A Virtuous Cycle: How Greater Wealth Is Making the World Healthier, and Greater Health Is Making the World Wealthier
GREATER WEALTH CAN ADVANCE human welfare in a myriad of direct and indirect ways. First, it means increased resources for advancing literacy and education, which itself is one of the more important indicators of well being. Hence, the proportion of the population enrolled in post-secondary educational institutions increases with wealth. Second, greater wealth also reduces the incentives for parents to put children to work to supplement family income. Those two factors act together to help reduce child labor rates.
Moreover, increased education helps provide populations with the knowledge and information necessary to live a healthier life through wider understanding of the importance of better food and nutritional habits, proper hygiene, safe water, immunization and pasteurization, and other things. It also enables populations to better and more easily assimilate and keep track of new information relevant to these matters as such knowledge is created and becomes available. Equally important, wealthier societies, not surprisingly, can better afford welfare-enhancing technologies. For instance, they spend proportionately more on health care than poorer ones. That, combined with the fact that their GDPs per capita are higher, translates into significantly more spending on health care per capita by or on their behalf. Thus, they have better access to improved health technologies. Such technologies include not only “old” technologies (such as water treatment to produce safe water, sanitation, basic hygiene, vaccinations, antibiotics, and pasteurization, which are still underutilized in the poorer countries, precisely because they are too poor to afford them), but also newer science-based technologies (such as AIDS and oral re-hydration therapies, organ transplants, mammograms, and other diagnostic tests, some of which are quite expensive at present).
Health can also be advanced indirectly through technologies that increase food availability. Wealthier countries can better afford yield-enhancing agricultural technologies, such as special seeds; inputs, such as fertilizers for nutrient-poor soils or lime for acidic soils; and methods to reduce spoilage and wastage on and off the farm. Although many of those technologies are pretty mundane and far from “high tech,” not everyone can afford their costs. For instance, while farmers in richer countries have sometimes overused fertilizers, especially in the past, the problem in poorer countries is that their farmers are unable to afford sufficient fertilizers to realize the productive potential of their land. This problem, as well as the inability to afford other yield-enhancing technologies, are the reasons that the richer the country, the higher its crop yield. Higher crop yields translate into more food. And if, despite that, supply can’t meet demand and additional food is needed, then if one is wealthy, one can buy what one cannot produce locally. Trade facilitates that by moving agricultural crops and products voluntarily from surplus to deficit areas. Global trade has, in fact, globalized food security. Trade allows not only richer states, such as Hong Kong, Japan, Saudi Arabia, and Singapore, but also developing countries in sub-Saharan Africa to make up their food shortfalls. In 1998–2000, net cereal imports by countries of sub-Saharan Africa were equivalent to 20.4 percent of their production. Thus, United States wheat goes to China, while produce from Chile, for instance, comes to the United States. Moreover, the transportation systems and associated infrastructure that trade depends on—hardware such as ships, refrigerated trucks, roads, and rails, as well as software such as mechanisms and techniques to transfer money, hedge risks, and so forth—are themselves products of technology, capital, and human resources. Not surprisingly, richer countries have more food supplies per capita. Greater wealth also makes it more likely that a society will establish and sustain food programs for those on the lower rungs of the economic ladder. Therefore, although “you can’t eat GDP,” if GDP is larger you are less likely to go hungry or be undernourished (except by choice).
But more food not only means fewer hungry stomachs, it also means healthier people who then are less likely to succumb to infectious and parasitic diseases. Historically, reductions in hunger and undernourishment have been among the first practical steps nations have taken to improve public health, to reduce infant mortality, and to increase life expectancy. Analysis by the Food and Agriculture Organization (FAO) indicates that malnutrition can increase the child mortality rate from common childhood diseases. Compared to children who have adequate nourishment, FAO’s analysis shows that the risk of death is 2.5 times higher for children with mild malnutrition, 4.6 times higher for children suffering from moderate malnutrition, and 8.4 times higher for the severely malnourished. Moreover, wealthier societies are more able to target capital and human resources on public health measures and technologies in order to increase the availability of sanitation, water supplies, immunization, and antibiotics, which further reduces infant mortality and increases life expectancies.
Thus greater wealth—through a multiplicity of sometimes overlapping pathways—leads to greater education; to lower rates of child labor; to higher food production; to greater access to food supplies and safe water; and, eventually, to better health, to lower mortality, and to higher life expectancies.
Wealthier is more educated, less hungry, and healthier. But the converse is also true: more educated, less hungry, and healthier is generally also wealthier. Less hungry and healthier people are more energetic, less prone to absenteeism, and, therefore, more productive in whatever economic activity they undertake. Robert W. Fogel, the Nobel Prize-winning economist, estimates that the levels of food supplies in 18th-century France were such that the bottom 10 percent of the labor force did not have sufficient food to generate the energy needed for regular work, and the next 10 percent had enough energy for about half an hour of heavy work (or less than 3 hours of light work). Economic historian Richard A. Easterlin notes that, on the basis of a United Nations study, when malaria was eradicated in Mymensingh (now in Bangladesh), crop yields increased 15 percent because farmers could spend more time and effort on cultivation. In other areas, elimination of seasonal malaria enabled farmers to plant a second crop. Similarly, according to the World Bank, the near eradication of malaria in Sri Lanka between 1947 and 1977 is estimated to have raised its national income by 9 percent.
Moreover, healthier people can also devote more time and energy to their own education and the development of their human capital. Good health is particularly important during children’s formative years. Similarly, improved food supplies and nutrition by themselves might help increase a population’s educability, which is one of the premises behind school meals programs. A healthier and longer-lived population is also more likely to more fully develop its human capital, which then aids in the creation and diffusion of technology. The benefits to individuals, families, and societies of investing in higher education, post-doctoral research fellowships, and medical residencies increases significantly if individual beneficiaries live to 70 rather than a mere 30 to 35, as was the case, for instance, before the advent of modern economic growth. Thus, it is not surprising that levels of education have gone up as life expectancy has advanced or that more and more aspiring doctors and researchers today spend what literally used to be a lifetime to acquire the skill and expertise necessary to pursue careers in medicine, research, and institutes of higher learning. And once having acquired this expertise, those researchers are poised to contribute to technological innovation and diffusion in their chosen fields and to guide yet others along the same path. Thus human capital breeds additional human capital. Hence, better health helps raise human capital, which aids the creation and diffusion of technology, further advancing health and accelerating economic growth.
