The issue of health care ought to provide Democrats a smooth limousine ride to the White House. Polling shows that health care is tied for first, along with the economy, as the leading political issue for Americans, and among voters in the upper Midwest swing states likely to decide the election, Donald Trump gets worse marks for his handling of health care than for any other issue. 

Yet in recent months, health care has been more like a demolition derby—a spectacle in which Democratic candidates bash each other over policy differences in ways that weaken the whole field. This past fall, Elizabeth Warren saw her lead in Iowa and New Hampshire polls collapse after she struggled to explain how she would pay for her single-payer “Medicare for All” plan without raising taxes on the middle class. She has also lost support among likely Democratic primary voters who have become increasingly concerned about polls showing that single-payer would be a political loser in the general election—because, in addition to higher taxes, it would require 157 million Americans to give up the employer-provided health coverage they currently rely on. Similarly, Kamala Harris dropped out of the race in December in part because of her embrace—and then rejection—of Medicare for All. 

Joe Biden and Pete Buttigieg have done somewhat better by eschewing single-payer in favor a “public option”—
essentially, building on Obamacare by letting the uninsured and others buy into Medicare or some other government-run health insurance program, with subsidies for those who need them. But these more moderate candidates have not been able to close the deal with the many left-leaning Democratic voters who think America’s flawed health care system needs more fundamental change.

And those voters have a point. America needs change beyond what any extension of Obamacare can offer because Obamacare can’t solve health care’s most pressing and electorally salient issue: rising costs. For the typical medium-income family of four with health insurance, annual health care costs have risen by more than $10,000 in the decade since the passage of the Affordable Care Act. Since 2008, deductibles for covered workers have increased eight times as fast as wages. The rising cost of premiums nominally paid by employers is a major reason why so many of us haven’t gotten a raise in decades. Money that might go to increased wages goes instead to cover the cost of unrelenting health care inflation. 

Champions of Medicare for All claim that their plan would attack this crisis by giving the government bargaining power to demand lower prices from doctors, hospitals, and drug companies. But even if that’s true in theory, it doesn’t change the fact that Medicare for All is electorally toxic. Its abstract promise of cost control doesn’t overcome voters’ aversion to higher taxes or losing their insurance. Warren and Sanders’s plans’ most-likely outcome isn’t cheaper care. It’s four more years of Donald Trump. 

Biden’s and Buttigieg’s plans are far more politically salable, and they claim that the public option, as it grows, could also be used by the government to extract lower prices. That’s also true—for those who choose the public option. But for those who stick with their private insurance (that is, most people in the short and medium term), health care costs will likely skyrocket as hospitals and doctor groups raise prices on employer-provided plans to make up the loss of revenue from the public option. In other words, Democrats might be able to win with the public option in 2020, only to get crushed in 2022 or 2024 as millions of angry voters who were promised health care cost savings wind up experiencing the opposite. 

Democrats desperately need an alternative health care plan—one that has broad political appeal and won’t cost the Democrats the next election, yet also gives progressives the structural changes they want. Most important of all, they need a plan for solving the health care cost problem that an overwhelming number of voters say they want addressed. 

Fortunately, there is such a plan. With coauthor Paul Hewitt, formerly deputy commissioner for policy at the Social Security Administration and a health economist, I first sketched it out in these pages nearly two years ago. (See “The Case for Single-Price Health Care,” April/May/June 2018.) The core idea is straightforward: Have the federal government mandate that the prices Medicare pays for health care apply to everyone’s health care plan. Call it “Medicare Prices for All.” 

If implemented today, it would, in one stroke, dramatically restructure health care markets while dramatically cutting medical costs for most working families, and all without asking a single voter to change providers or health plans, or to pay another dollar in taxes. In fact, if done right, most Americans with employer-provided health care plans would see fatter paychecks. Better yet, if combined with a few other features, it would dramatically reduce administrative costs, eliminate extra charges for “out of network” care and other forms of price discrimination, and put more control over clinical decisions in the hands of doctors.

We know those sound like big promises. It’s legitimate to ask hard questions—like how politically feasible such a plan might be, or whether the promised cost savings would actually materialize. 

As it happens, state employees in Montana have implemented a version of Medicare Prices for All for themselves. Since our story was published, the results of that experiment are in. They offer any Democrat who cares to listen the way out of the party’s increasingly acute health care dilemma. 

In the fall of 2014, Montana’s 30,000 state employees and their families faced a deep threat. Their health care plan was going broke, with losses on course to reach $50 million in just a few years. If this story had played out the way it has for just about everyone else in America with group health insurance, the plan’s members would have faced years of fast-rising premiums, higher deductibles, and an ever-shrinking choice of “in network” doctors. But that’s not the way this story ended.

Mostly that’s because of Marilyn Bartlett. An accountant by training, she had spent the previous 13 years working in the health insurance industry, rising to be the chief financial officer of a company that administered benefits on behalf of group health care plans. But as she neared retirement age, she decided to redirect her inside knowledge of the industry by switching sides. She embarked on an encore career as head of the floundering Montana Benefit Plan, which provides health insurance for Montana state employees, retirees, legislators, and their children, spouses, and survivors.

Bartlett was immediately struck by the crazy prices she saw coming across her desk. Some hospitals in Montana were charging five times what Medicare pays for performing specific medical services, while others charged “merely” double. One hospital, for example, would charge $25,000 for a knee replacement, and another would charge $115,000. Sometimes a hospital might offer the plan at, say, a 7 percent “discount” on the price of performing a knee operation, but it was a 7 percent discount off a list price plucked out of the air. 

Bartlett pressed Cigna, the plan’s administrator at the time she took over, to find out what the hospitals’ real costs were. But Cigna, like other insurance companies and third-party administrators she approached, refused to take on the task. So Bartlett went to the hospitals themselves, demanding to see some cost accounting. But here, too, she hit a brick wall. One hospital told her it didn’t know what its real costs were; the others just refused to share any accounting that might justify their prices, effectively saying to Bartlett and her plan’s members: “These are our prices; take it or leave it.” 

Under normal circumstances, people in Bartlett’s position just go along with such ultimatums. As hospitals merge with one another and increasingly combine with doctors’ practices, health care markets in most of America are becoming highly collusive and monopolized. In 90 percent of metro areas, according to measures used by the Federal Trade Commission and Department of Justice in evaluating antitrust cases, hospital markets are highly concentrated, typically dominated by large corporate chains that have bought out smaller community hospitals and in many instances shut them down. 

This means that when health care plans go to negotiate with these giants over what prices the hospitals will charge them (and, through premiums and copayments, charge their members), they usually wind up being price takers, not price makers. Hospitals that dominate their local market know that any health care plan doing business in the area must include them in their networks or their members will revolt. And so, like the “Soup Nazi” character on Seinfeld, such hospitals can just say “No soup for you” to any plan that dares to try negotiating for better terms. 

This means that for all intents and purposes the prices paid by different health care plans are not determined by open markets balancing supply and demand, but rather by sheer monopolistic power. In the face of such circumstances, insurance companies are busy merging with one another to increase their own monopoly power. Some are buying hospitals themselves. In both cases, plan administrators often just wind up colluding with hospitals and passing the pain down the line, ultimately in the form of increased out-of-pocket costs and a reduced choice of doctors for their customers, who barely have a clue what’s going on. 

But what if, Bartlett wondered, she could flip all that?

Her plan was as audacious as it was simple. Going forward, she told the state’s hospitals, the plan would pay all of them at the same rate, and that rate would be fixed at roughly two times what Medicare pays for a procedure. And don’t even think about sending a “surprise” bill to individual patients to make up the difference, Bartlett added. Take the deal or leave it. 

The hospitals went into battle mode, heavily lobbying the governor and the legislature to shut her down. But Bartlett was in a unique position to withstand the pressure. As she told ProPublica’s Marshall Allen, “I’m 67, so I could give a shit. What are they going to do, fire me? I’m packin’ a Medicare card.”

At first the unions representing state employees objected, fearing that they would wind up losing access to local hospitals that didn’t take the deal. But Bartlett helped to re-channel the unions’ anger by pointing out that it was the hospitals that were threatening their health care, by demanding monopolistic prices and fat financial margins. If hospitals couldn’t get by on two times what Medicare determined was a fair and adequate price, she pointed out, they might need to cut out some waste. 

State workers and their unions saw her point and began a letter-writing and public-relations campaign to pressure hospitals that refused the deal. Faced with this and the potential loss of some 30,000 fully insured patients, all of Montana’s hospitals eventually buckled. Soon, Bartlett deployed the same tactics to push down the plan’s prescription-drug bill, and within two years the plan went from projecting a $9 million deficit to a more than $100 million surplus. And despite their protests, Montana’s hospitals have managed to get by just fine. Across the country, rural hospitals are shutting down. But as of July last year, none in Montana have closed since Bartlett’s plan took effect.

Because of Bartlett’s work, state employees and their families have lower health care costs. But other Montana residents continue to pay some of the highest prices in the country. This means that to lower costs for everyone, the government needs to do what Bartlett did for all Americans, rather than just those who get their insurance through a state-run public plan. 

That may seem like a tall task. But it doesn’t require Medicare for All, and therefore isn’t insurmountable. Consider the politics. While Bartlett faced stiff opposition from hospitals, the political forces arrayed against her were not nearly as broad and powerful as those that would have been summoned had she tried to implement anything like a single-payer, Medicare for All–type plan. Deep-blue Vermont, home of Bernie Sanders, tried that in 2011, but couldn’t get it done, due primarily to the daunting political challenge of raising the necessary taxes and broad public resistance to trusting the state government with a monopoly on health insurance. Montana’s approach offers far fewer obstacles. If done on a national scale, it would mean that people who favor the status quo in private health insurance, or who are opposed to new taxes, are not enemies. Indeed, they could join with reformers and demand more reasonable prices for everyone. 

Medicare Prices for All has another advantage over Medicare for All: It is relatively simple to enact. Congress would just pass a law pegging all health care prices to some low multiple of what Medicare pays. There’s no need to eliminate private insurance to gain purchasing power over providers. And hospitals could no longer engage in price discrimination, charging different plans (and their members) different prices for the same medical services. It wouldn’t matter whether people lived in a cornered or competitive health care market, whether they were covered by a large or small health care plan, or whether their doctor or nearest hospital was a “preferred provider” or “out of network,” because all providers would get the same prices for the same treatments, just as they do under Medicare. That means no more surprise bills.

The benefits to the more than 100 million Americans who get their coverage through group insurance plans would be dramatic. Let’s do a little back-of-the-envelope calculation. According to Paul Hewitt, from 2010 to 2019, Medicare spending per enrollee rose by 18.5 percent, in line with the Consumer Price Index. Meanwhile, private-sector plans saw their costs rise by 57 percent. One result is a ballooning payment gap: This year Medicare only has to pay about 60 percent as much as private plans do for any given treatment. 

But what if we all got that Medicare discount? Medical costs for working families could easily fall by one-third or more. For those with an employer-sponsored health care plan, this could produce a fatter paycheck. According to Hewitt, a typical middle-class head of household whose compensations this year included $14,561 in employer contributions to his or her company’s health care plan, and who paid $6,015 in employee contributions, could expect a $6,800 to $8,200 increase in wages, provided that we required employers to share the savings, as could be done through changes in the laws governing private health care plans. 

Pursuing such a reform would, of course, lead to a vicious blowback from the medical-industrial complex. As in Montana, hospitals, especially those charging the highest prices in the most cornered markets, would bring out their big guns. They’d blast television and social media with ads threatening massive hospital closures. In many areas of the country, such as metro Pittsburgh or Cleveland, where large integrated health care systems are among the biggest local employers and sources of campaign contributions, they could certainly count on the support of many state and local officials, who not infrequently sit on their boards. When North Carolina’s state employee health care plan tried to implement a plan similar to Bartlett’s, hospitals proved strong enough to beat back the effort, at least for now. 

