Topic: General

Testing for Core Disruption

It’s been a day since the disappointing “Nation’s Report Card” results came out, and it has given me a chance to crunch some numbers a bit. They don’t tell us anything definitive – there is a lot more that impacts test scores than a policy or two – but it is worth seeing if there are any patterns that might bear further analysis, and it is important to explore emerging theories.

Not surprisingly, while many observers have been rightly hesitant to make grand pronouncements about what the scores mean, some theories revolving around the Common Core have come out. The one I’ve seen the most, coming from people such as U.S. Secretary of Education Arne Duncan and Karen Nussle of the Core-defending Collaborative for Student Success, is that the Core will bring great things, but transitioning to it is disruptive and we should expect to see short-term score drops as a result.

That is plausible, and we can test it a bit by looking at the performance of states (and the Department of Defense Education Activity) that have demonstrated some level of what I’ll call Core aversion. Those are states that (1) hadn’t adopted the Core at the time of the NAEP test; (2) had adopted but had moved away by testing time; and (3) were still using the Core at test time but officially plan to move away. They are broken down in the following table, which uses score changes in the charts found here:

The Ted Cruz Tax Plan: A Pro-Growth Restructuring of the Internal Revenue Code, but with One Worrisome Feature

The tax-reform landscape is getting crowded.

Adding to the proposals put forth by other candidates (I’ve previously reviewed the plans offered by Rand Paul, Marco RubioJeb Bush, Bobby Jindal, and Donald Trump), we now have a reform blueprint from Ted Cruz.

Writing for the Wall Street Journal, the Texas Senator unveiled his rewrite of the tax code.

…tax reform is a powerful lever for spurring economic expansion. Along with reducing red tape on business and restoring sound money, it can make the U.S. economy boom again. That’s why I’m proposing the Simple Flat Tax as the cornerstone of my economic agenda.

Here are the core features of his proposal.

…my Simple Flat Tax plan features the following: • For a family of four, no taxes whatsoever (income or payroll) on the first $36,000 of income. • Above that level, a 10% flat tax on all individual income from wages and investment. • No death tax, alternative minimum tax or ObamaCare taxes. • Elimination of the payroll tax and the corporate income tax… • A Universal Savings Account, which would allow every American to save up to $25,000 annually on a tax-deferred basis for any purpose.

From an economic perspective, there’s a lot to like. Thanks to the low tax rate, the government no longer would be imposing harsh penalties on productive behavior. Major forms of double taxation such as the death tax would be abolished, creating a much better environment for wage-boosting capital formation.

Technology Takes On the Big Problems

Take a look at how markets and technology are taking on some of society’s biggest problems and revolutionizing the way we live. 

Nanotech and clean drinking water 

The World Economic Forum recently reflected on nanotechnology’s potential to improve people’s lives by providing smaller yet more powerful batteries, and by speeding up the purification process for air and water, among other things. Nanotechnology could deliver clean drinking water to millions of people who currently lack it, furthering the current positive trend. Around 10 percent of the global population lacks clean drinking water, down from around 20 percent in 1990.

Minimum Wage Hikes in Theory and Reality

Don Boudreaux recently despaired that only 26 percent of economists surveyed agreed that

If the federal minimum wage is raised gradually to $15-per-hour by 2020, the employment rate for low-wage US workers will be substantially lower than it would be under the status quo.

In the University of Chicago Booth School of Business’s regular survey of distinguished policy economists chosen for ideological diversity, 24 percent disagreed with the statement, and 38 percent said they were uncertain.

Some said that employment effects were likely, but they might not be “substantial.” That’s an empirical question, of course, and knowing the direction of a change doesn’t necessarily tell us its magnitude. In addition, each person’s definition of “substantial” might be different. Boudreaux doesn’t think there should be much uncertainty:

Would 74 percent of my fellow economists either disagree that, be “uncertain” that, or have no opinion on the question of whether a forced 107 percent increase in the price of the likes of 737, 777, and 787 jetliners would cause airlines to cut back substantially on the number of new jetliners they buy from Boeing?  Or what if the question were about the prices of fast-food?  Would 74 percent of these economists either disagree that, be “uncertain” that, or have no opinion on the question of whether a forced 107 percent increase in the prices of the likes of Big Macs, Baconators, and buckets of KFC fried chicken would cause consumers to cut back substantially on the amount of food they purchase at fast-food restaurants?

But who am I to jump into this battle of economists? Just a lowly newspaper reader, that’s all. And as it happens, Boudreaux posted his critique on Sunday, and on Monday I read an interview in the Wall Street Journal with Sally Smith, CEO of Buffalo Wild Wings. She runs a chain of more than 1,000 sports bars, and she’s trying to expand. Here’s part of her interview:

WSJ: How are minimum-wage increases affecting the way you make business decisions?

MS. SMITH: You look at where you can afford to open restaurants. We have one restaurant in Seattle, and we probably won’t be expanding there. That’s true of San Francisco and Los Angeles, too. One of the unintended consequences of rising minimum wages is youth unemployment. Almost 40% of our team members are under age 21. When you start paying $15 an hour, are you going to take a chance on a 17-year-old who’s never had a job before when you can find someone with more experience?

WSJ: Are you turning to automation to reduce labor costs?

MS. SMITH: We are testing server hand-held devices for order-taking in 30 restaurants now, and we’ll roll them out to another 30 in the next month and another 30 by the end of the year. Servers like it because they can take on more tables and earn more tips. Eventually we’ll have tablets where guests can place their own order from the table and pay for it.