Mr. Goklany is an expert on globalization and environmental issues, including sustainable development, technological change, food, and health. He is the author of The Precautionary Principle and Clearing the Air: The Real Story of the War on Air Pollution. This article is excerpted from his book The Improving State of the World: Why We’re Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet, © 2007 by the Cato Institute.
Every now and then, it’s worth revisiting certain principles of good government—like federalism. A good place to start is with President Ronald Reagan’s Statement of Principles, issued on April 8, 1986, and reproduced on the opposite page. Reagan’s principles are relevant to many policy problems. One such is education policy, a current topic of national debate.
Discussions of education policy typically focus on things like budgets, testing, accreditation, and standards. Today policymakers are considering expanding the federal No Child Left Behind program so that it encompasses high school as well as elementary school children. Further, some are even talking about NCLB as a model for a higher education testing regime.
Reagan’s principles direct us to a different set of questions. Is the federal government uniquely competent to set education policy for every state? Could state experimentation help us find better solutions for increasing educational achievement? Is there really only one best education policy that fits every state?
At page 12, Eugene Hickok notes that federalizing education policy threatens to undermine the important role of responsible citizenship. If the federal government intrudes where state policy fails, then why should citizens bother holding their state governments accountable for performance?
At page 15, George Leef shows that higher education is plagued, not be a lack of government action, but by overly generous subsidies from both the states and the federal government. As we go to press, the U.S. Congress is considering expanding student loans and creating a federal testing regime. How are the states to fix bad policies when the federal government is moving in exactly the wrong direction? —Editor
April 8, 1986
I. Federalism is rooted in the knowledge that our political liberties are best assured by limiting the size and scope of the national government.
II. The people of the States created the national government when they delegated to it those enumerated governmental powers relating to matters beyond the competence of the individual States. All other sovereign powers, save those expressly prohibited the States by the Constitution, are reserved to the States or to the people.
III. The constitutional relationship among sovereign governments, State and national, is formalized in and protected by the Tenth Amendment to the Constitution.
IV. The people of the States are free, subject only to restrictions in the Constitution itself or in constitutionally authorized Acts of Congress, to define the moral, political, and legal character of their lives.
V. In most areas of governmental concern, State and local governments uniquely possess the constitutional authority, the resources, and the competence to discern the sentiments of the people and to govern accordingly. In Jefferson’s words, the States are “the most competent administrations for our domestic concerns and the surest bulwarks against anti-republican tendencies.”
VI. The nature of our constitutional system encourages a healthy diversity in the public policies adopted by the people of the several States according to their own conditions, needs, and desires. In the search for enlightened public policy, individual States and communities are free to experiment with a variety of approaches to public issues.
VII. Acts of the national government—whether legislative, executive, or judicial in nature— that exceed the enumerated powers of that government under the Constitution violate the principle of federalism established by the Founders.
VIII. Polices of the national government should recognize the responsibility of—and should encourage opportunities for—individuals, families, neighborhoods, local governments and private associations to achieve their personal, social, and economic objectives through cooperative effort.
IX. In the absence of clear constitutional or statutory authority, the presumption of sovereignty should rest with the individual States. Uncertainties regarding the legitimate authority of the national government should be resolved against regulation at the national level.
X. These principles should guide the departments and agencies of the national government in the formulation and implementation of policies and regulations.
WHEN THE IDEA WAS BORN in Philadelphia in the summer of 1787, federalism was seen not only as a way to check national power with state sovereignty, but also as a way to keep government at every level in check. Citizens, active in state and local affairs, would keep state and local governments in their place, and states would do the same thing with the new national government. As a system, federalism would have a salutary effect upon citizenship, nurturing it and encouraging self-government as it simultaneously kept the power of government in its place. Perhaps because the Framers of the Constitution knew that the nature of federalism would change over time, they understood that, in the end, good government required not only a limited government of competent powers but also active, informed, and engaged citizens. Federalism, it was thought, would encourage the formation of such citizens.
Indeed, it may be that federalism’s most important contribution to constitutional government in this country is its role in nurturing and sustaining self-government and good citizenship, essential but difficult tasks in any republic. In a liberal democratic society such as the United States, individuals are free, by and large, to fashion their own brand of participatory citizenship. Because all individuals possess natural rights, no special obligations are placed upon them and relatively few special rights or privileges are awarded to them. Citizenship in the United States, in other words, may mean a great deal or very little indeed; it is pretty much up to the individual. The paradox of this, however, is that a healthy republic relies upon citizens for both direction and support.
The advent of the modern administrative state, accompanied by the transformation of federalism, the growth in government at every level, and the increased expectations of the American people, have combined to contribute to a transformation in the character of citizenship in America. A nation of citizens who make responsible choices and elect individuals to make responsible choices has been transformed into a nation of consumers of government who pay tax dollars to purchase more and more government-delivered goods and services. Individual citizens who once were agents for change in society and in government have become passive subjects of an immense nation-state. Today, it is commonplace for people to look to the government for relief from the most ordinary of concerns, support for the most basic kinds of endeavors, and vindication for the most elementary of damages. People have become clients of the state as opposed to the masters of it. They have become dependent upon government rather than government being dependent upon them.
The education reforms introduced by President George W. Bush and embraced with strong bipartisan support in Congress provide a nice illustration of what is happening to the American character. Education has always been a state and local issue. Even as Washington allocates more money than ever in support of elementary and secondary education, about 90 percent of what is spent on public education in a state is revenue generated at the state and local level. The rules governing public education are, by and large, state and local rules. The decisions on the day-to-day operations of America’s public schools are driven at the local level. The problem is that America’s schools are not doing a very good job. Indicators such as test scores tell us our students and schools are just not performing well and that there are real “achievement gaps” among student groups, with minority and low-income students trailing their white counterparts. American public education is not working as well as it should—as it must.
President Bush asked Congress to enact new national legislation that requires each state to enact higher academic standards for students, regulations ensuring teachers are “highly qualified,” and policies to test every student in grades 3 through 8 annually, and to hold schools accountable for the performance of their students. He also asked Congress to increase federal spending for America’s schools, and Congress went along. Today, the national government plays a much larger role in the administration, oversight, and governance of America’s public schools. It is a bit early to know whether the schools, the students, and the nation will be better off.
