Taking Stock During the Thanksgiving Season
Each year at this time, Americans gather with families and friends in a spirit of thankfulness for the things that have enriched their lives. For some it involves material matters; for others it’s on a more personal or spiritual level.
Regardless of the circumstances, and they vary greatly with each individual, the Thanksgiving holidays give all of us a special opportunity to reflect upon the past year and to evaluate how we have been affected by what life has wrought.
The practice of a formal Thanksgiving Day, of course, started with the Pilgrims in 1621, though not exactly in the romanticized version we often see reenacted in school plays. And for the Pilgrims, Thanksgiving celebrations certainly were not annual events. Still, Thanksgiving is high on the list of our nation’s most cherished holidays, and it tops all other occasions that focus on being thankful.
Ironically, Thanksgiving became a national holiday in 1863 during the Civil War when many people had very little for which to be thankful. Even so, Lincoln’s Thanksgiving proclamation noted that in the midst of such a struggle there were many aspects of the US economy that were positive and were continuing to grow.
In 1939, when President Roosevelt set the date for Thanksgiving as the fourth Thursday in November (approved by Congress in 1941), the nation was attempting to recover from the Great Depression, a period of despondency that had enveloped the globe.
In times of despair when we are confronted with matters that seem insurmountable or uncontrollable, developing an optimistic view can be challenging. Although it may be hard in some circumstances, this approach can often be accomplished by thoroughly examining one’s situation and evaluating the good against the bad. When we take the time to count our “blessings,” the full picture usually becomes clearer, and the situation becomes more accurately portrayed.
Within recent months, Texas and our nation have faced many difficult circumstances—from the war in the Middle East with its escalating number of causalities to the unprecedented natural disasters which caused massive destruction and displacement of families. Even though not all of us were personally or directly affected by these events, practically everyone’s life has been impacted to some degree, at least from an economic standpoint.
We are constantly bombarded by the media with information about such things as the rising budget and trade deficits, growing healthcare costs and the number of uninsured, increases in white collar jobs being outsourced, potential inflation expansion, and gasoline and natural gas price hikes, along with much more gloom and doom.
To hear some tell the story, we are moving rapidly toward the edge of the earth, and the danger of falling off is coming nearer with each rising sun.
While it’s true that we have experienced something of an economic roller coaster in recent years, and although times will continue to be challenging, I am confident that our nation, and particularly the Lone Star State, is capable of meeting the trials we face and that momentum for moderate future economic expansion is continuing to grow.
At this time of the year, as we pause to consider that for which we can be thankful, in addition to remembering the love of our friends and families, let us not forget some other important areas such as the number of workers being added in most industries and the general increase in productivity. Until the last few months, Texas employment growth percentage lagged behind the US; now our state’s job expansion exceeds the nation.
Manufacturing in Texas has rebounded and over the past year; some 40% of manufacturing relocations have been in our state, thanks in great part to the Texas Enterprise Fund. Marvelous things are also being accomplished in high tech and emerging technologies. Texas remains the nation’s leading exporter, with the gap widening over second place California. Even gasoline prices are dropping. There are many more areas that could be mentioned, but space limits the listing of all the blessings we enjoy in Texas.
Naturally, not everything is rosy. There is still much work to be done, and we must remain vigilant in our pursuits to enhance our economy. But, during this season of the year, it would be helpful to take stock and consider the positives we are experiencing in our economy. If you do, it might make an optimist of you and enable you to join me in being positive about the expectations and possibilities for the future of Texas and our nation.
posted @ 08:09 AM CST [link]
Friday, November 18, 2005
Walking the Wire
Although I haven’t seen one of the traveling circuses that traverse the country since I was a youngster, I can still recall a few of the interesting and unusual performances at those I attended.
Among the many fascinating characters brought to town by the circuses, my favorites were the high-wire aerialists. Watching them slowly walk across a thin wire stretched near the top of the tent armed with just a long pole designed to help maintain balance almost took my breath away. In my mind as a child, those individuals with such unusual courage were true daredevils.
America has recently had the opportunity to witness some other unusual activities in what might be considered a circus of sorts. I have far too much respect for the US Senate, however, to ever use such a phrase to identify that body, even if occasionally the actions of a few lawmakers do bring to mind a few of the things I saw in the three rings under the big top years ago.