But as the Montana example suggests, the politics of Medicare Prices for All, while tough, are not impossible. The biggest challenge is overcoming the hospitals’ fearmongering about what will happen if they are forced to live on prices pegged to Medicare. But the idea that hospitals will go broke, or even have to cut back on clinically beneficial spending, is easily rebutted.

There are community hospitals that treat mostly Medicare and Medicaid patients. They learn how to cover their costs by avoiding waste and inefficiency. Meanwhile, hospitals with a greater mix of commercially insured customers are typically flush. Though many of these hospitals have managed to remain classified as “nonprofits” for tax purposes, their excess revenues can often be literally seen in the lavish new buildings and parking lots filled with the luxury cars of overcompensated CEOs, specialists, and administrative staff. The head of the “nonprofit” University of Pittsburgh Medical Center earned $8.54 million last year, and 33 other executives each collected more than a million. Data from the AFL-CIO shows that two of the largest for-profit health care systems in America, HCA Healthcare and Tenet, have CEOs earning more relative to their rank-and-file workers than the heads of Bank of America, Morgan Stanley, and Exxon Mobil. Even with all of this bloat at the top, hospitals collectively are earning an 8 percent margin, which, as the health economist Emily Gee of the Center for American Progress points out, is higher than the margins in the pharmacy or insurance industries.

The hospital sector as a whole is so wasteful, overpriced, and bloated with growing legions of administrative workers that it is one of the few areas of American life where standard measures of labor productivity have been declining for decades, even as hospitals deploy more and more expensive and clinically dubious technologies, like proton beam radiation machines. Americans may fret about spending less on health care providers; we trust hospitals and clinics with our lives, and it’s understandable to worry that cutting back their revenue would lead to worse treatment. But study after study shows that America’s excess spending on health care does not improve outcomes. If anything, the opposite is true. 

The United States spends more on health care each year than every other country in the developed world but boasts one of its lowest life expectancies. Indeed, America’s life expectancy has been falling since 2014, even as health care spending has gone up. One of the leading causes of this decline—opioid overdoses—is a direct product of uncontrolled and unchecked profit motives in the medical industry. Doctors themselves believe, according to a study published in 2017, that more than a fifth of all medical care is unnecessary. They are right: Over-medication (not just of opioids) and unnecessary surgeries are leading causes of death in the United States. 

Meanwhile, the prices Americans have to pay for drugs and medical services are multiples of what people in other nations pay for equally good, if not better, health care. The idea that the U.S. health care system will collapse if it has to live on the same share of GDP as, say, Germany or France, is ludicrous. 

So just how would a Medicare Prices for All plan work? The first order of business, of course, is setting Medicare prices. Currently, the Medicare Payment Advisory Commission (MedPAC), a congressional agency, computes what relatively efficient health providers would need to be paid in order to turn a slim profit on their various health services. Then Medicare establishes a base payment rate for different units of service, such as a hospital stay or an operation. Medicare makes adjustments for particular hospitals and other providers based on variables such as their geographic location and the complexity of the conditions they treat. 

This process is not without flaws or challenges. Over the years, Medicare has tended to overcompensate specialists and undercompensate primary care doctors and other caregivers—a bias that is replicated in private insurance plans. Moreover, providers treating patients covered under traditional Medicare have the ability to make up for any restraints on their prices by just increasing the volume of their services, such as by performing unnecessary tests and procedures. Medicare is attacking this problem by experimenting with new payment systems tied to patient outcomes that are mandated under the Affordable Care Act. 

Going forward, we could further improve pricing by implementing what policy wonks call “all-payer global budgeting.” Under this plan, all insurers, public and private, pay the same prices. But in addition, all hospitals are held to a fixed, global budget, as determined by an independent agency that calculates how much each hospital needs to cover its costs if it runs efficiently. The total amount of revenue the hospital gets to keep stays the same regardless of how many patients it admits or what medical services it performs. As a result, there are no incentives for engaging in unnecessary treatments. Instead, there are incentives to invest in prevention and effective disease management because keeping patients healthy reduces a hospital’s costs but not its revenues. 

Maryland has been experimenting with this approach, and so far the results look promising. When a rational, nondiscriminatory pricing system is combined with global budgeting, insurance companies no longer even pay for individual procedures or treatments. Instead, they pay a flat annual rate for the coverage of whole populations. That leaves it up to hospitals, rather than insurance-company bureaucrats, to figure out how to most effectively deploy health care resources in the care of individual patients and local communities. 

Notice, too, that moving to such a system should help all health care plans, public and private, as well as health care providers, cut back substantially on overhead costs, just as Medicare for All plans promise to do. Global budgeting eliminates billing. And once price discrimination is eliminated, all sides won’t need so many high-cost executives engaged in secret dealings over who gets to charge what and to whom for this or that procedure. Nor will they need so many executives and consultants involved in mergers and acquisitions designed to increase their bargaining power in price negotiations. Under an all-payer, single-price system, the incentives that have driven wave after wave of consolidation among both providers and insurers largely disappear. 

We will still need more aggressive antitrust action in many markets. But just eliminating price discrimination and fixing global budgets would go a long way toward restoring and properly structuring productive competition. Instead of competing over who can grow the biggest fastest and gain the most leverage in pricing and cost shifting, both purchasers and providers of health care can focus on other ways of winning, like who can provide the best customer service and, just maybe, the highest-quality, most cost-effective medicine.

The post How to End the Democrats’ Health Care Demolition Derby appeared first on Washington Monthly.

For years, Never Trump Republicans have courted Larry Hogan to run for president. It’s easy to see why. He’s won two gubernatorial elections in Maryland, where Democrats outnumber Republicans two to one; he’s currently one of the most popular governors in America; and he’s widely viewed as a moderate who’s willing to reach across the aisle. The late-night talk-show host Seth Meyers recently described him as “a Republican who believes in climate change.” In June, he’s publishing a memoir—a move that suggests he’s laying the groundwork for a 2024 presidential bid. Last spring, he launched a national advocacy group, An America United, designed to break partisan gridlock and “bring people together to advance bold, common-sense solutions for all Americans.” Simply put, everything about Larry Hogan’s public image would lead you to believe he’s the opposite of Donald Trump. 

But Hogan, it turns out, has more in common with Trump than his reputation suggests. 

Both are real-estate executives who have refused to relinquish their private businesses while in office. Just as Trump maintained his ownership of the Trump Organization when he became president, Hogan maintained ownership of HOGAN, a multipurpose real-estate brokerage firm, when he became governor. Both have left close family members in charge of their businesses—Trump with his children; Hogan with his brother, Timothy—and created arrangements that allow them to be apprised of the company’s dealings. In other words, they have set up situations in which they can use their powerful government positions to increase their private profits. 

As governor, one of Hogan’s signature policies has been to expand state spending on roads, highways, and bridges at the expense of mass transit. His most controversial policy to date was to cancel the Red Line—a planned $2.9 billion metro rail line through Baltimore, for which the state had already acquired land. In the process, Hogan gave up $900 million in federal aid from the Obama administration. As The Baltimore Sun put it, “Hogan freed up hundred [sic] of millions of dollars he plans to use to undertake a significant shift in the state’s transportation priorities from public transit to road projects.” 

Hogan has advanced a number of major state transportation projects that are near properties his company owns, a development that can boost the value of those properties. Before canceling the Red Line, he approved construction of an interchange down the road from a parcel of land his company controlled. Later, he approved millions of dollars in road and sidewalk improvements near property he had bought approximately two years earlier and was turning into a housing development.

Maryland law says that an official may not partake in a decision if the official or a qualifying relative—defined as a parent, spouse, child, or sibling—has an economic interest in the matter and the official or employee knows of the interest. These decisions “certainly seem to implicate the statute,” said Virginia Canter, the chief ethics counsel for Citizens for Responsibility and Ethics in Washington and a former ethics adviser for the International Monetary Fund. “It looks like there’s credible evidence of a violation.” 

Hogan’s real-estate business has only grown while he has been in office. In 2014, the year before he became governor, his company had ownership in 30 real-estate limited-liability companies, or LLCs, according to his financial-disclosure forms. Now, he has 43. HOGAN is currently selling or leasing more than 20 properties throughout the state, according to its website, and has completed other real-estate deals over the past five years. 

But Hogan has not revealed payments he has received from specific real-estate transactions while in office. “He’s getting paid by developers all across the state—who he’s in charge of regulating in one way or another—and the public has no idea who they are,” said Democrat John Willis, a former Maryland secretary of state and now a University of Baltimore politics professor and a historian of Maryland politics and government. 

Hogan’s income has far exceeded his official yearly government salary of roughly $180,000. From 2015 to 2018, his first three years as governor, he made a total of roughly $2.4 million, according to his tax returns for those years, which he released during his 2018 reelection campaign. But he has refused to release his returns for the years before he became governor, much like Donald Trump, giving the public no way to compare his earnings before and after he ascended to Annapolis. In addition, the tax returns Hogan has released do not include attached statements detailing the sources of his private income, effectively hiding what entities were paying him. 

The amount he’s made while in office is unprecedented. According to Willis, Hogan has made more money as governor than any other governor in the history of the state— and is the only one to have made millions of dollars while in office.

In February 2018, Maryland Matters, a state-based politics and policy website, reported that Hogan held ownership in a company called Brandywine Crossing Realty Partners LLC. The company was chartered on March 9, 2015, and it became a controlling partner for a parcel of land behind the Brandywine Crossing Shopping Center in Prince George’s County. The land was just down the road from a major state transportation project: a new highway interchange.

As Maryland Matters reported, development funding for this project was first allocated by Hogan’s predecessor, Democrat Martin O’Malley, and it had been studied by state transportation planners since 1984. “There is no indication that the governor deliberately took an official action to benefit himself financially,” the site wrote.

But there’s more to the story—and reason for greater concern. 

Several months before the governor’s company took control of the Brandywine land parcel, Hogan’s administration—not O’Malley’s—earmarked $58 million to build this interchange. In April 2015, the general assembly approved the project. Hogan did not notify legislators that he had property interests nearby before the vote.

The allocation for the interchange was made as part of Maryland’s annual transportation budget process. Each September, the Maryland governor releases a draft six-year transportation budget. It includes transit projects that the government is considering or actively building, along with the phase that each is in. The following January, the governor releases a finalized version. The legislature then takes several months to deliberate on the budget—for which the gubernatorial staff lobbies—before voting on it. Lawmakers can vote down individual projects but can’t add any.

In O’Malley’s final 2014–19 transportation budget, the Brandywine project was in a planning phase of development. When O’Malley released Maryland’s draft 2015–20 transportation budget, it was not mentioned. But when Hogan released the finalized 2015–20 budget five months later, he moved the overpass into construction and added $58 million in new funding. A source familiar with the situation said that the decision to expedite the project was made during meetings that included the governor, which took place in November and December 2014, after Hogan was elected but before he was sworn in. Hogan didn’t become a controlling partner for the Brandywine property until the following March, but it’s not clear when his negotiations to gain a stake in the property began. Real-estate executives I spoke to who are familiar with the process, and who have worked with HOGAN in the past, said these deals typically take months (and in some cases years) to complete.

Hogan’s communications director, Michael Ricci, said that advancing the Brandywine project had nothing to do with Hogan. “The governor has never made a decision on an individual project,” he said. 

But a Maryland Department of Transportation (MDOT) official familiar with the process, who spoke on the condition of anonymity, said that wasn’t true. Ricci’s claim, he added, “doesn’t pass the laugh test.” The governor, at the very least, has signed off on every decision. “The [transportation] secretary can propose it, but it’s the governor’s call,” the official said.

