Inferior Schools, Venom For Reformers

28 Monday May 2018

Posted by pnuetz in Regulation, School Choice, Socialism, Uncategorized

Tags

Betsy DeVos, charter schools, Common Core, Corey A. DeAngelis, Disparate impact, Don Boudreaux, Education Week, Educational Equity, Every Student Succeeds Act, Henry Brown, Horace Mann, John Stossel, Kevin Currie-Knight, monopoly, Nancy Thorner, No Child Left Behind Act, Public Schools, Robert P. Murphy, School Choice

We all want better K-12 education in the U.S., which has an extremely uneven — even dismal — record of student outcomes. The U.S. ranks below the OECD average in both math and science scores, despite spending 35% more per student than the OECD average. Yet there is a faction that leaps to the defense of the status quo with such viciousness that its members deride sensible reform proposals as classist and racist. Then, of course, they call for additional spending! These antics reveal their self-interest in doubling down on the status quo.

An obvious starting point for reform, and one that would save taxpayers roughly $40 billion (K-12), is to dismantle a federal education bureaucracy that adds little value to educational outcomes. Another element is expanding the set of alternatives available to parents over the way their children are educated. Betsy DeVos, President Trump’s Secretary of Education, favors both of these steps as general principles, though she lacks direct control over either, especially school choice.

Both of these steps are fiercely resisted by the public educational establishment and teachers unions. And no wonder! Who wants to lose their privileged monopoly power over a local market? The public school establishment does not wish to be troubled by demands that schools respond to competitive forces, that teachers be rewarded based on performance, or that schools should be answerable to parents and taxpayers. As for the federal role, the public school cartel seems to welcome federal money, even if it means that the feds impose control in the process.

Choice

For those skeptical of reforming public schools by allowing choice, Don Boudreaux proposed a useful thought experiment that I discussed in my earlier post “Public Monopolists Sa y Don’t Be Choosy“. It examines a hypothetical world in which supermarkets are structured like public schools. Consumers pay for their food via local taxes and must shop at one local public supermarket, and only one, at which food products are available at no additional marginal cost. However, parents are free to pay their taxes and pay for food elsewhere, at a private supermarket. Most thinking people would probably agree that this is a spectacularly bad idea. Public supermarkets would deteriorate relative to private supermarkets. Rural and inner city supermarkets would likely suffer the most. Public supermarket worker unions would lobby for higher food taxes. And of course proposals for supermarket choice would be met with hysteria. Read the earlier post for more discussion of the likely consequences.

One of the arguments often made in favor of today’s public school monopoly is that K-12 education should be regarded as a necessity, but few would take that as a compelling reason to grant government a monopoly in the retail food business. A better argument for government schools, were it strictly true, would be that education is a public good, yielding significant non-exclusive benefits to the community. And in truth there are some external benefits to society from an educated citizenry. The primary benefits of an education, however, are exclusive to the student. Kevin Currie-Knight offers an excellent treatment of the education-as-public-good question, and he concludes otherwise. And the public-good argument does not imply that parents should be denied choice in their selection of a school for their children. Ultimately, the policy question hinges on whether government schools, as currently structured, do a good job in educating students, and as Corey A. DeAngelis points out, they do not.

There is no shortage of evidence that school choice is beneficial for students and society in several respects, including academic outcomes for students and schools, racial integration, fiscal impacts, and parental satisfaction. This paper by MIT researchers found that school choice improved educational outcomes for special education students and those who were not proficient in English. This essay in Education Week, signed by nine educational researchers, emphasized the preponderance of positive findings on school choice and some additional dimensions of improvement on which they hope the education research community will focus.

The promise of choice is seldom greeted objectively by the public education establishment and its reflexive allies. To their dishonor, distortions of fact and ad hominem attacks on choice advocates are almost the rule. For example, John Stossel writes the following in “Why the Left Hates Betsy DeVos“:

“When she spoke at the Kennedy School of Government, students held up signs calling her a ‘white supremacist.’ … When she tried to visit a school, activists physically blocked her way. … The haters claim DeVos knows little about education, only got her job because she gave money to Republican politicians, and hates free public education.“

Of course, public education is not free! But it is a disgrace that someone so dedicated to the cause of improved education should be treated this way. The DeVos family has given over a billion dollars to various causes over the years, much of it to educational initiatives, and even those gifts, somehow, are seen by critics as a pretext for vilifying Betsy DeVos. But she knows much more about the poor performance of public schools than her critics care to discuss, as well as the dynamism and improvement that choice and competition can bring to education. Her critics disparage the performance of charter schools in DeVos’s home state of Michigan even while the facts show that they have performed well.

The idea that charter schools “hurt” public schools by creating educational choice is the very weakest protest a monopolist can put forward. These critics conveniently overlook the fact that most charter schools are in fact public schools! More importantly, an erstwhile monopolist must respond by adding value for consumers! If it fails to do so, it must be closed or reorganized. THAT is a good idea!

Monopoly public schools do not earn a profit in the way of monopolistic business enterprises, but remember that perhaps the greatest social costs imposed by monopolies are languid effort and a poor product. This is not to dismiss the great efforts of many teachers who toil under trying circumstances, though the current system also tends to protect bad teachers. And much of the waste in government schools is caused by bloated bureaucracy and costs imposed on teachers and schools of complying with regulation.

The Federal Bureaucracy

Another priority of Secretary DeVos is to reduce the federal role in education. Hurry, please! The unpopular Common Core standards, implemented in 2009, proved a failure. Test scores declined for student cohorts expected to benefit the most (those in the lowest percentiles). At the last link, Nancy Thorner discusses more recent legislation:

“It was in December of 2015 that Congress passed the Every Student Succeeds Act (ESSA), that replaced the often criticized No Child Left Behind Act (NCLB). ESSA, in contrast to NCLB, signified a clear move away from federally prescribed standards. In fact, ESSA expressly forbid federal regulators from attempting to ‘influence, incentivize, or coerce’ states to adopt the Common Core.”

That’s progress, but 36 states plus DC still use those standards. Curriculum mandates are only one area of federal school regulation that must be addressed. “Educational equity” is also mandated along several dimensions, requiring schools to devote a disproportionate share of resources to various subsets of students who might not benefit from the extra instructional intensity. Then there are the administrative costs of demonstrating compliance with these mandates, not to mention the virtual prohibition under these mandates of developing innovative, local solutions to the problem of educating their charges.

There is well-deserved pushback against federal control over school discipline, which requires schools to implement policies that avoid disparate impacts on certain minorities (African Americans, Latino, and special-ed children) such that they are no more likely to receive detention, suspension, or expulsion than the general student population. This is an absurdity, potentially requiring schools to go light on offenders should they happen to belong to a minority. Even worse, if the enforcement of discipline results in an observable bias in favor of any minority, it is likely to be noticed by the minority students themselves, creating a negative behavioral incentive and potentially stoking resentment among non-minority students.

In April, President Trump signed an executive order authorizing a review of federal education rules imposed on states and local school districts. Again, central regulation is costly: it involves rule-making at the federal level to interpret enabling legislation, then review by state departments of education where specific policies are designed, which are then passed down to school districts and individual schools, who must review and attempt to implement the policies, and who then must report back on their success or failure in meeting the mandates. Resources are consumed at every level. In the end, the process creates increased complexity, and the policies have proven to be of questionable value to the goal of good education. While spending on education has soared over the past 30 years, student achievement has remained static, and the same disparities of outcome remain.

Secular Statism

Robert P. Murphy provides a brief history of U.S. public schooling. It is a fascinating take on the history of secularization of education in America. It is the story of the substitution of state for private institutions, including family and church, in the development and socialization of children. Murphy offers a telling quote:

“Thus Henry Brown, second only to Horace Mann in championing state education, commented, ‘No one at all familiar with the deficient household arrangements and deranged machinery of domestic life, of the extreme poor, and ignorant, to say nothing of the intemperate—of the examples of rude manners, impure and profane language, and all the vicious habits of low bred idleness—can doubt, that it is better for children to be removed as early and as long as possible from such scenes and examples.'”

Whoa! The K – 12 public education system, as it now stands, is striking in its failure to benefit the children and families it is intended to serve. Critics of meaningful reform do not acknowledge the abysmal condition and performance of many government schools in America today, except to insist that they need more money. These critics, including the educational bureaucracy, teachers unions, and misguided statists generally, behave as if they accept the attitudes expressed by Henry Brown. They have no respect for private decision makers — families, churches, private schools of any stripe, and private markets in general. They do not understand the power of incentives and competition to allocate resources efficiently and maximize well-being. But they know how to disparage, defame, and propagate hateful rhetoric for those with a true interest in creating a better educational system for all.

The Ruinous Authoritarian Impulse: Rules For Housing and Diversity

20 Friday Oct 2017

Posted by pnuetz in Affirmative Action, Housing Policy, Identity Politics

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Admissions Quotas, Affirmative Action, Hiring Quotas, Historic Preservation, Housing Inequality, Land-Use Regulation, Mismatch Hypothesis, Randall O'Toole, Rent Control, School Choice, Stigmatization, Wendell Cox

I’m following up on an earlier post with a few thoughts on two topics: the “unexpected” harms of affirmative action and the left’s unwitting promotion of inequality via restrictive housing policies in many American cities. I mentioned both policies last week without much elaboration in “American Homicide Rates: Which America?” Both are efforts by government to apply centralized decision-making to complex social issues. Both reflect misdiagnoses of the problems they seek to address. Both are coercive and dismissive of the power of free individuals to help themselves and the power of markets to solve social problems. And both kinds of policies are failures.

