students makes the grad-rate increases look hollow….”

Nat Malkus, "The Problem with a 90% Graduation Rate,"Real Clear Education, June 19, 2019, https://www.realcleareducation.com/articles/2019/06/19/the_problem_with_a_90_graduation_rate_110337.html

The Problem with a 90% Graduation Rate

Last week, America’s Promise released its 2019 “Building a Grad Nation” report monitoring the nation’s progress toward a 90% public high school graduation rate. It celebrated the progress made between 2011 and 2017, wherein each year saw record graduation rates, and the percentage of non-graduates dropped by a quarter. It also implored greater focus, noting that to meet its goal by 2020, schools would have to double their rate of progress.

A 90% goal is nothing if not ambitious, as it would cut the percentage of non-graduates by more than half in ten years. America’s Promise wants more students—especially marginal students at the greatest risk of dropping out—to leave school “prepared to immediately enter postsecondary education or the workplace.” So do we all, but ambitious statistical targets like a 90% graduation rate, especially when sought quickly, are dangerous because they are as likely to produce empty victories as improved outcomes, especially for the marginal students the targets are purported to help.

One reason a 90% target is problematic is because all graduation requirements aren’t equal, and therefore, neither are graduation rates. Kentucky, the state with the 4th-highest grad rate in 2017, at 89.7 percent, is an excellent example. So close to the 90% goal, it may seem odd that Education Commissioner Wayne Lewis recently sought to toughen the state’s graduation requirements, which would inevitably send grad rates lower. The problem is that Kentucky’s graduation requirements are so weak that more than a third of graduates get a meaningless diploma, one that does not come with the “skills necessary to succeed in college or the workplace.” Lewis is rightly prepared to knowingly forego Kentucky’s enviable spot on the road to 90%, precisely because maintaining it would allow more, not fewer, graduates to leave school unprepared.

Of course, most states have more rigorous graduation requirements, and lower grad rates, than Kentucky, and I worry that these may be willing to lower the academic bar, especially for struggling students, to meet ambitious graduation rates targets. The authors of the America’s Promise report address this head on with a new Secondary School Improvement Index (SSII), which combines states’ increases on 8th-grade math and reading proficiency on the National Assessment of Educational Progress (NAEP) and Advanced Placement (AP) test passage, as a check on whether graduation rates are rising alongside—rather than in spite of—other indicators. They find little evidence “that increases in high school graduation rates have come at the expense of academic outcomes and levels of postsecondary preparation.”

Unfortunately, their conclusion is unconvincing. The SSII is rife with problems. The scores largely align with their grad-rate increases, with a moderate correlation of 0.6, but that is wholly because the grad-rate increases are part of the index. If the index took grad-rate growth out of its index, and compared it to just test scores and AP passage increases, the correlation would fall below 0.1.

Now, 8th-grade NAEP is a lousy indicator of high school quality, chosen more for its availability (12th-grade NAEP scores aren’t available at the state level) than its value. However, if America’s Promise had to use NAEP, the SSII should have used the percentage of students scoring above “Basic” (Proficiency is a relatively high standard), which is a score closer to the floor of graduation requirements in most states. In familiar terms, scoring Proficient on NAEP means you are at least a B+ student, not the marginal students we typically worry will drop out; scoring Basic means you are a solid C. And in the end, it’s the states that can push more marginal D students to solid C territory that will legitimately raise graduation rates.

Between 2011 and 2017, most states increased the percentage of 8th graders who met Proficiency. Only eight lost ground in reading, while 30 did so in math. However, if the SSII focused on the marginal students, using the more appropriate Basic benchmark, the picture looks bleaker. In reading, 28 states had fewer students reaching Basic, as did 44 in math. To the degree these 8th-grade tests reflect high school progress, using the “Basic” benchmark that focuses on marginal students makes the grad-rate increases look hollow.

Focusing attention on these marginal students is vital if we want to see higher graduation rates and more students prepared for the future. These marginal students need the most assistance, are the most expensive to educate, and are the most likely to see the bar lowered. What’s more, these students are clustered in a subset of high schools. The report notes that the 12% of high schools with extremely low graduation rates account for 30% of non-graduates. The bulk of the pressure to reach a 90% graduation rate, through legitimate or illegitimate means, falls on these students and schools.

To its credit, the report does flag concerns about graduation rate inflation, recommending that we “probe deeper on credit recovery programs”—accelerated make-up courses which have a long anecdotal record of abuses. That concern is appropriate, as schools with the highest credit recovery participation displayed an array of student disadvantages and poor student outcomes, but still managed to post higher average graduation rate increases than schools with less credit recovery, for four years running.

Despite this brief note of caution, the report’s hard push to increase graduation rates is problematic precisely because its SSII is such a halfhearted check on lowered expectations. On net, it pumps up pressure for better numbers, without serious attention to what those numbers mean. To get schools to graduate more prepared students, scorekeepers like America’s Promise need to put more earnest attention to how schools prepare more marginal students for life after high school, or they may meet their target without reaching their goal.