I had lunch yesterday with several teachers. We discussed economics. It did not go well.
Dear Mr. Paz,
I was taken aback by our conversation yesterday. Not by the fact that we disagreed, but because you abruptly ended the discussion with the argument that “Neither of us is going to change the other’s mind.” Quite frankly, I find that “blind allegiance” to whatever dogma one espouses to be rather silly. Either it’s true, or it’s not. And if one (or both) of us embraces ignorance and error – and sticks with it – well, that type of misinformation is nothing less than damning. For how can one progress under the delusion of error and misinformation?
I’m taking the time to address this issue again because I like you. I also find your ideology to be rather dangerous – particularly as it applies to macroeconomics – inasmuch as the forced “redistribution of wealth” (by other than market forces) always leads to penury, misery or death. Every government system founded upon this misguided economic principle invariably experiences tyranny and/or ruin simply because it defies human nature.
Case in point:
You may one day choose to pay each of your children a “living wage” (allowance) for chores done that may sustain them under their own roof, with their own chef, chauffer, etc. (What “wage” would that be? $10? $20? $100 per hour?) However, I think you would go bankrupt in short order, or your children would find themselves unemployed. Either that or, perhaps, in return for your patronage and obligation to support them, you would compel them to work, but you wouldn’t pay them.
That is precisely the danger inherent in (what I called) your “utopian” vision of economics, where everyone receives a “living wage” and a “guaranteed” job, regardless of the value of their services rendered.
There are no “sacred cows” here. If older, more experienced, more talented (and expensive) teachers can be replaced by younger, less experienced, less talented (and cheaper) teachers – or no teachers at all! – then they should be!
You don’t drive a Rolls-Royce, do you? Why not? Shouldn’t your family ride in (what has historically been considered to be) the “best” car?
Rolls-Royce has been around for 105 years. (Almost as long as public schools!) With so much experience and capital invested, shouldn’t Rolls-Royce deserve your business now? In fact, shouldn’t you be forced to buy a Rolls-Royce, regardless of how expensive it is?
Otherwise, Rolls-Royce might go out of business! And all those wonderful people building Rolls-Royces might be thrown out of work. They’d lose their homes, together with their livelihoods! Think of the children!
As much as you care about the children, I’m sure, you won’t be buying a Rolls-Royce any time soon. Why? Because so many “better” alternatives exist for you.
Forcing you to buy a Rolls-Royce (and no “cheaper” option) compels you to reallocate resources that might have been used for other purchases (clothes, food, housing, entertainment). Oh, sure, you’d have an expensive car. But you’d be poorer for it! And because you weren’t buying those other things, other people wouldn’t have jobs making them. And everybody would be poorer and less employed.
You could simply not buy a Rolls-Royce. But then how would you get around?
In the same way, minimum wage laws (tenure, unions, etc.), requiring employers to pay “above-market” wages to those who lack “marketable” skills, force employers to misallocate resources. Rather than do so, employers simply refuse to hire under-skilled workers.
How, then, are individuals to gain experience (and skills) if they cannot get a job? How are they to (eventually) support themselves?
Minimum wage laws effectively lock out millions of unskilled (and under-skilled) laborers from the working pool, making them certainly poorer and dependent upon others for their support. This support requires taxing the wealth or labor of others, making them poorer. Hence, everyone is made poorer by “minimum wage” laws.
A “free market”, conversely, inspires innovation and better allocation of resources. If we over-pay one person for a job – because “it’s their livelihood” or because “they’re tenured” or because “they belong to a union” or because “they deserve a living wage” – then we must under-pay (or not pay at all!) others who, perhaps, could do the same job (or another job) more efficiently. What about them? Do you not care about others who are under-paid (or unemployed) because someone else is being over-paid, contrary to market forces?
Communist / socialist / Marxist economies are wonderful at putting people to work, “giving” them jobs. (I recall seeing hundreds of Chinese digging a canal by hand, doing the work of one mechanized earth-mover.) Frequently those types of authoritarian, top-down, market-controlling governments shift from “giving” people jobs to “forcing” them to work, even directing which job each person will do. (“It’s all for the greater good! Don’t be selfish!” they say.) And, invariably, those economies are stifled. The people suffer.
What would just be a ludicrous misallocation of funds were you to over-pay your kids for doing menial, perhaps even unnecessary, chores becomes a disaster on a municipal or national scale. At some point it becomes theft and, taken too far, tyranny.
Before our discussion was cut short, you argued that, historically, people generally worked at the same job, in the same line of work, for their entire lives and that this is no longer the case. Ruthless “capitalism”, you suggested, is to blame for this cruel “instability”. Unions, minimum wage laws, tenure and other employment protections are all necessary to keep people (like us!) from being savagely unemployed by “market forces”.
However, “capitalism”, “instability” and “market forces” are the very things that have spurred the present innovation, progress, and wealth creation we now enjoy! Because of innovation, people are no longer required to work at the same job all their lives. Without the ability to hire and fire or pay “true value” as needed, people in factories would still be making buggy whips – even though buggy whips are no longer used.
When people don’t have to compete, innovate, or improve to keep their jobs, not surprisingly, they don’t! They work at a slower pace. They put less effort into it. They lose incentive. They even take on an air of “entitlement”. They begin to believe they “deserve” their jobs.
None of this is good.
In fact, only in places where unions, tenure and employment protections are in place is innovation stifled and cost excessive. Think government-run, “protected” operations like AmTrak, the postal service, DMV, and public schools. They’re all mired in inefficiency and ineffectiveness.
It’s never “comfortable” or “nice” to lose one’s job. Competition is fierce! But the struggle for survival is a necessary evil, both in our nature and in our economy. It “weeds out” inefficiency and lesser utility. It spurs innovation, health and improvement.
Tenure, union wages, employment protections – they’re all largely to blame for the current morass in which government schools find themselves. Millions of kids today receive equivalent – or better! – educations in private schools, home schools, even no schools! Teachers are ill advised to ignore these “market forces”. Technology is rendering the classroom superfluous. Children are now learning their “3 Rs”, together with history, science and the other subjects, by computer, without a teacher present.
Sure, someone needs to produce and provide all that software. But one person, or a relative few, can now replace the labors of millions.
Should we keep employing millions in the labor of education, at higher-than-market salaries, simply because teachers need jobs and few have other marketable skills? Do we need a million more buggy whips? Or millions of buggy whip makers?
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