Did the Tea Party Change Anything?

I know it has to be have been a frustrating election cycle for the Tea Party, and there is a natural human desire to find something good in bad news. But if the Tea Party went away today I’m having a hard time understanding exactly how it would have made a difference in our government. The situation that I think sparked the anger that lead to the Tea Party, the bank bailout. But none of the intertwining between big government big finance that led to the bailout has been undone. Financial institutions are still free to sell trillions of dollars worth of derivatives to each other, exactly like the ones that caused the need to bail out AIG. Unregulated Hedge Funds are still free to borrow billions of dollars from the regulated economy to gamble on derivatives. Government spending is still far higher than it was when George W. Bush became president. What has actually changed? How is our country on a different path?

To my mind, at the root of this ineffectiveness was a very basic misunderstanding of the role of government – most of these bad things happened not because of too much government regulation, but rather because of too little. The idea of insurable interest, that you can’t buy insurance on something you don’t own, goes back to English Common Law. And yet we abandoned it – derivatives are insurance policies. The idea that we should limit the amount of money financial institutions borrow goes back to the 1930s, and did a great job in reducing risk. We abandoned it. This is the paradox of the Tea Party – most of the things that made it the maddest happened because we lessened regulation, not because of too much regulation.

And somewhere deeper, there was a misunderstanding of the intersection of the government and the free market. Somewhere Tea Parties came to the conclusion that a free market can only happen absent a role for government. But the economic reality is just the opposite – a free market, especially at the national level, can only exist through the power of the federal government. A federal government that makes sure that every individual has access to a safe banking system, and that the natural tendency of monopolies to develop is curtailed. A federal government that takes seriously its obligation to insure that all men and women have an equal opportunity to participate in our capitalist system.

It’s hard to know where the Tea Party will go from here. A movement that began with a very justified anger at the direction of our country didn’t really change the direction of our country. Instead its anger was coopted by the very interests it claimed to be against; the Tea Party, at the end of the day, was used to protect the very interests that are undermining our country.

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A Conversation with a Rational Tea Partier

Via email (shortened just a bit)

Me: I have to say, very intriguing, lots of well written stuff. But also the paradox that I think is the main challenge to the Tea Party movement. There is this idea that absence of government results in a free market. But really it’s just the opposite – a national free market can’t exist without a strong national government. The government is the only entity that can be the guarantor of claims, and without a guarantor of claims people are far less likely to buy products make by people they don’t know. But as you correctly point out, a strong national government has regularly used its powers to distort the markets it helped create, for instance the export bank.

Again, intriguing stuff. You are clearly very intelligent and well spoken, and many of the components of what you write are dead on. But it still feels like the anger at government over reach has been translated into the idea that we can do without government, instead of the need to make sure government fulfills its obligations in creating markets – in creating competition – while still staying within the boundaries.

Him: I’m afraid I’m guilty of imprecision. I sometimes write and talk about “strong” and “weak” when I mean “broad” and “narrow.” And I sometimes fail to distinguish between three moral activities of government: things government is permitted to do, things government ought to do but lacks legal authority, and things government ought not do but does anyway.

I agree that government must be strong, but only in the first of those activities. In the second, we ought to work to give government legitimate authority to act on our behalf. Of the third kind of activity, we ought to dish out the harshest punishments for government officials who do what we prohibited of government, whether, morally, government ought to do it or not.

When we established the federal government, we gave it a limited list of duties and authority. Then we added the 10th Amendment which expressly forbids the government from doing anything not listed in the Constitution. All government activities of the second and third types violate the law.

People might say, “government has permission to do whatever the courts say.” Well, that’s not exactly true. Judicial review is a concept invented by the Supreme Court, much like a child who grants himself authority to determine his own bedtime or his own allowance. Logic says that the Supreme Court has no authority to expand its scope of authority or to expand the scope of the government’s authority. The Supreme Court cannot legitimately avoid the 10th Amendment, though it has illegitimately ignored that law for centuries.

