Wednesday, August 20, 2014


Paranoia about the nefarious and conspiratorial intentions of the Federal government, “Washington bureaucrats,” and the Obama administration has been part and parcel of the conservative Republican mindset for some time now. You know: Obama’s going to take away your guns, indoctrinate your children, march you in front of death panels, make you read the Koran, raise your electricity rates to astronomical levels, etc., etc., etc.

If you’re like me, you’ve pretty much learned to let these ravings slide. Some of them are even kind of funny. But at times they can get your goat. Take, for example, this recent Missoulian opinion piece, by Joanne Blyton.

Blyton, a Republican House member from Carbon County, is all upset about the “gainful employment” rule being proposed by the US Department of Education, which establishes performance standards for vocational programs at community colleges and for-profit institutions such as trade schools. It’s a little complicated, but the basic idea is that under the rule vocational programs whose graduates exceed certain benchmarks with respect to their student loan burdens will lose their eligibility to participate in Federal student loans programs.* The idea is that if a program recruits students, teaches them a trade, tells them they will get a decent job when they graduate and helps them borrow money to pay for the training, it should deliver: Graduates should be gainfully enough employed to repay the loans and not have to use the lion’s share of their income to do it.

Now there is certainly room for a conversation about how this rule is written, how badly it’s needed, how well it will work, and whether it will have unintended consequences. One hopes that that conversation would be grounded in reality, but the representative from Carbon County doesn’t quite get there. According to Blyton, the Department of Education has embarked on a “strange quest to dismantle ‘for profit’ higher education.” She says the rule is an example of the “Orwellian doublespeak we see so often from Washington these days.” It would “severely restrict education opportunities for many Americans.” “It’s a blatant attempt to put a large swath of our higher education system out of business.” And it is “dangerous” because it gives the “Washington bureaucracy…new power to pick and choose favored institutions.”

This is all very odd. According to this report, the Department of Education estimates that there are about 8,000 vocational programs, housed mainly in community colleges and for-profit schools, that would have to comply with the standards. The programs enroll about a million students, which amounts to around 5 percent of total US higher education enrollment. And about 16 percent of these programs would fail under the proposed rule. So let’s get this straight: the rule applies to all vocational programs, not just to for-profit institutions. And while vocational programs are the principal offerings of for-profits, approximately 84 percent of them would not be affected by the rule. Students in the programs that would be affected make up less than 1 percent of total higher education enrollment. How can those numbers possibly be construed to mean that the Federal government wants to dismantle for-profit education or put a “large swath” of the higher education system out of business? How does establishing minimal standards for the success of programs amount to picking and choosing favored institutions?

Blyton is concerned about denying educational opportunity to the students who have no choice but to enroll in programs that can’t comply with the regulations, and well she should be. But she is tone deaf to the real problem these students face. Their educational background is typically poor, they are often disadvantaged economically and socially, their ability to evaluate the usefulness of the vocational programs on offer is limited, and as a result they can be easily deceived into enrolling in institutions that take their money – or worse, the money they borrow – and give them little or nothing in return. That, such as it is, is the educational opportunity we are talking about here. It certainly does not describe what most vocational programs or for-profit institutions provide. The vast majority give their students a useful education; that’s the same vast majority that will comply with the standards. But unfortunately, this educational market is one where bad actors can also easily get a foothold.**

You don’t have to take my word for it. You can go to this Department of Education site and download the “2012 GE Informational Rates.” Do it and browse around a little. You’ll find schools like the Southwest Acupuncture College in Santa Fe, whose graduates’ student loan payments are equal to half their income of $16,900. Or there’s the International Academy of Design and Technology in Chicago. Its graduates have to pay off student loans at an average of $4,300 a year, which is 22 percent of what they earn (better than the acupuncturists!) but 191 percent of their “discretionary” income, i.e. what they earn beyond the poverty level.

Now I’m not saying that the folks running these schools are snake oil salesmen, but there’s definitely a problem here. People are borrowing money to pay for vocational training that doesn’t appear to be doing them much good. Can we agree on that? Can we agree that this is an issue we should take seriously? And if the Department of Education wants to take this issue seriously, can we refrain from outlandish and unfounded accusations about what we think its “real” intentions are?

