Given the impending UC 8% pay cut (and some talk that faculty who are well paid should volunteer to take a 10% or 12% pay cut), I've been thinking about going on my own Wildcat strike. That's why I stopped blogging for 10 days.

I used my time away from blogging to attend the UCEI Energy Camp at Berkeley. This summer conference brings together some of the best people doing work at the intersection of energy/IO/environmental topics. I had a great time and it was good to see my old friends, co-authors and future co-authors. I even learned some economics.

While in Berkeley at my in-laws' house, I sat down and took pages of notes on a variety of projects that I'm working on. This helped me to "recharge my batteries" and I'm now quite excited about these projects.

The one funny thing to happen in Berkeley was that the UC Energy Institute is 2 blocks from People's Park . I went to this park to take a phone call from my book editor. I'm making progress on a book that will interest you when it will be published next summer! If climate change interests you, if cities interest you --- then this book may interest you. Returning to my boring story, as I discussed strategies and writing outline with my book editor --- several bums started to converge on me in the park. The paranoid New Yorker, that I am, thought that I would be cooked for dinner by this motley crew. I got up and abandoned ship and had to retreat to a safer haven to finish my phone call. Say what you want about UCLA but this does not take place in Westwood.

While the 7 equation structural model on page 12 may not interest everyone, this new Ted Joyce Review Paper is worth reading. One of the great joys of modern empirical applied micro is our focus on measuring the unintended consequences of private and government choices. The original Donohue and Levitt paper merits the attention it has received. But, it is tricky stuff to test hypotheses about individual behavior using state/year data. In general, that was a 1970s approach. Joyce makes some nuanced points about how a structural econometrician might approach this tough question.

The UC faculty has been warned that a 8% pay cut is coming in August 2009 . While you shouldn't feel too sorry for us, 8% is a big number and it will have long term consequences.

When the private universities are feeling richer 2 years from now, we will see a huge flow of talented academics moving away from the California sunshine towards safer harbors.

Dora and I are worried about gross flows. A faculty can grow if exits decline or if new faculty sign on. At UCLA, we will see more faculty leaving to go to private universities and few private university faculty being willing in the future to take the gamble of moving to UCLA. The President of the UC is creating a dangerous precedent and recruiting will suffer for a decade.

Now, he would say that he has no choice. That's not obvious to me. There is extensive building construction going on across the 10 campuses. They contine to build the UC Merced campus. All of this could come to a halt. Tuition at the UC is still quite low relative to the prviates. It should increase 25%. We are selling a quality product.

I'm eager to see the UCLA Chancellor and the senior Deans use this crisis to run UCLA like a cost minimizing business.

I've been telling Dora that we should think about retiring but she has told me that we would only collect 6% of our salary in annual pension under the defined benefit flow formula.

Faculty here at UCLA are whispering to each other that the elite stature of UC Berkeley and UCLA as worthy competitors of the privates is at stake here. Our nightmare scenario is that in 25 years, we may be just like any other state university with good sports teams and little else in terms of academic excellence. I don't want to see this happen and I'm hoping that we have a master plan to recover from this major misstep.

UPDATE:


The Chronicle of Higher Education has posted some
outstanding letters on the situation. #44 makes a lot of sense. There are some smart people who are really worked up about this issue.

Ignoring my own personal loss of income here, the core issue is that human capital is California's best hope of staying great. Gut the best research universities here and this state better count on importing ivy league graduates.

Skilled, disciplined people are costly to produce and they tend to increase income inequality at the same time that they generate new ideas and innovations. Whether the median voter is willing to vote tax dollars to help this "unfair" small but crucial group, remains an open question but I'm growing more pessimistic.

Today the NY Times has an interesting piece on Prof O'Rourke's "Moonlighting" as the boss of GoodGuide. He has a fledgling 24 person firm that provides information on how "green" is a product when you use your cellphone to provide data based on its bar code. Read this article .

Two questions. If I was the Dean of Prof O'Rourke's division, I might want to know how many hours a week he spends on this activity and whether this crowds out any research or teaching time? Now, if I was O'Rourke --- I would use the information my website collects to write a paper about "green concerns". He would face a selection issue concerning the fact that a non-random sample of people go to his site.

I would also like to know whether everyone agrees with his index weights? "For instance, Toms of Maine deodorant gets an 8.6 (score)". O'Rourke uses information on both the known carcinogens in the product (but does he know exactly what is the magic formula of how much is used or is this a checklist) and "whether the company has women and racial minorities in executive positions or faces labor lawsuits." A Dick Cheney might care about not getting cancer but he may also not care about this diversity box. As in all "green" work, the key issue is whether the consumer has the same preferences (i.e index weights) at the ranker. A dick Cheney would put a weight of "0" on the diversity criteria.

