A bridge to African self-reliance: The big bond

By Luisa Teixeira Felino, Brian Pinto

Virtually every strategic document for improving economic outcomes in sub-Saharan Africa—for example, Germany’s January 2017 Marshall Plan—lists the following priorities: creating jobs for Africa’s burgeoning youth, bringing women into the labor force, moving up the value chain to first processing rather than simply exporting commodities, improving food security, responding to climate change, and addressing the massive infrastructure deficit, especially in transport and power. These compelling goals overlap with the United Nations Sustainable Development Goals (SDGs) and the High 5s of the African Development Bank (AfDB). 

These plans also emphasize leveraging private sector resources and strengthening domestic revenue mobilization as essential to taking Africa forward.

But for this to happen, African governments have to put in place certain basics. These key lessons from emerging markets include keeping public debt sustainable and creating a solid foundation for long-run growth based on good governance, selfless leadership, and strong institutions. It is doubtful that the private sector will propel long-run growth in Africa in the prevailing environment. It is more likely to focus on short-term opportunities. Nor will ramping up domestic revenue mobilization yield the expected benefits absent ironclad assurances, now seriously lacking, that the government will use the money well.

A trillion dollars needed every year

At the same time, the development financing needs are vast. The U.N. Conference on Trade and Development 2016 Economic Development report for Africa notes that financing the SDGs could require investments of between $600 billion and $1.2 trillion per year. Infrastructure alone will cost $93 billion, of which Africa can raise only half. These are formidable numbers, especially in view of the constraints donors face as noted in an earlier companion blog post on the prospect of less concessional development finance.

Our working paper on the development and debt sustainability implications of less concessional finance identifies a three-pronged plan to propel Africa forward.

First, a relatively small amount of the official development assistance now going to Africa can be securitized to raise a sizable sum of money. Here’s the math: With the yield on the U.S. 30-year Treasury well below 3 percent, setting aside less than $5 billion per year for the next 30 years—about 11 percent of the annual $45 billion in grants now given to Africa—will enable $100 billion to be raised upfront via a big bond. While this sum is large in relation to current annual aid flows, it is small relative to the financing needs outlined above.

Second, this money can be on-lent using moderately concessional loans (MCLs). This will serve two purposes. First, it will lower the fiscal burden on donors as a portion of grants is converted into loans. Second, it will bolster debt sustainability, as MCLs will be superior to eurobonds and of far longer maturity than domestic market borrowing, which in many cases is at exceptionally high real interest rates.

There should be no automatic eligibility for these loans. Countries seeking access should be required to show that they have the absorptive capacity and a program for putting and keeping public debt on a sustainable trajectory. These conditions would apply to countries like Ghana, Mozambique, and Zambia, which have issued eurobonds and would therefore benefit from MCLs on cost and maturity grounds, must overcome serious, mostly self-inflicted, debt sustainability challenges. Others such as Guinea and Togo could demonstrate their commitment to reform, which then opens up access to finance for their ambitious public investment programs. With some countries still needing access to highly concessional finance, a two-tier approach will be needed, with the current performance-based allocation system targeted at countries not eligible for MCLs but with incentives for them to make the grade over time. Details are discussed in our working paper.

Third, there needs to be an enhanced policy dialogue. The current policy dialogue and aid allocation framework are not adequate. The new policy dialogue should utilize the International Monetary Fund and World Bank’s Debt Sustainability Framework and the World Bank’s Country Policy and Institutional Assessments. But it will need to be a lot more candid, with an explicit focus on governance, institutions, and leadership. Given the political sensitivity of these topics, this dialogue should be led by the AfDB as Africa’s development bank, in close collaboration with the IMF, World Bank and other development partners such as the African Union and New Partnership for Africa’s Development (NEPAD). Key topics should include public debt sustainability, growth policy, and prudent use of natural resource wealth, which now tends to be squandered.

In a fragmented region, the most fragile countries need special attention

The $5 billion set aside to service the big bond should not be at the expense of fragile countries, which should continue to benefit from highly concessional finance under the existing allocation rules. Regional infrastructure projects are an obvious way of using a significant chunk of the big bond’s proceeds, thereby helping reverse the arbitrary fracturing of the continent as exemplified by the 1885 Berlin Conference noted in Germany’s Marshall Plan report.

