The Risible Hand to Meddle further in NY Higher Ed?

Newsday reports that the visible – and clumsy – hand of government is poised to interfere in NY’s burgeoning for-profit higher ed. market. But the Board of Regents’ impending move to impose strict new regulations on for-profit colleges is the wrong solution to the wrong problem.

If students at these colleges were paying their own way, the state would have no compelling interest in regulating them. The only reason the state presumes to interfere is that funding from New York’s Tuition Assistance Program goes to these schools, and it wants more oversight over how that money is spent. Rather than impeding market forces and freedoms by trying to inject central planning into a promising and dynamic part of the higher education sector, New York should replace its current Tuition Assistance program with a system known as “human capital contracts” or “equity loans,” in which the amount paid back by students subsequent to graduation is contingent on their earnings. These loans allow students to finance their own higher education, eliminating the need for the state to intrude in the market process. It’s a better, cleaner solution.

A Timely Chiding from the Washington Post

Today’s editorial in the Washington Post is a timely reminder of the negative consequences if Congress does not renew certain non-reciprocal trade preference deals (mainly allowing developing countries to import certain goods to the United States tariff free).

Although it strikes a somewhat mercantalist tone (e.g., it seems to imply that there may be reason to block trade deals if they do not “save American jobs”), the editorial board is right to say that the benefits to the United States from renewing these deals, both economic and political, certainly outweigh any “costs” from opening up trade that some members of Congress usually get upset about. Extending permanent normal trade relations to Vietnam (a topic I have blogged about here and talked about in this podcast) should be an especially simple matter.

I am a little skeptical about the long-term benefits of non-reciprocal trade preferences; they can lead to a culture of dependency and concentration in certain industries, and create political constituencies against multilateral trade liberalization, for example. But I wouldn’t go so far as to say that the problems related to these types of deals generally are sufficient to outweigh the benefits of approving the particular deals under consideration. In any case, somehow I doubt that the nuanced arguments against development-related unilateral preferences are the reason behind failure to pass the deals. The Washington Post suggests the inertia may be due to simple laziness. Surely not?

Open Business Models and Privacy

I’ve written here before about how Web 2.0 business models, particularly Google’s, are in conflict with current Supreme Court privacy cases denying people a Fourth Amendment interest in information they have entrusted to third parties.

Now comes a very interesting Information Week report on last month’s Web 2.0 Summit:

None other than Google – which has profited enormously from the data users submit to its services and from the data its users generate through use of its services – is thinking seriously about how to give users more control over their data. Though stopping short of a complete data emancipation proclamation at the Web 2.0 Summit, CEO Eric Schmidt said, “The more we can let people move their data around … the better off we’ll be.”

And the better off users’ privacy will be.

Is Rawlsekianism the Future?

I see the man every day, but today I can’t go two mouse clicks through the political opinion thinkosphere without tripping over Brink Lindsey, Cato’s own VP for research, and his article on liberal-libertarian fusionism in this week’s New Republic. [Free version at Cato.] Sebastian Mallaby features Brink’s piece in his Washington Post column yesterday, though I think misses the intended audience.

Lindsey is not merely joining the large crowd of disenchanted conservatives who believe that the Republican Party has betrayed its principles – spraying money at farmers, building bridges to nowhere and presiding over the fastest ramp-up in federal spending since Lyndon Johnson. Rather, Lindsey is taking a step further, arguing that libertarians should ditch the Republican Party in favor of the Democrats.

Since the New Republic doesn’t have much of a libertarian readership, I’m pretty sure Brink wasn’t so much saying that libertarians ought to jilt the GOP as he was trying to open up a serious dialogue between libertarians and TNR’s centrist Democrats on our common ground as liberals. The project Brink mentions, melding the best of Rawls and Hayek and identifying feasible policies of a Rawlsekian stripe, is very dear to my heart. The point of my 2005 Cato social security paper was precisely to show that Rawlsian liberal moral concerns are best served by relying on the kinds of market dynamics Hayek’s work illuminated.