If the goal is a strong federal government, it must be a strong, limited government. A strong, unlimited government, answering to no one, eventually enslaves and murders millions of people. There are no exceptions to this rule in history. And long before the murder and mayhem comes hideous, stifling bureaucracy, shortages due to mismanagement and mal-incentives, and just the normal government wastefulness.

I will grudgingly allow government to grow strong only if we control the scope of government’s endeavors. If the government is the only arbiter of the government’s activities, then I will do everything in my remaining power to cripple and debilitate that government–for the safety and lives of myself and everyone in that limitless government’s malevolent path.

Me: It’s the Commerce Clause that is the problem, or more accurately its malleability. In my world view the Commerce Clause very clearly supports the idea of a USDA inspecting meat packing plants, because the vast majority of meat is sold across state lines. But I have a hard time understanding how it might support hundreds of millions of dollars in loans to a startup alternative energy company – it has moved beyond facilitating private commerce to picking a market winner, never the government’s strong point.

But my problem with the Tea Party (much less so with you, you are very nuanced), is that we need government to do some things very well, specifically do what it needs to do to create the infrastructure of a private market, and not do the other things. The anger of some of the Tea Partiers that I have heard and read seems to suggest they believe government does nothing well and should do nothing at all.
This is the challenge for the Tea Party. Unless some of its energy is devoted to making sure the government does some things well, it will be viewed just as an anti government party, and anti government parties always eventually fade…

Him: I agree. By the way, I probably hate big business and Wall Street banksters more than big government, but that’s another story. And I have serious issues with what the TP has become. It’s been hijacked by Todd Akin, anti- gays, and tons of interests who weren’t there on 2/27/2009. But enough whining. Let’s get together for more drinks.

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Kids and Capitalism

It was an eye-opening moment. I asked the students if they knew what “capitalism” was. Not a single student knew the answer.

The students were what we gently refer to as “urban youth”, high school students from economically challenged neighborhoods. They were participating in a pilot after-school program at the Mathews Dickey Boys and Girls Club called “Sound Basics”. The goal of the program was to use the students’ fascination with the music industry to teach them the basics of business, about profit and loss statements and balance sheet – we were trying to teach them the skills of capitalism.

In many ways they were the best and the brightest of their crowd. When we came into the room, one was showing a friend how to solve an algebra problem on the whiteboard. Four were attending one of the very challenging St. Louis magnet schools. Another just graduated high school and was about to start college. And none of the kids knew what capitalism was.

My more conservative friends weren’t surprised. They have a general distrust of public education and this nagging feeling that most public school teachers and administrators are secretly closet socialists. Sometimes it seems that Conservatives are intent on blowing up the public education system in our inner city schools, through school choice, changes to teachers’ tenure, charter schools. This is why – Conservatives’ underlying fear that the people teaching our disadvantaged youth don’t believe in our economic system and are instead actively promoting its overthrow.

I know a good number of teachers and none of them are closet socialists, let alone outed socialists. But many of them do have an unease with capitalism, a concern that somehow how capitalism is responsible for much of the misery and pain in our society. They can’t necessarily point to what would be better, but many of them do believe that capitalism is somehow inherently flawed and that what we really should be doing is giving kids the skills they need to change the system, not work within it.

But capitalism isn’t a choice – it is a description of how industrialized economies work. Two hundred years ago most Americans lived on farms or in farming communities, and most of what they consumed they made for themselves or got from their neighbors. Now virtually everything we consume is produced hundreds or even thousands of miles from where we live in large factories (the “capital” in capitalism). A hundred years ago socialists suggested that if the government owned the mines and factories and stores, instead of individuals like the Koch brothers, somehow this would result in a different, fairer system. But as history has shown, the socialists got it wrong – government ownership of the factories produced a lot less wealth and most of the wealth still went to the people at the top that controlled the factories. “Socialism” is really just “state capitalism”.