But we do know some things. As the 21st century dawns in America, its citizens have turned to government to do something they once did for themselves. Recognizing that their schools are not getting the job done, they looked to Washington to do something about it. They wanted more from their schools and their students and their teachers, and so they looked to Washington to pass a law to require more from their schools and their students and their teachers. None of this is necessary, of course. It shouldn’t take an act of Congress to set high standards for schools. It shouldn’t take an act of Congress to hold a public school accountable to the public. But in 21st century America, public education has become something government provides rather than something the “public” or the “people” provide; public education has been transformed into government schooling. It is something people expect from their government and purchase from it with their tax dollars. It is as though the public is no longer really a part of public education.
This transformation in the character of America and in American citizenship, illustrated by the education reforms noted above, is the result of many things. And it has transpired over time, surely. But interestingly, it is a transformation that those who created the American Republic anticipated and sought to avoid, in part through federalism. They recognized that good government would depend on both the structure of the government and the civic virtue of the people. Federalism, as we have seen, was considered one way to achieve both.
Federalism’s contribution to the structure of government served two purposes initially. It provided another check on the consolidation of power in the national government while ensuring the vitality of state and local government. The vitality of state and local government was considered important, as well, to nurturing the sort of civic virtue so necessary to the creation of good citizens and the maintenance of good government.
Citizenship is all about self-government: people actively participating in the public affairs of their communities and states. As this happens, the tendency all people have to pursue their own individual self-interests is blunted by a concern for a wider general civic responsibility. Managing the tension that can exist between individual self-interest and the community or public interest is particularly important in America, where the emphasis is on rights rather than individual responsibilities. Here, in order for popular government to succeed, there would be a need to ensure that there were public-spirited citizens, thus making the cultivation and nurturing of civic virtue all the more important. There would be citizens interacting with one another in the discussion and pursuit of public issues within a community in which every citizen recognizes his well-being is related to the well-being of his fellow citizens. If civic virtue is the foundation on which citizenship is built, then federalism is the crucial structure for nurturing good citizenship.
Dr. Hickok is as an adjunct professor of political science at the University of Richmond, and is a Bradley Fellow at The Heritage Foundation. This article is an excerpt from his book Why States? The Challenge of Federalism, forthcoming from The Heritage Foundation.
Education as an Entitlement How Making It Easy for Students to Go to College Has Harmed College—and Students
IN A MARKET, PURCHASERS OF GOODS and services usually pay full price for the things they buy and they usually have reasonably accurate information about the benefits they will get from them. In the automobile market, much as manufacturers might like to see it, most people do not drive luxury SUV models. Even if Cadillac were to advertise that life without its Escalade model would hardly be worth living, there would be little increase in sales. Most drivers know that the benefits are not sufficient to warrant the unsubsidized expense associated with buying and operating such a vehicle.
When it comes to higher education, however, the circumstances are different. Because of government subsidies, most students and their families do not have to bear the full cost of a decision to enroll in higher education. While we frequently hear complaints over the rising cost of going to college—most often in conjunction with a political proposal for action to solve this alleged problem—few American students have to forgo higher education for financial reasons. Researchers Jay Greene and Greg Forster found that, in 2000, the number of students who enrolled in four-year institutions (1,341,000) was greater than the number who were qualified (1,299,000). The authors concluded: “While some college-ready students are undoubtedly denied the opportunity to attend college, the results of this study suggest that the number of such students is not large.” A 2004 report by the Congressional Budget Office came to the same conclusion, finding that financial hurdles are “not a major obstacle to college attendance.”
By keeping the price of college artificially low with state and federal subsidies, attendance is increased. The increase in demand for higher education has led to rising costs and calls for more governmental aid to offset them. Keeping the price of college artificially low also appears to have an adverse effect on student effort. The more heavily subsidized the student, the less effort he puts forth. Economist Aysegul Sahin summarizes her findings as follows: “[L]ow-tuition, high-subsidy policies cause an increase in the ratio of less highly- motivated students among the college graduates and that even the highly-motivated ones respond to lower tuition levels by choosing to study less.”
Not only is college highly subsidized, but many young people obtain poor information about it. A major source of that information is high school teachers and counselors. Professors Kenneth Gray and Edwin Herr write in their book Other Ways to Win: “Among the ‘true believers’ in one way to win are high school teachers and guidance counselors. Both should know better. … According to disturbing research by Oakes (1985) and others, teachers in the average high school have a pejorative view of non-college-bound teens. … An amazing 57.2% of the students in even the lowest quartile said their teachers had recommended that they go to college.”
Teachers and counselors strongly encourage most high school students—even academically weak ones—to enroll in college. Students repeatedly hear the conventional wisdom that getting a college degree will make the difference between a comfortable life and a life of drudgery. Rarely do they hear it said that going to college could be a costly mistake and that other opportunities might be better for them. The “go to college” siren song lures into higher education a large number of students who are not interested in college except as a means of obtaining a supposedly indispensable credential.
The Educational Value of College
For many students, college is several years of fun between high school and the time when they’ll have to start earning a living—several years of “beer and circus,” to borrow the title of a book by Professor Murray Sperber. As Milton Friedman puts it, college “attract(s) many young men and women who come because the fees are low, residential housing and food are subsidized, and above all, many other young people are there. For them, college is a pleasant interlude between high school and going to work.” Furthermore, many young people see going to college as the prerequisite to landing a good job and enjoying the good life. Those students want the degree, but with as little effort as possible. In David Labaree’s view, the credentialism rampant in American education undercuts learning since it means “directing attention away from the substance of education, reducing student motivation to learn the knowledge and skills that constitute the core of the educational curriculum.” With large numbers of students enrolled who have little or no interest in academic pursuits, it is hard to disagree with the view of Stephen Balch, President of the National Association of Scholars, that “we don’t so much have higher education as we have longer education.”
Why do colleges and universities want students who aren’t interested in studying? It’s because they bring in revenue. Many colleges and universities would face a tremendous financial problem if they accepted only serious, well-prepared students. Gray and Herr remark that the excess capacity at schools that have expanded “removes the obstacle of admissions standards; as enrollment declines, colleges take in fewer qualified applicants and then finally all applicants.” Some administrators even admit that they have made a Faustian bargain—large enrollments at the expense of academic integrity. Stephen C. Zelnick, vice provost for undergraduate studies at Temple University, says that academic demands on students “went slack” in the mid-1990s “when Temple decided to open its doors to all and sundry in order to pay its bills.”
