Several weeks ago, I received a letter from the Cato Instituteadvertising that they were putting on a day seminar here in Houston. On the agenda, entitled "Policy Perspectives 2006" were education analyst Andrew Coulson, Energy spokesperson Jerry Taylor speaking on the case against "energy independence", and featured speaker Bruce Bartlett who has recently written a book entitled "Impostor - How George W. Bush Bankrupted America and betrayed the Reagan legacy". I had the week off and since it was a chance to network, I decided to pony up the $50 and go.
Coulson was the first speaker. Coulson started his speech by stating that he was aware of the never ending saga known as the Texas public education finance game. He did state that he had not had enough time to intimately familiarize himself with all of the grisly details of public education in Texas, but he already knew enough to state that few or none of the interest groups (or actors) had the interests of children at heart (amen brother!). Coulson went on to say that within the school choice movement, there is no consensus on how to achieve universal access to education. Details however, do matter and matter big time with regards to education and outcomes.
Coulson said that amongst his studies of education, he picks several criteria for achieving education excellence (I might have missed one or two here):
1) Freedom and competition
2) The profit motive in general ( though this is not a universal. Religious schools might not care about profit).
3) Parental choice and direct responsibility for full or partial payment by parents for education.
4) Teacher choice on how to teach and what to teach.
Coulson cited studies of other educational systems in India and Indonesia where having parents pay a certain percentage of school fees - say 20 - 30 percent - add up to a big difference in outcomes. However this trend of increased parental direct financial involvement getting better outcomes does not fully extend all the way through having parents pay up to 100 percent of the financial tab. The improvements in outcomes become quite marginal once the parents are paying 80 percent or more of the bill.
Coulson spoke of an issue which I have come to discern about public schools, namely that certain conflicts are irreconciliable within a public school system. Such topics include whether to have school prayer or references to God in public schools (some people want them while others don't), whether or not to teach sex education in schools (again some say yes, while others say no), whether to teach classes in English or have classes in the kaleidescope of other languages (namely Spanish) because parents of those kids are immigrants (yet eligible to vote), and whether to teach creationism or evolutionary biology. Losing the battle in the political arena and subsequently running to a judge in order to get a ruling in your favor does nothing to solve the problem. As with everything else in politics, someone is going to win and someone is going to lose. I have little doubt that this is a reason that religious schools and home schooling have been gaining popularity over the past 20 years.
So what about universal access and the financing problem? As we know, there are many poor people who simply cannot afford to pay the tuition to send their kids to school. Coulson thinks that the way towards solving this problem involves implementing a two part tax credit. Part 1 involves parents with kids simply getting a dollar for dollar tax write off for paying for tuition. Part 2 involves setting up a tax credit using "scholarship funds" for means tested low income families. Tax write offs could be used by wealthier people to donate to these pools of money. Coulson says that no State has both, but some have either one or the other. The evidence so far with regards to part 2 is that money does seem to flow from richer people to poorer ones, but the jury is still out. As far as legal issues go, some courts like the Arizona Supreme Court, have held that since no tax dollars are paid directly to the state, then tax credits pass muster with regards to to the issue of worrying about whether public monies are going towards religious education.
The next speaker at the symposium was Jerry Taylor. Taylor, a boisterous and confident figure, set out to demolish the argument that America needs to be "energy independent", an idea that seems to have Washington enthralled at the moment. He started off by saying that broadly speaking, the case for using foreign suppliers for energy is the same one as the case for free trade. The topics which Taylor dealt with included 1) Do we really need protection against so called supply disruptions? 2) The "oil weapon" issue. 3) Keep the money at home argument. 4) The "Thomas Friedman" argument which says that Al Queda has been growing rich and fat off of $67 per barrel oil, ergo we can kneecap Al Queda financially by reducing dependence on Middle East oil. and 5) The ethanol / oil shale / subsidies arguments.
Taylor stated that in 1978 - 1980, the United Kingdom was self sufficient in oil and gas reserves. In fact, the North Sea fields were allowing Great Britian to export crude. So did this state of affairs allow the U.K. to be completely buffered from the world oil shocks that gripped the market during that time? The answer is no. Prices did go up the U.K. just as they did everywhere else. Now one could argue that a self sufficient regime can "protect" their citizens from oil shocks by pricing oil at below market prices, but that just leads to overconsumption, and social losses from not reaping the true cost of producing oil.
"Defang the oil weapon": The 1973 oil embargo largely resulted in oil companies and petroleum consuming countries having to buy their oil not directly from OPEC, but from countries which OPEC would sell to. Ergo, the 1973 embargo, though it caused a great deal of market convolutions and brief price shocks, ultimately was a wash.
