From Russia with Butter
Just in time for the Christmas baking season, Norwegians are facing an acute butter shortage. Last Friday, customs officials detained a Russian trying to smuggle 90 kilos of the creamy goodness into the country by car.
Wait. What?!? Isn’t Norway that rich Scandinavian country with all the oil ?
Yup, that’s the one.
Wow… This European debt crisis is already causing shortages of staples?
No, that’s not it.
Huh. I feel silly asking this, but are they at war with someone?
Not as far as we know.
Well what gives then?
The story linked above claims bad weather hurt crops and milk production while demand has risen due to a high fat fad diet.
Well why don’t they just, you know, import more?
That’s what Sweden’s doing—they’ve had similar weather and they’ve got the same diet fad, but their stores (and soon their arteries) are chocked full of butter. But the Norwegians couldn’t do that.
Why on earth not?
Norway has a butter monopolist called “Tine” that is deliberately protected from foreign competitors by government-imposed import tariffs.
Well, with all due respect: duh! We’ve only known the damaging effects of monopolies and protectionism for, like a couple of hundred years. You’d think the Norwegian people would have wised up and ditched them by now. Americans would never stand for that sort of thing.
Norwegians seem pretty angry right now, and it sounds as though they may do just that. But I wouldn’t be too smug about the United States. Turns out, it’s got its own $600 billion per year government protected monopoly that makes Tine look like small potatoes indeed. Here’s a hint:
Michelle Obama on Personal Responsibility and the Limits of Federal Programs
Yesterday the First Lady addressed high school students visiting Georgetown University for a day. Her message was to encourage students to strive for academic success and college degrees, but her answer to one question said a whole lot more. Here’s the question:
about the community, like, about this violence and teen pregnancy that’s going on…. What could you and your husband do to change or help out us young people? Because it’s like someone dying every day. Like, it’s just crazy.
Mrs. Obama answered at length, stressing the need for every individual to take responsibility for his own life and his own destiny, going so far as to add that
there’s all this stuff the President and Congress can do, but trust me, they can’t fix that. No matter what, they can’t get in your head and change that. You have to do that.
The First Lady is right that people must take responsibility for themselves, but what she seems not to realize is that government programs often stifle that kind of behavior. Responsibility is like a muscle: use it or lose it. The only way you learn how to behave responsibly is to actually have real responsibilities. Government has gotten in the way of that process in a host of ways, but nowhere so perniciously as in education. Today, the only educational responsibilities most parents have is to get their kids up in the morning and point them in the direction of the school or the school bus. They don’t decide where their kids go to school, who teaches them, or what they’ll be taught. The natural result—the inevitable result—is the atrophy of parental responsibility towards their children’s education and the horrendous cascade of social ills that flows from it.
Most of this is the fault of our state school monopolies that automatically assign children to schools based on where they live. But the federal government has exacerbated that problem by centralizing control over schooling even further. By abolishing their failed k-12 education programs alone, Congress would save the nation’s taxpayers roughly $70 billion annually. And by encouraging states to return power over education to parents instead of leaving it with bureaucrats, they would dramatically increase the exact kind of responsible behavior that Mrs. Obama knows is essential to solving so many of our social and economic problems.
Consider that the state of Florida has a program that cuts taxes on businesses that donate to non-profit k-12 scholarship funds. Those scholarship organizations subsidize private school tuition for low-income families. According to two separate studies, this program improves achievement in public schools, by virtue of the new competitive pressures it introduces, and it improves the achievement of the students who participate. And by requiring parents to make the difficult decisions as to where to send their children to school, and by requiring most parents to contribute at least a small co-payment, this program builds exactly the kind of responsibility and exactly the kind of social capital that Mrs. Obama so rightly yearns for.
Oh, and, by the way, it saves taxpayers $1.49 for every dollar it reduces state revenue, so it makes economic sense in the immediate term as well as in the long term.
