There is some level of danger that pushes even the most stubborn government bureaucracies to start acting semi-rationally. Tyler Cowen has a brilliant new post that clearly demonstrates that the US has not reached that point. But things are much worse in the UK, due to a new variant of Covid-19 that spreads much more rapidly. As a result, the UK has switched to the “first dose first” approach, which is very likely to save lives.  And even if it doesn’t, the approach can be reversed at a far smaller cost than if the alternative view is correct. The UK is already beginning to make substantial progress in vaccinating old people, who are of course much more likely to die of Covid-19: Prime Minister Boris Johnson said 23% of all over-80s in England have now been given a dose of a Covid-19 vaccine, meaning some of the most vulnerable patients are getting the protection they need. Given the new variant of Covid, the British are engaged in a race against the clock. If the new variant becomes widespread in America before the vaccine is distributed, the entire country could end up being hit as hard as places like New Jersey, meaning several hundred thousand extra (unnecessary) deaths.  Let’s hope our public health authorities come to their senses before its too late. PS.  For those who like numbers, here’s the sort of decision we face: Likelihood of one dose first being the wrong approach:  Very low, say 10%.  Cost of adopting it if it is the wrong approach:  Relatively low, say a few thousand deaths. Likelihood of two doses first being the wrong approach:  Very high, say 90%.  Cost of adopting it if it is the wrong approach:  Relatively high, say tens or hundreds of thousands of deaths. You do the math. (1 COMMENTS)

Whenever I lecture on privatization, I bring up the following quote from Senator Phil Gramm: And last year, in the darkest hour of the health care debate, when it looked like Bill Clinton was about to convince America that it made sense to tear down the greatest health care system the world had ever known to rebuild it in the image of the post office… Gramm’s opponents angrily denied that Clinton planned to rebuild the health care system “in the image of the post office.”  For my purposes, however, it barely matters.  Because the question I want to ask Gramm’s supporters and his critics is: “If we all agree that the post office is a terrible business model, why don’t we postpone the health care debate and join forces to privatize the post office?!” Only recently, though, did I actually read Gramm’s full 1995 speech.  This is what a famous conservative politician used to sound like.  Overall, his rhetoric is far more libertarian than conservatives provide today, but Gramm’s still has a lot of explaining to do.   Which I now provide, line-by-line.  Gramm’s in blockquotes, I’m not. Twenty-seven years ago, I drove to College Station, Texas, in a used Mercury with a back seat full of books to start what would be a 13-year teaching career and a lifelong love affair with Texas A&M University. It was here that I met and courted and married my wife, Wendy Lee Gramm. It was here that my two sons were born. It was here that I came and asked you to send me to Congress. It was here that I came back and asked you to let me trade in that little shovel that I was working with in the House for a bigger shovel in the United States Senate. And I have come back today to ask you for a final promotion, and I’ve come to ask you for that promotion based on the work that I have done in the House, the work I have done in the Senate and my commitment to see the job through until it’s done. Very good, we know who you are. On Nov. 8, in the most decisive election since 1932, the American people said to their government, “Stop the taxing. Stop the spending. Stop the regulating.” And they will be stopped. But our job is not finished. We are one victory away from changing the course of American history. We’re one victory away from getting our money back and our freedom back and our country back, and that victory is a victory over Bill Clinton in 1996. Absurd hyperbole.  You’re obviously not going to abolish taxation, government spending, or regulation.  So what does “stop” mean?  Stop increasing them?  That contradicts your language of “getting our money and our freedom back.”  Ever heard the old adage, “under-promise, over-deliver”? With a love for America and a resolve to make her right again, I today declare myself a candidate for president of the United States. I’m running for president because I believe that if we don’t change the policy of our government, if we don’t change it soon, if we don’t change it dramatically, in 20 years we’re not going to be living in the same country that we grew up in. In 1950, the average American family with two little children sent one out of every 50 dollars it earned to Washington, D.C. Today that family is sending one out of every four dollars it earns to Washington, D.C. And if nothing changes soon, it’s going to be one in three. In 1950, the lowest tax federal income tax bracket was 17.4%.  Adding in Social Security taxes, I don’t see how this math can be right.  The truth is that we’ve been living in a statist country for a long time.  The New Deal began before Gramm was born, and has been going strong ever since. The odds that a boy born in America in 1974 will be murdered are higher than the odds were that a serviceman serving in World War II would be killed in combat. It’s hard to verify this precise comparison, but 2.5% of U.S. soldiers deployed in WWII died, and the 1994 murder rate was 9 per 100,000. Last year over half of the children born in our big cities were born out of wedlock, and if this trend continues as it is, illegitimacy will be the norm and not the exception in America. Fairly prophetic: The non-marital birth rate is now about 40% for the whole U.S. I think the frightening but inescapable conclusion of any honest look at where we are as a nation has got to lead us to believe that we’re either going to change the way we do our business or else we’re going to lose the American dream. There comes a time in the lives of families and businesses and even in the lives of great nations where you have to either face up to your problems or you’re overwhelmed by them. I believe now is such a time for America. As a nation, we face tough choices. But those choices are no tougher than the choices that are faced up to and dealt with by working families and by businesses every day in America. We have watched politicians for 30 years wring their hands about the budget deficit, but all we have to do to balance the federal budget is to freeze government spending at its current level and keep it there for three years. Things look a lot worse now! Now, I ask you, how many businesses represented here today have had to go through a tougher restructuring than that just to keep your doors open? How many families here today or families in your hometown have had to make tougher decisions than that when a job was lost or when a parent died? The difference is that families and businesses in America live in the real world. Our government has not lived in the real world for 40 years. Makes sense to me.  Austerity now! And if I become president, that’s going to change. We need a leader that has the courage to tell our people the truth. We need a leader who has the vision to define solutions to our problems, solutions that people can understand and can believe in. And we need a leader who is tough enough to get the job done. In the next 20 months, I hope to convince the American people that I am that leader. I want your vote, and I mean to earn it. But I know you’re tired of promises, and I’m not asking you to accept me on faith. I want you to hear me out. But before you decide, read my record. As a Democrat member of the House, I authored the Reagan program. That program cut government spending, cut taxes and ignited the longest peacetime expansion in American history, an expansion that created 20 million new jobs. That budget rebuilt defense and set in place the cornerstone of a policy of peace through strength that won the Cold War and tore down the Berlin Wall and liberated Eastern Europe and changed the world. Odd that Gramm doesn’t mention the Reagan deficits, widely seen as irresponsible at the time. Now, America and the people of my district were happy about that leadership, but Tip O’Neill and the Democrat bosses in the House hated it. So they took me off the Budget Committee. I felt the people of my district were being disenfranchised. But I’d been elected as a Democrat, and I felt if I simply changed parties and stayed in the Congress, something I had every right to do, that there might be some people who would feel betrayed. So against the best political advice, including the urging of my dear friend Lee Atwater, I resigned from the Congress, came back home and ran again as a Republican. No Republican had ever gotten more than a third of the vote in my district. But on Lincoln’s birthday, Feb. 12, 1983, I defeated 10 Democrats and I went back to Washington to finish the job. As a freshman senator, when nobody else wanted to face up to the deficit, Warren Rudman and I wrote the Gramm-Rudman law, which was the only effort in a generation to do something about the deficit. And until Congress repealed it in 1990, it did bring the deficit down and it did slow down the rate of growth in government spending. You’re plainly good at winning elections.  Yet even on your own account, you seem pretty bad at actually controlling spending or deficits. And last year, in the darkest hour of the health care debate, when it looked like Bill Clinton was about to convince America that it made sense to tear down the greatest health care system the world had ever known to rebuild it in the image of the post office; when pollsters were saying it was political suicide to take on the Clinton health care bill head-on, when 20 Republican senators had signed on to a big-government compromise that raised taxes, I stood up and said, “The Clinton health care bill is going to pass over my cold, dead political body.” I am happy today to say that my political body is alive, the president’s health care bill is deader than Elvis – and Elvis may be back but the president’s health care bill will not be back. Actually, something like Clintoncare passed 16 years later.  But I’ll still give you some credit for delaying the profligacy. To paraphrase an old country and western song, I was conservative before conservative was cool. As president, I will balance the federal budget the way you balance your family budget and the way you balance your business’ budget, and I will do it by setting priorities. And where no is the right answer, I will say no. Promising.  