The U.S. trade deficit rose in January, according to this morning’s monthly trade report from the U.S. Commerce Department, and on cue the news is being greeted as a bad omen for the U.S. economy.

Reflecting the conventional wisdom, this morning’s Associated Press story states as a matter of fact, with no attribution:

A widening trade deficit hurts the U.S. economy. When imports outpace exports, more jobs go to foreign workers than to U.S. workers.

Oh really? As I’ve documented elsewhere, the U.S. economy actually grows faster during periods when the trade deficit is widening compared to when it is shrinking. That’s because an expanding economy increases demand for imports as well as domestically made goods. Stronger growth also attracts more foreign investment, which is the flip side of the trade deficit.

The same story is true for jobs. In Chapter 5 of my 2009 Cato book, Mad about Trade, I show how the unemployment rate invariably rises during periods when the trade deficit is “improving,” and declines during periods when the deficit is “worsening.” (Check out Table 2.2 on p. 81, courtesy of Google Books.)

Just think back to the 1990s. From 1992 to 2000, the trade deficit widened from 0.5 percent of GDP to 3.9 percent. During that same period, the unemployment rate fell from 7.3 percent to 3.9 percent and the economy added more than 18 million jobs.

More recently, the trade deficit narrowed sharply between 2007 and 2009 as a share of GDP, while the economy lost more than 8 million jobs and unemployment soared.

The conventional wisdom on trade deficits and the economy is due for a reality check. If politicians believe that “a widening trade deficit hurts the economy,” contrary to all the evidence, they will be more tempted to reach for the snake oil of protectionism.

Time for a Reality Check on the Trade Deficit is a post from Cato @ Liberty - Cato Institute Blog

While politicians probably support many policies for college students in part because they think the policies will be educationally or otherwise beneficial, vote buying is no doubt also important. Of course, it’s hard to find a politician who will actually cop to the latter. On this morning’s Today show, however, Democratic National Committee Chairman Tim Kaine came about as close to doing that as you could possibly hope for. 

Responding to interviewer Ann Curry’s observation that President Obama has aimed a lot of campaigning at college students lately, Kaine noted that young people voted for Obama in record numbers in 2008, and “the message to young voters is pretty simple… we’ve done the largest expansion of the student loan program in American history… we’ve done a health care reform that allows youngsters to stay on their family insurance policy until age 26, and we’ve done important credit card reform that has helped young voters. So we have their attention….” 

Translation: Kids, vote the right way, and keep that free stuff coming!

Yes, We Do Bribe Kids! is a post from Cato @ Liberty - Cato Institute Blog

Professor William Easterly, the economic development expert from New York University, has written an excellent comment for the Financial Times online. He writes, “The Millennium Development Goals [summit that wraps up in NY today] tragically misused the world’s goodwill to support failed official aid approaches to global poverty and gave virtually no support to proven approaches. … But current experience and history both speak loudly that the only real engine of growth out of poverty is private business, and there is no evidence that aid fuels such growth.”

At the Center for Global Liberty and Prosperity, we have continuously emphasized the power of trade to help the poor escape poverty. Unfortunately, politicians in rich countries find it easier to waste billions of taxpayers’ dollars in the form of foreign aid than to take on special interests that thrive on trade protectionism; hence European and American agricultural tariffs and subsidies.

However, the impact of rich countries’ protectionism should not be exaggerated. African countries are typically more protectionist than rich countries. In fact, they are more protectionist against one another than against rich countries. The sad truth is that poor countries are perfectly able to shoot themselves in the foot by following growth-killing economic policies – irrespective of what the rich countries do.

Foreign aid, incidentally, has been ineffective at promoting liberalization.

Trade Can Help the Poor Escape Poverty is a post from Cato @ Liberty - Cato Institute Blog

Despite every major US bank being declared by regulators as “well capitalized” prior to the financial crisis, we still found ourselves watching the government plow hundreds of billions of capital into said banks.  How can this be?  The answer is quite simple:  we were lied to.  Maybe that’s a little harsh, after all these banks did meet the regulatory definition of “well capitalized”.  But when push came to shove, market participants rightly ignored regulatory capital.  After all you cannot use things like “deferred tax losses” to pay your bills with.

It is hard to improve upon Martin Wolf’s observation in today’s Financial Times:  “This amount of equity is far below levels markets would impose if investors did not continue to expect governments to bail out creditors in a crisis.”  This point is best illustrated by the trend in bank capital over the last 100 years.  Back when banks were actually subject to market forces and were not explicitly subjected to government capital standards, they held significantly more capital.   In 1900 the average US bank capital ratio was close to 25%, now it’s closer to 5%.  The trend is unmistakable:  the more government has regulated bank capital, the less capital banks have ended up holding.

Despite the claims of the banking industry, what the bank regulators have just delivered with “Basel III” is simply another fraud upon the public and investors.  Any framework that continues to treat say Greek or Fannie Mae debt as largely risk-free is a sham.

The real solution is to first end the various government bailouts, guarantees and subsidies behind the banking system, subjecting bank creditors to actual losses, while also abandoning the charade that is capital regulation.   Sadly politicians (see the Dodd-Frank Act) and regulators continue to simply tweak a flawed and morally bankrupt system.