Such projects will benefit all countries, including the poorer ones. But there is a surprising lack of “shovel-ready” bankable regional projects. To some extent, this is a chicken-and-egg problem. Regional infrastructure projects are big by nature and need large sums of money to prepare. The $50-80 billion Grand Inga Dam project is an example, heralded as a venture that could power half of Africa. Yet it is also controversial; the World Bank suspended financing for it in July 2016. But even if all the engineering and environmental issues could be fixed, the Inga Dam is located in the Democratic Republic of Congo, with its weak governance and leadership.

Because of the imperative of integrating the continent, the governance challenge in Africa transcends the national, a fact recognized in the agendas of the African Union and NEPAD. Only Africa and its leaders can resolve coordination and governance issues. But donors can play a catalytic role. This should start with a brutally honest acknowledgement that the present system governing official development assistance is delivering neither debt sustainability nor long-run growth. And both Africa’s leaders and development agencies have to recognize that African growth will eventually need to be self-financed. This is exactly the rationale for the package consisting of the big bond, MCLs, and enhanced policy dialogue.

Sending a message

As important as the interest that the $100 billion will inevitably stir up among infrastructure companies worldwide are the signals it will send: Africa is open for business, donors are committed to maintaining Africa’s momentum with a big push on infrastructure and human capital without increasing their own fiscal burden, and, in a partnership of equals, the world expects African leaders to do the heavy lifting.

The Luisa Teixeira Felino is a Young Professional at the African Development Bank (AfDB) and Brian Pinto is an adviser to the ADF Policy Innovation Lab headed by Aloysius Ordu and financed by the Bill and Melinda Gates Foundation through a grant administered by the AfDB. The views herein are those of the authors and not necessarily shared by the AfDB.

      
 
 
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Big cities, small cities—and the gaps

By Mark Muro, Jacob Whiton

All year, the Metro Program has been documenting the nation’s prosperity divides, ranging from the tech divide to the productivity divide to the output divide. Over and over, the stark unevenness of the nation’s city and regional economic map reads like a Rosetta stone of the nation’s frustration.

But now let’s talk about another gap: the city size gap. City size matters because it’s a major influence on city prosperity and adaptability as well as local worker fortunes. Bigger cities are more productive. They are more innovative. They draw better-educated workers by offering higher wages.

And yet here’s what may matter most in an era of disruptions: whether they rely on local retail activity or coal mines, or a hospital or auto parts plant, small metropolitan areas are having a hard time adapting to recent technology transitions that seem to favor large urban concentrations that vastly increase the returns to proximity.

This was the point Eduardo Porter of The New York Times made in a sobering essay last week based on some of our data. As Porter wrote, the struggles of smaller places to recover from shocks and adapt to change are again looking like a huge problem for a widely dispersed country contending with an era of “winner take all (or most)” economies and the big getting bigger. See, for example, in the table below the extent to which larger metropolitan areas have recovered significantly better than smaller ones from the Great Recession, as reflected by three basic measures of labor market performance.

Labor market performance by metro size tier

2009-2015

Metro group Private employment CAGR Real personal income CAGR  Labor force participation rate change
Top 20 (n = 20) 1.9% 2.1% -0.1%
Large metros (n = 100) 1.8% 1.9% -0.3%
Medium metros (n = 100) 1.2% 1.6% -0.8%
Small metros (n = 182) 1.1% 1.6% -1.0%
All metros (n = 382) 1.7% 1.9% -0.4%
United States 1.6% 1.8% -0.6%

Notes: Averages weighted by private employment (total employment minus the public sector); large metros are those in the national top 100, medium metros are the next 100, and small metros are the smallest 182; labor force participation includes workers aged 20-64 and is drawn from 2005-09 and 2011-15 American Community Survey 5-year estimates

Source: Brookings analysis of Moody’s Analytics, U.S. Census, and BEA data

In this vein, it is becoming clear from research such as by Kelly Ray Wilkin that labor market adjustment (so important to regional adaptability) is yet another area of large-city superiority that puts small cities and regions at a disadvantage. In this regard, where small places afford workers relatively few nearby or diverse options for finding new work, the larger and denser labor markets of big cities afford workers vastly more job opportunities and therefore ways to achieve to achieve new jobs and higher earnings following unemployment. From that perspective, the relatively weak ability of so many small places to support the successful adjustment of workers and firms to economic shocks and new trends portends a future of pain for a lot of people and places. Millions of people may be stuck. That’s a problem. If a critical function of the city in an age of disruption is to ameliorate under- and un-employment by facilitating workers’ search for new employment, small cities and regions and the people in them are at a disadvantage.