Whether government is prescribing the rental value of a property, regulating forms of new construction, or imposing land-use regulations, zoning, historic preservation, and environmental rules, the result is higher housing costs and often lower-quality housing for the low end of the income distribution. The effects of some of these policies are discussed by Randall O’Toole in “Bringing Soviet Planning To New York City“. Wendell Cox notes that progressive cities are home to the worst inequality of housing opportunities for blacks and hispanics. The Cox piece is a bit dry, but it is instructive. These are results that reinforce the alienation described in the “Which America?” post linked above.

Allowing government to prescribe the appropriate matching of individuals to roles based on racial or identity group status is divisive and counter-productive. This is so-called affirmative action. Decisions based not on merit, but on skin color or membership in favored identity groups are discriminatory by their very nature. Members of non-favored groups, including non-favored minorities such as asians, are penalized, despite their lack of any connection to the injustices of the past. Human capital is a scarce resource, which is why merit has value. So group preferences in hiring involve tradeoffs, subverting goals such as productivity, profit and expense control. This inflicts a cost on society as a whole.

In college admissions, affirmative action often compromises learning. This article on affirmative action at universities emphasizes the “mismatch hypothesis”, which asserts that individuals with lesser academic credentials who are placed as a consequence of preference programs often “suffer academically as a result”. The damage includes higher dropout rates among minorities and generally less learning than if these individuals had studied with peers having more similar credentials. A further implication is that these individuals probably experience less career success. In fact, an under-qualified employee’s job performance might permanently damage his or her career prospects. There may be other consequences of group preferences such as stigmatization and alienation of individuals within the academic community or workplace.

Whether the topic is better housing, improved educational and economic prospects, trade, drugs, technology, or any other human endeavor, the best solutions do not involve decisions imposed by government coercion. Instead, allowing individuals to interact freely, gaining valuable employment experience and access to the bounty of markets, fosters organic gains in opportunities. Individual liberties and equality before the law are the real keys to broader success. The visible, iron hand of the state tends to diminish the supply of affordable housing. Forced quotas in hiring and academic admissions often harm their intended beneficiaries and poison the social environment. When placement decisions are in the hands of public institutions like state universities, it is in the best interests of both schools and students to make those decisions based on academic credentials. Opportunities for higher education will improve only with advances at lower levels of education, which requires parental choice rather than a collection of unresponsive mini-monopolies. In addition, higher education should lose it’s cachet as an elixir for economic prospects. Many individuals, regardless of group identity, would optimize their careers through vocational skills and entering the workforce to gain experience at an earlier age than the typical university graduate.

American Homicide Rates: Which America?

12 Thursday Oct 2017

Posted by pnuetz in Discrimination, Gun Control, Immigration

≈ 1 Comment

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Affirmative Action, Assimilation, Bretigne Shaffer, Diversity, Economic Mobility, Heterogeneity, Illegal Immigration, On the Banks, Rent Controls, Ryan McMaken, School Choice, Segregation, Sponsorship, Violent Victimization, War on Drugs

A heterogenious society and the successful assimilation of minorities are two very different things, as much as we might wish otherwise. Two populations within a region will come into contact, but conditions promoting real assimilation are complex. (I’m avoiding use of the term “diversity” because it has come to imply the successful assimilation of distinct groups.) While cultural differences can enrich the lives of both populations, sharp economic gaps between minority and majority populations (and even some cultural differences) will tend to slow the process of assimilation. This is often associated with social dysfunction, such as high crime and homicide rates, especially among the minority group. This is a fairly common phenomenon in countries with racial and ethnic minority or immigrant populations, as Ryan McMaken writes in a recent piece on international differences in heterogeneity and homicide rates.

Heterogeneity In the West

Countries in the Western Hemisphere tend to have relatively high immigrant and minority populations, as McMaken describes:

“… when considering the Americas, … nation-states are in most cases frontier states with populations heavily affected by immigration, a history of conflict with indigenous populations, and institutionalized chattel slavery that lasted until the 19th century. The factors are significant through the region, and the United States cannot be held apart in this regard from the Caribbean, Brazil, Colombia, and other states impacted by all these factors.

