The Right Way to Do Unpaid Internships

I'm going to guess if college students shunned unpaid summer internships, somebody who wrote this book would take them to task for imitating the Baby Boomers' alleged self-centeredness. I cannot but shake my head in disbelief at (and naturally blog about) yesterday's op-ed about unpaid internships by Anya Kamenetz in The New York Times.

Her thesis is to question whether the encouragement of unpaid internships is a good thing for the interns and for society at large. In her own words:

Let's look at the risks to the lowly intern. First there are opportunity costs. Lost wages and living expenses are significant considerations for the two-thirds of students who need loans to get through college. Since many internships are done for credit and some even cost money for the privilege of placement overseas or on Capitol Hill, those students who must borrow to pay tuition are going further into debt for internships.

Second, though their duties range from the menial to quasi-professional, unpaid internships are not jobs, only simulations. And fake jobs are not the best preparation for real jobs.

It is true that there are opportunity costs. (Shall I ask her to identify the activity for which ther are no opportunity costs, or should I just refer her to a discussion of revealed preference?) At Dartmouth, students may apply to the Rockefeller Center for a stipend to cover living expenses when they take an unpaid internship in the public or non-profit sectors. Several of the roughly 40 internships awarded each year are supported financially by alumni or alumni classes who specifically value the opportunities gained through working in an unpaid capacity in the public or non-profit sector.

Just as importantly, when students receiving financial aid apply for a grant, the Center contributes to or covers the financial aid contribution expected from the students' summer work activities, enabling them to focus on their internships without necessarily picking up a part-time job. So Ms. Kamanetz is overstating her case, at least where institutions like Dartmouth are concerned. If her younger sister at Yale, whose internship in New Orleans motivated her op-ed, did not have this opportunity, then her sister (like many others) should have tried to come to Dartmouth rather than Yale.

No one would deny the simple fact that students who come from well off families have more opportunities than those who come from less well off families. That point is irrelevant here, as long as we make sure that the internship is not relatively more expensive for the students from less well off families.

Her second point is sheer lunacy. I supervised a few interns while at CEA. I wouldn't call their experiences "simulations" or "fake." They were assigned projects commensurate with their abilities and academic preparation. Their contributions were generally quite good, and some were downright impressive. One of my regrets after my year at CEA was that I did not go work there as an intern or research assistant 15 years earlier while I was in college. It would have made me a better economist. I think the 10 students being sponsored by the Rockefeller Center this spring (on the page linked above) all have interesting opportunities ahead of them as well. Take a look at the full list from last year, along with a few in-depth profiles, in the Center's annual report.

At the Center, we have taken our support of internships further with the advent of our Civic Skills Training program, in which the Center's staff spends 5 days in Washington with a group of students before their internships to educate them about the public and non-profit sectors and to train them in the skills they will need to succeed in their internships. The Rockefeller Center picks up the entire cost of the training.

I would never presume to disparage a student's choice to work to earn money over the summer rather than work in an unpaid public or non-profit internship. But the suggestion that unpaid internships are not contributing substantially to students' development as young adults is preposterous and flies in the face of what thoughtful colleges are doing to support those internships.

UPDATE: Tony Vallencourt comments below and posts to his blog about the other parts of the Kamenetz op-ed, dealing with societal issues of a perceived lack of access to internships. I actually thought those were the weak points of the op-ed and so left them out of my post. Will Wilkinson takes Kamenetz to task for them on his blog in "The Baffling Mind of Anya Kamenetz."

Hank Paulson for Treasury Secretary

The President has nominated Hank Paulson, CEO of Goldman Sachs, to replace John Snow as Secretary of the Treasury. In what seems to be a surprise (via Greg Mankiw) to some, Paulson agreed to be nominated. The Wall Street Journal compiled a number of quotes from Paulson over the past 6 years that indicate congruence with the Bush administration's economic policies on taxes and trade.

There are a number of things that caught my attention in the news stories. Among them:

1) Let's hear it for the home team.

Paulson is a member of Dartmouth's Class of 1960. Newly confirmed OMB Director Rob Portman is Class of 1978. I direct a Public Policy Center here--it's great to have alumni who are willing to devote themselves to public policy for some part of their professional careers and who achieve prominence. Nothing motivates students as much as an example. Consider Paulson's statement about his experience right out of business school:

When I graduated from business school in 1970, I was fortunate to begin my career in Washington -- first in the Pentagon, and later in the White House as a liaison to the Treasury and Commerce Departments. For a young man in his early 20's, it was a wonderful experience being assigned to the team that analyzed the ailing Lockheed Corp. for then Deputy Secretary of Defense David Packard, and then meeting with Cabinet officers and reporting to the President on tax policy issues. -- Investment Dealers Digest, May 22, 2000

Working in the public sector is not just good -- it's good for you.

