Arnold Kling  

On National Education Policy

Ed Pinto on Mortgages... Geraldo Rivera as Coase...

George Leef writes,

The first point to observe is that "our" college graduation rate is just a statistical artifact, like "our" home ownership rate and "our" voting rate. To people imbued with a central planning mindset, such statistics betoken national success or failure. In fact, the nation isn't doing anything. Millions of individuals are deciding whether or not to go to college and complete the course of study. Students and parents make those decisions with good (but not necessarily perfect) knowledge of the student's capabilities, the costs of college, and the prospective benefits of doing so.

In other words, "lose the we."

Imagine what would happen if education policy were decentralized. In order to have influence, a self-styled education expert would have to convince families that the expert has helpful ideas about how their children ought to be educated. And in order for unprofitable education programs to receive funding, a self-styled charitable giving expert would have to convince donors to support those programs. Instead, what we have is a political process. To get your preferred education policy adopted, you ignore individual families and donors and instead go straight to Congress. If the results are clumsy and wasteful, so be it. "We" must have these policies, just as "we" must have government-guaranteed mortgages. Any other point of view is beyond the pale.

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COMMENTS (14 to date)
Noah Yetter writes:

Isn't it so obviously true when articulated this way? Aggregates aren't things they're just numbers that describe things. And yet we threat them as if they had primacy.

Applying this insight a bit orthogonally, "aggregate demand" is NEVER the correct explanation, or even relevant, in macro because "aggregate demand" does not exist.

Peter Lentz writes:

My favorite line from Mr. Leef's post:

"We can't magically transform our anemic economy into a powerhouse by scraping the bottom of the barrel to find more disengaged kids to process through our credential factories."

Ted writes:

This argument is pretty dumb. That quote is just pedantic dribble about semantics that means nothing. I notice in his article he didn't analyze anything about Obama's policies or even his actual intentions behind the policy, I don't think any of Obama's policies for increasing college graduation rate is going to work much - but if you listen to him carefully what he is saying is that he feels that there is inadequate opportunity for those to go to college. He believes that everyone who wants to go to college should be able to, not so much that increasing college graduation in and of itself is a good thing. He wants to create an environment where people who want to go can and those students who are cognitively able to go to college would be able to go (perhaps they are prevented due to bad inter-city schools not teaching them anything, so colleges won't admit them, whereas in a different educational environment they would have gone to college). You can obviously make it look like Obama thinks about anything by snipping quotes of his out of random speeches. And George Leef did just that sort of hack job in his piece. I personally think you'd need much more radical reform to accomplish this goal (e.g. some type of voucher scheme) but Obama's intentions here are perfectly fine.

Also, he doesn't seem to know the definition of "statistical artifact."


Macro is the study of aggregates ... try doing macro without using aggregates. You won't get very far. It's pretty much impossible to talk about general equilibrium effects without talking about aggregates.

Shawn Smith writes:


The whole article was an analysis of Obama's intentions of increasing college graduation rates. Leef mentioned how some college graduates must work at "high school" level jobs and how this leads to the question of why we need more college graduates. He also mentioned how college graduation rates don't necessarily correlate with economic growth or living standards. Both of these points go to Obama's intentions of increasing college graduation rates.

Increasing college graduation rates will not make the world a better place in and of itself. Just like increasing home ownership rates did not make a better housing market...if you try to force individuals to do something that they don't want to or can't do, then you end up in the sort of economic mess we are in now. Government intervention only leads to distortion in markets which eventually leads to bubbles and busts.

Hyena writes:

First you must recognize that "fish" are just a chemical artifact, just like "trees" or "rocks". In fact, there are no such things. Billions of atoms are "deciding" whether or not to share electrons and form molecules. Atoms make these "decisions" based on their individual properties, the energy required to form the bonds, and they persist if the arrangement is more stable.

In any case, with only slightly reduced snark, I'd point out that this is an adequate case against parents, those horrifying tyrants.

Norman Maynard writes:

I agree that we need to distinguish between aggregates and individuals, but to say the aggregate doesn't matter is plainly ridiculous. Macroeconomists study aggregates (which are assembled from individual decisions) precisely because there are aggregated effects that heavily influence individual decisions.

This is no different than a microeconomist who studies common value auctions. The mass of individual signals, thoughts, and valuations creates the aggregate value of a good, and because of the nature of the good / system, that aggregate value is precisely the only one that *does* exist.

I think a reasonable case can be made that, if education is primarily a skill-signaling mechanism, then ones position in the aggregate ranking is what really matters, and it makes sense to think in aggregates about something where the aggregate is what matters. This doesn't necessarily support the current administrations particular ideas, but to dream of education being decentralized is as peculiar as dreaming of the Keynesian beauty contest being decentralized: centralization is the thing itself.

MernaMoose writes:

In similar fashion, we must recognize that there is no such thing as a "Hyena", because in fact this "aggregate term" consists of five distinctly individual letters. These letters decide to arrange themselves in this particular pattern based on....oh never mind, that just gets way too complicated.