I like the language of “priorities.” I will look at every program of the federal government and I will submit it to one simple test. It is a test that by the end of this campaign every person in every city and town in America will know and understand, and I call it the Dickie Flatt test. I call it the Dickie Flatt test in honor of a printer from Mexia that you know because he introduced me here today. Many of you have met him and know him. Many of you have heard me speak about him. He works hard for a living. His print shop is open till 6 or 7 every week night, open till 5 on Saturday. And whether you see him at the PTA or the Boy Scouts or the Presbyterian Church, try as he may, he never quite gets that blue ink off the end of his fingers. I’m going to look at every program of the federal government and then I’m going to think about the millions of Dickie Flatts in this country, and I’m going to ask a simple question: Will the benefits to be derived by spending money on this program be worth taking the money away from Dickie Flatt to pay for it? And let me tell you something: There are not a hell of a lot of programs that’ll stand up to that test. This sounds too good to be true, so let me probe further.  Is Social Security worth taking the money away from Dickie Flatt?  How about Medicare?  Medicaid?  Higher ed?  Or the least useful half of the defense budget?  Can we at least means-test every transfer program in the name of Dickie Flatt? It’s time for America to choose. Are we going to stay on this 30-year spending spree and squander the future of our country, or are we going to change policy and save the American dream? If I am elected president, I will make balancing the federal budget my No. 1 priority and I will not run for re-election unless I get the job done. I want to cut government spending, I want to cut taxes, and I want to let families spend more of their own money on their own children, on their own businesses, on their own future. The debate is not about how much money is going to be spent on education or housing or nutrition. The debate is about who ought to do the spending. Bill Clinton and the Democrats want the government to do the spending. I want the family to do the spending. I know the government and I know the family and I know the difference, and so do you. Again, this sounds too good to be true.  You state principles that imply near-zero government spending, but your only concrete promise is to balance the budget.  To paraphrase a great movie that came out soon before your speech, balancing the government’s budget and “letting the family do the spending” aren’t in the same ballpark, the same league, or even the same sport. The family is the most powerful engine for progress and human happiness in the history of mankind, and if I become president, we will put the family first. Our welfare system robs poor families of self-respect. It displaces fathers. It makes mothers dependent. And I mean to change it. I want to ask the people – I want to ask the able-bodied men and women riding in the wagon on welfare to get out of the wagon and help the rest of us pull. We’ve got to stop giving people more and more money to have more and more children on welfare. And we will change the welfare system because it hurts the very people that it’s supposed to help, because it denies our fellow citizens access to the American dream. And because we love them, we’re going to help them get it back. Does “helping them get it back” pass the Dickie Flatt test?  Or is the “we” just private philanthropy?  Inquiring minds want to know. You know, Bill Clinton still takes the old “blame society first” for crime. But if social spending prevented crime, Washington, D.C., would be the safest spot on the planet. I want to stop building prisons like Holiday Inns. I want to make prisoners work. I want 10 years in prison without parole for possessing a firearm during the commission of a violent crime or a drug felony. I want 20 years for discharging it, and I want the death penalty for killing somebody. We don’t have to live in a country where we open up the newspaper every morning and read that a robber, or a rapist, or a murder who has been convicted five or six times is back out on the street and they killed another child. I know how to fix that. And if I have to string barbed wire on every closed military base in America, I’m going to put these people in jail and keep them there. I’m tempted to say you got your wish, but that’s not quite right.  When you gave this speech, the U.S. prison population had already roughly doubled over the preceding ten years.  After you gave this speech, the U.S. prison population rose another 60% or so.  But the system’s so chaotic that violent criminals often still serve light sentences, while non-violent offenders occasionally face life in prison. In taking the oath of office, I will swear to uphold, protect and defend the Constitution. Our Constitution guarantees equal justice under law. Wait, how is drug prohibition compatible with anything else you’ve told us?  It’s not in the Constitution, is it?  If we needed an amendment to federally ban alcohol, why don’t we need a parallel amendment to ban marijuana, cocaine, or heroin?  As president, wouldn’t your oath to uphold the Constitution require you to pardon every inmate serving time on drug offenses? And, as president, by executive order I will end quotas, preferences, and set-asides. I will fight for equal and unlimited opportunities for every American, but there will be special privilege for no one. Reagan had the legal power to do this, right?  Why didn’t he? The American dream – the American dream has always been the deeply held conviction that in America we have a land of opportunity, that in America hard work pays off, that in America you can do better than your parents did, and your children will have an opportunity to do better than you have done. My wife’s grandfather came to this country as an indentured laborer to work in the sugar cane fields in Hawaii. My wife’s father was the first Asian-American ever to be an officer of a sugar company in the history of Hawaii. And under President Reagan and President Bush, my wife served as chairman of the Commodity Futures Trading Commission, where she oversaw the trading of all commodities and commodity futures in America, including the same cane sugar that her grandfather came to this country to harvest long ago. That is what the American dream is all about. That’s America in action. And it’s not the story of an extraordinary family; it’s the story of an ordinary family in an extraordinary country. So what’s your stance on immigration?  I guess I should be glad that you’re staying silent rather than attacking it.  Reagan, in contrast, was vocally pro-immigration (though he didn’t do much to liberalize it). The United States of America cannot be a passive observer in world affairs. But we can’t be the world’s policeman either. For our children’s sake, and for the sake of humanity, we must be the leader of the world. And to be the leader of the world we must be strong. And that’s why I am committed to the principle that even in a world where the lion and the lamb are about to lie down together, I want America to always be the lion. As president, I will stop the defense cuts. I will provide the pay and benefits necessary to continue to recruit the finest young men and women who have ever worn the uniform of this country. And we will provide them with the finest training and the best equipment that Americans can build. “The finest”?  “The best”?  Sounds exorbitantly expensive.  Whatever happened to Dickie Flatt? As president, I will never send Americans into harm’s way unless our vital national interests are at stake, and unless our intervention can be decisive. And I will never send American troops into command under U.N. command. As a Texas senator, I have been called upon to console families of young men who have given their lives in the service of our country in Somalia and the Persian Gulf. And I want to promise you here today that I, as president, will never send your son or daughter anywhere in the world that I would not be willing to send my own sons. So were the actions in Somalia a matter of vital national interest?  The Persian Gulf?  Can we get a tentative ranking of vitality? In the postwar period we have been like a little rich kid in the middle of a slum with a cake. And everybody’s looked at this cake and they wanted a piece of it, and we’ve gone around cutting off pieces, handing it out. And people have hated us for it, because they wanted a bigger piece than we gave them. But what we have to share with a hungry world is not our cake, but the recipe that we use to bake that cake. That recipe is private property, free enterprise, and individual freedom. And in a Gramm administration we will keep the cake and share the recipe. Sounds great.  But again, too good to be true.  Does “sharing the recipe” include allowing foreigners to come here and get a job? Unlike the current occupant of the White House, I know who I am. And I know what I believe. And in this campaign I will speak in simple words that everyone will understand, because I want you to know how I feel in my heart. I appreciate the simple words.  Your true meaning, however, remains slippery.  You could reply, “If I spelled out my real intentions, no one would vote for me.”  Perhaps.  The alternative, I fear, is that you’re another power-hungry politician who deceives to gain power, not a conflicted politician who deceives for the greater freedom of your country. Neither of my parents graduated from high school, but my mother had a dream before I was born that I was going to college. I resisted. They kept trying to inoculate me with learning. I failed the third, seventh and ninth grade. But my mama prodded me every step of the way through college, to a Ph.D. in economics, because in the America that we grew up in, mothers’ dreams did not die easily. Too many mothers’ dreams are dying too easily in America today, and I want our America back. I want it back for those of us who have known it, and I want the American dream back for those who missed it the first time around. Including would-be immigrants?  Sounds great – and too good to be true. Almost 3,000 years ago, a prophet in Judea named Joel told his people, Your old men shall dream dreams, your young men shall see visions. America is not through dreaming. I want an America where families are limited only by the size of their dreams. I believe that America is worth fighting for, and with God’s help I believe that we can and will win this fight. Thank you, and God bless you, and God bless America. So on a scale of 0-10, how much has the last quarter century vindicated your belief that “we can and will win this fight”?  Well?   (0 COMMENTS)