How does the NY Times select what books it will review? Or more specifically, why did they choose to review this "brilliant" book about West Los Angeles? This book appears to offer people in NYC, who are unable to move to LA but wonder what their life would be like if they moved to Los Angeles, a good reason for not moving to LA. This book sketches an LA that I don't see. Despite the fact that a spouse is a UCLA faculty member, this is not my Los Angeles.

Los Angeles is New York City in the sun. In Westwood and Santa Monica, you can re-create the urban density of Manhattan. Yes, we own a car but we drive it 5 miles a week. We make 2 round trips by car by week; One to the Beverly Hills Farmers' Market and one to Whole Foods in Westwood Village.

Los Angeles may have more rich immigrants than Manhattan does. The characters who live in Queens, New York can be found as richer guys in West LA. Perhaps, we need a novel about these guys. I might read that.

Well, he already is a stata command, so why not introduce an entire equation for Jim Heckman? Most people West of Chicago believe that he merits another Nobel Prize. Would he agree?

Flipping through the slides of the Heckman Equation Project, I see a media push to solidify the intellectual case for investing more in the very young. Children cannot "buy" their parents. In a world where parents have ample discretion over investments of time and $ in children, some children may be left under-invested in during a critical phase. Learning begets learning, skill begets skills. Economists have fancy words such as dynamic complementarity but at the end of the day -- a well functioning adult is a mixture of ability, focus , ambition and tenacity. Each of these can be learned and need to be reinforced.

The challenge is the political economy. The young people tend to be immigrants and minorities while the older people whose tax $ would pay for these programs tend to be white. There is the whole diversity and redistribution literature that is pessimistic about the likelihood of a democracy making the investments that Heckman calls for.

Now there is one way out. Chris Mayer has done some interesting work on why home owners (old white people) favor good schools in their district even when they don't have kids going to school in the district. He argues that the schools are capitalized and this raises the price of the asset.

In the Heckman case, migration actually attenuates the Mayer point. If kids were stuck and couldn't move, the rich in the community would have a greater incentive to invest in them because they would grow up and be thugs and trouble the neigbhorhood --- or in a Moretti/Rauch sense they could raise the neighborhood's human capital level.

Thus in a world with migration, the Feds have to finance this. I hope that Jim Heckman can use his considerable clout to push this debate forward. The political economy here hinges on cross-group bridging social capital (see Luttmer's JPE paper on the taste for redistribution).

Similar to Poterba's old JPAM paper, the public finance behind Heckman's plan in an over lapping generations model is a transfer from rich, old whites today to young minority kids. Because the old whites die, unless they are very altruistic to the minority kids or to their descendents, the young minority kids who will receive the investments under the Heckman plan have no way to pay back the old white "donors" even if they do earn 10% a year on their investment.

The NY Times has a nice piece on the future of Paris as a "Green" compact city . I respect that they are thinking ahead about how to handle growth and its implications for housing markets and transportation and hence congestion in the city. I do not fully understand the height limit restrictions on housing towers. I appreciate that views are nice but building up has its advantages especially if the public health and crime costs of density have been tamed. It would interest me if Paris has its own Don Trumps and what these private developers are lobbying for? I also don't know how monocentric Paris is. Is everyone still trying to get downtown like in New York City or does it have multiple gravitational centers like Los Angeles?

The LA Times has a cool web site that gives you a menu of tax increases and expenditure cuts to see what you would do to balance our state's budget.

Who knew that interactive media is so much fun?

I was able to balance our budget without too many tricks such as dipping into the 2010 revenue pot or by taking any $ from the community colleges or UCs. I emptied out the jails and furloughed a few people but somebody has to make the tough choices and the buck stops here!

http://latimesblogs.latimes.com/lanow/2009/06/fixing-california-here-are-some-of-your-ideas-1.html

As a book author and occasional book reader, I have been curious about Ed Glaeser's forthcoming Penguin Press book. While I am not Sherlock Holmes, I did discover this. It sounds fascinating and I'm sure it will sell a lot of copies. My mom will ask me why I didn't write that book and I'll have to tell her the truth. I am hoping that similar to Freakonomics that each of his past co-authors will get a piece of the royalties.

This Pew Trust Study is interesting and probably merits getting a serious academic involved in counting these "green jobs". I respect that these guys actually state a definition (based on industry categories) of what is a green job and look at medium term growth trends (from the mid-1990s until now) by state. The green jobs total counts do look small to me. California (a state with 35 million people)has 125,000 green jobs and 6.5 billion dollars worth of venture capital invested? (see page 8).

The key issue here is the potential for this sector of the economy to accelerate. If Waxman/Markey don't sign a serious bill or if AB32 in California fizzles, will the "green job" sector fizzle? We appear to be approaching a key public sector/private sector synergy here. We need carbon pricing to gain some momentum. In the absence of carbon pricing or carbon cap & Trade, we need some "Peak Oil" and price spikes for exhaustible fossil fuels to push companies to invest in green R&D.