Ms. Smith is no economist. (She has a BSBA in accounting and finance, and served as CFO of Buffalo Wild Wings and other companies for about 10 years before becoming CEO in 1996.) She’s just a CEO trying to make revenues come out ahead of costs. And when she thinks about a substantial increase in the minimum wage, her thoughts turn to not expanding, hiring more experienced workers, and using technology so fewer servers can serve more customers.

She doesn’t seem as uncertain about the effects on employment as the academic economists do.  

Yet More Breakthroughs in Science and Technology

Here is yet another installment in the series on incremental change in science and technology. As ever, check out data on the improving state of the world at www.humanprogress.org.

Prawn Sex-Change Boosts Yields   

Male prawns grow faster and get to be 60% larger than female prawns. As such, they are more economically valuable. By slicing the prawn genome, scientists from the Ben Gurion University found, it is possible to generate all-male populations of prawns. In trials, female prawns were injected with a molecule that silenced certain genes thus allowing for all-male prawn yields. This method eliminates the need for chemicals or hormones, which have been used to increase prawn yields in the past. The breakthrough in prawn yields could also be used in the fight against bilharzia in Africa. Bilharzia is carried by snails and prawns are snails’ natural predators. By increasing prawn yields, snail populationscould be controlled more easily.   

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Bernie Sanders and the Missing GI Bill Evidence

As I’ve written before, the case for “free” college is decrepit, and Bernie Sanders’s op-ed in today’s Washington Post does nothing to bolster it. It sounds wonderful to say “everyone, go get a free education!” but of course it wouldn’t be free – taxpayers would have to foot the bill – and more importantly, it would spur even more wasteful over-consumption of higher ed than we have now.

Because I’ve rehearsed the broad argument against free college quite often, I’m not going to go over it again. But Sen. Sanders’ op-ed does furnish some “evidence” worth looking at: the notion that the post-World War II GI Bill was a huge economic catalyst. Writes Sanders:

After World War II, the GI Bill gave free education to more than 2 million veterans, many of whom would otherwise never have been able to go to college. This benefited them, and it was good for the economy and the country, too. In fact, scholars say that this investment was a major reason for the high productivity and economic growth our nation enjoyed during the postwar years.

I’ve seen this sort of argument before, as I’ve seen for government provision of education generally, and have always found it wanting, especially since we have good evidence that people will seek out the education they need in the absence of government provision, and will get it more efficiently. Since Sanders links to two sources that presumably support his GI Bill assertion, however, I figured I’d better give them a look.

Surprisingly, not only does neither illustrate that the GI Bill spurred economic growth, neither even contends it did. They say it spurred some college enrollment growth, and one says veterans ended up being better students than some high-profile college presidents expected them to be, but neither makes the Sanders’ growth claim. Indeed, in line with what we’ve seen broadly in education, one says that at least 80 percent of veterans who went to college on the Bill would likely have gone anyway, and in seemingly direct opposition to what Sanders would like to see, the other notes that the Bill disproportionately helped the well-to-do, not the working class. As the Stanley study says right in its abstract: “The impacts of both programs [the World War II and Korean War GI Bills] on college attainment were apparently concentrated among veterans from families in the upper half of the distribution of socioeconomic status.”

If we really want to do what’s best for the nation – not just what sounds or feels best – we need to ground our policies in reality. In education, as in Sanders’ op-ed, that often doesn’t happen.  

Kasich Aims to Revive Federalism

The Republican congressional leadership has failed to articulate strong themes to counter the big-government policies of President Obama and the Democrats. People don’t know what the Republican Party stands for, partly because they rarely, if ever, see leaders such as John Boehner and Mitch McConnell on television presenting a coherent vision or a specific program of cuts.

Republicans have particularly dropped the ball on federalism, or the devolving of power back to the states and the people. Reviving federalism was a central theme of the Reagan administration, and it was also a focus of Republican reform efforts in the 1990s.

So I was pleased to see Ohio governor and presidential candidate John Kasich focus on federalism in his new fiscal reform plan. In the Washington Post today, he said:

Let’s start with infrastructure. The interstate system is long finished, and states already oversee their own highway design and construction. Americans don’t need a costly federal highway bureaucracy. I will return the federal gas taxes to the states, leaving only a sliver with the federal government for truly national needs. Then, I will downsize the Transportation Department and reassign it a smaller role, supporting states with research and safety standards. Federal spending would go down, resources available for highways and transit could go up, and states could work faster.

The Education Department will receive a similar approach. Washington isn’t America’s principal or its teacher. Education is a local issue, and decisions should be made by parents, our communities and our local educators. We need high standards, but they are not Washington’s business. I will bundle the department’s funds and send them back to the states with fewer strings attached. The department will be a research center and a local school booster, not a micromanager.

I’d go further than Kasich on many of his proposals, but the important thing is that he is articulating a clear approach to spending reform and reduction. By contrast, House Republicans just introduced a 543-page transportation bill that would increase federal highway and transit spending. The House GOP probably imagines they are being conservative because their spending on transportation would grow more slowly than Senate GOP spending. But the proper amount of federal spending on transit, for example, is not $9.6 billion or $10.6 billion, but zero.

Reviving federalism is a powerful idea for policy reform because it cuts across a vast swath of activities in just about every federal department. And it is a winning theme with the general public, as Emily Ekins and I discuss in this article.

Republican leaders ought to follow Kasich’s lead and explore federalism reforms. If they want to bone up on the advantages of decentralization, they can start with this essay at Downsizing Government. I’d also highly recommend A Less Perfect Union by Adam Freedman for an overview of the history, economics, and constitutional aspects of federal-state relations.