In light of my last post, I decided to write something positive about President Obama: I think most of his foreign policy decisions have been very good. While some think his brand of “YouTube diplomacy” is a little unstatesmanlike, I happen to think it might work. He told us that when it comes to countries with which we have issues, like Iran, he was going to do things differently — and he has done so. When he said he would sit down with Iran personally and negotiate, whereas Bush would not, some thought that was naive. But I think the way he is playing it has a chance of working. By using more diplomacy than before, and by making these gestures public for the people of the world to see on their computers, he puts the onus on other countries to step up and do their part. No longer can they accuse the United States of not negotiating, when it’s out there for the whole world to verify. Now Obama can say, “They wanted us to talk to them, and we’re talking to them.” So if countries still won’t do their part and make concessions, he can say, “Okay, we tried our best. Now send in the Tomahawks.”

I’m not sure about the Afghanistan strategy – many have tried to overthrow insurgents in Afghanistan and have left empty-handed. But I hope it works. It puts the focus back on Al Qaeda, and anything that makes Cindy Sheehan mad is just fine in my book. One thing I know for sure: you’ll never hear Obama call this a “surge.” He voted against the surge in Iraq, and even when it worked said he still would have voted against it. He’s not coming within ten feet of the word “surge.”

Secretary of State Hillary Clinton came out last week and said that the United States is partially to blame for the drug-cartel-fueled crime in Mexico that is starting to come across our borders. Some said it was unfair to put the blame on us. I hate to agree with Hillary Clinton (oh, how it pains me to agree with her!), but she’s right. We are at fault. Are we the cause of all of Mexico’s problems? No. But we have some culpability here. Without any demand, supply would dry up — just ask Smith-Corona. You can’t condemn the results of a market and pin the whole blame on the supply side. That would be just as stupid as blaming McDonald’s for making people fat, and not putting any of the blame on people who eat it 5 times a week. Or blaming the tobacco companies for selling a product that everybody knows kills people when used as directed, and putting no blame on the people who continue to use the product. Oh, wait… nevermind.

I don’t agree with much of what Obama has done on the economic front, but when it comes to foreign policy, I think he has made some good decisions. I like that he is not reflexively saying “If Bush did it this way, I’m doing the exact opposite.” That’s the way Bush played it with respect to Clinton, and he messed up a few things as a result. Obama is listening to the generals on the ground in Iraq and Afghanistan, even if it means putting in more troops than Nancy Pelosi, one of the greatest military minds of our generation, would like. He’s trying to sound like someone who will work with other countries. And he’s making it clear that we will use diplomacy more than before, and if diplomacy fails, it will not be because we did not try. Many people think Bush could have done more before invading Iraq, and that obviously is part of his legacy. When it comes to Iran and North Korea, Obama does not want to make the same mistake as his predecessor, and I don’t think he will. I hope he succeeds.

I want to take this opportunity to thank those of you who have been reading this blog faithfully. I can’t express how much I appreciate having the audience. The overall site traffic numbers have been increasing steadily, much of it being visits by previous viewers, which apparently means you aren’t sick of me yet. The only downside to this is that the spam comments I get have increased. It used to be one a week. Now it’s more like two a day. The spam has grown as the amount of site traffic has grown, so I guess I should consider increased spam the cost of writing posts that people seem to want to read. But I’ve had enough of it and I won’t put up with it any longer.

Because of the spam, mostly from Russia (we introduce them to capitalism, and they use it to give us spam), I am changing the comment feature on my blog. Your comments will no longer show up immediately — they will have to be approved first. I apologize for the inconvenience this might cause, and I really do not want this to limit your interaction with me on this blog. Please trust that as long as you’re commenting on an article and not trying to sell something, your comments will be approved. I check my e-mail pretty frequently, so you shouldn’t have to wait long. Hopefully after I have it like this for a while, the spam will stop, then perhaps I can switch comment approval off, but we’ll cross that bridge if and when we get to it. (Note: another option is to make people set up an account and log in in order to comment. I don’t like that option, as it makes it harder for people with mobile devices, but if others think that’s a better way to go, I’m willing to listen.)

On another note, I apologize for not posting as frequently lately. Work has been hectic and I am also frustrated by the fact that most of what I have been writing about has been looking at issues from a critical and often rather negative perspective. I don’t like to think of myself as a negative person, but apparently that’s what’s been coming out here lately, and I don’t like it. I need to work on that… Happy thoughts. Happy thoughts.

In light of the spending of trillions of dollars by our federal government, the printing of trillions of dollars by the Federal Reserve, and the assault on anyone actually successful in this economy as underhanded or undeserving of the income they earned, I decided to share my all-time favorite speech. From Atlas Shrugged, by Ayn Rand, it is a speech by Francisco d’Anconia, a wealthy industrialist, at a dinner party of mostly Washington politicans and socialites. Francisco has just overheard a woman call money evil, prompting this response. It’s a bit long, but well worth the read — much like the book from which it is taken. I tried reprinting it directly on this blog, but for some reason it kept disappearing. So instead, I share the link.

http://www.capmag.com/article.asp?ID=1826

You should know by now the “men of the double standard” to which Francisco refers. They have been in the news a lot lately, complaining about people at AIG who honored contracts according to the law passed by these same men of the double standard. They denounce anyone who has been successful, assuming that since they cannot produce anything themselves and have been in government their entire lives, the only way someone else may have become rich is through shady or unlawful practices. They denounce the private sector, saying only the government can solve our problems, then beg the private sector to join them in a public-private partnership. They hold as sacred the “right to privacy” and then abandon it when it suits their political whims, releasing the names of private individuals who did nothing more than take the money that was contractually owed to them, so they can be swarmed by the media and citizens whose outrage, while justifiable, is more appropriately aimed at the men of the double standard who were too interested in politics to read the laws they pass.