The Fraud From Basel is a post from Cato @ Liberty - Cato Institute Blog

Paul Waldie at Toronto’s Globe and Mail reports on the case of Mike Reilly, who (unsuccessfully so far) has sought to write off as tax expenses the costs of campaigning for local office in a suburb of Vancouver. Reilly told a tax court that there was nothing idealistic about his quest for government office: he wanted “to earn a good salary and promote his business,” raising the visibility of his development company. Lawyers for the Canada Revenue Agency insisted that Reilly wouldn’t have gone to the trouble of running unless he had cared about at least some public issues, but he disputed that:

“You know, I don’t recall being passionate about any issues other than seizing an opportunity to step in and develop a better profile for myself,” Mr. Reilly replied. “No. It was strictly business for me.”

The tax judge ruled against Reilly based on accounting issues but accepted his general contention that he “was not passionate about any issue except increasing his own profile and earning the salary of mayor,” noting that the candidate “did not listen to the citizens of Delta and did not appear to have much interest in their concerns.” If all politicians had to tell the truth, how many similar confessions might we hear?

“Either the Most Honest Politician in the World or the Most Opportunistic” is a post from Cato @ Liberty - Cato Institute Blog

Christopher Weaver of Kaiser Health News has an excellent article in today’s Washington Post on the various government agencies that will now be deciding what health insurance coverage you must purchase, and how many of those decisions will ultimately fall to lobbyists and politicians:

For years, an obscure federal task force sifted through medical literature on colonoscopies, prostate-cancer screening and fluoride treatments, ferreting out the best evidence for doctors to use in caring for their patients. But now its recommendations have financial implications, raising the stakes for patients, doctors and others in the health-care industry.

Under the new health-care overhaul law, health insurers will be required to pay fully for services that get an A or B recommendation from the U.S. Preventive Services Task Force…[which] puts the group in the cross hairs of lobbyists and disease advocates eager to see their top priorities — routine screening for Alzheimer’s disease, diabetes or HIV, for example — become covered services.

And it’s not just the USPSTF that will be deciding what coverage you must purchase:

[P]lans must also cover a set of standard vaccines recommended by the Advisory Committee on Immunization Practices, as well as screening practices for children that have been developed by the Health Resources and Services Administration in conjunction the American Academy of Pediatrics. Health plans will also be required to cover additional preventative care for women recommended under new guidelines that the Department of Health and Human Services is expected to issue by August 2011.

The chairman of the USPSTF says the task force will try “to stay true to the methods and the evidence… the science needs to come first.”  A noble sentiment, but as my colleague Peter Van Doren likes to say, “When politics and science conflict, politics wins.”  Witness how industry lobbyists have killed or neutered every single government agency that has ever dared to produce useful comparative-effectiveness research.  (You’re next, Patient-Centered Outcomes Research Institute!)

When government agencies are making non-scientific value judgments–e.g., are these studies reliable enough to merit an A or B recommendation? what should be the thresholds for an A or B recommendation? will the benefits of mandating this coverage outweigh the costs?–politics does even better.  Witness Sen. Barbara Mikulski (D-Md) overruling a USPSTF recommendation when she “inserted an amendment in the [new] health-care law to explicitly cover regular mammograms for women between 40 and 50. ”

Speaking of value judgments, the one flaw in Weaver’s article is that it inadvertently conveys a value judgment as if it were fact.  He writes that the mandate to purchase coverage for preventive services is “good news for patients” and that 88 million Americans “will benefit.”  Whether the mandate is good news for patients depends on whether patients value the added coverage more than the additional premiums they must pay.  (The administration estimates that premiums for affected consumers will rise an average of 1.5 percent.  One insurer puts the average cost at 3-4 percent of premiums.  Naturally, some consumers will face above-average costs.)  Whether the benefits outweigh the costs is ultimately a subjective determination. (The best way to find out, as it happens, is to let consumers make the decision themselves.)

Your Health Insurance, Designed by Lobbyists is a post from Cato @ Liberty - Cato Institute Blog

Michael Crowley, late of the New Republic and now with Time magazine, writes thoughtfully about Ron Paul, Rand Paul, and libertarianism. Crowley notes that Rand Paul, “more politically flexible than his father,” has plenty of unlibertarian positions. But both of them are tapping into a real strain in contemporary politics:

But he, like his father, also knows well that a genuine libertarian impulse is astir in America…. polls show an uptick in both social permissiveness and skepticism of government intervention….[Ron Paul] has already waited a long time — and it appears the country is moving his way.

This is a current trend, but it’s also deeply rooted in the American political culture. As David Kirby and I wrote in “The Libertarian Vote“:

It’s no surprise that many Americans hold libertarian attitudes since America is, after all, a country fundamentally shaped by libertarian values and attitudes. In their book It Didn’t Happen Here: Why Socialism Failed in the United States, Seymour Martin Lipset and Gary Marx write, “The American ideology, stemming from the [American] Revolution, can be subsumed in five words: antistatism, laissez-faire, individualism, populism, and egalitarianism.”… Richard Hofstadter wrote: “The fierceness of the political struggles in American history has often been misleading; for the range of vision embraced by the primary contestants in the major parties has always been bounded by the horizons of property and enterprise. However much at odds on specific issues, the major political traditions have shared a belief in the rights of property, the philosophy of economic individualism, the values of competition; they have accepted the economic virtues of capitalist culture.”… McClosky and Zaller sum up a key theme of the American ethos in classic libertarian language: “The principle here is that every person is free to act as he pleases, so long as his exercise of freedom does not violate the equal rights of others.”…

Some people recognize but bemoan our libertarian ethos. Professors Cass Sunstein and Stephen Holmes complain that libertarian ideas are “astonishingly widespread in American culture.”

