An education in education

4732

an-education-in-education

Having read his superlative The Beautiful Tree, I have been working my way through Professor James Tooley’s E.G. West: Economic Liberalism and the Role of Government in Education. Stunned also by E.G. West’s magnum opus, Education and the State, I was thus keen to read Professor Tooley’s analysis of the great man and his work. It did not disappoint. In thoughtfulness it put shame to my scribbles in the margins of my copy of Education and the State.

Although unknown to far too many people, E.G. West’s work was, and remains, groundbreaking in scope and depth. Using the lessons of public choice theory he convincingly explains how and why the state came to dominate schooling. The initial usurpations in the 19th Century can be broken down in to six stages:

1. 1833 – The Committee of Council encouraged private schools to take money in exchange for being regulated.
2. The Committee of Council then produced dubious statistics to argue that there were deficiencies in the population’s education
3. Through the elaborate pupil-teacher system, the Committee of Council aligned teachers’ interests with those of the Council’s.
4. Churches were restricted from helping the poor and strict building codes were introduced.
5. 1870 – The Education Act set up the board school. This increased the domain and influence of the Department of Education.
6. 1878 – Board schools given the right to supply deficiencies ahead of voluntary establishments, who were now ineligible for any subsidies.

It is important to note that most, if not all, of this happened without ill intent; yet it is still best explained by the self-interest of bureaucrats through public choice theory. Disturbingly, despite this increase in government expenditure, these policies lead to a decrease overall in spending on education. West calculated that by 1882, 27% of private investment had been crowded out by the state.

In light of West's and Tooley's works it is odd that so many people who are open to free markets in so many functions of the state are still remarkably statist with regards to education. It is not only that they fail to make the ‘leap of facts’ to support a system with no, or almost no, government intervention, they are even averse to anything that goes beyond the limited terrain of Friedman’s voucher system, despite all the state controls that would still be left in place. As such, I can do no more than suggest they read West and Tooley, required reading for anyone that requires an education in education.

Well, we all knew we'd get to this

4730

well-we-all-knew-wed-get-to-this

Yes, inflation, the last refuge of spendthrift governments. And to make matters worse we've actually got The Guardian praising the idea:

But the panic is plainly preposterous: living costs are rising at just shy of 3%, as opposed to just shy of 30% in the dog days of disco. The truth – although it is unthinkable for central bankers to say it – is that cheaper money can be a force for good. It was not (just) to be flippant that Keynes claimed Shakespeare's genius required inflation in order to flourish. At least until savers get wise and demand extra interest, it boosts enterprise by reducing the debts of people who borrow to do useful things, at the expense of those who squirrel their money away. It could also eat up the public borrowing that hangs over us all, just as it did with vast bills for the second world war. The downside? If prices rise steadily and in step, the costs are measured in the shoe leather worn out by extra trips to the cashpoint and in the endless reprinting of price tags – neither a truly crippling burden for UK plc.

Well, at least someone there has read at least one economics book to get the reference to shoe leather costs. But, umm, the rest of it smells like months old tripe really. "Saving" so that others can invest that money is squirrelling it away now, is it? 3% inflation over 25 years halves the value of money: not greatly helpful for those who would save for their retirement now is it?

But the truly gargantuan problem is the supposition that inflation would eat away at the debt burden. Firstly, of course, what this really means is a hidden default on that debt. You know, sort of a "Tee hee...we'll pay you your money back but it won't be worth anything by then. Aren't we clever!". Well, no actually, this isn't big and it's not clever. Those gilts largely exist in the pension funds of us out here in the general population so that suggestion is really that you'll steal from us in our old age in order to fund your fiscal incontinence now.

Worse than that though is that it won't actually work. For markets have been stung by that inflation ruse once already and so matters are now different. Some 25% (so I'm told) of long term gilts are now inflation linked. Inflation does nothing to reduce that burden then. Short term gilts will of course need to be refinanced at the new, higher, (nominal) interest rates that inflation will bring. And the largest parts of government debt, things like the PFI exposures and the public sector pension plans are all inflation indexed. So inflation would be both a default upon those who are not inflation protected and wouldn't solve the debt problem either.

Inflation simply won't cure the debt problem. We're back to either raising taxes so as to choke off new economic activity or firing some portion of the army of wastrels who consume the current tax take. Given my language choices there you can probably guess which course I regard as sensible....

Just not cricket

4729

just-not-cricket

It was pretty depressing watching England get hammered in the final test match in South Africa last weekend. However, it was even worse hearing English Cricket Board (ECB) Chairman Giles Clarke interviewed about the potential effect of the government’s Davies Review on English cricket – yet another example of the law of unintended consequences at work.

Basically, the government set up the Davies Review to consider which sporting events should have to be shown on terrestrial TV (i.e. not on Sky). And one of the events that the Review decided should be ‘listed’ was the Ashes – the famous test match series between England and Australia. The government has accepted the findings, and seems intent to introduce the relevant legislation before the general election.

But the trouble is English cricket is heavily dependent on the money the ECB gets from selling broadcasting rights. The £30m they estimate they will lose if they have to sell the Ashes to ITV, Channel 4, Channel 5 or the BBC rather than Sky represents a third of their annual turnover. To put it another way, that’s more than the entire ‘Team England’ budget. Take that money out of the game, and it will suffer.

Moreover, while it’s easy to be populist and say that more sport should be shown on free-to-air channels, people ought to bear in mind the extraordinary impact that Sky has had on British sport. Without the money they brought to football, for example, there is no way the Premier League would be what it is today, attracting the world’s greatest players and showcasing some of the world’s best football.

But of course, that’s not really the key point here. Nor is the fact that Sky’s coverage is vastly superior to that of the terrestrial broadcasters. It’s not even that the terrestrial broadcasters show no real interest in showing cricket. The key point is that private sporting institutions should be able to contract freely with whomever they want for whatever price they want. End of story. The government just shouldn’t be involved.

P.S. Another sign of the times came when Clarke discussed the increased burden of government-mandated CRB checks - £600,000 last year, up from £300,000 the day before.

Gore on freedom

4727

gore-on-freedom

I believe we are on an irreversible trend toward more freedom and democracy - but that could change.

Al Gore Vice, 5/22/98

Chile vs. Venezuela

4726

chile-vs-venezuela

While Chile was being welcomed with open arms into the OECD, Chavez was busy devaluing Venezuela's bolívar fuerte. The lesson is unambiguous: free markets work, while planned economies fail. The Chicago Boys – protégés of the late and great Milton Friedman – deserve a great deal of the credit. Theirs were the policies that broke through under Pinochet’s dictatorship and have been continued and extended under Socialist governments since.

Chile is ranked 10th in the 2010 Index of Economic Freedom, ahead of the UK. By these measurements, this makes it the most economically free country the South and Central America/Caribbean region. Following the recent elections, Chile is now lead by the right-wing Sebastian Piñera. He was elected on a pledge to introduce more business friendly policies – an area in which there is certainly room for improvement.

Things have been looking good for Chile for a while, as Nick Reynolds points out for an article in The Globe and Mail:

From 1914 through 1980, Chile's economy grew at an average annual rate of 0.7 per cent. Since 1981, it has grown at an average annual rate of 4.2 per cent. Before the reforms of the Chicago boys, it took Chile 70 years to double its living standard; after these reforms, it took only 17 years.

Nestled in between Libya and Burma, Venezuela is judged to be the 174th most economically free country in the world, thus 28th out of the 29 countries in the South America/Caribbean region. And with that Constitutional Referendum passing last year, as low as Venezuela currently stands, Chavez is likely to only continue drive the country further into the ground in the coming year (or decades).

Silliest blog comment in the world...ever?

4728

silliest-blog-comment-in-the-worldever

i) As the production of goods and provision of services becomes less labour-intensive, economies need mechanisms to distribute goods and services to those no longer directly involved in production. At some point, state-mediated re-distribution of products and services grows. This leads to extended periods of education and retirement (to keep people out of the workforce), growing prison populations (to keep people out of the workforce), and the proliferation of law creation, law enforcement and law interpretation positions and professions. How will we provide income (a share of the economy) to the laid off police officers, prison guards, soldiers, bureaucrats, lawyers, judges, social workers, teachers, bankers, tax accountants etc. if we shrink government?

ii) In the cell biology analogy to an economy, only a small minority of genes and proteins are actually involved in metabolism (the equivalent of production of goods and services). Most genes and proteins (ca. 80%) are involved in monitoring the environment and regulating cellular activity. So, in a highly mechanized, capital intensive society, it is reasonable that most people are involved in monitoring or regulatory activities, rather than primary production.

Commenter on 'Stop' The Economist.

UK grocers: Recession, what recession?

4723

uk-grocers-recession-what-recession-

In anticipating a recession, discerning City investors normally adjust their portfolios in favour of defensive sectors – pharmaceuticals, tobacco, utilities and grocers. They recognise that these sectors will generally outperform a weak market.

This view continues to be vindicated by Thursday’s impressive sales figures from Morrisons, showing 6.5% like-for-like growth over the last six weeks to January 3rd, which capped a highly successful Christmas for UK grocers.

Tesco, with its 30% market share, reported underlying UK like-for-like sales growth of over 4% – after adjusting for the double vouchers offer. Sainsbury, which vies for second place with Asda, reported similar numbers. Up-market grocer, Waitrose, has also sparkled, partly at the expense of Marks & Spencer, whose food sales were lacklustre.