This article by Wolfgang Streeck for the New Left Review will be disturbing to many. But it is an interesting article, and well worth reading. I would take issue with one claim Streeck makes: that the “supranational extension of the debt state” he rightly considers the Corona Recovery Fund to be, does not entail a change in European institutions toward more “solidarity”. These transfers are financed by issuing European debt, but the way in which member states will have to contribute to their repayment will make a difference. Perhaps Brussels would claim some more tax base for itself (a European tax, or similar?). Streeck has a few interesting points. He deems “imperial systems”, as he considers the European Union to be, to be dependent “on a successful management of peripheral by central elites. In the EU, peripheral elites must be staunchly ‘pro-European’, meaning in favor of the ‘ever closer union of the peoples of Europe’ as governed by Germany with France through the Brussels bureaucracy.” If they are not, they become worrisome and have to be punished one way or another, even by twisting the letter of extant treaties. Streeck is critical of the way in which the Polish and Hungarian governments are being “nudged” by Brussels to exhibit some more respect for the rule of law. He writes: Under the Treaties, member countries, all of them, including Hungary and Poland, remain sovereign, and their domestic institutions and policies, for example, family and immigration policies, are for their electorates to decide, not for Brussels or Berlin. When it comes to a country’s legal institutions, the only legitimate concern of the EU is whether EU funds are properly spent and accounted for. Here, however, Poland has an immaculate record, and Hungary seems still on or above the level of ‘pro-European’ Bulgaria and Romania, not to mention Malta. So what to do? In Brussels there is always a way. The Commission has for some time tried to punish Poland and Hungary under a different provision in the Treaties that forbids member countries interfering with the independence of their judiciary. But this is such a big bazooka that member states hesitate to let the Commission activate it. (It also raises uncomfortable questions on the political independence of, say, the French Conseil d’Etat.) Now, however, comes the Corona Fund, and with it the idea of a so-called ‘Rule-of-Law Mechanism’ (ROLM) attached to it, on the premise that if you don’t have an independent judiciary, including a liberal constitutional court, and perhaps also if you don’t admit refugees as a matter of human rights and in obedience to EU distribution quotas, there is no assurance that your accounting for your use of European money will be accurate. I am not a fan of either the Polish or the Hungarian government but I think this year has been terrible for the rule of law all through Europe. Due to the pandemic, constitutional rights have been dismissed, and very often the judiciary seemed silent or inert. Freedom of movement, a pillar of the European project we purportedly have to defend against populist rulers, was suspended everywhere. I am afraid this will constitute a precedent that will be hard to dismantle. Streeck suggests there is little concern with the rule of law in Brussels and more interest in power games. I hope he is wrong, but the point can hardly be dismissed as the ravings of a lunatic. (0 COMMENTS)

The Economist has an interesting article on Sadie Alexander, who in 1921 became the first African-American to earn a PhD in economics. Her politics were not easy to pin down in today’s terms, as she favored a mix of Keynesian demand-side stimulus and black self-improvement. Franklin Roosevelt attracted many black votes when he succeeded in boosting the economy after taking office in 1933. However, Alexander did not view his policies as an unmixed blessing: Some policies designed to relieve the Depression neglected black workers. New pensions and unemployment insurance introduced in 1935 left out both servants and farm labourers. “It is clear that in his years of planning for Social Security of the common man, Mr Roosevelt never had in mind the security of the American Negro,” she said. Other policies made things worse. Many blacks in the South could get only jobs that whites did not want at pay they would not accept. When the National Industrial Recovery Act lifted the wages and prestige of these jobs, blacks lost them. Roosevelt’s national recovery act, she thought, might as well be called the “Negro Reduction Act”. My research suggests that the NIRA set back the recovery by several years, after the dollar devaluation of early 1933 had temporarily boosted output sharply. FDR had two really bad ideas, the NIRA and his court packing proposal. It’s a testament to America’s checks and balances that the NIRA was thrown out by the Supreme Court in 1935 and his court packing proposal was rejected by an overwhelmingly Democratic Senate in 1937. On Wednesday, our system of government will have another opportunity to check a questionable power grab by the executive branch. (1 COMMENTS)

Regular EconLog reader KevinDC wrote me last week with some interesting content from Slate and his own insightful comments. He has given me permission to quote. Kevin writes: I came across a story in Slate I thought you might find interesting. The author describes how food delivery apps similar to UberEats or GrubHub work in Indonesia. From a certain naive point of view, these sorts of services could be seen as successful instance of an algorithmic, central planning model of food delivery. But the author points out that these systems can work due only to the ability of the drivers to bring their deep knowledge of specific local conditions, the quintessential Hayekian point about “particular circumstances of time and place.” From Rida Qadri, “Delivery Platform Algorithms Don’t Work Without Drivers’ Deep Local Knowledge,” Slate, December 28, 2020: To do their jobs, they must think every day about which routes have the most potholes and which traffic signals stay red the longest. Their mental maps of the city note what places have unfriendly security, where they might encounter violent traditional motorbike drivers, specific agreements they have to comply by [sic], friendly roadside restaurants that would let them rest. They must compensate for inaccurate geolocations caused by GPS signals blocked by nearby infrastructure. Much has been written about the frictionless technology of ride-hail platforms celebrated by customers and technologists alike…Yet their elegance is powered by and relies on the human mediations of the drivers on the street. It is the local markets they claim to replace that have often furnished drivers with the knowledge of local physical and social constraints. Kevin then points out that this caused him to recall “a similar observation by James C. Scott about how apparently successful planning depends on the ability of people to ignore the plans and regulations, and follow their own evolved rules instead.” Scott wrote: Workers have seized on the inadequacy of the rules to explain how things are actually run and have exploited it to their advantage. Thus, the taxi drivers of Paris have, when they were frustrated with the municipal authorities over fees or new regulations, resorted to what is known as a grave de zele. They would all, by agreement and on cue, suddenly begin to follow all the regulations in the code routier, and, as intended, this would bring traffic in Paris to a grinding halt. Knowing that traffic circulated in Paris only by a practiced and judicious disregard of many regulations, they could, merely by following the rules meticulously, bring it to a standstill. The English language version of this procedure is often known as a ‘work-to-rule’ strike. In an extended work-to-rule strike against the Caterpillar Corporation, workers reverted to following the inefficient procedures specified by engineers, knowing that it would cost the company valuable time and quality, rather than continuing the more expeditious practices they had long ago devised on the job. The actual work process in any office, on any construction site, or on any factory floor cannot be adequately explained by the rules, however elaborate, governing it; the work gets done only because of the effective informal understandings and improvisations outside those rules. I (this is David R. Henderson speaking) remember when I first heard, in my teens, about a work-to-rule strike and thought “What’s the problem? Isn’t everybody supposed to be working by the rules?” It might not surprise you to learn that I grew up in a family run by a man (my father) who was a high-school principal. Someone, probably my mother, who, OMG, was so much looser with rules, explained to me why such a strike would be effective. Back to Kevin. He writes: These (and other examples) are bringing into focus something that I’ve noticed for a long time but never articulated. “Planning” is most able to appear successful in places where people are most free to ignore or work outside the plan. Delivery drivers aren’t successfully allocated by algorithms crunching all the “relevant data” – the drivers use their own local knowledge, unaccounted for by planners, to determine what the most efficient allocation of driving resources will be. A de jure “well regulated” taxi industry can appear to work efficiently, but only to the extent that the taxi drivers are de facto free to ignore regulations and act instead by their own evolved order. In countries that were dedicated to the idea of “planned economies,” life was most tolerable in the places where the local authorities tacitly approved (or at least tolerated) the existence of black markets operating in parallel to allocate resources outside the dictates of the planners. The less effectual planning is, the more successful planning appears. This is even true (in my experience) of what appears one of the most “command and control” organizations you can think of – the US Military. (I was in the Marine Corps for nine years.) On the one hand, there are the official rules, regulations, general orders, and standard operating procedures written up by people sitting behind desks and printed up in the official manuals. And on the ground, there is how stuff “really gets done,” which varies from unit to unit. (This phenomenon was made fun of in the Terminal Lance webcomic, where Marines fresh out of training are quickly advised to forget everything they were taught: https://terminallance.com/terminal-lance-character/itb/) There was also an informal understanding that “regulation thumpers” who insisted that everything be done “by the numbers” according to the official rules should never be allowed to be in charge of anything – because they were prone to substitute official rules for evolved unit level practices, and nothing would ever get done properly. Back to David R. Henderson: One of the funnest and most illuminating projects I gave my students for the last 15 years I taught was to discuss I situation they had confronted in the military and say acting according to local knowledge worked (or didn’t work) or why centralized decisions didn’t work (or worked.) We all agreed that a lieutenant should not start a nuclear war, but there were some really good examples far below that level of importance where local knowledge worked well (and some where it worked badly.) I’ve sometimes thought to collect these in a book. (0 COMMENTS)