But there’s a catch: This practical and proven solution does not seem to fit well with Mrs. Obama’s political ideology—or, more damagingly, with her husband’s. So instead of ending failed federal education programs and encouraging parental choice, power, and responsibility, the president will keep pursuing federal programs that even his own wife recognizes are doomed to fail.
But while it’s hard for a person to change his ideology, it’s easy for a country to change its president.
All You Have to Do Is Let Go of the Monopoly
I don’t have to prove my bona fides when it comes to opposing top-down, standards-based education reforms. I’ve been highly critical of the No Child Left Behind Act; very aggressive in attacking the reckless drive for national curriculum standards; and have repeatedly noted the importance of educator autonomy. So when you read the following, keep in mind that it is definitely not coming from a command-and-control aficionado: The weakest position in today’s big education war is the one opposed to both standards-based reforms and school choice. It’s the one enunciated yesterday by the Washington Post’ s Valerie Strauss, but which is most firmly staked out by historian Diane Ravitch. It’s the position that essentially boils down to “don’t touch my local, teacher-dominated monopoly!”
Why is this so weak? Because it gives parents and taxpayers — the people who pay for public education and whom the system is supposed to serve — the fewest avenues to get what they want out of the schools.
Outraged over your neighborhood school because it is dangerous, the staff apathetic, and the building crumbling? Too bad — you get what you’re given and can’t even appeal to a higher level of government. And as we’ve seen in far too many places where the residents aren’t rich enough to exercise choice by buying expensive homes in better districts — the District of Columbia, Compton, Detroit, etc. — Ravitch’s utopian vision of school districts as places where “people congregate and mobilize to solve local problems, where individuals learn to speak up and debate and engage in democratic give-and-take with their neighbors” is just so much gauzy rhapsodizing. Reality is much harsher.
Of course, there are gigantic, fatal flaws with the standards-and-accountability movement, and people like Ravitch and Strauss have very compelling reasons for concern.
The standards movement, for one thing, is completely reliant on standardized testing. Indeed, it is heading for a single, national test, despite well-established evidence that tests are highly constrained in what they can tell us about learning.
In addition, as Ravitch and others regularly lament, the standards movement seems to be dominated by present and former business leaders who have tended to treat education as just another uniform-widget production problem. But children are not uniform; they are individual human beings with widely varied interests, rates of maturity, educational starting points, and life goals. But that never seems to enter into the standards equation, rendering it wrong from the start. Add to this that standards-based reformers tend to treat the education system as a single entity to be engineered, rather than an industry in which schools are the firms and competition is essential for sustained innovation and improvement, and standards-based reforms are as hopeless as teacher-dominated mini monopolies.
Unfortunately, top-down standardizers seem unlikely to join the fold of the one reform that includes both necessary educator autonomy and powerful accountability to parents: educational freedom. Yes, they often like school choice as long as government dictates what chosen schools teach, but they don’t embrace real freedom. Perhaps, though, the Ravitches and Strausses of the world can be brought on board. They won’t be able to keep the local monopolies they cherish, but they’ll be able to get most of what they want: much less stultifying uniformity; considerably more freedom for teachers; and the flourishing of communities, though communities based on shared norms and values, not mere physical proximity.
The flimsiest position in our great education debate is the one held by opponents of both top-down accountability and educational freedom. But if they’ll remove the rose-tinted glasses through which they see local public schooling, there is an option that should appeal to them, one that injects essential parent power and competition into education while giving educators the professional autonomy they crave. It is school choice — educational freedom — and it is the reform that wins the great education debate.
Postmaster General Stepping Down
Postmaster General John Potter has announced that he is stepping down. The Washington Post speculates on the reason for Potter’s departure:
It is not immediately clear why Potter decided to step down, though USPS staffers and others in the postal community — a wide fraternity including the shipping industry, labor unions and large retailers — signaled recently that he was likely to go after another record year of financial losses and failing to earn greater management flexibilities from Congress.
