Keynesian economics, solar costs, education excesses
Branding Higher Ed
“Bullish on Private Colleges” (by Richard P. Chait and Zachary First, November-December 2011, page 36) lived up to its title until the peroration, when the authors bizarrely observed, “Yet more often than not, the bees actually build the hive: the percentage of tenured faculty ebbs; the number of preprofessional programs rises...schools burnish brands—all without presidential pronouncements.”
Huh? If top universities have so far avoided the fate of the Fortune 500, is it because tenured faculty percentages have ebbed and “schools burnish brands”? I think not. Harvard and its sister institutions needn’t resort to “branding,” since the intellectual life, personified by career scholars, is a cumbersome item to “brand.” Contrary to what Chait and First conclude, universities are trying too hard to become businesses, rather than simply becoming.
Ira Braus, Ph.D. ’88
West Hartford, Conn.
I read with interest Isabel Ruane’s article about her experiences at Camp Onaway (The Undergraduate, November-December 2011, page 63). Her moving account recalled my experience in the early 1970s of living for a week in the vicarage (no refrigerator or central heating) of a working-class Anglican parish in Plymouth, England, and sharing in the life of that community. When I returned home, the awareness slowly percolated through me of how much more content, calm, and generous the people of that community were than the privileged, driven strivers among whom I’d spent my life at elite schools, camps, and places of employment.
The experience ultimately led to my own life-changing decision after I began attending an Episcopal church in New York City and encountered regular reflection on concerns I’d always had but never really articulated for myself: how to live, what to live for, and where to find the much-needed help to make the ongoing effort to live a values-guided life.
In addition to embracing the particular values of kindness and generosity that Ruane highlights, I think it is the fact of making them explicit that contributes to their power. Her article added much-needed balance to the implicit values of achievement and status generally represented in Harvard Magazine and other alumni magazines I receive.
Jill A. Becker, M.A.T. ’65
The Case for Keynes
Jonathan Gal’s “call for change in the economics department” (Letters, November-December 2011, page 4) is indeed timely. His description of Keynes’s economic theory as an example of “the failure of central planning” reveals the need for some remedial studies. But his comparison of Keynesianism to “Stalinism, Nazism, monarchism, and theocracy” reveals something more fundamental, and probably not susceptible to improvement by education.
Bruce A. McAllister, LL.B. ’64
Palm Beach, Fla.
Jonathan Gal’s diatribe against Keynesian economics seems misguided. For starters, he conflates Keynesian fiscal policy with “central planning.” But the idea is not that government will decide how money will be spent but that it will adjust its taxing and spending to smooth out the market’s excesses of alternating boom and bust. It says that the government should save while everyone else lives high, and when bad times lead everyone else to hunker down, sitting on their money, the government should spend.
The market may work marvelously in many ways, but it is subject to periodic vicious cycles, when what is rational for individual actors to do—hunker down in hard times—is destructive for the system as a whole. The market, where we act as social atoms, needs to be supplemented by decisions and actions we take collectively, i.e. through government.
But Gal points to the “failure of Obama’s…disaster” as proof of the failure of Keynesian policy. Let it be noted, however, that at the time the Obama stimulus was being proposed, the great neo-Keynesian economist Paul Krugman predicted a failure of precisely the kind we’ve seen: the size of the hole in the aggregate demand in the U.S. economy, Krugman said in early 2009, was twice as large as the proposed stimulus would be able to fill.
Those who dismiss Keynesian economics often unknowingly contradict themselves. After declaring that “government cannot create jobs,” and that the New Deal failed to end the Great Depression, they’ll say World War II ended the Depression. That’s when the government started spending in quantities corresponding to the magnitude of America’s unused capacity. Today, those who refuse to learn from history seem determined to force the rest of us to repeat it.
Andy Schmookler ’67
Editor’s note: The correspondent is a candidate for Congress in Virginia’s sixth district.
Concerning “Time to Electrify” and Michael Jura’s comments on his solar panels (Letters, November-December 2011, page 6), I also installed a generating system. My experience is very similar to his. It has been a nice investment…for me. My conclusions differ from his. To me, solar will long be a technology relegated to a minor role. It remains very costly. I suspect if Mr. Jura had to pay the full tab for his project, its 35-year payback would have caused him second thoughts. It is only with access to the wallets of our fellow citizens that solar is economical. Secondly, solar doesn’t match my consumption at all. Energy production (when it is not cloudy or raining) occurs every day of the year with a peak at noon. My usage is heavily skewed to evenings and summer. From October to May I generate almost twice my consumption. When I turn the air conditioning on, I am lucky to generate half what I need. Fortunately for Jura and me, our states have passed net-metering legislation that requires our local utility to “store” the excess electricity I produce eight months of the year and return it in the dead of summer (at no charge). Clearly without “real” storage or lots of idle power plants, this is only feasible when solar is a small fraction of production.
