Tag: stimulus

While You Were Watching the Economy, Health Care, Wars…

…the federal government was taking over education. At least, it was moving a lot further in that direction, with Secretary of Education Arne Duncan wielding billions of “stimulus” dollars to coerce states to do Washington’s bidding. And that’s not just my take. It’s also the New York Times’:

Mr. Duncan is a man in a hurry. He has far more money to dole out than any previous secretary of education, and he is using it in ways that extend the federal government’s reach into virtually every area of education, from pre-kindergarten to college.

Race to the Top. SAFRA. National standards. For well over a year, we at the Center for Educational Freedom have issued warnings about all of these escalations of utterly unconstitutional federal power in education, but it has been nearly impossible to cut through all of the huge, non-education stories to get much notice.

Unfortunately, the hits just keep on coming. While the nation is fixated on oil in the Gulf of Mexico and the supposed evils of Wall Street, the administration continues to change the constantly moving target that is the Race to the Top program, now essentially offering individual districts in California a chance to compete in RTTT round two. This despite states explicitly being identified as THE competitors in the current RTTT. It almost makes you conclude that you just can’t trust anything you’re told about RTTT by the administration, and that there is no good reason for any state to expect a fair race.

Thankfully, there is some good news to report. According to the Times, the ever-expansive Department of Education is now about as popular as the tax man – but not quite:

A new survey by the Pew Research Center found distrust of government at its highest level in 30 years. Of all federal agencies, the department of education’s approval rating had fallen most sharply, to 40 percent from 61 percent in 1998. In fact, the department got the lowest rating of any federal agency, including the Internal Revenue Service.

And that is with ED operating largely under the radar. Imagine if people actually knew what Duncan and company were doing!

Lobbying R Us

Think Washington lobbying is just for the big-money interests? Think you could never afford a lobbyist yourself? Well, think again! At Crazy Eddie’s Lobbying Service, our prices are insane!

The firm is actually called Keys to the Capitol. It was started not by Crazy Eddie or Sy and Marcy Syms, but by Paul Kanitra, who’s happy to call it McLobbying. Keys to the Capitol

targets small towns, humble associations and others of modest means that can’t even consider signing the $10,000-a-month retainers required by many top Washington firms. Instead, Kanitra’s company offers contracts starting at $995, month-to-month agreements and prices and other details spelled out on the company’s Web site.

Want some government money? Want to regulate your competitors? Come on down to Keys!

Now of course it might be that the new, low-priced, easy-to-understand lobbying firm would be helping people get government off their backs. Sort of a “leave us alone” lobbyist for Tea Party times.

Get real. What do you think those small towns want? They’re not hiring a Washington lobbyist, even a cheap one, to get government off their backs. They want a piece of that stimulus money, or that Race to the Top money, or that highway money, or whatever. And take a look at the Washington Post’s description of one of Keys’s first clients,

the aptly named Louie Key, national director of the 3,000-member Aircraft Mechanics Fraternal Association of Aurora, Colo. Key was shopping around for a lobbyist to help his union on several federal issues, including persuading lawmakers to tighten oversight of repair stations that use unlicensed mechanics.

That’s right. This little ol’ association just wanted a nice simple law to impose new regulatory burdens on their cheaper competitors. That’s Washington in a nutshell. As long as the government has favors to hand out, people will pay lobbyists to get access. So come on down and get yours!

Obama vs. Common Sense

President Obama delivered a commencement speech at the University of Michigan in Ann Arbor on Saturday.

He called on all Americans “to maintain a basic level of civility in our public debate.”  Who could argue? Yet the president apparently believes that civility means protecting his policies from valid criticism.

He instructed graduates that “the practice of listening to opposing views is essential for effective citizenship.”  Right again.  But the civics lesson rings hollow coming from a president who falsely claimed there was “no disagreement” over his massive “stimulus” bill, and that opponents of his health care takeover offered no proposals of their own.

He explained, “what we should be asking is not whether we need ‘big government’ or a ‘small government,’ but how we can create a smarter and better government.”  Which is pretty much what every politician says when he wants big government and voters want small government.