The socialists missed a key point – benefit accrues to those that control, regardless of “ownership”. Running a factory – choosing the right product, materials, distribution network – is a skill, and the people with this skill benefit from it. Yes, the Koch brothers started with an inheritance, but they are as wealthy as they are because they are very good at running their business – they are very good capitalists.

The children of the wealthy and even the middle class learn about capitalism at home, in ways large and small. The skills and tools of accumulating wealth are easy to pick up if you are surrounded by wealth. But our urban students often don’t get this understanding at home. They lack the role models that would teach them not only the importance of accumulating wealth but also the skills and tools required to accumulate wealth in our capitalist system.

If the people teaching our disadvantaged children secretly wish capitalism would go away, that it is one of the things wrong with our country, it’s hard to imagine they will do a good job teaching kids the skills of capitalism. We risk creating a self-fulfilling prophesy – if we don’t teach our urban youth the skills they need to participate and thrive in the economy we have, in capitalism, then they are unlikely to succeed in our current economic system. We need to get beyond our unease with capitalism and this illusion that somehow we could have a different system without the flaws. We need to actively teach all of our children, and particularly our urban youth, how to be good capitalists.

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Gay Marriage and Conservatism

A St. Louis Missouri House Member has introduced an amendment to the Missouri Constitution to allow gay marriage. The amendment is unlikely to be voted upon because of opposition from Conservative lawmakers. But at some point Conservatives are going to have to support gay marriage; not doing so is counter to the movement’s values.

Cultural norms matter. They help foster the success of individuals and in aggregate the success of our nation. The moral character of our nation matters. I know many conservatives are concerned about the impact of the “gay lifestyle” on our moral character and the future of our country. By chance I was a long-time part owner of a late night lounge with a very broad clientele. I can tell you from experience that what Conservatives refer to as the “gay lifestyle” is about the same as the rock and roll lifestyle or the hip hop lifestyle, just with house music. When you get right down to it, it’s the party lifestyle, regardless of musical choices or sexual orientation.

I’ve seen my share of people living the different party lifestyles, and certainly went through long stretches as a fellow traveler. My partying friends think it shouldn’t be anyone else’s business how they live their lives. But maximizing fun rarely maximizes economic gain. Again, speaking from personal experience, it’s harder to focus on getting ahead each day if you are staying up until 2:00 in the morning many nights of the week. And if you don’t accumulate some wealth during your prime working years there is a pretty good chance you will not have enough to live on in your later years, which means that the government will have to do more to support you.

“Government” is an abstraction – it is other taxpayers that will have to pay. And serious people tend to pay more in taxes than less serious people do. So it’s not unreasonable that the serious people want the less serious people to get a grip. There is an old saying – “Your right to swing your fist ends at my nose”. The same holds true with respect to lifestyles – your right to party ends at my wallet.

The way most people leave the party lifestyle is to get married and have kids. Our country has numerous reasons to want two people to get married. Financially, a married couple is far more likely to do a good job preparing for their future and less likely to be dependent upon other taxpayers. A person that grows old alone is more likely to need government – taxpayer – support. And marriage provides a stronger framework for rearing children hopefully into self-sufficient, tax-paying citizens.

The same benefits for both the state and the couple are realized with gay marriage. Certainly there are physical differences in the union because there are two men or women instead of a man and woman, but the physical differences don’t change or lessen any of the benefits to the state or the couple. Having children for a gay couple might take the input of a third person, but regardless of how the child is conceived and birthed the state still benefits from having the child born into a two person family, and certainly the state benefits from any vehicle that allows two people to better accumulate wealth and care for themselves. Allowing gay couples to step into a ready-made body of laws and norms instead of having to contractually define the parameters of their relationship greatly eases the process of starting and living a life together.

And this is why Conservatives need to support gay marriage, and yes, even adoption by gay couples – it is the best antidote for the “gay lifestyle”. Yes, the antidote to the gay lifestyle is gay marriage. Again, speaking from experience, the gays I know in committed relationships are no more likely to party like rock stars than the married people – gay couples in committed relationships are easily as boring as any straight married couple I know.