Mike Groshans, M.B.A. ’84
Jura reports that he paid only 40 percent of the total cost of $17, 500 for his panels, with the rest coming from a $7,000 payment from the Los Angeles Department of Water and Power (LADWP) and a $3, 500 federal tax credit. His annual electricity bill without panels is about $500, and the solar panels will have to be replaced in 25 years.
While these data yield a financial rate of return of 5 percent on Jura’s $7,000 investment, they yield a rate of return of minus 2 percent on the entire $17, 500. These calculations assume that without solar panels his annual electricity bill would remain at $500 for the next 25 years. But the price of electricity purchased from the LADWP may, of course, rise in the future. Energy Information Administration data show that between 1997 and 2010, the average retail price of electricity rose at an annual rate of 2.8 percent (from 6.85 cents to 9.88 cents per kilowatt hour). Even if one assumes that the retail price of LADWP’s electricity will increase slightly faster—by 3 percent annually—over the next 25 years, then the $17, 500 investment earns only a zero rate of return.
Jura’s experiment suggests that society needs to look at more than the financial rate of return to justify installing the current generation of residential solar panels.
Benjamin Cohen ’58, Ph.D. ’63
Business and the Environment
Professor Rebecca Henderson’s optimism about the role business does or will play in addressing the world’s most urgent environmental problems (Harvard Portrait, November-December 2011, page 58) is naïve, to say the least. Her comments suggest the private sector will respond promptly to the unprecedented need for clean water and sanitation—but if business actually concerned itself primarily with meeting human needs, instead of generating profitable wants, it would have begun working to improve the availability of clean water, etc. long ago. Billions of people in the developing world have lacked access to suitable drinking water for decades. The suffering that results is hardly new. Until or unless their thirst can be turned into a money-making venture (in its way, an awful prospect), it will remain a low priority for business and go unquenched. Yes, business can attend to such problems. But that is not “what business does.”
Kate Levine, Ed.M. ’03
Education has become so expensive in the United States [see the letter from Simon Frankel, November-December 2011, page 2] because we have increased the supply of money to students through proliferation of student loans. At nearly $1 trillion, such loans are second only to mortgages as personal debt obligations in this country.
There are discussions of loan forgiveness, relaxing repayment terms, and making loans easier to obtain, but little discussion of the pernicious effects of more money chasing a limited supply of college seats.
Harvard shares responsibility with other universities for increasing fees. An entering freshman faces tuition, room and board of over $50,000 per year, representing a constant increase that has outpaced inflation by a significant amount for over 30 years.
The facile assumption that education is “worth it” over a lifetime is breaking down.
So: the cause is too much money chasing the same number of places in education, and universities such as my alma mater taking advantage of federal largesse and students’ willingness to throw more money at obtaining a degree.
What’s the solution? (1) Harvard’s faculty and staff should no longer assume their salaries will continue to exceed inflation and nearly all other sectors in the American economy. They should moderate their demands. (2) Harvard should take the lead in determining the cost and payback for an education in strictly financial terms. If the terms have worsened over the past few decades, Harvard should review how it will improve this. (3) Harvard should invest a portion of its endowment in making loans to students, rather than relying on federal largesse. This will tie Harvard’s fortunes to the financial outcomes of its graduates.
I’ve never encountered a situation where the price of the product could continue to exceed inflation for such a long period of time—in fact, the pressures of the market force prices down. In this case, Harvard should take the lead in analyzing excessive study costs, and bring them down to earth.
John Lonergan, M.B.A. ’76
Redwood City, Calif.
Observe Harvard’s 375th anniversary logo: an empty shield. Unaccountably, there is neither Veritas nor book. One hopes this is not, in the words of University marshal Jackie O’Neill, “what we aspire to be in the future” (“H 375,” May-June 2011, page 48).
Danslav Slavenskoj, A.L.M. ’07, CM ’07
Israelis and Palestinians, Part III
I was amused, reading the letters in the November-December 2011 issue (page 6), that Zionists still promote the operatic scenarios about Palestinian refugees, who supposedly fled in 1948 to facilitate an Arab invasion of Israel. At Harvard, I used to tease Palestinians I knew by asking them if they left because their leaders told them to go. One exasperated response I remember was that they took off when artillery shells began falling in their neighborhood.