Much political change in America occurs within those guiding principles. Even our radicals, Lipset and Marks note, have tended to be libertarian rather than collectivist. America is a “country of classical liberalism, antistatism, libertarianism, and loose class structure,” which helps to explain the failure of class-conscious politics in the United States. McClosky and Zaller argue that many of the changes of the 1960s involved “efforts to extend certain values of the traditionalethos to new groups and new contexts”—such as equal rights for women, blacks, and gays; anti-war and free speech protests; and the “do your own thing” ethosof the so-called counterculture, which may in fact have had more in common with the individualist American culture than was recognized at the time.

In a broadly libertarian country most voters and movements have agreed on the fundamentals of classical liberalism or libertarianism: free speech, religious freedom, equality before the law, private property, free markets, limited government, and individual rights. The broad acceptance of those values means that American liberals and conservatives are fighting within a libertarian consensus. We sometimes forget just how libertarian the American political culture is.

And of course American politics and policy deviate a great deal from those fundamental principles, which leaves libertarians feeling frustrated, even angry, and seeming extreme or radical to journalists and others. But as Conor Friedersdorf just wrote in Time‘s longtime rival, Newsweek, the media have a bias toward the status quo and establishment politicians, even when current policies and the proposals of elected officials are at least as extreme as libertarian ideas:

If returning to the gold standard is unthinkable, is it not just as extreme that President Obama claims an unchecked power to assassinate, without due process, any American living abroad whom he designates as an enemy combatant? Or that Joe Lieberman wants to strip Americans of their citizenship not when they are convicted of terrorist activities, but upon their being accused and designated as enemy combatants? In domestic politics, policy experts scoff at ethanol subsidies, the home-mortgage-interest tax deduction, and rent control, but the mainstream politicians who advocate those policies are treated as perfectly serious people.

And Fareed Zakaria, the editor of Newsweek International, made the point a dozen years ago in a review of Charles Murray’s book What It Means to Be a Libertarian (in the Public Interest, not online)

The reason that libertarians seem extreme and odd is not that they are a furious minority, angry at a world that seems to have passed them by, but rather the opposite. They are heirs to a tradition that has changed the world. Consider what classical liberalism stood for in the beginning of the nineteenth century. It was against the power of the church and for the power of the market; it was against the privileges of kings and aristocracies and for dignity of the middle class; it was against a society dominated by status and land and in favor of one based on markets and merit; it was opposed to religion and custom and in favor of science and secularism; it was for national self-determination and against empires; it was for freedom of speech and against censorship; it was for free trade and against mercantilism. Above all, it was for the rights of the individual and against the power of the church and the state….

The reason that libertarianism seems narrow and naive is that having won 80 percent of the struggles it has fought over the last two centuries, it is now forced to define itself wholly in terms of the last 20 percent. Extremism in the defense of liberty is no vice if you were in Prussia in the 1850s, but in America in the 1960s? Libertarianism has become extreme because the world has left it no recourse.

Now, I don’t feel furious, angry, or extreme. I think that libertarianism is the philosophy of the American revolution, the basic ideology of America, and indeed the foundation of Western civilization. The concept of personal and economic freedom — giving people more power to pursue happiness in their own way by restricting the size, scope, and power of government — is not extreme. Nor is it reactionary. In fact, it is the direction in which civilization has been heading, with many digressions and blind alleys, since the liberal revolution of the 17th century. I am a progressive. I believe that the simple, timeless principles of the American Revolution — individual liberty, limited government, and free markets – are even more powerful and more important in the world of instant communication, global markets, and unprecedented access to information than Jefferson or Madison could have imagined.  Libertarianism is not just a framework for utopia, it is the indispensable framework for the future.

Libertarianism Hits the Big Time is a post from Cato @ Liberty - Cato Institute Blog

Paul Krugman says libertarianism is not a serious political philosophy because politicians are corruptible, do stupid things, et cetera.  My colleagues Aaron Powell and David Boaz demonstrate why that’s a bigger problem for Krugman than for libertarians: Krugman’s statism wouldn’t make politicians any less ignorant or corruptible, it would just give those ignorant and corruptible politicians more power.

I made the same point to Krugman during a health care debate.  He complained that Republicans complain that government doesn’t work, and then they get elected and prove themselves correct.  (It’s a good line, but I think he stole it from P.J. O’Rourke.)  I responded, “Unless you have a plan to abolish Republicans, they’re part of your plan. Maybe we can put them in camps?”  Krugman seems impervious to the point.

The Mote in Paul Krugman’s Eye is a post from Cato @ Liberty - Cato Institute Blog

The draft national curricular standards released yesterday, as I wrote earlier, will in all likelihood do little or no educational good if adopted. They’ll either be ignored or, if hard to meet, dumbed-down.

That said, the really troubling question is not whether the standards will do any good, but whether they will do much harm.

The answer: Oh, they’ll do harm. They’ll move us one step closer to complete centralization of education, which portends many potentially bad things, from total special-interest domination to even more wasteful spending.

Perhaps the most concerning possibility is that complete centralization — meaning, federalization — will lead to nationwide conflict over what the schools should teach, much as we are seeing in Texas right now and witnessed in the 1990s, the last time Washington tried to push “voluntary” national standards. Back then national standards in several subjects were proposed, and a national firestorm was set off over what they did, and did not, contain.

