There's a growing perception out there that a college degree no longer delivers the value that it used to.

Too many college kids are living in Mom's basement, or working at Starbucks.  Like most personal finance columnists, I get the letters from them: what do I do?  How do I fix this? For many, the answer is grad school.  But I get the letters from grad students too.  A while back, I found myself talking to a professor whose school has a number of impressive-sounding graduate programs that were originally conceived as add-ons for a professional degree in law or medicine or business.  They are now attracting a number of students who just go for the standalone degree.  He didn't understand what the career path was for these kids, and he wasn't sure that they did either.  

"It sounds good, so they can persuade their parents to pay for it," he said, a touch guiltily. 

In some sense, it doesn't really matter how the Supreme Court rules on the gay marriage case it's hearing today.  The culture war is over on this front, and gay marriage has won.  Even if it loses at the Supreme Court this term, it will win in the legislatures . . . because it is already winning in popular opinion.  Few people much under the age of sixty see a compelling reason that straights should marry and gays should not.  For that matter, my Republican grandfather is rumored to have said, at the age of 86, "I think gays should marry!  We'll see how much they like it, though."

At this point, it's just a matter of time.  In some sense, the sexual revolution is over . . . and the forces of bourgeois repression have won.

That's right, I said it: this is a landmark victory for the forces of staid, bourgeois sexual morality.  Once gays can marry, they'll be expected to marry.  And to buy sensible, boring cars that are good for car seats.  I believe we're witnessing the high water mark for "People should be able to do whatever they want, and it's none of my business."  You thought the fifties were conformist?  Wait until all those fabulous "confirmed bachelors" and maiden schoolteachers are expected to ditch their cute little one-bedrooms and join the rest of America in whining about crab grass, HOA restrictions, and the outrageous fees that schools want to charge for overnight soccer trips.

I know, it feels like we're riding an exciting wave away from the moral dark ages and into the bright, judgement free future.  But moral history is not a long road down which we're all marching; it's more like a track.  Maybe you change lanes a bit, but you generally end up back where you started.  Sometimes you're on the licentious, "anything goes" portion near the bleachers, and sometimes you're on the straight-and-narrow prudish bit in front of the press box.  Most of the time you're in between.  But you're still going in circles.  Victorian morality was an overreaction to the rather freewheeling period which proceeded it, which was itself an overreaction to Oliver Cromwell's puritanism.  (Cromwell actually did declare a War on Christmas, which he deemed to be sensuous paganism.)

When sex scandals erupted in the Catholic Church and Penn State's football programs, we heard a lot about how the sick culture and institutions of religion and football created a safe space for pedophiles. Why no similarly harsh words for private school?

Full disclosure: I didn't go to Horace Mann.  But I went to its nearest neighbor, Riverdale.  They were two of the three "Hilltop schools", green leafy campuses in the Riverdale neighborhood of the Bronx.  The biggest sporting event of our school year was not a football game, but a basketball match, the "Buzzell Game".  It was held in memory of a Horace Mann athlete who had succumbed to polio in 1950.  

And the schools were similar in many ways, though when I was there, Horace Mann was supposed to be the brain school and Riverdale had the jocks.  Both schools had gone co-ed in the 1970s, just a decade before I arrived; my graduating class was still 2/3 boys.  The old, somewhat cloistered atmosphere was gone, but traces of it still lingered at both places. I played basketball and ran track and cross country for the Riverdale Indians, a name that was changed to the Falcons sometime after I left, and so thoroughly scrubbed that school sources now talk about the Falcons playing games in the 1950s.

So you can imagine how shocked I was to read the stories of teachers molesting students, first from the New York Times Magazine and now from the New Yorker.

Yesterday, the head of the EU group of finance ministers dropped a bombshell on markets.  Cyprus, noted Jeroen Dijsselbloem, was the new model for bank bailouts in the eurozone--which is to say, there won't be any.  If your bank goes under, the intervention will be minimal.  Depositors and shareholders will take substantial losses.

Markets, as you may imagine, did not like this news.  European indices like the DAX plummeted.  The euro dropped 1% against the US dollar.  Would a bank run spread across europe as depositors in the periphery started to seek safer havens?  

So far, no. Dijsselbloem's comments were quickly walked back, though not all that far: each situation is unique, said the EU, and there is no one model for banking crises.  Unsaid: "We will bail out your banks if they get into trouble."  Morgan Stanley analysts quoted in the FT say that "We now expect the downside risks for the euro to increase, given the apparent change in policy approach being adopted by the EU for bailing out the Cypriot banks."

All this has a curiously familiar ring.  Five years ago, when the government bailed out Bear Stearns, we heard a lot about moral hazard.  Lots of commentators, including, er, me, were worried that the Bear Stearns bailout would encourage bankers and other investors to take unwise risks with their money, because hey, if everything goes south, Uncle Sugar will pay the piper.