What’s driving the rise of the big and the decline of the small are the powerful, ubiquitous forces of agglomeration amplified by technology

What should be done about the plight of the small places increasingly being left behind? Our colleague Amy Liu and ourselves acknowledged recently that it’s a wickedly hard problem to which economists have as yet detailed few solutions. After all, what’s driving the rise of the big and the decline of the small are the powerful, ubiquitous forces of agglomeration amplified by technology, which are powering growth and more growth in large metropolises at the expense of the drift of smaller, less educated, and techy places.

And yet, one doesn’t have to be naïve or overly idealistic to think that the nation can and must do better than simply helping the residents of small-city America move to a big city, as Porter recommends in concluding his piece. Supporting progress towards “catch up” among the more vibrant of smaller places, especially by investing in their higher education institutions and digital skills, is one of the dozen ways Amy and I proposed to help some smaller places advance. Likewise, the centrality to cities’ value of their ability to support worker adjustment argues for bold federal and state reforms of the nation’s current threadbare adjustment programs, with an eye to their effectiveness in small places.

In any event, one doesn’t have to believe we should save every place left behind to think we need to help at least some catch up even as the waves of disruption sweep through nearly every field and workplace.

 

      
 
 
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How do you like your content?

I was reading the article Morgan Linton wrote about domain blogs and it kind of fit in with an article I started on over the weekend. How do you like your content? Morgan was specifically talking about a Twitter conversation about Bitcoin and Domaining, that was being had by Rick Schwartz and Konstantinos from OnlineDomain.com. […]

The post How do you like your content? appeared first on TheDomains.com.

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Celebrating Folklore Studies in a Multicultural World

This fall, University of Illinois Press celebrates the final books published in the Folklore Studies in a Multicultural World Series. Since 2009, University of Illinois has been a partner in the multi-press initiative, funded by the Andrew W. Mellon
Foundation, along with the University Press of Mississippi, and the University of Wisconsin Press. The Folklore Studies in a Multicultural World series emphasizes the interdisciplinary and international nature of current folklore scholarship, documenting connections between communities and their cultural production. Series volumes highlight aspects of folklore studies such as world folk cultures, folk art and music, foodways, dance, African American and ethnic studies, gender and queer studies, and popular culture. 

BidgoodF17_144 HarrisF17_144 InserraF17_144

 

 

 

 

 

 

 

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This fall we have published our final contributions to the series, including: Global Tarantella: Reinventing Southern Italian Folk Music and Dances in which author Incoronata Inserra ventures into the history, global circulation, and recontextualization of tarantella around the world; Storytelling in Siberia: The Olonkho Epic in a Changing World by Robin Harris, who documents how Siberia’s Sakha people have used UNESCO’s Masterpiece Program to revive the epic narrative and song tradition olonkho; Recasting Folk in the Himalayas: Indian Music, Media, and Social Mobility by Stefan Fiol who explores the lives and work of Gahrwali artists who produce folk music, juxtaposing performance contexts in Himalayan villages with Delhi recording studios; Czech Bluegrass: Notes from the Heart of Europe by Lee Bidgood who merges intimate immersion in the music with on-the-ground fieldwork informed by his life as a working musician to paint a portrait of the Czech bluegrass phenomenon; and Building New Banjos for an Old-Time World by Richard Jones-Bamman who ventures into workshops and old-time music communities to explore how banjo builders practice their art.

To celebrate the end of the series, University of Illinois Press, the University Press of Mississippi, and the University of Wisconsin Press will host a reception at the American Folklore Society Conference on Thursday, October 19, 2017.

Please join us in celebrating this remarkable scholarly collaboration!

 

 

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Strangers of Familiar Soil

Edward Dallam Melillo— On October 31, 1967, California governor Ronald Reagan addressed seventy-three diplomats, businesspeople, and academics who had assembled in Sacramento for the fourth annual Chile-California Conference. As the former Hollywood actor and future US president told his audience, “Well, Chile is something special to California, and to Californians

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Ray Boomhower on Robert L. Sherrod and the War in the Pacific

Blog headers - iu press

Ray Boomhower's new book Dispatches from the Pacific dives deep on the reporting of World War II correspondent Robert L. Sherrod. In this interview, Boomhower shares some of what he learned about Sherrod and what his work means to people today.