Rawls and Hayek were, in my estimation, the greatest social/political thinkers of the 20th Century. Rawls understood markets better than he is given credit for, but no one understood markets better than Hayek. And Hayek was a first-rate political philosopher, but Rawls was king of that hill. If you fortify Rawls’ theory of justice with a Hayekian grasp of the coordinating function of prices, and the dynamics of spontaneous order (or fortify Hayek with Rawls’ rather more intelligible normative framework), you will arrive, as Brink argues in less esoteric terms, at something like a system that gives free rein to the informational and dynamically equilibrating function of market prices, while creating a framework for well-targeted and effective social insurance that mitigates counterproductive incentives. Like Brink, I think this synthesis, when followed fairly to the end, approaches canonical libertarianism more closely than moderate Democrats are comfortable with. But there is a coherent and attractive intellectual position in this neighborhood, and there is more than enough overlap between liberals and libertarians for genuine productive conversation that could generate real political results.

Many bloggers seem to be fixated on the immediate political feasibility of libertarian/liberal fusionism. But I think this misses the point. Feasibility is in part a function of the availability of a well-developed and broadly understood position, and a grasp of the kind of policy that follows from it. Fixating on the status quo balance of interest groups is a great way to go nowhere, or just to drift with the waxing and waning of constituencies wedded to superannuated ideas. I think Brink has opened an important conversation for liberals of all stripes genuinely concerned with helping people successfully exercise their autonomy and lead satisfying, dignified lives. I hope both libertarians and liberals will take seriously the opportunity of learning something from one another, and perhaps discover ideas that can get us closer to our shared goals.

Don’t Know Much about Friedman

It took a little more than a fortnight for someone to appropriate the legacy of Milton Friedman in support of something that the Nobel Laureate probably would have opposed. 

In an article for National Review Online, former Speaker Newt Gingrich and his associate David Merritt call on the nation to “Renew Milton Friedman’s Conservatism.”  Whether chosen by the authors or the editors, that title betrays that someone missed Friedman’s point entirely.  In 1975, an interviewer asked Friedman whether it was fair to describe him as a “conservative economist.”  Here was Friedman’s response:

I never characterize myself as a conservative economist. As I understand the English language, conservative means conserving, keeping things as they are. I don’t want to keep things as they are. The true conservatives today are the people who are in favor of ever bigger government. The people who call themselves liberals today – the New Dealers – they are the true conservatives, because they want to keep going on the same path we’re going on. I would like to dismantle that. I call myself a liberal in the true sense of liberal, in the sense in which it means (inaudible) and pertaining to freedom.

Even more jarring is a policy proposal that the authors seem to associate with Friedman.  Gingrich and Merritt write:

We can transform health and health care to deliver more choices of greater quality at lower costs to every American. And government has a role to play. It can and should build an electronic infrastructure, much like government builds public school buildings.

I see two problems here.  First, Friedman often argued that it would be far preferable were government to stop providing education and instead just finance it.  That suggests he saw no need for government to build the schools.  Second, if Friedman ever took a stand on government provision of health information technologies such as electronic medical records, the lack of which is often regarded as a market failure, I’m not aware of it.  However, I have to suspect that left-leaning economist Brad DeLong more closely captured Friedman’s views on the subject when he wrote:

[Friedman] believed…that where markets failed there were almost always enormous profit opportunities from entrepreneurial redesign of institutions; and that the market system would create new opportunities for trade that would route around market failures.

That view is hardly supportive of having the feds provide health information technologies.

Gingrich and Merritt do not completely misappropriate Friedman’s legacy.  They do argue for a few free-market health care and education proposals. 

Should Public Schools Be Racist?

Can public schools make student assignment decisions based solely on race? That’s just one of the questions before the Supreme Court today in pair of school integration cases (Parents Involved V. Seattle School District No. 1, and Meredith V. Jefferson County Board Of Education).