In a recent post, I discussed my frustration with cheating at academic institutions. Surprisingly, the very next week, I discovered a student cheating on a midterm exam. Talk about bad timing on this student’s part. I can’t get into details of the situation, but I wanted to mention that I had the option of just giving the student a failing grade and leaving it at that. I chose to not only do that, but also to follow through with a formal complaint, accusing the student of violating SCSU’s Student Code of Conduct. So far, it has required me to write a detailed explanation of the events surrounding the incident of cheating. I’m not sure how far the process will go, or what decision will be made. I know that if a student disputes a charge, it goes to a formal judicial board hearing, and I would have to spend a few hours of my day going through that. I can’t imagine the student disputing the charge, since this time I had solid evidence. But I wonder what punishment will befall the student if they just plead guilty and beg for mercy. Will someone in Student Affairs decide that a failing grade is punishment enough? Will the student be suspended? If the student does not like that option, will they pursue a judicial board hearing and hope the sentence imposed by the board is better than the one already offered? I’ll keep you posted and provide more details in the future when I can.

I’m making a stand here on principle. If the problem is that students cheat and professors do nothing about it because it’s a difficult process, then the solution is for professors to bite the bullet and do what’s right, not what’s convenient. So I’m doing what’s right — to protect the integrity of the university, and to protect all of my students who don’t cheat. If I were an honest student who didn’t cheat, that’s what I would want to be done.

I was going to stay out of this whole AIG mess, but it just keeps getting better and I can’t resist. There is so much hypocrisy and disingenuous outrage that I just have to give my take on this.

For anyone unfamiliar with the situation, here’s a basic description of what happened. AIG, the country’s largest insurance company, was going to go under last year because they bet that mortgages would not default and many of them did. AIG was another company “too big to fail,” so the government gave them $85 billion last September. They have given them more since then, to the tune of around $170 billion. That’s billion with a “b.” Now it turns out that AIG paid a bunch of their employees their annual bonuses last week, to a total of $165 million — about 0.1% of the federal money AIG has received. Surprise, surprise, everyone’s mad.

First, these aren’t “bonuses” in the way that you or I use the term. As King points out, a lot of salary is moved to a “bonus” for tax implications. Here’s an example to help illustrate. Players in the NBA don’t get huge signing bonuses because their contracts are guaranteed: if they get injured or the team doesn’t need them any more, they still get their money. And many players that sign multi-year deals get more on the back end, as a way of encouraging the player to stay with the team. But in the NFL, contracts are not guaranteed — players who do great one year and then get injured (Priest Holmes, anyone?), and players with large balloon payments in late years of their contracts, can get cut and not see a dime. So how do NFL players insure against this? They structure their contracts so that they receive a giant signing bonus up front and take less money in annual salary. In much this same way, Wall Street cuts down on regular compensation for tax purposes and gives people much of their salary in bonuses, which are taxed differently for the company. Many “bonuses” are contractual obligations that have little or nothing to do with actual performance. Even if AIG employees did a horrendous job, they’re getting that money because they already took a reduction in regular salary so the company could decrease its tax liability.

Apparently nobody knew about these bonuses, and that’s why Congress and the President are getting mad about it right now. This strains credulity, since a provision was put into the stimulus bill exempting bonus payments that were contractually arranged on or before February 11, 2009. That applies to all of these contracts. Congress wrote it into the bill that they passed, and now they’re shocked that AIG actually paid the bonuses that they are contractually obligated to pay. That’s why so many people are referring to this as phony or misplaced outrage. Congress should have known. Paraphrazing Representative Mike Pence (Rep-IN) yesterday: ”We give $170 billion to a company that ran itself into the ground making bad decisions with its own money, and somehow it’s shocking and outrageous that they didn’t use those funds appropriately?” Spare me the histrionics.

Everyone in Washington was so outraged that they demanded to see the former president of AIG, who was working for only a dollar a year by the way. Not the type of greedy Wall Street executive that Congress loves to give a tongue lashing to, but he’d have to do for now. He was brought in front of Congress (since they have nothing better to do) yesterday and interrogated. He said that he asked his employees who received bonuses to “do the right thing” and give back at least half of the money. They are not all complying, as one might expect. This is private information, so AIG is not releasing the names of the people who received bonuses, just descriptions of their situations. Representative Barney Frank (Dem-MA) demanded the names of the people who received bonuses, even though this is confidential information. This is the same Barney Frank who voted for this exact privacy legislation so that salaries are confidential information, between only you, your employer and the IRS. It’s the same reason why illegal immigrants “undocumented workers” can pay taxes to the IRS, but the IRS cannot release the information to the Department of Homeland Security — because Barney Frank voted to keep that information private. Until, that is, Barney wants the information to further his own political ends, then privacy be damned, he wants the names! Washington is his own little Gestapo. (On a different note, if you haven’t watched the O’Reilly-Frank smackdown, it’s a must see. If you’ve already seen it, watch this and try not to fall out of your chair laughing. If you enjoyed that, watch this.) The hypocrisy and fake moral indignation is maddeningly blatant, and apparently the only ones who can’t see that are the people in Congress doing all the finger-wagging.

Then there’s our good friend Senator Chris Dodd (Dem-CT). First he complained about this provision in the stimulus bill, saying it was unacceptable. Then when asked about the language in this provision, he admitted he actually worked on it originally. On Tuesday, he told a reporter from CNN that the language exempting these contracts wasn’t in the bill when the bill left his office, but somehow it got put in there later. He had no idea how it got in there, but he definitely had nothing to do with it. Then the next day he admitted actually putting it in himself. His explanation of the about face: he was mistaken and just didn’t remember things correctly. Riiiiiiight. But of course it wasn’t his fault — he did it at the request of Obama’s Treasury Department, who while denouncing the excesses of Wall Street purposely put this provision in so that they wouldn’t annoy Wall Street too much. Now Dodd is trying to parse his words and say that he didn’t say what he said, but if you look at the statements, he was lying before and had to come clean. (Update 3/19 at 8:30pm: Geithner is now admitting he asked for the provision to be put in there, as he was afraid that people from AIG would sue the government over the cancellation of their bonuses as a violation of their contracts.)

Now it’s President Obama’s turn. He also comes out in protest of these bonus payments, but he actually takes responsibility for everything instead of passing the buck like Dodd and Frank always do. Given that his Treasury Department had the provision put in, and he actually signed the bill, it’s a “the buck stops here” kind of situation. He did the right thing and bit the bullet for Tim Geithner, who must be the loneliest man in Washington, D.C. right about now.