Indiana University Press: If someone is coming into this book without knowing much about Robert L. Sherrod, what should they know?

Ray Boomhower: Robert Sherrod was a World War II correspondent. He wrote for Time and Life magazines. I kind of compare and contrast him to Ernie Pyle, where he’s kind of the Ernie Pyle of the Marine Corps and the War in the Pacific. He meant as much to the Marines as Ernie did to the average GI in North Africa, Sicily, Italy, and France.

Sherrod was in the Pacific War almost from the start. He was one of the first correspondents to go to Australia and was there to greet Douglas MacArthur after he made his famous escape from the Philippines and vowed “I shall return.” Sherrod was there to hear that speech. Later he covered the fighting in the Aleutian Islands, and from there he concentrated mainly on the Central Pacific battles. He went to Tarawa, Saipan, Iwo Jima, and Okinawa, and followed the Marines as they fought against the Japanese in the Central Pacific.

IUP: How did you first encounter Sherrod and his work?

RB: I’ve always been interested in World War II, particularly in the Pacific Theater of operations. As a young man I was helped in that interest by reading Sherrod’s book Tarawa: The Story of a Battle, which was originally published in 1944 and was a bestseller at the time. It really fired my imagination because I too wanted to be a reporter growing up, and later was a newspaper reporter like Sherrod was early in his career. I was fascinated by the fact that here was a guy that was on the operation with the Marines, landed with them, was there for the entire three days of the battle, and his firsthand observations of the fighting just really captured my imagination. I wanted to be someone like that who could be there to offer these firsthand observations of what the fighting was like.

IUP: What stands out about his writing? What keeps you coming back?

RB: I think his identification with the men he followed into battle, his reluctance to be one of those he called “communique commandos,” a reporter who stayed behind the front lines and just took the handouts from the public relations officer and just made the reports from that. He wanted to be there with the men who were doing the actual fighting, and that’s what makes him stand out from the pack of reporters who covered the war.

IUP: How did you put this book together? What was your process like?

RB: Mainly there were two main collections of Sherrod’s work, one at Syracuse University archives and one at the Marine Corps archives at Quantico, so just making visits there, collecting the material. It’s kind of a slice of life biography. It’s not a full biography of Sherrod. I concentrate mainly on his work during World War II. I do talk a little about his early life and what happened to him after the war, but it mainly concentrates on his time in the Pacific during World War II.

IUP: What do you hope people take away from this book?

RB: I think the courage he displayed, the way that he covered the action in the Pacific. His contributions represents well what reporters bring to the war effort, reporting on it, trying to make people back home realize the gravity of the situation, what it would take to actually win the war, and get them to sympathize and identify with the men under fire.

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What Trump’s “America First” means for Latin America

By Richard E Feinberg

Smart great powers ensure their safety by befriending smaller neighboring countries. China is engaged in a high-profile charm offensive to overcome long-standing animosities and draw its Southeast Asian neighbors into its orbit, through trade agreements and massive infrastructure projects. The Russia of Vladimir Putin is working hard to regain influence in territories of the former Soviet Union, throughout Europe and Central Asia.

But U.S. President Donald Trump’s vision of a resurgent America apparently excludes some of our closest neighbors. Instead of erecting bridges, he seems intent on erecting walls—not only against Mexico, but now against Cuba, Puerto Rico and possibly Central America as well.

Historically, peace on our southern and northern borders has made it easier for the United States to expand its global reach. For if leaders are preoccupied with unstable, hostile neighbors, it is that much harder for them to focus attention and resources on engaging overseas.

President Franklin D. Roosevelt, as one example, sought to foster comity in our hemisphere. As he prepared for global warfare against fascism in Europe and Asia, FDR understood well the critical importance of good neighbors. He systemically withdrew U.S. occupation forces from the Caribbean Basin where they had overstayed their welcome. Thanks to FDR’s strategic foresight, when global war finally came the Western Hemisphere presented a united front (absent Argentina) against distant enemies.

