Here’s A “Toxic Asset” for You…
The Obama administration seems obsessed with making American taxpayers eat toxic assets. And I’m not talking about bad paper, derivatives, or any other inscrutable financial stinkers. I’m talking about good ol’ American public schooling.
Truth be told, after listening to the president’s presser last night, even I started to think that the key to American economic success is “investing” in education. After all, once you’ve heard something for about the twentieth time, you start to believe it. I mean, that’s how propaganda works, right? But somehow my mind refused to give in, and it forced me to remember:
We’ve been “investing” in government schools for decades, and have been reaping nothing but AIG-like results!
I actually laid out the startlingly awful returns we’ve gotten for our education dollars in several blog entries last month, but thought I’d revisit the basic, revolting facts one more time. I want it to be absolutely clear that lavishing more money on education isn’t change, nor, given what we get for the money, could it possibly be the key to long-term economic success.
So what have we invested? Let’s start with total outlays for elementary through post-secondary education, taken from table 26 of the latest Digest of Education Statistics. In 1969 we spent a total of $347 billion in inflation-adjusted dollars. In 2007, we spent $981 billion, a 183 percent increase.
How about public k-12 spending on a per-pupil basis? Again using Digest data (table 181) – which understates total expenditures by excluding such things as “state administration expenditures” – we can see that we’ve been spending increasingly sizable amounts. After adjusting for inflation, in 1969 we spent $5,161 per child. By 2005, that number had more than doubled, hitting $11,643. And what has that “investment” yielded?
Other than massive bloat, bupkus! Looking at National Assessment of Educational Progress long-term trend scores for 17-year-olds – essentially, our schools’ final products – we see almost complete academic stagnation. In mathematics, the average scale score was 304 (out of 500) in 1973, and only a measly 3 points higher in 2004! That’s a one percent increase in math outcomes for a roughly 100 percent increase in funding! And that actually beats the “return” in reading, where 17-year-olds were at 285 in 1971 and, yup, 285 in 2004!
How about higher education? Here we don’t have very good outcome measures and it is difficult to break down overall per-pupil expenditures. What we do have, however, suggests another bad investment.
To get a feel for expenditures, we can examine the State Higher Education Executive Officers report (figure A) showing that total revenue collected per full-time-equivalent student at public institutions, adjusted for inflation, grew from $8,463 in 1983 to $11,037 in 2008, a 30 percent increase. We can also look at aid per student, most of which came through government. According to data from the College Board (table 3), in 1983 the average full-time-equivalent student received $3,769 in inflation-adjusted aid. In 2007 she got $10,392, a 176 percent increase.
What are the returns on these investments? Again, lots of bloat, but from what we can tell, relatively little of educational value. Graduation rates, for one thing, seem to be falling.
According to the Population Studies Center, within eight years of graduating high school, 51.1 percent of students in the high school class of 1972 had finished college degrees. In contrast, only 45.3 percent of 1992’s high school class had done the same. And grads seem to be getting less well educated; according to the National Assessment of Adult Literacy, between 1992 and 2003 literacy levels dropped for both Americans whose education maxed out at a bachelor’s degree and those with graduate degrees. Whether it was graduates’ ability to read prose, documents, or handle math, scores went down while costs went up.
So all told, what do we have to show for our education investment? Pretty much just empty bank accounts. And yet, some politicians just can’t seem to get enough of those toxic assets!
Awesome, Fearsome, Awesome – Or Maybe Silly
This video is making the rounds because Senator Jay Rockefeller (D-WV) muses in it that perhaps the Internet shouldn’t have been invented.
He immediately grants, “That’s a stupid thing to say” – perhaps for political reasons, or perhaps because he recognizes that the Internet makes us much better off despite every risk it carries and security flaw in it.
But he goes on to overstate cybersecurity risks excessively, breathlessly, and self-seriously. Not quite to the point of stupid – maybe we can call it “silly.”
The Department of Defense, he says, is “attacked” three million times a day. Well, yeah, but these “attacks” are mostly repetitious use of the same attack, mounted by “script kiddies” – unsophisticated know-nothings who get copies of others’ attacks and run them just to make trouble. The defense against this is to continually foreclose attacks and genres of attack as they develop, the way the human body develops antibodies to germs and viruses.
It’s important work, and it’s not always easy, but securing against attacks is an ongoing, stable practice in network management and a field of ongoing study in computer science. The attacks may continue to come, but it doesn’t really matter when the immunities and failsafes are in place and continuously being updated.
More important than this kind of threat inflation is the policy premise that the Internet should be treated as critical infrastructure because some important things happen on it.
Of cyber attack, Rockefeller says, “It’s an act . . . which can shut this country down. Shut down its electricity system, its banking system, shut down really anything we have to offer. It is an awesome problem.”
Umm, not really. Here’s Cato adjunct scholar Tim Lee, commenting on a report about the Estonian cyber attacks last year:
[S]ome mission-critical activities, including voting and banking, are carried out via the Internet in some places. But to the extent that that’s true, the lesson of the Estonian attacks isn’t that the Internet is “critical infrastructure” on par with electricity and water, but that it’s stupid to build “critical infrastructure” on top of the public Internet. There’s a reason that banks maintain dedicated infrastructure for financial transactions, that the power grid has a dedicated communications infrastructure, and that computer security experts are all but unanimous that Internet voting is a bad idea.
Tim has also noted that the Estonia attacks didn’t reach parliament, ministries, banks, and media – just their Web sites. Calm down, everyone.
But in the debate over raising the bridge or lowering the river, Rockefeller is choosing the policy that most enthuses and involves him: Get critical infrastructure onto the Internet and get the government into the cyber security business.
That’s a recipe for disaster. The right answer is to warn the operators of key infrastructure to keep critical functions off the Internet and let markets and tort law hold them responsible should they fail to maintain themselves operational.
I have written elsewhere about maintaining private responsibility for cyber security. My colleague Ben Friedman has written about who owns cyber security and more on the great cyber security freakout.
New Podcast: ‘A More Transparent Federal Government’
Online technology offers President Obama more opportunities to increase government transparency than any president before him, says Jerry Brito, creator of StimulusWatch.org and senior fellow at the Mercatus Center.
In today’s Cato Daily Podcast, Brito says that although Obama has taken positive steps toward increasing transparency, there are hurdles in place that are restricting open access to government data.
President Obama has been very clear about making sure that Americans know where every dollar goes…the problem though so far, is that we have a Web site called Recovery.gov, but there isn’t much there yet.
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