Fisher Center Report Debunks Myths about California Fiscal Crisis
Automotive Industry Legend Bob Lutz to Speak at Haas on October 16
Don't Miss Wells Fargo's CEO Richard Kovacevich on Monday, Oct. 6
Haas Ranks #21 in Forbes Rankings Survey
Haas Moves to #6 in Hispanic Business Ranking
Haas in the News
Happening at Haas
California's budget crisis has been dominating the news - especially in the midst of the state's gubernatorial recall election - but most of the ideas for fixing it are based on myths and will not improve the state's fiscal outlook according to a new report by Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the Haas School.
The report, entitled "Anatomy of the California Fiscal Crisis: Facts and Figures Do Matter," attributes the current crisis to the unsustainable tax revenue increases related to the boom in the financial markets in the late 1990s. By treating this revenue surge as permanent and locking in higher spending, the report says, the state General Fund spending grew by 15% in 2000 and another 13% in 2001.
The report was co-authored by Daniel T. Van Dyke, principal at RCG, and Elisa T. Beller, analyst at RCG.
"Wrongly blaming the economy, high tax rates, or too large a government sector will not solve the real budget issues facing California," says Rosen. "Those criticisms of California simply do not stand up under close scrutiny of the facts and figures. It will take some imagination for elected officials to correctly diagnose the problems, and then to design measures to deal with those issues."
California's job loss is often credited with the problems in the state's budget. However, the authors point out, during the period in which the fiscal crisis developed, California's employment situation was actually marginally better than the nation's.
California also has the reputation of having a large number of state government employees, according to the report. But, says Rosen, "This is simply not true, if we normalize by population. In fact, among the ten largest states, California has the third smallest number of state employees per capita, after Florida and Pennsylvania. We just don't have a big state government."
Another myth concerns California's tax rate. When the burden of all state and local tax sources are pooled, says the report, California's tax rate does not particularly stand out. Among the ten largest states, California's total tax rate relative to gross state product is about in the middle, according to the authors.
To remedy the crisis, the authors suggest that temporary revenue ought to be treated as such, so that expenditures are not geared upward to reflect those temporary revenues. For the current situation, they say, there is no choice but to decrease expenditure growth or raise taxes until the budget situation is again stable. The authors also consider a reform of Proposition 13, passed by California voters in 1978 to keep property taxes aligned with a property's purchase price.
The report is available through the Fisher Center for Real Estate and Urban Economics at
Long a legend for his years of developing stunning designs for Chrysler and now breaking new ground as a senior executive at General Motors, Haas School alumnus Bob Lutz will give the second lecture in the Dean's Speaker Series on October 16.
The event will take place at 5:30 p.m. in the Arthur Andersen Auditorium. Seating at the event will be first-come, first-served. For more information, contact Susie Hanna at email@example.com.
When Bob Lutz was named head of product operations by General Motors in 2001, it was widely seen as a move to revitalize its automotive designs and improve the design decision-making process within the firm. This is a role he played to great acclaim at Chrysler, where he was responsible for developing the PT Cruiser and Dodge Viper. Within months of joining GM, Lutz was promoted to chairman, North America, and continues to serve as vice chairman of Product Development.
Design has been a central concern for Lutz throughout his career. In a recent speech he commented on his commitment to good design, "In our industry, design is the key emotional differentiator. Safety, basically regulated by the government, is more or less the same in all vehicles . Basic performance is nearly the same for all cars. Fuel economy is very similar . So the last true differentiator is how does the car look? Not only its appearance from 20 feet away, but also from 20 inches away."
Lutz added, "The physical appearance of a vehicle speaks volumes to the viewer about its brand, its heritage, and about its real or implied characteristics."
Lutz is an alumnus of the Haas School, having earned his BS degree here in 1961 and his MBA in 1962. He served as a member of the Haas School Advisory Board 1981 to 2000.
The first Dean's Speakers Series event for the fall takes place next Monday, Oct. 6, when Richard Kovacevich, chairman and CEO of the nation's fourth largest bank, Wells Fargo, speaks in the Arthur Andersen Auditorium at 5:30 p.m.
This event will be videotaped and available at http://www.haas.berkeley.edu/haas/video_room/ at a later date.
Please arrive early for the event, since seating will be first-come, first-served. A reception in the Wells Fargo Room at Haas will follow the speech. For more information on this and other lectures in the Dean's Speakers Series, please contact Susie Hanna at firstname.lastname@example.org.
The Haas School was rated 21st in the nation by Forbes magazine in its biennial ranking of full-time MBA programs based on their "return on investment." The article was published in the October 13th issue.
