Here’s the longer, unedited version of my column published in today’s The Daily Beast – It Wasn’t About the Economy, Stupid.

The conventional wisdom among pundits, pollsters, and political analysts is that the Republican victory in the midterms represents a referendum on – and a stunning of repudiation of – the Obama administration’s stewardship of the economy. “U.S. registered voters choose economic conditions by nearly a 2-to-1 margin over any of four other key election issues as the most important to their vote for Congress,” according to a Gallup organization analysis, a result that held “across all partisan groups.”

But the geographic patterns of Tuesday’s historic election results reveal a curious paradox. While the economy was clearly the voters’ number one concern, economic conditions alone cannot explain why they cast their ballots as they did. A Wall Street Journal analysis of House races found that Democrats held onto their seats in congressional districts that were feeling the recession the worst. “Of the 25 congressional districts hit hardest by the recession—measured by joblessness, poverty rates, and housing prices—16 are currently represented by Democrats. Fourteen of them won re-election despite the Republican tide.”

Economic factors did not drive state-wide races for Senate or governor either. Democrats, for instance, held onto governorships in the blue states of New York, Massachusetts, and Maryland, and they won a victory in California even though it has taken a tremendous economic hit. Despite the massive Republican pickup in the House and smaller gains in the Senate and governors races, the American electoral map continues to reflect its long-held red versus blue shading.

Columbia University’s Andrew Gelman’s influential book Red State, Blue State, Rich State, Poor State sheds light on this conundrum. Rich voters trend Republican, Gelman and his colleagues found, while rich states trend Democratic. My own earlier analysis of polling data suggested that short-term economic factors like the unemployment rate or changes in housing values provided little explanation of state favorites for Senate or governor, while more deep-seated structural factors like income, social class, attitudes toward religion, and openness toward immigrants as well as gays and lesbians were more likely to hold sway.

With the help of my colleague Charlotta Mellander, I took a close look at factors associated with the recession’s impact – like the change in unemployment and in housing prices since the onset of the crisis — that might have influenced voters. We also looked at income and several other structural variables. In The Emerging Democratic Majority, John Judis and Ruy Teixeira argued that Democrats have gained an advantage by adding the wealthier knowledge workers who cluster in urban centers to their historic base among poorer populations and minority groups. On the red side of the divide, blue-collar working class voters have been shifting into the Republican column. Taking this into account, we examined the relations of work and class and partisan choice. Following Ronald Inglehart’s lead, we also looked at the relations between religious values, tolerance, and political preferences. Confining our analysis to state-wide Senate and gubernatorial races, we conducted a basic correlation analysis and compared the results for the current midterm. We also compared the midterm pattern to the state-by-state vote for Obama and McCain in the 2008 presidential race.  As always, we caution readers not to make too much of these findings. The size of the sample is small, and our analysis can only identify relationships among variables, and in no way implies causation. Still, a number of very interesting patterns emerge.

Despite all the hubbub about the economy, we found no evidence at all that short-term economic factors – unemployment and housing prices – significantly shaped state-wide voting patterns for either party. This is not to say that short-term economic factors did not matter at the margin: Clearly, election returns and exit polls showed that many individuals shifted their 2008 Democratic vote to a Republican one in the midterms. But, at the state level, deeper-seated factors remained by far the dominant factor.

Income and class remain important, but less so than in the ‘08 presidential race. Higher-income states went for Obama, while lower-income states went for McCain. This trend continued to hold for Senate races, with higher-income states voting Democrat and lower-incomes states trending Republican, but not for gubernatorial races.

Class also continues to play a role, though its relation was less evident than it was in ‘08.  Obama took states where knowledge workers and the creative class – which makes up roughly  a third of the workforce and includes workers in science and technology; business and management; law; arts, culture, media, and entertainment; health care and education – comprise a larger share of the workforce, while McCain took blue-collar working class states. The creative class was more split in the midterms, and significant segments of it shifted from Obama and the Democrats to the Republicans. While a considerable change from ‘08, it is not surprising, as many creative class voters tend to be independent and more candidate-centered. While the correlation between creative class states and Democrats remained positive, it was not statistically significant. Blue-collar working class states were positively associated with Republican Senate votes and negatively associated with votes for Senate Democrats.