*Blyton’s description of these standards is a little off. If you want to delve into the details, check out this description by the American Council on Education.

** A wonkish aside: markets like this are characterized by what economists call “asymmetric information,” meaning that the sellers know a lot more than the buyers do about the true quality of the goods trading hands. Back in 1970, Geroge Akerlof wrote a paper in the Quarterly Journal of Economics (“The Market for Lemons: Quality Uncertainty and the Market Mechanism”) explaining why, in such markets, low quality goods tend to displace high quality ones. The paper became very famous and has been cited thousands of times in the past 44 years. For his work on asymmetric information Akerlof (with Michael Spence and Joseph Stiglitz) was awarded the 2001 Nobel Prize in economics.

Monday, August 18, 2014

Bipartisanship on the Flathead

In case you missed it in the your local newspaper, I am posting below an opinion piece regarding the Flathead Reservation water compact, authored by me and Bruce Tutvedt. Bruce is a Republican senator from Kalispell who, in his non-legislative life, is a farmer-irrigator and represents constituents who have a substantial interest in how the compact turns out. He has been outspoken in his support, which has not always been an easy thing to do. My connection to this issue is that I have been serving on the Reserved Water Rights Compact Commission since 2011, and have been of the Flathead compact negotiating team.

As members of the Montana Senate who come from opposing parties, we have often found ourselves disagreeing about political values, legislative proposals and our constituents’ interests. But one thing we do agree on is that there are times when we all should leave our politics, animosity and distrust at the door and work together to find practical, fair solutions to pressing issues. That’s why we support the Confederated Salish and Kootenai Tribes Water Compact and will work for its approval by the 2015 Legislature.

Over three decades ago, the Montana Legislature recognized the potential for serious conflict between the reserved water rights claimed by Federal agencies and Indian tribes, and the state based rights claimed by farmers and ranchers, state and local governments, households, and businesses. Rather than letting these conflicts be resolved by courts after long and expensive legal wrangling, the Legislature set up the Reserved Water Rights Compact Commission and charged it with settling disputes out of court, through negotiation.

Montana’s compacting process has been an outstanding success. It’s taken a while, but we now have 17 negotiated compacts that resolve all outstanding Federal reserved water rights claims, except those on the Flathead Indian Reservation. The reason for that success is that negotiation in good faith works, and it is working in the Flathead.

Although there is still an important piece of the agreement being negotiated, the State, the Federal government and the Confederated Salish and Kootenai Tribes have already agreed to a settlement that complies with Montana’s Constitution and water laws and will

·    Allow the adjudication of water rights on the reservation to be completed, giving households, businesses, farmers and ranchers clear title to their water rights and providing certainty regarding ownership of the private properties to which those rights are attached.
·          Protect all existing on-reservation, non-irrigation water rights from call by the Tribes.
·        Make a substantial amount of water from Hungry Horse reservoir available to mitigate the impact of future development in the Flathead and Clark Fork drainages.
·        Provide for the infusion of both State and Federal funds to improve the efficiency and infrastructure of the Flathead Indian Irrigation Project.
·    Recognize historic Tribal claims to water for fisheries off the reservation in a way that protects almost all existing off-reservation irrigation use.
·       Create an authority for managing on-Reservation water rights in the future in which the Tribes and the State will participate as equal partners.
·        Quantify a right to water that the Tribes can use for development on the Reservation or lease off the Reservation but within Montana.

The piece of the Compact still being negotiated concerns the allocation of water between the Flathead Indian Irrigation Project and in-stream flow to protect fisheries on the many waterways on the Reservation. The goal of all the parties is to assure that through improvements to the project and its operation, senior Tribal claims for in-stream flows to promote healthy fisheries will be recognized without curtailing crop consumptive use of water by Project irrigators.

While we believe that the Compact is a good deal for all parties concerned, it would be foolish to ignore the fact that it has run into bitter and strident opposition as well. We think that much of that opposition is based on fear, old animosities and misunderstanding of what the Compact does and doesn’t do. It simply isn’t true, for example, that the Compact will “take” water rights or private property. It won’t “give the Tribes control over all the water in western Montana.” It won’t end ranching and farming on the Reservation.