When Potter testified before a Senate Appropriations subcommittee hearing in March on the USPS’s desire to drop Saturday delivery, I noted that his comments indicated the need to privatize the U.S. Postal Service.
In his testimony, Potter stated:
If the Postal Service were provided with the flexibilities used by businesses in the marketplace to streamline their operations and reduce costs, we would become a more efficient and effective organization. Such a change would also allow us to more quickly adapt to meet the evolving needs, demands, and activities of our customers, now and in the future.
Of course, Congress has shown virtually no interest in giving the USPS, which is bleeding red ink, the greater flexibility it needs. This makes me wonder if Potter will reach the same conclusion that his predecessor, William Henderson, reached following his departure from the USPS.
Three short months after Henderson stepped down as postmaster general in June 2001, he penned an op-ed in the Washington Post that called for the USPS to be privatized.
Henderson wrote:
But for all the ways in which the Postal Service already resembles a private company, it lacks the advantages of any other corporation, such as being able to turn on a dime when it comes to rate changes, perhaps raising prices at times of high demand and lowering prices to entice customers during traditionally slow times, which for the Postal Service means summer. Today, a price change requires the permission of the Postal Rate Commission — a yearlong process.
And unlike a private company, the Postal Service has a universal service obligation, meaning it must deliver everywhere, six days a week, at a regularly scheduled time, making the delivery even for a single piece of mail, which is not cost-effective. And it means delivering in the Grand Canyon and in rural Alaska and in high-risk neighborhoods and lots of other places where delivery is not cost-effective.
The trade-off is that the Postal Service gets monopoly protection; no private company is allowed to compete with it head to head by carrying letter mail or using the mailbox. It should give up that protection for the greater benefits of privatization.
Henderson’s conclusion still rings true almost ten years later:
I can’t believe that 25 years from now the Postal Service will still be owned by the federal government. But the point is that, as with any government asset, this one needs to be maximized. And that means we need to free ourselves from the usual discussion about controlling costs or keeping rates stable or mailing more, all of which is simply a form of denial about the real issue. The model itself is not going to work for the long haul: It must be changed.
Unfortunately, Congress is still in denial. In commenting on Potter’s departure, Sen. Susan Collins (R-ME) offered the vacuous statement that his successor “must strengthen the Postal Service by cutting costs, enticing more customers and putting this vital institution on a sound financial footing.” Instead, Sen. Collins and her colleagues need to recognize that the USPS model “is not going to work for the long haul” so long as politicians ultimately remain in charge.
Would the Schools Work Better If They Outlawed All Competitors?
In the Washington Post, columnist Courtland Milloy praises the “profound egalitarian insights” and “radical oneness” of D.C. Schools Chancellor Michelle Rhee (and billionaire Warren Buffett):
“I believe we can solve the problems of urban education in our lifetimes and actualize education’s power to reverse generational poverty,” Rhee wrote. “But I am learning that it is a radical concept to even suggest this. Warren Buffett [the billionaire investor] framed the problem for me once in a way that clarified how basic our most stubborn obstacles are. He said it would be easy to solve today’s problems in urban education. ‘Make private schools illegal,’ he said, ‘and assign every child to a public school by random lottery.’ “
Milloy’s not satisfied that Rhee is taking on entrenched interests, firing principals and teachers who aren’t doing a good job, and apparently actually improving the schools in the District of Columbia. No, he’s attracted to the “radical concept” of outlawing private schools and forcing everyone in the District into the same schools, with no hope of escape. There would be one method of escape, of course: moving to the suburbs. And you can bet that lots more people would do that if Milloy and Rhee got their way.
I wonder what a total government monopoly on education would look like. Are Buffett and Rhee right that a government monopoly forced on every citizen would work well? Would work so well that it would “solve the problems of urban education . . . and reverse generational poverty”?