By contrast, Trump began his presidential campaign by denouncing Mexico as a source of criminals and racists allegedly terrorizing U.S. citizens. The proposed solutions: massive deportations and a tall, impenetrable concrete wall stretching all along our southern frontier. Trump then asserted that the NAFTA trade accord with Mexico was robbing American jobs. As president, he promised to rip up “the worst trade deal ever.”

Rather than making America great again, Trump’s postures against our near abroad threaten to damage our national interests. In fact, NAFTA has been the foundation for the U.S. and Mexico to overcome historical distrust and negotiate a remarkably broad range of constructive deals, from water and environmental protection to law enforcement, anti-money laundering and anti-terrorism.

Trump’s recent attacks on Cuba are similarly self-damaging. Since the Cuban revolution in the early 1960s, Cuba had been a thorn in American diplomacy. While the island was stable—in the way autocratic regimes appear to be, until they are not—Cuba’s capable diplomats systematically strove to counter U.S. interests worldwide.

Under the Obama administration, two short years of bilateral détente yielded an impressive series of deals with the Cuban government, on counternarcotics, orderly immigration, and protecting the oceans against oil spills and other environmental threats. As a result, our Caribbean shores became more secure. Overall, our hemispheric relations had rarely been stronger.

The Trump White House has since leveraged a mysterious illness affecting U.S. diplomats stationed in Havana to order crippling personnel reductions in the respective embassies. An unwarranted travel advisory – Cuba is a low-crime destination – targets the fastest growing sector of the Cuban economy.

As a result, Cuba will be less likely to cooperate on economic and environmental issues of vital importance to U.S. communities that border the Caribbean. Ominously, a less prosperous, less stable Cuba could also ignite a major immigration crisis.

Trump’s flaccid response to the devastation in Puerto Rico caused by Hurricane Maria follows the same pattern of disregard for our neighbors. The slow response may be due in part to the island’s ambiguous political status: a commonwealth that is part of the United States, Puerto Ricans are U.S. citizens but lack voting representatives in the U.S. Congress or in the Electoral College.

Publicly, Trump blamed the slow recovery on residents, who “want everything to be done for them when it should be a community effort.” Such callous comments carry a subtext: Latins are lazy and irresponsible; the solution is not more federal assistance but moral regeneration. Many Puerto Ricans—whether living on the island or on the continental United States—expressed their astonishment and outrage at these presidential affronts.

These are not the only examples of a Latin America policy that could damage U.S. national interests. The administration is also reportedly planning to expel hundreds of thousands of Central American immigrants who fled bloody violence in their homelands. Such a massive deportation would place severe pressures on the already weak economies, exacerbate violence and trafficking, and possibly destabilize their fragile democracies.

Why such counterproductive measures that harm our neighbors’ economies, threaten their social fabrics, and alienate their diplomats? Perhaps administration officials, driven by domestic politics, have not carefully considered the geopolitical consequences of their proposals.

But it is more likely a question of worldview. Building walls, massive deportations, commercial disruption, and harsh rhetoric fit within the Trump-ian vision of America First: a predominantly white homeland, with fewer Latins, that protects its borders through military might, not good neighbors.

Our geopolitical competitors must be confounded—and intrigued—by Washington’s own dismemberment of a strategic asset.  We shall see how nations such as China, Russia and Venezuela, and the unseen forces of global chaos, take advantage of the U.S.’s unforced errors in its hemisphere.

      
 
 
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The Patriotism of the Poor

Americans who have the least nevertheless tend to love their country the most.

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2017-10-13/fe6dcafa-9633-4021-92c6-ff72fbaea62c.png

America’s poor have plenty of reasons not to love their country. By most measures, they face bleak prospects and their government offers them the least support of any other advanced country on earth. Their chances of upward mobility are slim, the gap between their earnings and those of richer Americans continues to grow, and they work exceedingly long hours for very little. They have access to very limited social services and support.

It would be very reasonable for Americans to not love their country—to be resentful, rise up, and demand changes to the social contract of the country. Instead, America’s poor embrace and idealize their country.

Their patriotism runs deep and exceeds in many cases that of the poor in other advanced countries and that of richer Americans. It not only entails a love of country but a belief in its superiority and greatness. America, they feel, is a better nation than most.

The patriotism of poor Americans runs deep and exceeds in many cases that of the poor in other advanced countries and that of richer Americans.