Most troubling was this: “What troubles me is when I hear people say that all of government is inherently bad.”  That remark reminded me of this passage from Thomas Paine’s Common Sense: “Government, even in its best state, is but a necessary evil.” And it has me thinking that our president, a former constitutional law professor, who just received an honorary Doctor of Laws degree from the University of Michigan, really doesn’t get the American idea of government. At all.

Ron Paul, the Chamber of Commerce, and Economic Freedom

Tim Carney has a blog post at the Examiner that’s worth quoting in full:

The U.S. Chamber of Commerce has issued its 2009 congressional scorecard, and once again, Rep. Ron Paul, R-Tex. — certainly one of the two most free-market politicians in Washington — gets the lowest score of any Republican.

Paul was one of a handful of GOP lawmakers not to win the Chamber’s “Spirit of Enterprise Award.” He scored only a 67%, bucking the Chamber on five votes, including:

  • Paul opposed the “Solar Technology Roadmap Act,” which boosted subsidies for unprofitable solar energy technology.
  • Paul opposed the “Travel Promotion Act,” which subsidizes the tourism industry with a new fee on international visitors.
  • Paul opposed the largest spending bill in history, Obama’s $787 billion stimulus bill.

(Rep John Duncan, R-Tenn., tied Ron Paul with 67%. John McHugh, R-N.Y., scored a 40%, but he missed most of the year because he went off to the Obama administration.)

I wrote about this phenomenon last year, when the divergence was even greater between the Chamber’s agenda and the free-market agenda:

Similarly, Texas libertarian GOPer Rep. Ron Paul—the most steadfast congressional opponent of regulation, taxation, and any sort of government intervention in business—scored lower than 90% of Democrats last year on the Chamber’s scorecard.

Sen. Jim DeMint, R-S.C., had the most conservative voting record in 2008 according to the American Conservative Union (ACU), and was a “taxpayer hero” according to the National Taxpayer’s Union (NTU), but the U.S. Chamber of Commerce says his 2008 record was less pro-business than Barack Obama, Joe Biden, and Hillary Clinton.
This year’s picture was less glaring, but it’s still more evidence that “pro-business” is not the same as “pro-freedom.” The U.S. Chamber is the former. Ron Paul, and the libertarian position, is the latter.

I suspect that on issues such as free trade agreements and immigration reform, I might be closer to the Chamber’s position than to Ron Paul’s. But to suggest that Paul is wrong to vote against business subsidies – or that DeMint was wrong to vote against Bush’s 2008 stimulus package and the $700 billion TARP bailout – certainly does illustrate how much difference there can be between “pro-business” and “pro-market.” Instead of “Spirit of Enterprise,” the Chamber should call these the “Spirit of Subsidy Awards.”

More and More Caution Flags in Race to the Top

With the first round of the so-called “Race to the Top” having produced just two winning states – and those states appearing to have won primarily because they were able to get teachers’ unions to sign onto their reform proposals – there seems to be a growing backlash against RTTT.

For one thing, several states are not applying for the second round of RTTT grants. Apparently, many just don’t think jumping through all the RTTT hoops is worth it, especially when, as a welcome new Economic Policy Institute briefing paper illustrates, who wins and who loses is pretty arbitrary.

Perhaps the more interesting new ojection to RTTT, though, is that it is, frankly, illegal. So writes the Brookings Institutions’ Grover J. “Russ” Whitehurst, who asserts that nowhere in the “stimulus” legislation authorizing RTTT does it say that the U.S. Secretary of Education can award money based on states doing things he prescribes. No, the authorizing legislation, according to Whitehurst, says that the money must go to states that have already made significant reform progress.

None of this, importantly,  gets at the main problem with RTTT (in addition to its unconstitutionality): That there is just no good reason to believe that it will lead to any meaningful, lasting reform. Still, the crescendoing drumbeat against what so far has been the crown jewel of the Obama administration’s education policy is a good sign. More people, it seems, are realizing that the administration talks a great game about reform, but delivers quite the opposite.

Of course, hope still springs eternal for some folks.