Missouri will continue to be a Conservative state, and also a very religious state. I know that many of my more religious friends consider homosexuality to be a sin. But if that is the case, it is for God to judge, not other men and women. From the standpoint of the state, and from the principles of Conservatism, gay marriage should be allowed and even encouraged – it will improve the moral character of our nation.

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A UN Agency on Democracy

Conservatives have typically been skeptical of the United Nations. But the Russian annexation of Crimea has shown yet again the need for a United Nations Agency on Democracy. Yes, an expansion of the role of the United Nations would be good for the world and the United States.
Sometimes we forget how lucky we are in the U.S. Each of our states joined voluntarily and our borders were agreed upon a century ago. This is hardly the case in much of the world – many borders around the world were set by the controlling empire, and often these borders were arbitrary and even capricious. Ethnic groups were split and sometimes disparate cultures were joined into a single country. The situation in Crimea reflects this capriciousness. For centuries it had been part of Russia. Then in 1954 the leader of the old Soviet empire transferred it from Russia to the Ukraine. The Crimeans weren’t given a choice, it was just done. At the time it was a meaningless decision since both were part of the empire. But now, sixty years later, the meaningless decision has significant meaning to Russia, both strategically and historically.
That Crimea becomes part of Russia doesn’t really matter to the U.S. We don’t have a strategic interest in the area and the Crimeans hadn’t democratically vote to become part of the Ukraine. But because we do support international law and respect for national borders we have been forced to take a stand on the annexation. This is where the United Nations Agency on Democracy would have been helpful.
When Russia first began forcing the issue, under the guise of self-determination for the Crimeans, a U.N. agency would have been the perfect vehicle for the world to express its concerns and apply pressure. Instead of allowing the Russians to oversee a hasty referendum on joining Russia, the world could have pushed to have the U.N. agency oversee and operate the referendum. The U.N. could have controlled the balloting process to make sure it was reasonably fair and that the votes were counted correctly.
It’s very likely that Crimea still would have chosen to join Russia; Russia has a far bigger checkbook and is only slightly less democratic than the Ukraine. If the election had taken place under U.N. oversight, we would have been far surer that it reflected the will of the people, not the presence of Russian soldiers. And the United States wouldn’t have been forced to take a position on something that is not of strategic importance to our country.
A U.N. Agency on Democracy would serve many useful purposes. The U.N. has agencies to promote human rights, fight poverty and protect the interests of children. Democracy is undoubtedly the best tool for address all of these issues; if a country’s government is democratically elected its resources are more likely to be directed toward improving the quality of life for its citizens.
Democracy is slowly spreading around the world but by no means is the movement always forward, as Russia illustrates. Putin was democratically elected the first two times around, by reasonably fair elections. It’s a shame that once in power he lost confidence in voter’s ability to pick wisely and started undermining the democratic process. However he is hardly the first leader to appreciate democracy more as a candidate than an office holder. In Egypt the newly elected prime minister quickly began behaving autocratically. A fragile situation became a coup and democracy took a significant step back.
The United States has a strong incentive to support the spread of democracy – it is consistent with our beliefs and leads to a safer world. But we are regularly confronted with situations where our strategic interests don’t coincide with our philosophic interests, and as importantly where we aren’t best positioned to apply pressure. The world needs a vehicle to call out nations that disrespect democracy – we need the United Nations to take that role, speaking for the international community. Conservatives have typically been skeptical of the United Nations as an infringement on national sovereignty. But the UN has never had any real power to decide events in its member nations. Instead, its role has been to shine a spotlight on challenges of a given international situation. A U.N. agency on democracy wouldn’t have any real power either, but it could certainly help shine a spotlight on the progress of democracy. And that would be good for the world and the interests of the United States.

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Abortion and Conservatism

At some point conservatives are going to have to accept legalized abortion. Moral character is important to the success of our nation, and in some ways the moral character of the United States has declined. But I cannot be convinced that forcing women to have children that they don’t want improves the moral character of the United States. As unpleasant as it might be, keeping abortion legal is important to the future of our country.