No reduction in snark level is required to realize that Hyena is right. Sometimes libertarians make themselves as wrong as their opponents, they just do it in a whole new, unique way.

Liberals, I defy thee to claim a monopoly on stupidity! Ha!

None of which changes the facts that:

1) universities have a serious cost inflation problem going on, which is almost certainly driven by government involvement

2) most people are probably better off, on average, with college education than without it -- until colleges price themselves into the stratosphere and we can all return to the European Middle Ages

3) the problem is that "we" can't bring ourselves to keep the government out of education for a long list of reasons (not all of them invalid), but the government really has very limited clues as to what education is needed, where or by whom

4) politicians in D.C. know substantially less about this problem than anyone else in the country, but they're the ones who get to make many of the biggest decisions

Example: for decades I've heard the cry "we need more degrees in science and engineering, especially advanced degrees!" coming from both industry and academia.

As an engineer with a PhD, what I've never understood is the "why" behind it. If corporations are crying that they can't find the tech people they want to hire, pay close attention -- it's very much a flavor of the week phenomenon. They want a particular type of computer engineer this week, with some particular set of experiences. Two months from now -- far less than the length of time it would take one to acquire the skill set they just claimed is in hot demand -- they'll be wanting something else, some particular kind of electrical engineer with some other experience set.

So sorry that you can't grow highly specific technical expertise at the drop of a hat.

I've never been without work in my whole career. I've even seen times where I had more than one job option in hand. But by and large, I've rarely had companies knocking my door down to hire me. The demand just isn't that great. You can find work but you usually have to work at it.

So my question is, if we could graduate a big new wave of science and engineering PhDs tomorrow, what the hell would we do with them? There just aren't big bunches of unfilled jobs for them laying around.

Curious aside: once I gave up on the idea of being "just" a technical person (which is still my personal preference but the job market doesn't especially reward it), and developed some project lead/management and marketing skills, I found that the general demand (and pay scale) for my resume went up several notches.

Reality on the ground: to a substantial extent and for many years now, US industry has been able to assume that the base technical skill sets that are necessary, would be available for hire when the need arose (flavor of the week shortages aside).

The real demand is for technical people who can lead, manage, and market a technical project. But I learned nothing about this in school, I learned it on the job in the "real" world.

Doc Merlin writes:

Well said.

Doc Merlin writes:

@Ted, Norman Maynard

Aggregates only matter when we don't target them. Once you target an aggregate it loses the information it once had.

Home ownership is a good example of this. When we are not using policy to influence home ownership, the homeownership rate is a good indicator of quite a few sociological and economic factors. Once we begin to try to tweak it for its own sake, it loses that information and we just have a housing "bubble."

Charles Goodhart expressed this really well:

"Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes" - Goodhart, C.A.E. (1975). "Monetary Relationships: A View from Threadneedle Street". Papers in Monetary Economics (Reserve Bank of Australia) I

In short: Macro makes sense as an academic study and for measurement of various things, but it shouldn't ever be used directly for policy. When macroeconomics is used directly for policy it will inevitably fail.

Noah Yetter writes:

What's the difference between a fish and a macro variable? A fish acts. Oh, not in the same deliberate and rational way as a human being, no doubt, but I hope you can see the parallel. Its constituent systems, cells, molecules, and atoms do not act. The point is that only individuals act. Macro variables are emergent consequences of billions of choices. They cannot be controlled, only influenced. They are not the cause of anything.

Noah Yetter writes:

Also, macroeconomics is absolutely not the study of macro variables, but the study of macro phenomena. The map is not the territory.

Alejandro writes:

Noah says "Macro variables are emergent consequences of billions of choices. They cannot be controlled, only influenced. They are not the cause of anything." Also: " ..."aggregate demand" is NEVER the correct explanation, or even relevant, in macro because "aggregate demand" does not exist."

Temperature is a macro variable in physics, the emergent consequence of billions af random molecular motions. This doesn't mean it cannot be controlled. There are laws relating the temperature to other macro variables, and we can both change other variables in order to control the temperature of a system, and change its temperature in order to cause changes in other variables (e.g. electric conductivity). And saying that the electric conductivity of something changed because its temperature changed is a perfectly correct explanation at the macro level.

Of course matters are more complicated in social systems, and it may be that macroeconomic variables cannot be controlled and used as causal forces in such simple ways, but you cannot establish this with pure a priori definitional reasoning.

Brian Clendinen writes:


Its intresting business week about five or six years ago had a artical about engeering jobs that said almost the same thing.

Norman Maynard writes:


"The map is not the territory."

Very well said.

@Doc Merlin

The Lucas critique applies to reduced form models, but not structural models. Now I'll grant you that most modern structural models are unhelpful for other reasons, but to say that aggregation makes these models useless is to misuse Goodhart, Lucas, and others.

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