Importantly, these factors also make the Americas significantly different from Western Europe and other areas — Japan and Korea, for example — where the present situation is marked by much higher levels of cultural uniformity and quite different recent histories and current demographic trends.“

Homicides

McMaken questions popular theories of cross-country differences in homicide rates based on the degree of gun control and gun ownership rates. Homicides and violent victimization have been declining in the U.S. for many years even as gun ownership has soared. Furthermore, international comparisons are traditionally plagued by arbitrary country classifications and exclusions, as well as inconsistent definitions of homocide and gun ownership. However, McMaken points to other explanations for violent crime found to be fairly robust in the academic literature: poverty and population heterogeneity:

“… these factors contribute to lower levels of social cohesion, and thus higher levels of criminality and other socially-undesirable behaviors.“

McMaken cites research involving ethnic minority populations of Slavs in Germany, Italians in Argentina and the U.S., and Arabs in Europe, all of whom had crime rates far exceeding those in their countries of origin. The connection between heterogeneity and crime might have nothing to do with particular ethnic groups, though it seems all too easy for observers within individual countries to blame specific “others” for crime. It is a symptom of alienation from the majority as well as economic desperation and vulnerability to opportunities and threats arising from the underground economy. Illegal activities might truly provide the best alternatives available to low-skilled, minority job seekers. Needless to say, underground economic activity, such as the drug trade, involves high risk and often violence among users and between competing factions. This is an important source of the high crime and victimization that typifies many minority communities.

Despite declines since the 1970s, the U.S. still has a higher homicide rate than many other industrialized countries. Beyond the weakness cited above, such comparisons fail to control for other confounding effects, including the degree of heterogeneity across countries.

Policies

Heterogeneity poses a problem in the context of involuntary and often voluntary segregation of sub-cultures. If you don’t believe the “voluntary” part, take a close look at the different clusters of individuals in the cafeteria at almost any “diverse” university or corporate office. Judge for yourself. Differences in language, fertility, demographics, religion and cultural traditions may be noteworthy, but where crime is associated with effectively segregated minorities, there is usually a gap in economic status and mobility relative to society at large.

What policies can mitigate these conditions and their impact on crime? It would be nice to approach this question strictly from the perspective that heterogeneity is a given, but the degree of heterogeneity is, to some extent, an endogenous outcome. Restrictive immigration policies might leap to mind as a way of restraining heterogeneity, and there is little doubt that illegal immigrants are less likely to assimilate (many contend that their crime rate is low). Policies allowing less restricted flows of legal immigrants tend to be salutary if they are based on domestic economic need, economic potential, or compassion for those seeking asylum or a haven from political oppression. A legal immigrant receiving a welcome on new shores is more likely to assimilate successfully than an illegal immigrant, all else equal. Citizenship and language education are avenues through which assimilation might be encouraged. And there could be ways to improve sponsorships and even temporary visa programs so as to encourage assimilation.

What can be done to encourage more effective assimilation of all minorities? And what can be done to reduce the crime associated with unassimilated populations? One major corrective is a strong economy. Policies that encourage economic growth will lead to greater participation in markets and society, with consequent interaction and mixing of sub-cultures. Growth policies include low and non-distortionary taxes and light regulation.

The war on drugs also accounts for a major share of homicides, and that war interacts with non-assimilation in perverse ways. It is crippling to disadvantaged communities precisely because it creates risky “opportunities” in the underground economy. It also produces high levels of incarceration and dangerous forms of “cut” contraband. As I’ll discuss in my next post, ending the war on drugs would reduce violent crime and lead to safer drugs in relatively short order.

A short list of other policies that would foster assimilation and economic mobility would include: improved education: school choice and apprenticeship programs; better labor market outcomes: reduce the minimum wage or create sub-minimum wage categories to enhance opportunities to gain experience and skills; better housing: eliminate rent controls.

Assimilation is always more effective when it occurs “organically”. Affirmative action and forced diversity initiatives often fail to achieve effective assimilation. Beyond the obvious infringement on liberty, these policies may sow resentment among those who suffer reverse discrimination, and among those who witness it, to the probable detriment of efforts to eliminate bias. Even worse, these policies often put their intended beneficiaries into vulnerable, un-winnable situations: jobs or programs for which their skills are not adequate. There are undoubtedly excellent candidates among those placed in positions under quotas, but there is a likelihood that many will be unsuccessful in their roles.