Conservatives argue that making abortion illegal would improve the moral character of the country, by forcing irresponsible women (and men) to take responsibilities for their actions. But many of the women that have abortions are responsible, their situations the result of a mishap or failed birth control. Forcing these women to give birth to children they don’t want isn’t penalizing them for being irresponsible, it’s penalizing them for being unlucky and reduces their ability to choose and take responsibility for their lives.

One can certainly argue that women that have three or four abortions over the course of several years are irresponsible and callous towards life, including their own. But do we really want to force these women to have children they don’t want? I know there is the hope that a woman (and the father) will see that first sonogram and fall in love with the life inside of her and that she will become a caring, responsible parent. It does happen, but just as likely, even more likely, women and men keep on being the people they were before the child was born. If they are casual with the lives of their unborn children, with their own lives, they will most likely be casual with the lives of their born children. And as harsh as this is to say, women that have a hard time taking responsibility for their own lives, rearing children that they didn’t want, are unlikely to pass on the character and skills their children will need to succeed in life. Making abortion illegal doesn’t reduce personal irresponsibility; it just passes it on to the next generation. Again, harsh to say, but there is very little reason to assume that these unwanted children will improve the moral character of the United States.

They also create a very real financial burden. If a woman is forced to give birth to a child she doesn’t want, there is a pretty good chance the government – taxpayers – will wind up footing the bill for rearing the child. Taxpayers will likely pay the cost of feeding and housing the child to adulthood, which can easily surpass $100,000. Education through high school can cost another $100,000. And if the child turns into an adult that spends time in jail the cost to taxpayers can grow by hundreds of thousands of dollars. It’s not a stretch to say that forcing a mother to give birth to a child she doesn’t want winds up costing taxpayers more than a quarter of a million dollars over the life of the child.

It’s nice to think that we as a nation are rich enough that we can afford to spend any amount of money to improve the lives of children, that we can do whatever is financially necessary to insure that all have a chance to succeed in life. But we do not have infinite resources. As harsh as this is to say, the money that government will have to spend to support unwanted children comes at the expense of support for children who were wanted by their parents, who do have a loving mother and hopefully father focused on helping them grow into happy, successful adults.

I believe life begins at conception, and I believe that an abortion takes an innocent life. It doesn’t matter – it doesn’t matter. As harsh and unpleasant as the decision might be, we need to allow women who don’t want to have a baby to end that baby’s life. Yes, this means that some women will have an abortion and feel a terrible sense of regret and guilt the rest of their lives. And some irresponsible women will use abortion as a form of birth control. But we have no choice. Financially, we as a country cannot afford the cost of these unwanted children. And as importantly, forcing women to have children they do not want undermines the moral character of our country, and as such undermines our future.

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The AOL Babies and Healthcare Costs

Last week AOL chairman Tim Armstrong caused an uproar by linking a change in the company’s 401K plan to increased healthcare costs due to two premature births. The company has since reversed the 401K change and Armstrong apologized for his comments. But like it or not, we as a country must eventually have a conversation about how much we are willing to spend to keep a person alive, even a newborn.

Healthcare costs have skyrocketed in the United States, going from about 12% of our economy in 1990 to almost 18%, about $2.3 trillion a year. Insurance company profits and administration costs contribute but the primary cause of the increase is medical technology. Every year doctors come up with new procedures to fix maladies we used to have to live with and new technologies to save people that once would have died. Ninety years ago people died from diabetes. In the 1960’s most children born with hemophilia didn’t make it to adulthood; now the average life expectancy for a hemophiliac is almost sixty years.

