Monday, August 27, 2012

Cronyism and the Educational Establishment

Luigi Zingales is Professor of Entrepreneurship and Finance at Chicago Booth School of Business, and a faculty research fellow at the National Bureau of Economic Research.  I just finished his book, "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity." It's written from the perspective of of an adult Italian immigrant who remembers well the cronyism, corruption and limited opportunity in his native Italy.  America offers him limitless vistas of opportunity, as he earns his Ph.D. in economics from MIT and goes on to begin a career as a teacher, academic researcher, and author.  It is a good read. 

Professor Zingales talks about "regulatory capture," which has been evident recently in the battle between the SEC and global Wall Street banks over regulating money market mutual funds.  Corporate lobbyists have been pleading to sustain inefficient domestic sugar manufacturing and favoring the ethanol industry, which has been an economic and environmental albatross.  Examples abound in the book.

When the educational sector is discussed in the media, the word "lobbying" is always replaced by "activism," or "advocacy."  Their regulatory capture is nothing different or nobler: it is just lobbying.  As Zingales writes,

"...the most destructive cronyism that uses lobbying to extract money from the American people in exchange for a product that doesn't meet their needs is the public school system.

In the 2007-2008 election cycle, the National Education Association, the union representing public school teachers was the biggest lobbyist in America spending $56 million. the teachers union defends the status quo in education, it is killing the American dream for much of the population. 

...the U.S. spends more per capita than almost every other country, with little to show for it.  Between 1980-2005, public spending per U.S. student increased 75% in real terms, with little or no impact on performance." 
Some of the causes identified by researchers include inefficient teaching methods, and technology is the next large topic identified as something which can increase both efficiency and student performance. 

I think that it's a lot more complicated than giving every student an iPad.  Meaningful competition would be the best medicine to improve the public schools.

No comments: