Thursday, September 28, 2006

Wal-Mart and history

Engaged in the Wal-Mart debate are two sides: those who shop at Wal-Mart due to its selection and low price; and those who want to use the punitive arm of government to put Wal-Mart out of business.

Those of us who support Wal-Mart are a fickle lot. The minute a better option appears we will quickly cross the street to the new store without even a mournful glance at our previously favored best buy. You see, Wal-Mart's time will come. Someday it will be supplanted by a store that out performs it on price, selection, or both. The supporters represent the free market.

Those who fight Wal-Mart want to see the end of everyday low prices. Since the opponents recognize that the consumer desires Wal-Mart, they appeal to government to close the doors on all those packed supercenters. These folks represent statist interventionism.

The problem with having government intervene is that no better option exists once Wal-Mart is locked by decree. Sure the doors can be closed, but where does the consumer go to purchase goods at the price and quality desired? The followers of the free market have no qualms watching Wal-Mart's assured demise once a new competitor appears that can offer a more satisfactory option. When our choices close the doors on the Bentonville Behemoth, it will because the better option is available. The closing of Wal-Mart will simply be a signal that the consumer is now better off.

If government acts according to statist interventionism, it destroys consumer choice, investor capital, and jobs; leaving no better option, just waste, inefficiencies, and unmet wants. But isn't that the typical result of all government interventions?

Wednesday, September 27, 2006

Homeland Security in the Chicken Coop

The big arrest outside the September 21, 2006 gubernatorial debate. I'm glad the police are keeping our street clear of opposition candidates.

From the Peirce campaign web site: "Here’s a quick little music video of the Peirce supporters in chicken suits mocking the Ken & Ted ‘Fraid Chickens at Wednesday’s Gubernatorial Debate."





At the close of the Constitutional Convention in Philadelphia on September 18, 1787, a Mrs. Powel anxiously awaited the results, and as Benjamin Franklin emerged from the long task now finished, asked him directly: "Well Doctor, what have we got, a republic or a monarchy?" "A republic if you can keep it" responded Franklin. From a speech delivered by the Hon. Ron Paul of Texas, current member of Congress.

This video would be funny if it wasn't so sad watching our Liberty fade away. Thank goodness for internet, the last remaining avenue of free speech.

Sunday, September 24, 2006

Value-Added Analysis

You are going to here a lot about value-added analysis as an indicator of academic performance in the coming year as the state begins rolling out value-added as a new accountability indicator. Be careful.

Value-added is purported to show whether or not a child has achieved a year's worth of academic growth during the past school year. The year-for-a-year will become the new standard by which student achievement, as well as district, school, and teacher performance, is judged.

There are problems with this standard. It is important to understand that value-added only shows whether or not a student has remained in the same place on the bell curve from year to year. [1] In addition, value-added only compares the current level of student achievement against past levels of grouped, similar-situated student achievement.

If we agree that the education system needs to improve, basing the standard on a string of historic test scores will not drive improvements. To satisfy that standard, the school system only needs to continue producing the same product as has been historically produced. In other words, Detroit in the 80's and 90's could have satisfied a value-added standard by simply producing the same cars that it had produced in the 60's and 70's. Value-added would not have set the standard at the level of newer model Japanese cars.

A concept of total achievement is a much more valid standard. Instead of evaluating student progress against historical aggregates, total achievement looks at student performance against a measure set by students and their parents. The student who desires to attend college needs to graduate with skills that open college doors. Having met year-for-a-year growth, then subsequently receiving letters of non-acceptance, or letters of qualified acceptance (where acceptance is based on taking remedial college course-work), would constitute a failure of the system. The year-for-a-year does not guarantee a quality outcome – only an average outcome based on the historic academic achievement of similarly-situated students.

So, for example, if your child struggles for a few years, value-added will place you child in a path with other students who struggled. In this situation, a lower-level of achievement becomes the acceptable standard; acceptable to the school system, but not to the parent.