Suppose someone accuses me of being a pickpocket.  I respond, “I have picked no pockets, therefore I am not a pickpocket.”  My accuser could naturally retort, “Oh yes you are, I have video evidence of you picking pockets on three separate occasions.” Imagine, though, if my accuser instead declared, “There’s a lot of pickpocketing in the world.  You’ve personally done nothing to stop it.  That makes you a pickpocket!” I submit that this is an absurd and unjust position.  You lead with a baseless accusation.  Then instead of apologizing, you use Orwellian re-definition to label virtually the entire human race as “pickpockets.”  In the end, you’ve divided humanity into a teaspoon of noble anti-pickpocketing crusaders, and an ocean of vile pickpockets.  The vast majority of whom have never picked a pocket in their lives. This is exactly how I view most modern accusations of “racism” and sexism.”  Imagine the anger a typical white male would provoke these days by announcing, “I am utterly blameless for whatever racism and sexism exists in our society.”  Indeed, many people would take this very sentence as “proof” of the announcer’s racism and sexism. To so react, however, is absurd and unjust.  You don’t have to crusade against pickpocketing to avoid being a pickpocket, you don’t have to crusade against racism to avoid being a racist, and you don’t have to crusade against sexism to avoid being a sexist.  Just keep your own hands clean.  What could be more obvious? Doesn’t this view lead to self-satisfied complacency?  As soon as you ask that question, you are in the vicinity of the Noble Lie.  “Telling innocent people they’re guilty is more motivating than telling innocent people they’re innocent.  So should we falsely condemn people to spur them to action.”  In the words of Nietzsche, “Whoever fights monsters should see to it that in the process he does not become a monster.” Nietzsche aside, it’s far from clear that preaching near-universal guilt spurs people to action.  Consider this alternative appeal: “Sure, you’re an innocent bystander. But wouldn’t you rather be a hero?”  Maybe, just maybe, you can motivate people to do good without slandering them first. P.S. Don’t worry, I won’t call you a slanderer for failing to join my crusade against slander. (2 COMMENTS)

Why is business so good in politics? Why does it work so well for the industry itself but not for everyone else? Only by teasing apart the key rules and practices—the machinery of elections and legislating—that have been set and optimized by the duopoly over generations can we answer these questions and devise solutions to save our democracy. —Katherine Gehl and Michael Porter, The Politics Industry: How Political Innovation Can Break Partisan Gridlock and Save Our Democracy.1 Entrepreneur Katherine Gehl and business professor Michael Porter look at American politics as if it were a business case study. In The Politics Industry: How Political Innovation Can Break Partisan Gridlock and Save Our Democracy, they describe politics as a duopoly that is badly serving the ordinary citizens who ought to be its customers. They argue that we need to push for a new set of rules that would make the industry more competitive. In particular, they advocate open primaries with ranked-choice voting. In America, we have come to treat the two-party system as a sacred tradition, almost as if it were written into the Constitution itself. Gehl and Porter argue instead that the two-party system is a product of the rules for determining the outcome of elections. The two parties have joined forces to ensure that these rules stifle competition. The malfunctioning duopoly Many political theorists have supposed that competition between two parties would lead each party toward the center, in pursuit of the “median voter.” But in recent decades, the incentives have led in the other direction. “A political system is supposed to serve the public interest, so all citizens should be its customers. But. . .the duopoly prioritizes. . .party-primary voters, special interests, and donors” (36). In many Congressional districts, the primary is more important than the general election. In those districts, extreme partisan politics is rewarded and centrist politics is punished. This makes bipartisan legislation impossible, because a representative who votes for such legislation will be branded a traitor and voted out of office in the next primary. “Party-line legislation dominates partly because there simply aren’t enough moderates remaining who can bridge the gap between the extremes of the two sides” (75). Even on an issue where a bipartisan solution has broad support in the general public, the incentive of each side is to draw a line in the sand and refuse to compromise. On immigration, for example, the Senate passed an immigration reform bill with substantial backing from both Democrats and Republicans. Unfortunately, it died in the House when Republican Speaker Dennis Hastert invoked his Hastert Rule, refusing to hold a vote on the bill… out of fear that compromising would taint the Republicans’ ideological purity, disappoint their partisan and special-interest bases, and reduce their chances in the midterms (83). The Hastert Rule was a rule that the Speaker of the House would keep the House from voting on legislation that a majority of his party did not support, even though the overall House, including some members of his party, would have voted for the legislation. The Hastert Rule is an example of an arbitrary rule that works against compromise and centrism. Another example that Gehl and Porter cite is “sore loser” laws. These are laws that forbid a candidate who loses in a primary from running in a general election. Thus, if an extremist defeats a centrist in a primary, the centrist must refrain from running in the general election, even if he or she has a better chance of winning than the extremist. Gehl and Porter write that forty-four states have such laws. The Desired State Gehl and Porter spell out what they see as the desired state of Congressional politics. This would include these characteristics: —Effective solutions. These are centrist policies that deal with problems, not perfectly but effectively and with bipartisan support. —Action. Partisanship should not produce gridlock in the face of difficult issues. —Broad-based buy-in over time. This means that major legislation would have bipartisan support, rather than being rammed through by the party that happens to hold a majority. —A balance of short- and long-term needs. Too often, the only bipartisan legislation adds to fiscal deficits and unfunded liabilities. Final-Five Voting Gehl and Porter believe that one reform, if enacted in most jurisdictions, would promote centrism, helping to steer Congressional politics toward the desired state. They call this reform final-five voting. “Final-Five Voting consists of two parts—open, single-ballot, nonpartisan primaries, in which the top-five candidates qualify for the general elections. . .and ranked-choice voting in general elections” (127). Ranked-choice voting means that voters mark their choices in order of preference, one through five. Here is one possible algorithm for determining the winner in a general election with five candidates and ranked-choice voting. First, if a candidate obtains a majority of first-place votes, that candidate is the winner. Otherwise, take the 5th-place candidate off the ballot, and pretend that you held a run-off among the top four candidates, in which the second-choice votes of those who voted for the 5th-place candidate are allocated to the other four candidates. If one of those candidates now has a majority, that candidate is the winner. Otherwise, take the 4th-place candidate off the ballot and pretend that you held a run-off among the top three candidates, in which the votes of those who voted for the 4th and 5th place candidates are re-allocated to their top choices among the other three candidates. If one of those three candidates now has a majority, that candidate is the winner. Otherwise, take the 3rd-place candidate off the ballot and pretend that you held a run-off among the top two candidates, in which the votes of those who voted for the 3rd, 4th, and 5th place candidates are allocated to their top choices among the other two candidates. One of those two candidates will now have a majority and be declared the winner. Such a system would be more congenial to centrists. In a heavily Democratic district, the primary might result in two or more of the final-five candidates being on the left. In the general election, the more moderate of these candidates would have a better chance of winning than in a two-person Democratic primary. In a general election, the moderate might get more first-place votes. Moreover, even if the extremist gets more votes in the general election, the extremist may not get enough to win the election, and the second-choice votes might swing the election to the moderate. Such a system also would be more congenial to independents and to third parties. Suppose that you live in a district in which a third-party candidate has little chance of coming in first. Today, the votes for that candidate are unlikely to count. If you really cannot stand one of the major-party candidates, you are afraid