Maryland’s constitution declares that the governor is responsible for sending the budget to the legislature “in such form and detail as he shall determine.” Warren Deschenaux, who directed Annapolis’s nonpartisan Department of Legislative Services for decades, said Maryland’s transportation-infrastructure process is one of the most executive driven in the nation. He called Hogan’s claim that he hasn’t made any decisions in his transportation budget a “ridiculous assertion.” 

Former Maryland Governor Parris Glendening, a Democrat, added that the governor is the sole official responsible for moving transportation projects into construction: “Those decisions are going to have to be the governor’s decision and not someone in government bureaucracy.” 

Multiple legislators said they were not informed of the governor’s nearby real-estate interests before voting on his transportation budget. “I certainly had none of this information when working on the budget committees or in discussions,” said Bill Ferguson, a Democratic Maryland state senator, when we spoke in September. (In October, Ferguson was selected to become the Maryland Senate’s next president.) “Had I known this information, I think there would have been much more targeted and purposeful questions about the necessity of projects that appear to have a financial benefit to the governor.” (Hogan listed his holdings in real-estate LLCs in his submission to the Maryland State Ethics Commission, filed 17 days after the legislature approved his first budget, but he did not identify specific properties, let alone the dates of acquisition.)

Greg Slater, the Maryland State Highway Administration’s administrator, told me that transportation planners make a variety of recommendations for what belongs in the budget and at what phase. One of the reasons the Hogan administration advanced the interchange, Slater said, was that the state had completed “right-of-way”—meaning it had purchased the land needed to construct the project. But right-of-way and engineering were still in process when it was advanced, according to MDOT records. (In December 2019, Hogan nominated Slater to be Maryland’s new transportation secretary.)

Hogan himself has taken credit for the Brandywine interchange. “Our administration promised to fix Maryland’s crumbling roads and bridges, as well [as] address the worst traffic in the nation, and with the MD 5 interchange project, we are doing exactly what we said we would do,” the governor said in a press release. “This important project will help remove a major bottleneck in Prince George’s County.” 

Hogan awarded the contract to build the Brandywine interchange to Facchina Construction Company, according to records obtained by the Washington Monthly through Maryland’s Public Information Act. Facchina donated to Hogan’s reelection campaign one year before receiving the contract. The interchange is scheduled to be completed by the late spring of 2020.

Experts I spoke with who reviewed Maryland’s ethics laws were alarmed by the Hogan administration’s decisions around Brandywine and other properties. Richard Painter, a professor of corporate law at the University of Minnesota Law School and a former chief ethics lawyer for President George W. Bush, said that Hogan should have been prohibited from participating in the decision. “The [ethics law] language suggests that he should recuse because the official or employee or qualifying relative—he himself—has an interest in the matter and he knows of the interest,” Painter told me.

Hogan has a history of investing in the area surrounding the Brandywine project that dates back to 2003. Under his administration, the government has also advanced a number of other improvements in the same vicinity, including the construction of embankments, exit ramps, and median piers; pavement upgrades; a new park-and-ride lot; and a bridge. 

At the same time, Hogan’s business has been increasing its portfolio near all of these improvements. In early 2017, HOGAN purchased a new parcel of land for $2.2 million near the interchange, where, according to a Maryland real-estate newsletter, it plans to build townhouses, apartments, a medical office space, and an assisted-living center. Most recently, the company bought 14 additional parcels of land in Brandywine near the interchange for more than $1.2 million, according to public land records.

I asked Mike Sponseller, a HOGAN vice president, whether the interchange project contributed to the firm’s increased investment in the area. “Yeah,” he said. “Infrastructural updates are incredibly important to facilitating new development. Infrastructure contributes to land value, contributes to access, of course.”

Brandywine isn’t the only place where Hogan has advanced construction projects near his existing property interests. On November 12, 2014, just eight days after his election, Hogan’s company bought a parcel of land from Maryland’s State Highway Administration in Severn, Maryland, for $400,000. The sale was conducted through a public auction, and only one bid was made: by Timothy Hogan. In November 2014, HOGAN created a new LLC called the Villas at Severn Crest. Since Larry Hogan took office, the State Highway Administration has begun a number of transportation projects that could boost the value of that property, including intersection improvements and road resurfacing less than a mile away, which started in 2018. 

In addition to his Brandywine and Severn properties, HOGAN chartered a company in West Hyattsville in early March 2015 that bought a parcel of land a half mile off Queens Chapel Road. The company is turning the parcel into a townhouse development. In his 2017 transportation budget, Hogan put $23.5 million in road and crosswalk improvements on Queens Chapel Road into construction, less than a mile from the property. (Previously, this project had been in a planning phase.) Lawmakers said they were not told at the time that he owned a property near the road improvements.

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Larry Hogan, 63, has been steeped in politics since childhood. His father, Lawrence Hogan Sr., won a seat in Congress when his son was 12, and he gained fame as the first Republican member of the House Judiciary Committee to call for Richard Nixon’s impeachment. The younger Hogan nurtured dreams of holding office himself. Throughout the 1980s and ’90s, Hogan Jr. tried unsuccessfully to win a seat in Congress. 

Instead of going to Capitol Hill, he went into real estate. In 1985, he founded HOGAN, his real-estate firm. He wasn’t always successful. Hogan filed for bankruptcy in 1994 when he couldn’t pay back multiple longtime lenders who called in their loans, and he was forced to liquidate his assets, including by selling his house for $750,000. He later rebuilt his business, and his brother joined the firm in 1999. 

In 2003, Hogan got his first political break when Bob Ehrlich was elected governor, the first Republican to win in Maryland since Spiro Agnew. Ehrlich appointed Hogan to a cabinet post in charge of filling jobs at Maryland state agencies, boards, and commissions. After Ehrlich lost his reelection campaign to Martin O’Malley four years later, Hogan founded a political advocacy group, Change Maryland, which tallied O’Malley’s tax increases. That became the springboard for Hogan’s 2014 gubernatorial bid, which he won as part of a wave election that saw GOP victories all across the country. Hogan finally got his chance to serve in elected office.

But Hogan’s election came with an immediate complication: What would he do with his real-estate business? Maryland ethics law bans officials or employees from making decisions on matters in which they have an economic interest. But the law states that this prohibition does “not apply if participation is allowed as to officials and employees subject to the authority of the [Maryland State] Ethics Commission.” Hogan reached out to the ethics commission for advice.

One day after Hogan was inaugurated, on January 22, 2015, Maryland State Ethics Commission executive director Michael Lord wrote back with guidance. His letter was designed to “serve as an interim approach pending the full resolution of possible financial interest issues.” Those issues, Lord said, could take “a number of months” to fully sort out. 

In the guidelines Lord sent to Hogan, he told the governor to follow the ethics law’s prohibition on making decisions that impacted his financial interests. Lord wrote:

The Law provides that an official may not participate in a matter if (1) the official or a qualifying relative (defined as parent, spouse, child or sibling) has an interest in the matter, or (2) any of the following is a party to a matter: (i) a business entity in which the official has a direct financial interest; or (ii) a business entity, including a limited liability company, of which the official or a qualifying relative is an officer, director, trustee, partner or employee. Given these limitations, the Governor should not personally participate in any matter that may come before him or a state agency that involves [his] businesses, or any matter in which he or any of his qualifying relatives or a company that employs them have an interest. 

Later in the letter, Lord wrote, “The Commission has determined that participation includes supervision of others involved in a matter.” 

In December 2015, Hogan entered into a trust agreement that he asserted would prevent conflicts of interest. On April 15, 2016, the trust was approved by the state ethics commission. Between Hogan’s inauguration and the trust agreement’s approval, the governor submitted two transportation budgets—including the one advancing the Brandywine interchange—and gained ownership of at least seven newly created real-estate LLCs. In other words, Hogan’s real-estate business was growing just as he was supposed to be separating himself from it.

In an email, Ricci said that given the length of time it took the commission to deliberate, much of this was both unavoidable and acceptable. “Since before being sworn into office, the governor’s representatives requested and received guidance from the Ethics Commission to ensure full compliance with the Public Ethics Law,” he said. Ricci cited the letter from Lord, sent to Hogan the day after his inauguration, in which the chairman stated that the commission “appreciates the efforts that have been made to date by the Governor and his team to address the complicated issues involving his private business interests and his sincere desire to ensure compliance with the Ethics law.”

But even after Hogan began talks with the ethics commission, there were signs that he had not made a clear break from his business. In February 2015, while serving as governor, Hogan himself announced a $3.4 million real-estate transaction in a press release issued by his private company. His administration began construction on projects near both the Villas at Severn Crest and the Riverfront at West Hyattsville after his trust went into place.

Hogan refused multiple requests to be interviewed. “Washington Monthly is making absolutely baseless allegations that the state’s major media outlets have already thoroughly vetted and rejected,” Ricci wrote in an emailed statement. “With the advice and agreement of the Ethics Commission, the governor has gone above and beyond to comply with Public Ethics Law.”

There are several different ways by which Hogan could have separated himself from his business. Craig Holman, a government-affairs lobbyist for Public Citizen, a nonprofit good-government group, said that the most robust way would be to divest entirely. It’s an approach that some Democrats in the Maryland legislature have also endorsed. “When you have a business owner who takes the reins of government, that business owner needs to remember that he is no longer simply beholden to his business interest,” said Kirill Reznik, a Democratic state delegate. “He is beholden to the interests of the people of the state. If those business interests are not something that you are willing to give up, then you frankly don’t deserve to be in that position.” 

Some members of the conservative movement disagree. Kendra Arnold, the head of the Foundation for Accountability and Public Trust, an organization once led by former Acting Attorney General Matthew Whitaker, told The Baltimore Sun in 2018 that it was “not realistic” for public officials to sell their businesses. “Having everyone divest themselves of every interest they have is not a reasonable requirement,” she said. 

Reformers are not asking for politicians to divest from every stock or mutual fund, of course. And Hogan’s real-estate empire—which has properties across the state he governs—is not a typical business. But experts like Holman argue that when politicians do maintain their business interests while in office, they should have to place them into a blind trust, managed by an independent entity with which they have no prior relationship. When Jimmy Carter became president, for example, he put his peanut farm into a blind trust.

But Hogan’s trust is not blind. The ethics commission granted the governor a “financial-interest exemption,” which allows him to continue to own real-estate projects and to be apprised of his company’s business dealings, as well as how much money he’s making. In a letter to Lord, Hogan wrote that the arrangement “will not prevent me from requesting or receiving information about the status of the Hogan Companies . . . including the status of its current investments and, [sic] the identity of the investors and the locations of real property in which the Hogan Companies have an investment.” 

Ricci said Hogan opted for this type of arrangement because a “blind trust is generally reserved for passive investments. Given that the trust represents an active and ongoing business, it is sensible to have it managed by experts in the field.” Ricci said that, as part of the deal, the governor promised to not participate in matters involving HOGAN. “The agreement prohibits advance consultation or solicitation of advice with respect to the business activities of the trust,” Ricci told me. “In short, this trust goes further than current Maryland law.”

But the trustees Hogan chose to manage his holdings are not just experts in the real-estate field—they are his previous business associates: Victor White, the chief operating officer of HOGAN; Jacob Ermer, the executive vice president of HOGAN; and David Weiss, a former broker at HOGAN. According to public records, all of them are Hogan campaign contributors. His brother, Timothy, is in charge of his company. 

As governor, Hogan has maintained a close relationship with all four of these individuals. He had at least eight meetings with them between 2015 and 2018, according to his meeting calendar, obtained by the Washington Monthly through a Public Information Act request.

