Morgan Housel on skewness in business outcomes; Richard Hanania vs. government schools; David P. Goldman on the spirit of innovation; Niccolo Soldo on the imperial role of NGOs
Re: the long tail, there is also a good paper about this.
From “Do stocks outperform Treasury bills?”,
“I calculate that the approximately 25,300 companies that issued stocks appearing in the CRSP common stock database since 1926 are collectively responsible for lifetime shareholder wealth creation of nearly $35 trillion, measured as of December 2016.
However, just five firms (Exxon Mobile, Apple, Microsoft, General Electric, and International Business Machines) account for 10% of the total wealth creation. The 90 top-performing companies, slightly more than one-third of 1% of the companies that have listed common stock, collectively account for over half of the wealth creation. The 1092 top-performing companies, slightly more than 4% of the total, account for all of the net wealth creation.
That is, the remaining 96% of companies whose common stock has appeared in the CRSP data collectively generate lifetime dollar gains that matched gains on one-month Treasury bills.”
There is a simple reason why "parents tend to like both their child’s public school and school choice policies. They don’t see a tension between the two. " Because they think their school would be chosen when there is choice. And they are right!
Education is a very strange business because the whole point is that the consumers are ignorant. By definition, the consumers don't know what a good product is. Also, when there is choice in K-12, the consumers pretty much aren't the choosers; the consumer's parents are. The choosers pretty much leave it up to the experts to decide what a good education is and how a good education is delivered. What they do perceive and what they do want is for teachers to say nice things and not to fail their children. This is what they do today, which is one reason so many people graduate without knowing much.
Re: "I think that FOOL (fear of others’ liberty) is a major factor in the support for public schools. People do not trust other parents to know what is best for their kids. They are not so unhappy with what they see in public schools that they want the government to give up control over other people’s kids."
It’s commonplace to downplay the element of coercion in majority rule. We sometimes say, philosophically, “we get the government we deserve.” This saying is an indictment of voter competence and motivations. Bryan Caplan has a ready retort: No, we (the minority) get the government *they* (i.e., the majority) deserve. Arnold reminds us that the majority might simply want to bind the minority. Thus we have paternalistic or authoritarian tyranny of the majority: We (the minority) get the government *they* (the majority) think *we* deserve.
The competent teachers and administrators self-select into the best and safest public schools. The worst teachers and administrators end up everywhere else.
Don't forget that down to UMC and even MC incomes we have school choice, it's just laundered through real estate transactions. It's largely the lowest income levels that are stuck with no effective choice, and if you're cynical FOOL makes a lot of sense because the UMC and MC who pick a school by buying a house don't want that demographic getting vouchers good at any school.
Yes, it is a very good piece by Hanania. I've always been suspicious of strong parental discretion over education, because I think indoctrination into a repressive, chastity-focused moral system is one of the worst things that can happen to a child. Many parents want this for their children, whereas in most parts of the US the government doesn't.
But I am no longer certain that this factor outweighs the other reasons in favor of privatizing education. Not just because of the Hanania essay, I've been losing my conviction on this issue for a long time. Especially because it seems like fewer parents are interested in repressing their children than there used to be.
I think I’m with Caplan overall though. Schools don’t really matter that much public or private. Most of what parents want is for their kids to know other kids like them. Property prices and NIMBY take care of most of that for them so the extra effort to overcome the status quo doesn’t seem worth it.
That was true when we were growing up. Covid and wokeness showed that even if the null hypothesis is true schools can still fuck it up.
There is also just the bloat. Spending per capita has doubled since I was a kid even after adjusting for inflation. Tripled in the northeast. Giving that money directely to parents would make a big difference.
This is a good interview. The adult elites are the ones who have made the mess for the kids. School is way too much shallow box checking. Who could blame kids for looking for meaning at non-profits, even if it is ultimately a fool's errand?
"The kids don’t want to work in profit-seeking business at all. They only want to work for non-profits"
And observe how activist employees argue MegaTech for-profit companies should be run as egalitarian non-profits. And why not? Both MegaTech and NGOs have access to seemingly unlimited pools of money. Everyone employed should enjoy good salaries and great benefits, whether any productive work is done. This explains how Twitter could fire 80% of its staff and continue operating.
I think there's room for a libertarian argument to be made against what its proponents call "school choice".
Real school choice exists already. If I want my kids to attend a particular private school, and if the school's willing to admit them, I pay the tuition and the kids go. The school has a strong incentive to deliver good services at a reasonable price, in order to attract parents and their money; the parents have an incentive to find a school that delivers good services at a reasonable price, since it's their money that they're spending.