Hayek after 35 Years

Today I reread F. A. Hayek’s Nobel Lecture, “The Pretence of Knowledge.” Hayek was awarded the Nobel Memorial Prize in 1974 and delivered his lecture on December 11, 1974. I was amazed at how modern it was, and appropriate once again for the times.

The 1970s were terrible times: stop-go demand management policies had produced stagflation that would continue for the rest of the decade.  Hayek said that “we have indeed at the moment little cause for pride: as a profession we have made a mess of things.” He charged that the mess had been produced by policies the majority of economists “recommended and even urged governments to pursue.”

The focus of his lecture was on scientism and how its errors had led economists and the Western economies to where they found themselves at that moment.  What was the chief theoretical error? It was “the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level.” The “Pretence of Knowledge” was that economists had or could ever have the knowledge required to do that.

What was the correct theory of the cause of widespread unemployment? It is “the existence of discrepancies between the distribution of demand among the different goods and services and the allocation of labour and other resources among the production of those outputs.” We call such discrepancies a coordination failure.

The coordination failure cannot be resolved by stimulating demand because spending is always on particular goods and services.  There is no aggregate out put on which to spend money. Aggregate demand and supply are categories of a model with no empirical counterparts.

Unless economists can solve the knowledge problem, they have no way of aligning spending with actual preferences.  Stimulus policies are more likely to aggravate as alleviate the problem.

Indeed, it was stimulus that caused the coordination failure.  Hayek outlined his theory succinctly in one paragraph.

  • Monetary injections into particular markets stimulate demand only temporarily.
  • Labor and other resources are drawn into the stimulated activities [think housing, 2002-07].
  • Once the monetary stimulus ceases or merely slows, the production and employment cannot be maintained.
  • Only if monetary stimulus or accelerated (once expectations come into play) can the new pattern of production and employment be maintained.

The consequence of monetary stimulus is “a distribution of employment which can be maintained only by a rate of inflation which would rapidly lead to a disorganization of all economic activity.”

The lecture is worth reading by those who have not done so, and rereading by those who have.

[Cross-posted at Thinkmarkets.]

Harkin: Education Too Important Not to Mortgage Our Future

Yesterday, I wrote about a bill introduced by Sen. Tom Harkin (D-IA) that would allocate $23 billion to protect public schooling employment against the end of “stimulus” funding. I wrote that it appeared the stimulus would essentially set a new floor for education spending – as many had feared it would – not just be a one-time deal.  It also seemed an utterly irresponsible  expenditure given the nation’s almost unimaginable debt.

At a hearing on the measure yesterday, Harkin addressed the debt concern. Of course, he did it in the same way federal politicians have for years dealt with their spending the nation into oblivion. According to Inside Higher Ed, Harkin said the debt is a legitimate concern, but this particular issue is just too important to worry about it:

“We’re going to borrow from our kids and our grandkids to pay for this now? That shouldn’t be – we’re borrowing too much from our kids and grandkids,” Harkin said, channeling criticism he said he anticipated hearing. Harkin said he agreed with the overarching concern. But the fact that this money is targeted for education makes it different, he suggested. “How can you argue on the one hand that it’s okay for kids to borrow to go to college, but it’s not all right to borrow to make sure there’s a college for them to go to? That there are teachers in our high schools and grade schools to prepare these kids for the future? It seems to me if there’s one legitimate area where we can borrow from the future, it’s in education.”

Um, Senator, even if you think education is more important than utterly unsustainable debt, would you at least take a small moment to see if yet more spending and hiring would do any educational good? You know, if we’d get a positive return on our investment?

Oh wait – if you did that, you’d not only see that it is absurd to suggest that failing to furnish $23 billion would lead to the widespread demise of colleges and teachers (in 2008 we spent almost $1.1 trillion on education), you’d also see that decades of spending increases haven’t produced any meaningful improvements. K-12 test scores have been flat, literacy levels among college graduates dropping, and our international standing poor.

So Senator, feel free to think that a good education is more important than controlling profligate government spending.  But don’t try to tell us that spending more will actually provide that good education. That just isn’t true.