While we have seen Education alone isn’t the path to “More”(It’s an Elephant 1/25/16), it is a very important building block. Our present Educational system suffers from the twin blemishes of being ineffective while being ridiculously expensive. At the K12 level the whole format is hopelessly out of date. In this wonderful interconnected world somehow we are using a basically 19th century Prussian teaching model adapted at that time in the U.S. by Horace Mann. While a rigid system of lecture, drill and exams working your way up yearly grades may have worked centuries ago, it is evident we could so much better adapting to modern educational opportunities. For instance look at the worldwide success of the online Khan Academy. Kids learn online, combine the online and classroom or the home. Seemingly endless learning variations, but isn’t that the point. Each child learns differently, but all have a natural curiosity. With the ability to customize the learning experience to the needs of each child to a degree never even contemplated in the nineteenth century, why are we stuck with this antique system?
Custom and an enormous political constituency for the present system are the major impediments. Each little step towards reform and modernization is met with all out trench warfare. Charter Schools in Harlem or vouchers in Washington DC are attacked with almost religious fervor, even though their worth is obvious to any unbiased observer. We can’t possibly achieve 21st century learning with two small steps forward and one step back. We’re losing large chunks of our of children to a lifetime of failure. It isn’t just a poor or racial thing, we’re under performing across the board. When a business sees an under performing asset, they don’t keep putting more money in a failing situation so why do we? When the government realizes that an area it controls has run into a blind alley it has turned to deregulation. Unable to deal effectively with the airline industry, it was deregulated under the Carter Administration. (Yes that Jimmy Carter) Flying before this action was incredibly expensive. In fact, the vast majority of Americans had never even taken any kind of flight. In the the following half century the cost of flying in constant dollars has fallen in half. That’s right 50%. As a result it is hard to find anyone who hasn’t taken flight. Letting the market work it’s magic here was a great overall success, so why not deregulate education?
How could this be accomplished? For K12, simply state and local governments set either the value of a voucher, refundable tax credit or a combination of the two for every school age child. The child goes to any school (including home school) the parents or guardians choose. It’s that simple. We know people will say that’s crazy. How are they to know if the school is any good? How do we know anything these days, we go on the internet and find out. Restaurants, Yelp. Hotels, TripAdvisor and on down the line. Even better kids can go on the internet and see what attracts them. Our children want to learn. They seek knowledge and answers naturally. They can tell us how they want to achieve their ends by where they gravitate. Won’t that result in a terrible mishmash of schools? We prefer the term diversity. That would in fact be one of the great positives of deregulation. Rather than the one size fits all (or at best 1 1/2 sizes) education that produces an amazing degree of uniformity across the land, people would be coming at problems from different perspectives and increased openness. Better it would make it unlikely that important information wouldn’t be known by the bulk of the population. One of the great benefits of education is that we don’t have keep relearning and rediscovering basic information. That is exactly what happens in this unvarying educational system and its can be costly and dangerous.
One only has to look at today’s current news to find how true this is. Exit interviews at the recent Michigan Primary showed the over riding importance international trade was to voters for the two winners, Trump the Republican and Sanders the Democrat. They didn’t like it. To them it costs America jobs. Both winners are solidly against our present trade treaties such as NAFTA and along with Hilliary Clinton staunchly oppose the proposed Transpacific Partnership to increase our trade with friendly Pacific Rim Countries. As we have seen in this series trade is one of the two things (innovation being the other) that actually produces “More” for the mass of humanity so how can this be? People who have lost or fear losing their jobs in a rapidly changing interdependent world are angry and resentful. The lack of a good varied educational system has impacted these people in two ways, an almost universal lack of knowledge of the part trade has and will continue to have in expanding mankind’s access to “More” and the increasing inability of the under or improperly educated to adapt to a changing world.
The Soviet Union was and Cuba is economically organized as Marxist States. In such states the Communist party elites dictate economic decisions across the board. Bernie Sanders is a Marxist so he falls in this camp. On the other hand the United States economic system is Capitalist. In 1776, the same year of our Declaration of Independence Adam Smith published the Wealth of Nations, the book that laid out our basic understanding of how we use markets to organize ourselves economically as a capitalist society. Smith argued that breaking down trade barriers increased the the Wealth of Nations. The Trump adherents would do well read or reread chapter 2 the full title of which is “Of Restraints upon the Importation from Foreign Countries of such Goods as can be Produced at Home”. It is here that the famous Smith “invisible hand” appears to support his argument for open trade. The idea of of trading partners all being enriched by trade was further developed in 1817 by David Ricardo’s “Theory of Comparative Advantage “which simply by doing what it does better and trading it for things somebody else does better, both are enriched.” Open trade leads to “More”. These two men laid out basic principles how our economy functions.
