Tag: WSJ

Letter to the WSJ: Armen Alchian’s Wise Economics

My letter to the editor was published in today’s Wall Street Journal. In response to the obituary of Prof. Alchian, the WSJ published on 20 February 2013, I wrote the following:

David R. Henderson’s obituary of the great economist and pedagogue Armen Alchian (“An Economist Who Made the Science Less Dismal,” Feb. 20) brings back fond memories from the summer of 1966, when I was one of Prof. Alchian’s students.

One of the many take-aways from Alchian’s 1966 lectures was his “95% Rule”—95% of what you read in professional journals that passes for economics is either wrong or irrelevant. Over the years I have verified this and regularly conveyed Alchian’s rule to my students.

Prof. Steve H. Hanke

The Johns Hopkins University

Baltimore

Prof. Alchian met his maker on 19 February 2013. He was 98 years old.

Barack Obama, Mr. Deregulation?

In today’s much talked-of Wall Street Journal op-ed, President Obama reaches for common ground with critics of excessive government regulation – not a constituency he’s had much time for in the past. He announced an executive order requiring agencies to review existing regulation for outdated or unwise rules deserving of being struck from the books. That drew measured praise from organized business groups, something the President has not had much of lately.

Many left partisans are aghast, just as they were when Bill Clinton dashed for the political center after his own mid-term electoral “shellacking.” Salon complains that Obama’s op-ed “reads like an apology to the business community,” while Rena Steinzor fears the move signals a decline in influence for the administration’s regulatory ultras, such as Margaret Hamburg (FDA), Lisa Jackson (EPA), and David Michaels (OSHA).

Environmental law expert Jonathan Adler thinks the new executive order might do some good:

The Executive Order is here. It reaffirms the basic principles outlined in President Clinton’s Executive Order 12866, issued in September 1993, and continues to require agencies to conduct cost-benefit analyses of proposed rules. As noted in the President’s op-ed, it also requires agencies to engage in “retrospective analysis” of existing rules so as to accelerate the pace at which outdated regulations are revoked. Specifically, it requires all agencies to develop a plan for such retrospective review within 120 days. If the White House Office of Information and Regulatory Affairs ensures such reviews are meaningful, this could be a significant and positive step.

That’s a big “if.” Over the past two years, OIRA has not restrained its administration colleagues from making 2010 by far the biggest year for new regulatory burdens in memory (Heritage helpfully assembles details.) The most burdensome new rules are not from the best-known areas of new legislation, such as ObamaCare and financial reform, but from the environmental area. That makes it especially disturbing that, as Ted Frank points out, the President’s op-ed “singles out the top-down and economically inefficient fuel-economy regulation as a good one.”

So what does Obama see as an example of an excessive regulation needing repeal? The example he offers is the inclusion of the sweetener saccharin in the category of hazardous waste. Really? Saccharin as hazardous waste? Amid dozens of high-stakes, much-studied regulatory controversies, the only one he could come up with is one that – with all due respect to the people who make the little pink packets – is of hardly any significance to the wider economy, and not much more as a matter of principle?

Even this administration could have made better deregulatory boasts than that. For example, in a fit of sense, the Obama Justice Department a while back adopted regulations specifying that the Americans with Disabilities Act should no longer (as of this March) be interpreted to require restaurants, theaters and other Main Street businesses to admit patrons’ non-canine “service animals” such as monkeys, goats, snakes and spiders.

But it was almost as if his point was to pick a regulation so minor that no one cared much about it one way or the other. Had the President’s speechwriters been looking for an example of a hazardous-substance rule that would actually get people talking about regulatory overreach, they might have picked EPA’s dairy-spill regulations, which (in the words of one report) “treat spilled milk like oil, requiring farmers to build extra storage tanks and form emergency spill plans….” That one does have big and widespread economic costs.

Whoops – not a good example. That one’s not being repealed – EPA at last report intended to go forward with it. Can we really assume anything much is changing here besides the atmospherics?

When National Standardizers Attack!

There’s just no pleasing some people who want to impose uniform curriculum standards on every public school in America.  Yesterday, the Wall Street Journal ran an editorial that wasn’t even critical of national standards (save arguing that there are better reforms), yet Michael Petrilli of the standards-philic Thomas B. Fordham Institute still attacked.

What exactly did the WSJ have the temerity to write? That while there is “nothing wrong…with setting benchmarks for what the average child should know by a certain grade,” imposing national standards is not nearly as proven a reform as “school choice  and accountability.”

Petrilli was having none of this, declaring that choice is fine, but that people need national standards, set by government, to be able to make better choices.

His evidence? He offered almost none, and what he did cite was poppycock.

That curriculum standards set at any level of government will produce accurate and useful information for parents flies in the face of historical and political reality. Indeed, Fordham itself has furnished abundant evidence that standards-and-testing regimes, first under state control and then under No Child Left Behind, have repeatedly produced, essentially, lies about academic “success.”

National standards, on the other hand? In his response to the Journal, Petrilli simply proclaimed that they would provide “trustworthy information.”

Not only is there no evidence to support this claim, there are good reasons to conclude the opposite. The people employed by the public schools are the most motivated to be involved in education politics and the most easily organized, giving them outsized power. Couple that with their best interest being served by being held to low or no standards, and it is clear why standards and accountability mechanisms set by political, “democratic” means – as national standards would be – have almost always been rendered hollow.

This inconvenient political reality is one reason that there is no convincing research showing that national standards drive superior educational outcomes. But don’t expect a discussion of the national-standards evidence from the Fordham folks. They seem determined to avoid it. Except, that is, for citing one, isolated factoid.

Petrilli started his attack on the Journal by implying that the paper had actually acknowledged this homerun factoid: that the ”countries that outperform us on international assessments all have national standards in place.”

Arrgh!

As I and many others have repeatedly pointed out – and as is obvious when you know the whole truth – this “evidence” is meaningless. Yes, most of the countries that beat us have national standards, but so do most of the countries that do worse! There is simply no meaningful correlation between having national standards and results on international exams.

Unfortunately, Petrilli didn’t just use the factoid to sell his national standards snake oil. He also invoked it to suggest that the WSJ editorialists had addled brains, that they had illogically acknowledged the factoid yet still soft-peddled national standards. But the Journal writers hadn’t embraced the factoid half-truth. They wrote the whole truth:

It’s true that some countries with uniform standards (Singapore, Japan) outperform the U.S., though other countries with such standards (Sweden, Israel) do worse. On the 2007 eighth-grade TIMSS test, an international math exam, all eight countries that scored higher than the U.S. had national standards. But so did 33 of the 39 countries that scored lower.

Unfortunately, this sort of evidence avoidance and distortion has been par for Fordham’s national-standards course. Indeed, in reviewing my new report that analyses the empirical evidence, Fordham’s Stafford Palmieri suggested that I simply failed to find proof that national standards work. She also concluded that that was no reason to avoid such standards. But what I actually found was that while the research is limited, what exists gives good reason to believe that national standards do not work. It’s a big difference.

Fordham’s refusal to systematically deal with the evidence is disturbing since the Institute is arguably the leading exponent of this  ”reform.” But whatever Fordham does, the nation must not ignore reality. If Fordham gets what it wants it will be imposed on everyone, and then it will be too late to “discover” that it was the wrong thing to do.