Government-Imposed Failure

Chuck has good idea for reforming education:

Sometimes you hear lamentation over the fact that teachers aren’t regarded with proper levels of esteem. That we have star athletes but no star teachers even when most students would benefit more from the latter. A possible solution to that problem with a keener eye for improving the cost/benefit equation of education at all levels would be to pay the best teachers a lot of money. And pay the really good really well through syndicated teaching.

To reform the cost structure of the education system –college, high school, junior high – cut out the redundancy. Let the best instructors instruct the whole nation of students. Each school would pay a subscription fee to each of these syndicated teachers, or each student would pay tuition directly to a superior teacher. Or, hell, each student would just go on Youtube at the tiny cost of whatever time use would be contributed to the computer or the internet subscription. I would have literally saved thousands of dollars and would have a better baseline knowledge of philosophy and a few other subjects.

I suppose that if this hasn’t been already, it’s unlikely to occur. The problem, at this point, is not technology or money. This would have been feasible shortly after the invention of subscription television; all you would need on-site would be technology facilitators to ensure that equipment functions properly and someone to collect and grade homework, enter grades, and ensure classroom discipline. Alternatively, at this point, one needn’t even go to school; one could receive instruction at home. I would imagine that this proposed system would be cheaper to operate than the system currently in use.
The reason why Chuck’s proposal will never be implemented, then, is not due to logistics, cost, or the limitations of technology. The failure is ultimately due to a lack of political will.
As a child of two public school teachers, I can say with are asonable degree of certainty that the vast majority of school teachers would be opposed to merit pay. Because most of them suck at teaching. I’ve observed plenty of my parents’ coworkers (it’s easy to volunteer at public schools when you’re homeschooled), and I also spent a couple years in public high school under the tutelage of a large number of stupid and incompetent teachers. Very few teachers have a reasonable degree of mastery of their subject. Of those who do, few are able to teach effectively.
Now, most teachers belong to a union, and simple probability suggests that most of the teachers belonging to the union are either stupid or incompetent. The union’s job is to protect teachers’ jobs,not reward good work. So, the main opposition to merit pay and “star teachers” is…the teachers themselves. Why? Because a meritocracy would cause many teachers to be worse off financially.
Ironically, it is the teachers themselves that complain how they’re underpaid relative to, say, sports stars. I suspect that this lamentation is borne of nothing more than envy. In essence,teachers are complaining how they can’t earn millions of dollars for doing what they already do. They want to be rich,but they don’t want to work hard for it or make serious sacrifices for it. (Seriously, how many teachers would spend hours a day practicing teaching during their years in Jr. High? How many would hire personal teaching trainers? Etc.) Ultimately, teachers who complain about being underpaid are often nothing more than socialists, trying to prove that they are noble people, well-deserving of society’s riches.
Beyond that, then, it should be clear that the very thing preventing teachers from being stars is…teachers themselves. The government, at the behest of the teachers unions, heavily distorts the education market. Attendance is mandatory until the age of eighteen (at least in my state). Students have a limited selection of schools. The whole teacher-classroom setup is maintained only at the behest of the government. Alternative forms of schooling often arise from private schools and homeschoolers. Innovation within government schools is low and costly.
What teachers need in order to become stars is the ability to compete in multiple markets simultaneously. This can easily be accomplished in this time of (relatively) low-cost technology. A teacher could record a lesson every day and have broadcast to various schools, customized for class period length, local class meeting times, etc. But the government, at the behest of the teachers’ union, refuses to allow this because many teachers would be out of a job.
Ultimately, the current education is organized around one central purpose: to make sure that the current number of teaching jobs remains the same. One good teacher, by the “magic’ of modern technology, would be eliminate the need for dozens of bad teachers. One great teacher would eliminate the need for hundreds of bad teachers. Betteryet, economies of scale would reduce systemic costs, making education simultaneouslyboth cheaper and higher-quality. The main thing preventing this from happeningis the government (quelle surprise, non?).