Fifty years ago, when disengaged students were accepted in college (which was rarely the case), they would usually drop out or flunk out quickly. Prevailing academic standards were too demanding for them. As more and more disengaged students enrolled, however, and administrators decided that they wanted them to remain in school for the sake of the institution’s bottom line, the inevitable result was downward pressure on academic standards. Where there used to be difficult mandatory courses—calculus and laboratory sciences, for instance—now students often have the option of taking simpler courses instead. At many institutions, the rigor of the curriculum has been eroding steadily in an effort to cater to students’ desires for courses that are entertaining and easy. The curriculum has also been eroding due to the desire of professors to teach only very specialized courses that track their current research interests. Harvard professor Harvey Mansfield observes that among the reasons for the ouster of Harvard’s former president Larry Summers was the fact that he “proposed a curriculum review that would result in solid courses aimed to answer students’ needs, replacing stylish courses designed to appeal to their whims. Such courses would require professors to teach in their fields but out of their specialties; no longer would they assume that the specialized course they want to teach is just the course the students need.” Owing to the degradation of the curriculum, there is reason to believe that the typical college graduate today is no better educated than was the typical high school graduate of 1955.
Attempting to teach a course where a large percentage of the students are “disengaged” leads to difficulties that often cause professors to compromise their standards and cater to student preferences. Consider this passage from Peter Sacks’ book Generation X Goes to College: “Overwhelmingly, our colleagues told us they were watering down their standards in order to accommodate a generation of students who had become increasingly disengaged from anything resembling an intellectual life.” Desiring to avoid bad student evaluations or simply to be popular, many professors have chosen to lower their expectations, remove challenging material, and give only high grades. Murray Sperber calls it “the faculty-student nonaggression pact”—the implicit understanding that students will be given high grades in return for minimal work, while the professor puts little effort into teaching the course so he can concentrate on his research.
Whereas students’ minds used to be the chief concern of colleges and universities, it is now more their bank accounts (more accurately, that of their parents and of the taxpayers). If students happen to learn anything useful while enrolled, that’s good, but if not, as long as they’ve paid their bills, it’s not the university’s problem.
The Damage of Credential Inflation
If college studies often do little to augment a person’s human capital, then why is it that, on average, college degree holders earn so much more than do those who don’t have them? That fact stands as an apparent refutation of the argument that college studies are of minimal benefit to many students.
There is a logical problem in moving from the observation that college degree holders on average earn more than do non-degree holders to the conclusion that particular non-degree holders would secure better, higher- paying employment if only they could go to college and obtain a degree. After all, those who go to college and those who don’t are people with very different characteristics. Instead of looking at average earnings for each group, it is more sensible to focus on the workers at the margin. The right question to ask is this: For high school graduates who might have gone to college but did not, is it the case that their earnings would be significantly higher if they had instead enrolled in college?
A decision to forgo college— especially in light of all the pressure on students to enroll—is usually deliberate and informed. If a young man or woman chooses to enter the labor force right after high school, that probably reflects an intelligent weighing of the relevant costs and anticipated benefits. For example, a young man may like the idea of working with his hands, perhaps as an auto mechanic, and dislike the work required in college— reading, studying, writing papers. If he concludes that college would be a poor use of his time and money because his interests and aptitudes do not lie in an academic direction, that decision is presumably a sensible one.
Also, there are quite a few job opportunities available to high school graduates that compare favorably in earnings with many of the jobs where a college degree is “required.” That young man who forgoes college to become an auto mechanic probably earns more than a classmate who spent four years in college and then took a low-skill job such as working as a theater usher, office clerk, or derrick operator—jobs that to a significant degree are now held by people who have earned college degrees. Contrary to the conventional wisdom, having a college degree is neither a necessary nor a sufficient condition for finding employment that pays well enough to enjoy a comfortable life. People who don’t have the interest or aptitude for serious college studies at age 18 may find that later in life they do, but those who enroll just because they think that the mere possession of a college degree is the passport to success will just dig themselves a financial hole.
It simply is not true that everyone would be better off with more years of formal education, as the average earning comparison implies. Most if not all low-income individuals who do not have college degrees would have no brighter job prospects even if they could manage to earn a college degree. Indeed, given the monetary and opportunity cost involved in getting a degree, many mediocre to weak students who now enroll in college would probably be better off if they instead partook of some vocational training and then entered the labor force. A college education is very beneficial for some students, but we can’t raise national income by dipping further into the non-college population and enticing more of that group to spend time and money in pursuit of a degree.
Furthermore, it is questionable whether all the jobs that are now said to require a college degree in fact require any skills or knowledge that would presumably be possessed only by college graduates. Many employers today use the college degree as a means of screening out applicants who haven’t continued their formal education past high school. They do so not because the work necessarily demands a high degree of cognitive ability, but rather because there is such a large pool of applicants with college credentials that they see no need to consider people without them.
David Labaree explains why credential inflation is a problem:
The difficulty posed by (the glut of graduates) is not that the population becomes overeducated (such a state is difficult to imagine) but that it becomes over-credentialed, as people pursue diplomas less for the knowledge they are thereby acquiring than for the access that the diplomas themselves provide. The result is a spiral of credential inflation, for as each level of education in turn gradually floods with a crowd of ambitious consumers, individuals have to keep seeking ever higher levels of credentials in order to move a step ahead of the pack. In such a system, nobody wins. Consumers have to spend increasing amounts of time and money to gain additional credentials because the swelling number of credential holders keeps lowering the value of credentials at any given level … Employers keep raising the entry-level education requirements for particular jobs … but they still find that they have to provide extensive training before employees can carry out their work productively. At all levels, this is an enormously wasteful system …
Credential inflation also explains why the earnings premium for college graduates continues to rise: More and more of the job market is closed off to people who have not gone to college. It is not that college does so much to enhance human capital—we have already seen evidence that it often leaves students with weak basic skills—but rather that credentialism is compressing those who don’t go to college into a shrinking segment of the labor market.