Well, one answer might be glimpsed on the same page B3 where part of Milloy’s column appeared. In an adjacent column, columnist John Kelly discussed his “Kafkaesque” five-hour visit to the state of Maryland’s Motor Vehicle Administration:
I was at the MVA. I was in Hell.
I know that complaining about the MVA or the DMV is the last refuge of a scoundrel columnist, but I don’t care. You don’t know what it was like. You weren’t there, man. I spent five hours at the Beltsville MVA on Thursday. Five hours. I could have driven to New York in that time….
I thought: Can this really be happening? Can I really have stepped into a Kafka story? Shouldn’t every counter be filled with employees working as fast as possible? Shouldn’t management be out there helping, and Maryland state troopers, too? This is the Katrina of waiting, people.
The MVA, of course, is a monopoly government bureaucracy. Everyone must go there — CEOs, diplomats, even Washington Post columnists. And yet, somehow, that has not led to the MVA equivalent of solving problems and reversing poverty. Five hours to get a drivers’ license just might be worse performance than that of the public schools.
It’s the system, Mr. Milloy and Ms. Rhee. Monopolies don’t have much incentive to improve. Give everyone the chance to go to a different supplier, and then you’ll see improvement. Giant Food wouldn’t last long if it took five hours to buy your groceries — because it has competitors. But as long as the schools are a near-monopoly, and the MVA or DMV is a total monopoly, don’t expect real improvement.
Moody’s Caves In to Political Pressure on Municipal Bonds
Moody’s has announced that it will change its methods for rating debt issued by state and local governments. Politicians have argued that its current ratings ignore the historically low default rate of municipal bonds, resulting in higher interest rates being paid on muni debt, or so argue the politicians.
First this argument ignores that the market determines the cost of borrowing, not the rating. And while ratings are considered by market participants, one can easily find similarly rated bonds that trade at different yields.
Second, while ratings should give some weight to historical performance, far more weight should be given to expected future performance. Regardless of how say California-issued debt has performed in the past, does anyone doubt that California, or many other municipalities, are in fiscal straights right now?
Last and not least, politicians have no business telling rating agencies how to handle different types of investments. We’ve been down this road before with Fannie Mae and Freddie Mac. During drafting of GSE reform bills in the past, politicians put constant pressure on the rating agencies to maintain Fannie and Freddie’s AAA status.
The gaming over muni ratings illustrates all the more why we need to end the rating agencies govt created monopoly. As long as govt has imposed a system protecting the rating agencies from market pressures, those agencies will bend to the will of politicians in order to protect that status. As Fannie and Freddie have demonstrated, it ends up being the taxpayers and the investors who ultimately pay for this political meddling.
A Severe Irony Deficiency
Tomorrow night at 8:00pm, Fox Business News will air a John Stossel special on the failures of state-run schooling and the merits of parental choice and competition in education. I make an appearance, as do Jeanne Allen and James Tooley.
News of the show is already making the rounds, and over at DemocraticUnderground.com, one poster is very upset about it, writing:
When will these TRAITORS stop trying to ruin this country?
HOW can AMERICANS be AGAINST public education?
Stossel is throwing out every right-wing argument possible in his namby pamby singsong way while he “interviews” a “panel” of people (who I suspect are plants) saying things like preschool is a waste of money and why invest in an already-failing system….
I hate Stossel and I hate all of those who think the way he does.
This poster goes by the screen name “Live Love Laugh.” I guess there wasn’t enough space to tack “Hate” onto the end.
What this poster–and many good people on the American left–have yet to grasp is that critics of state monopoly schooling are NOT against public education. On the contrary, it is our commitment to the ideals of public education that compels us to pursue them by the most effective means possible, and to abandon the system that has proven itself, over many many generations, incapable of fulfilling them. I wrote about this crucial point more than a decade ago in Education Week, in a piece titled: “Are Public Schools Hazardous to Public Education.”