During the debate over health care reform, a lot of people postulated the existence of what I started calling "magic pots of money": large expenses that could be cut, almost painlessly, in order to fund the new health care entitlement.  There were a lot of these, from "unnecessary surgery" to "reforming end of life care".  But probably my favorite was obesity.  Our nation's excess avoirdupois was, it was alleged, costing north of $100 billion a year.  And getting bigger all the time! (pun intended).  Curb the nation's waistline, and you could achieve the holy grail of health care cost control, while simultaneously making the obese better off.  

Like all the magic pots of money, it turned out to be underwhelming.  It's very hard to make people thin, especially using the crude tools of public policy.  And those crude tools aren't free: they have costs in both money and liberty.  The public health experts had tried to argue away the liberty costs on the grounds that people didn't really want to eat fattening food; they were helpless victims, stranded in food deserts, trapped in the predatory claws of Big Food, or betrayed by agricultural subsidies that made bad food cheaper than good.  (That last is a favorite of libertarians, who are happy to blame malign outside influences as long as those influences consist of government programs).

This was all wrong, argues a new article from Breakthrough.  The "obesity epidemic" is poorly understood, but we have a good idea of what didn't cause it: food deserts, advertising, or agricultural subsidies:

For some foods, the healthier option is indeed more expensive than the less healthy counterpart, but for many other foods, the price between the healthy option and the unhealthy option is more or less equal. Lentils are as cheap as potatoes. Skim milk costs the same as whole milk. Low-sugar cereals are typically no more expensive than high-sugar brands. Many seasonal fruits and vegetables are extremely inexpensive — bananas average just 60 cents per pound.

Becoming a journalist was a big financial risk when I entered the field in 2003.  In 2013, it's shaky indeed.  Last week Pew issued a report suggesting that journalism was entering a death spiral: the loss of ad dollars, particularly for classified ads, has led newspapers to make cutbacks.  This causes a decline in quality, because writing a good story takes a lot of time and resources.  And the readers respond to the quality decline by cutting back on their subscriptions.

(I'm not sure whether readers understand just how long it takes to report a single story, but a good rule of thumb is that just the interviews average an hour per usable quote.  Some interviews give you more, but others can't be used at all.  If you have to travel and see something, it's even longer.)

Not so fast, says sociologist Gabriel Rossman, one of my favorite sources on all things media.  Yes, if you look at the Pew survey, people superficially seem to be complaining about the declining breadth of the stories they read.  But if you look at other research, it's likely that what they're actually complaining about is the political slant:

There are three key pieces of evidence in the report itself for the Gentzkow and Shapiro model:

There's a deal in Cyprus, according to the New York Times, leaving the insured small depositors untouched and seizing a substantial portion of larger accounts:

A one-time levy of 20 percent would be placed on uninsured deposits at one of the nation’s biggest banks, the Bank of Cyprus, to help raise 5.8 billion euros demanded by the lenders to secure a 10 billion euro, or $12.9 billion, lifeline. A separate tax of 4 percent would be assessed on uninsured deposits at all other banks, including the 26 foreign banks that operate in Cyprus.

An agreement was still far off, though, as Cyprus’s lenders left for the night without reaching an accord. The proposal still requires approval by the Cypriot Parliament and by the European Central Bank, International Monetary Fund and European Union leaders. Finance ministers from the 17 euro zone countries have scheduled an emergency meeting at 6 p.m. Sunday in Brussels.

Under the plan, savings under 100,000 euros would not be touched — a rollback after a controversial plan last week to tax insured deposits was rejected by Cyprus’s Parliament, amid outrage among ordinary savers and widespread concern that a precedent had been set for governments anywhere to tap insured bank savings in times of a national emergency.

The single biggest fact you need to know about Cyprus is summed up by Kevin Drum's admirably pithy headline: Cyprus needs to lay its hands on one-third of its GDP by Monday.  Otherwise, the island nation's banks are insolvent--and since a surprisingly large fraction of its economy seems to consist of selling bank accounts to Russians, that presents something of a conundrum.

I'm still trying to wrap my brain around how we arrived at this impasse. It seems as if at every turn, the governments involved have actively, even joyously, bounded towards the worst possible decision.

To be sure, it isn't as if there were a lot of great decisions available to be made.  There's a big hole in their banking sector, and no obvious way to plug it without a huge cash infusion RIGHT NOW--which doesn't leave a whole lot of alternatives to taxing the bank accounts, or getting a big bailoit from the EU.  And the EU is getting kind of sick of bailouts.