Higher Education and Economic Growth
Part of the conventional wisdom about higher education is that by investing in it, a state can improve its economic performance. Michigan’s Governor Jennifer Granholm, for example, says that higher education is like “jet fuel” for the economy. Is it true, however, that increased government spending on higher education means increasing prosperity for a state or a nation?
Economist Richard Vedder analyzed state higher education spending and corresponding economic performance. He found that there is actually a negative relationship between the two. Vedder calculates that a 10 percent increase in state higher education spending will reduce economic growth in the state by 5.2 percent. He explains his unexpected result by noting that much of the money spent in public universities goes for noneducational purposes. Vedder writes: “[F]inancing of higher education means taking resources away from the private sector, with its relatively high and rising productivity subject to the discipline of market and profit imperatives, and giving them to the university sector, with its lower and falling productivity subject to little market discipline and no profit imperatives.”
International comparisons also support the conclusion that there is no necessary relationship between the extent of higher education participation and economic prosperity. Alison Wolf, author of Does Education Matter?, points out that there are nations that have invested heavily in education, resulting in large increases in the percentage of the population with college educations, that nevertheless have languished economically. At the same time, there are nations that have very strong economies where there is little or no effort to promote higher education access. She points to Egypt as an example of a nation in the first category and to Switzerland of the second.
What to Do
The best (and only appropriate) policy response to the informational aspect of our overselling problem is to rely upon the free flow of information. As people learn that more and more college graduates are winding up with unskilled employment, the blandishments of college recruiters will become less persuasive. Furthermore, competitive institutions offering job training that is more focused and beneficial than the traditional college degree have strong incentives to sell their programs to people who know what kind of career they want to pursue. A good example is Northface University in Utah. With backing from IBM, this for-profit school provides an intensive 28-month program for students who want to pursue careers in the burgeoning field of software development.
The federal government should also stop subsidizing students to attend colleges and universities. Economist Gary Wolfram has advocated that federal student aid programs be phased out over a period of years. Such a move would not leave students whose families cannot afford the expense without financing options, since there are many loan and scholarship programs available on the free market. Also, a new higher education financing mechanism appears to be developing—“human capital contracts” whereby a student obtains the money he needs for his education and in return agrees to repay the investors at a certain rate for some number of years after entering the labor market. The great advantage of philanthropic and market-based financial aid for education is that it can be targeted to bright students from poorer families rather than subsidizing the wealthy and the academically indifferent.
State governments should increase both their tuition charges and their entrance standards. Selective tuition reductions for good students from poor families is preferable to a policy that keeps tuition low for everyone.
All states subsidize their higher education systems to some degree, although the degree varies greatly. In some states, tuition covers less than 25 percent of the cost of the higher education system, while in some others it covers more than two-thirds. There is no reason why tuition should have to cover all of the cost of higher education—colleges and universities have substantial sources of revenue other than tuition and government appropriations—but by increasing tuition, the attractiveness of going to college will diminish, especially for the most marginal and disengaged students. Having to pay more for higher education where the benefit of that choice is questionable will cause some young people to pursue other training or job market options instead.
Equally if not more important, colleges and universities should increase student entrance requirements. Higher education is extremely valuable for some people, but not for everyone. By promoting it as heavily as we have in this country, we haven’t raised either the level of education or skill in the population, but instead have brought on credential inflation and the erosion of academic standards. Our best course is to turn down the sales campaign that has drawn so many weak students into college.
Dr. Leef is vice president for research for the John William Pope Center for Higher Education Policy. This article is adapted from his longer paper “The Overselling of Higher Education,” published September 5, 2006, by the John William Pope Center for Higher Education Policy.
LAST FALL, PRESIDENT BUSH SIGNED into law the Federal Funding Accountability and Transparency Act. This law creates an easy-to- use Web site that will allow citizens to track the recipients of all federal funds—“to Google their tax dollars,” as President Bush memorably put it at the bill-signing ceremony.
Every year the federal government dishes out nearly 1 trillion of your dollars in contracts, grants, and earmarks—often with very little transparency—to various businesses, associations, and state and local governments.
This new Web site will allow citizens “to go online, type in the name of any company, association, or state or locality and find out exactly what grants and contracts they’ve been awarded,” President Bush said. “It will allow citizens to call up the name and location of entities receiving federal funds, and will provide them with the purpose of the funding, the amount of money provided, the agency providing the funding and other relevant information.”
“Sunshine and accountability are wonderful things in the hands of voters,” The Oklahoman editorialized September 28, applauding the bill’s passage. Indeed, as Tommy Vietor, a spokesman for Sen. Barack Obama (D-Ill.), observed, “It was a bill that just made so much intuitive sense that no one could understand how Congress could not pass it.” And thanks to an army of bloggers, editorial writers, and concerned citizens, Congress did pass it.
Now it’s time to take the idea to our state legislature. Oklahoma taxpayers should be empowered to Google their state tax dollars.
Many taxpayers are frustrated that the state budget is now $7.1 billion, an all-time high. They may be aware that their tax dollars have paid for things like rooster shows and ghost employees and $100 car washes, but these things are just the tip of the iceberg.
The legislature should pass a law requiring the Office of State Finance to set up a searchable Web site modeled after the federal version. Taxpayers deserve to know the name of every recipient of state dollars, as well as the amount received in each of the last 10 years and an itemized breakdown of each transaction, including the state agency dispensing the money and a description of the purpose of the funding.
As conservatives, we favor low taxes, limited government, and spending limitations. Many of the people and organizations who fight for bigger government do so because, you guessed it, they receive taxpayer dollars. Those who take the king’s shilling do the king’s bidding. Taxpayers deserve to know who they are.
What The Oklahoman said about the federal funding Web site will also be true of a state funding Web site: It will be “invaluable to everyday Americans wanting to know more about how their tax dollars are being used.”
Dr. Coburn represents Oklahoma in the United States Senate and is a former trustee of the Oklahoma Council of Public Affairs. Mr. Dutcher is vice president for policy of the Oklahoma Council of Public Affairs. This article is adapted from Perspective: A Public Policy Journal from the Oklahoma Council of Public Affairs, November, 2006.
IT IS FAIR TO SAY THAT as a nation we do not like taxes, but we accept them as a necessary burden to run our country based on the rule of law. The social contract requires some form of taxation, but as King George III learned, it is unwise to be irresponsible when it comes to tax policy.