to “throw away” your vote, and so you vote for the other major-party candidate, to try to stop the one you really hate. With ranked-choice voting, if you vote for your third-party preference, you are helping to keep the candidate you hate from winning a majority. And in the pretend run-off, your vote will go to the major-party candidate that you hate less. “Today’s system artificially depresses the votes of third-party candidates relative to the number of voters who prefer them.” Today’s system artificially depresses the votes of third-party candidates relative to the number of voters who prefer them. With ranked-choice voting, third-party candidates would get more votes, and they would be more likely to score breakthroughs and win elections. If final-five voting worked as intended, it would provide today’s Congressional races with more effective competition from centrists, third parties, and independents. Gehl and Porter argue that this in turn would give Congress the incentive to adopt procedural reforms that would make legislative activity more constructive and effective. For more on these topics, see “Is Big Government an Abilene Paradox?” by Arnold Kling. Library of Economics and Liberty, August 3, 2015. See also the EconTalk podcast episode Michael Munger on Choosing in Groups. What could go wrong? I worry that final-five voting could produce third parties with veto powers. For example, suppose that there emerged an anti-abortion party that can command 15 percent of the vote. It is likely that no major-party candidate could win election without support of the second-choice votes of this party. So each candidate might commit to banning abortion, even though a majority of voters do not wish to ban abortion. Or you might see a third party committed to banning charter schools, with a similar effect. In short, a well-organized, intense minority might be empowered in final-five voting. Whatever the risks are with its adoption, final-five voting should not be compared with some political nirvana. Instead, it ought to be evaluated relative to the current situation, and from that perspective it seems like a promising reform. Footnotes [1] Katherine M. Gehl and Michael E. Porter, The Politics Industry: How Political Innovation Can Break Partisan Gridlock and Save our Democracy. Harvard Business Review Press, 2020. *Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012. Read more of what Arnold Kling’s been reading. For more book reviews and articles by Arnold Kling, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

A review of How to Educate an American: The Conservative Vision for Tomorrow’s Schools, edited by Michael J. Petrilli and Chester E. Finn.1 Readers who are interested in the future of public education will want to read How to Educate an American: The Conservative Vision for Tomorrow’s Schools edited by Michael J. Petrilli and Chester E. Finn. Solid and informed, the book explains the context of education reforms today and proposes a future path that many conservatives will support. For people who favor free markets, the most fundamental education reform over the past 30 years has been school choice. That’s the case for me (and for many of the contributors to this book). I spent much of my career working in Milwaukee, Wisconsin, the city that became the pioneer of school choice reforms. I served as a founding board member and longtime president of a Milwaukee all black charter school that specialized in teaching business, economics, and personal finance. I also served on the board of School Choice Wisconsin, which provided much of the policy impetus for the school voucher program that began in Milwaukee in 1990. The Debate on Free Markets in Education Many people who support a vibrant free market in education with a limited role for government regret the demise of private education that has taken place over the past one hundred years. Many would prefer an education market made up of all private schools paid for by parents, family, friends, foundations, and charities. Parents would clearly be in the driver’s seat when it comes to where, what, and how their children learn. That said, we should remember that Adam Smith wrote favorably about a role for government in education. He said: Though the common people cannot, in any civilized society, be so instructed as people of some rank and fortune, the most essential parts of education, however, to read, write, and account, can be acquired at so early a period of life that the greater part even of those who are to be bred to the lowest occupations have time to acquire them before they can be employed in those occupations. For a very small expense the public can facilitate, can encourage, and can even impose upon almost the whole body of the people the necessity of acquiring those most essential parts of education.2 Without doubt, Smith would be appalled at the high spending and dismal results in many of today’s public schools. Smith imagined public support for education to be a “very small expense.” It was impossible for him to imagine the expense and bureaucracy of today’s big urban school districts. Petrilli and Finn are not writing about an education system that was or might have been. They are clearly focused on how things look today in public schools. It’s not pretty. Their book offers an opportunity to learn about new policy arenas and new “takes” on familiar ones. The first theme is a call for a re-emphasis on moral education, civic education, and history. The second is a focus on diminishing the glorification of college for all and developing school-based and community-based opportunities for young people connecting them to educational opportunities offering dignity and earned success. The third is a consideration of how low income and minority students struggle in public schools due to teaching approaches that fail to meet their needs, the breakdown of the family, and chaos in classrooms. The final theme is the limitations of school choice reforms for improving education in small towns, rural communities, and among forgotten youth. Petrilli and Finn note that national education reform is no longer a priority. To some extent, this may be the result of past successes. For example, school choice reforms are much more widespread than they were 30 years ago. Many reforms were hashed out in a bipartisan manner. Obviously, such bipartisanship is dead. Petrilli and Finn insist that, while school choice initiatives represent impressive gains, much remains to be done. They note that conservatives have sometimes: … circumscribed their own truth-seeking behind a wall labeled ‘school choice’ and have withdrawn their own children into schools that suit them without paying great heed to the education of others or the broader needs of the country we all inhabit. (5) Part I History, Civics and Citizenship The opening two essays by Jonah Goldberg and Eliot A. Cohen note how our schools have failed to provide citizens who know civics. Goldberg cites dismal statistics regarding ignorance of American history and the Constitution. This ignorance is consequential. It helps to explain why today’s younger citizens hold favorable views of socialism and support bans on “hateful speech.” How did this happen? First, there has been an unrelenting effort by the progressive left to reject America’s past and American exceptionalism. Second, Joseph Schumpeter argues that capitalism tends to “burn though” the social capital needed to sustain itself. He writes: The founders, Adam Smith, and public choice theorists alike all understood that the danger to a healthy republic lay in factions using the government to impose a singular vision from above on the diverse moral ecosystem of a continental nation. (15) Third, there is widespread support of politically correct ideas among today’s young people and an accompanying inability to confront opposing views. Finally, the professoriate has a general hostility towards conservative views. Eliot A. Cohen comments on the demise of works of patriotic history. He draws a distinction between modern critical historical writing and patriotic history. Critical history tries to explain what happened. Patriotic history explains what happened but is also written to inspire. He argues that “patriotic history is a kind of glue for an extraordinarily diverse republic” (27). Robert P. George drills down on “groupthink” in higher education. Adam Meyerson and Adam Kissel revisit several of the points made by the first three writers. They decry the state of civics education. Their primary contribution is a description of the many opportunities for private philanthropy to address the civics education desert. Part II Character, Purpose, and Striving Peter Wehner begins Part II with a review of the history of character education in America beginning with the New England Primer. He observes that moral instruction was a central purpose of education through most of our history. The turning point came in the twentieth century with the values clarification movement. Wehner explains: At the heart of values clarification was the belief that morality was subjective rather than objective, that neutrality on moral questions was the teacher’s proper stance, and that the goal of education was not to instill traditional values but to help students clarify their own values and create their own value system. (67) Wehner notes that it is impossible to teach or learn when students are rude, undisciplined, and in charge. He stresses that self-discipline is a “basic virtue but not a natural one. It needs to be taught” (69). He urges action but no specifics. William Damon makes the case for purpose in our lives. He states, “The human species is built in a way that requires purpose for optimal functioning” (75). American schools are failing to encourage the development of purpose among students. Damon places much of the blame on twenty-five years of federal policies that narrowed the curriculum to reading and math. He argues that the “most glaring failure” of schools today has been their failure to produce purposeful, patriotic citizens. Heather Mac Donald writes with the courage of knowing she is right despite the fact that nearly the whole education establishment vehemently opposes what she says. She begins by reviewing the increase in juvenile crime in Chicago and New Orleans. Much of it is very violent. She blames the lack of arrests or other sanctions. Public school leaders would be well served to pay attention to what Mac Donald is saying. In my experience, one of the dominant reasons that parents abandon traditional public schools