Unions vs. Globalization

Unions are against globalization.  To listen to them, unions are a force for good for all workers (rather than just the workers who pay the union its dues). But to watch them, you can see that they’re in favor of cartelization. They don’t mind other people
competing against them, as long as those people are hobbled by the same pay rate, protections, and benefits as the union members have. In other words, they’re not allowed to use a lower cost of living, or a lower regard for their own safety, or a longer work week as a competitive advantage.

Sigh. Unions! Still selfish, after all these years.

Texas vs. California

There’s an interesting story from Washington Examiner (link) discussing the coming economic crisis in California (which has been notably called “The Greece of America”) and the flourising economy in Texas which enjoyed a decade of robust growth, low taxes, favorable demographic outlook and superior public services. Not surprisingly, unions in free labor market in Texas did not allow public sector unions extracting $100 million from taxpayers for TV-ads in defence of the status quo for public employees:

“Californians have responded by leaving the state. From 2000 to 2009, the Census Bureau estimates, there has been a domestic outflow of 1,509,000 people from California — almost as many as the number of immigrants coming in. Population growth has not been above the national average and, for the first time in history, it appears that California will gain no House seats or electoral votes from the reapportionment following the 2010 census… Texas is a different story. Texas has low taxes — and no state income taxes — and a much smaller government. Its legislature meets for only 90 days every two years, compared with California’s year-round legislature. Its fiscal condition is sound. Public employee unions are weak or nonexistent.”

The Economics of Unions

Gary Becker (link) and Richard Posner (link) opened a discussion on how unions influence policymaking decision. Recently, president Obama imposed punitive 35 percent tariff rate on imported Chinese tire (link) risking the coming trade war. Indeed, China may file a case against the U.S at the WTO, and the WTO may rule against the U.S for imposing illegal and discriminatory trade practices.

Many believe that president Obama enforced trade protection to win the support of the unions in health care reform. In fact, the bailout of GM and Chrysler was one of the major efforts to help unions, particularly the United Auto Workers, in paying the health-care and pension benefits that GM and Chrysler couldn’t actually afford to pay.

Recently, the Congress has been split up on Employee Free Choice Act which suggests giving mandate to unions representing employee in arbitrating union-management contracts. I believe the Congresional Budget Office will yield a meaningful research on the economic effects of the act.

The empirical evidence on union activity is, in fact, quite clear. In OECD comparison panel (link), there is a strong, negative and significant relationship between the density of union membership and labor market rigidity. Sweden, for example, hasn’t enforced a general level of minimum wages. Yet in 2007, over 7o percent of the working population was unionized. High union density further contributed to inflexible labor market structure which led to low employment growth, low productivity growth and exerted a strong upward pressure on real labor cost.

Yet, there is a distinctive character of trade unions within Europe. Traditionally, unions in Europe possessed a stronger influence on political decision in areas such as taxation, income redistribution and government size. However, there are significant disparities in union activity throughout Europe. In 1990s, Denmark enforced a series of reforms that deregulated labor market structure towards greater flexibility. Today, Denmark’s labor market is cited as the most competitive in the world (link). From 1990 to 2007, union density decreased from 75.3 percent to 69.1 percent. On the other side, labor market structures in Continental and Mediterranean Europe are known for inflexible features, regulation and rigidity. Meanwhile, Anglo-Saxon countries, Britain and Ireland, are known for flexible labor markets and few barriers impeding labor market performance. Dismissing and employee costs 10 weekly salaries in Ireland compared to 56 weekly salaries in Spain.

Although variation in trade union density over time explains a relatively large part of variation in productivity, union activity and influence in political decision-making could be the decisive factor in explaining cross-country variation in labor market outcome. That would requiring the design of principal indicator that could measure union influence on the quantitive basis. The influence of trade unions has, in my opinion, a strong common connection to cultural patterns and informal institutions.