"It keeps our money at home" argument: Money is fungible. Who knows where it ends up at.
"The Thomas Friedman argument": We need to become energy self sufficient because lots of money is going to Arab countries which are sympathetic to Al Queda and we have an opportunity to kneecap Al Queda through cutting off their flow of money which obviously comes from the river of petrodollars now flowing through the hands of the Oil Shieks.
Taylor pointed out that Al Queda did its greatest expansion during the 1990's, a period of low oil prices. Taylor also mentioned that the 9/11/2001terrorist operation was done for $400,000. In otherwords, terrorism can be done on the cheap. There seems to be little merit in Friedman's arguments.
We can be self sufficient through oil shale, tar sands, and ethanol: Taylor pointed out that gas prices in Europe are anywhere from $4.80 - $8.00 per gallon and yet Europe has little or no ethanol. The U.S. has an estimated 750 billion barrels of oil shale (I don't know if this is true), but oil shale becomes economical at something like $95 per barrel (2005 dollars).
Taylor had other things to say, such as about the Brazilian ethanol program and the heavy subsidization of nuclear energy, but I won't write about them here.
The featured speaker at the seminar was Bruce Bartlett. Bartlett started his speech by describing, George Bush the elder, who famously called Ronald Reagan's economic program "Voodoo Economics". Bartlett pointed out that many critics of Reagan missed a central point of Reagan's philosophy on taxes, namely that even though Reagan did acquiesce to raising some taxes, he did not raise tax rates on items such as income. Bush the elder in the 1990 budget deal did raise tax rates, even as he said that he sat next to Reagan for 8 years and supposedly learned from the master.
Bartlett then moved on to the subject of George Bush the younger. Bush's idea was "compassionate conservativism", meaning (he thinks) a hand up, not a hand out. Bartlett had his doubts when he learned that Bush was going to be running for the White House, but he realized that Bush needed ideas to get elected. But one of the first things Bush did when he got in was to call up Ted Kennedy and say "let's do an education bill". This was "touchy feely" stuff, with tons of money for bureaucracies. Some testing was thrown in, but Bartlett says that the states get to do the testing, by which they arrange these tests so that they can capture back the most federal money back that they can.
Other issues that Bartlett crucified Bush the younger on were steel tariffs, the so called "Campaign Finance" bill, which would have had the Founders rolling in their graves, and most of all the Medicare Drug bill, which will probably add an unfunded liability of something like $18 trillion dollars (I know, but who is counting). By doing this, Bush broke a fundamental axiom of Conservativism, namely that you NEVER put on more entitlements on the backs of taxpayers. One other note about the Medicare drug benefit which I was not aware of, and that is that some large corporations (IBM, GE, GM, Ford, etc) have long had a policy of paying for drugs for retirees. These companies will now get a check from Uncle Sam for doing what they used to do by themselves. Yet another classic example of what used to be a private activity sponsored by a private party which was an effort to attract employees to work for them now being taken over by the government (nee taxpayer) in an effort to get some program or legislation passed.
As a side note, Bartlett mentioned that he was fired last year from the National Center for Policy Analysis, a Dallas based think tank. The reason for this was that the NCPA didn't care very much one way or another about President Bush, but a lot of their contributors did, ergo since they didn't like what Bartlett was saying - out the door Bartlett went.
The fundamental point that Bartlett was trying to drive home was that he believes that Bush the younger didn't have to do any of these things to help himself politically. Did Bush think that by doing a bill with Ted Kennedy that the NEA was going to suddenly start supporting Bush and the Republicans? No. By caving in for steel tariffs, were labor unions going to vote more for Bush? No. By spending billions and trillions on the Medicare drug program, did Bush think that the old people were going to think that Republicans were better able to deal with the entitlements problems than Democrats? The answer according to Bartlett was no. So, in Bartlett's view, Bush would have been reelected in 2004 anyway and he has fundamentally hurt the Republican party in the midterm and long run for illusionary, alleged, short run electoral gains.
Enough for now. It was an interesting, though somewhat predictable day. I did give a small sum of money to Cato while there, breaking a previous promise to myself not to give any money to anything associated with Washington D.C. (what good will it do anyway?). Cato, even with its recent scholarship flaps, is still the most innovative think tank around. It's a shame that the Republicans in the White House and in Congress don't act on their ideas.
Posted by The Mighty Wizard at April 13, 2006 10:13 PM