The citizen response to taxation is often complex and confusing. Citizens do not like high taxes, yet they expect much from all levels of government and complain when deficits grow. How does government keep taxes low, keep revenues coming in, and yet keep the economy growing? The solution is to cut taxes and government spending, in addition to reviving the fiscal aspects of the Constitution.
The Constitution specifically lists the responsibilities and powers of the national government. Article I, Section 8 states the powers of Congress, and the Tenth Amendment establishes state jurisdiction or Federalism. The Tenth Amendment explicitly limits the scope of the federal government.
The 20th century saw three important periods where tax cuts stimulated the economy: the Harding/Coolidge cuts of the 1920s, the Kennedy cuts of the 1960s, and the Reagan cuts of the 1980s. All three substantially improved economic conditions and raised government revenues during their respective years.
The Harding and Coolidge Tax Cuts
President Warren Harding represented fiscal conservatism at its best. In 1921 when he took office, he faced a severe economic recession from his predecessor President Woodrow Wilson. Harding, along with Treasury Secretary Andrew Mellon, resolved the recession by slashing taxes and government spending. Historian Paul Johnson writes: “Harding and Mellon had done nothing except cut government expenditure by a huge 40 percent from Wilson’s peacetime level, the last time a major industrial power treated a recession by classic laissez-faire methods, allowing wages to fall to their natural level.”
President Calvin Coolidge, upon the unfortunate death of Harding, continued the tax- and budget-cut policies of the Harding administration. “The Coolidge-Mellon team,” says veteran political reporter Robert Novak, “took dead aim at a steeply graduated federal income tax.” According to historian Robert Sobel, Coolidge’s “goal was to hold the line on spending, and if possible roll it back, while at the same time reducing taxes, for he expected that this would result in greater personal freedom, continued prosperity, and a more moral population.”
The economic policies of the 1920s created more revenues and ushered in economic expansion. “Between 1922 and 1929,” writes fiscal policy scholar Veronique de Rugy, “real gross national product grew at an annual average rate of 4.7 percent and the unemployment rate fell from 6.7 percent to 3.2 percent.” According to columnist Cal Thomas, “[Coolidge] cut taxes four times and reduced the national debt by one-third while maintaining a surplus every year in office.”
The Kennedy Tax Cuts
President John F. Kennedy is not known for his “conservatism,” but he did understand the benefit of sound fiscal policy. “Recognizing that high tax rates were hindering the economy,” writes tax expert Dan Mitchell, “President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent.” In a speech before the New York Economic Club, Kennedy explained the reason for his policy: “In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise revenues in the long run is to cut the rates now.” Walter Heller, chairman of the Council of Economic Advisors, described the Kennedy tax cut as a “major factor that led to our running a $3 billion surplus by the middle of 1965 before escalation in Vietnam struck us.”
The Reagan Tax Cuts
President Ronald Reagan in 1981 inherited an economic malaise marked by inflation, high taxes, and a general feeling that capitalism had reached its capacity. Reagan understood that less government and tax cuts were necessary to reverse the past economic trend. In 1981 Reagan signed into law the Kemp-Roth tax cut, which slashed income and capital gains tax rates. “Total federal revenues,” writes Heritage Foundation policy analyst Peter Sperry, “doubled from just over $517 billion in 1980 to more than $1 trillion in 1990.” Reagan followed his tax cut up with another series of cuts in 1986, which added to the economic recovery and expansion into the 1990s.
According to Christopher Frenze of the Joint Economic Committee, “the Reagan tax cuts, like similar measures enacted in the 1920s and 1960s, showed that reducing excessive tax rates stimulates growth, reduces tax avoidance, and can increase the amount and share of tax payments generated by the rich.”
The Benefit of Tax Cuts
Arthur Laffer, the father of the Laffer Curve and Supply-Side economics, writes:
Lower tax rates change economic behavior and stimulate growth, which causes tax revenues to exceed static estimates. Under some circumstances, tax cuts can lead to more—not less—tax revenue. The exact opposite occurs following tax increases, and revenues fall short of static projections.
The tax cuts outlined above were significant because all three examples ushered in significant economic growth. The best economic policy can be summed up by tax cuts, budget cuts, and limited government, or to phrase it in simple terms: constitutional government.
Mr. Hendrickson is a research analyst at the Public Interest Institute, an Iowa-based nonpartisan public policy research organization. This article is adapted with permission from Iowa Economic Scorecard, October 2006, published by the Public Interest Institute.
In the 20th century, the growth of the state was a worldwide phenomenon. Now in the 21st century, having second thoughts is a worldwide phenomenon, too. Following is a report from Australia. —Editor.
THE WELFARE STATE DEVELOPED to support people who could not afford to look after themselves: old-age pensions for elderly people with no savings; help for widows; child payments for families; allowances for unemployed people who couldn’t find jobs; financial help with health costs for those who fall sick.
But Australia is now a much richer country than it was when these payments and services were first introduced. Economic growth has more than doubled living standards in the last 40 years (indeed, real incomes have risen 25 percent just in the last 10 years). Rates of growth this high have delivered a level of affluence that our grandparents could only have dreamed about. We buy houses that are bigger and better equipped than ever. We run cars. We take exotic holidays, and we think nothing of telephoning the other side of the world or flying to the other side of the continent.
This increased affluence should mean that most of us can afford to cover the basic necessities of life that our grandparents struggled to attain—things like private health insurance, personal unemployment savings or a retirement annuity. But here’s the puzzle:
Given that the welfare state came into existence to provide necessities for those who couldn’t afford them, and since we are all much better off now than we were a couple of generations back, why is the welfare state still getting bigger? If more people are in a position to look after themselves than ever before, shouldn’t the welfare state be shrinking?
In recent decades, the welfare state has become one of Australia’s biggest growth industries. For example, 40 years ago, just one working-age adult in 30 lived on welfare benefits. Today it is one in six. But the extraordinary expansion doesn’t end there. Nowadays, it seems almost everybody relies on government hand-outs in one form or another. If it isn’t middle class parents enjoying subsidised school fees, it’s affluent patients claiming Medicare rebates or young professionals getting taxpayers to share their child care costs. Even the wives of millionaires now claim family payments. We have become a nation of supplicants.
