Tag: state

A Law Colleges Love

I’ve often wondered why so many people go to college instead of learning on the job by offering to work for free for a company they like.  Turns out, it’s not that easy to work for free.  In most cases, it’s illegal.

Consider the absurdity of this setup.  Young people are supposed to do something to enhance their earning potential.  Without any knowledge or experience, they do not produce enough value to be worth hiring in most promising career areas.  So they’ve got to do something to gain skills.  Since they’re not worth paying, and it’s illegal to have unpaid workers, they can’t get on the job experience.

It’s supposed to be illegal to have unpaid workers because we wouldn’t want poor, unskilled people being taken advantage of.  Instead, they’re directed to college, where not only do they not earn money, they must borrow tens of thousands just for the privilege of not being paid.  They have limited choice as to what skills they learn, as a huge number of courses and credits are required in areas of little interest to them.  It takes at least three or four years to finish.

When they do finish, it’s often the case that they are only a little more valuable to employers than they were before – and much of that is a product of them being four years older and more mature, not any particular knowledge gained.  Most of the needed skills still must be learned on the job.  Most graduates have no idea what kind of job appeals to them or what they excel at, because they spent time in classrooms, not at workplaces trying different things out.

There are, of course, complicated work-arounds.  Non-profits and degree granting institutions can setup legal unpaid internships in some cases, and some businesses can do certain types of apprenticeships, on the condition that they create no value.

Let me repeat that: as long as unpaid apprentices do not help the business in any way – better yet if they destroy value – it’s possible to have one.  You think I’m joking, but read this language, pasted directly from the SBA website where they list the guidelines for a legal, unpaid apprenticeship.  This is number four in a list of six criteria:

“The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded”

We want young people to learn how to create value, but certainly not by actually creating it!  We want businesses to create wealth, but not if trainees do it!

You reap what you sow.

We Already Have the Solution: It’s Called Freedom

Milton Friedman once said of the political system,

“I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing.”

There already exists an institution that ensures people, be they right or wrong, do the right thing.  It’s called the market.

Any wish to constrain government, or keep political interests behaving in the interest of the general public, is a wish that government behave more like a market; and that the political class behave more like individuals must behave to succeed in a market.  All reform efforts aimed at making the state smaller, less oppressive, more accountable, more efficient in it’s various activities, and less arbitrary are efforts to make it completely unlike itself, and completely like the market.

What I mean by the market is the entire realm of voluntary exchange and coordination.  Politics, like all institutions, is a type of market, but not the type I mean.  It has two unique feature that no other institution has, it produces a host of things unthinkable under other institutions.

The first unique feature is coercion.  The transactions in the political system are not voluntary.  This dramatically alters the incentives and signals in all the exchanges.  “Customers” tolerate what they hate, because it’s not worth being jailed for.  The second unique feature is near universal moral approval.  Though the coercion is real and known by all, it is not only accepted, but praised and condoned.  No other institution enjoys this kind of unskeptical reception and sanction.  Without these two features, there is no state.

It is easy to see why governments produce so much of what we hate, and destroy so much value.  Any market entity that attempted to engage in a single activity the way government does would cease to become profitable and receive universal scorn.  On the market, people think it immoral and tasteless to say you’ll provide a free soft drink with a sandwich and not make good.  That kind of behavior from a corner deli wouldn’t last a week.  On the political market, people think little of a politician who promises to stop sending young people to kill others across the globe, but then sends more instead.  That kind of behavior might get you another four years.

If we wish for the wrong people to do the right things, we can engage in the monumental task of altering public belief and preferences enough that they are willing to pay the price for resisting the state.  We can work to continually alter the incentives faced by politicians on every single issue, fighting back against every incentive built into government.  Of course, the state itself resists this by its very nature, and always will.

The real solution is not the state at all, but the market.  It’s not changing the state, it’s letting it fade into irrelevancy as markets grow up around it, carrying out all the activities states try so jealously to monopolize.  Markets don’t require perfect consumers or producers.  They put bad people in the position where they must do good to succeed.

Friedman was right.  The easiest way to do it is to force political entrepreneurs out of government, and into the realm where they’ll have to be market entrepreneurs.