Kathleen Clark, a government ethics professor at the Washington University in St. Louis’s School of Law, said it was “misleading” to even call the arrangement a trust because Hogan is kept fully apprised of his investments and assets. “He owns it, he will benefit from it, he is not shielded from knowledge of what the holdings are,” she said. 

This faulty arrangement is, in part, the responsibility of the Maryland State Ethics Commission, which granted Hogan the financial-interest exemption and signed off on the trust. The commission’s decision speaks to the overall weakness of Maryland’s ethics laws. The Center for Public Integrity, in its 2015 State Integrity Report, the most recent to date, gave the state a D overall for integrity—and an F for ethics enforcement. (Maryland passed a law in 2017 that strengthened certain provisions in the state’s public ethics law—mainly toughening the regulations governing when and how former legislators can become lobbyists.) 

Still, the ethics commission made it clear that financial-interest exceptions do not allow officials to participate in government decisions that impact their outside business. “Even when the Commission grants an exception or exemption, all of the other provisions of the Ethics Law continue to apply,” the commission wrote in an August 2019 memo to state workers. “For example, the employee or an official may not participate in any matters on behalf of the State relating to the employee’s secondary employer or entity where the ownership interest lies even if the Commission grants an exemption or exception.”

In its specific guidance to Hogan, the commission stated that Hogan could, and should, identify “a specific person within the Governor’s Office to act in his place on any such matters that come to the Office while he continues to retain his financial interest in his businesses.” Yet when I asked Ricci, Hogan’s spokesperson, if the governor had ever recused himself from a decision in his transportation budget that could impact his properties, he was clear that Hogan had not. “The answer is no,” Ricci said. “The governor does not make decisions on individual projects, so he has no decisions to recuse himself from.”

The ethics commission did indicate that it’s these kinds of discrete decisions Hogan should avoid making. In its guidance to Hogan, it wrote that the participation restrictions refer to specific matters, “not to broad policy matters where his businesses are among a small number directly affected.” But senior Maryland officials, past and present, said the governor routinely makes specific calls on infrastructure projects and, indeed, is the official responsible for making such calls.

Maryland law allows state officials or employees to participate in decisions from which they would otherwise be barred, as long as they are the only person authorized to make those decisions. But the law also states that when officials are exempted from participation prohibitions by necessity, they must publicly disclose their conflict of interest. Multiple legislators said Hogan did not disclose real-estate interests before they voted on his proposed transportation projects.

Last October, Hogan endorsed the Ukraine-related impeachment proceedings against Donald Trump. “I think we do need an inquiry because we have to get to the bottom of it,” he said in a televised interview. “I don’t see any other way to get to the facts.”

But Hogan has been, at best, silent over the president’s alleged violations of the Emoluments Clause. In fact, in 2018, he withheld $1 million from the Maryland attorney general’s office to stop a series of lawsuits against Trump, the most prominent of which alleged that the president was using his position to bolster his real-estate empire’s profits. 

The governor justified his decision on fiscal grounds. “The administration takes its responsibility to find efficiency and savings in the state budget extremely seriously,” Doug Mayer, a spokesperson for Hogan at the time, told The Baltimore Sun. “This is a perfect example of that.”

The post Who Does Maryland’s Governor Really Work For? appeared first on Washington Monthly.

David Firestone, an associate special ed teacher in New York City, is in his final semester of a master’s program at the Hunter College School of Education. Yet he still feels like he hasn’t learned one of the core skills of teaching. 

“No one has ever bothered to teach us how to write a real lesson plan,” he told me in November. “They just care that we know how to write edTPA lesson plans.” He was referring to the test you’re required to pass in New York State to become certified as a teacher. A real-world lesson plan is usually half a page, maybe a little more. What the program has instead drilled into him is how to write the kind of document he will submit to get his teaching license: a super-detailed, eight-page plan, essentially a script of everything he’d say in a class. 

As a full-time associate special ed teacher and a graduate student on the side, Firestone has a finely calibrated sense of time—how to divvy it up, maximize it, save it. He leaves his house in central Brooklyn at seven to get to school in south Brooklyn by eight, teaches a full day of classes, and finishes just before three. Then he spends an hour and 20 minutes trekking to the Upper East Side of Manhattan to take grad school classes, which can run until 9:40 p.m. He often doesn’t get home until after 11. That doesn’t leave a lot of time for eight-page lesson plans. Frequently he writes his on the subway. It’s a schedule that he described alternately as “brutal” and “God awful.” 

So why do it? Because he has to. Right now, one of the most common ways that school districts attempt to increase teacher quality is through master’s degrees. Some states, like New York, Maryland, and Connecticut, require that teachers get master’s degrees in order to keep teaching. Far more states encourage teachers to get them by tying them to pay raises.

It makes sense for states and school districts to look for ways to improve teacher quality. There are many factors schools can’t control, such as family income, parents’ level of education, and so on. But out of the factors they can influence, like class size or access to technology, one has a far greater impact on student achievement than all the rest: teacher quality. Research shows that having a great teacher rather than an average one makes as much as a half year’s difference in learning growth. 

The problem is that education master’s programs generally don’t produce better teachers. While programs vary greatly, and some stand above the rest, the teachers I interviewed told me that they had spent too much time on theory and not enough on practical teaching skills; professors were too far removed from the classroom and using out-of-date pedagogy; and many programs simply weren’t rigorous. Decades of research back up their critiques. 

“When you talk to someone who is not in the weeds of ed research, they would be shocked that more education wouldn’t make a teacher more productive,” said Dan Goldhaber, who directs the Center for Education Data and Research at the University of Washington. But that’s what the data shows. Students whose teachers have a master’s degree don’t perform better on standardized tests—an incomplete but meaningful metric—than students whose teachers have just a bachelor’s degree. 

Some teachers get a master’s because they want to. But many do it because their district requires them to, or because they aren’t being paid much and it’s a way to get a raise. Some teachers bluntly told me their degrees were a waste of time—a surprising admission given the strong human impulse to attribute value to whatever you’ve already spent a lot of money on. 

In districts across the country, teachers aren’t paid enough. To attract talented, devoted people to the profession—and so that teachers don’t need second and third jobs—we need to pay them more. What doesn’t make sense is tying increased teacher pay to cumbersome, expensive degree programs that don’t actually improve teacher quality. And it’s clear that there’s a better way.

American teachers weren’t paid salaries at all well into the 19th century. Schools were largely community organized, and teachers’ compensation mostly consisted of free room and board. By the early 20th century, with the cash economy in full swing and K–8 education growing rapidly, teaching had become more professionalized—but teacher pay reflected the intense racial and gender inequities of the time. In part to confront that unfairness, districts began setting pay schedules based on objective criteria like training and years of experience. Scholars disagree on when exactly the master’s pay bump started, but by the 1960s it had become widespread.

This arrangement has proven durable. It makes budgeting more predictable for school districts. It suits the needs of teachers’ unions, who want to increase benefits that are equally accessible to all their members and tend to prefer linking pay to seniority rather than performance. And, not incidentally, it ensures a steady stream of tuition revenue to the universities offering the degrees. 

What the system does not do, however, is improve teacher quality. 

That’s not exactly what Arthur Levine expected to find when he set out to study the field of teacher education in the early 2000s. At the time, he was the president of Columbia University’s Teachers College, one of the most prestigious programs of its kind in the country. Education schools were coming under criticism, but Levine assumed that his research project would prove their value. He and his research team conducted four massive surveys and 28 case studies of education programs, resulting in a more than 100-page report. 

“When I started the study, what I suspected was that the criticism was overstated,” he told me recently. He was wrong. “Things were so much worse than I had imagined,” he said. “It was shocking.” While there were some standout programs, on the whole he found a system rife with low selectivity, low rigor, and low graduation standards. Students criticized faculty for having limited classroom experience, which led to dated material and a lack of practical tips. Worst of all were school- administration programs, which many teachers enroll in with an eye toward career advancement, and of which Levine concluded, “The majority of programs range from inadequate to appalling.” 

Subsequent studies have backed up Levine’s research, showing that teachers with master’s degrees aren’t any better, on average, at educating students. (A notable exception, according to recent research, is that students had higher math scores when their teachers had master’s degrees in math or science.) The American Association of Colleges for Teacher Education, which represents hundreds of colleges and universities that have education programs, cautions that much of this research relies narrowly on student performance on tests, and doesn’t capture other skills we expect teachers to impart. But the consensus among people who have studied the question is overwhelming.

“Most of the research is that there’s either no statistically significant difference, or small significant differences, in teachers with master’s degrees,” said Thomas Kane, an economist and professor of education at Harvard. Matthew Chingos, an education-policy expert at the Urban Institute, has described it as “one of the most consistent findings in education research.” Kate Walsh, president of the National Council on Teacher Quality, put it more bluntly: “It’s as conclusive as research that finds smoking causes lung cancer. It’s as conclusive as the research on climate change.”

It cuts against logic. How could several years, hundreds of hours, and tens of thousands of dollars spent on making teachers better not make better teachers? 

One explanation I heard again and again was that programs spend too much time on theory and not enough on practice. “Education programs in general are abstract, and they don’t really give teachers opportunities with real-world practical strategies which you can utilize in classrooms,” said Jessica Chirico, a social-studies teacher at a New York City charter school, who, like David Firestone, did her master’s at Hunter College. “Vygotsky is a great guy, Piaget is a great guy,” she said, referencing two famous pedagogical theorists. “But at the end of the day, the kid is throwing paper balls at his friend in the classroom, Johnny is not listening—how is that going to help you?” 

Firestone found that many of his professors were professional academics who hadn’t worked in a school classroom for decades, or at all. “There’s nothing wrong with leaving the classroom to be an academic,” he said. “But I just find that people who are in the classroom every single day think more practically than the academics.” Other teachers noted that their professors weren’t using up-to-date pedagogical practices themselves. Martin Goldman-Kirst, a math teacher at Cleveland High School in Washington State, recalled the irony of being lectured on not lecturing his students. “I found that really funny,” he said. “It would have been funnier had I not been so bored.” 

When programs do try to deliver hands-on classroom experiences, it can be the most valuable part of the degree—but it can also fall flat. Firestone was required to spend a summer observing and learning from full-time teachers leading summer school classes. But the teachers, he said, were hardly models to emulate. They were mostly close to retirement or brand new, and were teaching summer classes because they needed the money or didn’t yet have a full-time job. Sometimes Firestone found himself offering to take over a lesson. 

To the extent that programs are challenging, most teachers I spoke with pointed to the burden on their schedule, rather than the rigor of the content. This leads to perverse incentives. The salary bump for getting a master’s degree is given in exchange for the signed and stamped diploma, whether or not teaching improves. Teachers, most of whom already have tightly packed schedules, often seek the least time-consuming programs. Schools of education, in turn, compete for customers by making their programs less demanding. In many districts, there are few restrictions on the types of degrees that qualify, so often teachers choose subjects, like school administration, unrelated to what they teach. It might qualify them for a more lucrative leadership position down the line, but it won’t make them a better math, Spanish, or history teacher now. “You could get a master’s degree from a topflight master’s of education program, or you could go to a fly-by-night program, and typically those two would be treated the same [by the school district],” said Dan Goldhaber, the researcher at the University of Washington.

Laura Lozito, a social-studies teacher who works with Chirico, would have liked to get an advanced degree in history. But when she compared syllabi, she quickly realized that a master’s in education would entail less reading and writing, and would cover material she was already familiar with from her undergrad courses. Her schedule couldn’t bear the workload of the history degree, so she chose a master’s in adolescent education offered online through Mercy College. The homework mostly entailed posting in an online forum for her class. It was a lot of “ ‘Yeah, I agree with so-and-so’s point,’ ” she said, and it got tedious. “I will be 100 percent honest, I did not notice any added value with this degree,” she told me. “With the exception of a couple of things I gleaned from the texts, I feel like if I had never gotten it, I’d be teaching the same way.”