The unusual activities to which I’m referring are the recent hearings at which oil executives were grilled about the high energy prices and the big profits their companies reaped during the last quarter—an industry record-breaking $32.8 billion. The jousting among the participants was fascinating to observe as the oil industry officials sought to present details of the phenomenon.
Several explanations were given as to why gasoline prices jumped so sharply following Hurricane Katrina—in some places the costs soared upwards of $1 almost overnight. None of them seemed to be acceptable to the senators or media representatives.
On one hand, as a concerned petroleum consumer (I travel over 100,000 miles annually on the Texas highways and that many more on airplanes), I certainly can understand the reluctance people might have in accepting the energy executives’ rationales. On the other hand, as an economist, I have sympathy with the reasoning offered for the price increases and the large profits.
As you may recall, the oil company executives acknowledged that high prices had put a strain on Americans. They also gave various justifications for the situation and denied charges of gouging the public at a time of sacrifice.
One of the reasons offered for the large profits was the enormous size of the companies and the industry’s enormous revenues, noting that even when all that was taken into consideration, the profit percentage was in line with those of other large industries.
An explanation for the high fuel costs focused on the notion that without price increases, demand might have exhausted the supply which was already tight prior to the hurricanes. Forgotten, in all of the brouhaha was the duty these folks owe to their shareholders.
There is probably some truth in all the various raison d'êtres, but they boil down to the fact that until the amount of oil demanded decreases relative to our capacity to refine it, energy prices are not likely to drop substantially. Global energy needs are expected to surge by 50% over the next quarter century. As the economies of China, India, and other nations continue to expand, new sources of energy will increasingly be required. Unless production capacity is increased dramatically, there are very dim prospects for notable price declines.
Fortunately, there are sufficient quantities of oil and natural gas reserves to last quite some time, especially in the Middle East and North Africa. However, to get the supplies to the customers may cost as much as $20.3 trillion.
Prices for crude oil have moderated to some degree after soaring to more than $70 a barrel on August 30. In fact, they’ve dropped about 20% since then. That’s good news, but the bad news is with winter coming and the demand for oil and natural gas increasing, possibilities exist for a weather-led hike in energy prices.
In circus parlance, one could say that the US is poised at the edge of a tight rope and the consumers are waiting for the aerialist to move forward. What is the next step to be taken?
It’s not just one step, but a combination or an appropriate balance of steps that will be required. The refining capacity of our nation must be expanded, and additional energy resources should be provided. Investments in science and technology need to be increased as should the use of alternative energy fuels. In addition, we all need to practice better conservation of energy.
These small steps are vital if our nation is to take giant steps toward our energy independence goal for the future.
posted @ 07:07 AM CST [link]
Friday, November 11, 2005
Benefiting Judges and Texas
Judicial systems are fundamental elements of both the US and Texas constitutions. The developers of these documents were undoubtedly well aware of the importance of a judicial system in sustaining the stability that is necessary for a society to function properly. A court system also plays a vital role in supporting the economic growth and prosperity of a nation or a state.
Fairness, efficiency, and predictability of the legal process are essential for the competitive landscape in today’s complex global environment. Without these factors, businesses could incur additional risks and costs which would limit their ability to survive and remain profitable.
Indeed, the legal climate of a state is integral to economic development as it has become a key consideration in site selection for business relocations, retentions, and expansions. On the other hand, an uncertain judicial system creates a disincentive for innovation and can lead to substantial losses in productivity.
These matters are a central focus of the myriad judicial reform initiatives being considered or underway across the United States. Regardless of what legislation is enacted; however, its effectiveness is ultimately dependent upon those who administer the process.
Experienced jurists at the trial and appellate levels of the Texas state court system, supported by appropriate staffing and technological resources, are indispensable to creating and maintaining a positive environment for resolving legitimate disputes and assuring public safety. They are also highly important in enabling investment decisions to be made in a stable framework and, thus, promoting economic development.
In recent years, judicial compensation across the US has lagged inflation as well as the salaries of professionals with comparable experience in the private sector. This circumstance has been particularly acute in Texas, where salaries of judges ranked at or near the bottom of the other 10 most populous states. The fact that the Lone Star State has a relatively high level of court filings in comparison with other states, yet has far fewer trial judges, exacerbates the situation.
Until the recent passage by Texas lawmakers of a bill to boost salaries of state judges by about 23%, judicial compensation in Texas had been constant since 1999. The result was that the real purchasing power (inflation adjusted) of our state jurists had declined some 15% over the past seven years or so. Given this pattern, it is not at all surprising that the time Supreme Court and Appellate Court justices spend on the bench was a relatively short six to 12 years. Trial Court judges serve approximately two terms or eight years.