Fortunately, a small but steadily growing number of American liberals have already grasped this pivotal difference between means and ends, as the growing Democratic support for Florida’s school choice tax credit program evinces. Giving all families, particularly low income families, an easier choice between state-run and independent schools is the best way to advance the ideals of public education.
Government Mail Loses $3.8 Billion
The U.S. Postal Service reported that it lost $3.8 billion last fiscal year and that it expects to lose $7.8 billion this year. The loss occurred despite cost-cutting measures and legislation that allowed the USPS to forgo $4 billion in required payments to pre-fund retiree health benefits.
From the Associated Press:
The post office has been struggling to cope with a decline in mail volume caused by the shift to the Internet as well as the recession that resulted in a drop in advertising and other mail. Total mail volume was 177.1 billion pieces, compared to 202.7 billion pieces in 2008, a decline of almost 13 percent. For the fiscal year that ended Sept. 30 the agency had income of $68.1 billion, $6.8 billion less than in 2008. Expenditures were down $5.9 billion to $71.8 billion.
The recession and the rise in electronic communications are generating huge financial problems for the lumbering government monopoly. Despite its efforts to reduce headcount, the USPS remains overburdened by a costly and heavily unionized workforce. As I noted previously:
The average USPS worker earns $83,000 per year in compensation, which is considerably more than the average U.S. worker. And the Government Accountability Office recently noted that ‘compensation and benefits constitute close to 80 percent of USPS’s costs — a percentage that has remained similar over the years despite major advances in technology and the automation of postal operations.’
Radical reform is needed, but I suspect that Congress will just paper over the problems for now and also continue allowing the agency to defer funding its retirement obligations:
The post office is required to make an annual contribution of about $5 billion to pay in advance for medical benefits for future retirees. Congress reduced that by $4 billion for 2009, but that change was for one year only. The agency’s independent auditor, Ernst & Young, questioned whether the post office would have enough money to make the next payment on Sept. 30, 2010, when $5.5 billion will be due.
This will just kick the can down the road. It shows that even when Congress gets something right — as it did with making the USPS pre-fund its retiree health benefits — it lacks the will to see it through when the going gets tough. Meanwhile, the Europeans continue to make progress toward deregulating their national postal services and allowing for competition. Unfortunately, it seems that Congress only looks to Europe for guidance on expanding the welfare state.
Just Say “No” to Competition
The Democrats who still control the Virginia State Senate (which wasn’t on the ballot this week) say they want to work with the new Republican governor.
“I won’t be like the House Republicans were, where anything they propose is bad,” said Senate Majority Leader Richard L. Saslaw (D-Fairfax), who like many Democrats says the GOP-led House obstructed the agenda of Gov. Timothy M. Kaine (D). “If there are areas where we can work things out, I’m ready, willing and able, and so is my caucus.”
But not so fast:
But asked about certain key pieces of McDonnell’s agenda, Saslaw demurred. Selling state-run liquor stores to raise money for transportation, for instance, would sacrifice the annual revenue the stores provide to schools and other purposes, Saslaw said. The Senate’s education committee remains opposed to changing state laws to allow more charter schools, another McDonnell proposal, he said.
No to bipartisan cooperation, no to competition, yes to hoary monopolies. Is that really the rock on which the Democrats want to make their stand as the country’s “implicit libertarian synthesis” yields a “libertarian moment”?
NAEP Math Scores, NCLB, and the Federal Government
I’m surprised anyone was surprised by the recent flat-lining of scores on the NAEP 4th grade math test. The rate of improvement in NAEP scores has been declining since No Child Left Behind was passed, and the recent results are consistent with that trend.
But what really amazes me is that so many people think the solution is just to tweak NCLB! The unstated assumption here is that federal policy is a key determinant of educational achievement. That’s rubbish.
We’ve spent $1.8 trillion on hundreds of different federal education programs since 1965, and guess what: at the end of high school, test scores are flat in both reading and math since 1970, and have actually declined slightly in science. (Charted for your viewing pleasure here).