Nixing the automatic master’s pay bump, which many experts advocate, would likely face intense resistance from teachers’ unions. It would also draw quiet resistance from a less obvious source: the universities awarding degrees. Data from the Department of Education shows that education master’s degrees are the second most commonly awarded master’s degrees in the country, after MBAs. That makes them an important and reliable source of tuition revenue—as long as teachers feel the need to get them.

Marguerite Roza, an education-finance expert, got an inkling of that fact when she published a paper arguing that states should end the “master’s bump.” The money going toward degree-based pay raises—nearly $15 billion nationwide in the 2007–08 school year—was a waste, she argued. She authored that paper from her perch at the time at the University of Washington’s College of Education—the very sort of institution that was benefitting from the arrangement.

The paper had been out for less than a week, Roza said, when she heard from the dean of the college, Patricia Wasley. Wasley told Roza she had been inundated by calls from deans of other education programs across the country, according to Roza. They were asking that she censure Roza or even make her retract the paper. Wasley declined. 

“The college of ed, for sure, earned a lot of their money through this whole handshake relationship with the school districts,” Roza told me. “It makes colleges of education extremely resistant to any real change.” 

That doesn’t make real change impossible, however—in fact, some states have already done it. In 2013, North Carolina stopped paying teachers extra for master’s degrees in part because of the research finding their limited impact on student achievement, and in part because of budget squeezes from the Great Recession.

But wait: Does this mean paying teachers less? As teacher strikes have swept across the country, the public has been reminded that in many places, teachers make so little that some end up taking second jobs, or even, in extreme cases, selling their plasma. In most places, we should be paying teachers more, not less. 

Roza agrees. This money should still go to teachers—it just shouldn’t be tied to an expensive, time-consuming degree with no tangible benefit. Simply giving all teachers higher salaries, says Roza, would be better than having teachers go into debt to get degrees.

Some districts are proving that it’s possible to do one better. Over the past decade, DC Public Schools (DCPS), long seen as one of the worst school systems in the nation, has clawed its way up the ranks of urban school districts across the country. In 2019, only D.C. and one state (Mississippi) saw improvement across most measures on an important national test of fourth and eight graders. Some of those gains are due to demographic changes, but research shows that demographic change isn’t the whole story. The district also undertook a series of major but controversial reforms aimed at improving the quality of the teacher workforce. As part of the teacher effort, it abandoned the traditional practice of paying teachers strictly on the basis of years of service and graduate credits. It implemented a new evaluation system, combining principal evaluations throughout the year with student test scores and other measures. High marks meant that a teacher would get a substantial bonus and, in some cases, permanent bumps up the pay scale. The small percentage of teachers rated “ineffective” were dismissed. In addition to shifting to a performance-based pay system, the district also beefed up mentoring and career development, including by implementing a weekly coaching program. 

Vast racial and socioeconomic achievement gaps among students remain, and when the Washington Teachers’ Union surveyed their members, a majority said they felt that the evaluations were unfairly subjective. But academic researchers found that, on average, low-performing teachers who leave the system are replaced by more effective ones. And a recent Washington Post poll found that the share of Washingtonians who approve of the city’s schools (including charters) is at a record high, and up sharply from 2008. 

Not all school districts could easily replicate what DCPS has done. Smaller districts, especially in rural areas, can’t replace low-performing teachers so easily, and they may not have resources for a robust coaching system. In other words, those districts will still have to rely on university programs to provide continuing education for their teachers. The question is how to make those programs better.

When I put that question to experts, several suggested looking into Relay, an independent nonprofit grad school that focuses exclusively on teacher and school-leader education. Initially incubated within Hunter College and accredited in 2011, Relay was created to be a hyper-practical program for training new teachers. In their first year, students work in classrooms full-time with mentor teachers, earning assistant-teacher salaries. At the same time, they’re taking classes and being coached by professors—all of whom have been classroom teachers for years. In their second year, Relay students lead classrooms, earn full salaries, and continue to take courses and receive feedback. Student teachers submit video of themselves leading classes, which professors  review and give them feedback on, like a football coach going over a game tape with players. 

Relay has grown quickly, and now has campuses in 19 cities. It says it educates more than 4,000 student teachers. The school’s impact on students hasn’t yet been evaluated by third-party researchers, but some early indicators are promising. Relay had 18 first-year teachers working in DCPS in the 2018–19 school year who were assessed under the district’s evaluation system. While it’s hard to draw conclusions from such a small sample, Relay says the share of its first-year teachers scoring in the top two brackets was nearly 20 percentage points higher than other novice teachers in the district.

Researchers will watch as Relay and other programs test out new strategies. But there’s a larger, structural fix: decoupling master’s degrees from automatic raises. Enrollment in education master’s programs would almost surely dip, at least initially, but those still choosing to enroll would become more demanding customers. As Marguerite Roza and Patricia Wasley put it in a piece for Education Week responding to the backlash against Roza’s research, replacing the master’s bump with performance-based pay would “tip the scales to those programs that have redefined their offerings with a focus on achieving better results in the classroom.” 

Figuring out how to actually make teachers more effective should be a national priority, Arthur Levine said. “The research makes clear that teacher quality is one of the best investments we could possibly make,” he told me. “Our future depends upon the quality of our teaching force.”

This piece was produced in partnership with FutureEd, an independent think tank at Georgetown University’s McCourt School of Public Policy. Brooke LePage provided research assistance.

Correction: A previous version of this story incorrectly described David Firestone as a special ed teacher. He is an associate special ed teacher. We regret the error.

The post Master’s of None appeared first on Washington Monthly.

Shoppers hate waiting. If they’ve made the effort to go shop at a brick-and-mortar store, rather than stay home and order something online, they hate not finding what they’re looking for. They hate not finding assistance. They hate bad service.

Unfortunately, bad service is often the norm. Research from MIT’s Sloan School of Management finds that large shares of shoppers can’t find anyone to help them. They’re put off by jumbled piles of unfolded clothes or misplaced items. Many walk out the door without dropping a dime, costing, in one estimate, between 5 percent and 15 percent in lost sales, potentially more if people are frustrated enough to take to social media.

To understand why stores appear dysfunctional, look at how chaotic life is for their workers. Consider the experience of former Target employee Adrian Ugalde. Sometimes, during the holiday rush of Christmas or at back-to-school time, Ugalde received the full-time hours he was promised when he was hired. But outside of that, his hours bounced around, sometimes wildly. One week he was assigned 20 hours of work. The next week, 12. Sometimes he would be on the closing shift until 12:30 a.m., take an hour bus ride or expensive rideshare home to the one-bedroom apartment he shares with four other people, only to be back on the job the following morning at seven. In order to keep his health insurance, the 37-year-old routinely had to beg coworkers to give up their shifts so he could cobble together enough hours of work each week to stay eligible for full-time status. 

Ugalde’s chaotic schedule is the product of the exploitative use of a sophisticated, “smart software” computer algorithm. For the past several years, these programs have been determining how many retail, food-service, or other hourly service workers are needed per shift; what hours these workers are given each week; and which days and which shifts workers get. The algorithms use big data—previous sales trends, weather patterns, consumer preferences—to predict how many customers are likely to be in a store at a given time, and then assign staffing levels to match that expected demand. More rain predicted? More customers are likely to dash indoors to buy stuff; more last-minute calls are made to weary workers to come in. Or, when the rain doesn’t bring in the expected rush, more workers are called in at the last minute and then sent home, often without pay.

Algorithmic scheduling has wreaked utter havoc in the lives, health, financial stability, and future prospects of millions of service workers. Now, 16 million retail workers (one out of every 10 employees in the United States), 12 million food-service workers, and scores of other hourly workers and their families are trapped in a never-ending cycle of precarious and unpredictable low-wage labor. “A computer decides when I work and how much I work and whether I work,” said Ugalde, who made $10 an hour at Target. “It’s just trying to fit me in like a puzzle piece. A computer doesn’t know your life. It only knows what you input.” 

The rise of scheduling algorithms has been driven by one goal: increasing efficiency to increase profits. In a capitalist economy, that’s hardly surprising. Especially in an era dubbed the “retail apocalypse,” when brick-and-mortar stores are under increasing pressure from online retail, it sounds brilliant. Use big data to better track customer demand, then come up with a smart-software algorithm to figure out how many workers you need and when to most efficiently deploy them. The cost of labor is the single largest controllable expense for retailers and other labor-intensive businesses. So it’s the first place they look to cut.

The push to use new technologies to wring as much value from workers as possible isn’t exclusive to this era, or even to brick-and-mortar businesses. New surveillance technology has turned truckers into America’s most-watched workers. Amazon—the death star for physical stores—uses algorithms in its warehouses to track and time worker movements. 

But it doesn’t have to be this way. In fact, it shouldn’t be this way. The software is easy to program to treat employees like human beings. Some companies already have programmed software to be humane. And they’ve found that when they do, it isn’t just employee health and well-being that improve. Customer satisfaction does, too. Research shows that better, more predictable schedules for staffers means happier workers. That means better customer service and more sales. And that’s better for business.

Nevertheless, U.S. corporations have overwhelmingly chosen to program software to do the opposite. As the data scientist Cathy O’Neil writes in her book, Weapons of Math Destruction, “It’s almost as if the software were designed expressly to punish low-wage workers and to keep them down.” 

Scheduling software debuted in many companies right around the time of the Great Recession, just when a spike in involuntary, poorly paid, part-time hourly work took root across the economy. As retail and service companies began transitioning from employing mostly full-time to mostly part-time staff, they began to demand that workers have “open availability.” Algorithms programmed to closely match predicted customer demand and labor then began assigning these part-time, always-available workers increasingly erratic hours.

For years, this problem was largely invisible, subsumed by research on the impact of post-recession unemployment and pay cuts. Experts stumbled on it almost accidentally. In 2014, Daniel Schneider, a demographer and sociology professor at the University of California, Berkeley, and his colleague Kristen Harknett, a sociologist at the University of California, San Francisco, were studying how the 2008 recession had affected families. Much had been written about plummeting birth rates, higher divorce rates, and lower marital quality. Many attributed that family instability to the loss of a job and the devastation of unemployment.

But Schneider and Harknett began to find lasting negative effects beyond job loss. Even among those who kept their jobs, or found new ones, they found an enormous and enormously debilitating sense of everyday uncertainty. Many workers reported that they didn’t know when or how much they would work, if they’d be asked to stay late, or if they’d be called in at all. Despite the scope of the problem, Schneider and Harknett quickly realized that there was no data about what was going on. “We’re so focused on wages in our labor-force surveys in the United States,” Schneider said. “This is different. This is about time.”

In 2016, what began as Schneider and Harknett’s informal interviews with hourly retail and service-sector workers in the San Francisco Bay area grew into the Shift Project, which is now the largest source of data on work scheduling for hourly service workers, with reports from 84,000 workers in the retail and fast-food sectors from across the country. The data includes worker schedules, economic security, and the health and well-being of workers and families. 

Half of the workers in the Shift Project’s database say their shifts change from day to day and week to week. Since the recession, working hours have begun to swing wildly from one week to the next for low-wage workers with less than a college degree. Two-thirds of the workers reported that they have to keep their schedule open and be available to work day or night at the drop of a hat. Two-thirds of workers in the survey get their schedules less than two weeks in advance. Sixteen percent said they have less than 72 hours’ notice. Eighty percent said they either have no input or limited input in making their schedules. 