This year, Forbes surveyed the Class of 1998 full-time MBA alumni at 99 schools around the world to determine whose "graduates get the most dollars for their degree," according to Forbes.
To determine the five-year MBA gain, Forbes asked for pre-MBA salaries as well as for compensation in three of the first five years out of school. It then compared the compensation after school with both the costs of attending (tuition and foregone salary) and estimates of what the same students would have made in their old jobs.
"Nearly a third of our students in the Berkeley MBA Class of 1998 were employed by the technology sector, which has suffered disproportionably during the recent economic downturn," said Teresa Costantinidis, assistant dean for school affairs and initiatives. "That, of course, has significantly affected our graduates and their salaries."
Haas ranked #15 in the previous ranking in 2001, and #7 in the 2000 ranking.
Read the full story at www.forbes.com.
Hispanic Business magazine rated Haas at #6 in its 2003 annual ranking of top business and law schools for Hispanic students, published in the September issue of the magazine.
This is the fourth year in a row that Haas placed in the top ten in this survey. Haas ranked #10 in 2002, #4 in 2001, and #2 in 2000.
The survey ranks business schools based on the number of Hispanic students and faculty, recruiting and retention services for Hispanic students, retention rate, and the school's reputation (based on the US News & World Report ranking, in which Haas ranked #7).
The Hispanic Business magazine considers Hispanic faculty and students from both the US and abroad.
Richard Velazques, MBA 03, who founded the Haas School's Hispanic MBA Student Association last year, is quoted in the magazine's profile on Haas.
Read the full story at http://www.hispanicbusiness.com/news/newsbyid.asp?id=12277.
Jennifer Chatman Speaks at Economist Magazine Summit
Jennifer Chatman, the Paul J. Cortese Distinguished Professor of Management, gave an invited talk at the Economist magazine's second annual Innovation Awards and Summit: Making Innovation Count on September 23. Chatman spoke on "Fostering Innovation: People and Organizations."
Robert Edelstein to Speak on Residential Housing Market
Robert Edelstein, real estate development professor and co-chair of the Real Estate Group, will address the Security Analysts of San Francisco (SASF) on October 9 at the Palace Hotel in San Francisco. He will discuss the market for residential housing both locally and nationally. He will be hosted by David Distad, SASF member and Haas lecturer in finance.
David Levine's Book Recognized by Princeton Library
Professor David Levine's book "How New is the 'New Employment Contract'?" published by the W. E. Upjohn Institute for Employment Research in April 2002, was listed as a "Noteworthy Book" by the Industrial Relations Section of the Princeton Library in the most recent issue of "Selected References." For more information on this book, visit http://www.upjohninst.org/publications/titles/nec.html.
Dean Emeritus Ray Miles Honored For His Work In Outreach
Former Dean Raymond Miles was honored at the second annual Young Entrepreneurs at Haas reception on September 17 for his enduring commitment to reaching out to underserved youth in the bay area.
In 1989, while dean of the Haas School, Miles helped to initiate the YEAH program and has continued to play a key role in advising and supporting the program by sharing his deep knowledge of business, management, and education.
Pablo Spiller Named Research Associate at the National Bureau of Economic Research
Pablo Spiller, Jeffrey A. Jacobs Distinguished Professor of Business & Technology, has been named as a research associate for the National Bureau of Economic Reseach (NBER). NBER, founded in 1920, is a private, nonprofit, nonpartisan research organization. Nationwide, 600 NBER associates concentrate on four types of empirical research: developing new statistical measurements, estimating quantitative models of economic behavior, assessing the effects of public policies on the US economy, and projecting the effects of alternative policy proposals.