Conclusion

The anti-gun left is eager to attribute differences in homicide rates to the impact of gun control policies, but a close examination of the facts reveals better explanations. A prominent factor contributing to differences in homicide rates is the degree of heterogeneity across countries. Those with more homogeneous populations tend to have lower homicide rates and vice versa. But the problem is not merely heterogeneity, but the difficulty of economic and cultural assimilation of minority populations. These factors appear to lead to greater crime within many minority populations. The U.S. is not unique in its experience with high minority crime rates, but it is a relatively heterogenous nation. This is an important factor in explaining why the homicide rate tends to be higher in the U.S. than in other industrialized countries. To close, I’ll offer something cogent from Bretigne Shaffer’s On the Banks blog, in which she offers this quote from an individual named Michael Owen (the soccer player?):

“... we don’t really have a single America with a moderately high rate of gun deaths. Instead, we have two Americas, one of which has very high rates of gun ownership but very low murder rates, very comparable to the rest of the First World democracies such as those in western & northern Europe, Australia, New Zealand, Canada, Japan, South Korea. The other America has much lower rates of gun ownership but much, much higher murder rates, akin to violent third world countries.“

Busting the K-12 Monopoly

12 Monday Dec 2016

Posted by pnuetz in Education, School Choice

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Betsy DeVos, Cafe Hayek, Don Boudreaux, Donald Trump, Education Funding, GI Bill, Opportunity cost, Public School Monopoly, Racial Segregation, School Choice, School Vouchers, Teachers Unions

Public school teachers are highly sensitive to any suggestion that their schools should “compete” for students, but it’s difficult to rationalize restrictions on competition faced by any institution that trades with consumers. Education is certainly not a natural monopoly. But in the U.S., K-12 public schools are granted an effective service monopoly over large segments of their local markets. Their monopoly status is a legacy and usually taken for granted, but that does not make the arrangement a natural state of affairs, or a healthy one.

The idea that education is a “public good”, or nonexclusive in the benefits it confers, is true only in a weak sense. Yes, there are external benefits from the education of children, but those are secondary to the personal benefits reaped by the children themselves as they go through life. And even strong public spillover benefits do not imply that government should provision the education itself, free of competition. Economic theory justifying intervention in markets implies only that the public sector should attempt to augment supply; direct production by the public sector is unnecessary and often unwise. Competition among schools will bring forth more of the private and public benefits than a monopoly.

But the public schools are free, and that doesn’t sound like a monopoly, right? Well, no, they aren’t free! Not to taxpayers, of course, but also, not to families with children who are denied the right to fully internalize the true opportunity cost of the resources claimed by public schools. The option to move to a school district with better academic performance is unavailable to many families. What would those families decide given a greater degree of empowerment to consider alternatives?

About 18 months ago, the topic of the K-12 monopoly was the subject of a favorite post on Sacred Cow Chips called: “Public Monopolists Say “Don’t Be Choosy“. It called attention to a thought exercise featured by economist Don Boudreaux on Cafe Hayek. Consumers are very choosy about their food, and they should be. Why shouldn’t they be just as choosy about another essential: the school for their children? Because the government won’t let them! Boudreaux lists factors that would make consumer grocery distribution just like the structure of K-12 education. That includes property taxes to pay for “public” grocery stores and the allotments of food they distribute, assignment of each family to a single public grocery store, but freedom to shop at “private” grocery stores at additional expense. He then asks how the food distribution system would perform. Here’s Boudreaux:

“Being largely protected from consumer choice, almost all public supermarkets would be worse than private ones. In poor counties the quality of public supermarkets would be downright abysmal. ….

Responding to these failures, thoughtful souls would call for ‘supermarket choice’ fueled by vouchers or tax credits. Those calls would be vigorously opposed by public-supermarket administrators and workers.

Opponents of supermarket choice would accuse its proponents of demonizing supermarket workers (who, after all, have no control over their customers’ poor eating habits at home). Advocates of choice would also be accused of trying to deny ordinary families the food needed for survival. Such choice, it would be alleged, would drain precious resources from public supermarkets whose poor performance testifies to their overwhelming need for more public funds.

As for the handful of radicals who call for total separation of supermarket and state—well, they would be criticized by almost everyone as antisocial devils indifferent to the starvation that would haunt the land if the provision of groceries were governed exclusively by private market forces.

In the face of calls for supermarket choice, supermarket-workers unions would use their significant resources for lobbying—in favor of public-supermarkets’ monopoly power and against any suggestion that market forces are appropriate for delivering something as essential as groceries.“

That’s exactly the behavior we see from the teacher’s unions, from which sanctimony flows liberally as to “public service”. Remember that the classic monopolist actively engages in denying choice and restraining trade through private actions, public relations and various other political means. But why would any sane observer have concluded that these “protected markets” would lead to successful outcomes?

It’s no secret that public schools in the U.S. face severe challenges. They are highly uneven in their results. A recent report in U.S. News said the following:

“Since World War II, inflation-adjusted spending per student in American public schools has increased by 663 percent. Where did all of that money go? One place it went was to hire more personnel. Between 1950 and 2009, American public schools experienced a 96 percent increase in student population. During that time, public schools increased their staff by 386 percent – four times the increase in students. The number of teachers increased by 252 percent, over 2.5 times the increase in students. The number of administrators and other staff increased by over seven times the increase in students.“

Federal efforts to improve K-12 education have been remarkably fruitless. Despite the massive increases in staffing over the past 50 years at all levels, graduation rates are still miserable in minority districts; schools are more segregated today than 50 years ago; huge gaps exist between the achievement of students in high and low-income districts; and math scores on standardized tests rank near the bottom of OECD countries, (science and reading scores are closer to the average).