I have questions for our government officials in D.C. First, for President Obama: Isn’t all spending stimulus? You gave your speech to the Democrats and said that spending = stimulus, and we have to spend money. You mocked Republicans who said that some spending wasn’t stimulus. If that’s true, why does it matter whether we’re giving money to people who work at AIG, who then go home and spend that money or put it in the bank (keeping our financial system strong), or giving it to other people as part of other programs in your stimulus bill. If all spending is good, which you have implied many times it is, what does it matter who we give the money to? Oh, they’re rich people on Wall Street, and being rich = being bad, so I guess I get it…

Now my question for Congress: where was all this outrage when earmarked legislation was rushed past your offices and we spent TRILLIONS in the last few months? Being outraged over $165 million after passing spending bills totalling several trillions is like a husband buying a new boat and then yelling at his wife for leaving the light on and wasting electricity. There is so much pork and waste in the stimulus bill, the Omnibus bill, and the new proposed budget for next year that it makes $165 million look like a drop of water in Lake Superior. I would love it if Congress actually suddently realized the error of their ways and actually looked out for the taxpayers and safeguarded their money. But that’s not what’s happening here. This is a political play, plain and simple. And they’re too stupid to realize that by being all outraged over this, they’ve just set the stage so that every time any spending bill or earmark comes up, someone in the opposing party can say “You got upset and did something about a little $165 million mistake, so how can you justify spending $X on this?“ Senators and Congressmen like Frank and Dodd jumped headlong into this thinking it would benefit them, without realizing it’s going to make their lives miserable in the future. Soak in the irony, my dear readers.

I have one easy solution to all of this. READ THE FREAKING BILL BEFORE YOU VOTE FOR IT OR SIGN IT! How many times do we have to hear that a bill is so urgent it can’t be debated, then we find out there were all kinds of weird provisions in the bill that have had unexpected adverse consequences? Congress doesn’t read the bills they vote on and the president doesn’t read them before he signs them. Then they both get mad at the people who behave according to the bill they passed. They then demand accountability for this horrible, shameful behavior. Off with their heads! I don’t even know how they can all yell and scream with a straight face, when it’s so transparent to everyone else. And for Obama, maybe none of this would have happened if he had kept his campaign promise to have all legislation available on the internet for public comment for at least 5 days before signing a bill. He broke that promise with the stimulus bill. He also promised that he would go line by line through budgets and eliminate wasteful spending, and he broke that promise with the Omnibus bill. He also promised the American people that when we spent hundreds of billions bailing out Wall Street, it would be done responsibly. He told us he understood how angry we were that money was going to the people who got us into this mess. He told us that he “got it” and knew we didn’t want to bail out Wall Street, but it was necessary, and he assured us there would be 100% accountability for every penny. If he intends to keep that promise, he might want to make sure at least one person in his administration actually reads the next bill before he signs it.

No, this post is not about financial bailouts. It’s about educational bailouts — specifically, the policy my university has for dropping courses and replacing bad grades when a student retakes a course in which he or she did poorly. The week before spring break, I had about 20% of my Industrial Organization and Public Policy class drop. I was a little annoyed about it, but I tried not to take it personally. It’s not exactly an easy class, and for some students with hectic schedules, it might just be too much work. I can’t make it any easier without feeling like I’m not doing justice to the material — if I don’t require students to be able to solve for the Cournot and Stackelberg equilibria in a duopoly, I could be accused of dereliction of duty. But it got me thinking about the entire system of adding and dropping here at SCSU and MnSCU as a whole, and how horribly it is set up. It’s unfair to students, professors, and the entire concept of education. That may be a bit strong of a statement, but hear me out.

Here’s how the drop system works at SCSU. Students have one week of class to determine if they like a class and they can drop with no penalty. That’s it. One week. At U.C. Berkeley, we had about 6 weeks — enough time to go through a few assignments or an exam and see if the class was something you could actually handle. I remember one course, Econ 101A (Intermediate Microeconomics with Calculus) where, after the first midterm exam, enough people dropped the class that the waitlist for the course was down to zero. At that point, the professor said, “Congratulations. I had to keep the course tough to get people to drop, so I’ll make it easier from here on out.” Here at SCSU, as a student you really have no opportunity to see what you’re getting into until it’s too late. If students drop after a week but before the half-way point in the semester, they get a W on their transcript. The W does not factor into the student’s GPA, but obviously it doesn’t look good either. Typically, students will re-take the course again to replace the W with an actual grade. The problem is that if students drop too many courses, they can end up having to repay financial aid to the state and federal government.

So what do a lot of students do? They don’t want to drop and get the W, especially if it is a course they need for their major — they have to take the course over anyway, and there may be financial aid implications (explained below). So they ride the course out the entire semester, barely showing up in the end because they know they’re going to fail anyway, and then they take the final exam. I fail them, they take the class over again, and they get the better grade. Everybody wins, except for the taxpayers who are partially funding their education, who end up paying twice for the class: once when the student failed it and again when they take it again to replace their grade. We have full replacement here at SCSU, so if you get an F and then retake the course and get an A, the only grade that impacts your GPA is the A. (The F still shows up on the transcript, but unless you’re applying to graduate school, nobody will ever know…)  There is basically no penalty for taking a class and failing (other than the fact that a student will take longer to graduate)…unless the student stops coming to class. See, when I give a failing grade, I actually have to assign one of three different types of grades. The standard F is for someone who went the whole semester and just did poorly. Then there is the FW, which is given to students who do not drop (probably because it’s past the drop deadline so they can’t drop) but who stop coming to class or doing online assignments. And there is the FN, for students who are enrolled but never even showed up in the beginning. It’s all very complicated, but I know that if a student is in class until the last week and then stops showing up, they get an FW and can get in financial aid trouble and may have to repay financial aid. But if they go the whole way and take the final exam, they get the F and keep their money. I used to wonder why some students who I hadn’t seen since the second midterm exam actually showed up to take the final exam and bombed it, but now I know why. If they don’t take the final exam, a professor might interpret that as a drop and give them an FW and they might take a financial aid hit. It makes perfect sense. And if I were in their shoes, I would do the same thing. We have a system that basically tells students that if a course is not required (my course is not required for majors), they should just drop the course and take the W and take something else next semester. And if it is required, so they’ll have to take the course again, they should stay in the course and just fail it. That’s why so few people ever drop my principles courses even when they’re doing horribly – they’re required courses for most of the people who take them, so they’ll have to take them again anyway.