This is a deeply felt and resilient sort of appreciation: while the patriotism of many richer Americans has waned since the 2008-2009 financial crisis, for instance, that of poorer Americans has remained steady and, by some measures, even increased.

We should take the patriotism of America’s least well off very seriously. The country’s social cohesion, standing in the world, and understanding of itself depend on it. As we learned during the 2016 Presidential elections, it can also be leveraged strategically by politicians and other public officials, with great consequences for who gets elected to the highest echelons of power. Needless to say, Trump’s slogan “Make America Great Again!” tapped directly into such passion for the country, as did, in perhaps subtler ways, Sanders’ own populist messages.

Broke and Patriotic
Broke and Patriotic » offers a stirring portrait of the people left behind by their country and left out of the national conversation.

In my new book, I have sought to answer a seemingly simple but very pressing question: why do America’s worst-off citizens believe in the greatness, even superiority, of the United States? With little data available on the matter, I set out to speak to impoverished Americans. I spent time in bus stations, laundromats, senior citizen centers, homeless shelters, public libraries, fast food restaurants, and other places in Montana and Alabama in 2015 and 2016 and conducted in-depth interviews with impoverished Americans from all walks of life. What I found was both immensely revealing and moving. Three narratives stood out.

First, many view the United States as the “last hope” for themselves and the world: the country offers its people a sense of dignity, a closeness to God, and answers to most of humanity’s problems. Deprive them of their country, they told me, and you deprive them of the only thing that is left for them to hang on to.

Where else will a homeless person tell you, with full conviction, that he is worth as much as the President of the country? And then there is the fact that America is the country on earth to stand for optimism, the rights of each individual, and a better future for itself and mankind in general.

Second, America is still the “land of milk and honey”: a very rich country where those who work hard can succeed, and a country that generously gives to peoples in need across the world. It is still possible to succeed in this society.

Importantly, the people I spoke with took in most cases full responsibility for their troubles in life. They were confident that the future will bring them better things. Many felt that they had just turned a corner—perhaps with God on their side. Rich Americans, they told me, deserve what they have. Besides, they reasoned, look at the rest of the world: they keep trying to come to America. This must be the place to be.

The people I spoke with took in most cases full responsibility for their troubles in life.


Third, America is the freest country on earth—and self-determination is what every human being craves above all. Many of the people I met spoke of feeling very free to come and go, think as they wish, and even be homeless. America allows people to be as they want to, with little preconceived notions about what the good life should look like. One’s destiny is in one’s hands.

Here guns often can play a big role, both for personal and historical reasons. Guns give one security and make hunting, and therefore feeding one’s self and family, possible. It is important as well to always remember that Americans rebelled against the English by making guns. Guns equal freedom, and America ensures gun ownership.

Taken together, these answers made clear to me that while people belong to America, America belongs to the people. There is a bottom-up, instinctive, protective, and intense identification with the country. This is a people’s country.

Of course, misconceptions about other countries abounded. One person told me that there are only two democracies in the world: Israel and the United States. Another told me that Japan is a communist country. Yet another that in Germany one’s tongue can get cut off for a minor crime. And almost everyone else outside of America is poor. Yet, these, and many other ideas, were almost afterthoughts—mental detours perhaps articulated to justify already hard-felt feelings and commitments.

At the end, therefore, I realized that there is no puzzle to be solved. There is no contradiction between one’s difficult life trajectories in America and one’s love of country. If anything, those in difficulty have all the more reasons to believe in the promise of America. The people I met were indeed extraordinary patriots.

Start reading Broke and Patriotic »


Francesco Duina is Professor of Sociology at Bates College, as well as Honorary Professor of Sociology at the University of British Columbia and Visiting Professor of Business and Politics at the Copenhagen Business School. He is the author of several books, including Winning: Reflections on an American Obsession and, most recently, Broke and Patriotic: Why Poor Americans Love Their Country.

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Gary Saul Morson & Morton Schapiro: The Humanomics of Tax Reform

CentsThe Trump administration is now placing tax reform near the top of its legislative agenda. Perhaps they will garner the votes for tax reduction, but reform? Good luck.