If we’ve proved anything in the past 40 years, it is that federal involvement in education is a staggering waste of money.
Meanwhile, education economists have spent the last several decades finding out what actually does work in education. They’ve compared different kinds of school systems and it turns out that parent-driven, competitive education markets consistently outperform state monopoly school systems like ours. I tabulated the results in a recent peer-reviewed paper and they favor education markets over monopolies by a margin of 15 to 1.
So policymakers who actually care about improving educational outcomes should be spending their time and resources enacting laws that will bring free and competitive education markets within reach of all families. And they should be ignoring the education technocrats who — like Soviet central planners — just want to keep spending other people’s money tweaking their fruitless five year plans.
Throwdown with Charles Murray
In a response to my post this morning, Charles Murray remains unconvinced that changes to our school system could result in dramatic improvements in educational outcomes.
He asks to see the scholarly study showing that a school has miraculously boosted achievement above the norm. In one way, this hurdle is too low, and in another it’s too high.
If we could only point to a single study of a single school, it wouldn’t instill much confidence in the generalizability of the phenomenon. A consistent pattern of scholarly results is necessary for that. On the other hand, asking for “miraculous” improvement is a needlessly high standard. My disagreement is with Murray’s earlier, lower threshold claim that: ”reforms of the schools can never do more than produce score improvements at the margin.”
Let’s call a marginal improvement an increase of less than .15 standard deviations above the current mean (typically considered a “small” effect in the social sciences). Taking that as our litmus test, is there a consistent pattern of scholarly evidence that better school system design can boost achievement by more than .15 standard deviations? Yes.
That pattern is presented in the figure above, drawn from my recent review of the global econometric literature comparing educational outcomes across different types of school systems. The figure relates the number of statistically significant findings favoring free education markets over state school monopolies (in white), significant findings of the reverse (in light grey), and insignificant findings (in dark grey). Markets beat monopolies by a ratio of 15 significant findings to 1, across the seven educational measures for which data are available.
Actually, Big Mistakes Are to Be Expected…
Cognitive scientist Dan Willingham has a helpful column on the WaPo‘s “Answer Sheet” blog. In it, he notes that DC Public Schools advises its employees to teach to students’ ”diverse learning styles” (e.g. “auditory learners,” “visual learners,” etc.) despite the fact that research shows these categories are pedagogically meaningless.
But what really grabbed my attention was this comment: “a misunderstanding of a pretty basic issue of cognition is a mistake that one does not expect from a major school system. It indicates that the people running the show at DCPS are getting bad advice about the science on which to base policy.”
As cognitive scientists have been collecting and analyzing evidence on “learning styles” for generations, social scientists and education historians been doing the same for school systems. What these latter groups find is that it is perfectly normal for public school districts to be unaware of or even indifferent to relevant research and to make major pedagogical errors as a result. Furthermore, there is no evidence that large districts are any better at avoiding these pitfalls than smaller ones. If anything, the reverse is true.
Not only are such errors to be expected of public school systems, we can actually say why that is the case with a good degree of confidence: public schooling lacks the freedoms and incentives that, in other fields, both allow and encourage institutions to acquire and effectively exploit expert knowledge.
Districts such as Washington DC can persist year after year with abysmal test scores, abysmal graduation rates, and astronomical costs. That is because they have a monopoly on a vast trove of government k-12 spending. In the free enterprise system, behavior like that usually results in the failure of a business and its disappearance from the marketplace. So, in the free enterprise sector, it is indeed rare to see large institutions behaving in such a dysfunctional manner, because it would be difficult if not impossible for them to grow that big in the first place. Long before they could scale up on that level, they would lose their customers to more efficient, higher quality competitors.
So if we want to see the adoption and effective implementation of the best research become the norm in education, we have to organize schooling the same way we organize other fields: as a parent-driven competitive marketplace.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