Religious orientation remains a key pivot point in America’s cultural and political divide.  In 2008, more religious states went for McCain and less religious states went for Obama. This pattern continues to hold for the Senate, though not for governors’ races. Religion is positively associated with both Republican votes for Senate and negatively associated with Democrat votes for Senate. (Our religion variable is from Gallup polls that ask individuals if religion is an important part of their everyday life.)

From Tom Tancredo in Colorado to Carl Paladino in New York, we’re constantly reminded that immigration and gay rights remain significant wedge issues in American politics. (We used the percentage of immigrants and gays and lesbians in states as proxy measures for openness). Salient in 2008, openness toward gays and lesbians and toward immigrants were again among the most important factors in state partisan patterns. States with higher percentages of gays and lesbians and higher percentages of immigrants went for Obama in 2008 while those with lower percentages went for McCain, and these trends also continue to hold. Immigrants appear to have a more substantial relation with votes in Democratic states, while gay and lesbians have a more noticeable association with Republican states. States with larger percentages of immigrants were more likely to vote Democratic in both Senate and governor races. The percentage of immigrants was negatively associated with Republican votes for Senate but not significantly associated with Republican votes for governor.  The percentage of gay and lesbian residents in a state was negatively associated with Republican votes for both Senate and governor, and it was positively associated with the Democratic votes for Senate but not significantly associated with Democratic votes for governor

But, the strongest factor of all in our analysis was the red-blue pattern itself. States that voted for Obama in ‘08 tended to elect Democrats to Senate and governor, while those that went for McCain again went for Republicans. The correlations were significant for both Senate and governor races across both parties, though they were about twice as powerful for Senate races.

The upshot of this could not be clearer. We witnessed no massive realigning of the electoral map; instead, America remains divided along the same political, cultural, and economic axes. Richer states are still more likely to be Democratic and poorer ones Republican. But it’s about more than just money. The creative class might have split its vote to some degree, but working class states continue to trend red, while states with higher percentages of immigrants and especially gays and lesbians continue to tack Democratic.

Of course economic conditions do play a role in elections and this one is no exception. Obama benefited strongly from the support of the creative class in 2008; economic conditions have considerably tempered their enthusiasm this time around. And “throw the bums out” inevitably takes a greater toll on the party in power.

But a discernible political pattern remains, one that is etched in a deep class divide that is rooted in the very structure of our economy. It’s not just that more educated, higher income, knowledge workers prefer to live in denser cities and metro areas on the coasts. The logic of an idea-driven economy generates innovation and productivity by concentrating them there. But just as the economy benefits from the concentration of human capital and the creative class in tighter, spikier geographic locations, our political system penalizes it, as evidenced by the big swaths of red in the less densely populated states and the smaller specks of blue on America’s new electoral map.

And this political reality handicaps the nation’s ability to address the very serious economic problems it faces. In previous periods of economic crisis and transformation, like the Long Depression of the late 19th century and the Great Depression of the 1930s, America benefited from the “critical realignments” that were long ago identified by Walter Dean Burnham, which recast the electorate to create more stable governing and policy coalitions. These political realignments shift the power balance between the parties and, in doing so, provide the political underpinnings for the major changes in public policy that are needed to help the nation adjust to structural economic change.