The usual rejoinder from the public school establishment is that still greater funding is needed. Always more…. But families are exercising their right to opt-out. The number of home-schooled children is likely to exceed two million by 2020. There are now programs in 32 states facilitating choice through vouchers, tax credits, tax deductions, and education savings accounts. The body of research surrounding the effects of school choice is overwhelmingly positive: choice has improved academic outcomes in both private schools and the public schools that are forced to compete, it has a positive fiscal impact, and it reduces racial segregation. The constant drumbeat of additional funding requests looks unnecessary and wasteful in view of the options.

As for federal dollars, one suggestion is to pare back sharply the number of bureaucrats at the education department, putting the savings toward a program that would emulate the hugely successful GI Bill, under which beneficiaries chose how to spend the money.

Donald Trump’s nominee for education secretary is school choice advocate Betsy DeVos. Obviously, the new administration will not view the public school monopoly as untouchable. But let’s get one thing straight: no one is trying to “ruin” public schools. The objective is to fix something that’s been broken for a long time and, in so doing, to improve educational outcomes across all segments of society. The medicine delivered thus far, including top-down planning and profligate spending, has been expensive and ineffective, and even counterproductive in some respects. A few bad schools will fail under a competitive regime, but they already do. Bad schools have no sacred right to survive. Most struggling schools will improve, leveraging innovative techniques as well as their natural advantages, which often include proximity to a base of prospective students. It’s time to tackle the education problem by vesting consumers with sovereignty in the choice of schools.

Minority Politics and The Redistributionist Honey Trap

22 Friday Jan 2016

Posted by pnuetz in Big Government, Free markets

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Affirmative Action, Economic justice, Glenn Reynolds, Homeownership, Housing Subsidies, Joel Kotkin, Living Wage, Minority Interests, Old Confederacy, Political or Economic, Rent Control, Reynolds' Law, School Choice, The View From Alexandria

obama-zombie-hope-change

Minorities are not well-served by political, big-government solutions to social and economic advancement. Joel Kotkin weighs in on this point in “What’s the Best Way Up For Minorities?” He discusses the experiences of African Americans and Hispanics with two starkly different approaches to moving up:

“Throughout American history, immigrants and minorities have had two primary pathways to success. One, by using the political system, seeks to redirect resources to a particular group and also to protect it from majoritarian discrimination, something particularly necessary in the case of the formerly enslaved African Americans.

The other approach, generally less well-covered, has defined social uplift through such things as education, hard work and familial values. This path was embraced by early African American leaders such as Booker T. Washington and Marcus Garvey. Today, the most successful ethnic groups – Koreans, Middle Easterners, Jews, Greeks and Russians – demonstrate the validity of this method through high levels of both entrepreneurial and educational achievement.“

Minorities have largely succeeded in achieving political stature, and minority politicians garnering the most support from minority constituencies have advocated statist solutions, as opposed to emphasizing individual initiative. A leader advocating for public provision of transfers or any form of “economic justice” is undoubtedly attractive to many disadvantaged voters. Unfortunately, those policies offer little more than support. They are incapable of lifting the disadvantaged out of poverty.

“From 2007-13, African Americans have experienced a 9 percent drop in incomes, far worse than the 6 percent decline for the rest of the population. In 2013, African American unemployment remained twice that of whites, and, according to the Urban League, the black middle class has conceded many of the gains made over the past 30 years. Concentrated urban poverty – on the decline in the booming 1990s – now appears to be growing.“

Kotkin notes that blacks are in worsening economic straits in cities that are considered “exemplars of black political power and redistributionist politics”, and even in more affluent but “progressive” coastal cities. And paradoxically, according to Kotkin, African Americans have achieved greater economic gains in the “old Confederacy”, and that is where they are moving. The same is true of Hispanics, though most of their population growth in the south is from immigration. African Americans are reversing an older pattern of migration to the north.

Kotkin cites statistics on minority homeownership and educational performance in the south relative to northern cities, and he compares results for Texas and California. The south wins convincingly. He emphasizes the role of education and housing policies in helping minorities overcome disadvantages, but he is rightly critical of housing subsidies and affirmative action. Bad housing policies, such as rent control and zoning ordinances, hurt minorities by limiting the stock of good housing, ultimately raising its cost. The public education system, usually shielded from competitive pressures in urban areas, has often failed minorities and the urban poor.