Peter Sealey, adjunct professor in the Marketing Group and the co-director at the Center for Marketing and Technology, was quoted in the Los Angeles Times on September 26 in an article titled "Levi, an American Icon, to Shut Last Plants in U.S." Sealey commented on Levi Strauss & Co.'s history and public perception. For full text: http://www.latimes.com/news/printedition/ la-fi-levi26sep26001450,1,7762131,print.story
Kenneth Rosen, the California State Professor of Real Estate and Urban Economics, was quoted in the Sacramento Business Journal and the San Francisco Business Times on September 25 in an article titled "Berkeley Report Challenges Fiscal Crisis Claims." Rosen commented on California's budget concerns." For full text: http://sacramento.bizjournals.com/sacramento/stories/2003/09/22/daily30.html?t=printable
Hal Varian, professor in the Operations and Information Technology Management Group, wrote an article published in The New York Times titled "Lessons From California's Budget" on September 25. For full text: http://www.nytimes.com/2003/09/25/business/25SCEN.html?pagewanted=print&position=
On September 24, the Boston Globe published an articled titled "Grads Falling Victim to 'Blow-up Offer': Firms Renege on Job Offers Amid Weak Economy," which featured the Haas School of Business as one of the 10 leading business schools nationwide. For full text: http://www.boston.com/business/globe/articles/2003/09/24/grads_falling_victim_to_blow_up_offers/
Alexandra Denisova Johnson, MBA 94, was featured in the San Francisco Chronicle on September 24 in an article titled "Alexandra Johnson: Building Business Bridges to the Capitalist Frontier." For full text:
Three Haas staff members, Gwendolyn Cheeseburg, June Wong, and Terry Yokoyama, were mentioned in the Berkeleyan on September 24 in an articled titled "Long-Serving Campus Staffers Honored." All three were recognized for 35 years of service to UC Berkeley. Dean Tom Campbell was also mentioned. For full text: http://www.berkeley.edu/news/berkeleyan/2003/09/24_staff.shtml
Anastasia Stamos, senior undergraduate, was quoted in the Berkeleyan on September 24 in an article titled "Homecoming Gets Even Livelier." For full text:
The Daily California published an article on September 23 titled, "New Student Group Seeks to Increase Black representation at Haas." It quoted undergraduate students Soloman Asfaw and Melanie Boughton, president of the new Haas Undergraduate Black Business Association and Faye Lawson, student advocate. For full text http://www.dailycal.org/article.asp?id=12803&ref=search.
A conference hosted at Haas and organized by Jay Stowsky, executive director of the UC Berkeley Project on Information Technology and Homeland Security and former associate dean at Haas, was mentioned in the San Francisco Business Times on September 22 in an article titled "Cal Focuses on Effects of New Terror Policies." For full text:
Dwight Jaffee, the Willis Booth Professor of Banking, Finance, and Real Estate, was quoted in the San Francisco Chronicle on September 22 in an article titled "Freddie Mac's Strategy Includes Taking on More Risk." For full text: http://www.sfgate.com/cgi-bin/article.cgi? file=/news/archive/2003/09/22/financial1019EDT0034.DTL&type=prin
Andrew Rose, Bernard T. Rocca Professor of Economic Analysis and Policy, was mentioned in the Business Standard on September 22 in an article titled "Whose Truth?" Rose commented on The World Trade Organization.
Laura Tyson, professor in the Business and Public Policy Group currently on leave, wrote a column for Business Week published on September 22, titled "A New Governor Won't Fix What Ails California."
Severin Borenstein, the E.T. Grether Professor in Public Policy and Business, was quoted in the San Jose Mercury News on September 22 in an article titled "Actor Takes Stance on Environment." Borenstein commented on clean-air fuel alternatives. Read the full text at http://www.bayarea.com/mld/mercurynews/news/local/6831568.htm? template=contentModules/printstory.jsp.
Dwight Jaffee was quoted in The Wall Street Journal on September 22 in an article titled "House Money: Behind Freddie Mac's Troubles: A Strategy to Take on More Risks." Jaffee commented on Freddie Mac's risky strategies.
Terrance Odean, associate professor in the Finance Group, was quoted in The Baltimore Sun's Eileen Ambrose Column in on September 21. Odean commented on the bear market.
American Way, American Airlines' inflight travel magazine, featured the Haas School in its round-up article on business school rankings "Rank Professionals" in the September 15 issue. The article quoted Dean Tom Campbell, Executive Director of Marketing & Communications Richard Kurovsky, Associate Director of Marking & Communications Ute Frey, and Jenni Winslow, MBA 04. Read the full article at http://www.americanwaymag.com/business/feature.asp?archive_date=9/15/2003.
Karlene Roberts, professor in the Organizational Behavior and Industrial Relations Group, was featured in the Orlando Sentinel on September 14 in an article titled "NASA Avoids Pinning Blame for Columbia."
Severin Borenstein wrote an article for The Sacremento Bee published on September 12 titled "Other Views: What's Wrong with Regulating Gasoline Prices." For full text: http://www.sacbee.com/content/opinion/forum/v-print/story/7399788p-8343042c.html
Severin Borenstein appeared on KCBS radio in an interview regarding Attorney General Lockyer's gasoline report and also on Worldlink TV (cable channel on DirectTV and Dish TV) in "Refuge at Risk," a panel discussion Arctic Refuge, fossil fuels, and alternative fuels.
Ilse Evans, executive director for career services and initiatives, was quoted in the the Wall Street Journal's College Journal section on September 19 in an article titled "MBA Programs Focus on Leadership Skills." For full text: http://www.collegejournal.com/mbacenter/mbatrack/20030915-alsop.html
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