Category Archives: books and book reviews

The History of American Education

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Kevin Carrie-Knight reviews The American Model of State and School, by Charles Glenn.

At root, The American Model of State and School tells the story of a gradual centralization of many local models of schooling in America into an increasingly uniform system with increasing government involvement. Before the Whig reformers of the 1830’s and 1840’s succeeded in ushering in common schools, “the state role in schooling – apart from the rhetoric of state constitutions – was long a matter of financial bookkeeping than of determining how education would be provided and for what purposes” (p. 125). Using a wide array of primary and secondary sources, Glenn shows how reformers (with the best of intentions) evolved a school system that became more centralized and standardized and less responsive to American diversity and parental input.

Some random thoughts:

1. Goldin and Katz describe the expansion of schooling in America from the early 1800s through 1950 as a highly decentralized process.

2. I do not know if Glenn gets into this, but the consolidation of school districts since the 1940’s has played a major role in making schools more centralized and less responsive to parental input. It is doubtful that school district consolidation resulted from the sort of grass-roots reform movements that drove earlier efforts to standardize education.

3. When I saw this:

American public education should be “disestablished,” just as state churches were in the decades after the revolution.

I thought of Ivan Illich, who used the same term and made the same plea in 1971. It appears (based on a search at Google books) that Glenn mentions Illich, but only once and not in the section of the book quoted in the review.

4. Lately, I have been puzzling over the relationship between coercion and education. Do we not often act as if we believe that education must involve coercion? If left to themselves, young people would not learn what “we” think they should? If left to themselves, parents would not educate their children? If left to themselves, teachers would not teach the “right” curriculum? If left to themselves, local school principals would not promote quality education? It seems to me that beliefs like this implicitly underly the American education system today.

Huemer Unbound

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Michael Huemer writes,

the question of political authority is not “Should we have government?” The question is: Should the government be subject to the same moral constraints as apply to private agents? The failure of theories of political authority means that we must apply to the state the same moral standards that we apply to private agents. If a private agent would not be justified in using coercion to achieve a particular goal, then the state is also not justified in using coercion to achieve that goal.

The state is an institution, not an individual. Individuals play roles within this institution, such as legislator, policeman, or citizen. These roles are defined partly by law and partly by custom. When one talks about applying moral standards to the state, what I think this means is that we are applying moral standards to its laws and customs. For that purpose, using the metaphor of the individual to characterize these laws and customs may be helpful but it is not obligatory.

Consider another institution–a business. Should we say that a business is like a family, and the owner should be subject to the same moral standards as apply to a parent? Some people might find that analogy attractive, but I do not.

I think that the term I am looking for here is “category error.” Saying that a business or “the state” belongs in the same category as an individual strikes me as such an error. Instead, I think that “the state” belongs in a category that is closer to “relationship” or “institutional arrangement.” Within that institutional arrangement, we give authority to firemen to break traffic laws in the line of duty. When they are off duty, they are subject to the same laws as the rest of us. There are many relationships and institutional arrangements in which we authorize people to do things to us that differ from what we would permit a random stranger to do.

The problem I have with government is with the scope and scale of monopoly control. I think that the laws and customs in the United States today give too much authority to government officials. I wish that everyone had much more freedom to choose laws and customs without being forced to accept the territorial monopolies that we call government. However, I would not lean on Huemer’s arguments to make that case. Instead, I focus on the knowledge-power discrepancy.

I wrote about Huemer’s book here, and we had a follow-up exchange here.

The Dark View of Schooling

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Bryan Caplan thinks that schooling is not about education. He thinks instead it is about signaling.

Bryan’s view is benign compared with John Holt.

society demands of schools, among other things, that they be a place where, for many hours of the day, many days of the year, children or young people can be shut up and so got out of everyone else’s way. Mom doesn’t want them hanging around the house, the citizens do not want them out in the streets, and workers do not want them in the labor force. What then do we do with them? How do we get rid of them? We put them in schools. That is an important part of what schools are for. They are a kind of day jail for kids.

Thanks to a commenter on this post for the pointer.

Bryan is also mild in comparison with Ivan Illich.

A political program which does not explicitly recognize the need for de-schooling is not revolutionary; it is demagoguery calling for more of the same.