I understand the financial aid angle — if students blow off a course and aren’t really in school, they shouldn’t get loan and grant money as if they were taking school seriously; they should have to pay that money back. I get that. But you can’t combine that policy with the full replacement of grades and not realize that it gives students in required courses an incentive to phone it in for the last month in the class and just take the F.

I have two recommendations to make the system better. First, the deadline to drop without getting a W should be extended beyond just the first week. Give students at least a month — let them actually get a feel for the course before you punish them by giving them a W. Second, the free replacement of any grade needs to be changed. Knowing that an F can be replaced completely, students that know they are struggling in a class during a semester might as well just blow off the class completely. They’ll have more time for their other classes and can salvage those grades. At some schools, including Berkeley while I was there, a student that takes a course more than once gets the average of the two grades. That gives students the incentive to learn as much as possible and actually take the class seriously, even if they know they might need to retake it later. That F might turn into a D with a little bit of effort, and the student will no doubt learn more in the process. Or the school could use some weighted average, putting more emphasis on the better grade. But there should at least be some penalty for failing a class or else students will do exactly what they do now — take advantage of the system.

I’m interested to hear what students have to say about these policies — please comment if you have any thoughts about this.

P.S. Sorry it’s been a while since my last post — it was Spring Break and I was trying to relax a little bit and catch up on some things.

Here are some quotes from the week that I found interesting. I liked the first one so much I wanted to share it, but thought I should add a few more.

1. “I think we have the best president imaginable in the White House right now, but if we wait on him to solve all our problems, we’re not being America.” Cory Booker, Mayor of Newark (March 8). I love this quote, and I couldn’t agree more, well, at least with the second half of that sentence. It used to be that Americans did not wait for their government to do things for them. Does nobody in government these days remember JFK’s speech? “Ask not your country can do for you. Ask what you can do for your country.” I was very impressed with Booker on Real Time with Bill Maher – he was level-headed, well-informed and not at all mean-spirited. Pretty much the opposite of Bill Maher.

2. “Nothing is harder in politics than doing something now that costs money in order to gain benefits twenty years from now.” President Barack Obama, (March 5). Amen. I agree with Pres. Obama on this, and wish more politicians took a long-term cost-benefit approach. I also wish more Americans realized the short-run sacrifices that must be made for long-run gains, and voted accordingly.

3. “Never waste a good crisis.” – Senator Hillary Clinton (March 6). Sen. Clinton echoed White House Chief of Staff Rahm Emanuel who said the same thing in November. Hillary’s goal in this speech in Brussels was furthering worldwide efforts on combating climate change. I’m not sure how adding carbon taxes and regulations are going to be easier to get pushed through when the world is in a recession and more people are unemployed and struggling to feed their families and keep their homes, but what do I know? I’m an economist, and we all know Hillary doesn’t care what economists think.

4. “Do you think there’s any truth to what the Republicans are saying, that the Democrats are taking advantage of this crisis to put forth their agenda? Now, that’s how Republicans think because when 9/11 happened, of course, that’s what they did.” –Bill Maher (March 6 – just a few hours after Hillary’s quote above). Uh, yeah, Bill, there is some truth to it. Ask Hillary. I know Bill loves to think that Republicans are evil and Democras are saints, but it’s not just Republicans that are opportunistic. Most politicians are opportunistic. Maher’s quote is similar to one I heard from Judge Andrew Napolitano on the radio earlier this week. I don’t have the exact quote, but his basic point was that Obama is behaving very much like Bush did. Bush used 9/11 to push through the Patriot Act, and Obama is using the current recession to push through his stimulus and budget bills. Both presidents said that the situation was so urgent that they could not waste time with debate, used the urgency of the situation to get a bill passed quickly that otherwise would have met with substantial debate, and implied that anybody who disagreed with them was doing harm to the country.

Update: Here are two more.

5. “If you bound the arms and legs of gold-medal swimmer Michael Phelps, weighed him down with chains, threw him in a pool and he sank, you wouldn’t call it a ‘failure of swimming’. So, when markets have been weighted down by inept and excessive regulation, why call this a ‘failure of capitalism’?”  – Peter Boettke, George Mason University. The same people that say “this is not socialism; we have always had a blend of markets and government” seem to be the same people that now decry capitalism and say that it has failed and now we have to push more towards government intervention. It wasn’t capitalism that failed — it was the specific blend of capitalism and regulation/taxes/subsidies that were in place in the housing and financial markets. People in government are so quick to blame the capitalism portion instead of the regulation/taxes/subsidies portion.

6. “Occasional crises are the cost of the prosperity that entrepreneurial capitalism brings. Try to eliminate risk, and you eliminate entrepreneurship itself.” – more from Peter Boettke, in this editorial. Lambasting bank executives, saying they wanted capitalism on the way up but socialism on the way down, is just fine. The solution is not to destroy capitalism — it is to stop bailing everyone out.

Every semester, faculty on the Announce list-serv get a Sexual Assault Profile Report e-mailed to us. Identities are withheld, but it summarizes information about sexual assaults reported to the Women’s Center here at SCSU. It contains information such as: how many, where they occurred, who the attackers were. The WC does not even bother with the pretense of using the word “alleged” in this report, despite the fact that according to the report only 20% of the cases resulted in some consequence to the attacker; attackers apparently are presumed guilty.

I chide the WC for assuming guilt, but don’t get me wrong — I think it is vitally important for people to know this information. I applaud their efforts to get this information to the university community. If the number of reported assaults is on the rise, and it is (15 in Fall 2008 vs. 10 in Fall 2007), we need to know about it. Female students need to know that they need to take precautions, and other people need to know what to watch for. If it is on the decline, we also need to know this so that we have proof that our efforts are working and give credit where credit is due.

