“Vested interests are universal”

Every once in a while, we experience moments of clarity. I experienced one while listening to this EconTalk podcast.

In it, Terry Moe discusses the special case where the power of vested interests in the New Orleans school district was wiped out after Hurricane Katrina and the effects that had on the re-emergence of the public school system there. It was a very interesting episode and well worth a listen.

The moment of clarity is here, with Moe speaking:

Let me just take a step back and say: Vested interests are universal. Every institution in every policy area generates vested interests. And these are interests of people who get the services of those institutions but also who get the jobs that those institutions generate or the business contracts that those institutions generate. And, this is true in agriculture; it’s true in defense; it’s true in the environment–you name it. And it’s not just true in this country: it’s true in every country; and it’s been true throughout time. This is a universal thing. All institutions generate vested interests, and those vested interests have a stake in protecting their institutions from change because those institutions are the source of their benefits. And in many cases, those benefits, like jobs and profits, have absolutely nothing to do with whether the institutions are performing well.

And so these vested interests, which have a stake in investing in political power, will use their political power in order to stop reforms even when the institutions are performing very badly. And that is the problem that all societies face, and that our society faces, in trying to have a healthy democracy in which our institutions actually work. When we have institutions that are failing, the vested interests will still protect them and make it virtually impossible for us to reform them.

This is true in state, federal and local government, U.S. Soccer, business, non-profits, school districts, universities, unions, tenure and so on.

All these things can be good.

But, a question rarely asked is what happens when they aren’t performing well?

What brings about change that might improve performance?

Do those changes threaten vested interests benefiting from the current system?

In my opinion, competition is a more preferable option to limiting the power of vested interests than natural disasters. It acts is the same manner on vested interests without all the collateral death and destruction.


Wisdom and telling the truth

From a Harvard Business Review Ideacast (podcast) with Maya Angelou

[Interviewer]: Both your mother and your grandmother were businesswomen.


[Interviewer]: What did they teach you about good management?

MAYA ANGELOU: Well, that’s it’s wise to be fair. It’s unwise to be a cheat. And both of them were really [INAUDIBLE] fair. And, of course, by teaching that, they also taught me, or I learned from them, not to lie. And that doesn’t mean tell the truth and tell everything you know. You’re never supposed to do that. But just make sure that what you do say is the truth.

I know there are people who say, I’m brutality frank. Well, one doesn’t have to be brutal about anything. One can tell the truth and tell it in such a way that the listener hears it and really welcomes it. So I learned that from both of them.


Signals v Causes: High School Graduate

I often hear folks say that people with a high school diploma today cannot expect to do as well as folks did with high school diplomas in previous generations.

One cause offered to explain this is less opportunity because good manufacturing jobs have gone to machines and foreign competition.

More likely, K-12 education hasn’t evolved to teach students skills that are valued in today’s economy. I got this idea from Jeffrey Sachs, this week’s guest on EconTalk. I didn’t agree with everything Sachs had to say, but I did agree with this and recommend listening to the podcast.

Also, maybe education has evolved away from teaching such skills as curriculum designers have included things thought to enrich and broaden the students lives, but really just serve the personal preferences of those designers.

When I was truly on my own for the first time, I remember thinking how ill-equipped I was to determine something as practical as how much house I could afford, even though I did know what Keynesian multipliers were. Luckily, I educated myself by turning to personal finance magazine and books and asking friends and family. I wasn’t surprised later when it became clear with the housing crisis that many others also did not have this practical knowledge, either.

I was also annoyed that I learned in school how important it was for me to exercise my right to vote, but there was no mention about doing my homework on the issues and carefully considering who I voted for.

It is also more likely that a high school diploma, once viewed as a reliable indicator of demonstrated mastery in skills, knowledge and behaviors that were of some value to employers, is now viewed as a participation trophy — a mere bauble to add to the recipient’s trophy case — as standards have slipped and the purpose of a high school diploma have changed. 

I believe the purpose of the high school diploma was to reward the folks who tried. Somewhere along they way, however, that got too hard. We didn’t want to tell someone they didn’t deserve something because they didn’t put in the effort or meet the standard. Rather than expect them to rise up to the standard, we lowered it for them.

The Answers Are All Around Us

Today’s EconTalk podcast was Knowledge, Power and Unchecked and Unbalanced with guest Arnold Kling.  Like occasional EconTalk guest Mike Munger and the host Russ Roberts, Kling has a knack for discussing economic principles in common language and looking at real world examples to illustrate these principles in things that are so common that we generally take them for granted.

The entire podcast is worth a listen.  I found a few things especially blog worthy.