Though our economy is currently in the midst of a similar great reset today, our politics reflect what Burnham called an “unstable equilibrium.” In fact, the overlay of class and geographic divides, combined with Washington’s inability to get much done, creates an especially volatile backlash-gridlock-backlash partisan cycle. Democratic anger at Bush motivated massive voter enthusiasm in the ‘06 and ‘08 cycles among Democrat-leaning groups. The same kind of mobilization was apparent not just in the Tea Party but in Republican-leaning groups this cycle.  According to a November 2 Gallup poll, 63 percent of Republicans surveyed reported that they were more enthusiastic than usual about voting — an all-time high. Americans are most enthusiastic about voting when they feel the least empowered – it is hardly an inspiring picture.  This backlash cycle is chronically unstable. No sooner is a new administration or a new congressional majority in place than anger begins to mount on the other side and the cycle begins again. To match our unstable economy, we have an unstable political system.

The consequences of this backlash-gridlock cycle extend far beyond politics, paralyzing America’s ability to deal with the deep and fundamental economic issues it faces. Just when the United States needs bold, forward-looking leadership which can develop broad efforts to renew the economy, upgrade jobs, spur innovations, and address mounting inequality, it is stymied by a volatile political system propelled by anger and backlash, leaving it with gridlock and inertia.

With the midterm elections only two weeks away and the Democrats in jeopardy, the prevailing wisdom is that the election will be a referendum on the Obama administration’s stewardship of the economy. A large fraction of 2008 Obama voters now cite the economy and jobs as the key reason they will vote Republican this year, according to an October 17 AP poll. “The president must zero in on the economy if he wants to help himself and his party,” writes Eleanor Clift. The basic notion here, promulgated by pundits and political analysts, is that the current political environment turns on the vagaries of the economy. This amounts to a cyclical theory of American politics. And, in fact, several decades ago, the political scientist Douglas Hibbs advanced his seminal theory of the “political business cycle” which argues that economic movements have a sizable effect on American elections.

But another line of thinking suggests that American politics turns on deeper structural changes in economy and society. In the influential Red State, Blue State, Rich State, Poor State, Columbia University’s Andrew Gelman and his colleagues uncovered a paradox that both confirms and defies the conventional wisdom about American elections. While rich voters trend Republican, rich states trend Democratic, he found. The opposite holds as well. Though poor and minority voters overwhelmingly pull the lever for Democrats, poor states consistently end up in the Republican column. A second version of the structural approach comes from John Judis and Ruy Teixeira, who argue in The Emerging Democratic Majority that the rise of the post-industrial economy has tilted the playing field toward Democrats who gain advantage in wealthier urban “ideopolises” while holding onto the votes of the poor and minorities. A third perspective comes from Ronald Inglehart of the University of Michigan, whose detailed World Values Surveys identify a shift in political culture from the more traditional, religious, and materialist orientations of the industrial age to post-materialist values of self-expression, openness to diversity, secularism, and broad public goods like concern for the environment.

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This juxtaposition thus mirrors the debate over the economy: Will shorter-term cyclical factors determine the outcomes of the mid-terms or are deeper structural factors at play?

With the help of my colleague Charlotta Mellander, I decided to take an empirical look at this question. On the one hand, we considered a series of key cyclical variables such as the unemployment rate and its change since the economic crisis began, and also housing prices and their change since the bubble burst. And, on the other hand, we considered key structural factors, such as income a la Gelman, post-industrialism a la Judis and Teixeira (measuring the prevalence of creative class jobs versus working class jobs), and post-materialist political values a la Inglehart, including the prevalence of religion and openness to both immigrants and gays and lesbians. We confined our analysis to the state level, using pooled polling data for both Senate and governor races across the country, which we drew from Nate Silver’s FiveThirtyEight election forecasts at The New York Times. We conducted a basic correlation analysis and compare the results for the current midterm to those for Obama and McCain in the 2008 presidential race. (The graph below summarizes the key findings). This kind of analysis can only point to associations between factors and does not identify any causal pattern, and of course other factors may come into play. Polling data covers a much smaller number of observations than election returns and suffers from other problems. For these reasons, we caution against drawing overly broad conclusions from this exercise. Still, the patterns it points to are quite interesting.

