“…by the content of their character”

I think it is important to remember this part of MLK’s speech:

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

Unfortunately, there is a tendency to confuse judging the content of character with the judging of other things like skin color.

This is a feedback problem. The reactions we get from how we behave are feedback that signal when our behavior is acceptable and unacceptable to others.

If it is made easy to believe that changing our behavior will not change the reactions we produce in others when we behave unacceptably, because we attribute their reaction to something else (like skin color), then we are less likely to change our behavior.

In his book, Black Rednecks and White Liberals, Thomas Sowell traces the origin of the collection of behaviors that we recognize today as the ‘thug’ and ‘redneck’ cultures. He hypothesizes that these are evolved versions of the same culture with the same origin.

He also shows that both of these cultures were waning in American society through the first half of the 20th century, due to normal societal feedbacks that encouraged politeness, productivity, self-reliance and cooperation. However, the introduction of the welfare state reversed this course among both blacks and whites, because it enabled folks to get by without adopting these virtues.

Sowell also shows, remarkably, that the behaviors commonly associated with these cultures tend to produce the same reactions in others no matter the skin color of the person practicing them.

I recommend reading it.

Shameless Behavior

W.E. Heasley, of the Last Embassy, points to a troubling study on recipients of the Social Security Disability benefit.

One excerpt from a survey of 2,300 that I hope is not representative of the 11 million SSDI recipients:

Returning to work is not a goal for 71 percent of the SSDI recipients, 60 percent of the SSI recipients.

Here and here I wrote about feedback loops that use to keep such behavior to a minimum. I think those feedback loops are broken.

Update: In the comments, Mike states it well:

Not only is the old negative feedback loop – shame – broken, a new positive feedback loop – pride in gaming the system – has taken over.

He also pointed out that, in this case, ‘gaming the system’ means ‘pulling one over on their fellow citizens.’

This reminds me of a point that Daniel Hannan made about localism of welfare in his book, The New Road to Serfdom, which I wrote about here (in the last part of the post). His point is that the more local a welfare program is made, the more likely it is to retain the shame feedbacks and the less likely it is to pick up the ‘pulling one over on the system’ feedback.

Why? Because, now instead of pulling one over on some faceless and distant third parties spread across the country (Federal taxpayers), they’re pulling one over on their more direct neighbors and they a bit more incentive to speak up about being taken for granted.

Able-bodied vs. plausible-no-fault-of-your-own tests

In “the old days” it seems like if you seemed able-bodied, you were expected to find something to do that was worthwhile. There was no dignity for burdening your fellow-man. There were plenty who were not able-bodied that needed our help, after all.

Somewhere along the line, that able-bodied test has morphed into any plausible excuse that you found yourself in an unfortunate position through no-fault-of-your-own, even if by most accounts you could have done a great deal to, at least, prepare for that inevitability.

All of us get in a bind now and then and can use some help, but once we ‘systematized’ that help, we removed the helpers from the helped and created a bureaucracy to administer in between the two. We changed the incentives.

Before the helpers would give friendly advice to those they helped to prevent them from needing help again. They provided gentle nudges and signals to the helped that planning was their responsibility. Perhaps you could have saved more? Maybe you don’t need to drive two Tahoes? Often, the helped was grateful enough for the help and being steered in the right direction, that they would come back and do the same for others. It was a virtuous feedback loop.

But, when we systematized it, we made it so that the helpers could just get by putting the right bumper sticker on their car. They voted for the right people. The people who will take a lot from the wealthy to help those who need it. All they need to do is demonstrate their choice to the rest of us and no more thought is needed.

The helped no longer needed to face the gentle nudges, signals and advice from the helpers.

And, the bureaucracy responds to incentives. The folks in it want to perpetuate their jobs. One way to do this is to work really hard to remove any stigma with being helped. I wonder how many people would take unemployment if there was even a minimal 10 hour per week work requirement attached to it.