The Common Core State Standards Initiative folks clearly learned from the nineties experience, assiduously avoiding even the appearance of mandating the reading of specific literary works and focusing instead on skills. (The draft standards include a lot of reading exemplars but don’t require knowledge of any specific literary pieces). As a result, the response so far seems much less heated than occurred in the nineties, though critiques of the proposed standards certainly do exist. Once control over language arts skills and mathematics is fully centralized, however, can we really expect specific content standards in literature and other subjects to be left entirely to states and districts?

It seems unlikely: Once Washington connects receipt of federal funding to performance on national standards for some subjects, it is very likely to expand into others. After all, aren’t science, history, and other topics as important as reading and math?

“Promoting” science is a huge favorite of federal politicians, so it’s certainly hard to imagine science — and the freighted questions about human origins and climate change that go with it — not becoming a target for nationalization. Similarly, since many public schooling advocates argue that we must have government schools to create good citizens, it’s hard to envision the controversy-laden subjects of history and civics not entering the sites of federal politicians.  And when they do, we can either expect the sparks to fly, or the standards that are set to be so milquetoast as to be meaningless.

Wait. Am I being overly alarmist about this, trying to start a trumped-up slippery-slope scare to undermine the current national standards push?

Nope. National standards supporters are already talking about targeting science and history. For instance, in the forward to International Lessons about National Standards, a recent report from the national-standards-loving Thomas B. Fordham Institute, it is written about the CCSSI:

Our authors would prefer for science to be included in this first round, and we’d like to get to history sooner rather than later.

And Fordham is not alone. Indeed, the CCSSI folks have already been talking about creating national science and social studies standards!

When should all kids learn evolution, if at all? How much Hispanic history should students know? How many Founding Fathers should high school grads be able to identify? What caused the Civil War? Is global warming a major threat? Are we a Christian nation? How these and numerous other bitterly contested questions will officially be answered will suddenly have to be duked out by every American, and the winners will get to dictate to the entire nation.

So the language arts and math standards revealed yesterday are, almost certainly, just the camel’s nose under the tent.  Unfortunately, that means the whole destructive beast isn’t far behind.

Slippery Standards Slope is a post from Cato @ Liberty - Cato Institute Blog

From my op-ed in The Daily Caller:

ObamaCare would dramatically expand government control over health care.

Each new power ObamaCare creates would be targeted by special interests looking for special favors, and held for ransom by politicians seeking a slice of the pie.

ObamaCare would guarantee that crucial decisions affecting your medical care would be made by the same people, through the same process that created the Cornhusker Kickback, for as far as the eye can see.

When ObamaCare supporters, like Kaiser Family Foundation president Drew Altman, claim that “voters are rejecting the process more than the substance” of the legislation, they’re missing the point.

When government grows, corruption grows.  When voters reject these corrupt side deals, they are rejecting the substance of ObamaCare.

If Obama is serious about fighting corruption, he should invite C-SPAN to into every meeting he holds with members of Congress.

Then we’ll see whether he’s lobbying House members based on the Senate bill’s merits, or promising House members judgeships or ambassadorships in exchange for their votes.

What’s going on behind those closed doors, anyway?  Aren’t you just a little bit curious?

Or does corruption only happen when Billy Tauzin is in the room?

Open All of Obama’s Health Care Meetings to C-SPAN is a post from Cato @ Liberty - Cato Institute Blog

1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.

2. As federal spending rises, it creates pressure to raise taxes now and in the future. Higher taxes reduce incentives for productive activities such as working, saving, investing, and starting businesses. Higher taxes also increase incentives to engage in unproductive activities such as tax avoidance.

3. Much federal spending is wasteful and many federal programs are mismanaged. Cost overruns, fraud and abuse, and other bureaucratic failures are endemic in many agencies. It’s true that failures also occur in the private sector, but they are weeded out by competition, bankruptcy, and other market forces. We need to similarly weed out government failures.

4. Federal programs often benefit special interest groups while harming the broader interests of the general public. How is that possible in a democracy? The answer is that logrolling or horse-trading in Congress allows programs to be enacted even though they are only favored by minorities of legislators and voters. One solution is to impose a legal or constitutional cap on the overall federal budget to force politicians to make spending trade-offs.

5. Many federal programs cause active damage to society, in addition to the damage caused by the higher taxes needed to fund them. Programs usually distort markets and they sometimes cause social and environmental damage. Some examples are housing subsidies that helped to cause the financial crises, welfare programs that have created dependency, and farm subsidies that have harmed the environment.

6. The expansion of the federal government in recent decades runs counter to the American tradition of federalism. Federal functions should be “few and defined” in James Madison’s words, with most government activities left to the states. The explosion in federal aid to the states since the 1960s has strangled diversity and innovation in state governments because aid has been accompanied by a mass of one-size-fits-all regulations.

For more, see DownsizingGovernment.org.

Six Reasons to Downsize the Federal Government is a post from Cato @ Liberty - Cato Institute Blog

Steve Poizner, the California insurance commissioner who is seeking the Republican nomination for governor, created a stir this week by charging opponent Meg Whitman’s campaign with attempting to coerce him out of the race. He said he had reported her campaign to state and federal law enforcement authorities.

What did Whitman actually do? Well, Poizner said that Whitman consultant Mike Murphy had contacted a Poizner staffer by phone and email to urge him to withdraw from the race. The email, released by Poizner, said: “I hate the idea of each of us spending $20 million beating on the other in the primary, only to have a badly damaged nominee. And we can spend $40 million tearing up Steve if we must; bad for him, bad for us, and a crazy waste to tear up a guy with great future statewide potential.” In the email, Murphy went on to suggest that if Poizner dropped out of the race before the June 8 vote, Whitman and her team would immediately get behind him for a 2012 challenge to Sen. Dianne Feinstein.