My one sentence opinion on these policies:  Trying to promote meaningful integration through race-based school assignment policies is like trying to promote love through arranged marriages.

Put less briefly, these cases raise four important questions about race-based assignment:

- Is it legal (the only question the Court will address)?
- Does it do any good?
- Does it do any harm? And,
- Is there a better way to achieve the same goals?

I’ll leave a thorough analysis of the first question to the Justices and to Cato’s legal scholars, though it’s hard for me to fathom how anyone could find purely race-based student assignment decisions consistent with “equal protection of the laws.”

Do forced public school integration policies do any good? It is fair to say that the answer is no, since they have not even achieved the immediate result of integrating schools. After half a century of compulsory integration policies, public schools are little more racially integrated today than they were before such policies were introduced in the early 1970s. It is not even clear that racial balance at the school level is the right goal, since it does not necessarily produce meaningful integration. It is common for students to sort themselves into cliques along racial or ethnic lines, and to have comparatively little interaction with those outside their own group. Schools that seem “integrated” on paper do not always have meaningfully integrated hallways, lunchrooms, or even classrooms.

Do they do any harm? In numerous ways, yes. Attempting to force racial balance in schools through busing not only failed to achieve the immediate goal of public school integration, it dramatically increased residential segregation by driving the (predominantly white) middle class to the suburbs (middle class blacks fled, too, but were fewer in number). Denying students their first choice of public school based solely on race is likely to drive still more families to suburban districts that do not use such assignment policies (or to the private sector), hence further aggravating residential segregation. And clearly, denying children their first choice of school is harmful in and of itself.

Is there a better way? Of course! And better in every respect! The right solution is to introduce a system of financial assistance to ensure that all families have access to the public or private school of their choice. First of all, such programs lead to greater school-level integration and reduced residential segregation. Second, integration in the private sector tends to be more meaningful (children are more likely to choose to sit with peers of different races in private school lunchrooms than is the case in public schools). Third, the most significant educational benefits to private schooling tend to be enjoyed by African Americans, both in achievement and graduation rates.

An overwhelming body of evidence points to parental choice and market incentives as a better way of achieving meaningful integration and improved educational opportunities for minority children. Those truly concerned with advancing the cause of civil rights have to realize that race-based student assignment within a government school monopoly has been and continues to be both ineffective and counter-productive.

New at Cato Unbound: Lawrence Harrison on “Culture and Economic Development”

This month’s issue of Cato Unbound, “How Much Does Culture Matter,” asks:

What are the fundamental determinants of economic growth and development? The question is of much more than academic interest in a world where billions of people continue to live at the margins of subsistence. Yet experts’ advice to poor countries has been all over the map. During the heyday of the “Washington Consensus,” the primary emphasis was on implementing a particular menu of policy changes. More recently, economists have been placing greater stress on the role of institutions — in particular, the rule of law, protection of property rights, and other limits on government power. Less widely discussed is a more controversial proposition: culture — basic norms and values — holds the key to a country’s development prospects. The linkage between culture and economic progress was most famously explored by Weber, but in contemporary debates there has been a decided reluctance to “blame the victim” or declare that some cultures are “better” than others. In this issue we examine how much culture matters — and how culture, institutions, and policies interact and mutually influence each other to shape countries’ economic destinies.

Lawrence E. Harrison, author of The Central Liberal Truth, and co-editor, with Samuel Huntington, of Culture Matters: How Values Shape Human Progress, leads off with a rich discussion overview of studies on the effects of culture on growth around the world. Replies are on deck from UC David economist Gregory Clark, author of the forthcoming A Farewell to Alms: A Brief Economic History of the World; George Mason economist Peter J. Boettke, author of Calculation and Coordination: Essays on Socialism and Transitional Political Economy; and Harvard economist James A. Robinson, co-author, with Daron Acemoglu, of Economic Origins of Dictatorship and Democracy.