Keep in mind that a year-for-a-year is not what is appears to be. I have yet to see a source that details a year's academic growth as a normative standard and not a relative ones; a normative standard described by a rubric that defines in exact terms what a year's growth looks like.

In other words, a year's worth of growth is defined as x where x has no relationship to other similarly-situated students' historical pattern of test results; a rubric that answers the question, "What is the expected level of achievement, in absolute terms, of a given child at the end of fourth grade." Without such definitions, value-added is an empty concept when it is used as a standard of individual student achievement.

A look at total achievement: The fact that ACT is stating that the greater majority of students taking the ACT are not ready for college-level work shows that absolute levels of achievement are not being met - according on ACT's informed standards.

Basing a year's worth of growth on historic levels of achievement will never solve the education problem. In addition, telling parents that, "We did our job by advancing your child at the same pace as similarly-situated students (a year for a year), so your child's inability to get into college is not our problem," has a hollow ring. In this instance, the total achievement goal set by parents and child was to be college-ready upon graduation - a higher standard than a simple year's worth of growth.

I suspect most parents want more with regard to their child's education than a simple progression equal to the historic test patterns of similarly-situated children.

That's what value-added isn’t; now for what value-added is. Value-added is a statistical means to evaluate programs and teacher effectiveness; a tool that takes into account all attributes of a child so that no one can claim that a program or teacher's class achieved low-level of results due to the students being the product of poor demographics, or that simply meeting state proficiency levels is sufficient for high socio-economics districts.

Value-added is not the ends, it is the means to improve the system. Programs or teachers that cannot keep pace with average growth should, respectively, be discontinued or shown the door.

The solution must be growth patterns that continually exceed historic averages across the board. Anything less is an insult to children, and their parents.

Notes:

[1] This is a very simple description of a complex system, though it is accurate in a simplistic way.

Quotes

"It may sometimes be expedient for a man to heat the stove with his furniture. But if he does, he should know what the remoter effects will be. He should not delude himself by believing that he has discovered a wonderful new method of heating his premises." Human Action, Ludwig von Mises.


"If it is believed that these elementary schools will be better managed by the governor and council, the commissioners of the literary fund, or any other general authority of the government, than by the parents within each ward, it is a belief against all experience." (Thomas Jefferson, letter to Joseph C. Cabell, 1816)

Thursday, September 21, 2006

Response to the push for federal education standards

Be cautious about advocating for federal control over any issue. The feds are simply an aggregation of state officials and bureaucrats - no better, though more power-hungry. Sometimes we forget that the drive to game the system is found at all levels of government.

Having the feds involved creates a positive impression simply because we have been taught to believe in the omniscience of the greater governmental power. That's why issues move up the chain of control, since those who are unhappy with their local situation appeal to the next level of government for redress.

A true market doesn't need governmental control as all can be satisfied with their own choices. Of course, some are only satisfied when we all are required to select the supposed correct public good.

The movement of standards from the local level to the federal level will not reduce the politics involved in the process. Typically, federal issues are more political due to the increased amount of money at stake with any decision.

Advocating for federal standards, and their certain to follow accountability and control, seems antithetical to school choice. Once the feds push standards down to the local level, all schools will have to adhere to them, whether they are good for a given child or not. School choice will become the same as the choice between a Whopper or Big Mac. Not much of a choice at all for those who prefer a Taco Bell Bean Burrito.

Wednesday, September 20, 2006

Blowing the whistle on silly laws

Effective tomorrow, Ohio Revised Code § 4511.56. Signal devices on bicycle will contain the following language:

C) A bicycle may be equipped with a device capable of giving an audible signal, except that a bicycle shall not be equipped with nor shall any person use upon a bicycle any siren or whistle.

Yes, the state is finally putting a stop to such activities! Blowing a whistle while riding a bike, indeed!

Similar to Thomas Woods's comment about the volumes of federal laws and regulations; thank goodness we have ORC 4511.56. One can only imagine the chaos that would ensue should this law be repealed.