Poizner says that’s not only “strong-arm tactics” but possibly an illegal inducement to get him to withdraw. But isn’t this really just politics as usual? Don’t candidates as a matter of course say “support me this time, and I’ll support you next time” or “run for a different office and I’ll endorse you”? Presidential candidates, or their campaign managers, are often said to have promised the vice presidency to more than one rival to clear the field.

The point about spending $40 million of Republican money tearing up fellow Republicans is a pretty common complaint about party primaries. In fact, National Review correspondent John J. Miller raised just that concern about the Rick Perry-Kay Bailey Hutchison showdown in Texas.

Even during the Rod Blagojevich flap over “selling” a Senate seat, the always-provocative Jack Shafer and Jim Harper both asked, Isn’t this what politicians do? They make deals — including deals like “I’ll support your campaign if you’ll make my buddy (or me) a Cabinet secretary.” No doubt the promises are often worthless, but they still get made. Blagojevich and Murphy have reminded pols all over the country that such deals are better made in person, not via email or telephone.

Politics ain’t beanbag, Mr. Poizner. Accept the deal or reject it. But “let’s clear the field and spend our money fighting the other party” is pretty standard politics. And a darn sight better than another standard political practice, using the taxpayers’ money to bribe the voters to support you.

Criminalizing Politics is a post from Cato @ Liberty - Cato Institute Blog

• Gene Healy on today’s election in Massachusetts: “If Republican Scott Brown wins the Massachusetts special election Tuesday, the Bay State will have its first GOP senator since the era when disco was king. And Brown will have the much-derided Tea Party legions to thank.”

• Why opportunistic politicians need to stop using times of crisis for their own ends and let the next one go to waste.

• George W. Obama? “Bush’s successor—who actually taught constitutional law at the University of Chicago—is continuing much of the Bush-Cheney parallel government and, in some cases, is going much further in disregarding our laws and the international treaties we’ve signed.”

• Can Google beat China? Cato’s Timothy B. Lee tackles the question in The New York Times Online.

• Podcast: “Our America Initiative” featuring former New Mexico Governor Gary Johnson. Johnson discusses out of control government spending, immigration, the Bush years, the drug war, defense policy and more.

Tuesday Links is a post from Cato @ Liberty - Cato Institute Blog

Washington Post education columnist Jay Mathews has done it again: lifted my hopes up just to drop them right back down.

In November, you might recall, Mathews called for the elimination of the office of U.S. Secretary of Education. There just isn’t evidence that the Ed Sec has done much good, he wrote.

My reaction to that, of course: “Right on!”

Only sentences later, however, Mathews went on to declare that we should keep the U.S. Department of Education.

Huh?

Today, Mathews is calling for the eradication of something else that has done little demonstrable good — and has likely been a big loss – for American education: the No Child Left Behind Act. Mathews thinks that the law has run its course, and laments that under NCLB state tests — which are crucial to  standards-and-accountability-based reforms — “started soft and have gotten softer.”

The reason for this ever-squishier trend, of course, is that under NCLB states and schools are judged by test results, leading state politicians and educrats to do all they can to make good results as easy to get as possible. And no, that has not meant educating kids better — it’s meant making the tests easier to pass.

Unfortunately, despite again seeing its major failures, Mathews still can’t let go of federal education involvement. After calling for NCLB’s end, he declares that we instead need a national, federal test to judge how all states and schools are doing.

To his credit, Mathews does not propose that the feds write in-depth standards in multiple subjects, and he explicitly states that Washington should not be in the business of punishing or rewarding schools for test performance.

“Let’s let the states decide what do to with struggling schools,” he writes.

What’s especially important about this is that when there’s no money attached to test performance there’s little reason for teachers unions, administrators associations, and myriad other education interests to expend political capital gaming the tests, a major problem under NCLB.

But here’s the thing: While Mathews’ approach would do less harm than NCLB, it wouldn’t do much good. Mathews suggests that just having the feds “shame” states with bad national scores would force improvement, but we’ve seen public schools repeatedly shrug off massive ignominy since at least the 1983 publication of A Nation at Risk. As long as they keep getting their money, they couldn’t care much less.

So neither tough standards nor shaming have led to much improvement. Why?

As I’ve laid out before, it’s a simple matter of incentives.

With punitive accountability, the special interests that would be held to high standards have strong motivation — and usually the power — to demand dumbed-down tests, lowered minimum scores, or many other accountability dodges.  The result: Little or no improvement.

What if there are no serious ramifications?

Then the system gets its money no matter what and again there is little or no improvement.

It’s damned if you do, damned if you don’t!

So what are reformers to do? One thing: Take government — which will almost always be dominated by the people it employs — out of the accountability equation completely. Give parents control of education funds and make educators earn their pay by having to attract and satisfy customers.

Unfortunately, that still seems to be too great a leap for Jay Mathews. But one of these days, I’m certain, he’ll go all the way!

Neither Standards Nor Shame Can Do the Job is a post from Cato @ Liberty - Cato Institute Blog

Colbert King argues that DC should continue the opportunity scholarships private school choice program on its own dime, instead of complaining that Congress is killing it off. He starts off with a refreshing dose of realpolitik: “It should come as no surprise that Democratic congressional leaders are effectively killing the program. They, and their union allies, didn’t like it in the first place.” Too true. This is what disgusts many Americans about politics, but hey, that’s the reality.