The miracles of medical technology have increased life expectancies and improved quality of life. But miracles come with a price tag. Managing a severe case of hemophilia can cost over $400,000 a year. The two babies born to the AOL employees incurred $2 million dollars in medical bills. This level of spending isn’t that unusual for the first year of a premature baby’s life, and it is likely to go on for several years; there is a good chance each baby will require several million dollars in medical care before he or she is out of diapers. The extreme cost of these procedures is reflected in our healthcare spending – 1% of our population consumes about 22% of our spending; the top 5% consume about half of the $2.3 trillion we spend. And the lifesaving potential, and cost, of medical technology is still accelerating.

Healthcare is a very personal experience for each person, but it is also a group activity – the medical bills of any one member of a group plan are in part paid by the premiums and contributions of the other group members. The $2 million in care received by the two premature babies cost each of the 4,000 AOL employees $500, with part of that paid by the employees and part paid by AOL on their behalf. And next year, they will likely pay another $500 each, and possibly even the year after that. It’s nice to think that AOL is a wealthy company, and can afford to spend whatever is necessary to keep its employees healthy. It’s nice to think that as a wealthy nation we can afford to pay any amount to keep our citizens alive. But AOL can’t, and neither can the United States. Already we spend almost twice as much on healthcare as other nations and if costs keep increasing eventually it will bankrupt our country.

Needless to say, this is a challenging question. No company chairman wants to have to stand up and point out the financial cost of healthcare. No politician wants to stand up and say we can’t afford to save every premature baby or that sometimes we have to let people die because we can’t afford to keep them alive. The Affordable Care Act reflects this ambivalence. It promotes something called Accountable Care Organizations that essentially make caregivers financially responsible for excessive healthcare costs. This makes for an appealing narrative – “Take profit out of the equation and let doctors make decisions based on medicine”. But you can’t pretend away cost as a factor in healthcare decisions. Doctors will face the same pressure to avoid expensive treatments or risk bankrupting their medical practices.

The Affordable Care Act also significantly reduces employers’ ability to control healthcare spending. Many healthcare plans had implemented annual and lifetime caps on payments for any one person as a way of limiting costs. The Affordable Care Act eliminates these caps. While this is great news for the parents of the two premature babies, and great news for the parents of all children born with tragic health challenges, it is bad news for our country. Healthcare isn’t paid for by some abstract “society” – it is paid for by all of us, as employees and tax payers. And we as a society – all of us – need to decide how much we can afford to pay to keep any one person alive, even that greatest of miracles, a newborn baby.

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Income Inequality and the Decline of Nations

The recent waves of articles on our growing income inequality have compared the United States of today to the United States of the 1930s. But the comparison we need to be making, and worrying about, is to Ancient Rome.

The city-state of Rome grew to become a rich, powerful empire controlling most of Europe and large parts of the middle-east. In its day, Rome was the greatest nation on earth. And then it wasn’t. Over time the empire crumbled, other more dynamic nations pushed to the fore and the comparative living standard of Romans dropped.

There are different theories on why nations rise and fall, but general agreement that nations rise because their societies are fluid. The success of any nation is defined by the collective actions of its individual citizens. The innate character that allows an individual to succeed – drive, discipline, wisdom, intelligence – isn’t tied to the social standing of the parents. The children of poor parents have as much chance of being born with this character as the children of rich parents. Rising nations tap into the potential that exists throughout society. People at all levels of society believe they can improve their situation, think they can increase their wealth and their power. Aggressive individuals trying to better their situation lift up the nation as a whole.

Meritocracy – people rising or falling on their own merits- allows a society to tap into the whole of its potential, regardless of class or social position. When Ancient Rome was on the way up, a person born to farmers could become a general in the army. Great Britain became a navel power because it promoted sailors to captain based on their skill, not family heritage. All of the great nations in history embraced meritocracy on their way up.

But nations that have succeeded tend to move away from meritocracy. When a nation is growing rapidly, when its economy is expanding, the citizens of the nation believe that there will be enough to go around for everybody. As growth slows things change. The leaders of the country stop thinking about expansion and instead begin worrying about insuring that their children enjoy the same wealth and power that they do. And just like the character necessary to get ahead isn’t defined by birth, neither is the character that tends to lead to economic decline – the children of very successful parents aren’t necessarily born with the same drive and discipline.