So, who says our state representatives don't earn their pay?

Sunday, September 17, 2006

Knowledge, action, and the feds

Latest Mises.org Blog post by Jim Fedako
http://blog.mises.org/archives/005629.asp


As has been reported on this blog, Israel Kirzner wrote a short article where he distinguishes between information-knowledge and action-knowledge. The distinction between the two is that action-knowledge refers to "knowledge that actually spurs and shapes action" while information-knowledge is simply facts and figures that exist in memory. The point is that information alone has no economic value unless it takes the form of action-knowledge, thereby causing acting man to direct and redirect scarce resources to satisfy the most-pressing needs.

As reported by The Christian Science Monitor, Congress is working on a bill which will provide for a searchable internet database that details how government is spending our federal tax dollars. I'm certain that all of this data will be of interest to a lot of people, but additional heaps of data will not spur or shape any political change. The Soviet Union, another planned economy, was flooded in data yet continually wasted scarce resources chasing utopian dreams.

We already have sufficient data to know for certain that the feds are spending way too much of our tax dollars. We don't need more data; we need someone to stand before Congress like Davey Crockett and remind our representatives that our money is not theirs to give. We need action, and its requisite action-knowledge, instead of servers full of more depressing data.

Is All-Day Kindergarten An Economic Fix?

Latest Mises.org article:

Is All-Day Kindergarten An Economic Fix?
By Jim Fedako
Posted on 9/14/2006

Is your state's economy in the doldrums? Does it need a kick start to get it humming again? The immediate and boring solution is reduced government regulations and tax cuts. But according to a new civic ethos, the long-term and innovative solution is mandatory, all-day kindergarten.

That's rights, all-day kindergarten is the perfect solution for the politician looking for headlines and votes. What a great way to stand out from the crowd of other power-seekers. All-day kindergarten is for the children, and it will improve the state's economy — though improvements will not be seen for a quarter century at best.

You see, it takes anywhere from 3 to 5 years to fully implement a government solution, so the first class to benefit from all-day kindergarten is still 3 to 5 years in the future. Then it takes another 17 years for a child to move through the primary, secondary, and tertiary school programs in order to receive a Bachelor of Arts degree. Finally, the new graduate has to find a job and become acclimated to a new career — add another 5 years. So, there you have it, benefits to all-day kindergarten do not begin accruing for at least 25 years.

And, more importantly, the first time anyone can empirically assess the benefits relative to the costs is more like 28 years from now — assuming three years for data to be gathered and analyzed. Of course, that is if there are any benefits to accrue. In the meantime, the bills keep coming and coming.

Twenty-eight years from now? By then, who cares? The politician who crafted the law is retired in Florida, and the years of additional interventions have muddied the educational waters so that all-day kindergarten will be the least of our worries. If the public education system is still plodding along, there will be other ideas to implement and the educationists and unions will still sing praises to the man who gave the state mandatory, all-day indoctrination of five-year olds.

Success will follow implementation, because the success will be the implementation. The praises and awards will be given to the man who was brave enough to push such a beneficial program forward against hostile and vile opposition; a program that not only benefited the kids, but also got the economy back on track.

Advance the clock a couple of years after the proposal of this long-term solution: The governor who ran on the platform of all-day kindergarten pushed and prodded his legislature to fund the program a year ago. Through the rustbelt haze, a solitary economic report shows that the state is on the rebound. The media is summoned and governor proudly states that his plan for an improved educational climate in the state has lead to an economic resurgence. All-day kindergarten has saved the day.

You ask, "How could the economy benefit in such a relatively short time from a program whose results will not be known for decades?" The governor's Keynesian court will set this matter straight. See, it wasn't the increased academic performance to be reaped years hence that saved the state today; it was the pumping of additional funds into the state's rustbelt economy. Yes, the state — I mean the governor — has guided the state to brighter horizons.

