Opinion
The Michigan Daily — michigandaily.com
4A — Wednesday, January 16, 2019

D

ecember 2018 — the 
month 
when 
the 
stock market decided 
to abandon all normalcy and 
descend into complete and utter 
chaos. The month which instilled 
fear in all Americans about 
whether or not the 10-years-aged 
bullish market had finally begun 
to falter. The month when the 
White House abandoned all of 
America and decided it couldn’t 
deal with this ever-so-volatile 
economy, and began to argue — 
of all things — about a wall.
Okay, okay, too dramatic — I 
know. Still, it’s not exactly wrong 
for me to say 2018 really did go out 
with a bang. During the month 
of December, the Dow Jones 
Industrial Average plummeted 
more than 15 percent before 
posting a 1,086.25 point gain on 
Dec. 26, 2018, “logging its biggest 
single-day point gain ever.” This 
surprising increase came a day 
after the S&P 500 drew within 2 
points of entering a bear market 
— a condition wherein securities 
fall by 20 percent or more from a 
recent high.
Nevertheless, 
the 
market 
stayed 
resilient, 
refusing 
to 
drop into bear territory, and 
continuing said nearly 10-years-
long bullish run — the longest 
such 
run 
in 
the 
market’s 
history. During this time, the 
unemployment rate hit historic 
lows, dropping below 4 percent. 
And amid such circumstances, 
the Federal Reserve was quick to 
raise the interest rates, especially 
as indices showed inflation rising 
above the 2 percent mark.
The White House was quick to 
criticize the Fed’s raised interest 
rates, with President Trump 
lashing out, claiming that “the 
only problem our economy has 
is the Fed.” Now, such an action 
is not exactly unprecedented, as 
past presidents have been known 
to bash the Fed over economic 
policy, but it does beg the 
question of whether or not the 
Fed is making the right decision.
Before we begin analyzing 
this, however, we must first 
understand 
the 
mechanics 
behind how the Fed manages 
economic growth. The Fed is in 
charge of maintaining the federal 

funds rate — the rate at which 
financial institutions, such as 
banks, borrow money from one 
another. This influences national 
interest rates, or, simply put, the 
price tag that a lender puts on the 
money loaned to a borrower.
When the Fed decreases 
the interest rates, the amount 
of investment also increases as 
people the cost of borrowing 
decreases. As such, the amount 
of loans demanded increases, 
thereby increasing the quantity 
of 
money 
(based 
on 
the 
fractional-reserve 
banking 
system). And when the quantity 
of money increases, so does 
inflation.
In this way, the Fed has the 
ability to adjust the economy’s 
level of inflation. But why does 
this matter? There exists a 
model in economics devised 
by economist William Phillips 
— 
appropriately 
named 
the 
Phillips Curve — that posits an 
inverse 
relationship 
between 
unemployment 
rate 
and 
inflation. While most economists 
believe some level of inflation is 
acceptable, they acknowledge 
that when it gets out of hand, 
inflation is detrimental to an 
economy. By and of itself, this 
must be managed so that it 
doesn’t get too out of hand. At the 
same time, however, if inflation is 
too low, the unemployment rate 
naturally increases. This dual 
mandate is inherently very tricky 
to work with, especially due to 
many caveats. Nevertheless, a 
balance must be reached.
The Fed’s move to raise 
interest rates in 2017 and early 
2018 were very understandable. 
The United States had a booming 
economy that was showing no 
sign of stopping, something that 
is a signal of recession. However, 
as the inflation rate began to turn 
upwards of 2 percent following 
historic 
unemployment 
lows 
over the summer, in December it 
seemed to have stabilized around 
2 percent, based on fourth 
quarter data. While it definitely 
is too early to declare the “war” 
with inflation has been won — 
especially given market volatility 
in 2018 — such a trend forecasts 
good things to come in 2019.