Unfortunately, calls to expand government support extend well beyond the optimal size and scope of the social safety net: free college education, subsidized home ownership, proportional representation in virtually any occupation, and “living wage” demands are very much a part of the economic justice narrative. Supporters of these policies among the poor, convinced that they are deserving, cannot be expected to understand the implications of Reynolds’ Law, named by The View From Alexandria blog after Instapundit‘s Glenn Reynolds:

“Subsidizing the markers of status doesn’t produce the character traits that result in that status; it undermines them.“

Higher education is not a birthright. It is for those who demonstrate sufficient learning skills, and it is often free to the most promising students. The value of education provides a powerful incentive to those possessing the “trait” of prescience. Homeownership is a choice that should follow from resources earned by hard work or from one’s long-term prospects. Representation in certain occupational categories, and higher pay, reflect “traits” (skills, effort and reliability) that must be developed or demonstrated. As Reynolds says, subsidies destroy incentives by creating the illusion of success, a thin simulacrum revealed by long-term dependency. Subsidies do not create self-sustaining success. They do not create the real thing. And the resources confiscated to pay for subsidies punish those those bearing the most positive traits.

Minority voters, especially African Americans, placed great hope in the Obama Administration to improve their economic success. Unfortunately, Obama favors the political route to minority material gains, not the economic route. The results have been dismal (and see this) in terms of poverty, dependency, labor force participation, wages, income, and wealth:

“On every leading economic issue, in the leading economic issues Black Americans have lost ground in every one of those leading categories. So in the last ten years it hasn’t been good for black folk. This is the president’s most loyal constituency that didn’t gain any ground in that period.“

The answer to promoting economic gains for minorities lies in encouraging market opportunities, freedom and the rule of law. This includes wage and price flexibility, labor rights, choice in schools, even-handed law enforcement and criminal justice, secure property rights, low taxes, and ending prohibitions that promote black markets and crime. The political route to success undermines the vibrancy of the economy, opportunities faced by minorities, and their ability to capitalize on them.

Proof of Concept: School Choice vs. Failing Publics

09 Monday Nov 2015

Posted by pnuetz in Education, School Choice

≈ 1 Comment

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Administrative Costs, CATO Institute, Don Boudreaux, Monopoly Schools, Monopsonist Unions, Rural Education, School Choice, Show-Me Institute, Specialization, Teachers Unions, The Netherlands

The evidence that school choice is associated with better educational outcomes has been mounting. Given the poor performance of so many public schools, it is time to reject the “sanctity” of their monopoly privilege. The link above emphasizes the promise of choice as a reform for public schools in the U.S. (as do several other links below from the Show-Me Institute and elsewhere).

It is implausible to suggest that the opportunities afforded by choice could make things worse than public-school outcomes. Poorly-served students and families have too much to gain from broadening their educational options and they know it. A recent survey of African-American parents of school children found that more than 75% of the respondents were interested “in obtaining a voucher to cover the cost of private or parochial school tuition for [their] children“. A majority agreed that:

“… I should be able to enroll my child in the school I think will give my child the best educational opportunity. If my choice is a private or parochial school then I should be allowed to use the same tax dollars allotted to every child in public school to cover the cost of their tuition.“

Choice should not be viewed as a threat to the public school system, although that is a familiar narrative issued by school-choice opponents. In fact, it will create new opportunities for public schools to excel, taking advantage of the benefits of specialization that are well-known in most walks of life. Choice and competition will either reform or weed-out the worst-performing schools and will encourage a rationalization of the administrative bloat so characteristic of public institutions. That’s all to the good, but by weakening schools’ market power, choice will change the relationships between public schools and families. Apparently that is threatening to vested interests, which underscores the importance of reform.

The Netherlands has had a system of school vouchers in place for almost 100 years, and research indicates that it has been highly successful:

“Specifically, access to private schooling has helped Dutch students. A 2013 study reveal[ed] strong positive effects for students using the voucher program to attend private schools. The effects were anywhere between 0.2 and 0.3 standard deviations, which would move a student at the mean of the standard bell curve of student performance up 10 or so percentile points (from a 50 to a 60).

Given these large effects, it shouldn’t be surprising that in a system where two thirds of the schools are private, we see strong academic performance. What’s more, according to the National Center on Education Statistics, Dutch schools spend on average $1,500 less per student per year than American schools do.“

A recent study from the CATO Institute demonstrated the long-run impacts of school choice on several types of outcomes. Little wonder that choice is described as a “Moral and Financial Imperative” (video). School choice is also an option for providing better educations to students in rural areas, despite the worn-out argument that distances make it impossible. Under today’s archaic structure, course offerings at many rural schools are necessarily limited, but new technology and choice programs can allow those schools to specialize and give their local students broader access to educational resources.

