Is state sponsored education a Good Investment?

In his recent article in NY Times, David Leonhardt asserts:

" High school became universal in the United States in the early 20th century, when other countries viewed universal schooling as wasteful, which goes a long way toward explaining our economy's 20th-century success."

find the complete article at: http://www.nytimes.com/2011/01/26/business/economy/26leonhardt.html?_r=1&adxnnl=1&adxnnlx=1296410469-7EWiR6BJpKIraI+ijbmSvg

this is a myth.  we can explain America's success in a myriad of ways related to productivity gains fueled by the private sector.  America's "success" (measured in rising standard of living over past 100 years)  was in spite of state sponsored universal high school education, not because of it! 

Entrepreneurs learned risk taking and creative problem solving despite the monopoly power the Federal government has wielded in education since the early 20th century.

The state doesn't have to sponsor investment in universal education or investments in any important sector of the economy to ensure or even to facilitate "successful"  economy or society.   In fact, when the government does get involved it inevitably screws things up. 

Look at all of the key sectors of economy which structurally dysfunctional thanks to massive "subsidies" which supporters might call "investment":  e.g. education, healthcare (tax breaks on company sponsored health insurance), infrastructure, housing (Fannie, Freddie, tax break on interest, etc), banking and finance (deposit insurance, Greenspan put, Fed bailouts), food (farm subsidies). 

The "universal" state sponsored education model paved the way for public unions to hijack the system for their own selfish purposes in the 1960's.  Consider the recent WSJ article by Fred Siegel published on JANUARY 25, 2011 titled:

How Public Unions Took Taxpayers Hostage: The first to seize on the political potential of government workers was New York's Mayor Robert F. Wagner. The Kennedy White House took notice of his success.

http://online.wsj.com/article/SB10001424052748703909904576052150177439350.html

Public education is a cancer that promotes our modern idea that we need the state to solve big social problems.  You can hear this erroneous assumption embedded throughout Obama's 2011 State of the Union speech. 

Just because the government led a program to land a man on moon or build the atomic bomb doesn’t mean it can manage a complex system like education, energy policy or financial markets.   

Landing a man on moon is a discrete project with a discrete beginning and end.  Complex systems like education and healthcare have no beginning or end per se.   Experts can understand all of the important variables required to land a man on the moon, but as Fredrich Hayek pointed out in his work The Fatal conceit, enlightened governmnetn bureaurcrats have an information problem with respect to managing large complex systems in society, no matter whether we are talking about health care or education or banking.   You name it there is an information access and collection problem inherent in all Big Government programs that sows seeds of its own destruction.

That is not to say there is no role for the state.  The state can help in a pinch.  If there is a natural disaster or financial crisis the state may come in and help reduce suffering.  But the logic of the intervention has to be that it is limited and temporary.  the State can't make wise investment decisions and it can't manage large sectors of the economy, whether energy, health, education, housing, banking.   

This doesn't mean markets are perfect.

They're not.  but if we try to use enlightened government policy making to improve inherent flaws in the market with government solutions, we will only make things worse.  

once the state gets involved it is very hard (i would say impossible) to cut waste.  that is what we've seen with Obamacare.  the savings promised were enormous, but once the bill writing process got going, we got all of the increased coverage and very little of the savings.  that's because there are special interests that protect "waste."  

so no i don't buy David Leonhardts assertion that the government can lead smart and efficient investment decisions and cut waste at the same time in education or in any sector of the economy. 

i just bought a book titled Education and the State,  which was recently made available again through a re-printing by the the Mises Institute.  Written and originally published in 1965, it goes to show you that even way back then it was clear to some people that state sponsored education was/is a growing cancer in our great country.   

Education and the State by Edwin G. West

Description: 

Can education be provided entirely by private markets? In some ways, it is a preposterous question, as this seminal important book shows. Private education was thriving and growing completely on its own. The advent of state education was superimposed upon the voluntary society, in both U.S. and Britain. The goal was NOT to provide better education but to change what and how people are taught.

That we even doubt the capacity of society to provide education is a testament to the success of the dubious political process. Today, people question the capacity of private markets solely because the state has been doing it (and doing it poorly) for so long.