Despite all the “it’s the economy, stupid” hub-bub among the chattering classes, our analysis finds little empirical support for the cyclical view. There was no statistical association at all between the share of voters leaning Democrat or Republican for either Senate and governor races and our key cyclical factors – the unemployment rate, the change in the unemployment rate, housing values, or change in housing values. This is not to say that these factors do not matter at the margin, as polling data clearly tell us that  many individuals are shifting their 2008 Democratic vote to a Republican vote in these midterms.

But it’s structural factors on which this election is much more likely to turn. We find significant statistical associations between most of the structural variables in our analysis and the share of voters leaning Democrat or Republican in both Senate and governor races, as detailed below.

Income: Higher income states went for Obama in 2008 while lower income states went for McCain. The trend continues, even in light of the ongoing economic malaise. Income is positively associated with Democratic share for Senate (.4) and governor (.36) races. And it is negatively associated with Republican share for Senate (-.54) and governor races (-.38). These associations have weakened more on the Democratic side (.52 for Obama) than for the Republicans (.-51 for McCain).

Class: Class played a role in the 2008 presidential election and it continues to do so in the midterms. Creative class states went for Obama in 2008 and working class states went for McCain, and this holds up for the midterms as well. The creative class is positively associated with Democratic share in both Senate (.34) and governor (.36) races, and negatively associated with Republican share in each (-.38 for Senate and -.52 for governor). These associations have again weakened more for the Democrats (.52 for Obama) than for the GOP (-.46 for McCain) in 2008.

Working class states voted overwhelmingly for McCain in 2008 and this remains the pattern today. The working class is positively associated with both Republican share for governor (.46) and Senate (.48) and negatively associated with Democrat share for both (-.34 for governor and -.38 for Senate). The results are slightly weaker than for the 2008 contest (.64 for McCain, -.64 for Obama). While many creative class members vote Republican and many working class members vote for Democrats, the state-level patterns show the continuing salience of class for American politics.

Post-materialism: The shift from traditional, religious to more secular values is a hallmark of post-materialist political culture. In 2008, more religious states went for McCain (.63) and less religious states went for Obama (-.59), and this patterns continues to hold. (Our religion variable is from Gallup polls which ask individuals if religion is an important part of their everyday life.) Religion is positively associated with both Republican share for governor (.37) and Senate (.55), and negatively associated with Democrat share for Senate (-.46), though the correlation for Democrat share for Senate (-.22) is not significant. The patterns are also weaker than in the 2008 presidential election, especially on the Democratic side (.63 for McCain and -.59 for Obama).

From Tom Tancredo in Colorado to Carl Palladino in New York, we’re constantly reminded that immigration and gay rights remain significant wedge issues in American politics. We employ openness to immigrants and gays and lesbians (based on share of adult population) as proxy measures for opennesss – another key marker of post-materialism. States with higher percentages of gays and lesbians and higher percentages of immigrants went for Obama in 2008 while those with lower percentages went for McCain, and these trends also continue to hold. The percentage of foreign-born residents is positively associated with Democratic share in both Senate (.38) and governor (.36) races, and negatively associated with the Republican share in each (-.27 governor, -.5 Senate). These associations have weakened more on the Democratic side (.52 for Obama) than for the Republicans (.-51 for McCain).

The percentage of gay and lesbian residents is positively associated with the Democratic share in both Senate (.58) and gubernatorial (.47) races, and negatively associated with Republican share (-.68 for Senate, -.46 for governor). These associations are comparable for 2008 (.57 for Obama, -.57 for McCain) and among the strongest of any in our analysis. Clearly, openness remains a key factor in state-level politics.

