Didn’t Adam Smith write a Book explaining why this is a Bad Idea? Back in 1776?

The herd instinct can be in charge in many areas but few are more important than public policy in an area like education. Getting it wrong affects individual student’s life prospects as well as any region or country’s likely future prosperity. To bolster the public policy choice, the common strategy in education is to recruit business leaders and other politicians to vouch that what is desired is A Very Good Idea. Necessary in Fact. The Reform That Will Save Us All From Ruin.

Busy, well-intentioned, respected people make themselves available. Then someone pesky like me comes along and says not so fast. There are relevant facts you are not aware of or the reform does not actually work in the way you believe. I have joked my business cards should read “When You Want to Get Beyond the Echo Chamber”. I simply see things differently because I rely on reading the actual documents. I investigate past effects of comparable language. My opinions are never just based on what I have been told and that is frustrating to people. I suspect this will be a frustrating post to many important people. I wish their staffs knew their history better or thought more in terms of how does this business make its money before automatically using its support to validate an idea.

One of my frustrations is when Business support is the reason a bad policy is to be enacted. The Business support always seems to fit a certain profile. Vendors of the computer hardware and software and consulting expertise governments need if they have aspirations to plan and run a society or economy. Or maybe the Business support comes from a utility executive who operates in an industry where he or she provides a necessary service and then passes on all costs to rate holders plus a tacked on return. Or a defense contractor whose only customer is governments around the world. With few competing suppliers, if any. Or heavily regulated insurance companies or hospital executives. All good people. All needed services. None of those industries though involves the kind of innovations or prosperity that grow wealth or make a country more productive.

If we want education to be about tomorrow’s jobs in a prosperous free market economy, we need to be talking to businesses that have created wealth and new technology. Not just those who manage what already exists or fear innovative products or ideas as the kind of dynamic destruction that could harm their business. If education reform is quietly premised on the idea that tomorrow’s economy will be centrally planned and managed, we need to address that now. That’s certainly a sorry record of nonachievement beyond the politically connected.

This past Monday, May 7, I had the opportunity to be in the audience for Education Nation: Job One Preparing America to Compete in the 21st Century. It was presented by NBC News and most of the ideas being pushed as the solutions are ideas I have spent a great deal of time tracking and pondering. That means I see things differently largely because I am working off a different set of facts. A huge part of the program’s emphasis was on the type of skills needed by all. The stressed point was on the need for education to be about workforce development and career pathways for all students. We had a major city’s mayor, the state’s Governor, and a US Senator all urging in a bipartisan manner that this was the solution to create jobs for tomorrow. Their plea was followed by a business panel:utility exec, defense contractor exec, execs with 3 multinational companies with backgrounds of seeking Industrial Policies.

Industrial Policy is when the government picks economic winners and losers and uses taxpayer money to play favorites. It is good if you get picked as a winner and are taken care of thereafter. Industrial Policy though has a very poor record of picking good ideas and a solid record of propping up bad ones. Not too good for the taxpayers footing the bill or overall prosperity and economic growth.

The validation that this was a correct policy came from a belief that if top civic and business leaders agree, it must be a good policy. Again, the fact that so many educators, media, business, and civic leaders were all on the same page on the need to put the emphasis on workforce readiness and skills for all was the rationale that the idea was sound. Then it hit me. That’s the classic Mercantilist argument for what must be done and what an economy needs.

Mercantilism-that alliance of business and politicians to plan and manage policies that benefit the producers. Current politicians and established large businesses over the centuries love this model because it offers power and stability. For them at least. Perfectly rational desire. But will it create Good Jobs in the future? The stated goal.

Basically education is now being used as the rationale to adopt a Mercantilist economic policy for the US in order to create the jobs of tomorrow. Except that’s not how Mercantilism has ever worked. That’s what The Wealth Of Nations was all about. Explaining the spontaneous economic practices that were allowing England to prosper and create wealth and opportunities and technology at an unprecedented rate in world history.

Adam Smith compared England’s free market, non-state directed approaches and individual activities with no one in charge that existed in fact to what was occurring in countries like France which used the government/Producer alliance known as Mercantilism. One generated widespread prosperity and the other did not. One produced the Industrial Revolution. The other frustrations at the special privileges and enormous tax burdens that financed all that planning and those perks. It produced the Terror of the French Revolution.

If the most prosperous America for as many people as possible is indeed the goal underlying what we need to be doing in education, we appear to be adopting practices that have never worked before. We need to once again slow down and talk about what is really being mandated in the worthy pursuit of education for all.





5 thoughts on “Didn’t Adam Smith write a Book explaining why this is a Bad Idea? Back in 1776?

  1. This post reminded me of ‘The Most Powerful Idea in the World’ by William Rosen. A study of the development of steam power, industry and invention, Mr. Rosen observed that the steam engine was a decidedly English-speaking world innovation. Not that other nations’ inventors didn’t develop some elements of the steam engine but rather for a complete working engine, the English-speaking world is the one that invented all the pieces independently.

    Not that it was an English invention, but rather England had the environment of invention providing fertile ground for native or immigrant to change the world. The US had this environment for much of the 20th century. There still is small plots unmolested by the government man, but the large tracts are gone, hopefully opening elsewhere, otherwise things will be a bit stagnant.

    • I have not read that yet but I will locate it at your recommendation.

      Thanks for commenting and please join the discussion. I am just getting cranked up.

      Laying the foundation of the underlying ideas at stake.

  2. rse, this post really intrigues me as I watch our area economic development coalition, made up of local universities, defense contractors, businesses and a major AFB. Granted, some good is accomplished, but there is the down-side of stifling independent creativity. Ideas and activity must fit in the defined framework of the cluster or partnership. The group defines the economic activity. Our very own mercantilists?

    I will continue to read here as I’m gaining insight into watching our local universities interact within the structure of this economic development coalition.

    • Trish,

      That’s the model. If it’s the world you live in, you may have never stepped back and thought about the fact that your revenue model is based on having been given the government monopoly to provide a necessary service. That manages existing wealth but it doesn’t create it. Think of being given the Middle Ages’ privilege to collect the tolls on a given bridge or roadway. It’s lucrative but there’s no incentive to create a better product or provide better, more convenient service. The kind of service that let’s a busy person get on with other areas of their life.

      There’s a certain way of thinking in the world of market entrepreneurs, not political entrepreneurs. Political entrepreneurs obtain revenue and preserve it milking their connections to political power. No mass prosperity there. Market entrepreneurs never forget what drove the revenue necessary to “make payroll”. It is a mindset of income streams and expenses and when there’s sufficient demand to add another employee that stays with them. No matter how successful they are. They cannot easily pass on costs. We should be asking them what they need in tomorrow’s employees.

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