Think about it, we are talking about a double benefit here. An improved economy now, plus the utopian society born a little more than two decades from now as the first all-day-kindergarten class graduates college and introduces the world to the Progressive heaven on earth. What a way to retire fulfilled on the beaches of a sunny coast? The marble bust of this visionary governor will rest in the center of the state capital rotunda, a Lenin-inspired monument visited by future children as they learn about the great state and its role in all facets of life.

All-day kindergarten, what a silly solution. And what fools we must be to even consider its merit. If the economy is lagging and education is the reason, the finger needs to be pointed at the changes in education that grew out of the 1960s and the work-to-rule unionization of teachers — the public education system itself. If education is the solution, the improved product will not begin hitting the streets for years — and it will never be the result of government programs, as only the market can solve the education malaise.

Carl Menger noted in his groundbreaking work, Principles of Economics, that time is central to understanding economics. Goods of a lower order cannot be produced today unless goods of higher order are already available. One cannot simply abstract time out of plans and expect immediate and realistic results. Time must be considered before proposing solutions or pursuing ends.

In addition, higher order goods derive their goods-character — their value — from corresponding goods of a lower order. The time factor comes into play whenever consumer desire for first order goods changes, resulting in changes to the value of corresponding higher order goods. Time is key. The motions set into play today may lead to the satisfaction of tomorrow's needs. But, then again, they may not.

The all-day Kindergarten solution is the means to satisfy some hypothetical end 25 years in the future. There is a high probability that today's education solution will not meet tomorrow's employment needs, especially when the solution is in the form of a government program and not the plans of a profit-seeking entrepreneur.

The educational and political systems do not recognize time when proposing solutions. How else can you explain the support for a program that may produce benefits decades from now; a program that is being proposed as a solution to an immediate problem? Of course there is the desire to hold power that drives humans to make fallacious statements, but I sometimes believe that many politicians and bureaucrats actually believe in their programs. The only reason for such invalid beliefs must that these individuals don't include time in their models and plans.

Programs created today that are supposed to have a future benefit are risky in the free market. Look back at entrepreneurial predictions that were proposed three decades ago and see how many hit the mark. Who predicted the internet age other than Al Gore? Despite the risks, government is always inclined to take on the long-term project that may never satisfy a need. The reason is simple, the kudos are delivered at the groundbreaking ceremony, along with the photo ops and headlines. The failures are forgotten or pinned on the other political party.

Voters go along with these ideas since they were never taught the concept of time, and how time affects economics matters. The current mainstream paradigm, the one taught in public schools and most universities, simply abstracts out the influence of time. Only the Austrian School recognizes time since the Austrians understanding of the allocation of scarce resources is not tied to static models of equilibrium; models where time has neither place nor merit.

So we are stuck with dueling gubernatorial candidates debating whose plan for all-day Kindergarten will save a rustbelt economy. Neither candidate takes into consideration the added tax dollars that must be picked from taxpayer pockets in order to fund the program. They never debit their account for all the lost economic activities that would have occurred had those dollars been allowed to be freely invested in order to satisfy real consumer wants. They only credit their account for the implementation of a program that might produce results far off in the future.

Let's settle the scores; the politicians and bureaucrats win since they claim success based on programs implemented, the children lose due to additional years in state institutions, the teachers and their unions win as more money is pumped into the sinking barge, and the taxpayer — William Graham Sumner's forgotten man — continues to pay the bill year after year.

In economics, the best solution is always boring one — simply reduce regulations and cut taxes. Everything proposed by government is a fool's errand.


--------------------------------------------------------------------------------

Jim Fedako, a former professional cyclist who lives in Lewis Center, OH, is a member of the Olentangy Local School District and maintains a blog: Anti-Positivist. Send him mail. Comment on the blog.

Thursday, September 14, 2006

Letter to the editor

Israel M. Kirzner is an economist from the Austrian School. In his article, Action-Knowledge and Information-Knowledge, he distinguishes between the two types of knowledge. Congressman Tiberi appears to grasp only the simpler information-knowledge as he doesn't seem to be able to utilize his information-knowledge as action-knowledge.