First, we often talk about bigger and smaller government.  Kling makes an interesting point (near 14:36 mark).  As we have grown government spending the number of governmental units, or decision-makers, has stayed the same.  We have one Congress, 50 states, 435 members of Congress, 100 Senators.  Yet, more is spent per capita than ever before and the number of people making the Continue reading

Dennis Miller Show Podcasts

Here are two quotes from the Dennis Miller show last week.  The first came in an interview with Michelle Malkin and it was in reference to Malkin’s new book title, Culture of Corruption: Obama and His Team of Tax Cheats, Crooks and Cronies.

While reading the title, after “Tax Cheats” Miller inserts this:

People say, ‘oh that’s such an incendiary title’.  Geithner DID NOT PAY TAXES.  We live in a time when you can point out an accuracy and be deemed to be incendiary.

I agree. I often find that the other side doesn’t mind being incendiary.  They often drop bombs not based on reason or fact and they want to be able to get away with that without a response.  When I start to respond, usually by simply asking them  the reasons or facts behind their statement, they shut down the conversation with something like,  “Oh, I don’t feel like talking about that,” “I just know,” or “that’s just how I feel and you aren’t going to change that.”

Miller also interviewed author Arthur C. Brooks, who made some excellent points.  Here are a couple of those.

In regards to Greece and the U.S.:

Here’s the great contrast [between Greece and the U.S.].  And the question is, what are their protesters protesting?  They’re burning down their own buildings because they want more lavish pensions, they retire at…what do they retire at, like age 21?   They want to have their salaries paid by their fellow Greeks in the worst recession in 50 years.

In the United States we have protesters too.  The tea party guys who are protesting against exactly what the Greeks are demanding.  That’s an example of what’s best about America as far as I’m concerned.

Miller then went on to say:

It amazes me, all the old hippies who warned you about The Man, the Jerry Browns, the Bill Ayers, now they’re perpetually on the government teat all the way to the death rattle.  It’s unbelievable.  Do they not see the irony that they have become an insipid version of the man they so decried in their fiery youth.  It’s unbelievable, isn’t it Arthur?

Brooks’ great response:

Actually, it’s kind of believable.  People who love liberty, love liberty all the way through.  But people who simply [protest] because somebody has power and they don’t, you know that pretty soon they’re going to be able to get their hands on the reins and things are going to be even worse than they were when they were protesting.

Great Tea Party Podcasts

Catching up with my Dennis Miller podcasts from the past week, I came across three exceptional podcasts:

Go to iTunes.

Search for The Dennis Miller Show.

Download and listen to these three podcasts:

Andrew Breitbart Interview – April 13, 2010

John Stossel Interview – April 15, 2010

Greg Gutfeld Interview – April 15, 2010

Greg Gutfeld and Miller were discussing comments made by Ted Koppel about media.  Koppel apparently longs for the days of three networks.  Apparently, he doesn’t like the competition from the cable and internet.  As Gutfeld puts it:

You know what he actually said.  He said the real problem here is competition.  He’s saying “in the good old days when the three networks didn’t have to try, when we could just do whatever we wanted because there was nothing else.  And now, all these cable stations came in and now we have to work for a living.

Continue reading

Are You a Rational Ignoramus?

More good stuff from this podcast on Public Choice with Don Boudreaux and Russ Roberts.

Are you rationally ignorant?  We all are in some sense:

Rational ignorance. First, the term sounds weird. Surely ignorance is always irrational. All it means is that knowledge is a scarce good. It’s not free. If it were free, each of us would be geniuses and fully informed of everything in the world. Huge amounts that we don’t know.

There is problem in some cases because that rational ignorance many people have about politics, government and political candidates effects us all.

If you vote like a moron, there’s no cost. You don’t even know if you are a moron. If enough people vote moronically, will get moronic candidates. The point is: at the time of voting, that act–and it’s the individual act of voting that we’re talking about–there is no consequence to anyone of voting A, B, or not voting at all. Therefore, people are quite unconstrained in being able to express whatever fantasies, romantic notions, anger that they feel.

Another underappreciated aspect of voting for candidates–understood by public choice scholars but underappreciated by the public–underappreciated because it’s called the people’s “choice”–we choose. By attaching the term “choose” or “choice” to candidates and the process of electing candidates we transfer to that choice process the same good feelings we have about choosing in a supermarket. Too much difference between those choices for the political process to have that good name.

Thomas Sowell addressed the same topic as the last paragraph in the three paragraphs I posted of his yesterday.

Some might respond to the “moron” paragraph, and say that if you make a bad choice in an election you’ll know and you’ll vote differently next time.  Maybe, maybe not.  Your bad choice may not directly impact you enough for you to notice.

There is not that individual feedback loop in the voting process. If you have a family of three kids and you buy a sports car, you are going to find out that that was a bad choice.

But in politics, you can keep buying the same flavor over and over again; it doesn’t achieve its goals; it impoverishes the people you think it’s helping, and you can be a proud supporter of that candidate forever. Even after they are dead. You can be oblivious, no incentive to look deeply into whether that was a wise choice. Part of your identity, your reputation, your self-esteem; very different process.