in favor of charter or voucher schools is that they are seeking a safe environment for their children. Michael Barone provides readers with a brief history of education for gifted students, much of it from a personal perspective. He makes that case that parents and philanthropists are doing a pretty good job serving gifted students assisted by the expansion of school choice alternatives. Rod Paige points to stagnant test scores in reading and math based on statistics from the National Assessment of Educational Progress. He reviews some education reforms that occurred after the publication of A Nation at Risk. He suggests that what has been overlooked is an emphasis on the quality and quantity of the energy that students put into the learning process—student effort. Arthur Brooks and Nathan Thompson conclude Part II by shedding light on a different problem—the demise of dignity. They cite a study showing that “three-quarters of the population either doesn’t feel needed or useful in the work they do, or perceives that they are not valued by the nation’s decisionmakers or institutions” (121). They assert that large segments of society have been left out of the system of earned success. The common policies discussed to address this issue tend to be college for all or universal basic income. Brooks and Thompson reject both as deeply flawed because they do nothing to elevate human dignity. Instead, they propose three reforms. The first is to widen the K-12 curriculum to recognize subjects beyond math and reading, stressing subject mastery over grades. The second is to create local business and school connections so that students can graduate from high school with an industry-recognized associate degree or some other credential. Graduates of such programs would make an immediate and important contribution to themselves and their communities. Finally, they argue that now is time to get over the “glorification” of higher education. Part III Schools, Families, and Society Naomi Schaefer Riley observes that the biggest successes in education over the past few decades are the result of expanded school choice. Conservatives need to create new approaches to address the “toughest case kids” by which she largely means young people in foster care and preventive services. She explains that these youth have no consistent adult presence in their lives. Public education has a role to play in serving these students. School choice alone is not sufficient. Nicholas Eberstadt focuses on the retreat from the world of work by men of working age. He calls for improving K-12 education, vocational education, and the redesign of disabilities programs. Ramesh Ponnuru suggests that we need to rethink the mission of high school. We need to challenge the idea that a college education is prerequisite for individual and national success. We need new pathways for people who do not go to college that lead to earning a good living and making contributions to society. We need to liberalize occupational licensing. He supports apprentices and similar programs. He even supports personal finance education. Kay S. Hymowitz explains a cultural contradiction in American education. Middle class children are often raised in a home that stresses individual choices, recognition, and achievement. Such children are the “perfect customers” for the creative, child centered, constructivist, “guide on the side” classroom so preferred by progressives. But, she notes, when low-income students arrive in such classrooms, they are “entering a foreign country.” She uses this contradiction to explain endless curriculum battles and why charter schools with highly structured classrooms are often so successful. Mona Charen writes about the importance of sharing with young people the advice, built on the research of Isabel Sawhill and Ron Haskins. 1. Finish high school. 2. Get a full-time job. 3. Wait until age 21 to get married and have children. This is called the success sequence. Researchers found that 97% of Millennials who followed all three steps are in the middle class or above by the time they reach young adulthood. Charen argues that the success sequence should not be kept a secret from families and youth. Ian Rowe addresses the limitations of education reform. Family structure, as shown by the percentage of children being raised in single-parent families, seems to be a major explanation for why education outcomes in many locations are so bleak. But current statistical reports make it nearly impossible to study the connections between education outcomes and family structure. Why is that? Part IV Renewing the Conservative Agenda Yuval Levin provides insights into the divisiveness of the education wars by explaining the differing world views of progressives and conservatives. He argues that for substantive and political reasons, public education has become too technocratic and too focused on reading and math. He calls on conservatives to press the case for a return to character formation, civics, and inculcating the best of our traditions. Bill Bennett presents an education agenda for conservatives. He gives examples of states that have made improvements including Massachusetts, Louisiana, and Florida. Bennett’s agenda includes rigorous state standards in all core subjects, rich content, a review of teacher education (to improve teacher content knowledge), licensing, professional development, and accountability. Conclusion Petrilli and Finn return to launch a vigorous defense of school choice reforms but then explain that it is no cure-all. School choice alone cannot address the toughest case youth. School choice does not guarantee a content rich curriculum including character education, history, and civics. Large numbers of children will continue to attend traditional public schools, especially those in small towns and rural areas across the nation. What do conservatives have to offer them? They offer a three part call for action: 1. Refocus on preparing young people for informed citizenship. 2. Restore character, virtue, and morality to the head of the education table where they belong. 3. Build an education system that confers dignity, respect, and opportunity to every youngster. Three Takeaways My intention in providing the long preceding summary is to encourage readers to get the book to learn more. Congratulations to Petrilli and Finn for their heroic effort to try to refocus conservatives on reforms in public education. They have assembled an informative and articulate set of writers who offer readers stimulating ideas all in one volume. “It strikes me that the problems are well defined, but they are bigger than the policy solutions presented.” The book offers thoughtful and persuasive descriptions of problems that are usually accompanied by some sort of advice on how to address the issue. There’s the rub. It strikes me that the problems are well defined, but they are bigger than the policy solutions presented. We can’t restore character education, civics, and history through advocacy alone. What exactly should we do to encourage a return of the nuclear family? To be clear, some specific policy actions are offered, such as advice to follow the lead of states like Massachusetts, Louisiana, and Florida. But it seems to me that some of these problems are endemic to public schools in the way interest group effects are endemic to democratic nations. We should continue to pursue aggressive policies for all forms of school choice. Perhaps it will turn out that the charter school movement will find a way to address issues related to children in foster care or who are in preventative services. Perhaps the competition provided by charters, vouchers, and other forms of school choice will force public schools to change their curriculum, teaching practices, discipline, and to pay attention to parents. But one thing is missing that has serious policy implications for conservatives. We know that dominant instructional practices in today’s public schools with the emphasis on constructivist and discovery learning have failed in important ways. Several authors comment on this. Students’ scores in history and civics are appalling. For more on these topics, see the EconTalk episodes Sarah Carr on Charter Schools, Educational Reform, and Hope Against Hope, Robert Lerman on Apprenticeships, and Doug Lemov on Teaching. What if we knew about well-researched, content and vocabulary rich teaching practices—ones that have proved to be effective with low income and minority students—and what if leaders in traditional public schools ignored them? That is exactly the case we face today. Direct methods of instruction are not explicitly addressed by Petrilli, Finn, and their many colleagues. That is a big shortcoming. Direct instruction goes by a few different names including fully guided instruction and effective teaching. Direct instruction is the Rodney Dangerfield of education. It addresses many of the problems identified in the book, but it can’t get enough respect to be explicitly included. Two University of Oregon education professors, Siegfried Engelmann (deceased) and Douglas Carnine have done heroic work in developing Direct Instruction or DI. It features highly scripted and sequenced lessons in math and reading (and other subjects) with special emphasis on mastery learning. There are hundreds of published studies offering ample evidence of student success.3 Educational psychologists Richard E. Clark at the University of Southern California and Paul A. Kirschner at the Open University of the Netherlands and John Sweller, emeritus professor of education at the University of New South Wales, cite overwhelming evidence showing that constructivist teaching approaches are not nearly as effective as fully guided instruction.4 Equally ignored is the work of Barak Rosenshine (deceased) emeritus professor of educational psychology at the University of Illinois-Champaign. Rosenshine’s research illustrates how teachers who begin with a review, present new material in manageable amounts, demonstrate or model new material, provide much student practice, and present periodic review are much more effective than teachers who do not. 5 These are all “sage on the stage” approaches that empirically demolish calls for teachers to be the “guide on the side.” A discussion of the teaching approaches and related content needs to be on the table of the conservative agenda. Footnotes [1] Michael J. Petrilli and Chester E. Finn (eds). How to Educate an American: The Conservative Vision for Tomorrow’s Schools. Templeton Press, 