Dear Editor:

Some knowledge is only valuable if someone will act on it. In his letter, "Bill shines brighter light on federal spending," U.S. Rep. Tiberi expresses his support for another federal initiative, the creation of a Google-like search engine that will allow internet users the ability to see exactly where Washington is spending our money. Tiberi says that the search engine will give taxpayers the ability to determine if too much, or too little, money is being spent on federal programs. Well, I don't need another search engine to figure out that too much money is currently being spent. So, the question to Tiberi is: When are you going to act and do something about it? Only then will the additional knowledge be of any value to overburdened taxpayers.

Jim Fedako

Tuesday, September 12, 2006

The exception that proves the rule

Hear's an interesting graphic.



click on graphic to enlarge


The correlation is supposed to be between wealth and performance, but Olentangy is the obvious exception to this rule. Second on wealth, yet 79th on performance. Something is very wrong with these results.

Or, should we spin the results, claim reverse causation, and pride ourselves with earning a lot despite the district's scores? That's it ... there's nothing like a positive spin ...

Monday, September 11, 2006

Blackwellian economics

How we are fooled sometimes. PT Barnum spoke the truth when he talked about the fool born every minute, and this appears to be my minute.

You see, I ran for a seat on the Central Committee of the Delaware County Republican Party because I thought that Ken Blackwell was a true small-government candidate. I supported his campaign financially because I believed what he said, although I apparently missed what he truly meant in his speeches and campaign literature.

Read the healthcare plan below and guess whether it's from Blackwell or some lesser socialist. Hint: It's Blackwell's plan.

In addition, Blackwell has transportation and energy plans that sound like they are a blend of Corporatism and Mussolini Fascism (I'm dealing strictly with the economics definition of this term, not its more sinister political one).

Watch out! Anytime you combine business sectors and government bureaucracies nothing good can result. I had always believed the conservative wing of the Republican Party understood this, now I realize that I am wrong once again.

The Blackwell campaign shows why FA Hayek, Nobel Laureate in Economics, stated that he could never call himself a conservative. The philosophy of the Right has blended with the Left, and now they're both statist fighting over whose central plan works best.

Spending reductions? Tax cuts? Please, you can't reduce spending and cut taxes when you truly believe that government provides the solutions.

It's Blackwell's inability to understand economics - the science of human action with regard to scarcity - that leads me to support Bill Peirce, Libertarian candidate for governor.



The Blackwell Plan

My Plan relies on five keys to success
:

Government Reform: The Blackwell Plan will create a five member appointed Commission to coordinate healthcare policy and expenditures and supervise the numerous state agencies involved in the healthcare industry as well as Ohio's Medicaid Program.

Covering the Uninsured: The Blackwell Plan will create a new program called the "Buckeye Health Connection" which will work to provide health insurance to uninsured Ohioans by matching uninsured individuals with private health insurance coverage and facilitate (not replace) those relationships.

Medicaid Reform: The Blackwell Plan will work to address remaining issues reported by the Ohio Commission to Reform Medicaid; namely the creation of a separate Medicaid agency, the modernization of Medicaid's information systems, the establishment of a consumer-directed health care model for Medicaid clients, adequate funding for a complete audit of the Medicaid program, a more consumer-focused approach to clients in our long-term care programs which would enable them to have more control over the care they receive, and lastly ensuring that manipulation of eligibility for Medicaid not be used as a method of exercising fiscal control over the program.

Pharmacy Management: The Blackwell Plan will propose a statewide drug purchasing pool for all programs administered or financed by state government and will recommend pursuing affiliation with one or more of the existing state consortiums to include states already actively managing their pharmacy expenditures.

Insurance Reform: The Blackwell Plan will immediately increase the age a young adult can remain on a family insurance policy to 29, begin to strengthen health purchasing pools by allowing new forms of consumer-directed health care products, including health savings accounts.