Still, it's hard to understand why the Germans apparently insisted that the Cypriot governmetn kick in so much money that it was left with no alternative to slapping a tax on its bank deposits.  Yes, I do understand that the Germans didn't want the Spanish and Italians and Irish and Portuguese thinking that a similar deal might be forthcoming if they let everything go to hell.  On the other hand, if their depositors get worried about similar haircuts . . . well, it's hard to say that they'll be in a better position.  And what if they succeed?  Cyprus slaps a hefty tax on its bank deposits, and then five gets you ten that they have a bank run which sows considerable chaos throughout the EU.

Ezra Klein interviews Desmond Lachman on Cyprus and the Euro.  This, for me, is the money quote:

My view is that things are getting worse. If you just want one metric just look at unemployment. Overall euro-zone unemployment now keeps grinding up, it’s at 9 or 10 percent now. Youth unemployment is in the 20s. Or look at Spain. Spain isn’t a Mickey Mouse economy. They’re at 26 percent unemployment and youth unemployment is 60 percent. This is a social explosion waiting to happen.

And what is the policy recommendation? They need to do more austerity. They need to stay the course. Greece has been in recession for five years, and they still need to tighten their budget. The Cypriot case is their financial sector got out of control. It was 8.5 times the economy. What they managed to do was use Russian deposits to buy Greek bonds. When the Greek bonds got restructured, they suddenly had a big hole in their balance sheet. The Germans, because they have an election coming in September, aren’t prepared to bail out banks in Cyprus because they feel that what they’d be doing is using German taxpayer money to bail out the oligarchs. That makes this a complicated mess.

As I remarked the other day, every time another one of these crises comes up, we're assured that they're unique.  But collectively, they're not unique.  Much of the eurozone is stuck in a simmering crisis that never seems to really resolve itself.  The common currency is creating huge structural problems within the currency union, and so far, the best the government has come up with is a string of just-enough bailouts that keep the place from imploding, but don't resolve any of the underlying problems.

Speaking of local protectionism, according to Jessica Sidman at the City Paper, DC is proposing new regulations to curb the presence of food trucks downtown.  As one so often sees with protectionist measures, people are suggesting that this is really for the good of the food trucks--after all, they'll be able to enter a lottery for a handful of prime spots in each location, at the low-low price of only $150 to $400 a month.  As always, such protestations are ludicrous.  It's hard to run a business on the premise that many months, you will have a chance to sell your wares in a good spot, while in other months, you're out of luck and will have to vend in low-density areas where there aren't enough buyers to cover your cost.  The new system will drive some trucks out of business, and drive up the costs of others.  Who benefits?  Incumbent restauranteurs who are paying high rents for their prime location, and don't like the low-cost competition.

D.C. Food Truck Association chairman and Red Hook Lobster Pound co-owner Doug Povich says trucks could end up winning proposed locations with little weekday lunch traffic like Navy Yard, Historic Anacostia, Minnesota or Benning avenues NE, and Friendship Heights. Because they’ve spent $150 for the spot, they’ll likely go the first time. But if they’re losing money there, they may not want to come back the following weeks, Povich says. The result would be empty parking spots that nobody else could use for four hours.

Povich believes only five areas—Farragut Square, L’Enfant Plaza, Franklin Square, Metro Center, and Union Station—have enough traffic and congestion to warrant a zone, not 23. He says his trucks do half the business in a lower-traffic location like Friendship Heights or Navy Yard as they do downtown. Trucks that don’t have Red Hook’s 25,000 Twitter followers might do as little as 5 to 10 percent, Povich estimates.

Restricting vehicles to certain spots goes against the mobile spirit of food trucks, Whitfield says. When she has cupcakes left at the end of the day, she asks her Twitter followers where Cubside Cupcakes should go next. “That’s dead,” Whitfield says. “Responding to customer requests is dead if these regulations go through.”

Since the 1960s, the State of Louisiana has threatened illegal casket vendors with thousands of dollars in fines and up to 180 days in jail.  The only way to be a legal casket salesman is to become a licensed funeral director, a process that is expensive and time consuming.  As you can imagine, this is a situation that licensed funeral directors like just fine.  But it's hard on families who can only get a pricey casket through the funeral home cartel.  Worse, it's ridiculous.  It's hard to imagine any reason that the state needs to get into regulating the procurement and sale of . . . wooden boxes.  What's the worst thing that can happen if someone gets a subpar casket?  

Last August, a Louisiana monastary sued.  St. Joseph's Abbey opened a casket business in 2007, selling high-end handcrafted cypress caskets to help finance its operations.  The state of Louisiana threatened to shut them down and jail the deacon who was running the casket-shop; the cease and desist letter was mailed even before they'd made a single casket.  So the Institute for Justice took their case, and today, they won a major victory.  

A federal judge in New Orleans has ruled that the state cannot hurt consumers simply in order to protect the lucrative monopoly of the funeral directors.  This should not be surprising--the testimony for the defense included such gems as suggesting that legally forbidding consumers from doing business with anyone except a funeral director was really helping them, by guaranteeing that they would be buying their wooden box from a trained expert. After all, if they didn't get their box from a trained expert . . . well, the box might be too small, because how would you know how tall Dad was without the help of a specially trained expert with a funeral director's license?