2) Who says you need to major in Economics?

Paulson majored in English Literature. The lack of an economics degree at the undergraduate level did not seem to encumber his admission to Harvard Business School or his subsequent success on Wall Street. (This reminded me of the experience of Tim Geithner, President of the New York Federal Reserve Bank and Dartmouth Class of 1983, who majored in Government and Asian Studies.) The message to students: use your time as an undergraduate to study what interests you. The rest will take care of itself.

3) File this under "You've got to be kidding me ..."

The Washington Post story linked above contains this statement:

Bush then fanned speculation that he would tap his close friend, former commerce secretary Donald L. Evans, by taking Evans with him to Camp David for the Memorial Day weekend.

Let's hope it was a small fan, not waved particularly vigorously.

4) The Job Description

The story continues with:

But with Paulson on board, Bush believes he will have a messenger with great credibility on Wall Street who can help first deliver the message that the economy is fundamentally strong despite public misgivings and second push through a refreshed economic agenda in 2007 if Republicans hold onto both houses of Congress in the fall midterm elections.

So the Treasury Secretary is a "messenger?" More of the same later in the article:

Yet while White House officials respected Snow, they believed he was not always the most effective spokesman for their policies.

Bush aides have been enormously frustrated that the economy is growing strongly -- gross domestic product was up 5.3 percent in the first quarter -- and yet polls show that the public gives the president no credit.

Maybe because they know that it partially compensates for the 1.7 percent growth rate in the fourth quarter of 2005? Messaging to Capitol Hill or the public is a nice talent to have, but the soundness of the economic agenda is the Treasury Secretary's main responsibility. As Brad DeLong put it:

Henry Paulson is not somebody who is going to passively watch economic policy made by political operatives in the White House. This could be very good news[.]

In the absence of strong appointments at Treasury, OMB, and CEA, this is what would happen to economic policy in any administration. Paulson looks like a sound appointment all around. Let's hope it contributes to solid economic policy in the years to come.

Spring Cleaning at Vox Baby

I've made a few changes to the sidebar of the blog--added a picture and disclaimer to the profile, added The Empty Cradle and Our Underachieving Colleges to the Recently Enjoyed section, and cleaned up the Blogroll. There were several deletions to be made--bloggers who looked like they might be on hiatus but really seem to have stopped posting.

There are two Dartmouth student blogs still there, and they are both at the top of their game: a group effort anchored by Andrew Seal at The Little Green Blog and Joe Malchow at Joe's Dartblog. They are both daily reads for me.

The big addition to the Blogroll is Greg Mankiw, professor of economics at Harvard and the CEA chairman for whom I had the pleasure to work in 2003-2004. He's been blogging up a storm as of late, on topics ranging from immigration to carbon taxes to Fannie Mae.

In Praise of Representative Sensenbrenner

Maybe the lack of bipartisanship wasn't such a bad thing. Consider this bipartisan effort in the Senate:

The Senate legislation, which also creates a guest worker program and seeks to tighten control of the border, passed 62 to 36. Twenty-three Republicans and one independent joined 38 Democrats to win approval of the bill in one of the few displays of bipartisanship on a major piece of legislation in years.

If the Senate bill's provisions were to make it into law, they would be the most substantial overhaul of immigration law in two decades. The key architects of the bill, Senators John McCain, Republican of Arizona, and Edward M. Kennedy, Democrat of Massachusetts, hailed the bipartisan coalition for withstanding a large number of amendments intended to sink the legislation.

The New York Times article goes on to describe the Democrat supporters of the Senate bill as follows:

But supporters of the Senate legislation said they hoped to keep their central principles intact. Democrats said they would not support legislation that did not place most of the estimated 11 million illegal immigrants on a path to citizenship.

Can someone give me a justification of why that's the line in the sand? Exactly what did these 11 million people do to merit a path to citizenship that is anything other than follow the existing laws for legal immigration?

I don't think it can be done. I think Representative Sensenbrenner, the chairman of the House Judiciary Committee, had it exactly right in his reaction to the bill that came out of committee in the Senate:

The bill that passed the Senate Judiciary Committee on March 27 repeats the mistakes made 20 years ago when we provided amnesty to illegal aliens and let unethical businesses off the hook. The Senate bill includes amnesty for the 11 to 12 million undocumented aliens in the US who have managed to elude the authorities. This is a slap in the face to those who are following the law and taking the right steps to enter this country. The Senate proposal absolves the wrongdoers and penalizes those who are obeying the law. I do not accept the claim made by some that this is not amnesty because among other things, illegal aliens would have to pay two fines of $1,000 each. It is offensive to me to think we have legislators who are considering selling US citizenship for $2,000. US citizenship is not for sale. It is a privilege bestowed upon those who appreciate its value, and who contribute to our nation by living in a manner that reflects the principles and ideology of being an American. When someone’s first step in this country is taken in direct violation of our laws, I cannot support a process that allows them to continue residing in the US, while others wait up to 20 years outside the US before they are able to take their first step into this country legally.