Nevertheless, the Fed still is 
on track for additional interest 
rate hikes in 2019, something 
I think should definitely be 
approached with caution. Amid 
all of Trump’s complaining on 
the Fed’s disruption of the U.S. 
economy this past calendar year, 
there actually might be some 
truth to it based on recent trends. 
It does appear that the economy 
has begun to cool down from the 
hot start it had in 2016. 2018 was 
“the worst year for stocks since 
2008,” with the Dow and S&P 
both down by 5.6 and 6.2 percent 
respectively.
If 
the 
Fed 
were 
to 
overcompensate by increasing 
interest rates higher than they 
should be, the agency runs the 
risk of creating a recession 
by 
unnecessarily 
occluding 
economic growth. At the same 
time, if they undercompensate, 
the Fed runs the risk of inducing 
increased inflation. Both are 
formidably terrible outcomes in 
their own rights, but given our 
current circumstance, it seems to 
be a better idea to back the foot 
off the brakes a little and let the 
economy find its footing. This 
is perhaps strengthened by the 
fact that the global interest rates 
are running at levels much lower 
than those in the United States — 
a counteracting force out of the 
Fed’s control.
So despite Trump’s persistent 
complaints 
that 
the 
Fed 
is 
intentionally 
sabotaging 
his 
economy, it seems the Fed has 
truly been quite successful in 
managing 
the 
inflation 
rate 
thus far. Whether such a trend 
continues 
is 
determined 
by 
whether or not the Fed decides to 
back off on further interest rate 
hikes in 2019 (at least based on 
market signals today).
And Trump would do well to 
worry about his trade talks with 
China, which arguably played a 
large role in last year’s market 
volatility. Indeed, seeing to a 
resolution of some kind would 
help start 2019 off in a positive 
way.

Should the Fed be increasing interest rates in 2019?

ADITHYA SANJAY | COLUMN

Adithya Sanjay can be reached at 

asanjay@umich.edu.

Emma Chang
Joel Danilewitz
Samantha Goldstein
Elena Hubbell
Emily Huhman
Tara Jayaram

Jeremy Kaplan
Sarah Khan
Lucas Maiman
Magdalena Mihaylova
Ellery Rosenzweig

Jason Rowland
Anu Roy-Chaudhury
Alex Satola
Ali Safawi
 Ashley Zhang
Sam Weinberger

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EDITORIAL BOARD MEMBERS

Where politics, academia and tolerance collide
A

s a first-year student at the 

University of Michigan 

this past semester, I could 

see 
that 
tolerance 

was a big topic at the 

University. 
Incoming 

students 
received 

notices 
to 
attend 

tolerance-focused 

workshops, heard from 

their resident advisers 

about the importance 

of honoring differences 

and, in many ways, 

were made aware that 

mutual respect at U-M 

was vital. “Diversity, Equity and 

Inclusion” seemed not only to 

be a University office, but also 

a mantra on campus. However, 

the inverse appeared true when 

it came to the vast political and 

ideological diversity within the 

campus culture.

Rhetoric 
surrounding 

intolerance, specifically political 

intolerance, at our university 

made international headlines in 

September, when many students 

and those from all sectors of 

the school community felt that 

a professor chose to put his 

own political expression above 

a student’s academic freedom. 

This student, hoping to gain the 

professor’s 
recommendation 

to study abroad at an Israeli 

university, was denied — after 

previously being accepted — when 

the professor learned where the 

student wished to study. The 

professor stated he was pledging 

an “academic boycott against 

Israel in support of Palestinians 

living in Palestine.”

Though 
some 
argued 
the 

student could have easily received 

a recommendation letter from 

a different professor, others in 

the student body and University 

leadership viewed it as a clear 

violation of the student’s right to 

inquiry by a politically motivated 

professor.

The University administration 

responded 
by 
revoking 
his 

sabbatical 
privileges, 
and 

Elizabeth 
Cole, 
interim 
dean 

of LSA, criticized him for his 

misconduct by letter, writing, 

“Faculty…have 
discretion 
to 

decline 
(writing 
letters 
of 

recommendation) for legitimate 

reasons such as lack of time, 

information about the student, 

and 
academic 
assessment; 

however, that discretion… does 

not extend to withholding a letter 

because of your personal views 

regarding the student’s place of 

study and then using the student’s 

request as a political platform for 

your opinions, both in the media 

and in the classroom.”

Some 
in 
the 
University 

community felt that the professor 

had a legitimate right to withhold 

his recommendation on personal 

moral 
grounds. 
However, 
in 

addition 
to 
the 
University 

administration, many students, 

whether speaking as supporters 

of Israel or as self-described 

proponents of academic freedom, 

applauded 
the 
University’s 

response. 
Regardless, 
it 
was 

soon clear again that tolerance 

of 
ideological 
and 
political 

difference 
is 
still 
threatened 

at U-M. Within two weeks, a 

Graduate 
Student 
Instructor 

withheld 
her 
recommendation 

from a student who wished to 

study in Israel, and 

later, in a required 

speaking 
exhibition 

for first-year students 

in the School of Art 

& Design, a speaker 

showed a PowerPoint 

slide 
with 
side-

by-side 
pictures 
of 

Adolf 
Hitler 
and 

current Israeli Prime 

Minister 
Benjamin 

Netanyahu, 
with 

the words “Guilty of Genocide” 

written across their foreheads.

