The current issue of the online journal Intereconomics features stories about the politics of adjustment in Greece, Ireland, Spain, Italy, and Portugal. Aidan Regan and I contributed the article about Ireland. Each paper outlines the measures that have been taken in recent years, and the major challenges each country now faces. All five countries share many common features of course, including the difficulty of keeping on track with deficit reduction targets in the context of no growth and truly awful unemployment figures. But the challenges discussed by authors are quite varied too: in Greece, for example, it’s governance problems that are highlighted; in Portugal and Italy, productive capacity and export performance; in Spain, problems over sustaining the revenue base of the state.

In Ireland’s case, we outline the ongoing problems involved in trying to reduce the large government deficit. We also note that the legacy of the financial crisis complicates Ireland’s recovery strategy. The government has staked a great deal on getting some relief on a portion of the deficit and debt issues that arise from recapitalizing the banks. What the government is looking for at the moment is not a debt restructuring or a default by this or any other name, but a rescheduling of a portion of the costs of unwinding the full liabilities of the now-defunct Anglo Irish Bank. From the Irish point of view, the ECB has given mixed signals on this: positive indications about the design of the ESM in June 2012, but in September, a statement that was construed by UCD Professor of Economics Karl Whelan as ‘Germany to Spain and Ireland: Drop Dead’.

Yet the backroom diplomacy continued, and the government certainly seemed to that that an agreement would be possible before the next critical deadline for Ireland of 31 March. Right now though, things are not looking so good. There are fears that, as in other areas of crisis management, there is a tendency for EU decision-makers to pull back from new commitments unless crisis is staring them straight in the face. ‘They are under-performing again’, a senior EU official said in December. Even as Germany reported a downturn in economic activity earlier this month, José Manuel Barroso said that ‘the existential threat against the euro has essentially been overcome’. Well, that’s alright then.

For all that, the game is not over yet in Ireland’s negotiations with the ECB. The Irish Congress of Trade Unions has taken up the case too. With the call to ‘Lift the Burden: Jobs not Debt‘, it’s calling for protests on 9 February. We’ll wait and see.

Is college education really expanding ?

by John Quiggin on January 31, 2013

In his (relatively) new gig as business and economics correspondent at Slate, Matt Yglesias is really churning out lots of material. Often, it’s useful and insightful, but, inevitably quality control is imperfect. Arguably, there’s still a net benefit from the increase in output, provided readers apply their own filters. Nevertheless, I got a bit miffed by this post, which makes a mess of a topic, I’ve covered quite a few times, namely the question of whether US middle class living standards are declining as regards services like higher education.

As I’ve pointed out, the number of places in most Ivy League colleges has barely changed since the 1950s, and many top state universities have been static or contracting since the 1970s. In addition, the class bias in admissions has increased. College graduation rates have increased modestly since the 1970s, but an increasing proportion of post-school education is at lower-tier state universities as well community colleges offering only associate degrees.[1]

(Added in response to comments): Given static numbers at the top institutions, increasing populations, and a reduced share of admissions going to the middle class, education at the kinds of colleges usually discussed in this context (the top private and state universities) is an example where the middle class (roughly, the middle three quintiles) are getting less than they did 40 years ago. They’ve substituted cheaper second-tier and third-tier institutions where tuition, while rising fast, is much lower than at the Ivies, top state unis etc. But the chance of getting into the upper middle class (top quintile) with a degree from these schools is correspondingly lower. So, education as a route out of the middle class and into the top quintile is less accessible than forty years ago – this is leading to a reduction in already limited social mobility.

Yglesias says “Colleges charge much higher prices today than they did 40 years ago but many more people have college degrees” and backs this up with the following graph

YglesiasCollege

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