Benjamin Ginsberg writes in the Washington Monthly about one reason that the cost of attending university has skyrocketed over the past few decades:

Forty years ago, America’s colleges employed more professors than administrators. The efforts of 446,830 professors were supported by 268,952 administrators and staffers.

....In 2005, colleges and universities employed more than 675,000 fulltime faculty members or full-time equivalents. In the same year, America’s colleges and universities employed more than 190,000 individuals classified by the federal government as “executive, administrative and managerial employees.” Another 566,405 college and university employees were classified as “other professional.”

Faculty growth has been roughly in line with growth in enrollment, which Ginsberg pegs at 50% over the past four decades. By contrast, support staff of various kinds has increased by nearly 500,000, a growth rate of 182%.

There's more at the link, including Ginsberg's take on why this is a bad trend even aside from all the money it costs. Maybe we need fewer adjunct professors and more adjunct administrators?

Who You Gonna Believe?

Soon-to-be colleague Adam Serwer writes today about a New Jersey Supreme Court ruling about the reliability of eyewitness testimony. In a word, it sucks:

It may seem shocking just how unreliable your eyes can be. The ruling cites studies that showed eyewitnesses picking the wrong person out of a lineup as often as they picked the right one, along with another study showing that even when witnesses are told the person might not be in the lineup, they'll choose an innocent person about a third of the time. The reason is that our memories may seem vivid, they're often not as accurate as we think they are. While lineups are constructed of similar looking individuals precisely to force the witness to think strongly about what they remember, this may result in witnesses unconsciously conforming their memory to the available choices.

The most complex part of eyewitness misidentification, though, is the fact that people who wrongly identify someone are often really confident they've made the right choice — and that confidence is persuasive in court.

This evidence has been around for decades, and it's common knowledge throughout the legal profession. Everyone knows about it, including prosecutors, though they'll generally refuse to acknowledge it for obvious reasons. The fact is that even under ideal conditions most of us are lousy at IDing people, and under the conditions of most crime scenes we're a whole lot worse. There are several things that are known to make eyewitness identification less reliable, and all or most of them are usually in play when you're watching a crime unfold:

  • The action is often far away.
  • It's often dark and the light is bad.
  • There's lots of tension and your adrenaline is pumping.
  • Everything happens quickly.
  • The culprits often belong to a different ethnic group than the eyewitness, and we're all much worse at distinguishing between people of a different race.

There's more, but you get the idea. As Adam says, though, this makes little difference to the witnesses themselves. Just as everyone thinks they're a great driver, just about everyone thinks they're great at remembering faces, too, even if they did get only a brief look in dim light from 50 feet away.

This isn't a topic I've spent a ton of time on, but knowing the basics, and knowing just how widely appreciated this stuff is in the criminal justice profession, I've always been a little surprised that the Supreme Court hasn't weighed in with some new guidelines on the use of eyewitness identification. I'm not talking about the usual stuff, like insisting that police conduct lineups properly, but something deeper: guidelines about how eyewitness testimony can be used in court, how the circumstances have to be disclosed, what kind of instructions the jury should get, and so forth. This is about as fundamental a part of getting a fair trial as there is. Perhaps this New Jersey decision is the first step in making this happen.

President Obama plans to nominate Alan Krueger to be chairman of the Council of Economic Advisors today, taking over from Christina Romer, who held the position for the first two years of his presidency, and Austan Goolsbee, who held it until last month. Krueger is most famous for his research suggesting that it's possible to raise the minimum wage modestly without hurting employment levels, research that makes conservatives literally apoplectic if you mention it. Think I'm exaggerating? Krueger did the research with UC Berkeley's David Card, and Card shortly decided to abandon the subject because of the furious response it provoked. Here's his explanation for never wanting to do research on the minimum wage again:

It cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.

Now, who knows? Maybe Card is just unusually thin-skinned. But I don't think so. This is the kind of thing that happens when you suggest that there's more to life than simple Econ 101 models. The right hasn't had time to respond to Krueger's appointment yet, and maybe they'll decide to give this a pass since (a) CEA chair isn't exactly a high profile appointment among their tea party base, and (b) they already had their shots at him back when he worked at Treasury. But I imagine we'll start hearing about it soon. Probably ferocious denunciations of Krueger as an ivory tower professor who denies the common sense operation of supply and demand, has no ground level experience in the business world (where he would have learned first-hand the crippling effects of raising the minimum wage), and is intent on, um — debasing the dollar. Yeah. Debasing the dollar.

Or something. Anyway, it should start soon. Should be fun in a B-list kind of way.

David Leonhardt on why the Fed is so hawkish on inflation even though the economy is sluggish and inflationary pressures seem remote:

Why does the Fed skew more hawkish than the economics profession as a whole? Part of the answer lies in the way the 12 voting members of the policy-setting committee are chosen. They are a mix of presidential nominees subject to Senate approval, with 14-year terms, and regional Fed presidents, who are chosen by outside boards that are made up partly of private-sector finance executives.