‘Government is overhead’ follow-up

Last August, I wrote this post about how I think we should view government as an overhead expense. Yesterday, Edward wrote the following response to that post:

A very interesting post. I agree with your premise that government is overhead. However, if you look at government expenditures relative to GDP, they are lower than the average overhead rates of successful companies. Currently this rate is 19 percent or so (gov/gdp) and for companies this number is in the high twenties. Why is it that anti-tax folks presume that the correct level for our national enterprise is even lower than the faultless private sector can achieve?

This is my response to Edward.

The Federal government is not the only overhead in the economy. It’s a piece of it. Comparing Federal government spending to all business overhead is an apples-to-oranges comparison.

For example, all government — Federal, state and local — is part of overhead. According to this graph, all government spending makes up nearly 40% of GDP, which is more than ten percentage points higher than Edward’s ‘high twenties’ benchmark.

And still, all government is only a part of the economic overhead. For example, all the overhead tied to successful companies that Edward mentions, is also economic overhead.

Also, anything we do to comply with the government is overhead. For example, the time and money you and the companies you deal with spend to keep records and prepare your taxes — at all levels — is economic overhead that does not show up in government spending.  That’s time or money that we could have spent doing something productive, like cleaning our toilets.

Edward then asked a question that I’m really glad he asked:

Why is it that anti-tax folks presume that the correct level for our national enterprise is even lower than the faultless private sector can achieve?

First, as I pointed out above, economic overhead is higher than the ‘faultless private sector’.

Second, and more important, folks of my political persuasion don’t believe the private sector is faultless, as Edward suggests. Far from it. I’d guess the failure rate of government and private sector is about the same. Why wouldn’t it be? Both are run by humans after all.  Are the humans in government less fallible than the humans in the private sector, or vice versa? No.

One reason we favor the private sector is the difference in how it and government naturally respond to failure. The private sector is better in this regard, though not perfect.

The private sector — you, Edward and I — reward organizations that provide us with stuff we value by buying that stuff and we punish the others by not buying their stuff.

When it comes to government, that success/fail feedback isn’t quite as strong, and sometimes it’s the opposite of what it should be.

For example, for years the answer to “Public schools are failing!” was “Public schools need more money!”

This sounded reasonable to a lot of folks. I bet those same folks would scoff if “Public schools” was  replaced in those two sentences with “Enron”.

We realize that giving more money to the corrupt leaders of Enron so it could try to “fix its problems” and save some jobs would have made no sense.  Those corrupt leaders would have blown that money on themselves.

The market clobbered Enron’s stock and put it out of business long before the government even figured out what was going on.

We realized that the best thing was for Enron to go out of business. The market naturally stripped the fraudsters running Enron of their power. Its failure caused some painful collateral damage to people down the totem pole, but it also taught a generation of people valuable lessons in prudence, investment diversification and ‘if it sounds too good to be true…”  And, all this happened without taking the whole economy with it. Markets naturally isolated the disturbance.

This wouldn’t be the case a few years later when government actually encouraged fraudulent practices in home lending.

I also believe that the success/feedback loop is weak in overhead functions, whether those functions are in private companies or government.

I’ve been a part of overhead of private organizations most of my career. I’ve witnessed this from the inside. Strong underlying businesses can feed crony, corrupt and political bureaucracies in the overhead departments, precisely because the success/fail feedback loop is weak.

It wasn’t a stretch for me to recognize that government also had this success/fail feedback problem.

Again, that is precisely the reason government tends to grow in good times and bad and is one reason why anti-tax folks would like to minimize government and overhead.

Politicians tell you they can solve your problems if you vote for them and allow them to spend your money (or the rich guy’s money) and too many people believe them.

Four broken feedbacks in public K-12 education

I believe that most problems are caused by broken feedback loops.  In 2009, I listed four broken feedback loops hurting quality in the public K-12 education system.   These include parent choice, teacher quality, grading and student discipline.

This weekend, the Wall Street Journal features basketball star Jalen Rose’s efforts to make a difference in education with his Leadership Academy charter school in Detroit.  Jalen addresses these feedback loops.

