Macro Roundup

read this new Tyler Cowen op-ed @ the bar at highway last night and almost spit out my beer. he is channeling your idea of talent being the limiting constraint (sadly doesn't reference you)

"... Venture capitalists will tell you that there are plenty of great ideas; what’s lacking is execution. There simply aren’t enough talented founders to go around....it also may help explain those negative yields. Consider this scenario: You are invested in German bonds at a negative yield. This is not a very attractive proposition. Yet maybe you are already heavily invested in German and U.S. stocks. And since stock markets move together more than before, due to globalization, you may be reluctant to raise your level of risk. Furthermore, in the U.S., by far the single largest equities market, the number of publicly traded companies has been shrinking dramatically. So you might seek out less correlated equity investments that will give you a higher return. In particular, you might consider investing in venture capital. That is one way of investing in new companies. But while new companies can eventually become highly profitable, most of them fail. Under one estimate of the return to venture capital, perhaps only 20% of funded projects succeed, and that is in the portfolios of the top venture capital firms. (The estimates vary considerably, but everyone agrees big winners are hard to come by.) Now consider a scenario from an alternate universe....there is a lot more talent for startups. When it comes to venture capital, rather than having 2 out of 10 companies do well, maybe it is 3 out of 10, with more mega-winners too. That brings a big increase in returns, roughly 50% more, if the new talent is proportional in impact to the old. Under this scenario, capital would flow out of negative yield securities and into the venture arena, or into other ways of starting and funding new companies. It is then probable that yields on government securities would move into positive territory, to attract the funds from portfolios. In other words:The great stagnation in returns stems from a stagnation in finding and mobilizing talent. There are plenty of lamentations about how the world is squandering human potential. There are also numerous hand-wringing discussions about negative yields. Rarely, however, does anyone note that these two problems are related: They reflect an imbalance between how well we mobilize human and non-human resources.I am not suggesting that the shortage of talented labor is the only reason for negative nominal yields. But the negative yields are now so widespread that they can no longer be dismissed as an aberration. It is also noteworthy that the U.S. has the most developed venture capital markets in the world, and it has not yet moved into negative yield territory.I agree with the notion that negative yields are the result of larger structural forces. That’s precisely why the best way to think about them is not in purely financial terms but as a symptom of the difficulty of finding talent...."

also reminded me of a Brynjolfsson's paper that echoed the same thing that found the "genius' share" (so talent's share, defined as the top 3% of all US labor income * by the total US non-financial corporate labor income) ) of income increased from a nadir of 6.7 percent in 1984 to a peak of 31.4 percent in 2006. (included that as a updated citation for your chapter)

Seth G. Benzell and Erik Brynjolfsson, "Digital Abundance and Scarce Genius: Implications for Wages, Interest Rates, and Growth," National Bureau of Economic Research, February 2019, https://www.nber.org/papers/w25585

Tyler Cowen, "How a Labor Shortage Could Explain Negative Interest Rates,"Bloomberg, September 13, 2019, https://www.bloomberg.com/opinion/articles/2019-09-13/negative-interest-rates-could-their-cause-be-a-labor-shortage

“…Whistleblowers call it fraud. The secret to the school’s 98% graduation and 90% Regents pass rate, they say, is simple: “Cheat!” Four teachers told The Post that the 2,100-student high school — awarded a prestigious National Blue Ribbon in 2018 by the federal secretary of education — has an unwritten but iron-clad “no-fail policy,” even for kids who repeatedly don’t do the work or even show up. “Teachers are not allowed to fail students,” a staffer said….”

Susan Edelman, "Maspeth High School’s secret to high pass rates is cheating: teachers,"New York Post, September 14, 2020, https://nypost.com/2019/09/14/maspeth-high-schools-secret-to-high-pass-rates-is-cheating-teachers/

Maspeth High School’s secret to high pass rates is cheating: teachers

At highly rated Maspeth High School in Queens, students know they can play hooky, skip course work, flunk tests — and still pass.

They call it the “Maspeth Minimum,” meaning everyone gets at least the minimum grade or score needed to pass or graduate, no matter what.

Whistleblowers call it fraud. The secret to the school’s 98% graduation and 90% Regents pass rate, they say, is simple: “Cheat!”

Four teachers told The Post that the 2,100-student high school — awarded a prestigious National Blue Ribbon in 2018 by the federal secretary of education — has an unwritten but iron-clad “no-fail policy,” even for kids who repeatedly don’t do the work or even show up.

“Teachers are not allowed to fail students,” a staffer said.

One recent Maspeth graduate posted on Instagram about taking Mandarin in 11th grade, writing, “there was no way I should of passed that class.”

But in the end, someone raised the student’s failing grade just high enough to earn a credit.

“At the time, I didn’t believe in the ‘maspeth minimum’ thing but I almost never showed up to class and vividly remember having multiple 0’s on quizzes I never took,” the student wrote. “My average was a 45 and then magically turned into a 65 when my report card came in.”

In other statements and documents brought to City Councilman Robert Holden of Queens, teachers blow the whistle on various alleged grade-fixing scams. Some of the described schemes, Holden said, “could be considered criminal.”