David Levey, a former managing director at Moody’s and another critic of Fed inaction, points out that banks often have more to lose from inflation than from unemployment. Inflation reduces the future value of the money that their debtors — homeowners, car buyers, small businesses and the like — will repay them.

“The Fed regional banks represent, in essence, the banking community, which tends to be very conservative and hawkish,” Mr. Levey says. “Creditors don’t like inflation — it’s good for debtors.” Indeed, the three recent dissents all came from regional bank presidents: Richard W. Fisher of Dallas, Narayana R. Kocherlakota of Minneapolis and Charles I. Plosser of Philadelphia.

This is obviously the traditional view, and certainly it was true at one time. But is it still true? Or maybe my real question is: should it still be true? Isn't most long-term debt either indexed to inflation in some way (usually via links to LIBOR or treasury spreads or something similar) or else hedged for inflation risks? Shouldn't banks these days actually be fairly indifferent to inflation as long as it stays within a moderate range? There's probably a hole here in my understanding of how finance works, but I don't really get why this creditor/debtor divide on inflation still exists.

The Guardian has a big scoop today:

The bastards! "Recognisably rightwing"! That's going too far. Someday soon there will be a price to be paid for this kind of insolence.

Breezy Talk About Oil

Earlier today, in my post about the economic volatility produced by world demand for oil getting close to the world's supply ceiling, I wrote:

This is not something that can be tamed with gasoline taxes in the United States or anything similar. It’s a global phenomenon. This is all the more reason we should be making Manhattan Project kinds of commitments to developing alternative energy sources and reducing our economy’s dependence on oil. There’s plenty of low-hanging fruit in the areas of conservation and increased efficiency, and no reason to waste any more time arguing about. At the very least, we should be doing the easy stuff.

Matt Yglesias replies:

I find this kind of breezy dismissal of higher gasoline taxes to be quite frustrating. For one thing, it’s just not the case that some amazing technological breakthrough is required for people to have less gasoline-intensive lifestyles. The technologies deployed in France—shorter commutes, lighter cars, trains, and buses—don’t require a massive R&D effort to implement....Meanwhile, if Congress were sitting around atop a giant pile of money, I feel certain that they could be relatively easily persuaded to disburse it on a giant alternative energy R&D effort....But how to acquire the giant pile of money? Well, you could tax gasoline.

The bolded sentence in my piece was prompted by a feeling that, in a post yesterday, Matt had breezily dismissed the oil problem as solvable with higher gasoline taxes. So I guess I deserved that.

To be a little clearer, though, the point I was trying to make in bold is that our global oil constraints are driven largely by increasing demand in developing countries, so things like higher American gasoline taxes aren't likely to have a big effect on the broad dynamic caused by bumping up against limited oil supplies. Higher gas taxes would curb demand a bit in the U.S., but developing countries would just suck up the excess and we'd end up right back where we started. Beyond that, however, there's roughly zero difference between Matt and me. It's absolutely true that we could substantially reduce oil use without a technological breakthrough. It's absolutely true that this would insulate us a bit from volatile oil prices. And it's absolutely true that gasoline taxes could be used to fund lots of basic research that might produce a holy energy grail someday.

Still, until we get that technological breakthrough, it's worth keeping in mind that we probably can't insulate ourselves from global oil dynamics more than modestly. The problem is that if the pessimists are right, we're now in an era where oil volatility is going to limit global growth by provoking periodic global recessions. And even if we use less oil, global recessions will still hurt us.

So we need to be more aggressive about building the alternative energy infrastructure we already know about, we need to be more aggressive about looking for new energy sources, and we need to develop these sources aggressively enough that they're cheap enough for the whole world to use. We're still finding significant new oil fields, like the Bakken formation and the recent offshore Brazilian discoveries, but we're finding them in much smaller numbers than in the past — almost certainly too small to make up for declines elsewhere. We don't have all that much time left.

Remember all those #3 guys in al-Qaeda that we used to kill with such frequency? Well, with Osama bin Laden's death they've moved up to #2, and apparently we're still killing them.

Here's a little bit of a follow-up to my post yesterday about oil production and how it may now be a binding constraint on economic growth. The basic argument is fairly simple: Global production of oil has hit a ceiling — or, at best, will grow very slowly for the next few years on its way to a ceiling in 2015 or 2020 or so — and this is going to cause severe volatility in the global economy. As world GDP grows, demand for oil increases and bumps up against the supply ceiling, prices spike upward, and the world goes into recession. Demand for oil then decreases a bit, the economy recovers, rinse and repeat.

This is a plausible story, but as far as I know there's very little in the way of rigorous modeling of this entire scenario. At a minimum, any solid econometric model would need to account for the following:

  1. As the global economy grows, how does demand for oil increase?
  2. As demand for oil increases near the supply ceiling, how do prices spike?
  3. As prices spike, how does the economy react?

#1 is probably fairly straightforward. Doing the math rigorously is a challenge, but basically this is just a regression of oil consumption on world GDP. The evidence suggests that the relationship here is pretty strong: rich countries may have weaned themselves off oil a bit over the past couple of decades, but poor countries haven't. As incomes rise in developing countries, demand for oil goes up strongly regardless of how expensive it gets. This means that pretty much any period of global economic growth will very quickly push oil demand up to its supply ceiling.