Illich’s DeSchooling Society starts with a chapter “Why We Must Disestablish School,” which opens

Many students, especially those who are poor, intuitively know what the schools do for them. They school them to confuse process and substance. Once these become blurred, a new logic is assumed: the more treatment there is, the better are the results; or, escalation leads to success. The pupil is thereby “schooled” to confuse teaching with learning, grade advancement with education, a diploma with competence, and fluency with the ability to say something new. His imagination is “schooled” to accept service in place of value. Medical treatment is mistaken for health care, social work for the improvement of community life, police protection for safety, military poise for national security, the rat race for productive work. [Does this foreshadow the classic “not about” post by Robin Hanson?] Health, learning, dignity, independence, and creative endeavor are defined as little more than the performance of the institutions which claim to serve these ends…

the institutionalization of values leads inevitably to physical pollution, social polarization, and psychological impotence…this process of degradation is accelerated when nonmaterial needs are transformed into demands for commodities; when health, education, personal mobility, welfare, or psychological healing are defined as the result of services or “treatments.” I do this because I believe that most of the research now going on about the future tends to advocate further increases in the institutionalization of values and that we must define conditions which would permit precisely the contrary to happen. We need research on the possible use of technology to create institutions which serve personal, creative, and autonomous interaction and the emergence of values which cannot be substantially controlled by technocrats.

The New Left had its vices. As with the Occupy Wall Street movement, within their smoldering discontent it is difficult to discern how they would address economic organization. In The Mind and the Market, p. 345-346, Jerry Muller writes of New Left icon Herbert Marcuse,

his work, unlike Keynes’, was less than useless in providing tangible institutional solutions. For Marcuse was fundamentally uninterested in institutions, whether economic or political….Marcuse proceeded as if these fundamental issues of modern political and economic life could simply be ignored.

The New Left also bequeathed to us an academy where the oppressed-oppressor narrative becomes the sum of all scholarship. As Muller puts it on p. 344,

Scholarship, in this understanding, was not about objectivity…The model of the professor as critical intellectual, liberating his or her audience from one or another variety of false consciousness, became institutionalized in some academic disciplines, above all literary studies and sociology. Three decades after the zenith of the New Left and the publication of Marcuse’s Essay on Liberation, for example, the annual convention of the American Sociological Association was devoted to the theme of “Oppression, Domination, and Liberation”; it focused on racism as well as “other manifestations of social inequality such as class exploitation and oppression on the basis of gender, ethnicity, national origin, sexual preference, disability and age.”

But one thing I will say for the New Left is that they were not the hard-line statists that we see on the left today. On the contrary, they viewed government technocrats as part of what they called “the system,” and opposition to this system was a centerpiece of New Left ideology.

Ken Kesey, in One Flew Over the Cuckoo’s Nest, coined the term “the Combine” to describe forces of control that deprived people of freedom supposedly for their own good. Interestingly, John Taylor Gatto, another anti-schooling radical, wrote a Cliff Notes version of the novel that emphasized its anti-authoritarian aspects.

I imagine that if universal pre-kindergarten had been proposed by Richard Nixon, the New Left would have denounced the scheme as fascist. In that sense, I miss them.

The Role of Banks

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1. I write,

Franco Modigliani and Merton Miller point out that the real assets in the economy (fruit trees, oil wells, office buildings, and so on) are all owned ultimately by households. That fact is not changed by the way that financial claims are rearranged into debt and equity. As Miller was fond of putting it, “No matter how many slices you cut, it’s still the same pizza.”

Read the whole thing. It seems as though I constantly come across folks making broad generalizations about what to do about banks that are not grounded in an understanding of what banks do. My essay is an attempt to address that problem. It was provoked by receiving a new book by Anat Admati and Martin Hellwig.

2. Evan Soltas writes,

I can estimate that the average hour worked in the financial industry generates nearly 30 times the average per-man-hour profit in the rest of the economy. That’s up from six times the average in 1964.

This could very well be a question of global comparative advantage, but I find that hard to believe on the basis of the employment figures. It seems substantially more likely, rather, that the financial sector’s profitability comes from the implicit and explicit subsidies of a market with high barriers to entry.

Pointer from Phil Izzo.

Keep in mind that the interesting fact is the increase in the relatively profitability of the financial sector. I think this creates quite a puzzle.

Have barriers to entry increased? Not in any obvious way. Much of the infamous deregulation that took place since the 1960s was designed to increase competition, which should have reduced profitability (Gary Gorton even argues that we need to reverse that, to increase profitability in finance in order to give banks an incentive to hang on to their franchises). We got rid of restrictions on interstate banking. The erosion and repeal of Glass-Steagall were hailed at the time as allowing commercial banks and investment banks to compete on one another’s turf.

Has the subsidy increased? That is a more difficult question. But I do not immediately see how it has.

If one thinks in terms of natural forces, for an industry’s profits to increase, one needs some of the following:

1. An increase in demand.

2. An increase in efficiency.

3. Enough barriers to entry to maintain profit margins.

I suspect that (2) is very important. Off hand, would not finance benefit more than other industries from information technology?