For instance, countries with weak rule of law, persistent corruption, high tax burden and barriers to trade and investment, tend to have larger underground economies. Empirical estimates on the size of underground economies suggest that, in Europe (link), Mediterranean countries (Italy, Spain, Greece, Portugal) have the largest share of shadow economies. There is a significant cross-country variation. The estimates of shadow economies for 28 transition countries is 40.1 percent and 16.3 percent for the OECD. So, could union activity affect the size of shadow economies

If unions, as an interest group, exert a strong influence in politics, their political philosophy will probably lean left. Thus, if unions influence decisions on taxation issues, welfare benefits, pension schemes and government size, the outcome will probably induce more complexity, more regulation and more barriers to trade, entrepreneurship and investment. The combination of those factors can strongly influence labor and business incentives and, hence, also determine and productivity growth.

Five Things to Get Your Morning Started

1. A White House report shows that H1N1 may kill 90,000 – I’m going to come out out right now and say that I don’t know how exactly the White House is going to play this, or what tactics they are going to use, but they are going to try to use this virus as a crisis to increase federal power. They can use it to sell national healthcare, or they can intervene with the states’ handling of an outbreak, or try something far more nefarious like using the flu to declare martial law and subvert our liberties. Right now, they are just releasing these reports to pave the way for increased intervention down the road.

2. Van Jones – Continuing in the line of moderate, sane czars prudently chosen by President Obama, we have this man:

It’s not as if Obama just surrounds himself with lefties. He goes for the most radical, vitriolic and just plain batty people. There is no real oversight over these aptly named czars, and this extra layer of government allows Obama free rein over the system of checks and balances. It is very telling that the people in our government who he has sole power to pick are the craziest and most destructive.

3. NY AFL-CIO head named chairman of the NY Fed – I couldn’t believe this the first time I read it, but then again when you look at the big picture this makes perfect sense. The banking cartel needed to make amends for having their political brethren in important government positions. Labor is gaining inordinate power under the Obama administration and are probably the constituency that he is most banking on for his re-election in 2012. This move follows the strategy of the politicians to a tee – the government will do whatever it takes to bail out the moneyed interests and the union laborer’s interests, while screwing everyone else in-between. They bribe the moneyed interests to keep them paying the taxes to subsidize the poor. They bribe labor at the expense of the real capitalists and entrepreneurs who create labor’s jobs. The middle class and those who create the prosperity around us pay the price.

4. Eric Holder will pursue CIA interrogators – “Holder said that he realizes the move is controversial, but that it was the only responsible course to take. The decision does not reflect a sharp division between the Justice Department and the White House, government officials said, given the limits of the preliminary review and the respect that Obama says he maintains for the role of an independent attorney general.” I mean wow. First, what brilliant politics by Obama. He allows Holder to go after prosecuting members of the CIA because of the role of the “independent attorney general,” so he gets what he probably wanted all along but can always tell the critics that he is merely allowing for the proper separation of powers. Second, WTF is wrong with you Eric Holder. You go after the people that are doing their job to defend our country ex post, threatening the CIA and deterring anyone from ever joining the agency from this point forward, yet fail to go after members of the Black Panthers threatening to bludgeon people at the voting booths.

5. Obama on the Vineyard – The President always seems to come up smelling like roses. While the world goes to hell, and his party is taking bullets at townhalls (sometimes arguing that they should use bullets themselves), Mr. Obama gets to hit the links and sip on cocktails. Now I have absolutely no problem with President’s taking vacations (though it is garbage that they use taxpayer dollars to do so), as I understand that a “vacation” for a President is hardly a real vacation, and that their job is highly stressful all the time. That being said, imagine if a Republican President during a time like this when the country is running $9 trillion deficits over the next ten years (Barry’s guys were $2 trillion off on the math there mind you) and unemployment numbers are high decided to head to a ranch in Crawford or worse some lush pad out in Orange Country for some R&R. The media would be up in arms. But it seems that hypocrisy is the way of the world today. At least Obama should have the courtesy to invite some of his poor community organizing friends out to the 29-acre estate.

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