Similarly, I believe there needs to be an official report by the Student Affairs Office providing an overview of the number of cases of alleged cheating (notice I included the word ”alleged” — I’m old school in the fact that I presume innocence; the Women’s Center is so ahead of the times that they drop this quaint old concept). Students and faculty need to know how many students were brought up on charges of cheating, how many of them were punished, and how they were disciplined. Right now, nobody knows anything. Students know cheating occurs — and they admit it when surveyed. But nobody knows what the punishment will be. I believe that the fact that nobody knows how widespread cheating is or how cheaters are punished causes more cheating.

When I was teaching at Saint Louis University while I was a graduate student, I strongly believe I had a student cheat on an exam. He received special testing privileges allowing him a quiet room and extended time. He told me this a few days before, and showed me the documentation from Disability Services, so I told him that I would put him in one of the study rooms in the building and he could take his exam there while the rest of the class was taking the exam in the classroom. (I didn’t want him taking it early and telling people what was on it, or taking it late and learning what was on it before he took it.) That turns out to have been a mistake on my part. He knew he would be alone, isolated in a room with only a small glass window in the door, at the same time I was down the hall proctoring 44 other students in another room. After their exam finished, I would wait in the lobby of the building for him to finish the exam, since he received extra time.

On the day of the exam, he came to the room where everybody else was starting their exam, and I gave him a copy and told him to go to a specific wing of the building, choosing one study room in a particular corridor that contained about a dozen such rooms. When the rest of the class finished their exams, I looked through all the windows of all the doors in this wing and he was not in any of the rooms. I figured he stepped out to use the restroom. I went to the lobby and waited. I checked back 20 minutes later and still could not find him anywhere. I decided to just relax and go to the lobby and start grading the exams. When his actual time was up, I went and looked for him again. Still nowhere to be seen. I was starting to get angry. My parking meter was expiring and I was worried about getting a parking ticket. (I did in fact get a ticket — the little creep cost me $25.)

About 25 minutes later, he waltzed into the lobby and gave me his exam as if nothing was wrong. I asked him where the heck he had been and he said he was in one of the rooms. I told him he was NOT in one of the rooms, as I checked all of them several times in the last hour. He said he went to the bathroom a few times. Regardless, he was late and I should have wiped out his whole exam right then — he broke the rules. I took his exam anyway and left annoyed at the whole situation. When I got home, I looked at his exam and could not believe what I saw.

Before every exam I give, I give students a set of practice questions to give them a better idea of what they will need to know. I give them solutions to the questions if they show me they have made a serious attempt at answering at least half of them. And I tell them that I will use at least one of those questions on the exam, giving them an incentive to really study from them and make sure they know the answers. I think it’s a great system. Not so much this time.

His exam was about as bipolar as an exam can get. For any of the questions that were similar to the ones I had on the practice problems, he answered perfectly. Too perfectly. Verbatim from the answer key. And I mean three sentences verbatim, word for word exactly what I have on the answer key. But on the questions that were about different material than the practice questions, he was so far off that it was not even funny. Every answer was pretty much the exact opposite of the correct answer. His sentences were more much shorter, and much more vague. It seemed pretty clear to me that he took the exam somewhere, had the answers on him (or looked them up online, since I put them up on the web at that time) and copied down what he could. For the rest, he had to rely on his brain, which wasn’t working so well that day.

I informed him of this and told him that, in my opinion, it appeared that he cheated. Not once did he ever say to me, “I did not cheat.” If it were me and I were accused of cheating, the first thing out of my mouth would be, “I did not cheat.” He never said it once. I brought him up on charges with the Dean’s office and there was a hearing. I went to the Disability Services office beforehand and spoke with the person in charge there about the case, and he told me that he had had problems with this student in the past. The student was in their office taking an exam once and left to use the bathroom for about a half hour. This man finally sent a student into the bathroom to check on him and from behind one of the stalls, he hears papers crinkling. So this man brought him up on cheating charges too, and those went nowhere. I introduced him as a witness in my hearing, to testify to a pattern of behavior.

So we had our hearing and he finally gave his defense. Previously he had no explanation to offer me. Now he’s got a whopper: he has a photographic memory. He memorized all the answers verbatim but since he didn’t actually learn anything, he tanked the questions that weren’t from the practice solutions. This is the same student who, when working on homework, had to have answers explained to him about a half-dozen times and still would not understand it. Now he has a photographic memory. And at the hearing, he finally says the magic words, “I did not cheat.” I mention to the board that this is the first time he’s ever said that to me. The board, consisting of 3 undergrads, 1 grad student, and 1 faculty member, deliberates for about five minutes and finds him not guilty. Nevermind that he wasn’t where he was supposed to be at any point I was looking for him. Nevermind that he came back 25 minutes later than he should have. His photographic memory claim (which the board did absolutely nothing to substantiate) absolved him of everything. In their minds he had done nothing wrong. I walked out of the room stunned.

What are faculty supposed to do, short of videotaping all of their students taking their exams? Faculty have learned that when we bring charges of cheating, students walk most of the time because the standard of proof is apparently so high that a student can talk his way out of anything: claim you have a photographic memory and they believe you without asking you to demonstrate this phenomenal ability. That’s why many faculty simply give up trying and just look the other way. That’s why, when I see a student looking on another student’s paper, I move them to another seat. I want to take their exam and rip it up in front of them, grab them by the collar and throw them out of the room, and give them a zero, but I think it’s going to cause too much of a problem and ultimately I will be left unsatisfied with the solution. I have seen several faculty profiles on RateMyProfessors.com where the comments by students say that it’s so incredibly easy to cheat in this professor’s class because the professor just sits in the front and never even bothers looking up. Never walks the room at the start of the exam to make sure there aren’t items under the desk in one row that might help someone in the next row. Never bothers to see if there is anything on a student’s desk that they should not have. Never checks the calculator to see if, perhaps, they have a cheat sheet taped to the bottom of it. Never bothers to see if there is writing on the inside of the label of that Coke bottle. (Yes, students, some of your professors know about that trick.) Many of the students find it laughable. So they just keep on cheating. Why learn when you can cheat?