But then he seems to descend into uncharacteristic naivete with this:

If the city likes vouchers so much, why shouldn’t the District bear the cost? The answer is as clear as it may be embarrassing to voucher proponents: D.C. lawmakers don’t want to ask their constituents to shoulder the program’s expense.

That is NOT the answer. DC lawmakers are familiar with DC’s budget. DC’s FY 2009 budget, as I show in this Excel spreadsheet file, allocated $28,170 per pupil for k-12 schooling. And the average voucher amount is not $7,500, as King claims. That’s the maximum. The average is $6,620 – one quarter of what the district is spending on k-12 schooling. So operating the voucher program entirely out of the District of Columbia’s own budget would not cost a dime. And if expanded, it would save DC tens of millions, if not hundreds of millions, of dollars.

So DC lawmakers are most certainly NOT afraid of asking constituents to pay for it — it would more than pay for itself. What DC lawmakers must be afraid of is that DC schools have become a massive jobs program instead of an educational program. They must fear that if the voucher program were expanded it would put many non-teaching staff out of work — including perhaps some of their own supporters.

Well how about a realpolitik solution to that problem: offer displaced workers 18 months of severance pay at something like 75% of their current salary. That would give them plenty of time to find other work, and it could be paid for from the savings of students migrating from public schools to the voucher program. This would mean that taxpayers would not see savings in the first couple of years, but after that the District would be able to offer taxpayers generous tax cuts while also offering kids significantly better learning opportunities.

Surely the details of such a deal could be hammered out by experienced politicians and negotiators. Because, really, the status quo is insane. Why keep paying $28,000 for a worse education than the voucher program is providing for $6,600? That is sheer madness.

DC Vouchers Solved? Generous Severance for Displaced Workers is a post from Cato @ Liberty - Cato Institute Blog

I’ve been fretting for some time over the growing push for national curricular standards, standards that would be de facto federal and, whether adopted voluntarily by states or imposed by Washington, end up being worthless mush with yet more billions of dollars sunk into them. The primary thing that has kept me optimistic is that, in the end, few people can ever agree on what standards should include, which has defeated national standards thrusts in the past.

So far, the Common Core State Standards Initiative – a joint National Governors Association/Council of Chief State School Officers venture that is all-but-officially backed by Washington — has avoided being ripped apart by educationists and plain ol’ citizens angry about who’s writing the standards and what they include. But that’s largely because the CCSSI hasn’t actually produced any standards yet. Other, that is, than general, end of K-12, “college and career readiness” standards that say very little.

Of course, standards that say next to nothing are still standards, and that is starting to draw fire to the CCSSI. Case in point, a new post on Jay P. Greene’s blog by former Bush II education officials–and tough standards guys–Williamson Evers and Ze’ev Wurman. They are heartily unimpressed by what CCSSI has produced, and think its already time to start assembling a new standards-setting consortium:

The new consortium would endeavor to create better and more rigorous academic standards than those of the CCSSI….

Drab and mediocre national standards will retard the efforts of advanced states like Massachusetts and reduce academic expectations for students in all states.

Yes, it is late in the game. But this should not be an excuse for us to accept the inferior standards that at present seem to be coming from the rushed effort of CCSSO and NGA.

Evers and Wurman’s piece is an encouraging sign that perhaps once more national standards efforts will be torn apart by fighting factions and spare us the ultimate centralization of an education system already hopelessly crippled by centralized, political control. Unfortunately, the post also gives cause for continuing concern, illustrating that the “standards and accountability” crowd still hasn’t learned a fundamental lesson: that democratically-controlled government schools are almost completely incapable of having rich, strict standards.

Evers and Wurman’s piece offers evidence aplenty for why this is. For instance, the authors theorize that a major reason the CCSSI standards appear doomed to shallowness is that the Obama administration has made adopting them a key component for states to qualify for federal “Race-to-the-Top” money, and states have to at least say they’ll adopt the standards in the next month or so to compete. In other words, as is constantly the case, what might be educationally beneficial is taking a distant back seat to what is politically important:  for the administration, to appear to be pushing “change,” and for state politicians to grab federal ducats. Political calculus is once again taking huge precedence over, well, the teaching of calculus, because the school system is controlled by politicians. We should expect nothing else.

Here’s another example of the kind of reality-challenged thinking that is all too common among standards-and-accountabilty crusaders:

CCSSI’s timeline calls for supplementing its “college and career readiness” standards with grade-by-grade K-12 standards, with the entire effort to be finished by “early 2010.” This schedule is supposed to include drafting, review, and public comment. As anyone who had to do such a task knows, such a process for a single state takes many months, and CCSSI’s timeline raises deep concerns about whether the public and the states can provide in-depth feedback on those standards–and, more important, whether standards that are of high quality can possibly emerge from the non-transparent process CCSSI is using.

Evers and Wurman assert that if standards are going to be of “high quality” the process of drafting them must be transparent. But the only hope for drafting rigorous, coherent standards is actually to keep the process totally opaque.

Phonics or whole language? Calculators or no calculators? Evolution or creationism? Great men or social movements? Transparent standardizers must either take a stand on these and countless other hugely divisive questions and watch support for standards crumble, or avoid them and render the standards worthless. Of course, don’t set standards transparently and every interest group excluded from the cabal will object mightily to whatever comes out, again likely destroying all your hard standards work.