What's billed as "school choice" is actually an entitlement program, where the entitlement takes the form of vouchers or scholarships instead of direct cash transfers. Unfortunately, like most entitlement programs, especially those directed at the middle class, it's likely to expand rapidly, in terms both of the number of people eligible for the program and of the amount that they get; and it's highly questionable whether the increased entitlements will yield better results.
Compare it to the system of post-secondary education. There, we've got something like "school choice" in the form of guaranteed student loans, Pell grants, and other forms of government tuition assistance. And we don't see this making education better and more affordable; rather, we've got colleges competing on amenities like sports teams and recreation facilities, and raising their tuition to capture most of the loan/grant money.
I suspect that we'd see something similar with a general K-12 voucher system. We'd see private-school tuition rising as parents became able to spend more; and much of the extra money would go for things like domed football stadiums and interstate class trips to places with beaches. We'd wind up spending more of the taxpayer's money so that students can get the same mediocre education, but in a much ritzier environment.
If you look at how k-12 campaigns against choice they don’t lean on FOOL at all.
They just say “it’s taking money out of the public schools.” Yglesias types repeat the same thing. Since most people aren’t going to pull their kids out of public schools, at least in the short run, that sounds scary. You can talk all you want about how per capita funding increases, it just flies over peoples heads.
If you just suddenly forced choice on then they would adapt, but changing the status quo is scary.
It's hardly surprising the young aren't interested in "being their own bosses" and "being in business for themselves" when they've seen that rhetoric get used to promote driving for Uber. Turns out juggling three gigs and an online side hustle is actually hellish. The need to pay back student loans is perhaps a minor addendum here, making the taking on of even more debt to start a business not very attractive.
They desire the long careers many of their boomer parents just fell into, and would only come to appreciate later when they saw what their kids were up against.
For many years, I have been a big proponent of school choice and privatized K through 12 education. Money for education (vouchers, tax credits, ESAs) must be in the hands of enough consumers (parents) to create a supply of for-profit schools and the creation of an education industry which will never happen as long as there a just a bunch of small pilot programs affecting a tiny percentage of children. In the last couple of years, we have seen an expansion of school choice programs in some states. I haven’t seen any reports or even discussions on whether this has encouraged any expansion of existing for-profit school companies or the creation of new ones. The other question that has nagged me is how profitable school companies can be. The few for-profit k-12 companies are privately owned and don’t provide financials. The non for profit schools get both tuition and donations. Can a for-profit school make enough money to entice investors without charging excessive tuition? I am assuming that if the almost 700 billion dollars spent on government schooling were in the hands of consumers and eager to be spent, entrepreneurs would figure a way. Nevertheless, I would like to research what it would take to make schooling both profitable and affordable.
Time to make those who work in NGOs earn their "moral superiority" - tax the rich ones. A progressive income surtaxes on wages/ salaries larger than the prior year's median. So if 2022 median was $60k, the NGOs (& tax exempt edu orgs?) pay a 10% "excess" wage on those making more than $60k; and 20% on those over (2*) $120k, and 30% over $180k, 40 - 50 - 60 - 70 - 80 - 90 at $240, 300, 360, 420, 480, 540 (at 90%). [Quick tax wonk response]
Those wanting to "get rich" should do so by starting businesses.
"Profit" is good, AND is a measure of how the wealth of the world has increased thru peaceful, voluntary buy/sell decisions of (mostly) free folk. It's also a great measure of both short and long term sustainability - the businesses w/o profit have questionable sustainability; even the NGOs, tho not yet the gov't.
Vivek Ramaswamy's 8 year term limit on gov't bureaucrats is a good start on increasing the dynamism of the gov't sector. (I like him on Twitter - but he shows up now a bit too often).
On school reform, home school and collective pods using AI tutor assistants with Direct Instruction will likely show higher test results than avg current gov't* schools. There will be Tablet "primers" that repeat, patiently yet firmly, the lessons the kid needs to learn until his answers show that he knows it.
The AI edu changes will have bigger positive effects than school choice changes, but both will be positive for the other.
In no case with those with a "max" IQ of 95 be demonstrating academic ability of those with above avg SAT scores -- but fewer of such folk will be testing at 90 or 85 due to SES or bad home life. The big social problem is how should low IQ men live a good, productive life. We need to be more honest about how half the guys are going to be below median IQ.
*Republicans should be calling them government schools, and government transportation, since gov't makes direct decisions about them. The "Public" in Public Choice Theory was a mistake, it should have been more accurately called Government Choice Theory. In a Democratic Republic, the public choice is Who to vote for. It's not too late to change, but it's not easy (nor likely, until a popular leader does it.)
Re: the long tail, there is also a good paper about this.
From “Do stocks outperform Treasury bills?”,
“I calculate that the approximately 25,300 companies that issued stocks appearing in the CRSP common stock database since 1926 are collectively responsible for lifetime shareholder wealth creation of nearly $35 trillion, measured as of December 2016.
