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Let’s give our children the education they deserve instead of the one they were dealt

September 25th, 2011 No comments

The biggest government failures have not been limited to its market interventions; in fact, if you want to see the most impactful failure of government simply go to your local public school.

It has long been known that there is a growing income gap in the U.S., and it has long been argued that your destiny is determined by where you grew up. While the causes are up for debate, the trends are undeniable.

There is however one correlating element that is virtually unmistakable in the poverty stricken regions of the U.S., the education is beyond poor. The most overlooked part of this failure is that unlike the minor inconvenience when the postal service misplaces your mail, the displacement of a child has profound implications for their neighborhood and all of society.

Studies suggest that the difference between a good teacher and a bad teacher can displace students from their peers by as much as two years. Compounded throughout their school careers, it is no wonder that we have high school graduates that lack some of the basic skills needed to obtain admission to college, and worse we have a dropout rates that continue to plague our public school system.

There have been various solutions offered, but only one addresses the dismal futures the government has ordained for the children of low income neighborhoods. That solution is school choice.

School choice allows parents to move their children away from bad neighborhood schools into performing schools, regardless of their race, creed or income. Along with a more formidable education, these children are removed from the dreadful temptations and peer pressure associated with the culture of crime instilled in many of these communities.

Criticism of this system comes from various angles, but almost all of the criticisms stem from the interests of the adults rather than the children. If we are to strive to be a competitive nation, we should now say that a child’s future isn’t determined by their zip code. The biggest beneficiaries of such a system are the poor, but it’s important to note that school choice isn’t limited based on your income.

If you don’t want your child going to a crime ridden school or a school with a failing record, then it should be no right of yours to force that upon someone else. Unfortunately, under our current system that is exactly the case.

School choice isn’t an end-all solution. The schools that are currently failing could be helped by various other educational reforms, such as merit pay and the encouragements of alternative learning methods to name a few.

These ideas aren’t new. This is not an experiment. This is the future of our children and the future of America. We won’t be around forever, and it is our obligation as parents, teachers, and citizens to lead our children to a better future though a better education. Let’s give our children the education they deserve instead of the one they were dealt.

Chart of the day: Government default? Not likely.

July 12th, 2011 No comments

President Obama claimed that Social Security checks  are “not guaranteed,” yet research from Goldman Sachs calls this into question.

Using August 2010 spending and receipts as a proxy, the Treasury will probably take in $5-$10 bn in revenue on August 3, leaving insufficient revenues to make Social Security payments partly unfunded even if all other spending is deferred. Since the Treasury has carried a minimum cash balance of about $20 bn since 2009, and currently carries a balance of $74 bn, Social Security payments might still be made by drawing down the Treasury’s cash balance.

Why not provide how many calories I’m burning?

July 12th, 2011 No comments

I was reading USA Today this morning, and I came across this opinions piece about how food chains should be required to post calories counts. I thought it was genius, I had never thought of such a thing…but I felt it was missing something. While sitting down to read the article I was unaware that I’d be only burning about three calories. I started to ponder. Perhaps in an effort to help those who wish to be healthy we should put not only how many calories you’re taking in, but also how many calories you’re burning while doing something. As a measure I believe now is the time for USA Today to inform me of how few calories I’m burning while reading their website, after all I could be swimming or jogging, but seeing as I don’t know any better, I need to be informed. It’s a modest proposal, but one I think we can all get behind.

Boeing-union fight could spill over into Tennessee (with good photo)

July 11th, 2011 No comments

As appeared in 7/11/2011 edition of the Tennessean.

The clash between labor unions and businesses is a deep-rooted skirmish, creating fault lines that have helped to shape America’s political landscape.

The latest quarrel is that between the National Labor Relations Board and Boeing Corp., and though it is taking place outside of Tennessee, the implications run deep beneath its bedrock.

At stake in the battle is a $1 billion factory in South Carolina that Boeing hopes will be housing a production line of their new 787 Dreamliner passenger jet. The NLRB claims that Boeing is building the facility in South Carolina to punish the unions in Washington state for past strikes and high wages. The advantage that South Carolina has in luring companies like Boeing is their right-to-work status.