In a democratically-controlled, government schooling system, it is almost always tails they win, heads we lose for the standards-and-accountability crowd. This is why these well-intentioned folks need to give up on government schooling and get fully behind the only education system that aligns all the incentives correctly: school choice.

Choice lets parents choose schools with curricula that they want, not what everyone in society can agree on, establishing the conditions for coherence and rigor. Choice pushes politicians, with their overriding political concerns, out of the education driver’s seat and replaces them with parents. Finally, choice lets real accountability reign by forcing educators to respond quickly and effectively to their customers  if they want to get paid. In other words, in stark contrast to government schooling , school choice is inherently designed to work, not fail.

National Standardizers Just Can’t Win is a post from Cato @ Liberty - Cato Institute Blog

Blogger Matthew Yglesias has a response to my post on Ezra Klein’s slander that Sen. Joe Lieberman (I-CT) is okay with the mass murder (or the mass negligent homicide) of hundreds of thousands of uninsured Americans.

Yglesias claims that only one of the three studies I cited speaks to what he claims is the central point: the Institute of Medicine’s estimate of how many Americans die each year because they lack health insurance.  Yglesias is incorrect.  The central point/threshold question is whether giving the uninsured health insurance will save lives.  All three studies speak to that point, and all three all cast doubt on the intuitively appealing idea that giving uninsured people health insurance ipso facto saves lives.

To rebut the one study that Yglesias believes to be on point (Kronick), he offers two others.  Yet all studies are not created equal.  Kronick, Finkelstein/McKnight, and Levy/Meltzer represent the most reliable work that has been done on the relationship between health insurance and health.  If I am wrong about that, I hope that one of those authors or another expert in the field will correct me.

But if I am right, it means that Yglesias and Klein are slandering Joe Lieberman and millions of others based on their (Yglesias’ and Klein’s) limited and distorted understanding of the world.  (And even if I’m wrong, the Washington Post‘s Charles Lane explains why Klein’s slander is still wrong.)

Then again, considering that Yglesias also has another post suggesting that Lieberman and House Minority Whip Eric Cantor (R-Va.) are “dumb” Jews free-riding on the intelligence of other Jews, I’m not sure that the Church of Universal Coverage is open to persuasion right now.

Yglesias, Defending Klein’s Slander of Lieberman is a post from Cato @ Liberty - Cato Institute Blog

Based on my regular reading on education, but not China specifically, I know that the world’s most populous nation has had a lot of trouble finding jobs for its throngs of recent college graduates. I wrote a bit about that yesterday, pointing out that the important higher education lesson from China is that pumping out more college grads is meaningless if they don’t have skills that are in demand. Well, thanks to a very helpful Cato@Liberty reader who actually lives in China (and wishes to remain anonymous) I now have a much better idea just how important that lesson is. He directed me to this Asia Times article that includes, among many fascinating tidbits, this startling revelation:

An explosive report released by the Chinese Academy of Social Sciences (CASS) in September said earnings of graduates were now at par and even lower than those of migrant laborers [italics added].

Wow! If this report is accurate, until now I have had no idea how truly ridiculous Washington’s obsession with pumping out more degrees to keep up with the Chinese has been — and I’ve been pretty sure it’s ridiculous! Much more troubling, if I’ve had little clue about the true extent of the absurdity, imagine how far from grasping it our government-loving federal politicians have been! Of course, as I wrote yesterday, even if they did know it, they probably wouldn’t let on.

Degree Disaster Behind The Great Wall is a post from Cato @ Liberty - Cato Institute Blog

This morning the National Center for Education Statistics released a new report, Mapping State Proficiency Standards Onto NAEP Scores: 2005-2007.  What the results make clear (for about the billionth time) is that government control of education has put us on a road straight to failure. Still, many of those who insist on living in denial about constant government failure in education will yet again refuse to acknowledge reality, and will actually point to this report as a reason to go down many more miles of bad road.

According to the report, almost no state has set its “proficiency” levels on par with those of the National Assessment of Educational Progress (NAEP), the so-called “Nation’s Report Card.” (Recall that under No Child Left Behind all children are supposed to be “proficient” in reading and math by 2014.) Most, in fact, have set “proficiency” at or below NAEP’s “basic” level. Moreover, while some states that changed their standards between 2005 and 2007 appeared to make them a bit tougher, most did the opposite. Indeed, in eighth grade all seven states that changed their reading assessments lowered their expectations, as did nine of the twelve states that changed their math assessments.

Many education wonks will almost certainly argue that these results demonstrate clearly why we need national curricular standards, such as those being drafted by the Common Core State Standards Initiative. If there were a national definition of “proficiency,” they’ll argue, states couldn’t call donkeys stallions. But not only does the existence of this new report refute their most basic assumption – obviously, we already have a national metric — the report once again screams what we already know:  Politicians and bureaucrats will always do what’s in their best interest — keep standards low and easy to meet – and will do so as long as politics, not parental choice, is how educators are supposed to be held accountable. National standards would only make this root problem worse, centralizing poisonous political control and taking influence even further from the people the schools are supposed to serve. 

Rather than continuing to drive headlong toward national standards — the ultimate destination of the pothole ridden, deadly, government schooling road – we need to exit right now. We need to take education power away from government and give it to parents. Only if we do that will we end hopeless political control of schooling and get on a highway that actually takes us toward excellent education.

