Paul Krugman and other like-minded gentlemen keep trying to make a case for more aggressive redistribution of income, but they keep making the case for education reform.
In his most recent New York Times polemic, Professor Krugman argues that inequality creates a drag on our economic growth rate and that the policy necessary for overcoming this is — here you will not be surprised — raising taxes on the rich. He cites, with some caution, a recent survey of academic research on the question from Standard & Poor’s, along with research from the International Monetary Fund. John Cochrane of the University of Chicago, in the course of an obviously irritated dismembering of the S&P report, asks what seems to me the most important question: What is the mechanism by which inequality hinders economic growth? He argues that if you buy the conventional Keynesian diagnosis, that insufficient income at the bottom end of the income spectrum reduces aggregate demand, then you are intellectually obliged to take up the standard Keynesian solution, which is spending rather than tax increases. “If the reason that inequality is bad is that it is bad for growth,” he writes, “and if the reason it is bad for growth is that it leads to insufficient consumption and lack of demand, then that can easily be addressed in the same Keynesian framework with lots of stimulus spending. If you play the Keynesian game, it seems to me you have to play by the Keynesian rules.”
But that is not an argument for higher taxes on the wealthy — it is an argument for education reform. Conservatives have long argued that our current educational arrangements, organized around the interests of local political cartels that are in the main dominated by public-sector unions, reliably fail to serve the interests of the poor, even when they spend a great deal of money. As with public services ranging from police protection to trash removal, well-off people and well-off communities have the political clout to demand and secure reasonably good services from government, and poor people do not. Professor Krugman cites the food-stamp program as an example of how providing poor people with resources can lead to better long-run outcomes: The children of poor families who need food assistance and get it tend to do better in the long run than the children of poor families who need food assistance and are denied it, which seems plausible enough. What he ignores is that the basic mechanism of the food-stamp model is precisely what conservatives want to apply to the case of poor children in bad schools: What is a food stamp if not a voucher?
As Professor Cochrane points out, the New York Times’ Neil Irwin repeats the same argument: that poor educational performance is a drag on the economy. “But that’s not inequality lowering growth,” he writes, “that’s bad education causing both more inequality and lower growth.” Professor Krugman, hypnotized by the exercise of his own debilitating self-righteousness, never even considers whether educational reform should be part of his agenda, concluding with goofy histrionics: “Being nice to the wealthy and cruel to the poor is not, it turns out, the key to economic growth.”
The government schools are in fact a fairly good microcosm of the welfare state and welfare-state politics. We would all like better educational outcomes, but it takes a special kind of highly cultivated simple-mindedness to conclude that this means that the only way toward that goal is sending more resources into the same institutions that are squandering the resources with which they have been entrusted. We would all like better health outcomes, but that is hardly a brief for pouring more money into defective programs such as Medicaid. What Professor Krugman and others on the left consistently fail to account for is that redistribution in and of itself is insufficient: It matters a great deal what we get for our redistributive dollar. The food-stamp program, a straightforward subsidy that relies on a market system for the delivery of goods, may suffer from a good deal of waste and fraud, but it is fundamentally functional. The schools, which do not rely on a market system for the delivery of goods, are fundamentally dysfunctional for many or most poor communities.
If instead of food stamps, we had a system of government-run farms, ranches, distribution systems, warehouses, and grocery stores to support the nutritional needs of the poor, we would probably spend a great deal more on feeding them with worse results. But that is more or less the model we use for education. Who would denounce reformers as “market fundamentalists” for wanting to replace government farms and state grocery stores with food stamps? The resistance to making similar reforms with education is rooted in inertia, bias, and the narrow financial self-interest of public-sector workers and the politicians who depend upon them for money, campaign manpower, and votes.
We might consider the experience of those right-wing radicals in . . . the Netherlands. A century ago, the “schools to the parents” movement in the Netherlands led to the establishment of a system of education with many of the features that conservatives would like to see replicated in the United States. Government funds education on a per-capita basis, and families are free to send their children to public or private schools. It seems strange to the American sensibility, but the government of the Netherlands not only funds private schools but funds religious schools — Catholic, Protestant, Hindu, Jewish, Muslim. It also funds schools organized on the Montessori model and other models of education. The majority of Dutch students attend private schools that receive government support. The general verdict is that competition has been good for education, and that Dutch families value the choice they are given. Satisfaction with outcomes and consumer choice contribute to support for the system.
The issue is not only whether spending is high or low — but what you get for it.
A few radicals aside, there is a broad consensus across the American political spectrum in support of welfare programs for the poor and, implicitly, for the taxation necessary to support such programs. But that does not mean that programs we have are the best way of supporting the poor, nor that raising taxes on high earners to spend more money on defective programs is kindness, nor that reform is “cruel.” Professor Cochrane argues persuasively that Professor Krugman et al. do not really have faith in their own model: “Even if you accept the diagnosis, then you do not accept the conclusion that very high — and very distorting — taxes and transfers are the best remedy. Unless . . . you really don’t believe the mechanism, or the connection to growth, and this is all rhetoric in favor of taxation for other reasons. It is interesting how the diagnoses seem to follow the prescription, and redistributive taxation is a perennial answer in search of a question.”
The question is whether redistribution is a means or an end. Economic realities are what they are, and programs for the poor are unlikely to be funded by taxes on the poor. Such redistribution as is necessary to fund productive, transparent, competitive, and effective programs is much less painful than is redistribution for programs that function poorly. That is not the case if you take Professor Krugman’s view of the world, or the view of those arguing for such daft policies as a “maximum wage.” In that case, redistribution is an end in and of itself — not an economic policy but a moral crusade.
Reforming education should be understood as both good economic policy and a moral necessity. If Professor Krugman really wants to help poor families provide their children with better educations, and maybe help us toward a more robust and dynamic economy along the way, conservatives are waiting to help. We’ve been waiting for years.
— Kevin D. Williamson is a roving correspondent for National Review and the author of The End Is Near and It’s Going to Be Awesome.