Meritocracy is much less appealing if one’s children lack merit. Over time, successful societies start to calcify. The people at the top work to insure their children stay there. As the leaders make it harder for their children to lose wealth and status, they are also making it harder for the poor and middle class to gain wealth and status. At some point the majority of the population lose faith in their society, believing that it no longer works in their best interest. The potential still exists, but instead of driving a society forward it turns into frustration and even bitterness. When this happens – when a nation stops harvesting the potential of all of its citizens – then the nation starts its decline. This is the reality of history; every great nation that rose when its society was dynamic eventually lost its dynamism and fell.

The United States is the one great nation with a chance to break this pattern. In our democracy the power to choose our government lies with the middle class and poor which make up the majority of any population. Instead of a government that makes it harder and harder for the middle class and poor to get ahead, a democratic government has an opportunity to use its institutions to extend equality of opportunity to all of its citizens, to make sure that every person, regardless of their parents’ wealth and status, has an opportunity to rise on his or her own merits. Democracy can create a constantly churning, dynamic society that can continue to tap into the potential of its whole population.

This, really, is what we need to be worried about. Is the growing gap in income and opportunities an anomaly, or a trend? Will the United States go the way of Ancient Rome, or will democracy allow us to create a constantly churning, dynamic society? This is the question we need to answer: are we doing what is necessary for the United States to cheat history?

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The Normandy District and Creative Destruction

The fate of the Normandy School District is very much in question. But for all of the uncertainty and upheaval the district is going through, School Choice is working as intended.

Proponents of School Choice talk of applying “free market discipline” to education. The phrase is benign, but generally the discipline they are talking about is the possibility of failure – if a company is unable to sell its products it goes out of business. Customers go elsewhere, sales drop and eventually the company is forced into bankruptcy. School districts have typically been protected from failure – students couldn’t go elsewhere no matter how bad the education being provided.

The school transfer law, while undoubtedly a blunt tool, ends this protection. Under the transfer law, students in underperforming districts can choose to go elsewhere and take their tuition money with them. Underperforming schools would either suddenly become very nimble and adjust to the reduced tuition revenue or would run out of money and be forced to shut down. Normandy School District, unfortunately, is heading towards the second outcome – with a budget shortfall of $5 million, it is in danger of not even being able to complete the current school year.

In the free market, the options for a company in this situation are fairly straightforward. If there is no chance of saving the company it takes a chapter 7 bankruptcy and the assets are liquidated, paying secured creditors first, unsecured creditors next and distributing what is left (if anything) to the shareholders. The remaining customers of the company are forced to take their business elsewhere. However If someone believes the company can be saved it typically goes into a chapter 11 bankruptcy, a reorganization instead of a liquidation. Additional funding is brought in though “debtor in possession” financing and the company is reborn in a different form, usually with different management and new owners.

As the situation at Normandy illustrates, the dynamics of the business world do not fully translate to education. Students do not correlate to customers and parents don’t quite match up to shareholders. It’s hard to think of the free market equivalent of the property owners that pay for a portion of the education received by the students. As such, the incentives are different. The people that provide debtor in possession financing to save failed companies do so in anticipation of the profits they will receive when the company is turned around. At Normandy there are no future profits to be had, and as the head of the Missouri Department of Education has made clear, no ready source of financing to bridge the $5 million funding gap.

In the free market if a company shuts down a competitor is always happy to pick up the company’s customers and revenue – the competitor and its shareholders make more money. But the goal of a school is to educate its students, not to make money. The parents of the surrounding districts, the “shareholders” don’t necessarily benefit from taking in the students from Normandy – doing so won’t improve the education for their children.

The complexity of the situation is apparent in the range of proposed fixes for the Normandy District. The state is exploring everything from taking over the district itself to breaking it up into individual schools to dissolving Normandy and expanding surrounding districts to turning the school buildings over to a charter school operator. At this point there is no clear best answer and no clear source for any necessary financing.