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Despite all the attention that has been paid to the effect of current economic conditions on the upcoming midterm elections, structural factors remain the central axis upon which American politics turns. Yes, richer states are more likely to be Democratic and poorer ones Republican. But it’s more than money. States that have transitioned to more knowledge-driven creative class economies are more likely to be blue, while working class states are more likely to be red, echoing former Republican Congressman Tom Davis’s blunt statement: “Economic development works” – meaning that it tends to turn places to more open-minded, liberal bastions. In line with this and with Inglehart’s notion of the shift toward post-materialist values and cultures, states with higher percentages of immigrants and especially gays and lesbians continue to tack Democratic.

Cyclical factors do play a role in elections and this one is no exception. If Obama benefited from the enthusiasm of creative class voters in 2008, economic conditions have undoubtedly tempered this somewhat this time around. Gays and lesbians have been vocally disappointed with Obama’s failure to act on Don’t Ask, Don’t Tell — a frustration that may well turn out to be discernible in lower turnouts. And, of course, anti-incumbent sentiment is at an all-time high. And “throw the bums out” inevitably takes a greater toll on the party in power.

American politics is periodically recast by “critical realignments” long ago identified by Walter Dean Burnham, like the elections of 1896 and 1932. These political realignments shift the power balance between the parties and, in doing so, provide the political underpinnings for major public policy change which helps the nation better adjust to structural  economic change. Though our economy is currently in the midst of a similar great reset today, whether or not our politics realigns remains an open question.

The connection between creative class states and the Democrats, and working class states with the Republicans is a clear break from the old pattern of the New Deal and post World War II. But it’s equally clear that both parties are constrained by their connections to long-held special interests. By paying excessive deference to the social conservatism and extreme anti-statism of its right fringe, the Republicans are unable to attract the creative class broadly, even though many of its members are drawn to its individualist ethos and fiscal conservatism. Democrats, meanwhile, remain captive to the housing-finance-auto industrial complex which literally defined the old order. As the Cato Institute’s Brink Lindsey quipped some years ago, “Here, in the first decade of the 21st century, the rival ideologies of left and right are both pining for the ’50s. The only difference is that liberals want to work there, while conservatives want to go home there.” A sustained political realignment will only come about when one or the other of the two major parties is able to shuck off the interests that tie it to the past and develop an agenda that is in line with the future.

Unless and until that happens, the United States is likely to remain stalled at its current impasse, lurching between economic and political cycles, while failing to address the deep structural challenges it faces – and unable to develop the much-needed reforms, new economic policies, and broad infrastructure investments required for a new round of sustained prosperity.

Check out my new piece in The New Republic:

Speaking at a health care reform rally in Raleigh, North Carolina, in July 2009, President Obama declared that the worst of the recession was over. “We have stopped the free-fall. The market is up and the financial system is no longer on the verge of collapse,” he said proudly.

A year or so later, with midterm elections looming and an electorate that is as fearful and angry as any in memory, the stock market has risen, but even a breath of bad news can send it tumbling. As dismal as housing prices continue to be, they have yet to hit bottom in some places. Unemployment remains frozen at an overall level of nine-plus percent, and job creation has been anemic. If the crisis belonged to George W. Bush, the recovery has been Obama’s—and it has been a fragile and tentative one at best. Along with billions of dollars in stimulus payments, the president has spent down most of his political capital. So what is his next step?

Read the full article here.

Market forces are already causing a significant reset in America’s housing system – and a lot quicker than most people imagine.

Earlier this week, I argued that America’s penchant for homeownership distorted the economy, and that it makes good economic sense to tilt the balance of homeownership back from its high point of 70 percent to roughly 55 or 60 percent – about the level found in the most innovative, affluent, and highly skilled regions. The Urban Land Institute projections (PDF) already predict the homeownership level will fall back to 62-64 percent as a result of the downturn, tighter credit conditions, and demographic shifts.