However, just five firms (Exxon Mobile, Apple, Microsoft, General Electric, and International Business Machines) account for 10% of the total wealth creation. The 90 top-performing companies, slightly more than one-third of 1% of the companies that have listed common stock, collectively account for over half of the wealth creation. The 1092 top-performing companies, slightly more than 4% of the total, account for all of the net wealth creation.
That is, the remaining 96% of companies whose common stock has appeared in the CRSP data collectively generate lifetime dollar gains that matched gains on one-month Treasury bills.”
https://www.sciencedirect.com/science/article/abs/pii/S0304405X18301521
There is a simple reason why "parents tend to like both their child’s public school and school choice policies. They don’t see a tension between the two. " Because they think their school would be chosen when there is choice. And they are right!
Education is a very strange business because the whole point is that the consumers are ignorant. By definition, the consumers don't know what a good product is. Also, when there is choice in K-12, the consumers pretty much aren't the choosers; the consumer's parents are. The choosers pretty much leave it up to the experts to decide what a good education is and how a good education is delivered. What they do perceive and what they do want is for teachers to say nice things and not to fail their children. This is what they do today, which is one reason so many people graduate without knowing much.
Re: "I think that FOOL (fear of others’ liberty) is a major factor in the support for public schools. People do not trust other parents to know what is best for their kids. They are not so unhappy with what they see in public schools that they want the government to give up control over other people’s kids."
It’s commonplace to downplay the element of coercion in majority rule. We sometimes say, philosophically, “we get the government we deserve.” This saying is an indictment of voter competence and motivations. Bryan Caplan has a ready retort: No, we (the minority) get the government *they* (i.e., the majority) deserve. Arnold reminds us that the majority might simply want to bind the minority. Thus we have paternalistic or authoritarian tyranny of the majority: We (the minority) get the government *they* (the majority) think *we* deserve.
The competent teachers and administrators self-select into the best and safest public schools. The worst teachers and administrators end up everywhere else.
No, I went to a blue ribbon school and we had plenty of incompetents.
Don't forget that down to UMC and even MC incomes we have school choice, it's just laundered through real estate transactions. It's largely the lowest income levels that are stuck with no effective choice, and if you're cynical FOOL makes a lot of sense because the UMC and MC who pick a school by buying a house don't want that demographic getting vouchers good at any school.
Yes, it is a very good piece by Hanania. I've always been suspicious of strong parental discretion over education, because I think indoctrination into a repressive, chastity-focused moral system is one of the worst things that can happen to a child. Many parents want this for their children, whereas in most parts of the US the government doesn't.
But I am no longer certain that this factor outweighs the other reasons in favor of privatizing education. Not just because of the Hanania essay, I've been losing my conviction on this issue for a long time. Especially because it seems like fewer parents are interested in repressing their children than there used to be.
Agreed. Seems like the problem is not one of excessive repression any longer, like in the days of Footloose, but of excess permissiveness.
"It’s worse than that. The kids don’t want to work in profit-seeking business at all. They only want to work for non-profits."
It's worse than that- the kids don't want to work at all.
I think I’m with Caplan overall though. Schools don’t really matter that much public or private. Most of what parents want is for their kids to know other kids like them. Property prices and NIMBY take care of most of that for them so the extra effort to overcome the status quo doesn’t seem worth it.
That was true when we were growing up. Covid and wokeness showed that even if the null hypothesis is true schools can still fuck it up.
There is also just the bloat. Spending per capita has doubled since I was a kid even after adjusting for inflation. Tripled in the northeast. Giving that money directely to parents would make a big difference.
This is a good interview. The adult elites are the ones who have made the mess for the kids. School is way too much shallow box checking. Who could blame kids for looking for meaning at non-profits, even if it is ultimately a fool's errand?
https://www.persuasion.community/p/deresiewicz
"The kids don’t want to work in profit-seeking business at all. They only want to work for non-profits"
And observe how activist employees argue MegaTech for-profit companies should be run as egalitarian non-profits. And why not? Both MegaTech and NGOs have access to seemingly unlimited pools of money. Everyone employed should enjoy good salaries and great benefits, whether any productive work is done. This explains how Twitter could fire 80% of its staff and continue operating.
I think there's room for a libertarian argument to be made against what its proponents call "school choice".
Real school choice exists already. If I want my kids to attend a particular private school, and if the school's willing to admit them, I pay the tuition and the kids go. The school has a strong incentive to deliver good services at a reasonable price, in order to attract parents and their money; the parents have an incentive to find a school that delivers good services at a reasonable price, since it's their money that they're spending.