Separation of School and State

While reading Peter Boettke’s wonderful new book “Living Economics,” I was reminded by Boettke of an interesting disagreement between Scottish Enlightenment figures Adam Smith and David Hume. Both Smith and Hume used economic thinking to understand a puzzling phenomenon of their day: Countries with publicly supported religion were less religiously devoted than those in which the church relied on private funds.

Boettke uses this example to illustrate the “value free” nature of economic analysis. Since Hume was a religious skeptic and preferred a less influential church, he argued in support of publicly funded religion. He understood that this would result in a less religious populace and welcomed that result. Smith used the same economic logic but did not share Hume’s negative feelings toward the church, and thus he opposed public support for religion. As Boettke points out, good economic thinking does not tell us what we “ought” to do, it only reveals cause and effect relationships and shows us what the outcome of various policies will be.

Despite their differences of opinion on the preferred outcome, the logic of economics was the same for both men: When the church is publicly supported it becomes less responsive to parishioners and less creative in gaining and retaining new members. When churches had to rely solely on voluntary support, they innovated. Sermons became more interesting to the listeners, facilities were built to meet the needs of attendees, and church leaders more aggressively and creatively looked for ways to show the applicability and value of religion to everyday life. This marketing, innovation and energy resulted in greater “consumption” of religious “goods” than in countries where the state supported the church.

This conclusion was counterintuitive. It was strongly believed by many at the time that religion was unlike other goods and services. It was a “public good” of sorts. Left unaided by tax dollars, short-sighted citizens would underfund religion in pursuit of more temporary gains at the cost of their moral character and eternal souls. Perhaps bricks and blankets and bread could be left to the market, but religion was too important. Religious ideas and values needed to be firmly in the heart of every citizen, and as such it was the duty of the state to ensure that the church did not wane.

Smith and Hume smashed this logic with clear economic analysis. The analysis itself did not choose sides. It neither supported nor opposed religion. It did not care for the pure or impure motives of the advocates or opponents of state funded religion. It only revealed that, contrary to the intent of its advocates (with the exception of people like Hume), governments who supported churches with tax dollars got a less religious populace.

It’s relatively easy to accept this analysis dispassionately in the United States today. The separation of church and state, at least in terms of direct funding, has been so firmly entrenched, and our experience of the wide variety of flourishing denominations and churches so extensive, that we have no trouble agreeing with Smith and Hume’s conclusion. It’s silly to suggest that religion cannot exist without state support, and even more absurd to suggest that the federal government could improve upon religion. Yet the vast majority of Americans fail to see the same cause and effect relationship between state funding of education and the level of education among the public.

If you like the idea of a population that is competent in math, science, reading, writing, physics, philosophy, biology, history, economics and every other field of knowledge, you should oppose state support for education. Without resorting to complicated debates about curricula, teachers unions and budgets, the same economic analysis Smith and Hume used to understand the relationship between church and state can be used to understand the relationship between school and state. State support for education results in a less educated populace.

As radical as that may sound today, it may not have sounded so radical to the early advocates of public schooling. Their main goal was not to increase the overall level of education or to educate where education was previously absent, but to reduce variety in education. They did not want to increase supply, but rather decrease the number of choices for parents and children so as to produce a more uniform set of beliefs and create a more civically minded and compliant citizen. They wanted graduates able to step in to the regimented Scientific Management of factory life and fit neatly into a centrally planned economy, which they saw as the future of mankind. Whether or not you agree with their intentions, their economic logic was correct: State funded and operated education would reduce the wide range of educational goods being consumed.

If we want a more educated populace, full of energy and a variety of methods and ideas, much like the innumerable churches and denominations on the American religious scene, the removal of state sponsorship is a must. Absent the secure fallback of the state’s coffers, educational institutions would be forced to innovate, listen to consumers, market their services and find new ways of making their offerings beneficial in the day-to-day life of their students. A thriving market for schooling and education (not necessarily the same thing) would produce a more educated populace with greater enthusiasm for knowledge, just as Smith and Hume found with religion.

Perhaps separation of school and state is the first step to a flowering of education.

Originally posted here.