Teacher’s unions have been consistent opponents of school choice. They view choice as a threat to their members’ job security and their own ability to negotiate favorable contract terms. Perhaps, but the goal of improving educational outcomes cannot be subjugated to the goals of union monopsonists. When it comes to education, the schools should focus on serving children and their parents, and parents in failing schools want the kind of solution choice can offer.

Several months ago, a post here on Sacred Cow Chips discussed an entertaining question posed by Don Boudreaux: What if supermarkets were like public schools? To quote Boudreaux directly:

“In the face of calls for supermarket choice, supermarket-workers unions would use their significant resources for lobbying—in favor of public-supermarkets’ monopoly power and against any suggestion that market forces are appropriate for delivering something as essential as groceries.“

Parental control is a critical change needed in our schools. Schools should never be placed in a position exceeding the authority of parents over their children, even if public funds are involved. Teachers and administrators of public schools must learn to treat parents like customers. The only way to assure that kind of responsiveness is to give parents a choice.

Public Monopolists Say “Don’t Be Choosy”

12 Sunday Jul 2015

Posted by pnuetz in Markets, School Choice

≈ 3 Comments

Tags

Cafe Hayek, Don Boudreaux, K-12 education, monopoly, Politicized interests, Private education, Public education, Redistribution, Restraint of Trade, School Choice

Imagine a food distribution system that mirrored the organization of K-12 education in the U.S. How do you think it would work out? That thought exercise was conducted four years ago by Don Boudreaux in his Wall Street Journal op-ed: “If Supermarkets Were Like Public Schools”(gated). Boudreaux has helpfully reblogged this op-ed at Cafe Hayek as part of his post “Separate School From State“. Read the whole thing! Because this is a topic in economics and I am so very pedantic, I prefer not to use the term “market” at all in this context. After all, a public “supermarket”, as discussed by Boudreaux, is no more a market than a public school is a market. I will use the term “public grocery store” instead, except when quoting Boudreaux.

The comparison of grocery stores to schools involves outputs that are both considered essential. In fact, there should be no argument that food is the more essential of the two. Yet the essential nature of educating children in a modern society is thought to be an important rationale for the existence of a public school system. Would supporters of public education care to apply the argument that “market forces can’t supply quality education” to another essential product, like food?

Boudreaux invokes several features of K-12 education in “designing” his hypothetical food distribution system:

“Residents of each county would pay taxes on their properties.“
“Each family would be assigned to a particular supermarket according to its home address. And each family would get its weekly allotment of groceries—’for free’—from its neighborhood public supermarket.“
“No family would be permitted to get groceries from a public supermarket outside of its district.“
“... families would be free to shop at private supermarkets that charge directly for the groceries they offer. Private-supermarket families, however, would receive no reductions in their property taxes.“

Economic theory predicts that the monopoly status held by public grocery stores over the provision of “free food” within their districts would cause the quality and variety offered at those stores to suffer. This is just a form of restraining trade, which is what monopolists do. The classic monopolist charges a higher price and produces less output. Exactly the same is predicted in Boudreaux’s experiment.

One difference in comparing food stores to schools is that families, presumably, could purchase some of their groceries from private stores and meet the rest of their food needs from their district grocery store at no marginal cost, whereas the school selection is all public or all private. However, this does not invalidate Boudreaux’s assertion that the quality offered by the monopoly provider will suffer.

Like public schools, there would be massive variations in quality across public grocery stores due to variation in the tax base from one district to another. This would tend to reinforce differences in the value of property across districts, because it is so desirable to live in a district with a good public grocery.

Here’s an extended excerpt from Boudreaux:

That sounds all too familiar. Even with massive state redistribution of public grocery store funding from wealthy to poor districts, the result would be much the same, as it is with public schools. Increased grocery store funding cannot correct the larger problems plaguing the community, many of which are created by the welfare state itself. And increased funding does not correct fundamental dislocations created by a monopoly, especially a public monopoly. The entrenched, politicized interests that infest public institutions always resist changes that might improve quality. They are typified by bloated administrative machinery and a general lack of responsiveness to the community. Only competition and choice can eliminate these tendencies and drive improvement.

An objection that might be raised to Boudreaux’s comparison is that public schools must accommodate a student population with wide variations in learning ability. It may be claimed that this variation strains the resources of public relative to private schools. However, that burden is due in large part to the structure of the education system. A benefit of competition and choice is the extent to which it can accommodate diverse needs, and there is no reason why education should prove to be an exception. In fact, diverse needs are already met very well by private education, but they serve only “private school families.” Empowering all families to choose the schools that best accommodate their needs would bring higher quality to our K-12 education system.