Let's hope he stands his ground during the negotiations between the House and Senate versions of the two bills. For my earlier posts on immigration, see this, this and this.

Marginal Revolution's Open Letter On Immigration

Alex Tabarrok writes an open letter on the economic benefits of immigration and invites economists to sign. I'm happy to do so.

And yet there is nothing in the letter that would prevent me from also saying that of the House, Senate, and White House points of view described here, my policy preference starts with the House bill, strips out the penalties to those in the medical and religious fields who may provide humanitarian services to illegal immigrants, and ups the annual number of legal immigrants allowed into the country.

Recognizing the largely positive economic effects of immigration does not require one to favor open borders, a guest worker program, or amnesty for those currently here without proper documentation--all of which I consider very bad ideas.

Gas Prices in Perspective

I thought Jim Borgman of the Cincinnati Enquirer made a good point with this recent cartoon.

For some of his earlier work, see this archive.

LMS at AEI

Jeff, Maya, and I will present our Social Security reform plan at noon on Monday, June 19, at the American Enterprise Institute. Here's the lineup:

The three authors of the proposal will present their plan, which will then be discussed by a panel of experts, including Charles P. Blahous, special assistant to the president in charge of Social Security policy at the National Economic Council; Jason Furman, director of economic policy for the Kerry-Edwards 2004 presidential campaign; John C. Rother, director of legislation and public policy for the American Association of Retired Persons (AARP); and Kent Smetters, AEI visiting scholar and an associate professor at the Wharton School. Douglas Holtz-Eakin of the Council on Foreign Relations and former director of the Congressional Budget Office will moderate.

Register for the event and stop by if you are in DC that day. Thanks to Phill Swagel for setting up the panel.

Netroots Growing on Limited Acreage?

Via Powerline, I am directed to "Hillary Clinton: Too Much of a Clinton Democrat?" by Markos Moulitsas of The Daily Kos in Sunday's Washington Post. There were two elements of his non-endorsement that struck me as very relevant to 2008.

The first is that the more left-wing elements of the Democratic base don't seem to be all that concerned about how far to the right they can extend their coalition. I got some personal experience with this when the Nonpartisan Social Security plan was released--the most extreme criticism was directed at Jeff Liebman, the co-author who had served in the Clinton administration, for being too far to the right. Here's an example from the op-ed:

Dean lost, but the point was made. No longer would D.C. insiders impose their candidates on us without our input; those of us in the netroots could demand a say in our political fortunes. Today, however, Hillary Clinton seems unable to recognize this new reality. She seems ill-equipped to tap into the Net-energized wing of her party (or perhaps is simply uninterested in doing so) and incapable of appealing to this newly mobilized swath of voters. She may be the establishment's choice, but real power in the party has shifted.

I don't know if the second sentence is an accurate statement. Kos got to vote for John Kerry in a losing candidacy. What success is he claiming?

But let's suppose that Kos is right in the last statement, that the real power in the party has shifted. That means he gets to dictate the Democrats' agenda, but that doesn't mean the Democrats win in 2008. That only happens if the candidate he backs can capture enough of the national vote, the one that includes the Independents and Republicans. The Clinton strategy is to start in the middle (the muddle?) and move to the extreme only as needed to pick up the win. It worked for Bill. Perhaps Hillary thinks it can work for her, too. Kos offers no strategy for capturing a majority. He seems disdainful of even having to try. That doesn't seem like a recipe for electoral success.

The second element of his op-ed that stands out is his accurate assessment of the danger of nominating candidates who cannot run on their recent accomplishments. He writes:

Yet staying away from big ideas seems to come naturally to Hillary Clinton. Perhaps first lady Clinton was so scarred by her failed health-care reform in the early 1990s that now Sen. Clinton shows no proclivity for real leadership as a lawmaker.

Afraid to offend, she has limited her policy proposals to minor, symbolic issues -- such as co-sponsoring legislation to ban flag burning. She doesn't have a single memorable policy or legislative accomplishment to her name. Meanwhile, she remains behind the curve or downright incoherent on pressing issues such as the war in Iraq.

In 2004, John Kerry could not point to a single, substantive piece of legislation that existed because of his leadership, after a legislative career of nearly two decades. Had there not been such a gaping hole in his resume, I think he would have run a more successful campaign. I don't see how a one-and-a-third term Senator Clinton stands a better chance on this dimension. It is not surprising that sitting members of the House and Senate are very infrequently elected to the Presidency. Governors, with records as heads of state-level executive branches, make for more compelling candidates.