I would tell a story in which the main barrier to entry in finance is the value of reputation. In other industries, innovation creates opportunities for upstarts. In finance, it is more likely to create opportunities for those few incumbent firms that adopt technology quickly and intelligently, because upstarts cannot establish reputations rapidly enough. Thus, one might expect to see a big expansion of profits in the industry as a whole, concentrated in a relatively few firms.

Incidentally, this model may fit higher education going forward. If the Internet creates opportunities for tremendous increases in efficiency, then the “profits” may accrue to universities with strong reputations who adopt technology quickly and intelligently. I would prefer to see competition from upstarts, but first someone must find a way to overcome the reputation advantage of the incumbents.

Ben Bernanke, Before and After

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1. Before (June 12, 2006):

in the area of market risk, advances in data processing have enabled more analytically advanced and more comprehensive evaluations of the interest rate risks associated with individual transactions, portfolios, and even entire organizations. Institutions of all sizes now regularly apply concepts such as duration, convexity, and option-adjusted spreads in the context of analyses that ten years ago would have taxed the processing capabilities of all but a handful of large institutions. From the perspective of bank management and stockholders, the availability of advanced methods for managing interest rate risk leads to a more favorable risk-return tradeoff. For supervisors, the benefit is a greater resilience of the banking system…

Today, credit-risk management encompasses both loan reviews and portfolio analysis. Moreover, the development of new technologies for buying and selling risks has allowed many banks to move away from the traditional book-and-hold lending practice in favor of a more active strategy that seeks the best mix of assets in light of the prevailing credit environment, market conditions, and business opportunities. Much more so than in the past, banks today are able to manage and control obligor and portfolio concentrations, maturities, and loan sizes, and to address and even eliminate problem assets before they create losses. Many banks also stress-test their portfolios on a business-line basis to help inform their overall risk management.

2. After (March 22, 2012):

A second, very important problem was that during this period, financial transactions were becoming more and more complex but the ability of banks and other financial institutions to monitor and measure those risks was not keeping up. That is, their IT systems and resources they devoted to risk management were insufficient…So if in 2006 you asked a bank about the effect if house prices fell 20 percent, it probably would have greatly underestimated the impact on its balance sheet because it did not have the capacity to measure accurately or completely the risks that it was facing.

For (2) I am quoting from the version of Bernanke’s lectures that is printed in The Federal Reserve and the Financial Crisis, sent to me Princeton University Press. Perhaps someone can find a written transcript on line.

Given (1), I find (2) to be disingenuous. Also, in the lecture “Response to the financial crisis,” Bernanke says

when the mortgage-backed securities started going bad, it became evident that AIG was in big trouble and its counterparties began demanding cash or refusing to fund AIG, and it came under tremendous pressure.

In our estimation, the failure of AIG would have been basically the end. It was interacting with so many different firms. It was so interconnected with both the U.S. and the European financial systems and global banks.

This is also disingenous. The problem at AIG was the demands for collateral coming from Goldman Sachs and a number of foreign banks. It was those institutions that needed bailing out, not AIG. I still like what I wrote back in October of 2008.

It is highly unlikely that the buoyancy of the U.S. economy depends on the liveliness of the Liar’s Poker game of mortgage securities trading. We should resist panic reactions and emergency bailouts.

My alternative to bailouts was what I termed the stern sheriff approach. I wrote,

I think that the people who insist on Treasuries as collateral should have to pay a financial penalty, just as someone who has a CD at a bank can be assessed a penalty for early withdrawal. By punishing liquidity preference, we could stop the liquidity squeeze.

The government could have made it difficult for Goldman Sachs and other counterparties to grab low-risk assets from AIG. Staying within the law, simply requiring those counterparties to go to court would have done the trick. Instead, the government essentially seized AIG, paid off the counterparties, and then sold off huge chunks of AIG to avoid taking a loss. If the government was going to exercise arbitrary power that way, it could just as easily have exercised that power to keep AIG liquid and force Goldman and the others to raise short-term funds through other means.

Dan Pink’s Latest Book

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It is called To Sell is Human. I bought an e-copy, because I consider his work self-recommending. Some notes:

1. What Nick Schulz and I call the New Commanding Heights are really soaring. Pink writes,

Ed-Med–which includes everything from community college instructors to propietors of test prep companies and from genetic counselors to registered nurses–is now, by far, the largest job secton in the U.S. economy…Ed-Med has generated significantly more new jobs in the last decade than all other sectors combined.

Philanthropy and American Exceptionalism

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In Why Philanthropy Matters, Zoltan J. Acs makes the case. I was sent a review copy, which I only skimmed. p. 202-203:

what differentiates American-style capitalism from all other forms of capitalism is its historical focus on both the creation of wealth (entrepreneurship) and the reconstitution of wealth (philanthropy)…

…Historically, much of the new wealth created in the United States has been given back to the community to build up the social institutions that enhance future economic growth.