2020. [2] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations. R.H. Campbell and A.S. Skinner: General Editors; W.B. Todd: Textual Editor (Indianapolis, Ind.: Liberty Fund, 1981 edition). Page 785. Also available online at: An Inquiry into the Nature and Causes of the Wealth of Nations, paragraph V.1.182. [3] Education Consumer Foundation. Direct Instruction: What the Research Says. Education (Consumer Foundation Arlington, VA, 2011). [4] Richard E. Clark, Paul A. Kirschner, and John Sweller. Putting Students on the Path to Learning: The Case for Fully Guided Instruction. American Education, Spring 2012 P 6 -11. [5] Barak Rosenshine. Principles of Instruction: Research-Based Strategies That All Teacher Should Know American Education Spring 2012, P 12-19, 39. *Dr. Mark C. Schug is President of Mark Schug Consulting Services and Professor Emeritus at the University of Wisconsin-Milwaukee. Dr. Schug taught for over 36 years at the middle school, high school, and university levels. Today, he works as a national consultant on economic and financial education and urban education policy. For more articles by Mark C. Schug, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Can online education be good education? If you ask most economists, you’ll probably get their favorite answer: it depends. To figure it out, they’ll tell you, you need to know whether the move to online has expanded or contracted the set of tools available to educators. Most economists probably think about education the way I used to think about education: as another kind of exchange between a producer and a consumer. We may be a bit vague about what’s being exchanged, but whatever it is we’re the producers. And like all producers we’re trying to solve a constrained optimization problem. If teaching online means that teachers have a restricted set of opportunities—if we have fewer tools in our toolbox—then it can’t be as good as more traditional options. If online education expands our choice set, it can’t hurt and may make us better. (Of course, there’s always the worry that more choices could confuse the problem and lead to worse outcomes, but let’s set that aside.) I’ve been teaching some of my classes online for over a year. Since the pandemic began my University, like most others, has been experimenting with a bewildering mix of new ways to teach. I have plenty of reservations about online/hybrid classes, but after having taught them I no longer think that the model of education as a production process is a good way to figure out whether it will make education better. I still think economics can help us understand the consequences of going online. I just think we need a different model. We shouldn’t think about education as a kind of bilateral exchange. Education is a complex multilateral social interaction. Whether it’s teaching your kid how to scramble eggs or teaching a PhD student nuances of Austrian economics, all education is an attempt by humans with different specialized skills to cooperate so as to achieve some mutually beneficial outcomes. In other words, education is an economic activity. But it’s not as simple as the model of bilateral exchange suggests. Start thinking along these lines and you’ll see that online education has the potential to inject something helpful into this complex social process. I’ll start by explaining what this is, and then I’ll give a few examples of how it might help. I’ll also consider why, if online education really can be a powerful force for good, it took a pandemic to expand its use. I’ll end on a guardedly pessimistic note, speculating on where and why this could all go wrong. The Hidden Superpower of Online Education Let’s begin—as we so often should—with first principles as described by Ronald Coase. In his classic paper, “The Nature of the Firm,”1 Coase emphasizes that enjoying the benefits of specialization requires coordination and control. This can happen with some sort of hierarchical system—“as department chair, I order you to teach the 8:00 am section of micro.” “Coordination also sometimes relies on markets generating meaningful price signals—“if you teach the 8:00 am section, we’ll pay you for the overload.” And coordination can also be facilitated by bonds of mutual respect and affection, usually found within a small, cohesive group—“my friend, Professor Dad, has to drop his kids off at 8:00 am and so I’ll take the early section”). Every productive institution from Fortune 500 corporations to messianic cults struggles to find the right mix of the three. Educational organizations are no different. The thing is, though, educational institutions tend to make less use of markets than most other institutions. For some sorts of education this makes sense. Five-year olds, for example, are strange, idiosyncratic creatures. A properly educated child must master a complex set of intellectual and social skills. Competitive markets might generate informative price signals about a few things (“Goldfish are cheaper than Pirate’s Booty and so let’s have that for a snack”). But it’s hard to imagine how many of the really important questions involving the allocation of resources could be directed by market prices. (“Dani had trouble with her best friend today. Would you like to pay for an extra 10 minutes in the Calming Corner?”) However, smaller communities of people with shared values might be very good at sorting through all of this. It’s no surprise that Grandparent’s Day at a kindergarten feels very different from a trip to Walmart. Other kinds of education, though, aren’t nearly as tricky and so might benefit from a greater reliance on markets. To appreciate how markets might help, consider the work of economist Robin Hogarth.2 In his view education prepares people to make better decisions under uncertainty.3 Hogarth’s model distinguishes between the learning environment and the target environment. In the learning environment educators provide resources and then confront students with various challenges. The student’s reaction to the challenges is correlated with a reward—score 70 or higher on the driver’s exam and you will get a license. The student moves from this setting to the target environment—aka, the real world—where the student must make appropriate choices. The higher the correlation between success in the learning environment and success in the target environment, the better the education. A learning environment is “kind” when it is possible to design lessons that, if mastered, are highly correlated with the correct choices. For example, in flight simulator training a pilot learns that if a particular warning goes off, it is imperative to decide on a very specific set of actions. If that warning goes off while on an actual flight, a good pilot will decide to follow the training, almost always leading to the best outcome4. In wicked learning environments it is especially difficult to devise lessons that correlate with the correct choices. This could be because the choices themselves are fraught with deep uncertainty—they’re what David Epstein and others have described as wicked problems. Or it could be because it is difficult to design lessons where success in the learning environment correlates with success in the target environment. For example, almost all business schools teach “business ethics”, but it’s not at all clear that this leads to more ethical choices. This could be because deep uncertainty makes understanding the ethical consequences of business decisions difficult. Or it could be that the correct ethical choices are obvious but earning an “A” in business ethics doesn’t correlate with doing the right thing. Especially in wicked learning environments, educators require nearly constant feedback. First, they need to understand the target environment they’re training for—if the goal is to make good decisions when doing business in China, then lessons in Mandarin are better than lessons in Latin. Second, educators need feedback about how closely success in the lesson environment correlates to success in the target environment—if the Mandarin listening quiz is read by a professional actor, it may not help on the streets of Beijing. The need for feedback is not unique to education. Any system of coordination—whether hierarchical, communal, or market directed—requires that information be shared among all the specialized agents involved. In both hierarchical and communal structures. This typically happens through direct, face-to-face interaction—the Department Chair schedules a faculty meeting, the parent notices that the kid never eats her peas, and so forth. But online learning exists because direct interactions are very expensive. If online education is to work at all, it must rely heavily on market signals. “If educators want to depend more on online education, they will have to pay more attention to market signals.” And that, I think, may be online education’s hidden superpower. If educators want to depend more on online education, they will have to pay more attention to market signals. Where More Reliance on Markets Will Help One obvious constituency affected by the move online are those who use education as a signal. This includes graduate schools recruiting students and, most importantly, future employers5. It’s worth asking, then, whether online education can be an alternate means of signaling, perhaps even freeing scarce resources to serve other ends. I don’t see why not. Remember, employers and graduate schools use academic achievement as a signal of some unmeasurable characteristics, usually a particular sort of intelligence and self-discipline. The signal works for two reasons. First, the signal is correlated with those characteristics. Second, it is less expensive for people who possess those characteristics to send the signal than it is for people who lack those attributes. A law school, for example, needs students capable of abstract verbal reasoning. Someone who has or can learn those skills will have a much easier time earning, say, a degree in philosophy from Notre Dame than would someone whose talents lie elsewhere. Educators who love their subjects are loath to admit this, but in many cases the signal is valuable, independent of the value of the education. Understanding Thomas Aquinas doesn’t help understand antitrust law but a demonstrated ability to read Summa Theologica may signal the ability to critically evaluate US v Von’s Grocery. But generating such signals can be terribly expensive—a philosophy degree from Notre Dame comes with a price tag of over $200,000. Could success in at least some online Coursera-like philosophy courses designed by Notre