A short, but insightful graduation speech.
A longer and insightful discussion of wealth and how different views of where it comes from can affect the words we use.
From the first:
4. Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.
From the second:
Europeans and Americans “claimed” a higher portion of global output only because they produced a higher portion of global output! What these Europeans and Americans “claimed” simply would not have existed had they not produced it.
The previous post brings to mind discussions I’ve had on the topic in the past. In one such discussion, a person asked:
So, do you want to be the one who tells someone they can’t go to college?
It shows how much of a pedestal we’ve put college education upon. Like home ownership, it’s now a dream, that everyone is entitled to.
In home ownership, we forgot that renting was a good option for many. With college education, we forget that people without college education do fine, too.
Do I want to be the one who tells someone they can’t go to college? No. If I did, I’d apply to be a college admissions officer.
But telling people they can’t go to college or people deciding for themselves that it isn’t for them isn’t bad. How’s it any different from telling people they didn’t get a part in a movie or people deciding that pursuing their dream of acting isn’t panning out so they should try something else?
How’s it any different from kids in sports not making the team or deciding that a certain sport isn’t for them?
The question also shows how unimaginative we’ve become. It’s college or else. We can’t imagine alternatives. Yet, there are many.
In this excellent EconTalk podcast, EconLogger Bryan Caplan discusses his upcoming book on education. He closes with this:
…the private return [of education] is high is really a very bad argument for pouring more money on.
Now, the other point, as we were saying, the return that you should be looking at in terms of this argument of not being able to borrow against your future earnings–what you are looking at is return for the marginal people who are just on the edge of going or not going. And as we’ve seen, the return for those people is actually… quite mediocre. And then finally if you adjust for ability and everything else, really I would say that once you appreciate signaling you realize that, so we have subsidized education way past the point of [?] returns. So by my calculations, actually, the social return to education is now quite negative.
And it would be a much better policy to drastically scale it back, so rather than encouraging more people to go, I think it’s better to discourage them from going or at least to encourage them less. So in fact–so, the biggest policy implication that’s going to come out of my book is we just have way too much education. I call this the white elephant in the room. There are way too many people going to school, maybe not from their own selfish point of view, but certainly from a social point of view to go and pour more money on this really is just throwing gasoline on the fire. And we need to do less of it.
I agree. Caplan’s argument is that we college education isn’t the cause of higher income, rather it’s just become the customary path that people with above average ambition and ability take and along the way we’ve mistaken it for the cause of that higher income.
It’s similar to the mistake ‘we’ made with housing. We thought owning a house made people responsible, so we made it easier to irresponsible people to own homes. We learned the hard way that owning a home was a marker of a responsible person, not a cause.
Now, we’re learning the same about college education as many kids graduate and find themselves deep in student loan debt and no higher income job to pay it off.
Tyler Cowen, of Marginal Revolution, links to a piece about the increase in spending on college athletics.
Anyone involved in youth sports in the last decade might have noticed the emergence of large, multi-level sports clubs, playing in multi-million dollar sports complexes all designed to host large quantities of organized competition for young players to become seasoned masters in their sport and attract the attention of college recruiters.
Having your kid get “signed’ to a college team — no matter how small the college, or how un-followed the sport — is the new crowning achievement of childhood that brings ear-to-ear grins to the faces of parents.
Take away taxpayer-provided college athletic subsidies and that crowning achievement of childhood and the industry that has sprouted to help parents achieve that ear-to-ear grin goes away.
Arnold Kling also comments on college athletic spending.
Here’s a nice piece on the invention of the Slurpee (via Marginal Revolution). An excerpt:
Knedlik’s [Dairy Queen] franchise didn’t have a soda fountain, so he began placing shipments of bottled soda in his freezer to keep them cool. On one occasion, he left the sodas in a little too long, and had to apologetically serve them to his customers half-frozen; they were immensely popular.
When people began to show up demanding the beverages, Knedlik realized he had to find a way to scale, and formulated plans to build a machine that could help him do so.
You never know what customers are going to like. Here’s a secret, kids,– they do not teach you how to figure that out in business school. There’s not a formula or process to follow to do it, other than trial-and-error.
I think executives who are trying to find ways to grow their company should consider using more low-cost, trial-and-error discovery .
When I saw the alert that Kathleen Sebelius is going to resign her post as Secretary of Health and Human Services, the classic Warren Buffett quote came to mind:
When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
The business of attempting to solve problems caused by government intervention with more government intervention is a business with bad economics.
I realized that quip to describe the phenomenon where someone of the opposite sex looks attractive from a distance, but less so the closer you get to them, also applies to the poor and needy.
Deserving from afar, far from deserving?
I’ve noticed that the folks who tend to be strong advocates for the generic needy (the needy from afar), become less so the closer they get to specific needy people and to their own wallets.
I, again, recall a conversation with a friend who owned a car lot. He was a strong advocate for the deserving and faceless “minimum wage worker,”, because they were powerless against employers. But, apparently the car salesmen on his lot weren’t deserving of that treatment since he treated them as contractors so he wouldn’t have to be locked into paying them minimum wage.
Health insurance is another example. The faceless uninsured was used to garner support for Obamacare because everyone ‘deserves access to health care’. But, put faces on some of the uninsured and look at some of the choices they’ve made — like paying for an expensive cell phone plan, instead of buying insurance — and the ‘deserving’ moniker starts to make less sense.
This exposes a good tactic to use in conversations with people who have the ‘deserving from a far, but far from deserving’ affliction. First, put some faces on those who they think are deserving.
Their next argument will be that those are only a few abusers or outliers and ‘that should be fixed, but doesn’t take away from the vast majority of the other (faceless) deserving.’
To which, a good response is, “How do you know? Are you guessing?”
I agree (2nd to last paragraph), somewhat, with Google founder Larry Page: Give money to capitalists instead of charity (via Carpe Diem).
Where I disagree is that you don’t need to give them money. Rather, invest in them. Invest in entrepreneurship. Maybe get kids diddling less time away chasing college scholarships to play sports heavily subsidized by taxpayers and more time creating stuff of value.
Here’s more from me and Richard Branson on the subject.
From John Goodman’s piece in the Wall Street Journal, A Costly Failed Experiment (emphasis added):
With Sunday marking the fourth anniversary of the Affordable Care Act being signed into law, it’s worth revisiting the initial purpose of the president’s signature legislation: Universal coverage was the main goal. Four years later, not even the White House pretends that this goal will be realized. Most of those who were uninsured before the law was passed will remain uninsured, according to the Congressional Budget Office.
Democrats also fixated on another goal: protection for people with pre-existing conditions. One of the first things the new law did was create federal risk pools so that people who had been denied coverage for health reasons could purchase insurance for the same premium a healthy person would pay. Over the next three years, about 107,000 people took advantage of that opportunity.
Think about that. One of the main reasons given for interfering with the health care of 300 million people was to solve a problem that affected a tiny sliver of the population.
More recently, the president has had to explain why between four million and seven million people are losing their health insurance despite his promise that they would not.
Yes, think about that. Thinking isn’t something we do very much of this country anymore.
When I read that headline in the Wall Street Journal, my initial thought was that perhaps ‘the U.S.’ has been a bit too preoccupied with spying on its own people.