What's billed as "school choice" is actually an entitlement program, where the entitlement takes the form of vouchers or scholarships instead of direct cash transfers. Unfortunately, like most entitlement programs, especially those directed at the middle class, it's likely to expand rapidly, in terms both of the number of people eligible for the program and of the amount that they get; and it's highly questionable whether the increased entitlements will yield better results.
Compare it to the system of post-secondary education. There, we've got something like "school choice" in the form of guaranteed student loans, Pell grants, and other forms of government tuition assistance. And we don't see this making education better and more affordable; rather, we've got colleges competing on amenities like sports teams and recreation facilities, and raising their tuition to capture most of the loan/grant money.
I suspect that we'd see something similar with a general K-12 voucher system. We'd see private-school tuition rising as parents became able to spend more; and much of the extra money would go for things like domed football stadiums and interstate class trips to places with beaches. We'd wind up spending more of the taxpayer's money so that students can get the same mediocre education, but in a much ritzier environment.
If you look at how k-12 campaigns against choice they don’t lean on FOOL at all.
They just say “it’s taking money out of the public schools.” Yglesias types repeat the same thing. Since most people aren’t going to pull their kids out of public schools, at least in the short run, that sounds scary. You can talk all you want about how per capita funding increases, it just flies over peoples heads.
If you just suddenly forced choice on then they would adapt, but changing the status quo is scary.
It's hardly surprising the young aren't interested in "being their own bosses" and "being in business for themselves" when they've seen that rhetoric get used to promote driving for Uber. Turns out juggling three gigs and an online side hustle is actually hellish. The need to pay back student loans is perhaps a minor addendum here, making the taking on of even more debt to start a business not very attractive.
They desire the long careers many of their boomer parents just fell into, and would only come to appreciate later when they saw what their kids were up against.
For a great three part PBS special on privatized schooling see https://www.cato.org/schoolinc
For many years, I have been a big proponent of school choice and privatized K through 12 education. Money for education (vouchers, tax credits, ESAs) must be in the hands of enough consumers (parents) to create a supply of for-profit schools and the creation of an education industry which will never happen as long as there a just a bunch of small pilot programs affecting a tiny percentage of children. In the last couple of years, we have seen an expansion of school choice programs in some states. I haven’t seen any reports or even discussions on whether this has encouraged any expansion of existing for-profit school companies or the creation of new ones. The other question that has nagged me is how profitable school companies can be. The few for-profit k-12 companies are privately owned and don’t provide financials. The non for profit schools get both tuition and donations. Can a for-profit school make enough money to entice investors without charging excessive tuition? I am assuming that if the almost 700 billion dollars spent on government schooling were in the hands of consumers and eager to be spent, entrepreneurs would figure a way. Nevertheless, I would like to research what it would take to make schooling both profitable and affordable.
Time to make those who work in NGOs earn their "moral superiority" - tax the rich ones. A progressive income surtaxes on wages/ salaries larger than the prior year's median. So if 2022 median was $60k, the NGOs (& tax exempt edu orgs?) pay a 10% "excess" wage on those making more than $60k; and 20% on those over (2*) $120k, and 30% over $180k, 40 - 50 - 60 - 70 - 80 - 90 at $240, 300, 360, 420, 480, 540 (at 90%). [Quick tax wonk response]
Those wanting to "get rich" should do so by starting businesses.
"Profit" is good, AND is a measure of how the wealth of the world has increased thru peaceful, voluntary buy/sell decisions of (mostly) free folk. It's also a great measure of both short and long term sustainability - the businesses w/o profit have questionable sustainability; even the NGOs, tho not yet the gov't.
Vivek Ramaswamy's 8 year term limit on gov't bureaucrats is a good start on increasing the dynamism of the gov't sector. (I like him on Twitter - but he shows up now a bit too often).
On school reform, home school and collective pods using AI tutor assistants with Direct Instruction will likely show higher test results than avg current gov't* schools. There will be Tablet "primers" that repeat, patiently yet firmly, the lessons the kid needs to learn until his answers show that he knows it.
The AI edu changes will have bigger positive effects than school choice changes, but both will be positive for the other.
In no case with those with a "max" IQ of 95 be demonstrating academic ability of those with above avg SAT scores -- but fewer of such folk will be testing at 90 or 85 due to SES or bad home life. The big social problem is how should low IQ men live a good, productive life. We need to be more honest about how half the guys are going to be below median IQ.
*Republicans should be calling them government schools, and government transportation, since gov't makes direct decisions about them. The "Public" in Public Choice Theory was a mistake, it should have been more accurately called Government Choice Theory. In a Democratic Republic, the public choice is Who to vote for. It's not too late to change, but it's not easy (nor likely, until a popular leader does it.)