Of course, strong sales growth does not necessarily translate into higher profits. But, given these figures, is there really a recession on? Certainly, December was a very encouraging month for UK retail: the British Retail Consortium has calculated a like-for-like sales increase of over 4% compared with December 2008.

Before arguing that the recession is actually a fiction, six caveats:

• December 2008 comparators are very weak;
• Sterling’s decline has attracted tourists into the shops;
• January’s 2.5% VAT rise may have boosted December’s sales;
• Many special offers were available;
• Non-food retailers’ performances were far more mixed;
• Many former competitors, such as Woolworths, are no more.

The fact remains, though, that recession-driven Britain is still piling into the country’s top grocers, even if elsewhere on the High Street life is far more challenging. Both shareholders and customers are benefiting from the success of the UK groceries’ sector. And, in Tesco’s case, its very focussed export strategy is bearing fruit.

But, given the predictable failure of various Competition Commission enquiries, what, pray, will the proposed Supermarket Enforcer – nicknamed Offtrolley – bring to the party?

Dumping the Far Right with the tea

4725

dumping-the-far-right-with-the-tea

Many readers will be familiar with the worthlessness of political labels. Oh, Libertarian are you? So that’s the same as liberal? No? What’s that? A "classical liberal"? OK, so it’s conservative, but you’re not a huge fan of Cameron? But what, not Bush either? You get the picture.

But even among such confusion, there’s one thing everyone can agree on – they all hate the "Far Right". Naturally this political group is no less incomprehensible than any other – amorphous enough for conservative Americans to pin on Obama, and for him to return in kind. Makes you feel lucky to be in Europe where Jörg Haider, Nick Griffin and company simplify things by sticking to the "classical Far Right" model, no?

In the past, the privilege of branding opponents as "far right" in the US was the preserve of Democrats against Republicans. Therefore, as if by habit, Democrats last night lamented the triumph of Far Right politics as Scott Brown shook the political status quo by turning Massachusetts Red. But the easy marriage of this historically successful association is shrinking.

I wrote a while back that so-called "Far Right" social conservatism was giving way to libertarianism as the GOP’s most powerful weapon, led by the phenomenon of the Tea Party movement. Brown’s victory is yet another triumph for this perception. This new Republicanism is tough to discredit, as it’s peppered with that very American, and oh-so-un-Far-Right idea, "freedom".

Of course, the Left still tries. MSNBC’s in-house "firebrand" commentator Keith Olbermann provides a nice taster of current Democrat sentiment here, where the key outtake would be describing the Tea Party movement as:

…perhaps the saddest collection of people who don’t want to admit why they hate since the racists of the South in the 60s insisted they were really just concerned about States' rights.

Well Keith, isn’t it impressive what this mob of hick racists has achieved? Thanks to them, even as the numbers of self-proclaimed conservatives dwindle, it’s becoming harder and harder for left-wing Democrats to woo independents, leading to a tremendously entertaining political tussle.

Americans "left and right" seemingly still believe they have something to fight for, yet here in Britain we can barely summon an ounce of enthusiasm for an imminent general election that could turf out one of the most disastrously incompetent governments in history. And that’s a shame, because freedom isn’t just about practical measurements, it’s about the psyche a society fosters in its people.

data.gov.uk

4724

datagovuk

Following in the tracks of the USA, Australia and New Zealand, the government’s new website data.gov.uk has been launched today. Created with the help of internet mastermind Tim Berners-Lee, it is designed to make government information and statistics available and accessible to the public. Generating figures and statistics uses up time, resources and money. However, by making them available to the public, much more can be achieved than if they simply lay dormant in a department’s filing cabinet.

At the moment the website is still very much a work in progress; the data sets are rather limited, the website a little muddled and specific information hard to isolate. However, it is a step towards transparency, efficiency and the opening up of knowledge to businesses and individuals. The website invites you to make suggestions for ‘apps’ that utilize the information available - and allows you to upload your own creations. So far tools that allow you to check out your neighbour’s council tax band may not be revolutionary, but they could lead in a real change in the way people interact with public services and spending. As the minister for digital Britain Simon Timms notes, "by allowing industry to use data creatively they can develop new services and generate economic value from it."

The more public information made available through this website the better. George Osborne has pledged that a Tory government would put any government expenditure over £25,000 online. Posting such information along with data from local government could enable providers of services to compete with one another on price, delivering better value for taxpayers. The development of data.gov.uk would make scrutinizing the ‘success’ of policies in areas such as crime, health and education much easier, as well allowing the public to see just where their taxes go. If the concept of transparency and accountability really takes off in Westminster, perhaps the public will gain some political power, and the government will act like less of a ruler and more like the public servant it should be.

Tom Clougherty on business policies

4721

tom-clougherty-on-business-policies