Israeli general Yigal Allon described in his memoirs how they induced Palestinians in the Galilee region to flee in panic by spreading false rumors, through trusting Arab contacts, of an impending invasion.
The UN partition plan divided Palestine into a “Jewish” state with 498,000 Jews and 497,000 Arabs, and an “Arab” state with 725,000 Arabs and 10,000 Jews. Even without reference to the irregular borders, which Zionists complained of, the numbers reveal a clear case of gerrymandering.
When the cease-fire was declared in 1948, Israelis controlled 70 percent of the land area of Palestine. Had they allowed refugees to return, the Arabs would have been in the majority, defeating the aims of the Zionist ideology, which was to solve the problem of anti-Semitism by creating a Jewish state. As historian Arnold Toynbee once pointed out, Zionism and anti-Semitism are an expression of the same statement, that Jews and non-Jews are incompatible.
With the Jewish minority now a majority, the new state of Israel could legally expropriate Arab property through eminent domain and deportation of non-Jews, a process that continues to this very day.
David Mendenhall, Ph.D. ’71
Ginkgo and Memory
As a student of herbal medicine and a traveler to China, I greatly enjoyed Jill Jonnes’s article on Ginkgo biloba’s unusual genetics (“The Living Dinosaur,” November-December 2011, page 31). But I was dismayed by the sidebar, which would leave any reader with the impression that this ancient plant medicine is useless for age-related cerebral disorders. I disagree, as do many researchers. Perhaps the most cited, and still relevant, study is an open trial involving 112 geriatric patients with early dementia showing statistically significant regression of the major symptoms of cognitive decline: Vorberg, G. “Ginkgo biloba extract (GBE): a long-term study of chronic cerebral insufficiency in geriatric patients” (Clinical Trials Journal, 1985, 22: 149-57). A PubMed check brings up numerous recent positive studies.
Though not a brilliant student at Harvard, I did eventually pursue doctoral studies in medicine, and passed all my board exams with the help of standardized ginkgo—which gives me a near-photographic memory within three days of ingesting 240 milligrams daily. Needless to say, I do not take ginkgo daily (yet), but certainly do prescribe this safe, effective botanical to patients showing cognitive decline.
Emily A. Kane ’78
Peter Del Tredici responds: An exhaustive, eight-year study of the efficacy of G. biloba leaf extract (Jour. Amer. Medical Assoc. 302 (24), 2663-2670 [December 23/30, 2009]) concluded that, “Compared with placebo, the use of G. biloba, 120 mg twice daily, did not result in less cognitive decline in older adults with normal cognition or with mild cognitive impairment.” This was a rigorously controlled, randomized, double-blind, placebo-controlled clinical trial of 3,069 patients conducted over a six-year period. It used a high-quality leaf extract (EGb 761) provided by Schwabe Pharmaceuticals of Karlsruhe, Germany, and was very broad in the neuropsychological evaluation of the participants, who were between the ages of 72 and 96. Most earlier studies have been conducted with many fewer people and/or for much shorter time periods, and did not examine the rate of cognitive decline.
Jill Jonnes observes: In the United States, where such products are not regulated (unlike in Europe), consumers cannot even be certain that products labeled as ginkgo are ginkgo. Apparently, when herbal or plant-derived substances have been tested, they have not necessarily been the advertised substance, nor of the purported strength.
Lucia Whalen, this magazine’s circulation and fundraising manager, has decided to pursue a new career, concluding 17 years of gracious service to readers and supporters. As the principal contact for those who need to effect address changes, make a contribution, or untangle some glitch in getting their Harvard Magazine, Lucia has, in many ways, been our voice and face to our most important constituents. We thank her for helping thousands of readers—warmly, efficiently, patiently—and wish her the best in her new endeavors.
-Irina Kuksin, Publisher
The feature on Michael Rich’s studies of media use and its effect on young people’s physical and mental health (“The Mediatrician,” November-December 2011, page 48), incorrectly identified the leader of a study his team is conducting in Manchester, New Hampshire; Rich is the principal investigator. The longitudinal study aims to identify media exposures precisely, and specific associated outcomes over time, from obesity to violence to school performance.
The profile of video artist and sculptor Meredith James (“Disruptive Creations,” November-December 2011, page 22), misspelled the name of her mother, Amabel.
We regret the errors.