Saturday, September 09, 2006

Carl Menger, an economist and genius

According to Mises.org, Carl Menger (1840-1921) "was the true and sole founder of the Austrian school of economics proper." After reading Menger's work, Principles of Economics, Ludwig von Mises decided to become an economist.

Menger is known as one of the three economists (along with Jevons and Walras) who contemporaneously discovered the notion of marginal utility, thus defining many of the concepts that eluded Classical School of Economics (Adam Smith, David Ricardo, etc.) for a century. Menger's ideas founded the Austrian School of Economics - the school of economics that was founded in Austria but is now centered in the US.

The book is a great read and is available to download or purchase from Mises.org.

Thursday, September 07, 2006

A listserve response on curriculum, standards, and tests

Deb hits the issue on the mark. Unless the political climate of the past hundred years or so reverses overnight, we will see little or no real change resulting from a government-run, top-down system. Whether its aegis is with the feds or the states, top-down, government-run systems do not work; though we at least have a chance at the statehouses.

Take NCLB, or its Ohio predecessor, as the example. My district, one of the wealthiest in Ohio, has been improving on state-mandated tests since they were inaugurated almost a decade ago. Not just improving in the number of students scoring proficient, but also in the number scoring accelerated or advanced proficient. The state report card scores imply that we are improving, but improving based on what?

Typically, 35% of our graduates still require remedial coursework at state universities, and the ACT College Readiness Report shows that only 36% of our recent graduates were prepared for college-level classes in the four subjects analyzed.

So, my district is now ranked excellent by the state, yet the colleges and universities are saying that our product is poor. How can that be reconciled?

Let's assume that the feds push through a national curriculum. What will we have? We will have a system similar to that already in place. My district aligns itself to the state curriculum, as well as those offered by entities such as the National Council of Teacher of Mathematics. Per Ohio law, the local board approves its curriculum.

During the approval process, I always ask questions such as, "What is the standard or rubric to evaluate a studen'ts understanding of the content item, 'Student will be able to explain the causes of the Civil War?'" You see, the response to such a content item could be either a simple paragraph or a research task that could easily become someone's life work. The response from the administration is always the anemic, "Our teachers know what it means to attain that standard." If they really know, why can't they convey it to the board member who religiously asks that very same question?

But, you say, the standards are set be the state and are evaluated by the tests. As a member of the Ohio Department of Education's Grade 4 Writing Content Advisory Committee, I have been involved in the creation of state test items. I know firsthand that the tests do not reveal what they claim to show. These committees are stacked by teachers and administrators who reduce state-level tests of curriculum standards to a farce.

The tests are a farce so the supposed improvement is also a farce; just ask the colleges and universities if they are seeing the improvements implied by district scores of state tests.

Anyone who thinks that the feds can and will form a committee that defines a curriculum, standards, and test items, free of educationist bias hasn't paid attention to who actually runs state committees and bureaucracies. The unions and the other pro Progressive Education organizations - such as your own state's school boards association - are always given the biggest stake in any supposed stakeholders meeting.

Legislatures will stand up to these groups the day Ohio ends de facto teacher right-to-work laws. That said, our legislature has been willing to move forward on charters and vouchers since these are outside the public education system - untouched by the committees and bureaucracies, at least initially. Anything that comes out of education committee/bureaucracy system has educationist fingerprints all over it.

Don't expect the feds to have any more will to drive those evils out of the system. If anything, the educationist will be able to gain more power since the goings-on that occur in DC, far from the sights of most of us, stay in DC.

Deb, Your are indeed correct.

Jim Fedako
Member, Olentangy Board of Education
blog: antipositivist.blogspot.com

Wednesday, September 06, 2006

All-day Kindergarten: a fool's errand

Is your state's economy in the doldrums? Does it need a kick-start to get it humming again? The immediate and boring solution is reduced government regulations and tax cuts. The long term and innovative solution is mandatory, all-day Kindergarten. [1]

That’s rights, proposing all-day Kindergarten as the solution to a sluggish economy is perfect for the politician seeking headlines and votes. What a great way to stand out from the crowd of other power-seekers. All-day Kindergarten is for the children, and it will improve the state’s economy – though any possible improvement will not be seen for at least a quarter century.