#2 is a challenge because we've only been near the oil supply ceiling since about 2007 or so. There just aren't very many data points to work with here. However, we do know that earlier this year oil prices rose about $30 when we lost a mere 2% of global production thanks to the war in Libya. This certainly suggests that we're now in an era where very small changes in demand can have very large effects on price.

#3 would basically be a global version of the work James Hamilton and others have done on the effect of oil price spikes on the U.S. economy. You can see a bit of groping in this direction here, but I don't think anyone has done any kind of full-scale modeling.

All of this, of course, is contingent on the question of whether oil production really has hit a ceiling. That's still an open question, but we can say a few things for certain. First, oil production has certainly peaked in most of the world. The continental United States peaked in 1971 and has been in decline ever since. Prudhoe Bay peaked in 1989. The North Sea peaked in 1999. Norway peaked in 2001. China's massive Daqing field probably peaked around 2005. They're all still producing oil, but they produce less and less every year.

Second, the discovery rate of giant and supergiant oil fields, which produce most of the world's oil, peaked in the 1960s and has been in steep decline ever since.

However, there are still some big question marks in this picture. OPEC is one: no one knows for sure if OPEC, and Saudi Arabia in particular, has peaked or not. The Saudis claim they can continue to increase production, but there are some pretty good reasons to think they're at or near their peak. (They either couldn't or wouldn't pump more oil to make up for Libya's lost production earlier this year, for example.) On the other hand, Iraq's fields definitely have more production capacity. They just need to rebuild their pumping infrastructure. Still, taken as a whole, the balance of the evidence suggests that OPEC is either at or very near its peak and will be at a production plateau for the next decade or so before it starts to decline.

That leaves so-called "frontier oil" — polar and deepwater fields — and unconventional oil like the Canadian tar sands and Venezuelan heavy crude. This is truly uncharted territory, but it's wise to take the more optimistic forecasts with a grain of salt. If history is any guide, there will be some spectacular finds in these areas, but also the usual number of disappointments. And even if these sources pan out, the real question is whether they'll produce enough to offset the declines everywhere else. This is doubly uncharted territory because we don't know for sure how much oil we'll get from these new sources and we don't know for sure what the decline rate will be for the world's existing fields (improved drilling technology makes a big difference in the rate of decline). These are both hotly contested subjects, all the more so because in the past the official forecasts from places like the International Energy Agency have been so wildly — and frankly unbelievably — optimistic (see here and here).

The chart at the bottom shows an oil forecast from ASPO, the Association for the Study of Peak Oil. When you put everything together, they estimate that world production peaked in 2008 and is now in irreversible decline. My own personal guess (worth exactly what you've paid for it) is that this is too pessimistic. I suspect that production will continue to grow slowly for another five or ten years, peaking around 95-100 million barrels per day (compared to current production of 88 mbd). But the ASPO estimate and mine aren't really as far apart as they sound. Either way, demand for oil will increase faster than supply whenever the global economy is growing, and as long as that's the case, and we're bumping along near the peak, oil prices are going to be extremely volatile — and the global economy is going to be volatile right along with it.

This is not something that can be tamed with gasoline taxes in the United States or anything similar. It's a global phenomenon. But it's all the more reason we should be making Manhattan Project kinds of commitments to developing alternative energy sources and reducing our economy's dependence on oil. There's plenty of low-hanging fruit in the areas of conservation and increased efficiency, and no reason to waste any more time arguing about it. At the very least, we should be doing the easy stuff.

There are plenty of places to learn more about this. If you're interested in my lengthy takes on this from back in 2005, try reading "Crude Awakening," a piece I wrote for the Washington Monthly, and this five-part blog series I wrote around the same time in order to provide more detail (and charts!) than I could fit into the magazine.

No theme today, just some nice pictures of the cats taken as the sun goes down and provides some lovely lighting. Enjoy. And for all of you on the East Coast, human and otherwise, stay safe from Irene this weekend.

Jon Chait points out that the results of the latest Pew poll are pretty remarkable:

People always want leaders to compromise. It's amazing that a plurality wants Obama to confront the GOP more strongly. Want to see something even more amazing? You're seeing non-trivial numbers of Republicans say that Obama should stand up to the Republicans.

He's right. It's no surprise that liberal Democrats increasingly want Obama to fight back against Republicans, but that's not the real story here. The biggest shifts in attitude have come from the center. Take a look at the circled parts of the table: the entire middle of the political spectrum — liberal Republicans, independents, and conservative Democrats — is speaking pretty loudly here. They want Obama to fight back harder against the shouters in the tea party wing of the GOP.

As Chait points out, Obama is walking a tightrope: if he does get more confrontational, he risks losing ground in the areas where he's still viewed positively (trustworthy, well-informed, cares about people, etc.). But he better figure out how to walk it. His entire electoral strategy is based on winning the middle, and the middle is getting fed up.

You can see the full Pew poll here. It's interesting reading.