That’s what Kevin Drum — channeling his inner Alan Grayson — thinks about free health care markets, and the people who support them. Clearly, under government-dominated systems (including our own), no one falls through the cracks.
In this study, which I humbly offer Drum, I explain how the great advantage of a free market is that it would minimize the number of people falling through the cracks.
Rumor has it that President Obama, no doubt because it is always a warm and fuzzy subject, will feature education prominently in his upcoming State of the Union address. If so, he will almost certainly stress his goal of having the United States lead the world in the percentage of its citizens with a college degree by 2020.
Unfortunately, doing what feels good often isn’t the same as doing what’s smart.
Today, we get more evidence that simplistic, rhetoric-driven education policymaking — more degrees equals more learning equals economic bonanza! — is ultimately counterproductive. It turns out, students generally learn very little in at least their first couple years of college, and many learn little over four years.
According to Inside Higher Ed, that’s the main story of a new book being released today, Academically Adrift: Limited Learning on College Campuses. IHE says the book reports that “45 percent of students ‘did not demonstrate any significant improvement in learning’ during the first two years of college” and 36 percent “ ‘did not demonstrate any significant improvement in learning’ over four years.”
But if students haven’t been nose-to-the-grindstone learning, what have they been doing?
Think of just about every television show or movie you’ve ever seen about college, and you’ll have your answer: They’ve been focusing on havin’ fun, or what Ivory Tower officials euphemistically call “student engagement.” And they’ve been doing it with hundreds-of-billions of taxpayer dollars annually.
Now, all of this needs be taken with a grain of salt. The measure of learning used in the book was the Collegiate Learning Assessment, a test that according to IHE “is designed to measure gains in critical thinking, analytic reasoning and other ‘higher level’ skills.” Such fuzzy outcomes are notoriously difficult to pin down and aren’t necessarily major areas of concern for pupils studying, say, biology or engineering. It’s also worth noting that results varied significantly both between schools and within schools, so the findings are not at all universally applicable.
That said, the findings are a very troubling addition to the already mammoth heap of evidence that government pushes higher education way too much, not too little. But don’t expect to hear that in next week’s State of the Union. It is decidedly not warm and fuzzy, and that’s all that seems to matter in education policymaking.
Gross federal debt just hit $14 trillion and will soon reach the legal limit of $14.3 trillion. House Republicans are wondering what spending reforms they can extract from the Democrats for their support of a debt-limit increase.
I propose a “Cut and Cap” strategy. The GOP should insist on the $100 billion in initial cuts they promised, and also demand passage of a legal cap on overall federal spending. A simple form of such a cap would specify that total federal outlays cannot rise more than inflation plus population growth each year. If it did, the law would require that the president sequester, or cut, spending across-the board to meet the limit.
The chart illustrates the power of such a cap. The top line shows total spending as projected under President Obama’s budget. The president has spending growing at an average annual rate of 5.6 percent between 2013 and 2020, which is absurdly high given that we are running trillion-dollar deficits. The bottom line shows spending capped at 3 percent annual growth, which is roughly the sum of expected population growth and inflation.
Even with the modest goal of limiting spending growth to 3 percent, the results would be dramatic over time. Spending in 2020 would be $1 trillion less than the president is projecting—$4.6 trillion rather than $5.6 trillion. As a share of GDP, spending would be 19.2 percent instead of Obama’s projected 23.5 percent. That would put the budget close to balance as revenues will be about 18.5 percent of GDP in 2020 with current tax cuts in place.
The chart assumes that the cap and the $100 billion of cuts are put in place right away. However, because Obama’s budget assumes that spending is flat for the next two years as “stimulus” spending peters out, the cap wouldn’t really start biting until 2014.
I’ve discussed a spending growth cap in more detail here and here. One nice feature of such a cap is that any spending cuts achieved would be locked-in as the spending limit would ratchet downward to the new lower budget level. So the House Republicans should insist on “Cut and Cap” this year, and then keep on cutting after that.
China’s President Hu Jintau arrives in Washington today for a state visit, turning the spotlight once again on U.S.-China trade and China’s allegedly undervalued currency, the yuan. Not one to let such an opportunity go to waste, Sen. Charles Schumer (D‑N.Y.) is introducing legislation that would threaten to impose duties on imports from China if the yuan does not appreciate quickly.
Count me skeptical that a more expensive yuan relative to the U.S. dollar would make much of a dent in our bilateral trade deficit with China, or that it would have any positive effect on U.S. economic growth and employment. But even if those assumptions were true, the big story is how much the yuan as already appreciated against the dollar.
It has been a mantra of Sen. Schumer and other critics of U.S.-China trade that the yuan is undervalued by 15 to 40 percent. They were saying that before the 2005 appreciation, and they’re saying that now, as though nothing has changed.
Yet a lot has changed. In nominal terms, the yuan appreciated by more than 20 percent between 2005 and 2008. That’s when China relaxed its hard peg with the dollar and allowed its currency to gradually appreciate. After holding the peg steady again during the recent financial turmoil, China has again allowed it to rise another 3 percent since last June.
The nominal rate is just part of the story, however. Price levels in the United States and China determine the real exchange rate–the actual amount of goods that can be bought with each currency. A big story in China recently is its rising inflation rate, which makes Chinese goods relatively more expensive at any given exchange rate. In this way, a relatively higher inflation rate in China compared to the United States acts in the same was as a nominal increase in the exchange rate of the yuan.