It has been three decades since there has been meaningful tax reform in this country. In 1986, tax shelters were eliminated, the number of tax brackets went from 15 to 4, including a reduction of the highest marginal tax rate from 50% to 38.5% and the standard deduction was increased, simplifying tax preparation and resulting in zero tax liability for millions of low-income families. At the same time, a large-scale expansion of the alternative minimum tax affected substantial numbers of the more affluent.

President Reagan insisted that the overall effect be neutral with regard to tax revenues. That demand made it possible to set aside the issue of whether government should be larger or smaller and instead focus on inefficiencies or inequities in how taxes were assessed. Two powerful Democrats, Dick Gephardt in the House and Bill Bradley in the Senate, were co-sponsors.

Economists might evaluate the merits of this monumental piece of legislation in terms of the incentives and disincentives it created, its ultimate impact on labor force participation, capital investment and the like, but there is another metric to be evaluated – was it perceived to be fair? Accounts from that day imply that it was.

The notion of fairness is not generally in the wheelhouse of economics. But the humanities have much to say on that matter.

To begin with, literature teaches that fairness is one of those concepts that seem simple so long as one does not transcend one’s own habitual way of looking at things. As soon as one learns to see issues from other points of view, different conceptions of fairness become visible and simple questions become more complex. Great novels work by immersing the reader in one character’s perspective after another, so we learn to experience how different people – people as reasonable and decent as we ourselves are – might honestly come to see questions of fairness differently.

So, the first thing that literature would suggest is that, apart from the specific provisions of the 1986 tax reform, the fact that it was genuinely bipartisan was part of what made it fair. Bipartisanship meant the reform was not one side forcing its will on the other. Had the same reform been passed by one party, it would not have seemed so fair. Part of fairness is the perception of fairness, which suggests that the process, not just the result, was fair.

Fairness, of course, also pertains to the content of the reforms. What are the obligations of the rich to support needy families? Are there responsibilities of the poor to participate however they can in providing for their own transformation?

In Tolstoy’s novel Anna Karenina, two main characters, Levin and Stiva, go hunting with the young fop, Vasenka, and as they encounter hard-working peasants, they start discussing the justice of economic inequality. Only foolish Vasenka can discuss the question disinterestedly, because it is, believe it or not, entirely new to him: “`Yes, why is it we spend our time riding, drinking, shooting doing nothing, while they are forever at work?’ said Vasenka, obviously for the first time in his life reflecting on the question, and consequently considering it with perfect sincerity.” Can it really be that an educated person has reached adulthood with this question never having occurred to him at all?

And yet, isn’t that the position economists find themselves in when they ignore fairness? When they treat tax reform, or any other issue, entirely in economic terms? Levin recognizes that there is something unfair about his wealth, but also recognizes that there is no obvious solution: it would do the peasants no good if he were to just give away his property. Should he make things more equal by making everyone worse off? On the contrary, his ability to make farmland more productive benefits the peasants, too. So, what, he asks, should be done?

Levin also knows that inequality is not only economic. If one experiences oneself as a lesser person because of social status, as many of the peasants do, that is itself a form of inequality entirely apart from wealth. In our society, we refer to participants in government as “taxpayers.” Does that then mean that to exempt large numbers of people from any taxation entirely demeans them – not least of all, in their own eyes?  There may be no effective economic difference between a very small tax and none at all, but it may make a tremendous psychological difference. Isn’t the failure to take the psychological effect of tax rates seriously as disturbingly innocent as Vasenka’s question about inequality?

Combining a humanistic and an economic approach might not give us specific answers, but it does make questions of fairness, including symbolic effects, part of the question. And in a democracy, where popular acceptance of the rules as legitimate is crucial, that would be a step forward.

Gary Saul Morson is the Lawrence B. Dumas Professor of the Arts and Humanities and professor of Slavic languages and literatures at Northwestern University. His many books include Narrative and Freedom, “Anna Karenina” in Our Time, and The Words of Others: From Quotations to Culture. Morton Schapiro is the president of Northwestern University and a professor of economics. His many books include The Student Aid Game. Morson and Schapiro are also the editors of The Fabulous Future?: America and the World in 2040 and the authors of Cents and Sensibility: What Economics Can Learn from the Humanities.