This new study by economists at the New York Fed (via Tracy Alloway of the Financial Times Alphaville) suggests an even bigger homeownership reset is underway. Their analysis takes into account owners who are currently underwater on their homes. The study suggests that those who owe more on their homes than they are worth are likely to turn into renters as time goes on. Take them out of the picture and the ”effective rate” of homeownership drops by 5.6 percent, from the current official rate of  67.2 percent to 61.6 percent. That’s getting pretty close to the  reset rate of 55-60 percent I suggested. Here’s a chart from their paper. (There’s also substantial variations by region, as you can see here.)

Source: Andrew Haughwout, Richard Peach, and Joseph Tracy, The Homeownership Gap, New York Fed (via FT Alphaville).

Alloway points to one last bonus figure from the the Fed analysis:

The authors have calculated the additional amount of money Americans would need to save to boost themselves out of negative equity. That is, to close out their existing negative equity and buy a new home in five years time. The sums are pretty staggering: That’s an additional $92bn every year for five years. In other words, the US personal savings rate would have to increase about 0.8 percentage points, to 5.1 per cent. So that’s saving an additional $1,222 a month, or renting. What price the American dream, America?

That’s the question President Obama and his economic team need to be asking now.

The new administration’s urban policy is here (h/t Aleem Kanji).

My first reaction is to be nice and say we should all give them time to get their act together.

But right now, there’s very little new thinking or strategy here, and even less evidence that anyone has a grasp of role location plays in the economy and of the powerful geographic forces that are reshaping the global and U.S. economies. It’s essentially a retread of Clinton-era urban policy, with the Bush-era homeland security add-on, plus some more emphasis on green and neighborhoods.

I sure hope they don’t start pouring stimulus money into this smorgasbord approach…

Your thoughts…

Barack Obama won the election by winning cities, according to this analysis by Nate Silver. (h/t: Alison Kemper). While others have pointed to this trend, Silver does a nice job of putting it all together. Plus the graphics are great.

If Bill Clinton was the first black president, then Barack Obama might be the first urban one. He is the only American president in recent history to seem unembarrassed about claiming a personal residence in a major American city. Instead, presidents have tended to hail from homes called ranches or groves or manors or plantations, in places called Kennebunkport or Santa Barbara or Oyster Bay or Northampton …

In 1992, when Bill Clinton won his first term, 35 percent of American voters were identified as rural according to that year’s national exit polls, and 24 percent as urban. This year, however, the percentage of rural voters has dropped to 21 percent, while that of urban voters has climbed to 30. The suburbs, meanwhile, have been booming: 41 percent of America’s electorate in 1992, they represent 49 percent now).

In other words, if you are going to pit big cities against small towns, it is probably a mistake to end up on the rural side of the ledger. Last year, Obama accumulated a margin of victory of approximately 10.5 million votes in urban areas, far bettering John Kerry’s 3.6 million. Obama improved his performance not only among black and Latino voters but also among urban whites, with whom he performed 9 points better than Kerry. Obama also won each of the seventeen most densely populated states, a list that includes such nontraditional battlegrounds as Virginia, North Carolina, and Indiana. (One hidden advantage of urban areas: They’re easier to canvass to get the vote out.)  …

With the votes that he banked in the cities, Obama did not really need to prevail in the suburbs. But he did anyway — as every winning presidential candidate has done since 1980 — bettering McCain by 2 points there …  It may also be that suburban voters are starting to look — and behave — more like their urban brethren. According to a poll by the National Center for Suburban Studies, 20 percent of suburban voters are nonwhite — not much behind the national average of 27 percent — and 44 percent live in a racially mixed neighborhood (versus a national average of 46 percent). Suburban voters are just as likely to be concerned about the economy as other voters are and just as likely to know someone who has lost a job. Moreover, many suburbanites who do not live in cities may nevertheless be thoroughly familiar with them; according to the Census Bureau, at least eight to nine million persons commute into urban areas each day  …

Republicans trail Democrats among essentially every fast-growing demographic except the elderly — the youth vote, the Latino vote; they never had the black vote. It is long past time that they hone their pitch to urban voters, and find their shining city upon a hill.