Under right-to-work laws, you cannot be forced to become a member of, or pay dues to, a union. This incentivizes, as has been seen over the past 40 years, businesses to move or expand some production lines to states with these policies. Tennessee is one of the beneficiaries of this status. From major corporations to small operations, Tennessee has experienced a steady growth in its manufacturing base and economic output despite economic downturns and outsourcing nationwide.

It is no accident that states with business-friendly climates attract business from other regions and other nations. Yet, the NLRB attack on Boeing indicates a disturbing trend. As the U.S. economy struggles to find its stride, the push from labor unions on existing facilities grows. Lack of job creation in those regions has put stress on union leaders to keep their grasp on expansion.

Pressure also mounts on politicians dependent on union donations to keep them in power. It is important to note that Boeing isn’t cutting jobs but putting an additional plant in South Carolina.

The implications here are dizzying. Given Tennessee’s business-friendly reputation, are the policies that help maintain its business prestige all for naught? Elected leaders on both sides of the aisle have staked their careers in maintaining and building an environment that sets Tennessee apart from other states. Moreover, Tennessee workers have benefited greatly from the economic freedom and helped to build the solid reputation of our labor force.

Tennesseans should be concerned that unions now seek to prevent right-to-work states from scooping up those jobs. The NLRB appears to be doing its job to protect unions, but in reality it is merely protecting a monopoly at the expense of job growth and competition among the states to offer better economic climates.

I believe unions in some cases should exist, but their abuse of power in this instance threatens to undermine many state-based policies that have led to substantial economic growth and job creation.

This is not just a South Carolina problem. It could very well shake the foundation upon which Tennessee’s pro-growth economic foundation rests.

Current tax alternatives

April 26th, 2011 No comments

April brings about a lot of antipathy toward our system of taxation. From the murky state of the tax code to the vast number of accounting lobbyists that seek to keep the complexities for their own benefit, it’s undeniable that the system has its drawbacks.

There have been various proposals, all of which have sought to eliminate many of the loopholes and the headaches. The biggest complaints that have stemmed from tax reforms are their potential adverse effects on both revenues and the political landscape. You can rest assured that the system won’t change anytime soon as a result of those variables.

No matter the unlikelihood of major reform in our present day, it is not beyond us to question the system and its possible replacements from a moral and economic perspective. Certainly, a big hang up with proposals such as the fair tax and the flat tax is the perception of a system that is no longer progressive.

That is, however, not of great concern to most, and generally is argued purely from the political realm. The big hang up that many economists have with the fair tax, for instance, is the problem of lump sum. Many government officials and economists alike fear that the properties which lump the tax into sales may drive tax evasion through black market transactions.

On the other hand, the flat tax does not have such a draw back, and unlike progressive tax schemes on income, it doesn’t restrain the incentive for individuals to increase their income.

We often take for granted the withholding tax system we currently have, which in and of itself has improved the efficiency of tax collection. The man behind this structure, Milton Friedman, first proposed the flat tax for the United States in 1962. At the time, the proposed structure included something that not only would eliminate the lobbyist “capture” on the tax code, but it also spanned to eliminate U.S. welfare programs.

The proposal, now known as the negative income tax helped to alleviate the “welfare trap,” which just as with the remaining progressive tax scale is due to the restraint on incentives for individual from tax bracket shifting. Essentially, there is a point in which increasing your income has a cost greater than the income rise itself. So, you could have a lower income and still have a higher take-home pay because of the bracket differentials.

Just as with the flat tax seeking to eliminate this “trap,” the proposed negative income tax would remove the threshold on the poor to rely on government programs by weaning them off until their baseline rate is 0 percent.

While no system of taxation is fair, it is quite unfair to ignore the deep problems within our own tax system, which more often than not benefit the rich far more than the poor.

In the end, the flat tax at the very least would prevent changing of the tax code by businesses, which not only have the accountants to drive through the loopholes but also the lobbyists to establish the loopholes.

Categories: Economics, Politics Tags:

Pardon my French, but laissez-faire

April 26th, 2011 No comments

The free market is not a popular idea, from The Grumbling Hive of commerce that embraces the vices as a necessary condition for prosperity, to the Creative Destruction that brings about a positive change in society through economic evolution.

Yet, even with all of its harshest critics, none have been able to deny that the market is the most efficient means of production. Likewise, in the words of economist Milton Friedman, “the operation of the free market is so essential, not only to promote productive efficiency but even more, to foster harmony and peace among the peoples of the world.”