It didn’t used to be like this. For most of our history, ordinary people looked after themselves and cared for their families from their own resources. If they needed help they turned to their families, churches, and charities, or they banded together in friendly societies and trade unions to create mutual aid societies. But most of the time they expected to look after themselves and their families without seeking financial support from others. The norm was family self-reliance, and people were proud of their independence.
Over the last 40 or 50 years, as government spending has spiraled upwards, we have lost this spirit of self-reliance. We have learned instead to rely on politicians to give us the things we used to organise for ourselves. Our first instinct nowadays whenever we become aware of a problem is not to solve it ourselves, but to demand that the government do something about it.
The federal government has come to be seen by many people as a giant cash machine whose principal purpose is to spray money at them. We see this at federal budget time, when we ask what handouts the Treasurer has given us, and we see it during elections, when politicians compete for our votes by promising this or that group more goodies. Our democracy has come to look less like the Athenian polis and more like a bunch of spoiled children squabbling over their presents on Christmas Day morning.
Of course, the government has no money of its own to dispense. Every dollar that Prime Minister Howard directs at one section of the population, Treasurer Peter Costello has to take from another. As demands and expectations escalate, this means governments rob Peter to pay Paul, and then mug Paul to compensate Peter. The net result is that many of us end up no better off than we would have been had the government simply left us alone. What we receive in benefits, subsidies and services we lose in higher taxes. Everybody is paying for everybody else’s handouts.
This is why the welfare state keeps getting bigger, even though the need for it is declining. We have developed a “welfare state mindset” that assumes any problem and any need has to be resolved by government. We therefore keep demanding that government do more for us, and politicians respond by taking even more taxes out of one pocket in order to stuff the money back into another.
There are few winners from this continuous expansion of government other than politicians and bureaucrats. High welfare spending (and the high taxes that go with it) empowers them, for it puts our cash in their hands. But almost everyone else loses.
When we hand money to the government, we relinquish our ability to make our own decisions and choices about how it should be spent. We allow career politicians and bureaucrats to decide what schools our children should attend, what sort of retirement pension we should have, what kind of health treatment we should get. Like children, we are rendered dependent on a higher authority to determine many of the most important decisions affecting our lives.
Yet we actually need the government less today than ever before. Most of us today could afford to buy income insurance, health insurance, and a retirement pension—if only we didn’t have to give so much of our income to the government in taxes.
So we are trapped in a vicious circle. Because we give so much of our cash to the government, we don’t have enough left to buy the services we need, and because we don’t have enough left to buy these services, the government keeps raising taxes to provide them for us.
To break out of this circle, government must leave more of the money we earn in our own pockets. That way we can provide for ourselves rather than relying on politicians to look after us. Earlier generations (who lived in a world incomparably less affluent than our own) were perfectly capable of running their own lives with little support from the state. Given our level of affluence, we should at least be able to emulate their example. It is time to take back responsibility for running our own lives.
Mr. Saunders is Social Research Director of The Centre for Independent Studies and author of Australia’s Welfare Habit and How to Kick It. This article is a transcript from “Counterpoint,” a program of the Australian Broadcasting Corporation’s Radio National, November 27, 2006.
IN WAYS BOTH BIG AND SMALL, bloggers are changing how business is done on Capitol Hill.
Senate Majority Leader Harry Reid of Nevada learned firsthand the effect bloggers can have on public policy when he was handed a defeat only days after Democrats took control of the 110th Congress.
In the weeks that followed, bloggers demonstrated they weren’t going away. No matter what the issue—from the minimum wage to the war in Iraq—bloggers made sure they were part of the debate, demonstrating that anyone with a blog can have an impact on public policy.
Bloggers began having an impact on Capitol Hill long before the 110th Congress, but with conservatives relegated to the minority in the House and Senate, right-leaning bloggers have ratcheted up their focus on Congress.
It all started in early January when conservative Sen. Jim DeMint of South Carolina sought to strengthen the Senate’s ethics reform bill by amending it to include the same earmark reform language in the House-passed version supported by Speaker Nancy Pelosi of California. Reid’s deputy, Majority Whip Dick Durbin of Illinois, tried to kill the amendment, but nine Democrats broke ranks and backed DeMint. Instead of accepting defeat, Reid tried to twist arms and reverse the vote.
That’s when bloggers took notice. Following the lead of The Heritage Foundation’s Bridgett Wagner, who notified bloggers via e-mail, a coalition of bloggers known as “Porkbusters” documented Reid’s strong-arm tactics. Andy Roth at the Club for Growth and Ed Frank at Americans for Prosperity jumped on the story, alerting supporters on their blogs. Meanwhile, I posted video on YouTube of Reid and DeMint’s clash on the Senate floor.
Other bloggers sent e-mails to Jon Henke, the newly hired new-media director for Senate Minority Leader Mitch McConnell of Kentucky. It’s Henke’s job to deal with bloggers, and if there was ever an occasion, this was it. Despite McConnell’s support for DeMint’s amendment, an Associated Press story reported otherwise, and Reid implied as much on the Senate floor.
McConnell’s staff got the message—and set out to correct the record. Henke e-mailed bloggers, “Sen. McConnell is supporting Sen. DeMint and doing everything we can to make sure that the Democrats don’t destroy earmark reform.” By the next day, Henke was playing offense instead of defense, keeping bloggers appraised of the latest developments.
The debate had captivated the blogosphere. As Roth noted at the Club for Growth, more than 1,700 blogs had been written about earmark reform over a 24-hour period.
Three of the most well-trafficked liberal blogs—Daily Kos, MyDD and TPMmuckraker— also turned on the Democratic leader. “Sen. Harry Reid is fast losing whatever credibility he had on earmark reform,” wrote a blogger at Daily Kos. “Who’s the arm-twister now?” asked Paul Kiel at TPMmuckraker.
Just one day later, Reid reversed course and DeMint was lauding him for agreeing to language that was “even stronger than what I had originally proposed.”
Last fall, it was through a similar effort that two freshmen senators—liberal Barack Obama of Illinois and conservative Tom Coburn of Oklahoma—overcame hurdles to pass legislation improving government transparency on contracts and grants by putting most federal spending on the Internet in a Google-like, searchable database.
A group of conservative and liberal bloggers, most of whom had never met each other, rallied around the legislation, propelling it from oblivion to President George W. Bush’s desk. And the White House, recognizing the significance of the moment, invited a dozen bloggers to the bill signing.