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Ready For Some Good News? Educators Share What’s Happening in Their Classrooms

four-day school weekWe asked educators on NEA Today Facebook about the best thing that happened in their classrooms and schools last week. Some raised money with their students for disaster relief, others attended fun school-community events, and a whole lot had break-through moments with their students that sometimes brought tears to their eyes. We can all use a little positivity, so here’s a roundup of the good news they shared:

A discouraged dyslexic third grader has realized he can read the books I have set in a bin for him… and asked for permission to take some of the books to his after school program! This is the boy who normally says thing are too hard and puts his head down! Theresa Early, Fairfax, Virginia

Through the generous donations of my friends, I took my low-income, urban, Boston-area students on a field trip to New York City – the Empire State Building, Times Square, Ellen’s Stardust Diner, Liberty Cruise, Pizza Suprema – because they got the highest growth percentile on our state exam, because they worked their butts off every day in class, reading six more books than were in the curriculum, and because they are AWESOME. Nancy Petriello Barile, Boston, Massachusetts

My two newcomers with very little English yet, and who are both still pretty reluctant to attempt to speak in front of the whole class, enthusiastically volunteered to share their mathematical thinking and strategies during a math session this week. They were beaming from ear to ear with pride… Not only proud of them for putting themselves out there, but also for how supportive and encouraging the rest of the class always is of them. Made my week! Jennifer Gage Moke, Portland, Oregon

My seniors and AP juniors hosted a college and career fair for younger students (5th-10th graders). Each of my students became an “expert” on a college, military branch, or career field he or she hopes to pursue, created a table display and one-page informational handout, then they shared their research knowledge with their visitors. Barb Brown Andres, New Lothrop, Michigan

My first grade students performed All You Need is Love at our monthly assembly. We had picked the song long ago but it was so timely. Children remind all of us how beautiful the world is. They inspire me and drive me to be the best I can be every single day. Marianne Vasquez, Bakersfield, California

We presented a check for $5,100 to fund childhood cancer research at a local charity, the N8 Foundation. I work at the same school as Marianne Vasquez. Our school had a good week. Karen Nguyen, Bakersfield, California

I was subbing this week and when I introduced myself to the teacher she screamed and started crying because I had been her 2nd grade teacher!! I was so touched but felt old! Linda Morgan, Highland, California

During a math review quiz, one group worked together and only missed one question. But better than that was the collaboration. I heard things like, “We both got the same answer, do you agree with us” and “yes, I agree because…”. I was so happy I could cry!  Megan Rene, McMinn, Lewiston, Idaho

We had a kindergarten potluck at a local park. It was so fun for the kids, parents and grandparents to have a chance to meet each other. I loved spending time with my students’ families and meeting families from the other K classrooms with my K team. Carol Harris, Steamboat Springs, Colorado

I have a student that is passing a high school math class for the first time… the joy on the student’s face makes all the daily struggles so worth it!  Nell Dearing, Carlsbad, New Mexico

Thursday I returned as a volunteer at our highest poverty school to help some of the most dedicated teachers and work with kiddos that fill my heart! Phyllis Schneider Winkley, Vernon, Connecticut

New student came into our classroom and did not have a “rest buddy” of his own for rest time. The next day, a concerned child brought a gently used and carefully chosen stuffed animal of his own for his new friend. Heartwarming! Shelly Hess, Vincent, Ohio

Our association members attended events in the 3 communities that make up our district, raffling off 12 baskets of books, three Kindle fires and three family memberships to the Philadelphia zoo. Raffle tickets were free as prizes were donated by the teachers. Nicole May Armbruster, Aston, Pennsylvania

I got to see a second-grader who is struggling with behavior be a great role model to a first-grader who is struggling with behavior. ^_^Seeing them interact in such a sweet, friendly manner made my heart happy! Sarah Wood, Keizer, Oregon

An email from a parent informed me that her child loves my class and is excited about learning to love reading and writing, a subject she’s struggled with in the past. 
Joel Elrod Melsha, Orlando, Florida

A student who had done poorly in his first test put forth great effort at home studying, coming for extra help and really focusing during the test. ( that is hard for him). He finished early so I graded his test and it was a perfect test –100%. It was his birthday too. Right from the classroom, we called mom in front of the whole class and celebrate him. His mom was happy and the class applauded him. His smile lit up the whole room. Debra Calle, Bergenfield, New Jersey

A student who is homeless was going to have to transfer schools and be uprooted from all that is stable in his life. Our transportation department figured it out and will be busing him! Autumn Schultz, Toledo, Washington

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