Donald Trump wants to bring back the old and discredited Mercantile System dominant from the 16th to 18th century that Smith and Ricardo refuted, he is certainly free to do so as long as he is honest about it and is willing to defend it. But why are we are re litigating an argument that had long been resolved in Smith and Ricardo’s favor? Why do we have to relearn our own economic system? The short answer is our one size fits all educational system doesn’t get around to teaching it. This leads to grave errors that have contributed to severe downturns, such as the Smoot–Hawley Tariff during the great depression and Nixon’s lesser known 10% across the board Tax that contributed mightily to the ’70s inflation that terminated in the severe ’80 recession. Beggar-thy-Neighbor never ends well. Yet Trump wins big in South Carolina saying he’ll bring back lost jobs. Nikki Haley, the states successful governor, tried to point out with little or no media help, the state actually is highly dependent on exports. Trump promises that autos will be made in the U.S. He apparently is unaware that South Carolina not only manufactures autos but exports them along with tires, machinery, aircraft, rubber, plastic, electrical machinery, optics, paper, paperboard, organic chemicals and wood pulp worth tens of billions of dollars made by 100s of thousands of South Carolinians. Would you really jeopardize all these jobs in a trade war to try to bring back old textile jobs where we haven’t any comparative advantage? We keep other nations goods out of the U.S. and they retaliate and keep our goods out their countries. How does this benefit us? Instead of “More” we would actually have “Less”. Don’t we realize that 95% of our potential customers live outside our borders? Yet these questions rarely if ever are asked of the candidates. Putting it another way we don’t even know what we know.
But Trump and even Ohio Governor John Kasich say others don’t play fair using nefarious means to send us more goods than than they get from us. Some say they’re all for free trade but they don’t play fare so we have to retaliate. Nobel Laureate Milton Friedman answered this argument in 1978 informing us “the economic gain to Americans from foreign trade is what we import from countries like China, Japan and Mexico and 2) what we export is the cost of getting those imports. And the proper objective for a nation as Adam Smith put it, is to arrange things, so we get as large a volume of imports as possible from China, Japan and Mexico, for as small a volume of our exports as possible.” We don’t have the room here reprint the Friedmans'(Milton and his wife Rose) stirring 1997 defense of free trade but you can access it at http://www.freerepublic.com/focus/f-news/1154295/posts. The important point is that we have never found anyone who could refute their logic. If there is anyone out there that can, we would love to hear from you but we won’t hold our breath.
It isn’t just that Trump is ignorant of of our economic system, it’s that the media and other politicians aren’t even aware of the winning arguments against his policies. Just look at the questions he gets in interviews and the debates. Surely a more diverse educational system would produce more diverse thought. One where a least some people that know what we’re about. Then maybe the world’s greatest capitalist country wouldn’t be faced the possible presidential choice between a Marxist and a Mercantilist.
If our schools under the present educator class can’t even produce enough diversity of thought among from politicians, media and the populous to support a proper debate about our basic economic principles, how can it ever show the diversity and flexibility to cope with a future where change is coming at an ever increasing speed. The right answer for those who want more manufacturing jobs is to find our “comparative advantage”. For instance, one place we have been increasing manufacturing jobs is in chemicals. Plentiful cheap natural gas for feed stock gives us a great advantage, but chemical plants are highly automated requiring skilled people. Cheap stable energy prices added to our large home market, a better tax policy bringing home the capital to build,and reformed regulations making just as easy to do business as in our competitors could add to our nation’s comparative advantage. Of course none of this would work without trade agreements in place allowing the manufacturers to reach the 0ther 95% of consumers in the world. However, manufacturing will only be more automated with robots, 3D printers and newer methods we don’t even know yet. These jobs of the future will need a workforce that is educated and able to continue a lifetime of learning to be able to take advantage of change. Even now it is highly unlikely a person entering the workforce today will have the same job 5 or ten years down the road. This will only accelerate. How can we expect the needed diverse flexible workforce of the future to be produced by a rigid 19th century system. If we want a “comparative advantage” in our people we must innovate in how we learn and think and that can only happen by deregulation and we need to start right now.