These 
actions, 
viewed 
as 

anti-Semitic and anti-Israel by 

many within and outside of the 

University, are reflections of an 

intolerance for certain ideological 

beliefs and an inequitable passing 

of 
judgement. 
Within 
both 

the required presentation and 

the refusals to write letters of 

recommendation is the frequently 

demonstrated practice of holding 

Israel to a different standard than 

other states. While the Israeli 

government’s actions may be 

frequently subject to controversy, 

it is certainly inaccurate to claim 

that 
it 
perpetuates 
genocide 

against the Palestinians. Both the 

United Nations and Palestinian 

authorities 
have 
noted 
the 

rapid growth of the Palestinian 

population 
in 
recent 
years. 

Additionally, 
even 
in 
violent 

conflict, the Israeli Defense Forces 

has been known to make repeated 

and constant efforts to prevent 

casualties of innocent civilians 

and specifically target militants 

who seek Israel’s destruction.

In these repeated incidents, it 

is clear that students and faculty 

need to be made increasingly 

aware of the necessary respect not 

only for another’s race, economic 

background or ethnicity, but also 

for differing political stances 

and worldviews. Incidents such 

as these carry the power to not 

only 
harm 
academic 
inquiry 

and freedom, but also the safe 

environment 
the 
University 

strives to create for students and 

faculty.

In the results of a survey 

published 
by 
the 
University 

in 
November 
2017, 
U-M 

researchers 
recognized 
the 

need for “(encouraging) greater 

productive interactions across 

different political orientations 

and ideologies,” and explicitly 

stated, 
“the 
university 
is 

sponsoring a series of events 

focusing on the issue of free 

speech with participants from a 

variety of perspectives.” These 

efforts, if continued, may help 

students — and faculty — to 

become aware and tolerant of 

other ideologies and political 

stances 
and 
create 
a 
more 

inclusive campus environment. 

However, these measures will 

not achieve their desired goals 

if 
political 
discrimination 
is 

allowed to continue at the hands 

of University faculty, staff and 

invited guest lecturers, as these 

groups not only hold positions 

of power, but also serve as role 

models for how students should 

behave in a diverse community. 

I believe positive change is 

possible, 
but 
before 
students 

can be expected to change, the 

University must do its best to 

assure that those at the helm of 

creating our U-M education also 

hold up the standards we set on 

campus.

The problem of intolerance, 

specifically 
in 
the 
collision 

between politics and academia, 

does not only exist at Michigan 

and 
other 
college 
campuses, 

but on a national scale as well. 

Tolerance and understanding is 

often preached by citizens and 

politicians on both sides of the 

aisle, yet, toward their political 

opponents, it is rarely practiced. 

A study conducted by the Pew 

Research Center in June 2016 

found 55 percent of Democrats 

and 49 percent of Republicans 

say they maintain an unfavorable 

attitude toward their opposing 

party. The descriptions most 

commonly used by those in each 

party for those with differing 

views 
were 
“close-minded,” 

“dishonest,” 
“immoral” 
and 

“unintelligent.”

Perhaps the most alarming 

statistic of them all was 45 percent 

of Republicans and 41 percent of 

Democrats said the other party’s 

policies “threaten” the well-being 

of the United States. In a country 

that is at its best when its citizens 

are united, these statistics show 

we have quite a bit of work to do 

in healing our divided society. 

The question arises: What can we 

do about this?

I 
propose 
a 
solution: 

reparation can be achieved by 

creating more opportunities for 

dialogue and interaction between 

people of differing ideological 

persuasions, both as examples 

for — and within — the student 

body. The survey also provided 

one statistic that revealed when 

supporters of the two major 

parties had few to no friends 

from the opposing party, they 

were much more likely to take on 

“very cold” views of their fellow 

citizens. Yet, the opposite proved 

true 
with 
respondents 
who 

reported having “a lot” or “some” 

friends on the other side of the 

ideological spectrum.

Maybe this is where the 

solution lies, nationwide as well 

as at the University of Michigan. 

Organized 
dialogue 
between 

various political organizations 

could potentially significantly 

improve 
inter-group 
political 

relations from the ground up. 

This 
could 
operate 
hand-in-

hand with a continued and easily 

accessible series of speakers with 

diverse perspectives, not just on 

free speech, but on many of the 

wide ranging issues that arise 

in political discourse. It may 

take work to convince the vast 

network of ideological camps to 

emerge from echo chambers and 

open their hearts and minds to 

others, but the positive results 

we could see from a united 

country and campus, seeded 

with tolerance and free thought, 

will hopefully prove such efforts 

fruitful for all.

Noah Ente can be reached at 

noahente@umich.edu.