Still, it is through fierce debate that we establish the rules by which our economic freedoms can reside. The problems that are established with these rules of law are abhorrent to the process of dynamic markets because law and government, as they should be, are relatively constant.

As new laws are cast into the dynamic light of market processes, the shadows cast can very often leave many in the dark. As institutions age, the bureaucracy of government strangles their ability to adapt, yet a streamlined government is a threat to liberty itself.

The well-intentioned men and women responsible for these outcomes more often than not seek to remove the perceptual nature of the stultifying effects of labor on the human spirit. Despite being seemingly moral in their actions, they generally destroy the incentive for men to seek out commerce and innovation.

A society without the tangible and intangible rights of man alike cannot operate as an effective marketplace.

As with the poem The Grumbling Hive, by Bernard de Mandeville, the restoration of man’s view of virtue may be accompanied by poverty and primitive conditions. I’ve heard many conversations on campus, which reflect the desire for a return to their perception of heaven on earth, but very often these actions create the most hellish conditions.

Though the market isn’t entirely free, and never will be, the liberalization of global marketplaces has lifted more people out of poverty in the past decade than in any point in human history. The perceived demise of America hasn’t been due to the passing of U.S. industry due to comparative advantages of foreign nations, rather it has been due to the failure of U.S. institutional structures.

Education and the withering middle class nearly go in tandem. The fact is that our education system has been so static in its teachings that is has been unable to adapt to the market demands. Meanwhile, many of our industries have become unwilling to innovate because the long-standing tradition is comfortable, and our education system merely encourages its continuation.

So, while it is easy to blame our lack of adaptive abilities on the market, it is very often our static institutions and laws which hamper the ability for human intuition to fuel innovation and establish the creative destruction that is needed for economic evolution. So, if you will, pardon my French, but laissez-faire.

Categories: Economics Tags:

The First Amendment swings both ways

April 12th, 2011 No comments

It’s a sad state of affairs of late as various incidences have called into question just how far free speech extends.

On CBS’s “Face The Nation,” Sen. Lindsay Graham of South Carolina said, “I wish we could find a way to hold people accountable. Free speech is a great idea, but we’re in a war.”

This statement was in regards to the Koran burning held by Tennessee pastor Terry Jones, which may or may not have indirectly led to the deaths of approximately ten civilians.

Graham wasn’t alone in his calls to rein in the free speech. Senate Majority Leader, Harry Reid on the same program chimed in, saying that the incident needed to be investigated.

It doesn’t take long to realize just how dangerous these ideas of censorship are to our relatively free society.

It’s obvious that the Westboro Baptist Church or the Tennessee pastor aren’t going to persuade anyone, but now it seems their danger lies in the externalities that are beyond the control of the of the individuals expressing their beliefs.

So it is now seemingly within our right as a collective to revoke the speech of those for which are no agreeable.

It’s relatively easy to stand up for speech that you believe has no value of persuasion. What is significantly harder is to stand up for speech that is persuasive, and may actually cause people to adopt beliefs or enact policies that you disagree with.

Now the dialogue has shifted and added the variable of human lives being at stake in the instances of unpersuasive speech. Are you willing to risk your loved one’s life just so your neighbor can express their opinions of hate and vulgarity?

While people often pat themselves on the back for their compassion to give their neighbors the benefit of the doubt and grant them their First Amendment rights, that right is only extended if we sense no threat ideologically or physically. This is in local events such as the mosque construction here in Murfreesboro.

The very same people who shout down people or vandalize the mosque advocates are the same people who don’t want the Federal Communications Commission to enact the “Fairness Doctrine.”

Yet both are in conflict with one another, it’s the classic case of give to me, and take from them. It occurs in all rights, from property to speech and it’s on a dangerous path on both ends of the spectrum.

Property rights and the right to free speech, or even the right to assemble may have been paid for in blood by American soldiers; but even the act of war itself appears to have, in past and in present, given the ability for the government to limit our access to those very things that blood was shed for.

Some assume that free speech is selfish in its ability to allow individuals to express themselves, but I find it far more selfish to not allow that expression for the mere fact that it disagrees with and threatens with your worldview.