These workers tend to be among the most invisible and powerless. Previous research has found that the workers who are disproportionately more likely to have nonstandard hours are women, people of color, young people, and people with children. A September 2019 analysis of General Social Survey data on schedule volatility found that workers who are “black, young, and without a college degree appear to be at highest risk.” Research released in October shows that nonwhite workers are as much as 30 percent more likely to have precarious work schedules than white workers.

When Schneider asked one young single mother what kind of schedule she’d prefer, she sighed, and said it would be “amazing” if she could work a predictable night shift, and have someone she trusted sleep with her child, instead of having to frantically call around for help or park her child in front of the TV of whichever relative, friend, or neighbor is available at the last minute any time of the day or night. “I thought it was really sad that a stable night shift was her big dream. It shows how limited workers see the realm of possibility,” Schneider said. “But she’s right to dream for a stable shift, because it’s pretty uncommon. Variability is the rule.”

That variability in schedules, the Shift Project and other research has found, is associated with higher levels of depression and psychological distress—feelings of nervousness, hopelessness, worthlessness, and being overwhelmed—than other low-wage workers with stable schedules. Nearly three-fourths of the workers with erratic schedules reported poor sleep. It’s not hard to imagine the stress, anxiety, and sleepless nights—not to mention financial hardship—that result when your income swings more than 30 percent each week, while your bills don’t. 

These workers are already poorly paid, and the researchers tested whether higher wages or more predictable schedules would make a bigger difference in their lives. Time strain, they found, had twice the impact. “It’s really stressful,” Schneider said, “to have no control over disorganized time.” Try making appointments for the doctor or dentist or parent-teacher conference when you get your work schedule with only a day or two of notice. 

As Sam Hughes discovered, attempting to make time for medical necessities can lead to retribution. When the 26-year-old Hughes (who identifies as nonbinary and prefers a gender-neutral pronoun) got a job at a Fred Meyer deli in Salem, Oregon, in 2018, they made clear they needed four hours a week for doctors’ appointments and wouldn’t be able to have open availability. But instead of the 30 predictable hours a week Hughes asked for, they got 20 erratic hours. When Hughes asked for two additional hours off one week to make it to an unexpected doctor’s appointment, their weekly work hours were cut to 14. 

Like many hourly and service workers, Hughes made so little and had such an unstable work schedule that they qualified for public benefits like food stamps and Medicaid. They wound up working odd jobs for the landlord to pay rent and make ends meet. When we met, Hughes held out their arm to show me scars in the hollow of their elbow. “I was selling my plasma,” Hughes told me. 

The stress of disorganized time carries into the next generation. In another new paper released in October, Schneider and his coauthors found higher levels of anxiety, stress, and depression in children whose parents work unpredictable hours compared to those whose parents have set schedules. It’s easy to see why. Research shows that at a time of rapid brain, cognitive, and social-emotional development, children need stability and attachment to a warm, responsive caregiver. Parents’ unpredictable schedules disrupt that. The study found that these parents’ children have multiple caregivers, are constantly changing schedules, and are more often in informal care settings. That puts them at a further disadvantage to the children of better-educated parents with more control over their time, reinforcing inequality.

Disorganized time can also impact the previous generation. Ashley Worthen, for example, a 30-year-old single mother, would get her schedule for her cashier’s job at an Albertsons grocery store one day before her workweek was to begin. If the computer assigned her weekend hours or early mornings or evening shifts when her son’s daycare was closed, she was forced to rely on her mother for help or to cancel her shift. And because Worthen had to be always available and on call on short notice, Worthen’s mother, Ruth, had to be always available and on call to watch her grandson. That meant Ruth Worthen was held hostage to her daughter’s unpredictable schedule and couldn’t get her own job.

“In order for workers to work these crazy schedules, so many other people have to put their lives on hold,” Schneider said. “It’s a hidden subsidy to companies—all these broader networks it takes to make these unpredictable schedules work.” 

(Target declined to comment for this article. Spokespeople for Fred Meyer, Albertsons, the Chamber of Commerce in San Francisco, and the Oregon Business and Industry did not return several emails and phone calls.)

In just the past five years, even at a time of historically low union membership, stories of millions of workers like Ugalde, Hughes, and Worthen have sparked a newly energized worker movement. Last February, workers won a successful class-action lawsuit in California, arguing that on-call scheduling amounted to abusive wage theft. Organizations like Ugalde’s Los Angeles Alliance for a New Economy and unions, including Worthen and Hughes’s United Food and Commercial Workers (UFCW), have been organizing to pass stable-scheduling legislation. (Research shows that low-income workers have more schedule volatility in states with smaller union membership.) Already, the cities of San Francisco, Emeryville, San Jose, Seattle, New York, Philadelphia, and Chicago, as well as the entire state of Oregon, have passed fair-scheduling laws to give workers more notice and to guarantee some pay if they come in to work and are sent home

After years of worker agitation, in 2018, Walmart began to offer workers the ability to choose “core hours” instead of open availability, and began giving them two and a half weeks of advance notice of their schedules. They now give workers nine hours of rest between shifts and lock down shift changes 24 hours in advance to avoid last-minute disruptions. Walmart also recently began offering the “My Walmart Schedule” mobile app so workers can more easily swap shifts, pick up extra hours, and have more control over their time. The changes have led to reduced absenteeism and turnover rates, said Michelle Malashock, the company’s director of media relations and corporate communications. 

Walmart isn’t alone in seeing business upsides to employment stability. Research into unpredictable worker schedules shows that such schedules, rather than the cost-saving efficiency boon that many businesses expected, are quite the opposite. A 35-week-long, randomized controlled trial at select Gap Inc. stores, for example, found that the health, sleep, and well-being of workers vastly improved at the stores with more stable schedules. In addition, predictable schedules increased productivity and sales. Labor productivity and sales were both about 5 percent higher in these shops.

And, it turns out, the algorithms are fairly easy to reprogram with a different set of values, beyond cutting labor to the bone. Companies in Australia, the United Kingdom, continental Europe, and other capitalist countries use some of the same scheduling software. They just configure it differently, to comply with more robust labor laws and corporate norms, or to account for the humanity of workers. Some U.S. companies, including Costco, also employ worker-friendly scheduling-software programs. For the Gap study, one key intervention simply entailed asking managers to start with schedules from the prior week.

“Predictable schedules are easy to achieve with today’s scheduling systems. It’s all about how you use them,” said Bob Clements, president of the Axsium Group, a global workforce-management consulting company, who likened U.S. companies’ approach to scheduling workers to the game of 52 Card Pickup. “The retailer is really responsible for the configuration, which is going to refine or drive the software.”

Susan Lambert, a professor at the University of Chicago and one of the Gap study’s coauthors, said that much of what drives schedule instability isn’t just the software per se. Instead, it’s that the software doesn’t account for the unexpected—shipments that come in suddenly, new promotions handed down at the last minute from headquarters, or a surprise visit from an executive, all of which require more staff than the algorithm predicted. That, and what Lambert calls “management by fright.” Managers are driven to both meet strict sales targets, based on big data’s forecasts, and keep to tight labor budgets. “So what ends up happening,” Lambert explained, “is a manager will say, ‘We were supposed to sell 60 sweaters by now, and we’ve only sold 30! Someone has to go home!’ ”

That’s the situation that David Sciaudone, 49, found himself in repeatedly as the former manager of a Sears automotive center in Waterbury, Connecticut. His supervisors told him to tightly schedule his staff with demand, so when the garage got slow, he’d have to send people home. “It was really horrible,” he said. “But if you didn’t get under budget, you’d get a phone call, screaming. . . . They’d say, ‘You have 45 seconds, or you’re going to be on the unemployment line.’ ”

The cut-labor-at-all-costs mind-set, which keeps schedules so erratic, ignores the fact that good workers are retail’s unsung secret weapon. Poor customer service or disorganized merchandise could lead not only to a lost sale but also to the potential loss of a lifetime customer, and, if they’re angry enough, their personal networks. “Understaffing costs are potentially large but can’t be measured easily,” said Saravanan Kesavan, a business professor at the University of North Carolina and coauthor of the Gap study. “On the other hand, overstaffing may be a smaller cost, but it’s highly visible.” 

Yet despite the increase in health, well-being, productivity, and sales, the Gap didn’t change scheduling and management practices once the study ended. (Spokespeople from the Gap did not respond to phone and email requests for comment.) Why? Wharton School professor Marshall Fisher blames businesses’ cognitive bias—a business school mentality that they have to keep labor costs low at all costs, and a belief that this requires unstable schedules. 

Both assumptions are false. But they are pervasive. Rachel Deutsch, who heads the Fair Workweek Initiative at the Center for Popular Democracy, said her organization challenges companies to take a Fair Workweek pledge, and offers to work with them to implement it. Has anyone taken them up on the challenge? “The short answer is . . . not yet.”

Adrian Ugalde has since quit working for Target. “I couldn’t take it anymore,” he said. He’s found a new position making more money working full-time hours at a smaller drugstore chain that programs its scheduling algorithms for humans, not puzzle pieces. He has a set morning shift that he chose. He’s cross-trained to work both on the floor and in the back room to account for fluctuating demand so he won’t be sent home early. “To these big retailers, they never get to know you. You’re just a slot they have to fill,” Ugalde said. “Here, I feel they care about me as an individual. I love my schedule.”

Sam Hughes supported the passage of the first statewide stable-scheduling law in the nation. It passed with bipartisan support. In Oregon, retail, hospitality, and food-service companies with more than 500 workers worldwide are now required to give a “good faith” estimate of monthly work hours to employees at the time of hire. Starting in 2020, they must give workers their schedules two weeks in advance, a right to rest at least 10 hours between shifts, a right to have input into their schedules, and compensation for any last-minute schedule changes. Workers can sign up for a “standby” list and be contacted if extra hours become available.

“It’s incredibly helpful,” said Hughes, who quit the Fred Meyer deli to work full-time as the social-media coordinator for the UFCW union in Portland, Oregon. “Workers can plan, have lives, make doctor appointments. And if they call you at the last minute, you don’t have to come in.”

Ashley Worthen changed jobs to work a regular schedule as a bookkeeper at Albertsons. She tracks employee hours and shifts. What she’s noticed since the law went into effect is that, with more notice and more input into schedules, workers aren’t frantically canceling at the last minute or madly scrambling to swap shifts like before. “Everyone is happier. Everyone sleeps better. The atmosphere at the store is so much better for workers and managers,” she said. With her more predictable hours, her mother has been able to get a job washing dishes in a rehab facility, helping boost the family’s income. 

Of course, not all companies need changes in law to treat employees like humans. Inspired by MIT research on strategies to make all jobs good jobs—which includes giving workers schedule stability—Mud Bay, an employee-owned natural pet food and supply store with nearly 60 locations in Oregon and Washington State, seeks to give each employee the number of work hours they want, create schedules with their input, and publish these schedules three weeks in advance. To respond to staffers who want more hours than any one store has available, Mud Bay is beginning to create “packs” of nearby stores so they can boost their hours by working at any of them. “We spend a lot of time thinking about different accommodations. For example, if someone is struggling with their mental health or struggling with sleep and a morning shift isn’t best, we’ll set up an afternoon shift for them,” said Michelle Markus, the company’s chief people officer.

Right now, managers painstakingly schedule every “Muddy,” as employees are called, by hand in an Excel spreadsheet. But Mud Bay is now rolling out scheduling software. Markus said they’re hoping it will help stores become more efficient—not by using sales data and customer information to cut labor, as other companies do, but by saving managers’ time, giving employees better visibility to available hours, and ensuring that the company is complying with fair-scheduling legislation in Oregon and Seattle. “We want to stay grounded in our mission, our values, and our beliefs about what’s important for us, our customers, and as business owners contributing to the community,” Markus said. “It’s paramount that the technology isn’t essentially running our business.”

