What Massive Collapse?

On the Economix blog on the New York Times website, they've posted a challenge from Andrew Coulson, the director of education policy at the ultra-conservative (getting into libertarian) Cato Institute. He writes:

I’ve been claiming for some time (most recently in IBD) that K-12 education has suffered a massive and unique productivity collapse over the past 40 years: student achievement has been stagnant at the end of high school (see the NAEP [National Assessment of Education Progress, a standardized test]) and graduation rates have actually declined slightly (see James Heckman’s work), despite a more than doubling in real expenditures per pupil.

But some have challenged the claim that this economic catastrophe is unique to education, so this morning I decided to challenge readers of the Cato Institute’s blog to present an example of another field that has suffered the same productivity collapse. So far the most promising contender is live theater, but after looking into it, I find it doesn’t hold up.

Since Economix has a great many well-informed readers, and ones who are perhaps less predisposed to think ill of public schooling, I’m writing to enlist your help. Would you be willing to pass along my challenge to your readers? I’ll look into the most promising candidates suggested, and will publicly acknowledge any “winners” (i.e., fields that have seen productivity cut in half, or worse, since 1970).

Sorry to quote so extensively, but I wanted to give you the full picture of what we're discussing here. The thing is, I don't know that this "massive and unique" collapse in productivity is really born out by the facts as we know them. In fact, I think that the very premise is self-contradictory.

Let's assume that Coulson is right and that no major industry has suffered a massive productivity collapse over the last 40 years. (I've actually written before with some evidence that we have one of the most effective, efficient, and innovative economies in the world.) That would seem to indicate that the people working in these industries are (at least) competent at what they are doing or they wouldn't be able to maintain their level of productivity.

Now the question becomes, where do those people come from? Presumably, at least some of them had to have gone to American public school during the last 40 years. I think it's likely that most of them did, in fact. Thus, it would appear that the education system is able to continue to produce a workforce that meets the needs of our society and our economy. If we measure productivity by output, that seems to belie the assumption that education has suffered from a massive collapse.

To be sure, there are certain areas (notably poor urban neighborhoods) where the system is failing spectacularly. However, it's a fallacy to generalize those failures to the entire system.
The bottom line is that the education "industry" feeds into every other industry you can name. If there were truly to be a massive collapse in education, you can be sure that it wouldn't be unique.

How Convenient

I have to admit that I read the announcement that John McCain was suspending his presidential campaign to help deal with the financial crisis with a certain amount of amazement. I mean, here was a guy who was willing to put his own presidential aspirations on hold so close to the election in order to focus on the work that the country needs to do right now. He's not thinking of himself, just his country.

Hey.

Wait a minute.

Isn't this the guy who's running on the slogan that he'll always put the country first? Well, how convenient for him. By saying that he's stopping campaigning, he's actually still campaigning. I bet they were really toasting themselves over at McCain headquarters for that little bit of campaign jiu jitsu.

Maybe I'm just overly cynical, but this strikes me as little more than a cheap political gimmick. Interestingly, it seems like we've been seeing more and more of those from the McCain campaign as time goes on. First he was putting country first by suspending the convention when Hurrican Gustav approached. Now he's putting the country first by suspending his campaign while the financial crisis gets dealt with. I've read that he doesn't like campaigning very much, but come on.

The fact is, does stopping a campaign and not running political ads for a week actually help the economy? Is that really what's going to put Wall Street back on the road to fiscal solvency? Is John "I don't really know much about the economy" McCain really going to be in a good position to assist in complex negotiations about how to bail out Wall Street? Is this anything other than a political gimmick?

I think it's pretty obvious that the answer to all of those questions is a single, resounding NO.

Remember When

It seems like there once was a time when Republicans would argue against massive government interventions in private lives and businesses. There was a lot of talk about government being the problem not the solution and how government should just butt out and let people do their own thing so that the economy could flourish. Throwing money at a problem rarely fixes it, they'd say.

How the times have changed. We're now looking at throwing a $700 billion bailout for just about every financial institution in the country. If this is what it looks like when government butts out, I'd hate to see the price tag for when it gets involved.

The Republicans, though, seem unwilling to entirely abandon their non-interference mode of thought and so are trying to just give away the $700 billion without requiring any real oversight over how Wall Street uses the money. You know, because they've done such a good job so far.

I'm not much of an economist and I really can't say whether this kind of bailout (it's being called the biggest federal intervention in the economy since the Great Depression) will actually solve the economic crisis. To my non-expert eyes, though, it doesn't make a lot of sense to give a failing industry a huge chunk of cash and say, "Do what you think it best." There does need to be some oversight and some guarantees in place that I'm going to get my money back eventually. I would hate to have to be paying off this debt at the same time I'm trying to pay off the Social Security debts we'll be racking up as the Boomers retire.

Now that Republicans are coming in line with massive federal intervention designed to support a failing private industry for the good of ordinary citizens, we should be seeing universal health care pretty soon, right? Well, I can always dream.

Worried Ignorance

So, you may have heard or read something lately about how the U.S. economy isn't doing so hot over the last few days. One sign of trouble is when the New York Times - not known for sensational alarmism - uses words like "crisis" and "spreading" in the first sentence of their story.

I have to admit that I know very little about economics (macro or micro) or how these big financial institutions work or what role they play, exactly, in our economy. (I took one econ class in college in which the professor always used analogies relating to alcohol consumption. My favorite was when he told us that during the oil shortages of the '70s he drank a lot of gin to stay warm, so gin and oil were subsitutable goods for him.)

Despite knowing so little about it, I can tell that we're in trouble here. I'm not sure why and I certainly don't know what to do about it, but it looks pretty grim. I mean, for a fundamentally strong economy, this seems like a pretty bad development.