Ryan Avent, one of my favorite and one of the very best urban bloggers around, digs into Obama’s urban policy team. As a preface to his longer article which appears in Grist, Avent writes on his blog: “My thinking on the selections has evolved somewhat. Initially, I was fairly disappointed, but I’m more sanguine now.” Money quote: “The urban picks are probably just a bit more explicitly pragmatic and shouldn’t be read as a betrayal by the president.”

The best member of team city, as judged by urbanists and other progressives, is likely to be Shaun Donovan, tapped by Obama as secretary of Housing and Urban Development …A Clinton-era veteran of the agency, he’s familiar with the federal bureaucracy and managed to be effective despite institutional hurdles. More recently, he has demonstrated his knowledge of best practices in affordable housing as a capable head of New York City’s Department of Housing Preservation and Development  … Yet it’s unclear whether Donovan appreciates the scope of the housing challenge facing the nation.

From a visionary perspective, Obama’s Transportation pick is widely seen as the most baffling … Obama used the pick to name his promised Republican cabinet member (Defense secretary holdover Robert Gates excepted). Ray LaHood, a retiring downstate Illinois representative, will be handed the reins of the department at perhaps the most crucial juncture for transportation investment since the Eisenhower years …

Less remarked upon by urbanists but perhaps more disappointing, on the face of things, is Obama’s choice for head of the new Office of Urban Policy… And so the choice of Bronx Borough president Adolfo Carrion was also somewhat underwhelming. Carrion is at least nominally qualified. He’s a trained urban planner and a veteran of the New York political scene. He helped engineer redevelopment of underused portions of the Bronx … Carrion did take a courageous stand in favor of Mayor Michael Bloomberg’s congestion pricing plan … There is little in Carrion’s resume to indicate that the Bronx lifer can explain the necessity of a difficult transition to increased density to residents and leaders of the nation’s great suburban expanses.

The whole piece, here, is required reading for anyone interested in American urbanism and the future of urban and regional policy.

Two conservative intellectuals have recently raised questions about the value of college for most students. While they come from different starting points, they make the same basic point. I find the sources mildly interesting but I think the basic concept is long overdue. Just as high school needs to be reinvented, so does the undergraduate college model.

Charles Murray from the American Enterprise Institute had a piece in the New York Times about a week ago, which is summarized in these first paragraphs.

Barack Obama has two attractive ideas for improving post-secondary education – expanding the use of community colleges and tuition tax credits – but he needs to hitch them to a broader platform. As president, Mr. Obama should use his bully pulpit to undermine the bachelor’s degree as a job qualification. Here’s a suggested battle cry, to be repeated in every speech on the subject: “It’s what you can do that should count when you apply for a job, not where you learned to do it.”

The residential college leading to a bachelor’s degree at the end of four years works fine for the children of parents who have plenty of money. It works fine for top students from all backgrounds who are drawn toward academics. But most 18-year-olds are not from families with plenty of money, not top students, and not drawn toward academics. They want to learn how to get a satisfying job that also pays well. That almost always means education beyond high school, but it need not mean four years on a campus, nor cost a small fortune. It need not mean getting a bachelor’s degree.

Then yesterday George F. Will had a rambling column in the Washington Post about civil rights court cases that included this nugget:

…many employers, fearing endless litigation about multiple uncertainties, threw up their hands and, to avoid legal liability, threw out intelligence and aptitude tests for potential employees. Instead, they began requiring college degrees as indices of applicants’ satisfactory intelligence and diligence.

This is, of course, just one reason college attendance increased from 5.8 million in 1970 to 17.5 million in 2005. But it probably had a, well, disparate impact by making employment more difficult for minorities. O’Keefe and Vedder write:

“Qualified minorities who performed well on an intelligence or aptitude test and would have been offered a job directly 30 or 40 years ago are now compelled to attend a college or university for four years and incur significant costs. For some young people from poorer families, those costs are out of reach.”