As with any technology, that will depend on the humans who program it.

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Pro-Brexit Conservatives win a landslide victory in the U.K. Donald Trump is laughed out of a NATO summit after French President Emmanuel Macron declared the organization “brain dead.” Poland’s far-right government attempts to purge its judiciary, while Hungarian Prime Minister Viktor Orbán tightens his grip on the country’s media. Russia funds radical, anti-Europe, right-wing parties and floods U.S. elections with fake news. Every month, it seems, brings new evidence that the Transatlantic Alliance that has kept the peace and promoted democracy for seven decades is slowly cracking up.

Last summer, the Washington Monthly published a proposal by editor Daniel Block to revitalize the alliance and reverse the slide toward authoritarianism with a truly progressive U.S.-EU trade deal (“Free Trade for Liberals,” July/August 2019). This new “Atlantic Alliance,” Block argued, would cut tariffs between the United States and Europe in exchange for binding commitments to raise labor, environmental, and antitrust standards. The aim would be to boost incomes for average citizens, reversing the devastating income inequality that is one of the main causes of Europe and America’s current slide toward illiberalism.

For this issue, the Monthly asked five foreign-policy and economics experts to weigh in with their own proposals for revitalizing the U.S.-Europe relationship and promoting democracy in both places. They came back with proposals that detail everything from the rhetoric the next president can use immediately to stabilize deteriorating relations to what substantive new security arrangements both blocs should forge together for the long term.

— The Editors

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The transatlantic relationship has suffered a series of near-fatal blows in recent years. President Trump has openly questioned America’s Article 5 commitment to defend any attacked NATO member, dubbed the European Union a “foe,” and repeatedly disparaged some of America’s closest allies—for example, calling Germany “captive to Russia.” The people of the United Kingdom voted to leave the European Union. France and Germany, instead of joining forces to chart a future course for the European project, have spent years trapped between President Emmanuel Macron’s unbridled desire to lead a more assertive Europe and Chancellor Angela Merkel’s caution and paralysis.

Meanwhile, Russia and other adversaries have become increasingly creative in finding ways to undermine transatlantic unity and resolve. And populist forces on both sides of the Atlantic are bringing new leaders to power who lack an interest in or exposure to Europe and America’s shared history and values. While it would be premature to issue last rites to the transatlantic relationship, there’s no question that it is ailing.
The next U.S. president will need to revitalize this critical partnership—it serves far too many of America’s political, economic, and security interests to allow it to deteriorate further. Over the last 70 years, the United States and Europe have established the rules-based order through an array of multilateral institutions and alliances, from NATO to the United Nations, that have protected and promoted shared values. We have, at different times, tackled global challenges ranging from Ebola to climate change to Iran’s nuclear ambitions. While the U.S. brings the most military assets to the alliance, Europe’s contribution is substantial; its economic might is hefty; and it invests disproportionately in diplomacy, humanitarian assistance, and other forms of “soft” power.
Breathing fresh life into the relationship won’t be easy. Electing an American president who refrains from name calling, supports the rules-based order, and brings stability to the alliance would be a good start. But that won’t be enough to put the transatlantic partnership on a more sustainable and constructive course and restore America’s credibility.

There are certain steps, however, a new president could take to begin the rebuilding process. In the first 100 days, he or she should travel to Germany—the country that has been perhaps most relentlessly and unfairly criticized by Trump—and deliver a public address. The normal framing for such a speech is to tick off all the ways in which the two sides of the Atlantic can create a shared agenda. This speech needs to be different. Instead of promising cooperation, the president should redefine the transatlantic agenda around the concept of defending democratic values given the surge in authoritarianism globally. The target audience would be both Europe, which is experiencing its own illiberal slide, and China, which is increasingly brazen in its efforts to promote its political model and values.

In the longer term, the new U.S. president will need to focus on two separate tracks. The first involves fortifying the traditional building blocks of the transatlantic relationship. Inside NATO, that means issuing a promise to uphold our Article 5 commitments and bring fresh ideas to the table, such as a joint NATO-EU summit—the first of its kind. In addition, the new president will need to reassure Europeans that he or she doesn’t see the EU as an enemy but as a partner.

At least some Europeans will listen to such statements with skepticism. Many Americans will too. It wasn’t that long ago when President Obama—a president most Europeans adored—tried to negotiate an ambitious trade deal, the Transatlantic Trade and Investment Partnership, with the EU. They never got there. Convincing both Europeans and Americans to give it another go will be challenging. Instead of opening a new front, the next president will need to arrest the deteriorating U.S.-EU trade relationship and stop the tariff wars both sides have been waging for the last few years. In doing so, the new U.S. president should remind Americans and Europeans that one of the best ways for Europe and the United States to compete with a rising China and to set global standards is to strengthen their collective hand.

That’s not to say the next administration should focus only on repairing existing damage and preventing future blows. It will also have to think about preparing transatlantic partners for the future. The president should discuss how mass migration will shape our shared agenda, future elections, and economies. He or she should explore if we need new institutions to thwart attempts to undermine our democracies, and how Europe and the United States can both harness and manage a wide array of disruptive technologies like artificial intelligence.
But that’s a long list, especially for a president who will be consumed with an equally long list of pressing domestic priorities. Europe will have to assist. Now would be a good time for European leaders to start thinking about where they are willing to lead and how they can help. The American people may very well put a president in the Oval Office who wants to rejoin the Paris Climate Accords and try to salvage the Iran nuclear deal, two decisions that Europeans would no doubt celebrate. But that same president will also likely ask our European allies to commit more to defense spending and to stand up to China. Europe should be prepared.
When Democrats talk about revitalizing the transatlantic relationship, they aren’t talking about returning to the pre-Trump era. They are looking to rebalance the relationship for a new era. Let’s hope we’re all up to that
challenge.

The post What the Next President Can Do to Save Our Alliances with Europe appeared first on Washington Monthly.

Since the aftermath of World War II, foreign-policy practitioners have seen trade agreements as good for security regardless of their content. They were confident that trade deals strengthened political ties and ideological ties, made security agreements more credible, and made conflict less likely. Anything that tied pro-Western democracies to each other, and other countries to them, was thus good.

During the Obama presidency, officials made this argument while unsuccessfully negotiating the Transatlantic
Trade and Investment Partnership, a sweeping would-have-been U.S.-Europe trade agreement. Today, security strategists make similar claims in encouraging the Trump administration or its successor to keep trying for a deal.

Yet the core logic behind this argument has fallen apart. The past 20 years of globalization, including trade deals, have raised inequality and insecurity in the United States and Europe. The post–Cold War explosion in economic activity was distributed unevenly within economies, going to elites and urban regions to an unprecedented degree. That has spurred frightening levels of cynicism about democracy and support for extremist politicians in both places, putting immense strain on the democracies we intended to secure. In other words, the extreme narrowness of the economic gains of post–Cold War globalization is destabilizing the planet. Promoting these kinds of deals is thus a form of security malpractice. Instead, policymakers should work with Europe to redefine security—with the goal of reversing both threats to democracy at home and the decline in transatlantic engagement.

The next administration (or even this one) should open or expand discussions with Europe across new economic and technological domains. They should look to identify how we shape common interests and a common identity while supporting our military security, but also the health of our democracy. Rather than reigniting struggles over economic traditions such as agricultural subsidies, as current transatlantic trade negotiations do, these discussions should focus on industries that have a proven impact on security and a clearer impact on growth.

President Trump has defined security as synonymous with the strength of domestic heavy industry and the jobs that go with it. But his approach has failed to improve economic security and made no appreciable dent in China and Russia’s military gains. Instead, we should focus on cultivating a “small yard” of high-tech research, development, and manufacturing, where data suggests it will be possible to grow and sustain high-wage jobs in the future. Europe and the United States can collaborate to protect this limited number of military-relevant or
cutting-edge technologies, particularly developments in artificial intelligence, from theft or copying by China or others, on the grounds that they provide both the U.S. and European economies and militaries with irreplaceable advantages.

What kinds of initiatives might that entail? Samm Sacks, a cybersecurity expert at New America, has argued for international standards to govern collaborations on artificial intelligence, limiting China’s ability to acquire technology it uses to oppress its Uighur minority and then sells to other governments and movements that want to track opponents. The research partnership NordicWest Office has proposed a transatlantic accord on data sharing and privacy as a core element of defining and defending shared values. Such negotiations would be every bit as challenging as a traditional trade deal. But by paving the way for high-tech and high-value industries to remain and grow in Europe and the U.S., they would create more good-paying jobs in both regions, fighting inequality and bolstering the middle class.

In addition, U.S. and European planners need to find a way to deal with pressing environmental concerns. Military experts have made it clear that a warmer planet will lead to escalating security risks, as people are displaced en masse by natural disasters and forced to fight over frighteningly scarce critical resources like water. But while American security thinkers have gotten into the habit of genuflecting at climate change, they have done so without really addressing the question of what a strong response demands we do differently. The new European Commission, by contrast, has pledged to impose a border tax on imports from countries that don’t have a price on carbon in place. This poses a fundamental challenge to current WTO rules, and so U.S. policymakers might consider partnering with the commission to propose WTO reforms.

Alternately, the U.S. and the EU could both join an effort to eliminate all barriers to trade in green goods and services. Either way, American security would be better served by progress on these issues than by pressing European political systems to open their health-care systems further to American drug companies and their food to the GMOs and chlorine-treated chicken that are so neuralgic for European publics.

The way to rebuild strong U.S.-European security ties is not to gin up another U.S.-EU trade agreement with side provisions on the environment, labor, or anything else. Instead, it’s to identify the issues that challenge security on both sides of the Atlantic—the use of technology by autocrats to undercut democratic society, the growth of inequality that undermines faith in democracy, and the devastation of unchecked climate change—and work directly on them. Doing so will produce stronger democracies and better cooperation in the economic and military realms.

The post Europe and America Must Redefine Security appeared first on Washington Monthly.

For years, advocates of globalization have argued that spreading capitalism, by itself, breeds stability. As the German sociologist Erich Weede declared in 2004, “capitalism and economic freedom promote peace,” and globalization is “the universalization of capitalism.” But as the rise of populists makes clear, this isn’t the case. Without regulation, spreading capitalism leads to the arrogation of power and money to the few at the expense of the many. It results in an authoritarian backlash, as citizens endorse nationalists who promise to restore past glory, channeling xenophobia as needed.

The founders of the multilateral trading system, including Franklin Delano Roosevelt and John Maynard Keynes, saw these risks. That’s why they attempted to craft an order that would not just provide for tariff cuts—as the General Agreement on Tariffs and Trade does—but also hem in the excesses of capitalism through a broader agreement negotiated in Cuba and called the Havana Charter. These rules included worker rights, anti-monopoly provisions, and protections against abusive foreign-investor behavior. Fifty-three countries signed the Havana Charter, including the United States, much of Europe, and independent countries from the Global South.

But the charter didn’t survive. American industrialists rejected constraints on their behavior, and by early December 1950, they persuaded Congress to snub the agreement. Instead, we ended up with the trading system we have now: one that lowers tariffs without providing any disciplines on capital. It is therefore no surprise that we see widening income inequality within countries. The surge in nationalism, and the resentment of globalization, is logical.

It is also frightening. But it creates an opportunity for the European Union and the United States. We can seize on it to reconceive the way trade agreements are done. We can bring much of the Havana Charter
back.

The charter’s rules are well suited for today. The visionaries behind the agreement, working in the aftermath of the Great Depression and World War II, confronted the same issues of inequality and nationalism. They have provided us with a road map to create a more balanced global economic system. It will help us fight against modern-day robber barons and disperse the benefits of trade to the many rather than the few.