And for faculty, why try to fight it? Even when you catch a person red-handed, it’s an administrative nightmare for everyone involved, parents get upset at the whole thing, and in the end the student walks away clean. It’s just not worth it for most faculty. There is no mention of it in the student’s record, so that when it happens again and a pattern develops, that pattern remains hidden. And there is no public record that there even was a hearing, so nobody knows about it. At least in the case of sexual assaults, somebody is providing numbers so we have an idea of the size of the problem.

If students knew how many times other students tried to cheat and were brought up on charges, it might make them think twice about cheating. Then again, if students knew how many times students walked away clean from the hearing about their alleged cheating, it might just empower them to try even more. The whole process makes me sick to my stomach. That’s why I write two versions of my exams. That’s why I don’t give multiple choice exams. That’s why I don’t let students take exams late. That’s why I don’t allow calculators except for upper division classes with difficult math. I don’t want students to cheat — it’s not fair to all the other students that worked hard studying for the exam. And I know most students are good students. I have had students walk up to my desk during an exam to let me know that their pen ran out of ink and they are going to reach into their backpack to get another pen. They let me know ahead of time so I don’t see them doing it and think they’re cheating. The first time that happened, I couldn’t even believe it. I love those students.

Cheating is a huge problem on college campuses. But nothing is done about it because nobody knows how bad the problem really is. And the only way we’re going to know is for this information to be made public.

Revised data released today showed that job losses in December 2008 were revised upward to 681,000 people. It was reported on ABC World News Tonight as the largest single-month job loss since 1949. This is true if you look in nominal terms — just looking at the actual amount. But in terms of “real” numbers, it’s not even close. Nominal values are current values, using current prices and economic conditions; real values adjust for inflation and the size of the economy. To understand the difference, go here. Look up the top 10 grossing movies of all time and you will find only one made before 1990: Star Wars. But click on the “All Time U.S. Adjusted Box Office” and you’ll see the top grossing movies of all time in real terms, adjusting for changes in ticket prices due to inflation; you will only find one movie made after 1990 on that list: Titanic. Last year, The Dark Knight became the second highest grossing movie ever. but in real terms it ranks 23rd. Economists usually say that you should make judgments based on real terms, not nominal ones.

If you are going to compare 2008 to 1949, you have to adjust for population size. Back in 1949, the US population was around 150 million, roughly half what it is today. And our labor force participation rate is even higher now, so our labor force is even more than double what it was back then. So 681,000 jobs lost today is less than half the equivalent number of jobs lost in 1949.

Virtually none of the numbers you will see in the media are in “real” terms, adjusting for price changes or population changes. Why not? Because significant changes in economic variables (high oil prices, large job losses, stock market dips) are what make news. Charlie Gibson wants to report a record job loss or the worst spike in gas prices ever. That’s good television news. He doesn’t want to tell you that the aforementioned record job loss is actually about half (in real terms) the job loss in 1949 because that weakens his story. Putting economic data in perspective so that people understand what it really means? That’s not Charlie Gibson’s job. That’s my job.

It’s a situation professors faces every semester or two. A student’s grandparent passes away and they have to leave for the funeral. When this happens around exam time, it creates a difficult situation for students. And it also creates an awkward situation for faculty: prove to us that Nana passed away. It makes me feel like a jerk to ask this of my students, but I have a responsibility to do it.

Some students volunteer the information. Last semester a student brought me the funeral program so that I could verify that he indeed went to a funeral and had a legitimate excuse. He offered to do this when he told me about the situation initially, so I didn’t have to ask him the awkward question, and that made me feel better about the whole thing. But I need some kind of proof because the facts are: 1) grandparents die, and 2) some students lie.

When I was teaching at St. Louis University while in graduate school, I had a principles class one summer. I had a student in that class who had taken the same class with me the previous semester and failed it. I don’t know why she was taking it with me again instead of with another professor, but that was her call. Anyway, she did poorly on the midterm exam and was not doing well on her homework assignments. She had a C-/D+ going into the final exam, which was going to make or break her grade. And wouldn’t you know it, the night before the final exam, her grandma got sick.

I receive an e-mail from her at around 10pm the night before the final exam saying that her grandmother was admitted to a hospital in Cape Girardeau (over 100 miles from St. Louis). She has to leave first thing in the morning to be by her bedside, so she won’t be able to take the final exam. She doesn’t know how long she’ll have to be down in Cape, so she wants to know how I will handle the situation. I tell her that I’ll give her one week to take the final exam. If she can’t do that, then I’ll just have to give her a grade of “incomplete,” allowing her to take the final exam the next semester in someone else’s class. Sure enough, as I expected, the week goes by and she doesn’t take the exam.

When I get the e-mail, I know it’s a lie. I just feel it in my gut. So after her week passes, I go to the registrar’s office in the business school and talk to the person behind the counter there. I explain that I have a strong suspicion this is a lie and I want to ask for proof of the situation before I just give her an incomplete, but I’m not sure if I’m even allowed to or how I am supposed to go about it. They tell me that I should tell this student that in order for them to process the incomplete, the registrar’s office needs proof of the situation. Bingo! I get to blame it on the administration. Perfect.

I e-mail her and say that the registrar’s office needs some kind of proof — a hospital record, an admissions receipt, something, anything, to confirm this, or I will have to give her an F instead of the incomplete she wants. I give her 30 days. I remind her 3 weeks later. I get nothing. I gave her the F. She never disputed it.

Bottom line: I called her bluff and she folded. There was no sick grandmother. I didn’t even know her grandmother’s name — she could have given me something from any woman admitted to any hospital in Cape Girardeau and I would have taken it. My gut was right.

That’s why your professors ask you for proof that your relative died. It’s awkward and we don’t want to do it, but we have to do it because some of your classmates lie and cheat and we don’t want to be taken advantage of. In addition, it’s not fair to the rest of you who study your butts off before an exam you wish you had more time to study for. You suck it up, study hard and try your best, and we thank you for that. We have a duty to make sure that others don’t get bailed out by lying.