Parent choice:

“We didn’t cherry pick these kids,” says Mr. Rose. “They chose us,” he notes…

“There should be parental choice,” he says clearly. “Schools should be open. If it’s a public education, and the school in your district is poor-performing, you should be able to put your student or kid wherever you want.”

Choice could be relatively easily implemented, he says. “I’m a taxpaying citizen, right? So if I’m paying $4,000 worth of taxes and I don’t want my kid to go to this school, why can’t they give me my $4,000 and allow me to pick where I want to put my kids?”

Teacher quality:

His school also doesn’t have tenure for teachers. “I hate tenure. Tenure allows teachers to put their feet up on the desk and possibly have a job forever. That’s why I got turned on to charter schools. It’s a business model. Every employee and every teacher will be monitored by performance.”

Grading:

“This is college prep. We expect 90% to 100% to go on to college”

Student discipline:

Kids too: “We have a code of conduct here. If they act up, they’re suspended. They come back with a better attitude.”

 

All problems can be traced to the feedbacks

At least that’s my theory.

Problems in feedbacks in human behavior can also be called incentive distortions.  What looks to many people like a “free market” failure, is usually an incentive feedback loop that has been distorted by government intervention.

Sowell hits on this in his column today:

Obama says he wants “federal housing agencies” to “help more people refinance their mortgages.” What does that amount to in practice, except having the taxpayers be forced to bail out people who bought homes they could not afford?

No doubt that is good politics, but it is lousy economics. When people pay the price of their own mistakes, that is when there is the greatest pressure to correct those mistakes. But when taxpayers who had nothing to do with those mistakes are forced to pay the costs, that is when those and other mistakes can continue to flourish — and to mess up the economy.

People paying the price of their own mistakes is an important feedback loop in a free market. It encourages more prudent decision-making in the future.

Pushing the cost of those mistakes to taxpayers who had nothing to do with those mistakes, distorts that feedback and loop, and causes mistakes to “continue to flourish.”

Why private is better that public

This post by Don Boudreaux on Cafe Hayek reminded me of the insight that made me realize that private markets are more effective than public (government or politically-driven) markets.  It’s a two-parter.

Part I:  You first have to realize that most plans fail.

Part II: Feedbacks in private market clean out the failures, reward successes and encourage learning from failure.  In the public markets, feedbacks are not as strong to clean out failures while other feedbacks reward failure and there is little incentive to learn from failure.

Do you have any compelling arguments against that?  I haven’t heard any.

The arguments I’ve heard are “some government programs succeed” (which does not counter the insight, since it only says that successes are less likely, not impossible) or “the private market won’t invest in some things, that’s why it’s the government needs to do it” (that should be telling) or “voting works better than the private market, that’s why we vote (yet we all pretty much have the shoes we want, but at least half of us generally don’t have the politicians that we want).”

More about Part I:

Continue reading

George Will on Education

Please read this excellent column by George Will, Betting (Again) On an Education Fix.  Here’s the lead-off:

Doubling down on dubious bets is characteristic of compulsive gamblers and federal education policy. The nation was essentially without such policy for grades K through 12, and better off for that, until 1965. In that year of liberals living exuberantly, they produced the Elementary and Secondary Education Act. Now yet another president has announced yet another plan to fix education. His aspiration has a discouraging pedigree.

n 1983, three years after Jimmy Carter paid his debt to teachers’ unions by creating the Education Department, a national commission declared America “a nation at risk”: “If an unfriendly power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war.” So in 1984, Ronald Reagan decreed improvements.

They did not materialize, so in 1994 Congress decreed that by 2000 the high school graduation rate would be “at least” 90 percent and students would be “first in the world in mathematics and science achievement.” Even inflated by “social promotions,” the graduation rate in 2000 was about 75 percent (it peaked at 77.1 in 1969), and among 38 nations surveyed, Americans ranked 19th in mathematics, just below Latvians, and 18th in science, just below Bulgarians.

So, eschewing “the soft bigotry of low expectations,” in 2001 President George W. Bush undertook the loopy idealism of preposterous expectations. No Child Left Behind decreed that by 2014 there will be universal — yes, 100 percent — “proficiency” in reading and math. That will happen if enough states do what many have done — define proficiency down. NCLB gives states an incentive to report chimerical progress, so, unsurprisingly, state tests almost always indicate much more progress than does the National Assessment of Educational Progress, the federal test.