So I think Kos is correct about the need to nominate someone with a record to run on, but I don't think he is doing the Democrats any favors by stipulating that the record has to be one that (merely) appeals to his part of the political spectrum.

Krauthammer on "Never Again"

Charles Krauthammer has a fascinating column in today's Washington Post, "Never Again?" Here's the most interesting part:

For 2,000 years, Jews found protection in dispersion -- protection not for individual communities, which were routinely persecuted and massacred, but protection for the Jewish people as a whole. Decimated here, they could survive there. They could be persecuted in Spain and find refuge in Constantinople. They could be massacred in the Rhineland during the Crusades or in the Ukraine during the Khmelnytsky Insurrection of 1648-49 and yet survive in the rest of Europe.

Hitler put an end to that illusion. He demonstrated that modern anti-Semitism married to modern technology -- railroads, disciplined bureaucracies, gas chambers that kill with industrial efficiency -- could take a scattered people and "concentrate" them for annihilation.

The establishment of Israel was a Jewish declaration to a world that had allowed the Holocaust to happen -- after Hitler had made his intentions perfectly clear -- that the Jews would henceforth resort to self-protection and self-reliance. And so they have, building a Jewish army, the first in 2,000 years, that prevailed in three great wars of survival (1948-49, 1967 and 1973).

But in a cruel historical irony, doing so required concentration -- putting all the eggs back in one basket, a tiny territory hard by the Mediterranean, eight miles wide at its waist. A tempting target for those who would finish Hitler's work.

His successors now reside in Tehran. The world has paid ample attention to President Mahmoud Ahmadinejad's declaration that Israel must be destroyed. Less attention has been paid to Iranian leaders' pronouncements on exactly how Israel would be "eliminated by one storm," as Ahmadinejad has promised.

Read the whole thing.

You Pay Your Money, You Take Your Chances

I finally decided to go in for TimesSelect. I am greeted by Tom Friedman's column, "Let's (Third) Party," where I read this gem about gasoline prices:

Like someone who will tell the truth: The only way Americans are ever going to enjoy relatively cheap gasoline again is if we raise the price now with a gasoline tax— and fix it at that higher level for several years — so investors know that it is not coming down, and therefore it makes economic sense for them to make the long-term investments in alternative, renewable sources of energy. That is the only way to break our oil addiction and ultimately bring down the price.

That's a fascinating "truth." Note that he is not writing here about the externalities associated with our dependence on oil--he is writing about the direct consumption of it through gasoline. So in order to have cheap gasoline later, we should insist on having expensive gasoline today, even if the price of gasoline would fall in the interim. That is beyond silly.

I understand that post-9/11, Friedman has been frustrated by the failure of the President to launch a national initiative about anything, but particularly about our energy consumption. I share much of that frustration. I even advocate for a higher gasoline tax (because of the externalities associated with its consumption and instead of idiotic CAFE standards). I also wish more people understood Brad DeLong's very cogent point that the correct side of this debate to be on is to have people face the market price of gasoline and certainly to do nothing to shield them from it (again because of the externalities). But Friedman is doing the same sort of pandering as the politicians he is criticizing when he holds out the promise of a future with cheaper gas as the rationale for his proposal.

It doesn't have to be complicated. Estimate the monetary cost of the negative externalities associated with gasoline use, set the appropriate tax, and then do nothing else. The market price then sends the correct signal to investors about how to take advantage of new opportunities in alternative energy.

Bernie Marcus Comes to Town

On Friday, the Rockefeller Center was pleased to welcome Bernie Marcus, co-founder and former CEO of The Home Depot, as the Inaugural Portman Lecturer in the Spirit of Entrepreneurship. If we were to look across college campuses today and examine the list of people whom they invite to speak, I think that entrepreneurs would be the least well represented group relative to the contributions they make to society. And there really is no one who better exemplifies that than Bernie Marcus. He's the son of Russian immigrants, and a self-made man who has given back to his communities--primarily Atlanta, Jewish causes, and the medical field--many times over.

He viewed his contribution to the economy as making it possible for the United States to become a nation of "do-it-yourselfers" by putting everything they would need under one roof and doing so on a scale that would lower the prices they would have to pay. When asked (the presumably familiar) question of "What about your competition?", he gave a two part response. First, for the big box competitor, it was all-out warfare. Second, for the smaller hardware and other stores, he said that they shouldn't expect to survive if they couldn't adapt to provide a better or different service at a good value. He cited some examples of smaller stores that had done so.

Read the coverage of the event in the student newspaper.