You see, since it takes anywhere from 3 to 5 years to fully implement a government solution, the first class of students to benefit from all-day Kindergarten is still 3 to 5 years in the future. Then it takes another 17 years of education for a child to receive a Bachelor of Arts degree. Finally, the new graduate has to find a job and become acclimated to a new career – add another 5 years. So there you have it, the benefits from all-day Kindergarten do not begin accruing for at least 25 years. Of course, that is if there are any benefits to accrue.

In addition, and more importantly, the first time anyone can empirically access the benefits relative to the costs is something like 28 years from now – assuming three years for data to be gathered and analyzed. In the meantime, the bills keep coming and coming.

28 years from now? By then, who will care? The politician who crafted the law is retired in Florida and the years of additional interventions have muddied the already murky educational waters to the extent that all-day Kindergarten will be the least of our worries. If the public education system is still plodding along after all those years, there will be other ideas to implement; new solutions to propose.

Success will follow implementation, because the success will be the implementation. The praises and awards will be given to the man who was brave enough to push forward such a beneficial program in the face of hostile opposition; a program that not only benefited the kids, but also got the economy back on track.

Advance the clock a couple of years after the proposal of this long-term solution: The governor who ran on the platform of all-day Kindergarten pushed and prodded his legislature to fund the program a year ago. Through the rustbelt haze, a solitary economic report crosses the governor's desk proclaiming that the state is on the rebound. The media is summoned and governor proudly states that his plan for an improved education climate has lead to an economic resurgence. All-day Kindergarten has saved the day.

You ask, “How could the economy benefit in such a relatively short time from a program whose results will not be known for decades?” The governor’s Keynesian court will set this matter straight. See, it was not the increased academic performance to be reaped years hence that saved the state today, it was the pumping of additional funds into the state’s rustbelt economy. Yes, the state – I mean the governor – has guided the state to brighter horizons.

Think about it, we are talking about a double benefit here. An improved economy now, plus the utopian society born a little more than two decades in the future as the first all-day Kindergarten class graduates from college and introduces the world to the Progressive heaven on earth. What a way to retire fulfilled on the beaches of a sunny coast? The marble bust of this visionary governor will rest in the center of the state capital rotunda, a Lenin-inspired monument visited by future children as they learn about the great state and its role in all facets of life.

All-day Kindergarten, what a silly solution? And, what fools we must be to even consider its merit. If the economy is lagging and education is the reason, the finger needs to be pointed at the changes in education that grew out of the Sixties and the work-to-rule unionization of teachers, along with all the other ills of a government-run education system. If education is the solution, the improved product will not begin hitting the streets for years – and it will never be the result of government programs as only the market can generate a solution to education's malaise.

Carl Menger notes in his groundbreaking work, Principles of Economics, that time is central to understanding economics. Goods of a lower order cannot be produced today unless goods of higher order are already available. One cannot simply abstract time out of plans and expect immediate and realistic results. Time must be considered before proposing solutions or pursuing ends.

In addition, higher order goods derive their goods-character – their value – from corresponding goods of a lower order. The time factor comes into play whenever consumer desire for first order goods changes, resulting in changes to the value of corresponding higher order goods. Time is key. The motions set into play today may lead to the satisfaction of tomorrow's needs. But, then again, they may not.

The all-day Kindergarten solution is the means to satisfy some hypothetical end 25 years in the future. There is a high probability that today's education solution will not meet tomorrow's employment needs, especially when the solution is in the form of a government program and not the plans of a profit-seeking entrepreneur.

The educational and political systems do not recognize time when proposing solutions. How else can you explain the support for a program that may produce benefits decades from now; a program that is being proposed as a solution to an immediate problem? Of course there is the desire to hold power that drives humans to make fallacious statements, but I sometimes believe that many politicians and bureaucrats actually believe in their programs.