Indeed, by turning college degrees into indispensable credentials for many of society’s better jobs, this series of events increased demand for degrees and, O’Keefe and Vedder say, contributed to “an environment of aggressive tuition increases.” Furthermore they reasonably wonder whether this supposed civil rights victory, which erected barriers between high school graduates and high-paying jobs, has exacerbated the widening income disparities between high school and college graduates.

Maybe this rings true to me because it matches my own experience. I never liked school with its emphasis on memorization, and was bored to tears as a college freshman when I dropped out. By the time I went back years later and got a BA, I was able to test out of about two years worth of courses. By then I had started a couple of small businesses, edited and published two newspapers, been a broadcast engineer, managed a radio station, done a lot of political activism, and had many other jobs. None of these required me to have a college degree at the time.

However, I don’t accept Murray’s thesis that this is primarily Obama’s responsibility – everyone under the sun is trying to pile more work on his desk. Instead it should be the basis of a public conversation involving universities, think tanks, unions, and other interested parties.

What do others think?

Rich has already written about how 1930s New Deal stimuli projects will not help this country prepare for the 21^st century global economy. Bloomberg has an incredibly insightful article on the Obama stimulus package. In effect, all the funds that will be appropriated for infrastructure will go for fixing old roads and building new ones to open new open spaces to crackpot development. Whatever one believes about global warming, this is certainly environmentally irresponsible and a step in the wrong direction. Moreover, it will cost cities, which, as Rich, Ed Glaeser, and many others have shown, have subsidized suburban development in the past. Now, U.S. “leaders” want to give us another dollop of past solutions. Optimistically applying old solutions (like ever greater indebtedness) for a debt and insolvency crisis is definitionally “crackpot.”

Can Obama translate his vague promises of change into a real change of direction for this country? To those that responded to my posting about taxation decisions, thanks.

I hope you all have great holidays. Rest, have fun, and prepare to put your thinking caps on because next year will be the most important for the global economy since 1933. We need to be there with alternative solutions and open the space for debate. Otherwise, the economists with old failed theories, some of whom claim to understand the Great Depression, will continue to provide crackpot solutions… to be discussed in the next posting.

How many of you are startled and even a bit frightened at the lack of attention the rapidly worsening global warming crisis is receiving in the U.S. in particular? Yes, there is vague talk from the incoming U.S. President about global warming, but, in fact, the U.S. government is trying everything in its power to boost consumption and raise housing prices in an effort to reignite the housing bubble. Obama is talking about massive infrastructure programs and yet, when you examine the plans, it is largely about building highways with some money for energy conservation in government building retrofits. All of this will be done on a wave of deficit spending that is likely to pauperize the remaining U.S. middle class.

Highway building and energy conservation measures will fail to rein in global warming because hydrocarbon energy is too inexpensive in the U.S. Odd isn’t it, only six months ago, because of the price increases, the U.S. was treating energy conservation as a serious topic. Miles driven were dropping, people were demanding better mass transit, and the move back to the city was being celebrated. The price mechanism was addressing the global warming problem, though it did affect the poor disproportionately. Today, with gasoline prices down, miles driven are increasing, and once again traffic jams and the behemoth SUVs are back.

There is an obvious measure that can address our fiscal deficit and global warming – raise gas taxes, say $0.50 immediately, then after three months another $0.25, and again another $0.25 in another three months (the more one increases, the stronger the signal to consumers is). The phasing in of the increases would provide warnings to auto buyers to choose more fuel-efficient vehicles. This would be a serious response to global warming and the fiscal deficit, but there are no voices demanding such an obvious policy.

You don’t need to be a member of the Creative Class to see how disconnected from reality the policy discussions in Washington, D.C. are. No discussions of raising taxes to address an enormous and spiraling deficit. No discussions of serious policies to discourage the consumption of fossil fuels. The U.S. is today operating on what I term “crackpot optimism,” which I will discuss further in future posts.