“Creative Destruction” is a term economists use to describe the progression of economic systems and the process that happens under capitalism. The horse and buggy industry was destroyed by the rise of the automobile and automobile industry. Buggy manufacturers went bankrupt and buggy craftsmen become unemployed while auto manufacturers increased sales and add auto workers. Something existing was destroyed as something new and better was created.

The Normandy School District is about to go through the process of Creative Destruction. As the “Destruction” part of the phrase suggests, it’s a fairly harsh process. But that we are at this point illustrates the depth of frustration with educational improvement in our country. For all of the efforts at incremental change we have not managed to improve education for students in underperforming districts. It’s hard to know what will happen in the Normandy District. But school choice has achieved its first goal – a forced process of change has started.

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The War on Poverty and Out of Wedlock Births

The 50th anniversary of Lyndon Johnson’s War on Poverty is generating numerous conversations about poverty and the government’s role in social change. But we are avoiding the one conversation we need to have: the impact of changing social norms around out of wedlock births.

Social norms are an important tool to promote the ongoing success and health of a society, ours included – they help insure that adults behave in the manner necessary to successfully operate in society and perhaps more importantly that children learn those same behaviors and skills. As the old saying goes, “It takes a village to raise a child”. The parents are certainly the primary caretakers and moral educators. However the social norms of the village, of society, support the parents in their efforts to rear their children.

It wasn’t that long ago that our social norms were harshly critical of women having children outside of marriage. From a societal standpoint, this made a lot of sense; a husband and wife working together to rear their children have a far better chance of creating successful, self-sufficient adults. Statistically, this has been proven time and again; the single strongest indicator of a child’s future is the presence of two parents.

But social norms can also support a given distribution of power and prejudices within a society, with the goal of insuring those in power remain there – social norms can promote inequality. The social norms against homosexuality and inter-racial marriage certainly fall under this category. And social norms are in some ways inherently cruel. They work by inflicting social pain on the people that transgress the norms as a lesson for the rest of us, to make sure we do stay within the boundaries. This cruelty was particularly harsh for the children of unwed mothers – they were socially penalized for the actions of their mothers.

The movement away from the social norm that stigmatized unwed mothers happened for any number of different reasons. The United States came to recognize that many existing norms ran counter to our ideas of equality and opportunity and this caused a questioning of norms in general. We were moving to a less harsh, gentler society. And women, in their struggle to achieve equality, actively pushed back against many of the norms that had defined the female’s place in society. The social norm against unwed mothers was viewed as yet another way that society controlled how women lived their lives. De-stigmatizing out of wedlock births gave women greater freedom to choose how to live their lives.

But the norm against out of wedlock births wasn’t there to help keep white males in power – it was there to protect the children, to make sure that children brought into this world were given the best chance of succeeding. Certainly it is possible for a single woman to successfully rear her children and for the children to grow to be happy, successful adults. I know many impressive women that have raised very impressive children without the help of the father. But the fact remains that while it can be done it takes a lot more work, and the chances of success are lower. No matter how many individual success stories we point to, statistically the children born to unwed mothers will have a harder time.

The irony of all of this is that while educated women led the drive to de-stigmatize out of wedlock births, they still follow the old norm. Kathryn Edin, a professor at Harvard, notes that 94 percent of births to college-educated women still occur within marriage, a rate virtually unchanged from a generation ago. Instead it’s uneducated women that have changed their behavior – “Now 57 percent of women with high-school degrees or less education are unmarried when they bear their first child.”

The large majority of children of educated, wealthier parents are born into two parent homes that give them the best chance of succeeding. But now the majority of children born to poor, uneducated women are starting life at an even greater disadvantage – not only do they lack economic resources but they lack that second parent that would greatly increase their chances of growing into happy, successful adults. Ending the social norm against children out of wedlock might have increased the freedom of these unwed mothers, but at a cost to their children and our society.

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