The judge wasn't having any of it, and while this shouldn't be surprising, it still is.  These cartels are hard to fight, and judges tend to err on the side of letting the government enforce monopolies, because if we limit the government's power, well, it's all downhill from there.  So it's good to see a judge sticking up for the right to do something that's not harming anyone--except the funeral directors who no longer get to take a cut off every sale.

"Sudden rise in home demand takes builders by surprise."  That's the headline on a New York Times story this morning.  

This seems like good news: finally, the recovery we've been waiting for.  But there's something disquieting about it.  

There is good reason for prices to rise: inventories are at record lows all around the country. In my neighborhood, a fairly desireable place by the standards of adventerous young DC couples, there was exactly one open house this weekend.  But at the same time, this is a puzzle.  If prices are rising, why are inventories falling?  And why are people bidding up the prices of housing again, instead of, y'know, renting?

In many areas, builders are scrambling to ramp up production but face delays because of the difficulty of finding construction workers and in obtaining permits from suddenly overwhelmed local authorities. At the same time, homeowners — many of them lifted above water for the first time in years — often remain reluctant to sell, either because they want to wait and see how much further prices will climb or because they are afraid of being displaced in the sudden buying frenzy.

Is this how the euro ends?  Not with a Greek bang, but a Cypriot whimper?

The Cypriot parliament has rejected the proposal to recapitalize their banks using a combination of international funds, and the proceeds of a special "tax" on bank deposits.  EU ministers are said to be discussing capital controls.  

In these sorts of situations, capital controls are often imposed prefatory to abandoning your currency peg and "recapitalizing" your banks by redenominating their loans in cheaper local currency.  This does not have to be the case ,of course.  Even if Cyprus isn't planning to leave the union, they face a big problem: given all the problems in the banking system, a euro-denominated bank account in Germany has a higher expected value than a euro-denominated bank account in Cyprus.  The money will probably flow accordingly, undermining the stability of the banks still further.  Even if they're 100% committed to staying in the euro, they will probably face sizeable outflows when the banks reopen.

Nonetheless, capital controls are often a prelude to a devaluation, and given the size of the problems in the Cypriot banking system, this seems like a real possibility.

College improves your earning prospects.  So does marriage.  Education makes you more likely to live longer.  So does marriage.  Yet while many economist vocally support initiatives to move more people into college, very few of them vocally favor initiatives to get more people married.  Why is that, asks Pascal-Emmanuel Gobry? His answer:

Meanwhile, economists’ “cosmopolitan perspective” (as Cowen puts it) makes them not feel good at the idea of public policy that would interfere with personal choices (allowing for a second that getting married is a “personal choice” in a way that going to college isn’t). Most economists think that government should not interfere or have a stance one way or another with decisions that feel intimate to people. That is a complete value judgement. And it’s a completely defensible one.

But at the level of the economics profession, this leads to bias: much more ink is spilled on, and thought given to the college wage premium than the marriage wage premium. One is mostly praised and interpreted in a certain way, while the other is mostly ignored. And, of course, the thing that academic economics focuses on has an effect on elite debate and public policy, especially when the socially liberal, pro-higher ed biases of economists line up well with those of the rest of the elite.

Bryan Caplan has more thoughts.

Dear Blogger:

I'm wrapping up a doctoral degree in the physical sciences and heading to an industrial job in a few months. My grad school years have been spent in one of the highest cost-of-living parts of the States, so my individual savings aren't in great (mid four-digits), but I'm mid-twenties and thankfully debt-free (no student loans, never carry a credit card balance, car bought with cash, etc.) My new job will be both in a much lower cost of living state and a significant step up in salary at a little under $100,00/year base + signing bonus + potential annual bonus, dependent on company performance and my personal success or failure. The company offers a 401k with a mixed match (I put in 6%, they fractionally escalate until they've matched 4%) and discounted stock for employees. Health and dental carry a modest deductible but the coverage is good.

I've gotten by for a little under a decade as an undergrad on scholarships and lab assistant support and then as a grad student on fellowships and TA appointments; now that I'm slogging through my dissertation I'm starting to dream about how to structure my finances once I actually have finances to think about. I've been in school longer than most so I know I'm behind in starting major retirement savings, but the emergency fund will have to be bumped up first. Industrial research jobs are growing less stable than they once were, so I'm wary of locking myself too much into the company's system beyond what I need to get the match. I'm also likely renting for the first few years as I'm not sure if I'll be settling at that particular site long enough to merit binding myself with a mortgage to the local real estate environment. If you were in my shoes and starting your first outside-of-school job, how would you allocate things for the first few years?

-Almost a PhD