ANIK JOSHI | COLUMN

G

ov. Gretchen Whitmer 
was inaugurated on Jan. 
1, 2019 and she is already 
busy working on a number of 
her campaign promises. From 
fixing the roads to making health 
care easier to access and more 
affordable, 
her 
priorities 
are 
numerous. However, one was 
conspicuously missing from the 
list: occupational licensing reform.
Occupational licensing is the 
concept that people ought to be 
licensed to perform certain jobs. 
In theory, it sounds appealing. 
Who wants a doctor or dentist 
without a license? However, in 
practice, it can (and does) get 
applied to far more mundane 
activities, like shampooers (who 
need a license to literally shampoo 
hair?). Per the Institute of Justice, 
in the state of Michigan, acquiring 
that shampooing license would 
run you about $200 and would 
take 15 days short of a full calendar 
year (1500 clock hours). Driving to 
Indianapolis from Detroit, on the 
other hand, would take you about 
four hours and the state of Indiana 
does not require licensing for such 
a mundane task, which would 
make setting up shop significantly 
less arduous.
There are two other main 
issues 
with 
occupational 
licensing: their disproportionate 
impact on society’s disadvantaged 
and how they lead to regulatory 
capture on an epic scale. It goes 
without saying that the less well-
off have less money to spend on 
acquiring these licenses, but what 
can go under the radar is that this 
effectively locks people out of 
certain career paths for absolutely 
no good reason other than them 
not having exorbitant amounts 
of money to blow on unnecessary 
licenses. In addition, this kind of 
licensing can be very problematic 
from a free market standpoint 
because it leads to regulatory 
capture. Regulatory capture is 
when the government creates an 
agency and it ends up getting taken 
over by those it was supposed to 
regulate, so the agency now acts in 
the best interests of the companies 
represented 
rather 
than 
the 

people. 
This 
happens 
when 
occupational licensing boards are 
led by industry folk. The boards 
then come up with more and 
more onerous regulations that do 
nothing to benefit the people, but 
instead benefit the corporations 
and fatten their wallets along the 
way.
With all of these negatives, 
you might think, is any of this 
necessary? Do people really need 
this much time to learn how to 
shampoo? Do they really need this 
strong of a barrier? The answer is 
no, it is not necessary, and no, we 
don’t need this long to determine 
the art of shampoo, and finally, no, 
we do not need these artificially 
inflated barriers.
You would think the existence 

of 
these 
boards 
would 
be 
beneficial by making work safer, 
but unfortunately, you would 
not be correct. An Obama-era 
Department of Treasury report 
puts it very succinctly: “With the 
caveats that the literature focuses 
on specific examples and that 
quality is difficult to measure, 
most research does not find that 
licensing improves quality or 
public health and safety.” What is 
interesting to note is sometimes 
this kind of licensing can directly 
make people more unsafe. In 
one example discussed by the 
Mercatus Center at George Mason 
University, additional licensing 
restrictiveness 
for 
electricians 
tends to be associated with fewer 
electricians per capita, which is 
associated with more accidental 
electrocutions.
Now, for the good news. 

Former Gov. Rick Snyder made 
a lot of progress in this area by 
creating a new office to focus on 
ending burdensome regulation 
called the Office of Regulatory 
Reinvention, which eventually 
issued a report on the status of 
licensing in Michigan. Nearly 
seven years ago, that report was 
released, and it had a number of 
immediate positive effects and 
a number of burdensome rules 
were cut (including ones that 
regulated barbershop wastebasket 
sizes). Better than the report 
and its changes is a letter the 
governor wrote to the state House 
and Senate leaders, in which he 
eloquently stated his desire to not 
unnecessarily overregulate: “We 
should enact new restrictions 
only when they are absolutely 
necessary to protect the public 
welfare.”
Whitmer has a chance to 
continue this legacy and lend 
it additional support, and she 
should absolutely seize it. Since 
the 2012 report, Snyder slashed 
seven requirements. This may 
seem small, but it represents 
tremendous progress on this front 
and Whitmer should continue 
quickly.
This is a bipartisan issue 
and people all over the political 
spectrum 
are 
working 
to 
make sure this kind of reform 
continues to pick up movement. 
Think tanks as diverse as the R 
Street Institute and the Center 
for American Progress both 
blast 
much 
of 
occupational 
licensing done today because 
many people see the problems 
with it. Those on the right 
can support reform because it 
helps get government out of the 
private sector, and those on the 
left can support reform because 
it helps disadvantaged members 
of society.
Whitmer can become the 
champion of a new generation of 
regulation busters, as the ball is 
in her court.

Governor Whitmer should lead on occupational licensing

 Anik Joshi can be reached at 

anikj@umich.edu.

It goes without 
saying that the less 
well-off have less 
money to spend 
on acquiring these 
licenses

NOAH ENTE | COLUMN

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