Education and the State first appeared in 1965 and was immediately hailed as one of the century's most important works on education. In the thirty years that have followed, the questions this book raised concerning state-run education have grown immeasurably in urgency and intensity. Education and the State re-examines the role of government in education and challenges the fundamental statist assumption that the state is best able to provide an education for the general population.

West explores the views on education of the nineteenth-century British reformers and classical economists who argued for state education. He demonstrates that by the Foster Act of 1870 the state system of education was superimposed upon successful private efforts, thereby suppressing an emerging and increasingly robust structure of private, voluntary, and competitive education funded by families, churches, and philanthropies.

This new and expanded edition of Education and the State addresses the American situation in education, applying the lessons learned from the study of British institutions. It also broadens their application from education to the conduct of democracy as a political system.

If you care about education, this is the book you need to read and master.

Edwin G. West is Professor Emeritus of Economics at Carleton University, Ottawa.

FIND THE BOOK HERE:

http://mises.org/store/Education-and-the-State-P10423.aspx

Mister Center Manifesto: Let's Build a New Center for US politics based on Principle not Pragmatism or Good Intentions

Mister Center Manifesto

The modern political left and right in America are two sides of the same Big Government coin.

The left pushes big government social welfare (aka "butter") policies and the right pushes big government "guns and morality" policies, the funding for which is facilitated by the big government piggy bank favored by political elites on both sides of the aisle:  i.e. the Federal Reserve.

Thus, the current so-called "center" in American politics is an "immoral" compromise position between what I would call the Big Government left and the Big Government right. 

Bipartisan and centrist have a positive connotation in today's poisoned political atmosphere, but I assert that the modern center in American politics increasingly represents an extreme big government position because it is ultimately entails a "compromise" between Big government of the left and Big government on the right.

The goal of the Mister Center Blog is to re-frame what is considered to be the political Center in America.

Let us build a New Political Center in America, which is anchored in the core principles enshrined in the Declaration of Independence and the Constitution:   limited government, sanctity of private property rights, the right of individuals to pursue happiness and equal opportunity and to be treated fairly under the law.

All of these core principles are activating components of the DNA of our country; thus, why shouldn't the political center point to a political space where these are the activating principles?
The political center in American politics today has become a "relative" space between the Big Government political "right" and the Big Government political "left." 

I propose we go back to the fundamental principles upon which America was founded to identify a new and robust political "Center" that is not subject to the particular political winds of the moment. 

The Mister Center blog promotes a New Center for American politics that is an "absolute" center, not a relative center.  I propose we think of the New Center as a fixed place rather than a relative space created by a dynamic compromise process between what has evolved into Big Government alternatives on both the right and the left.   

How did Center politics today become a battle field for competing Big Government agendas?

The political currency that both the political right and left trade in is “safety”. The left sells government interventions (i.e. Big government) by scare mongering the evil of free markets, arguing that without Big Government our entire system would collapse; and the right sells government intervention (military industrial complex driven big government) by scare mongering homeland security (and morality) issues arguing that without such Big Government initiatives, or entire society would be at risk.

Ben Franklin said:
They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.

All too often, we make the trade because that is what both sides of the political debate are selling. 

The Republican party pays lip service to the principles of the New Center I am promoting in this blog, but the substance of policy is at odds with what has become mostly empty limited government rhetoric.

Make no mistake:  the substantive politics of today's conservative "right” promotes Big Government because the agenda of the right requires easy money provided by the central bank.  This is ultimately the Achilles heal of the Reagan revolution.  Reagan argued that "deficits" don't matter, which is a refrain later picked up by VP Dick Cheney to rationalize the massive spending for the Iraq War (and the pork barrel explosion under GW) leading to huge fiscal deficits.  

Deficits do matter because large ones require the central bank's convenient printing press.

Once the printing press is initiated -- for whatever ostensibly good reason -- there is no such thing as a "free market."  Easy money sets in train an ineluctable process of more and bigger Government because easy money distorts markets leading to what superficially appears to be market failure begging new government intervention technologies.  of course the new interventions sow the seeds for further market distortions which beg addition government intervention, and so on.

Republicans can't say, hey, we are for limited government and free enterprise and free markets and de-regulation, but we are also for massive deficit spending facilitated by the Federal Reserve to pay for our military industrial complex and for our Wars in Iraq and Afghanistan. 

