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Generation Gaps

by Robert VerBruggen

Disinherited: How Washington Is Betraying America’s Young, by Diana Furchtgott-Roth and Jared Meyer (Encounter, 152 pp., $23.99)

Hard-hit by the recession, floundering in the job market, and suffering under the weight of massive debt — of both the student and the government variety — today’s youth are having a rough time. In their new book, Manhattan Institute scholars Diana Furchtgott-Roth and Jared Meyer say that a small-government agenda is the way to change this.

Furchtgott-Roth and Meyer argue that in three major areas — entitlements, education, and jobs — current policy is failing the young. Their case is overstated at times, but on the whole it is compelling.

Most Americans have at least a vague sense of what has gone wrong with such programs as Social Security and Medicare: Baby Boomers are retiring, they’ve been promised substantial benefits to be provided at public expense, and there aren’t enough working-age people around to finance it all. The authors provide hard numbers to back up these notions. The federal government is $18 trillion in debt, more than $50,000 per capita. This is money that has already been spent, mainly on older Americans, and will need to be paid back, mainly by those who are today young or unborn. Even if a reform measure were passed immediately, it would need to permanently raise taxes 57 percent or cut spending 37 percent to cover the shortfall. The costs will only grow as Washington delays the inevitable.

The states aren’t doing much better, with $5 trillion in debt of their own. Their public-employee compensation systems in particular are a disaster, having promised retirees generous payouts and health-care benefits without saving enough money to cover the costs. States often paper over the problem with accounting tricks, such as expecting investment returns to be far higher than they could possibly be.

And our bold new entitlement, Obamacare, only compounds this bias against the young. It costs about five times as much to insure an older person as to insure a young person, but the law allows insurers to charge just three times the amount. Apparently it’s too much to ask that older Americans wait until they become eligible for Medicare before they start sending their children their medical bills.

As for K–12 education, by contrast, the young are definitely not being shortchanged when it comes to money: Spending is decidedly on the rise. Instead, the problem is that current policy just isn’t working.

Furchtgott-Roth and Meyer are a little alarmist when explaining the issue, highlighting statistics suggesting that American students lag far behind their peers in other countries and arguing that the difference is that those other countries have better education systems. In fact, American performance varies from measure to measure (e.g., American eighth-graders are above average on one math test, the TIMSS, scoring on par with Finland and England), and aggregate statistics mask severe disparities within the country (even on tests in which Americans in general score poorly, whites and Asians are much more competitive). It’s difficult to compare a country that has our demographics and racial history with homogeneous European and Asian states, and it’s not the case that any difference in performance can simply be blamed on educators.

But the problem is real. There are a lot of horrible schools in this country, typically serving the most vulnerable populations, and there’s good evidence that various measures — charter schools, hiring and promoting high-quality teachers while firing bad ones, etc. — could improve the situation. Too often, policymakers value the support of teachers’ unions over the education of children.

Even on these reforms, though, the authors indulge in what Charles Murray calls “educational romanticism,” claiming that their preferred solutions would produce incredibly dramatic results and wipe away inequality. In the most egregious example, they cite a 2009 study purporting to show that charter schools, attended from kindergarten through eighth grade, could close 86 percent of the math gap and 66 percent of the reading gap between students in Harlem and students in upper-class Scarsdale, N.Y. They even claim the study “likely underestimates” the benefits of charter schools by neglecting the effects of competition over time.

But these are, as various critics have detailed, highly suspect statistics. Among other, more technical problems, they were calculated by taking the average annual gain and multiplying it by nine, not by actually observing students who attended charter schools for nine years — in fact, the study covered only seven years of data, and the typical student attended charter schools for only three to five years. As Furchtgott-Roth and Meyer note, the study’s authors claim that charter-school gains remain steady as students keep attending, which would justify the study’s extrapolation from the data; but other studies, in concert with common sense and the law of diminishing returns, suggest that they do not. Further, this study focused on oversubscribed charter schools in New York City (where admission is decided by lottery), and there is plenty of evidence that charter schools in general are not nearly this successful. Charter schools are a great idea, as is school choice more broadly, but there are no panaceas in education reform.

Moving on to college, the authors highlight a number of highly problematic trends. Tuition prices and student loans have both skyrocketed in recent years, and there’s evidence that federal law is playing a role — when the government offers financial aid with the goal of helping students, schools gobble up the money by raising prices, and then use the cash to hire more administrators, jack up salaries, and install frivolous amenities. Meanwhile, high-school guidance counselors promote the notion that everyone should go to a four-year school, even though many students are better suited to other options. One result is the dismal fact that many enrollees — about 40 percent, according to the official statistics the authors cite (though, in fairness, the real number might be significantly lower) — fail to graduate from four-year colleges even after six years.

Here, though, the authors are somewhat more sympathetic to the young than is warranted. They actually say of one of their sources, “If Stacy had known that her women’s-studies major would not land her a job, she might have chosen communications or marketing.” (Yes, if only it were common knowledge that employers aren’t clamoring for women’s-studies majors.) Things aren’t as good for college kids — especially the many who drop out — as they could be, and government policy in this area is a train wreck. But these folks are some of the most privileged the world has seen, and they themselves chose to attend college, at great cost to (older) taxpayers. They can hardly claim to have been “disinherited.”

What about the job market? Furchtgott-Roth and Meyer outline the standard case against liberal labor-market policies: The minimum wage kills jobs by making hiring more expensive; threats to unpaid internships could keep young people from building up the experience they need; occupational licensing is often required in fields where the work isn’t remotely dangerous, just to keep out competition, harming workers who wish to gain a foothold in an industry.

This is all true as far as it goes, and the time is especially ripe for reform when it comes to occupational licensing. Even many on the left have said that it’s ridiculous to require, say, hair-braiders to get the government’s permission to work. On the minimum wage, though, a more careful exploration of the tradeoffs would have been helpful: Even if we assume that the minimum wage does reduce employment to some degree (as the authors concede, some studies fail to find that it does), we must weigh that cost against the benefit of higher wages for those who remain employed before we can declare it to be a loss for the young.

Clearly, readers will find a lot to take issue with in Disinherited. This is to be expected given how much ground it covers in so few pages. But the book will serve as a fantastic introduction to conservative and libertarian ideas for the young people the government has failed so dramatically.

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