Another Education Road Sign Screaming “Stop!” is a post from Cato @ Liberty - Cato Institute Blog

Yesterday, I offered the Fordham Foundation’s Andy Smarick an answer to a burning question: What is the proper federal role in education? It was a question prompted by repeatedly mixed signals coming from U.S. Secretary of Education Arne Duncan about whether Washington will be a tough guy, coddler, or something in between when it comes to dealing with states and school districts.  And what was my answer? The proper federal role is no role, because the Constitution gives the feds no authority over American education.

Not surprisingly, Smarick isn’t going for that. Unfortunately, his reasoning confirms my suspicions: Rather than offering a defense based even slightly on what the Constitution says, Smarick essentially asserts that the supreme law of the land is irrelevant because it would lead to tough reforms and, I infer, the elimination of some federal efforts he might like.

While acknowledging that mine is a ”defensible argument,” Smarick writes that he disagrees with it because it “would presumably require immediately getting rid of IDEA, Title I, IES, NAEP, and much more.” He goes on to assert that I might ”argue that doing so is necessary and proper because it’s the only path that squares with our founding document, but policy-wise it is certainly implausible any time soon.” Not far after that, Smarick pushes my argument aside and addresses a question to ”those who believe that it’s within the federal government’s authority to do something in the realm of schools.”

OK. Let’s play on Smarick’s grounds. Let’s ignore what the Constitution says and see what, realistically, we could expect to do about federal intervention in education, as well as what we can realistically expect from continued federal involvement.

First off, I fully admit that getting Washington back within constitutional bounds will be tough. That said, I mapped out a path for doing so in the last chapter of Feds In The Classroom, a path that doesn’t, unlike what Smarick suggests, require immediate cessation of all federal education activities. Washington obviously couldn’t be pulled completely out of the schools overnight.

Perhaps more to Smarick’s point, cutting the feds back down to size has hardly been a legislatively dead issue. Indeed, as recently as 2007 two pieces of legislation that would have considerably withdrawn federal tentacles from education — the A-PLUS and LEARN acts – were introduced in Congress. They weren’t enacted, but they show that getting the feds out of education is hardly a pipe dream. And with tea parties, the summer of townhall discontent, and other recent signs of revolt against big government, it’s hardly out of the question that people will eventually demand that the feds get out of their schools.

Of course, there is the other side of the realism argument: How realistic is it to think that the federal government can be made into a force for good in education? It certainly hasn’t been one so far. Just look at the following chart plotting federal education spending against achievement, a chart that should be very familiar by now.

Notice anything? Of course! The federal government has spent monstrous sums on education without any corresponding improvement in outcomes!

Frankly, it’s no mystery why: Politicians, as self-interested people, care first and foremost about the next election, not long-term education outcomes. They care about what will score them immediate political points. That’s why federal politicians have thrown ever-more money at Title I without any meaningful sign it makes a difference. That’s why No Child Left Behind imposed rules that made Washington politicians look tough on bad schools while really just pushing more dough at educrats and giving states umpteen ways to avoid actual improvement. That’s why Arne Duncan vacillates between baddy and buddy at the drop of a headline. And that basic reality — as well as the reality that the people employed by the public schools will always have the greatest motivation and ability to influence government-schooling policies — is why it is delusional to expect different results from federal education interventions than what we’ve gotten for decades.

OK. But what about a law like the Individuals with Disabilities Education Act (IDEA)? Hasn’t it helped millions of disabled kids who would otherwise have been neglected by states and local school districts?

For one thing, it is constitutional and totally appropriate under the 14th Amendment for the federal government to ensure that states don’t discriminate against disabled children in provision of education. IDEA, however, does much more than that, spending billions of federal dollars, promoting over-identification of “disabilities,” and creating a hostile, “lawyers playground” of onerous, Byzantine rules and regulations, all without any proof that the law ultimately does more good than harm. And again, this should be no surprise, because federal politicians care most about wearing how much they “care” on their reelection-seeking sleeves, no matter how negative the ultimate consequences may be.

Alright-y then. How about the National Assessment of Educational Progress (NAEP)? Isn’t it an invaluable source of national performance data?

NAEP results are used in the above chart, so obviously I have found NAEP of some value.  But does its usefulness justify ignoring the Constitution? Absolutely not. For one thing, instead of NAEP we could use extant, non-federal tests such as the SAT, ACT, PSAT, Stanford 9, Terra Nova, and many other assessments to gauge how students are doing. And as useful as NAEP may be, it sits perilously close to being as worthless as everything else that Washington has done in education. All that has kept it from being hopelessly politicized is that there is no money attached to how states and local districts do on it. And as Smarick’s boss at Fordham, Chester Finn, testified in 2000, even with that protection NAEP and other supposedly netural federal education undertakings are under constant threat of political subversion:

Unfortunately, the past decade has also shown how vulnerable these activities are to all manner of interference, manipulation, political agendas, incompetence and simple mischief. It turns out that they are nowhere near to being adequately immunized against Washington’s three great plagues:

• the pressing political agendas and evanescent policy passions of elected officials (in both executive and legislative branches)and their appointees and aides,

• the depredations and incursions of self-serving interest groups and lobbyists (of which no field has more than education), and

• plain old bureaucratic bungling and incompetence.

Based on all of this evidence, it is clear that the only realistic avenue for getting rational federal education policy is, in fact, to follow the Constitution and have no federal education policy. In other words, the very realistic Framers of the Constitution were absolutely right not to give the federal government any authority over education, and it is time, right now, for us to stop ignoring them. Doing anything else will only ensure continued, bankrupting failure.

Federal Education Results Prove the Framers Right is a post from Cato @ Liberty - Cato Institute Blog