“The ‘gangster’ culture in the school’s leadership needs to be investigated,” Holden, whose district includes Maspeth, wrote to Special Commissioner of Investigation for city schools, Anastasia Coleman.

Principal Khurshid Abdul-Mutakabbi, who founded the school in 2011, did not respond to an email seeking a response.

Among the allegations raised to both Holden and The Post:

Administrators strong-arm and intimidate faculty into passing all students.

Teachers face “retaliatory” evaluations or trumped-up disciplinary charges — and fear losing their jobs — if they don’t cooperate, whistleblowers said.

“You are called in about kids who are failing. The message is, ‘Make sure you pass them,’” a teacher said. “You know you have to change the grade.”

Another teacher recalled a student who didn’t have to worry about flunking even after flubbing his course and blowing off a last-minute “makeup packet.”

“I felt forced to pass him,” his teacher said, admitting, the act of self-protection felt wrong. “I think it’s unethical. I think it’s a disservice to students.”

Fake classes were “taught” last year by Assistant Principals Jesse Pachter and Stefan Singh, teachers charge.

Some of the “classes” were scheduled during phantom periods 00, 9 and 10, records show. Students didn’t attend the nonexistent sessions, but got credits toward graduation, the teachers said. Pachter and Singh did not reply to emails.

Enlarge ImageAssistant Principal Stefan Singh outside the school.Helayne Seidman

Truant students for real classes also got a pass.

Last school year, at least four students were marked absent all day for four to five months, records show, but were allowed to join the June 26 commencement ceremony.

Difficult students are allowed to skip classes and graduate a year early.

This happened last year with two juniors deemed too difficult to handle, teachers said.

On a tape recording obtained by a staffer, one student calls the secret arrangement “illegal.” Another youth says, “They gave up on us.”

A teacher confirmed, “They whisk them out as quickly as possible because they don’t want to deal with them.”

Teachers proctoring state Regents exams allegedly gave kids answers.

They accomplished this in different ways. For instance, kids with special-ed plans can have the questions and answer choices read aloud to them, but some proctors signaled the right answers by their tone of voice, teachers said.

One student wrote in a statement that Maspeth teacher and dean Danny Sepulveda reread the questions at the end of the exam.

“But while he was reading it he was only saying the right answer choice, and this made me uncomfortable because it showed he didn’t believe in me to pass the exam,” the teen wrote.

In another statement, a student wrote that during the math Regents exam in June 2018, Sepulveda and math teacher Chris Grunert “helped me and other kids in my room with answers.”

Enlarge ImageMaspeth teacher Chris GrunertHelayne Seidman

“So in September I was put in the next math class and sat the whole year not knowing how to do anything,” he adds. “I should have been learning the same stuff over again. Now I don’t feel ready at all for what’s next, witch is college, and many others feel like this.”

School staffers changed wrong test answers to right ones, teachers charged. Some school staffers erased incorrect test answers, which are written in pencil, and corrected them, teachers charged.

“I’ve seen teachers literally change answers on a Regents exam,” one said.

Sepulveda has defended giving kids the points they need to pass, telling fellow staffers it’s unfair to hold them back, a whistleblower alleged. Sepulveda allegedly called state tests “the antichrist.”

On Saturday, Sepulveda declined to comment. “I have nothing to say, I apologize,” he told The Post. Grunert could not be reached.

Administrators turned a blind eye to student dishonesty.

“Kids blatantly copy other students’ homework assignments. Copying and cheating are rampant,” a teacher said.

“If you bring it to the dean, nothing happens. Discipline is laughable. There’s no consequences for misbehavior, for disrespecting teachers, or for cheating.”

The allegations threaten to shatter Maspeth HS’s top-notch reputation.

US Education Secretary Betsy DeVos named Maspeth a 2018 National Blue Ribbon School, the highest honor the feds bestow upon schools.

“It’s a facade,” a teacher said of the honor.

Said another, “I had to stifle a laugh.”

Then-state Education Commissioner MaryEllen Elia in June named Maspeth one of 562 Recognition Schools in 2018-19 for “high academic achievement, student growth and graduation rate.”

According to the latest state data available, 99% of all Maspeth students graduated in four years in 2018. The city’s overall average is now 76%.

That year, 73% of Maspeth kids received a Regents diploma, which requires a passing 65 score on five exams. Another 35% received an advanced Regents diploma, which requires more challenging courses and passing nine exams.

But zero students received a “local diploma,” given only to special-ed students who score 55 to 65 on five exams.

Teachers called it “highly unusual” — and suspicious — that all special-ed students got a regular Regents diploma.

While 97% of Maspeth’s general-education students passed their Regents exams, an impressive 61% of special-ed kids did, too. But teachers contend those results were inflated.

The pressure on faculty led to about 15 teachers leaving Maspeth HS in each of the last two school years.

Holden, whose district includes Maspeth, met over the summer with a group of former teachers to discuss the allegations and review records. He then sent a letter dated Aug. 7 to SCI Coleman, urging immediate attention.

Coleman declined to comment, but Holden learned her office referred allegations to the city Department of Education’s own investigative arm.

“We take any allegation of academic misconduct very seriously, and there are strict protocols in place to ensure complaints are reported, investigated and addressed. These allegations are currently under investigation,” said DOE spokeswoman Danielle Filson.