DelDOT confiscates basketball hoops, lies about ownership

March 29th, 2011 No comments

Japanese quake brings out worst in economists

March 24th, 2011 No comments

After the quake in Japan wiped out a vast amount of infrastructure and took thousands of lives, some have found it playing in favor of an economic recovery. In an interview on CNBC, President Barack Obama’s former economic adviser, Larry Summers, suggested that the disaster could actually offer a temporary “boost” to the global economy.

This idea, of course, is preposterous and ignores a critical rule of economics called “opportunity cost.” In the case of a nation spending billions to rebuild its infrastructure, the question arises, what could it have done with the money otherwise? The answer and differential of this question is what is known as opportunity cost and is a critical idea in the margin theory of value. Something many economists seem to ignore if it’s not politically palatable to their school of economics.
In a 2005 survey by the American Economic Association, only 21.6 percent of professional economists correctly answered a question in regards to opportunity cost. In a similar survey by the same group, only 7.5 percent of college students correctly answered the question despite having economics courses. Ironically, of the students who had never taken an economics course, 17.2 percent of them
answered correctly.

This “broken window fallacy” extends to the press. In a Huffington Post article titled “The Silver Lining of Japan’s Quake,“ Nathan Gardels showed his ignorance of economics when he said, “Mother Nature has accomplished what fiscal policy and the central bank could not… The result of all the new wealth creation will be money in the pockets of Japanese to buy global goods
and services.”

While it is true that the economic output will likely increase due to more aggregate demand, the entire point of GDP measures is to measure the welfare a nation. I hardly view destruction and rebuilding as a boost to the livelihood of individuals in any economy.

If economists really believe such destruction is good for the economy, then we’d be ill advised not to burn down neighborhoods and destroy infrastructure, in times of economic downturn. After all, think of the demand for construction workers and equipment it would produce. We’d soon be kings, and the middle class would be restored.

Categories: Economics, In the News Tags: , ,

Don’t equate labor with labor unions

March 24th, 2011 No comments

Something is bubbling in Wisconsin, the bottle is ready to blow. The union sickouts may seem like a political godsend of cork popping proportions to the Democrats and progressives, but history suggests otherwise.

I recently read an article by author Amity Shlaes about Calvin Coolidge’s struggles with the police force of Boston during his tenure as governor. The end result of the attempt at public unionization was a firing of all Boston policemen who had abandoned their post, for life. As Coolidge put it, there is “no right to strike against the public safety by anybody, anywhere, any time.” As you may know, Calvin Coolidge later went on to become President. So while the political climate is currently heating up around Wisconsin’s governor Scott Walker, his actions aren’t necessarily political suicide.

Economist, and New York Times columnist, Paul Krugman isn’t celebrating the sickouts but he is celebrating the importance of unions in the political structure. Unfortunately for Krugman, the idea of unions acting as a check on the political powers of business and the right wing is unfounded.  According to the Center for Responsive Politics, trade and labor unions were 10 of the top 20 PAC since 1989, all the while the top 10 PACs contributed more to the Democrats than to Republicans in the latest election cycle.

The retort to this claim is often that the money shifts depending on which party is viewed to have the political upper hand during that election cycle, but the money flow of unions into the pockets of Democrats has not shifted. So the idea that this structure is a necessary institution in out political establishment, or in our economy is quite weak. The fact of the matter is that unions are “big money.” Politically they are viable to the union workers, not to all workers.

Moving forward, the monopolies that companies once held on the job market has dwindled. The only places that still resemble the times of the robber barrons is around coal mines where it is true that the coal mines still hold a virtual monopoly over labor in the surrounding area. Could unions be a viable option in these areas? It is possible, but in the public sector where the competition has driven up wages well above the minimum wage it’s hard to make a case for their existence.

Collectively the individual is at a loss, and many teachers lose the incentive of performing well, especially after tenure is achieved. We have all, I’m sure, had teachers which were and are unfit to fill the capacity of their jobs. In Los Angeles, less than 2 percent of teachers are denied tenure, yet there is a drop out rate of 35 percent. According to a report earlier this month in LA Weekly in the past decade the L.A. school district spent more than $3.5 million to fire just seven teachers for low performance.

If we put job projection in front of learning, we will continue to be plagued with an education system that only dwindles with age.

Categories: Economics, In the News, Politics Tags:
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