When you combine the effect of rising prices in China with the higher nominal value of the yuan, you get a double boost to the real exchange rate. According to a chart on the front page of this morning’s Wall Street Journal, the real value of the yuan has appreciated by 50 percent since the beginning of 2005. In early 2005, 100 Chinese yuan could be exchanged for about $12; today it can be exchanged for $18 (in real, inflation adjusted dollars).
Rather than complain, Sen. Schumer and his allies should congratulate themselves on achieving their goal of a much stronger yuan and a much weaker dollar, even if we are still waiting for the tonic effect they predicted it would have on jobs and growth.
I’m happy to report that my forthcoming book on bad ideas from the law schools, Schools for Misrule, just went off to the printer. Encounter Books commissioned a terrific jacket design (by Tamaye Perry) which you can preview here. Here’s the description from the book’s jacket:
Schools for Misrule: Legal Academia and an Overlawyered America
By Walter Olson
From Barack Obama (Harvard and Chicago) to Bill and Hillary Clinton (Yale), many of our national leaders today emerge from the rarefied air of the nation’s top law schools. The ideas taught there in one generation often wind up shaping national policy in the next.
The trouble is, as Walter Olson explains in this book, our elite law schools keep churning out ideas that are catastrophically bad for America. Rights to sue anyone over anything in class actions? Hatched in legal academia. Court orders mandating mass release of prison inmates? Ditto. The movement for slavery reparations? Court takeovers of school funding, at taxpayers’ expense? It’s not by coincidence, Olson argues, that these bad ideas all tend to confer more power on the law schools’ own graduates. In the overlawyered society that results, they are the ones who become the real rulers. And the worst is yet to come, the book demonstrates, as a fast-rising movement in the law schools demands that sovereignty over U.S. legal disputes be handed over to international law and transnational courts.
Some imagine that the law schools possess a finer, purer moral sensitivity than the everyday America outside their walls. (“Welcome to the Republic of Conscience!” Yale Law dean Harold Koh announced to incoming students.) But as this book shows, the pipe dream of training philosopher-monarchs not only leads to one policy disaster after
another, but distracts law schools from the most useful function they can serve: training competent, ethical and suitably humble lawyers for tomorrow.
On the back of the jacket are terrific blurbs from star law professor Randy Barnett of Georgetown (famous most recently for the ObamaCare court challenge), bestselling author and attorney Philip K. Howard (The Death of Common Sense), and perennial libertarian TV hero John Stossel.
You can pre-order the book at great prices from Amazon, Barnes & Noble, or your favorite bookseller. Publication date is February 15, so copies should arrive before you know it.
On the eve of a House vote to repeal ObamaCare, the Department of Health and Human Services has released a report claiming that if repeal succeeds, “1 in 2 non-elderly Americans could be denied coverage or charged more due to a pre-existing condition.” A few problems with that claim:
Chinese President Hu Jintao is in Washington this week for discussions with President Obama. On the agenda are various economic and security issues that are raising dander on both sides of the Pacific.
Frictions in the U.S.-China relationship are nothing new, but they have intensified in the past 18 months. One explanation for the rising tensions is that certain media pundits and policymakers now view the relationship through a prism that has been altered by the fact of a rapidly rising China. That China emerged from the financial meltdown and subsequent global recession wealthier and on a virtually unchanged high-growth trajectory, while the U.S. faces slow growth, high unemployment, and a large debt (much of it owned by the Chinese), is breeding anxiety and changing perceptions of the relationship in both countries.
Once-respected demarcations between geopolitical and economic aspects of the relationship have been blurred, and economic frictions are now more likely to be cast in the context of our geopolitical differences. Lots of ink has been spilled over the proposition that China has thrived at U.S. expense for too long, and that China’s growing assertiveness signals an urgent need for aggressive U.S. policy changes.
Although it may be fashionable to think of China as the country to which the U.S. manufacturing sector was offshored in exchange for tainted products and a mountain of mortgage debt, the fact is that the bilateral relationship has produced enormous benefits for people in both countries. Despite those benefits, Americans are more likely to be familiar with the sources of friction. Although some U.S. complaints about Chinese trade and economic policies are legitimate and probably worth deploying the resources to resolve (including through dispute settlement in the World Trade Organization), other complaints are bogus because there is no violation of an agreement or because the U.S. is guilty of the same infractions.
Much of the tension reflects indignation among media and politicians over China’s aversion to saying “How high?” when the U.S. government says “Jump!” That China is not a U.S. supplicant may rub some opinion leaders the wrong way, but that is not a persuasive argument for a more provocative posture. China is a sovereign nation. Its government, like the U.S. government, pursues policies that it believes to be in its own interests (although those policies—with respect to both governments—often fall short of their people’s best interests). Realists understand that objectives of the U.S. and Chinese governments will not always be the same, thus U.S. and Chinese policies will not always be congruous. Accentuating and cultivating the areas of agreement, while resolving or minimizing the differences, is the essence of diplomacy and statecraft. These tactics must continue to underpin a U.S. policy of engagement with China.
Although some policy tweaks would be beneficial, a more aggressive U.S. policy tack is unnecessary and unwanted. Even in a shifting geopolitical environment, U.S. policy toward China should continue to reflect the fact that globalization means interdependence, and interdependence demands cooperation, not conflagration.
(For a full exposition of this perspective, please see this paper.)