Dame’s best faculty provide as useful a signal? I have no idea. Neither, I suspect, does the faculty of Notre Dame. But students who want to generate a valuable signal and law schools who want to identify the best students have every incentive to find out. Online education is a market place generating information about what kinds of signals work best. A second area where more market based direction might make things better is in education intended to influence values. This notion of values education seems to have become conflated with indoctrination, a pejorative word that implies coercion. But we’re social animals. We need certain values in order to get along. We’re also self-aware, reasoning animals. This means we can shape our own values. Education has always been part of this process of socialization and personal transformation. Religious education of children is intended to instill spiritual values, so many parents seek religious education for their kids. Education in the arts is intended to shape aesthetic values, so many people seek arts education as a means of reshaping their values to have a richer artistic experience. But who decides what values to teach? Here I can only reveal my own view, a view shaped by a strong bias towards individualism. I think that individuals have the self-knowledge to help them understand what values will best contribute to their own flourishing.6 It may not be simple and many mistakes will be made, but I think I’m in the best position to choose the values taught to my kid. I think I’m in the best position to seek educational experiences that will reshape my values. I think you are too. Given this starting point, you can see why I am a big fan of relying more on markets in education. Market decisions are individual decisions. The information that comes from markets is information about what individuals want. If the move online coincides with a greater reliance on markets, values education may better reflect the desires of individuals to select the kinds of values they wish to explore and perhaps embrace. Recently the California State University system implemented a requirement that all students complete at least one course in “ethnic and social justice studies.” Can there be any doubt that the courses are intended to change student’s values? Many of the courses will be taught by proponents of “critical race theory” and a few will be taught by self-described Marxists.7 When my young daughter goes to college, I’d probably encourage her to take one of those courses. I might have benefited from one of those courses when I was in college. But the decision to add that requirement was made by a hierarchical university system that depends on feedback from the California political system. The decision may, by happy coincidence, be the kind of values education that the targeted students and their sponsors want, but without market feedback, how certain can we be of that? And it does no good here to respond—as I’m sure many educators will—that the requirement is necessary because students don’t know what they need to know. Of course, it’s true that students need expert educators to help design their curriculum. That’s no different than saying sick people need experts to design their treatments. But medical experts and patients largely agree on the goal of the treatments—doctors don’t need an elaborate feedback mechanism to know that the patient wants to feel better. That’s not true about values. Different people will seek to move their lives in different directions. Some students may wish to become more sensitive to the plight of minorities. Other students may wish to become more sensitive to the differences between rap and hip-hop. Many students may say that they don’t quite know in what direction they want to be steered, but they trust a particular group of expert educators to help them figure that out. My contention, though, is that educators should respect individual autonomy in setting the curriculum for values education. Relying exclusively on hierarchical structures responsive to political calculations just can’t do that as well as markets. Why Did We Wait for a Pandemic? If, as I’ve argued here, greater reliance on market forces can make education better, then why did it take a pandemic and the forced march online to move us in that direction? If there are $100 bills on the sidewalk, why hasn’t someone picked them up? I think the answer is both obvious and unpleasant to discuss. Creating a hierarchy necessarily creates powerful incentives to resist change. Coase teaches us that to understand economic institutions we should pay close attention to transaction costs. But we should also remember that one person’s cost is another person’s income. The administrators, faculty, and politicians who advanced the Cal State mandate for social justice education don’t work for free. Their income and status derive from having the power to control curriculum. Allowing more market direction threatens that sinecure and so they will—as all of us are wont to do—defend their turf. In summary then, I think that for a very long time educational institutions have made too little use of markets and prices to help direct resources to their highest and best use. The pandemic has forced schools to make greater use of online learning and to rely more on markets. Online classes can only get better as we gain experience. But even if some online classes never overcome their inherent constraints, the movement to online can be a force for good. What Could Possibly Go Wrong? I worry most about whether the educational establishment is ready—either temperamentally or institutionally—to more fully participate in a market based system. Consider what happened in the aftermath of the collapse of the former Soviet Union. I don’t mean to suggest a direct analogy—the typical university is not nearly as inefficient and corrupt as the Communist USSR. But the former Soviet Union and the modern western university have one thing in common: the absence of clear and transferable property rights. And without clear property rights, markets are prone to all sorts of failures. For more on these topics, see the EconTalk episodes David Epstein on Mastery, Specialization, and Range, Emily Oster on the Pandemic, and Michael Munger on the Future of Higher Education. Successful educational institutions have a valuable set of tangible and intangible assets. But these assets are not “owned” in any meaningful economic sense. Most importantly there are very limited pecuniary incentives to preserve the reputational capital that is usually the most important portion of an institution’s value. If the owners of a private business produce a shoddy product they may gain a short term profit, but by damaging the firm’s reputation they reduce the market value of their firm. If a university’s administrators roll out an inferior online program, they may earn short term revenues but may not personally suffer much of a long term loss. The President of my university seems like a good guy but he doesn’t plan on funding his retirement by selling his shares of the University’s stock.8 I wish he did. Even before the pandemic a number of small private colleges were in a weak financial position. Some of these schools will not survive.9 What’s been remarkable is that even the most celebrated universities—schools with multi-billion dollar endowments and ultra-selective admissions—feel deeply threatened. Nothing so concentrates the mind as the sight of the gallows. I don’t know if these schools will sacrifice the future for the present. But I know they have little pecuniary incentive not to do so. I don’t want to overstate the case for online education. I can imagine its possibilities to reshape education but having been on the frontlines I’ve also seen how bad it can be. The pandemic, though, is revealing new choices for education. Sure, we need to think about how to make our Zoom classes better. But more importantly we need to think about how this pandemic, for all its horrors, is giving us thousands of experiments that can help us reshape a sclerotic, inefficient system. Footnotes [1] Coase, Ronald H. (1937), “The Nature of the Firm,” Economica 4 (November): 386-405. [2] Hogarth, R. M. (2001). Educating intuition. Chicago, IL: The University of Chicago Press. [3] This view is best understood as describing practical, vocational education but in fact does not exclude any target environment. Modern popular music, for example, is a target environment characterized by a few brilliant compositions offered up next to the tedious and banal. A class in the history of pop culture can help the interested student make better choices about what pop stars deserve attention. [4] To say that the environment is kind does not mean the lessons are simple or the problem isn’t complex. It just means that a student who masters the lessons will usually make correct decisions. Chess students are trained to quickly recognize patterns. This is fiendishly complicated because of the enormous number of possible patterns, but Grand Masters who have mastered the skill dominate the chess board. [5] If you have any doubts about the importance of educational achievement as a signal, I can only recommend Bryan Caplan’s recent book The Case Against Education. [6] When I talk about “choosing” values I’m revealing the biases of a classically trained economist. For an introduction to the complexities of the problem check out the recent EconTalk podcasts with Agnes Callard on aspiration. [7] If I taught in the system, I’d propose a course based on readings from Thomas Sowell, Gary Becker, and Martin Luther King. And who knows, it might even be approved. [8] It would be helpful if the small army of academics who claim that business suffers from “short-termism” could acknowledge that incentives within their own institutions are much more likely produce the very result they disparage. [9] “Why The Coronavirus Will Kill 500-1,000 Colleges,” by Richard Vedder. Forbes, Apr. 7, 2020. * Michael L. Davis is a senior lecturer in business economics at the O’Neil Center for Global Markets and Freedom at Southern Methodist University’s Cox School of Business. For more articles by Michael L. Davis, see the Archive. (0 COMMENTS)

Author Matthew Crawford talks about his book Why We Drive with EconTalk host Russ Roberts. The conversation is about driving but also much more: how human beings interact with technology and what we gain and give up when we embrace technology driven by corporate profit-seeking. The post Matthew Crawford on Why We Drive appeared first on Econlib.