But the charter will need updating. Rules from the 1940s do not address more modern crises, the most pressing of which is climate change. The World Trade Organization has no enforceable environmental standards. Many U.S. treaties do, but they have been too modest. Similarly, globalization has created a race to the bottom when it comes to taxes, as rich corporations look to park themselves in cheaper jurisdictions. The EU has rules that help stop the kinds of tax incentives U.S. states use to lure big companies like Amazon, rules that could be considered a model for addressing beggar-thy-neighbor policies across the Atlantic.

Implementing such a deal will not be easy. Large business interests will fight to shunt provisions that would harm their bottom lines, and to include rules that will help them. But we must resist. Giving in will make for a deal that’s not just worse but also has little chance of success. Fights over big-money commercial disputes, like the safety of GMOs and chlorinated chicken, or state funding for Boeing and Airbus, date back decades. They have not been resolved because they cannot be resolved. Trying to solve them will do nothing but allow narrow parochial interests to swallow the much broader goal of creating an equitable trading framework.

Instead, the agreement between the Europeans and the Americans should set out important, enforceable principles that govern the overarching economic relationship between the countries—like the Havana Charter would have done. These principles should be set forth in a trade deal passed by Congress, and they should focus on promoting fair competition, high labor standards, and robust environmental regulations, rather than the race to the bottom our rules currently incentivize.

Succeeding in this task will be hard, but not impossible. The newly elected European Parliament—entered into office in July—is marked by a renewed attention toward a well-functioning trade relationship with the U.S., and it is willing to use sustainable development as a tool for global growth. That is why it may be more willing to press for a new approach to these agreements. Incoming trade commissioner Phil Hogan said during his confirmation hearings that he intends to improve the trade relationship across the Atlantic and to use trade to fight climate change.

But our vision is broader. The world is struggling to discern a way forward on trade. The WTO has no answers. Regional negotiations are based on the old model. In the meantime, China is expanding its own authoritarian reach through the Belt and Road Initiative and concerted forays into Africa. The European Union and the United States can work together to demonstrate that there is a better way.

The post The Trading System FDR Envisioned appeared first on Washington Monthly.

Since 2016, the Trump election, Brexit, and right-wing challenges across Europe have revealed an economic crisis of extraordinary proportions. Decades of laissez-faire economic policy have yielded a collapse in financial security for workers and farmers and a concentration of economic power at the very top. Now, China’s state capitalism has emerged to challenge the liberal economic and political order, with similar implications for workers and corporate concentration.

Sadly, the nationalist response in the United States since 2016 has largely made the problems worse, while Europe is often left on its own in defending the liberal principles of broadly distributed economic power.

In 2008, the world faced a global financial crisis of similar proportions, but it responded together with extraordinary actions. Instead of our current, failing nationalist approach, America and the European Union must work together again. They can do this by building a new “special relationship” between Washington and Brussels, in which they commit to domestic reforms in flexible coordination with one another. This would have two economic aims: to combat corporate monopolies and to boost worker power globally. And since principle-based agreements like these rely on political will, the new relationship would work best in combination with a progressive trade deal, as Daniel Block proposed in his piece for this magazine last summer.

Block correctly argued that the United States and the European Union must address the collapse of labor power, tax evasion by companies, climate change, and related progressive concerns. But his proposal, bold as it is, is only part of the response. That’s because a trade agreement, with limited exception, is a complement to fixing domestic standards, not a replacement.

To that end, the U.S. and the EU should agree to adopt a set of domestic reforms, akin to the international response led by President Obama after the 2008 financial collapse. In the wake of the recession, the U.S. rallied the G20 around a common set of principles to guide financial reforms in each country. The reforms covered everything from standards for how many reserves large banks should maintain to protect against insolvency, to how countries could best manage the failure of large banks if and when that happened. But the principles were flexible enough to permit countries to do more—such as a ban on high-risk “proprietary trading” in the U.S. and a cap on banker bonuses in the EU.

None of this was done through a trade agreement, but rather through political commitments from each country. The urgency of the crisis was the driving force for action, and while more could have been done (and still must be), U.S. leadership was critical to driving progress. Today, the rise of illiberal nationalism on both continents, coupled with attacks on our democracies by Russia and the rise of China, has given a similar urgency to our politics. The next progressive administration will have a chance to negotiate dramatic reforms that seemed impossible only a few years ago.

We could use a process similar to the post-financial-crisis reforms to increase the power of workers and farmers and rein in monopolies. To boost the economic power of workers, this U.S.-EU agreement would include commitments to raise or secure union density against the range of political interests and economic forces pressing against it. In the U.S., under a progressive administration and a progressively minded Senate, this would be achieved through a host of domestic reforms to undo 40 years of conservative attacks on unions, including enhanced strike rights and penalties for lawbreaking employers, as well as by adopting sector-wide bargaining.

In addition to giving more power to workers, the new U.S.-EU agreement would combat monopolies. It would begin by both the U.S. and Europe welcoming antitrust enforcement efforts by the other jurisdiction. And it would go one step further—countries in this new agreement would work together on antitrust investigations to maximize their resources and effectiveness. Much like attorneys general in different states in the U.S. are working in conjunction to investigate big tech companies, different countries who had signed onto this agreement could work together when investigating multinational companies or concentrated sectors. This wouldn’t bind countries to the same exact outcomes, lest that result in lowest-common-denominator enforcement. But pooling limited government resources can help us tackle enormously complex global companies and international supply chains.

Farmers in both the U.S. and the EU are being squeezed by monopolies, and they could benefit from the new agreement as well. On one end, farmers are forced to take high prices from their suppliers. The four largest suppliers—firms such as Bayer, which owns Monsanto—control 85 percent of the corn-seed market, up dramatically in recent decades. On the other end, commodity-trading companies and massive food processors, like JBS and Tyson Foods, use their market dominance and oppressive contract terms to force farmers and ranchers to sell their products at unfairly low prices. In the U.S., farmers could be helped greatly by enforcing antitrust laws that are already on the books, which would be supported through a U.S.-EU commitment to dismantling agriculture monopolies.

These reforms would best be complemented by the progressive trade agreement outlined by Block. The forces of globalization have shifted bargaining power in favor of mobile capital and against domestic workers—but a progressive trade agreement could help mitigate that. Harking back to the Havana Charter’s vision, it should add standards to ensure fair competition, like clear labeling for domestically raised products, which could strengthen farmers too. And the trade deal could help enforce labor, environmental, and other standards by slapping duties on, or blocking at the border, products from any country that violates them—say, by denying workers collective-bargaining rights or permitting the emission of industrial toxins.

A coordinated anti-monopoly effort is also critical to meeting the challenge posed by China, where state-subsidized companies are angling to monopolize global markets and critical infrastructure (think Huawei gunning for dominance in 5G). A tough application of U.S. and EU antitrust law can supplement the screening of Chinese investments that might pose security risks, as well as other tough trade action against Chinese companies that get unfair state subsidies. And as the U.S. and the EU take steps to rein in the dominance of their own multinational companies, that may also reduce the pressure that China feels to build its own monopolies to compete with ours.

In the Trump era, the international economic response to the problems facing workers and farmers has not gone smoothly, leaving everyone worse off. But a more progressive administration in the United States could kick off an international process to address shared challenges and rebuild economic relationships with allies. After all, progressive priorities in the U.S.—like raising labor and environmental standards and countering monopolies—are shared by Europeans and many other countries around the world. Counteracting the forces fueling economic distress for working families, the concentration of economic power, and the ensuing deep distrust in government would be a solid foundation around which to organize transatlantic economic and political relations. And with the rising challenge of China, it would help secure freedom and democratic self-government in the 21st century.

The post Washington and Brussels Need a New “Special Relationship” appeared first on Washington Monthly.

This has happened to me a number of times recently. I’m talking with Democratic operatives about the party’s frighteningly inadequate field of presidential contenders when somebody says, “God, I wish Sherrod Brown were running!” Everyone nods wistfully. 

The Ohio senator’s decision last March not to jump into the fray, after testing the waters extensively, set up probably the biggest what-if in politics right now. Had he chosen differently, it’s hard not to think he’d be a, if not the, top contender. His progressive bona fides are as strong as Elizabeth Warren’s or Bernie Sanders’s—no one in Congress has a more pro-union record on, say, trade. Yet he’s made a point of not endorsing positions that fire up the left but scare off most other voters, like Medicare for All and abolishing ICE. With his raspy voice, disheveled hair, and basic human decency, he has as much appeal to the Working Stiff Vote as Joe Biden—but is ten years younger than the former vice president. He’s as smart and knowledgeable on policy as Pete Buttegieg, but with a decades-long career in public office stretching from the Ohio legislature to the U.S. Senate. And, sure, he’s another white male, but I know women who would vote for him just to get his amazing wife, the Pulitzer Prize–winning columnist Connie Schultz, into the White House.

Whether Brown has the performance skills required to take on Donald Trump, I don’t know. I saw him speak recently in Washington and wasn’t blown away. Still, he would be the kind of candidate the party desperately needs but doesn’t have—a big-tent Democrat both left-liberals and moderates could comfortably unify around.

Another reason to wish he were in the race is that it would bring attention to his policy ideas. In September, he introduced legislation that would allow individuals to get an advance of up to $500 on their Earned Income Tax Credit (EITC), a federal benefit normally paid at tax time to low-income workers. This might sound like a small thing. But it’s actually a huge deal because it would be a simple, elegant way to save millions of families from the clutches of the payday-lending industry.

Payday loans are high on the long list of sick practical jokes America plays on the working poor. Such folk typically have little or no savings—they literally live paycheck to paycheck. So when they need quick cash—say, for car repairs or because their income unexpectedly drops (think hourly wage earners who lose days of work because of a blizzard)—they go to their neighborhood payday lenders. But the loans they receive come with effective interest rates (counting fees) of as much as 400 percent a year. If they are unable to quickly pay them back—and many can’t—a $500 loan (a typical amount) can mushroom into a crushing debt the borrower may never be able to pay off.

Under Barack Obama, the federal government issued regulations requiring the industry to ensure that borrowers can pay back loans before handing over the cash advances, and the worst practices were beginning to fade. That was until last February, when the Trump administration gutted those regulations. 

Other partial solutions are in the works. A handful of banks and credit unions have begun to offer their low-wage customers small-dollar installment loans on better, but still pricey, terms. Some companies are partnering with fintech start-ups to offer installment loans to their employees with interest rates as low as 10 percent, but only a limited number of firms are ever likely to offer such loans. 

The genius of Brown’s idea is that EITC advances would come with basically no interest charges and be available to virtually anyone who needs one. It’s sort of like a “public option” that could put the whole payday-lending industry, if not out of business, at least in its place. 

Alas, Brown isn’t running. So we have to hope the other candidates adopt his proposals as their own. 

In the same spirit, this issue of the Washington Monthly offers a number of policy ideas we think would benefit the current candidates politically and be great for the country. Phillip Longman argues that the single best way to address the concerns that the majority of voters have about rising health care costs is neither Medicare for All—the plan that has hurt Elizabeth Warren in the polls—nor the build-on-Obamacare position of moderates like Joe Biden. Rather, it is to impose Medicare prices on the whole health system. And a group of national-security experts weighs in on Washington Monthly editor Daniel Block’s recent proposal to create a truly progressive trade deal between the United States and the European Union—one even a trade-deal skeptic like Brown might well support.

The alarming truth is that none of the current Democratic candidates for president has formulated the message they’ll need to bring the left and center of the Democratic Party together, lock up the nomination, and successfully challenge Trump. But it’s not too late for one of them (I’m looking at you, Amy Klobuchar) to adopt some bold and unexpected new policy ideas and change the dynamics of the race.

The post The Policies Democrats Need to Unite the Party appeared first on Washington Monthly.