These fears and misunderstandings concern us deeply, and we urge all Montanans to take the time to examine closely what has been achieved in these negotiations and to consider carefully the implications of rejecting this agreement. We believe that rejection would lead to years of litigation, untold costs to be borne by individuals and very little prospect of a court determined outcome superior to the benefits the compact now provides.

But our support for this Compact does not come by default. It comes, rather, from our conviction that the settlement has been negotiated in good faith, is fair and practical and will serve well the interests of all Montanans.

Sen. Dick Barrett, Missoula
Sen. Bruce Tutvedt, Kalispell

Sunday, August 17, 2014

The Cliven Bundy School of Land Management

When Cliven Bundy and his ragtag posse of supporters staged that showdown with the Federal government last April, most Americans just didn’t get it. I’m talking here about all those folks out there in Boston or Akron or Tallahassee or Petaluma or wherever who regularly put quarters in parking meters or pay bridge tolls or send tuition checks off to the state university, apparently in the belief that when they get something of value they should expect to pay for it.

This point appears to have been lost on all the Sage Brush Rebels, County Movement Enthusiasts, Shovel Brigadiers, Tea Partiers, and Federal Land Seizers who grabbed their guns and rushed off to Nevada to defend Bundy, who for years had grazed his cattle on Federal land and refused to pay for it. In other words, although he dreamed up some cockamamie legal theory about how the land didn’t really belong to the Federal government, Bundy was a deadbeat pure and simple. But that just didn’t seem to bother the folks who rallied around him, ready to shoot it out with the Federales. It was only when Bundy turned out to be a racist as well as a deadbeat that they started to back away.

Now at first blush it might seem a little strange that Bundy’s pals were willing to overlook the fact that he was stiffing the Federal government. After all, these are the people who never tire of telling us what a bang up job they would do managing public lands, but now in the next breath are saying they’re willing to ignore the receivables. How does that work?

On the other hand, of course, these are also the people who have been trying for years to get their hands on public lands and resources with the fewest restrictions and at the lowest prices possible. And if that’s their aim, they’ve gotta love Bundy, who’s the poster child for exploiting Federal land at rock bottom prices. In his case, zero.

So there’s the dilemma: how do people (including a slew of state legislators) who want to take over Federal land get to claim, on the one hand, that they can do a much better job managing it than the Federal government does, and then on the other hand seem ready to rent, sell or lease it at fire sale prices?

The answer, of course, revolves around money and jobs. The takeover artists claim that they want public land management to be “economically productive,” by which they mean that public lands should produce a flow of cash revenue and be exploited in a way that provides jobs and stimulates local economies.

Now nobody’s going to argue that more revenue and more jobs are a bad thing, but using public lands to generate them does not necessarily constitute sound land management. Economically productive management puts land to its highest and best use – the one that creates the greatest net benefits – and that’s not always, or even usually, the use that creates the most jobs or generates the highest cash flow.

That may seem to defy common sense when it comes to what government should do with its resources – surely job creation is a worthy public goal – but think about it another way.  Public land managers could no doubt put an awful lot of people to work if they made access to land and the resources on it really cheap. But whether or not all that work made the land productive would depend on the economic value of what the workers were producing. And if people are only willing to work on the land if they can get access for next to nothing, it’s a safe bet that their use of the land is not going to produce much. It might be tempting to think that at least use of the land has produced a lot of jobs, but as I’ve pointed out before, jobs are not what’s produced, but the cost of production, and efficient management means keeping those costs as low as possible.

When it comes to the demand that they generate revenue, public land managers face another dilemma, because public lands can produce public services for which there is no market but that are nevertheless economically valuable. Think watershed protection or conservation of wildlife habitat: these services have economic value – in fact, a lot of economic value - precisely because they confer material benefits on the public,  just like private services like medical care or a Paul McCartney concert. The only difference is that nobody has to pay in order to get them. Nevertheless, the false notion that commercial values are economic (because they have a dollar sign attached to them) and environmental values are uneconomic (because there is no dollar sign) is remarkably durable.

Opponents of taking over Federal lands – Jon Tester, for example – worry out loud about how takeover would ultimately result in the public lands being “sold to the highest bidder.” I’m with the opponents, but I don’t think that’s the problem. The problem is that in the name of job creation and revenue generation, access to public land would be sold at rock bottom prices, and the land would end up wasting away in high cost, low valued uses.