Sunday, October 24, 2010

Value of Professors

In Saturday's WSJ, there is a lengthy piece about measuring the value added of professors at public schools. The author focused on Texas schools, especially Texas A&M. Apparently, A&M developed an income statement approach based on tuition generated by the individual prof less costs incurred by the prof, and then the difference was value added. Since the school is public, I don't see any problem with this. Tax payers, present and future, have a right to know how their confiscated funds are being deployed.

While there appears to be quite a lot of problems with the approach taken here, which I'll get to shortly, I must say that the concept of calculating individual value added is a good one. This is something every person should do when engaged in work for others: ask "what is my value-added here?" For professors, this is something that revolves around the primary tasks of teaching and research, along with "service."

Value added for teaching, for me, means this: whatever the students could get from reading/working on their own is my baseline. My teaching has to go beyond that level for me to be considered to be "teaching" at all. The further beyond you go, the better you are doing. Good teaching, like good anything, is hard work. Same goes for research, but by and large, students at the undergraduate level don't care about our research and their the ones paying the bulk of the tab, in gross. So on a day-to-day, I mostly think about value added in teaching.

So, an exercise to focus on profs value added I think is important. Now to the technical problems with the method of A&M. I'm sure they counted and added up the numbers correctly, so I don't mean technical in that sense. Rather, I mean technical in the sense that I don't think they have the measurements conceptually straight to begin with. Specifically, the don't seem to be able to differentiate between investment and consumption - one builds stock, the other is just flow.

For example, they find that a senior science prof has value added of near $250,000 per year, whereas a rookie prof has value added of around -$50,000. The senior prof has established, the rookie spent most of the year building a lab, applying for grants, and so forth. His negative value added constitutes investments, whereas the senior prof is earning the net profit from earlier investments. I didn't see anything in the paper that suggested this conceptual differentiation was occurring. I hope that, since this is apparently A&M's first stab at this issue, they'll get better with time. Probably there is some worthwhile reading there, if I can get my hands on the full report, too. You never get all the details in a newspaper article.

The upside I see here, that I mentioned before but will close with, is that such exercises cause us to focus on the value added potential that exists. So will I lament the fact that such-and-so professor can't teach "Medieval Folk Literature of Romania" to three people every year? Without question I will not. Such rarefied material is fine at a private university. But if folks want to insist on public universities and that an education is a public good then the education itself has to result in productive skills.

By the way, I don't buy into the whole public good b.s. I don't think we should have public universities. But that's another post for another day.

Friday, October 8, 2010

Ferguson Lecture

Anyone stopping in should go see this lecture from Niall Ferguson. He is a top-notch economic historian, especially of financial topics. It is very unsettling, especially for those living in the U.S. and UK.

Sunday, October 3, 2010


Where do rights come from? The Declaration of Independence, with the line regarding truths that are self-evident, suggests that the right to life, liberty and the pursuit (key word, by the way) of happiness are natural rights. To the framers, the natural rights are granted to humans by the Creator. Or creator, depending on how you view these things.

I'm not versed in the philosophy of rights and whatnot, but it seems that the above (natural rights) position has as its opposite the position that rights are granted by the state to its populace. The sticking point, as I see it, is that natural rights can be violated by the state. This makes it akin, in practice, to the rejection that rights exist outside of the state. So because the rights can be violated, and this looks like the rights are being rejected, then they must be granted by the state in the first place. This does appear to have some logic to it.

But note the conundrum one arrives at after a reductio ad absurdum. If the state grants rights and therefore can revoke those rights at any time then anything the state does is acceptable. I'm sure you can see how this leads one have to accept certain completely unacceptable historical events.

It seems that only a natural rights position in tenable at this point.

Friday, October 1, 2010

Renminbi Revaluation

Officials in the White House are pushing hard to get China to revalue the Renminbi, and congress passed some sort of resolution suggesting a tariff on Chinese goods if China doesn't revalue the currency.

The story, I guess, is that Chinese goods are artificially undervalued and thus unfairly competing with U.S. produced goods. Many economists and other bloggers have pointed out that, if this hurts anyone, it is actually the Chinese since U.S. consumers are able to purchase artificially cheap goods.

But the story goes that if the currency was revalued upwards, then U.S. goods would be more competitive. Unfortunately (and I don't know who else has pointed this out), this assumes facts not in evidence. Specifically, I think the probability is high that goods produced in China are not also produced in the U.S. That means that the revaluation would have to be pronounced and permanent so as to encourage U.S. producers to start manufacturing (say) tennis shoes in the U.S. again. How long would that take, if this happened at all?

Moreover, to the extent that Chinese goods are actually inputs into U.S. goods (say steel), this will raise the costs for U.S. producers, the bulk of which will be passed on to consumers. Those that aren't will cost shareholders.

Now, this kind of interventionism will hurt anyone who buys stuff from China, and help those who don't. Who is being helped by this operation? Anyone who sources from non-Chinese manufacturers.

This is just another intervention to favor one small group of producers at the expense of a large swath of people (consumers and other producers).