He is thinking of philanthropic support for education, scientific research, and the like. He claims that little of this take place in Europe. The picture there is one in which the wealth of the rich goes toward their own spending or toward taxes, with little in the way of philanthropy.

I am not such a fan of the non-profit sector. I prefer consumer sovereignty to donor sovereignty. In the academy, donors build too many buildings and do not offer enough research prizes.

Yes, I believe that philanthropists are better than government at investing in public goods. So, the choice is between taxes/government on the one hand and philanthropy on the other, I favor philanthropy. But if we hold the size of government constant, at the margin I think we are better off with a larger for-profit sector and a smaller non-profit sector.

The Narrative of American Public Education

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On p. 153 of Why Philanthropy Matters, Zoltan J. Acs writes,

Early Americans in New England and the Chesapeake region, and later throughout the West, established schools in the majority of towns and villages. There was no legal requirement to do this, nor any norm adapted from other countries. Among white Americans, the literacy rate was arguably the highest in the world by 1800.

This contrasts with the Goldin-Katz narrative of American exceptionalism in education, which is that universal public schooling was our unique contribution. This made me wonder whether universal public schooling was a sui generis innovation or a government take-over of a system that already was working well. Searching around, I found an article from The Freeman in 1983, by Robert A. Peterson.

for two hundred years in American history, from the mid-1600s to the mid-1800s, public schools as we know them to day were virtually non-existent, and the educational needs of America were met by the free market. In these two centuries, America produced several generations of highly skilled and literate men and women who laid the foundation for a nation dedicated to the principles of freedom and self-government.

…A study conducted in 1800 by DuPont de Nemours revealed that only four in a thousand Americans were unable to read and write legibly.

David Warsh on The Chosen Few

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He writes,

it is the Jews themselves who are seen to have done the choosing, having begun two thousand years ago, after their war with the Romans, when the hawks perished and the doves chose to require everyone in their community to learn to read. If the story of the Jews is to be rethought – beginning with the invention of primary education and universal literacy – then the history of humankind must be rethought as well including, for instance, the central role the Islamic Empire played as well.

This may be the first you have heard about The Chosen Few, but I pretty much guarantee you that it will not be the last.

So, should my next online course be something on the Jews and the economy? It could include selections from The Chosen Few, Jerry Muller’s The Mind and the Market and Capitalism and the Jews, and Brian Doherty’s Radicals for Capitalism, Jonathan Entine’s Abraham’s Children, George Gilder’s The Israel Test, Thomas Sowell, …

Possible issues:

1. How and why have Jews differed occupationally from the general population?
2. What other minority groups have played comparable economic roles?
3. What accounts for Jewish economic success?
4. How has Jewish economic behavior influenced anti-semitism, and how has anti-semitism influenced Jewish economic behavior?
5. How have Jewish thinkers influenced political economy, and how has economics influenced Jewish thinkers?
6. Relative to other Americans, are Jews more capitalist or more anti-capitalist–or both?
7. Does the economy of the modern state of Israel validate or invalidate Jewish stereotypes?
8. Does Israel exemplify Jewish capitalism or Jewish anti-capitalism–or both?

The Unintended Consequences of God

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In The Chosen Few, Maristella Botticini and Zvi Eckstein offer an explanation for how Jews wound up in high-skilled, urban occupations. They argue (p. 95) that between 200 and 650 AD,

world Jewry became a small population of literate individuals (“the chosen few”). The unintended consequences of the religious ruling that required Jewish fathers to invest in their sons’ literacy and education fully displayed themselves

Jews became much more literate than other populations, but at a cost of numbers, as those who could not afford to educate their sons converted to other religions. Over this time period (p. 113)

the general population decreased by about 12 percent, whereas the Jewish population collapsed by roughly two-thirds

In those days, most people were farmers, for whom literacy’s costs generally outweighed its benefits. However, in an urbanized society with skilled occupations, literacy pays off. As urbanization gradually increased in the late Middle Ages, Jews came to fill high-skilled occupations. Botticini and Eckstein argue that literacy, rather than persecution, is what led Jews into these occupations.

Urbanization is a very important process in economic development. Jane Jacobs made that argument convincingly. So has Ed Glaeser. Specialization and trade take place in cities, by necessity and by convenience. Without modern transportation, rural areas are cut off from trade. Even today, city dwellers account for a disproportionate share of wealth.

This year’s Super Bowl commercial featured Paul Harvey speaking on the theme that God created the farmer. The commercial has a lot of overtones along the civilization-barbarism axis. If Harvey is correct, then God’s gift of the bible to the Jews had some unintended consequences. Ultimately, according to Botticini and Eckstein, the first monotheists embarked on a course that ultimately led them away from farms and into the urban world of specialization and trade.