So if you are unfortunate enough to have a loved one pass away at an inconvenient time, before an exam or paper is due, make it easy on both you and your professors. Tell them you will bring proof, and then follow up and bring that proof. (If you forget amidst all the turmoil, please don’t be offended if we ask you for it.) It will let us know that you understand that the situation is difficult for both of us, and that you’re not lying about anything. And it will restore a little of our faith in our students.

Someone requested a blog from Jake. I wasn’t sure what he would write, so I let him describe his typical day:

“Dave gets up. I’m still sleeping. He gives me breakfast and then goes and works out in the basement. I go down to see what he’s doing. He throws the ball a few times and I run and get it. He doesn’t do that enough. I get bored and go back to bed. He lets me out so I can do my dirty sinful business. He leaves for school. I bark at the garage door for a while, hoping it will convince him to come back in. It doesn’t work.

“I sleep all day until Dave gets home. I hear his car coming down the street and the garage door opens. I grab Big Bunny so I can meet him at the door with it. He loves when I bring him presents when gets home from a hard day at work. He makes dinner for me. Yummers.

“His girlfriend Sam comes over. I bark at her for a while. It’s happy barking. She should feel honored that I like her so much. She doesn’t. I just annoy her. I don’t really care. It’s fun barking at her. I hang out in the living room with them while they watch television.

“Bedtime. I used to have to sleep on the floor, and jump up at around 3am when they’re too tired to notice, and lay at the foot of the bed. Now I’m on the bed before they even get there and they don’t try to kick me off. If they do, I growl at them and they leave me alone. I have them both trained pretty well. I sleep between them, usually on her side. It annoys her. I like annoying her.

“Tomorrow I’ll do the same thing. Life is good.”

If you’ve been reading this blog, you know that generally speaking I am against government intervention except when absolutely necessary. But I have also mentioned that I sometimes feel sorry for politicians — at least for the good, honest ones out there. True, there are probably only about three of them, but I feel sorry for those people. Reading the news the last month or so, I’m struck by the fact that every time state governments do anything at all, there’s a protest. The struggle that states are having to control their budget deficits highlights this problem, as almost every state has some form of balanced budget requirement. So what are state governments to do?

When New York’s Governor Patterson decided he would increase taxes on a variety of items to gain revenues to fight his budget deficit, he was met with protests. When California attempts to decrease spending to fight its massive budget deficit, and some state employees lose their jobs or have their hours cut, they are also met with protests. When states try to decrease the quality or quantity of services they provide, still more protests. And when states increase the price of government services (public transportation, for example), yet more protests. There are only so many things states can do to get their budget under control, and every one of them results in protests. If states need more tax revenues, perhaps they should put a tax on posterboard, wood sticks, and Sharpies.

This is one of the reasons that the Balanced Budget Amendment, at the federal level, has been defeated repeatedly. Having a BBA means that when tax revenues are low because of a recession (as they are right now), the government has to raise taxes or cut government spending to offset this. Both of these policies decrease output in the economy in the short run and make the recession worse, which is why Obama is doing the opposite right now. (Reducing spending is actually good for long-run growth, as the OMB’s report will attest, but nobody seems to care about that these days, so I won’t bother making that argument.) I’m not saying that states should abandon their BBAs. I have no doubt that would make some states’ situation even worse: can you imagine how much debt California would have if it were not legally required to actually do something to control its deficit? Scary.

I have a feeling that what the federal government is doing right now, providing large sums of cash to states for a variety of reasons, is just going to make this situation even worse. The reason is something called “moral hazard.” Every introductory economics textbook has a different definition of moral hazard, and none of them are great. Moral hazard is best discovered through an example, not a definition. When I don’t have dental insurance, I floss twice a day to avoid getting cavities; when a do have dental insurance and won’t have to pay for my cavities, flossing loses its appeal. The result is that when people have insurance, they engage in more costly behaviors since they do not bear the costs of those behaviors. When someone else is paying your costs, you don’t worry about controlling those costs. Part of the reason so many homeowners do not have flood insurance, especially in areas where they should have it, is that any time there is a natural disaster the federal government steps in and bails everybody out whether they have flood insurance or not. Why should I buy flood insurance when I know the government will bail me out if I don’t have it? Such will be the situation with state budgets. Why should states really work to control their budgets, facing protests at every turn, when the federal government will bail them out?

So what is the solution? I know I am going to sound like a doctor whose cure for a heart attack is to tell the victim he should have eaten fewer Baconators — that’s a great long-term strategy but it doesn’t fix the immediate problem of a heart attack. The truth is I don’t have a cure for the current financial situation — but neither do all the brainiacs in Washington, D.C., so I don’t feel too stupid. What I do know is that if states want to avoid facing these difficult situations in the future, they need to get smaller, not larger. I am hoping that the current budget shortfalls faced by almost every state will make them all realize that expanding the size of state government only makes difficult economic times worse. When you rely on increasing state taxes to fund expanding social programs, the effect of a recession in your state is magnified because state tax revenues drop by a larger amount, leaving you with a significant budget deficit that requires major adjustments. Just ask Arnold Schwarzenegger. And with the amount of federal taxes expected to increase in the next decade, I think many people would appreciate having lower state taxes to offset some of that. I know some people in California, the most heavily taxed state in the union, that are starting to realize this. Hopefully some people in Sacramento will realize it soon.

I am not sure what, in all of the horrible financial news at every level of government, makes some people say that the answer to their problems is even more government. What gives them such confidence that, despite the federal government’s ability to control its budget or deliver on most of its promises, it will work better when it is even bigger? We Americans are like the woman whose husband cheats on her again and again and we keep taking him back because he says he loves us; we know we should leave him but we just can’t do it because we’re scared of being alone. (As Dr. Phil would say, how’s that workin’ for ya?) What I glean from current state budget crises is that the leaner a state becomes, the more insulated it will be from economic fluctuations. Despite our relative success in the 1990s, the federal government cannot control economic fluctuations. The failure of dramatic government intervention in the last 6 months to have any appreciable effect on the economy has shown this clearly. The less you rely on government support, the less it matters if government spending is cut. To me, it’s just that simple.