Thank you George for a very nice summary of the history of increasing Federal government meddling in education.

The standards set by these administrations sound good and legitimate.  Better education.  Who’d be against that?  In fact, that’s the exact conversation blocking tactic often used to prevent an honest discussion of the merits of such policy goals.

Voice any amount of criticism against the government’s goals and supporters reflexively bristle and ask, “So, you’re against education?”  From there, they will not listen to a word you say.  In their mind, you are evil and hate kids.

If they would listen, I would love to tell them:

I want the same results as you – high quality education.  That’s why I am for something that actually works.

I am for an education system that is ever bit as good as any number of other systems that produce phenomenal, life-improving results through the free interactions of individuals.

I am for taking an honest look at the things we’ve done and assessing whether those have produced the intended goals or have moved us further from those goals.

With a short discussion about feedback theory, I can explain to you the mechanics of why centralized, government-controlled education produces such substandard results, if you’re interested.

If you’re not interest, then I would conclude that it is you that is against education.

Feedback Thomas Sowell Style

Thomas Sowell explores a similar thread as Walter Williams yesterday, in his column The Fallacy of “Fairness”: Part III.  Key lines:

Tests and other criteria which convey the realities of their existing capabilities, compared to that of others, can have what is called a “disparate impact,” and are condemned not only in editorial offices but also in courts of law.

But criteria exist precisely to have a disparate impact on those who do not have what these criteria exist to measure. Track meets discriminate against those who are slow afoot. Tests in school discriminate against students who did not study.

Disregarding criteria in the interest of “fairness”– in the sense of outcomes independent of inputs– adds to the handicaps of those who already have other handicaps, by lying to them about the reasons for their situation and the things they need to do to make their situation better.

I’ll repeat that last part, ” adds to the handicaps of those who already have other handicaps, by lying to them about the reasons for their situation and the things they need to do to make their situation better.”

That reminds me of something written by two well respected business leaders – Jack Welch formerly of GE and Howard Schulz, founder of Starbucks.  Both wrote about their thoughts on removing people from jobs that they weren’t very good at it.  Of course, they did this for business reasons, to improve the business.

But, both made an excellent point.  They felt keeping and under performer in a position was more disrespectful to the person than trying to shield them from the truth and may eventually lead to a much colder, harder lesson for those people.

A great example of this are the awful singers who audition for American Idol and are devastated when they hear the judges  tell them the truth.  It should not get to the point where someone who doesn’t remotely have singing talent make it in front of the American Idol judges.

Honest and accurate feedback was either never given to these people or never received.

Sensitivity

I listened to some sports talk radio while stuck in a traffic jam this evening.  The topic of discussion was the University of Kansas head football coach Mark Mangino and the complaints from his players about some comments he made.

Disclosure: I have no clue how Mangino treats his players.  I don’t care much.  He might have said some really bad things.  I don’t know.  But, the quotes I’ve heard so far don’t warrant the attention this is getting.

The show hosts were up-in-arms as they repeated the quotes on the air.  One rule of thumb I have is that if the quotes are repeatable under FCC rules, then it might not be terribly offensive.

Two callers in a row agreed with me.  The callers’ advice to the college football players – toughen up and get over it.  The show hosts thought the callers were way off base.  I tend to agree with the callers.   I strive to treat others with respect.  I think it’s a worthwhile goal.  I don’t see the upside to meanness.

However, I’ve also had a lot of rotten things said to me in my life.  My Mom taught me a very valuable lesson.  Sticks and stones.

The toughest part is that many times, buried in those rotten things was some truth.  That’s when it hurts the most, especially if you are not prepared to hear the truth.  But, I needed to hear it.  I benefited from listening.

The point the callers were trying to make is that with all of the attention given to the sensitivity of how someone says something, we forget that what they are saying might be right.   And sometimes, missing that truth in the message can be costly.