Under GW, the Republicans also added a massive Homeland Security industrial complex that is now part of the agenda of the Big Government political center.   

The Center promoted by the Mister Center blog is being re-energized by the Tea Party movement, which spontaneously organized in response to Obama's first fiscal stimulus program.   Critics of the Tea Party have called it an astro turf movement as opposed to grass roots.    But, such critics (mainly coming from the Big government progressive/liberal/left) dismiss Tea Party politics as a red-neck populist or an evil GOP invented conspiracy at their own political peril.
The GOP seems to be adjusting to accommodate the Tea Party rather than dismissing it. But, there will no doubt be a struggle for the soul of Republican party between limited government Tea Party types and Big government conservatives going forward.

Moral Bankruptcy of Modern Center Politics
The political left and right in America both sell a bankrupt morality based on the idea that “well intended ends justify the means”.  Such a morality is inherently bankrupt because it requires government coercion to make it work. 

Notice how President Obama talked about how "we" shouldn't care about the corrupt process that produced the fiscal stimulus plan or the health care reform; he claimed what mattered was the results of the policy; what mattered was “helping” people. 

GW sold the Iraq as a "just" war and thus pursued a similar "ends justify the means" logic. 

In what kind of an ethical, moral world are the means justified by the ends?  
The left and the right both use the rhetoric of war to describe Big Government efforts to solve domestic social issues.

The conservative right uses ends justify the means logic to defend Big government support of military and moral adventurism (e.g. war on drugs), while the left defends Big government based on the same ends justify the means morality for domestic “wars” such as the war on poverty begun in the 1960s by LBJ.   The left has its pet wars: e.g. war on poverty; and the right has its pet wars:  the war on drugs.

All such domestic “wars” are convenient rationalizations for mobilizing big government interventions in society based on ends justify the means logic.     

The Scourge of Central Banking: 
A key underlying principle of the "New Center" proposed by the Mister Center blog is sound money. Sound money is a big subject that deserves a lot more attention than I can give here.  Suffice it to say that a
"Sound Money" system ensures limited government and vice versa. 

A sound money system can’t work sustainably with a big government overlay. This is because ultimately big government has to be paid for with debt, which requires easy money supplied by a central bank.

A big government easy money world promotes "vice." Speculators gain. Greed wins. Might makes right -- special interests buy access to political goodies.   Savers are suckers. 

In a world organized around Big Government, the little guys gets screwed because big business, finance and labor all of whom have the resources to "buy" big government support.  This is the inherent paradox undermining the Big Government world view.  Once Big government gets in the game of choosing winners and losers, it opens the way for being co opted by big business, big finance and big labor. 

Big government supporters pretend to be ethical and moral by voting for well intended government interventions, but such interventions are counter productive and self defeating and end up impoverishing society and hurting the disadvantaged most of all. 

Meanwhile, policy makers point fingers at each other across the political aisle ... and Rome burns.

In the wake of the great Credit Crisis of 2007 and Great Recession of 2008, governments across the world are promising to use regulations to inject virtue back into society and stability and transparency and sustainability in markets. But these are empty promises. As long as our "easy money" system remains in place based on a modern Central Banking framework, the unethical will find ways around the new rules and the virtuous (savers) will be systematically turned into suckers. 

Easy money literally turns savers into suckers.   

Money is not the root of all evil. In a sound money system, money is an objective measure of what a man contributes to the increase in productivity of society as a whole.

“Easy money” is the root of all evil.   Big government can’t work without easy money; thus no matter how good its intentions, big government is evil. This logic explains the old adage that the road to hell is paved with good intentions. 

A modern interpretation of this adage could be: the road to hell is paved by Big government.

Easy money facilitates the concentration of power in the Federal government, which leads ineluctably to the moral bankruptcy of our political leaders.  Lord Acton observed that "power corrupts and absolute power corrupts absolutely."  By facilitating the concentration of the power of the purse into the hands of our central government, central banking naturally is self corrupting. 
There is no guarantee of happiness or equal outcomes in the New Center.  Our founding fathers aimed to guarantee the pursuit of happiness, not happiness itself.

Life isn't fair.   The idea that the government can make life fair is to believe in Santa Claus. 

The New Center guarantees the right for all of us to pursue happiness and a rich life outside the coercive purview of our government.  That is freedom.