Yesterday I received an e-mail from our union telling us that it looks like the state’s budget deficit next year will be less than expected. But what caught my eye was something about Pell grants. I mentioned in a previous post that the maximum Pell grant award would increase by $500. What I did not know, and what this e-mail informed me of, is that the State of Minnesota deducts Pell grant awards from state grant eligibility. The state is viewing this as a big windfall: a boatload of money (estimated at $69 million) students used to receive from the state grant fund will now come from the federal government instead, so the state can use that money somewhere else. Our union hopes it stays in our budget to prevent other funding cuts, but some of it is likely to go to other areas of the state budget.

For students, this basically means that if you were receiving both state grants and Pell grants, your total grant may very well remain unchanged: Pell grants go up, state grants go down by the exact amount. Bummer. Just thought you should know before you head out to your Spring Break destination thinking you have an extra $500 to blow.

Last weekend I had time to go through some new shows that have been accumulating in my DVR’s inbox. I’ve watched 3 episodes of Flashpoint and I liked each one of them. I almost cried at the end of one of them, too. I know, that means I’m a wuss. But it also means it’s good television.

The show follows the Strategic Response Unit, a SWAT-like group of cops that does just about everything: negotiation, profiling, bomb-defusion, and flash-bang raids — whatever the moment requires. The cinematography is top-notch, especially on a HD television. The colors are vivid and bright when they need to be, dark when they should be — whatever helps reinforce the scene. I don’t usually pay much attention to cinematography on television, but I guess that’s because most shows don’t really go out of their way to do a superb job. I enjoyed the picture much so that at times I actually stopped, paused the show, and just looked at the image on the screen, something I don’t often do in a normal television drama. The show is beautiful.

The acting is top-notch.  For all us old-school Felicity fans, Amy Jo Johnson is back (and badder than ever, since now she has guns and grenades!). Enrico Colantoni (probably most famous for playing Elliot on the 1990’s sitcom Just Shoot Me) is a better actor than I ever thought he was. I thought he was just a comedy actor — he was great as an alien in the movie Galaxy Quest – but he does drama well too. And the rest of the pack is a bunch of actors you have probably never heard of, but they all hold their own on screen. The writing is clever but not too clever, funny when you might not expect it and serious when it needs to be. While the show’s drama and tension are solid, and an explosion here and there always helps, the main reason I like the show is because the characters are so accessible. They seem like real people, not “characters,” especially in the episode “Haunting the Barn” (the one that almost made me cry).

You may have missed a few episodes by now, but it’s not too late to start watching. So far there has been only one running thread through the 3 episodes I watched: two of the SRU members started dating and then, realizing that it was affecting their work on the team, called it off. Aside from that, every episode has been self-contained, so it should be easy to jump in and enjoy.

CBS is showing the latest episode of Flashpoint on its website if you want to check it out. Unfortunately they don’t have full prior episodes on Hulu yet.

It seems that some people in Washington still don’t understand that businesses respond to incentives: when lawmakers change rules, people who operate businesses change their behavior. Consider the following set of events concerning the housing market bubble and the aftermath of its burst.

1. Partially because of the Community Reinvestment Act of 1977 and its subsequent revisions, partially because Fannie Mae and Freddie Mac were buying up tons of subprime mortgages so banks knew they could sell their loans to someone else and pocket the commissions, and partially because banks just wanted to make money on the booming housing market, many banks made loans to people who could not verify their income and probably had no business buying a house as a long-term investment.

2. The housing market tanked, these buyers could not sell their homes, and did not have the income to pay for them: foreclosures skyrocketed.

3. Banks become stuck with these properties and start taking huge losses on them. Many banks either go out of business or ask the federal government for bailout money because they just got in too far with these loans and were not diversified enough. Banks learned their lesson: tighten the standards you use for lending people money.

4. Congress hauls the heads of banks to a special session of the House Financial Services Committee on February 11 so they can publicly chastise these peoples for making loans they should not have made and paying for parties with taxpayer money (nevermind that all money spent by Congress is taxpayer money and they seem to have no problem wasting that…). “There is a great deal of anger in the country, much of it justified, about past practices,” said Barney Frank (D-Mass), the chairman of the HFSC. The moral of the story: banks should not have made these loans! Bad bankers! No soup for you!

5. The Obama administration and Congress announce they are seriously considering changing mortgage rules so that individual judges can change the terms of previously-issued contracts, violating the fundamental theory of contract law: that people have to know what to expect, or people will stop using contracts for long-term economic planning. The moral of the story: if a bank makes a loan with terms that a judge does not like, that judge will be able to change the terms and banks may find their loans actually costing them money instead of earning them profits. The plan is currently being debated in Congress.

6. Congress is now upset that banks are not making more loans with the money they have received from the federal government and the Federal Reserve Bank. At the HFSC meeting mentioned previously, Rep. Michael Capuano (D-Mass) demanded of the bankers: “Start loaning the money that we gave you. Get it on the street!”

Does nobody in Washington understand that their actions have consequences and, if they make policy changes or even annouce that they are thinking of making such changes, they must expect that people and businesses will respond accordingly? Is that concept really that difficult to comprehend? After being lambasted in the press and in Washington for making too many bad loans, banks reduced the number of loans and tightened credit standards. In fact, one might reasonably conclude that in light of the disastrous effect those loose credit standards eventually had on the economy, banks would have to be either stupid or irresponsible to not decrease the number of loans they make. But when they do the responsible thing, people in Congress get angry.

This whole situation reminds me of a great quote from Reagan: “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.”

If the past is any indication of the future, I know what will happen next. Congress will make new laws requiring banks to loan out more of their money if they take TARP funds. Some banks will choose not to take TARP funds and instead will stop making loans. (American Express is now offering some customers a $300 check card if they will pay off their balance and walk away from AE — these customers are just too risky and AE wants to bribe them to go away.) Recognizing that fewer banks are taking TARP funds, Congress will impose even more regulations requiring all banks to make loans, whether they take TARP funds or not. Then in a few years when those loans go bad, Congress will bring these bank presidents back one more time so they can yell at them about how they should not have made those loans in the first place. The bankers will say they were just doing what they were told to do, but Chris Dodd and Barney Frank will get up on their big podiums and scoff at them anyway. Just wait and see.