Programs created today that are supposed to have a future benefit are risky in the free market. Look back at entrepreneurial predictions that were proposed three decades ago and see how many hit the mark. Who predicted the internet age other than Al Gore? Despite the risks, government is always inclined to take on the long-term project that may never satisfy a need. The reason is simple, the kudos are delivered at the groundbreaking ceremony, along with the photo ops and headlines. The failures are forgotten or pinned on the other political party.

Voters go along with these ideas since they were never taught the concept of time, and how time affects economics matters. The current mainstream paradigm, the one taught in public schools and most universities, simply abstracts out the influence of time. Only the Austrian School recognizes time since the Austrians understanding of the allocation of scarce resources is not tied to static models of equilibrium; models where time has neither place nor merit.

So we are stuck with dueling gubernatorial candidates debating whose plan for all-day Kindergarten will save a rustbelt economy. Neither candidate takes into consideration the added tax dollars that must be picked from taxpayer pockets in order to fund the program. They never debit their account for all the lost economic activities that would have occurred had those dollars been allowed to be freely invested in order to satisfy real consumer wants. They only credit their account for the implementation of a program that might produce results far off in the future.

Let’s settle the score; the politicians and bureaucrats win since they claim success based on programs implemented, the children lose due to additional years in state institutions, the teachers and their unions win as more money is pumped into the sinking barge, and the taxpayer – William Graham Sumner’s forgotten man – continues to pay the bill year after year.

In economics, the best solution is always boring one; simply reduce regulations and cut taxes. Everything proposed by government is a fool's errand.


[1] Of course the same can be said about suggestions for preschool programs, especially government-run preschool programs.

Monday, September 04, 2006

Football, economically speaking

Coming soon. In an economic sense, is high school football a public good or a private good?

Life Without Government Equals Chaos. Hardly!

We tend to assume that without an interventionist government – a government that extends beyond the enumerated powers in the Constitution - life would resolve into chaos. Nothing could be farther from the truth.

In the nineteenth century, French economist Frédéric Bastiat remarked on the wonder of that phenomenon by exclaiming, "Paris gets fed!" The same can be said of New York, Tokyo, Mexico City, etc. It's doesn't take the intervention of a governmental planning board to ensure adequate food for all of us. Entrepreneurs seeking profit make certain that eggs and milk are readily available for tomorrow's breakfast.

Consider the alternative: In the late 1970's and early 1980's I spent three weeks in the then-socialist countries of Yugoslavia and East Germany. If it wasn't for the illegal food market there would have been nothing to eat other than cookies, Vodka, and stale bread. Keep in mind that the brightest minds planned these economies. Not much to be said for central planning.

But we tend to forget these real-world examples of government planning. Maybe we assume that our bureaucrats are more omniscient and brighter than those of Yugoslavia and East Germany. Ludwig von Mises of the Austrian School of Economics proved over 80 years ago that all attempts at central planning lead to chaos. He was correct then, and he is still correct today.

Yet we still believe in governmental solutions. As I have previously written, if government is omniscient, I am omniscient. And even I don’t believe that to be true. Parents allow school officials, such as me, to make important decisions for their children because there exists the belief that school officials somehow are unbiased and altruistic, and better at guiding children than their own parents. While it is certainly true that most school employees like working with students, they can’t possible have a child’s best interests in mind. That is the realm of parents only.

School officials have jobs, careers and families of their own. They also have biases and beliefs that greatly differ from individual parents. There is nothing wrong with differing views, but parents should not simply hand over their children to the schools and assume the best. We bristle at the idea of our friends, neighbors and family members guiding our parental decisions, yet we readily give school officials, who are nothing more than friends, neighbors and family members, the power to make those very same decisions. The robe of omniscience does not come with school employment or board election. In fact, there is nothing unique and special about school employment.

Remember, it's the entrepreneur who will truck the eggs and milk today so that you can eat tomorrow.

Jim Fedako