The difference between then and now is that two U.S. senators—McConnell and DeMint— now employ seasoned bloggers. As important a role as Henke played in the minority leader’s office, so too did Tim Chapman in DeMint’s. Chapman, who previously worked with bloggers while at The Heritage Foundation, knew how to get the message out.
Chapman and I began building the foundation for blogger activism last May when we co-founded a weekly meeting for conservative bloggers. Sponsored by Heritage and Human Events, the meeting brings together some of the nation’s top bloggers—from RedState’s Erick Erickson to Townhall’s Mary Katharine Ham—to share and discuss policy issues on Capitol Hill. More than a dozen members of Congress have addressed the group, and even the White House sent a representative to address the group in January. Each meeting offers an active discussion of how conservative bloggers can work together.
According to a recent study conducted by T. Neil Sroka, a student at George Washington University, upward of 90 percent of Capitol Hill offices pay attention to blogs, and 64 percent of congressional staffers say blogs are more useful than mainstream media for gauging political problems. Two of the most popular blogs—Daily Kos on the left and RedState on the right—welcome any user to post, meaning you could be changing minds almost instantly.
That’s what’s great about blogging—no matter what you care about, chances are you can build a coalition. And with tools like Technorati, an Internet site that tracks 63.2 million blogs, and Google Blog Search, it’s never been easier to find people with common interests.
As the episode with Reid illustrates, bloggers can pack a punch and—with allies in the halls of Congress—they really can make a difference.
Mr. Bluey is director of the Center for Media and Public Policy at The Heritage Foundation. He blogs at RobertBluey.com.
FOR MANY YEARS, advocates of the free market have argued that we need to “be” the media in our efforts to disseminate messages that might not otherwise make it through the editorial process.
The rapid rise of the Internet—the Web, e-mail, blogs, newsgroups—have given us tools to connect with allies across the globe in ways never imagined. Podcasting is another such tool.
What is a podcast? Put simply, it is an Internet-based audio program that can be easily downloaded to a computer, iPod (hence the name) or other portable music player. Podcasts can be thought of as running on the same technology that gives us blogs and other user-subscriber Web tools. The clearest advantage to a podcast is that once someone subscribes, your daily or weekly program is automatically delivered to their computer without them having to check for an e-mail or visit your Web site.
For most of us, the primary purpose of a podcast should be to offer existing information in a format that is more readily accessible, or easier, for our audience. One should not try to think of it as creating a new information program, or even as an in-house radio show. Instead, think of it as an audio version of our latest research, commentaries, or other communication outreach efforts.
Such an activity allows us to maximize our existing efforts in a convenient format for both pri-mary and secondary audiences.
Like most communications tools, podcasts must be offered on a regular basis. Irregularity makes it extremely difficult for users to know when something new is available. If they check back once or twice and nothing new is posted, they are likely to forget about checking back again. Set-ting a regular update schedule and sticking with it is critical.
By podcasting speeches, interviews, reports, short lectures and other forms of intellectual ex-change, think tank managers enable legislative staffers, and anyone else interested in important public policy discussions, to download and listen to great ideas at their leisure.
Podcasting allows individuals to expose themselves to great ideas as they go about their daily lives, often as they continue working uninterrupted on other projects.
For many of us, our core audience is policymakers and their staffs. While it might be nice to think they sit eagerly in their office awaiting the next 80-page study, complete with regression analysis tables and appendices upon appendices, they in fact are doing other things. It is in that realm of “other things” that podcasting allows us to disseminate our message.
It’s important, though, not to confuse podcasting efforts with real journalism. Just as we don’t pretend our newsletters are the one-news-source for our readers, so too should we treat our pod-cast somewhat realistically. We’re not trying to recreate a radio show or newsmagazine, we’re trying to propagate our ideas.
A daily or weekly podcast—set on a definite release schedule—can serve as background ac-companiment to the stuffing of envelopes, a morning job or the evening commute.
It is important not to let our podcasts become the audio version of a thick economic text. The content should be engaging, preferably in an “interview” format—giving the listener a voice with which to identify as the learner/questioner. The podcast should be kept to a manageable length—no more than 15 minutes.
As with all communications efforts, podcasts should be in line with the other things you are doing that week. Don’t have a commentary, press release and study coming out about the minimum wage, and use your podcast to extol the benefits of a new trade proposal!
And as with other forms of communication, know who you’re trying to reach with your podcast. It’s rather doubtful your largest donors are also going to be your primary podcast audience. The most consistent, immediate listeners will be young elected officials and their young staff—along with news reporters, talk-show producers and possibly lobbyists.
As a side note, radio reporters are no less lazy than their print counterparts. Just as the text from a press release helps a print reporter fill space in a story, so too does a quick, existing ac-tuality from a podcast help the radio journalist.
● Mixing board: EuroRack UB502. ($30);
● WavePad. A superior “audio capture” program for re-cording purposes. A free version exists, but the master costs only $50. This software allows for easy graphical editing of sound files, pasting in corrections, etc. It can also remove annoying clicks and pops that tend to plague audio recordings, as well as reduce distracting “white noise” background sounds (like the constant hum of an air conditioning unit).
● Propaganda. The software bills itself as a way to seamlessly record and post podcasts. It doesn’t entirely deliver on that, but for the money the program does an excellent job of turning wav-format files created with WavePad (or any other sound file) into a solid mp3. You can mix channels of audio for background music, introductions, exits, and other cues. Propaganda allows you easily to implement fades and other fancy audio stuff. Cost: $50.
● WS-FTP. I use this free file transfer program to upload my files (XML and MP3) to the Web server. FileZilla is another free option.
Questions to Consider
The tools for producing a quality podcast can be had for a very small investment—less than $500—and your existing Internet hosting provider should be able to support podcasting without any hiccups. It is important to check your contract to understand what your bandwidth charges might be; a popular weekly podcast of modest size could greatly increase your monthly Web hosting fees if you are not careful and do not plan ahead.
Perhaps more than any other form of electronic communication to date, podcasting allows us to speak, literally, in our own voices to those we are seeking to influence and educate.
Mr. Sullivan is president of Texans for Fiscal Responsibility. He started the successful, weekly “Texas PolicyCast” at the Texas Public Policy Foundation.