The new compensation levels for state jurists may help remedy this situation by helping to keep judges on the bench and broadening the pool of competent candidates seeking offices. By reducing turnover, the Texas system can maximize the desired benefits of stability, predictability, and productivity that are highly valued by constituents, but can only be accomplished through experience and longer terms of service.
Without improvements in judicial compensation, the Texas system would have eventually been impacted by less-experienced and less-qualified persons in judicial positions as well as an increased tendency by jurists to leave the profession for more lucrative opportunities. It could also have resulted in the creation of an affluent or elitist judiciary as only those with substantial income or wealth from other sources could afford to serve. Fortunately, the increase in salaries for those on the state benches helps reduce these possibilities. There is still much to be done in terms of staffing and resources, but this measure was extremely important.
Investing in the state court system by increasing the compensation for judges at the trial and appellate levels is a move in the right direction. It will lengthen jurists’ tenure and increase efficiency, thereby affording Texas an excellent opportunity to enhance its economic environment and further increase its competitive advantages on a national and global scale.
posted @ 07:54 AM CST [link]
Friday, November 4, 2005
Higher Education in Texas
During this time of the year, office water cooler conversations often focus on college athletic competitions—who won, who came close, and why. Indeed, predicting football bowl lineups and champions has almost become a national obsession.
Other important subjects are also on the minds of many families at this time, especially those with students who have aspirations to continue their educational pursuits beyond high school. Near the top of their list of concerns are matters such as qualifying for admission to particular colleges and the costs. In that regard, there’s good news and not so good news on both fronts.
Nearly 250,000 students graduated from Texas high schools this past spring, representing about 8.21% of the 3.04 million who received their diplomas across the nation. Over the next decade, the number of Texans graduating will creep up to around 287,300. Based on the average proportion of US high school graduates who enter college, institutions of higher education located in Texas and other states will welcome approximately 129,000 new students from Texas in 2016.
With more than 4,200 public and private colleges and universities scattered across the US (208 in Texas), there would seem to be lots of options for students to choose from to help them prepare for their futures. Of course, some schools are so highly competitive that only those with the best academic credentials are admitted. Other institutions may be out of the financial range of many students.
The average cost of tuition and fees for four-year US public colleges and universities this year is $5,491, a 7.10% rise over the 2004-05 academic year. Across the Southwest (Texas, New Mexico, Oklahoma, and Arkansas), the average tuition and fees charged at public schools is $5,005. Students are paying an average of $4,857 in the 34 public institutions in the Lone Star State. While more than $600 less than the national average, the Texas price is still 10.59% higher than last year.
The 53 two-year Texas colleges have an average price for tuition and fees of approximately $1,493 for the current academic year. The 41 independent universities are charging about $13,389 on the average.
Tuition and fees, of course, while a major portion of the overall cost of a college education, normally represent only around a third to a half of the total average expenditures that students make at four-year schools. For two-year institutions, the percentage is around 14%.
With room, board, books, supplies, transportation, and personal expenses tacked on to tuition and fees, median total costs per year at a four-year public institution in the US is currently $12,127, $29,026 for independent schools. In Texas, total costs are $15,640 for public and $22,255 for private institutions. To attend a two-year college in Texas this year, students are paying on the average a total of $10,555. These are big outlays, particularly given multiple years or multiple children.
Costs continue to rise annually, but the percent of growth has slowed somewhat from the past few years. The amount of grant aid available has also expanded, but not sufficiently enough to decrease students’ reliance on borrowing. The average loan debt a student has today upon graduation—combined public and private colleges—is about $15,500. This is certainly an investment in the future for most students as yearly salaries of those with degrees are normally higher than those with only high school diplomas or a few college credits.
Even so, the challenges caused by debt-repayment obligations coupled with the normal adjustments required by those initially entering the work place, could result in great financial and emotional strain to some graduates. Individuals facing such burdens could have difficulty establishing households, purchasing homes, or reaching the earnings they had expected.
Some of these matters are being taken into consideration as Congress is deliberating the extension of the Higher Education Act. How the final decision will play out is unknown, but for those desiring a college education tomorrow, the key to success could well be saving as much as possible today.
posted @ 07:37 AM CST [link]