Why the World Makes Far More Sense if You Add Dirigiste to the Things You Understand

I must admit I made it to my 6th Decade in this world before encountering the term -“Dirigisme” or the more common use–a dirigiste economy.  It means essentially a state directed economy. It is when the government sees it as its job to try to look out for the business interests of established companies. Or to try and create new industries.  Historically that protection stifles innovation. In the name of the desirable goal of Economic Growth, stagnancy occurs. Plus there is the cost of supporting all those planners and regulators. Less prosperity, More expense=Bad Deal for the Unconnected Picking Up the Bill.

We are much more likely though to have encountered and recognize the opposite philosophy, even if our definition is probably a bit skewed from its historical use. “Laissez Faire, Laissez Passer” is the philosophic opposite of the Mercantilist, Dirigiste approach to how an economy works and prospers. It sees the economy not as something almost tangible like a pie-“Here’s your slice.” But as a series of spontaneous transactions among lots of different people pursuing what they Know and what they Need and Who can best provide it. The idea of “Let Us Do It. Let Us Make It” goes back to the contrasting philosophies between Britain and France in the 1600s and 1700s. It’s not a matter of not wanting any government. It recognizes that the central planner or regulator cannot know what we Know. And what we Know and Can See Matters Most to developing the kinds of new technology or unique business practices (like a corporation that can now survive any individual human life or letters of credit that allow investment abroad without guards for your gold) that generate local or regional or even mass prosperity. It’s what moves the masses beyond the poverty of subsistence hand to mouth, barely getting by living that was the historic norm for centuries. That remains the norm in too many 3rd world countries even today where Those in Charge want to manage and control everything. No prosperity there as you will learn when I tell you about the real history of the IB Middle Years Programme in a different post later.

Laissez Faire, properly understood, is all about how important diverse pieces of information and knowledge scattered among lots of different individuals are to what creates prosperity and wealth. It recognizes just how many earth reshaping inventions have been created by people who knew their trade well and saw a need. The Industrial Revolution did not ignite in the countries like France that funded scientific research and wanted that research to lead to economic growth. The Industrial Revolution took off in England where artisans with knowledge were looking for solutions to very particular problems that no one in London likely knew existed. Steam engines and cotton gins which shifted the way the world worked occurred because local engineers in the hands-on tinkering sense were trying to solve immediate problems. England had little wood for heating but lots of coal. The coal mines though flooded in the deeper veins and the shallow veins were tapped out. How’s that for a real life, authentic problem in need of a relevant solution?

Yesterday, in a review of Pasi Sahlberg’s Finnish Lessons:What Can the World Learn from Educational Change in Finland?, the former executive director of the NEA wrote of the need for the US to emulate “the power of linking education and the economy in an intentional manner”. Since that  review popped into my inbox several hours after I blogged about the connection between the current education vision being pushed in the US and mercantilism, it was tempting to try to teach one of my cats to High Five. Sweet vindication. The Finns have a dirigiste economy. Copying their education policies means adopting their economic and social policies. And those have a poor track record we are just starting to explore.

For today though I want to call your attention to the area of education where I think this dirigiste approach is the strongest. We are very expensively expanding a sector (new buildings! programs! campuses!) under the assumption that government, federal, state, and local, can use its legislative and regulatory powers to insist that the public must subsidize an industry. We are also quietly putting in place the elements of what is known in other countries as Qualifications Frameworks. The idea that employment in the future will require the right credentials and that only the institutions of higher ed can provide the requisite degrees and credentials. And that job changes require yet another stop pushing more of your money at higher ed to get that next required training or skill set.

College for all defies common sense. There’s a reason the research pushing this vacuous idea always seems to rely in the footnotes on previous papers by the same professors and groups baldly asserting this self-interested point without any evidence. We are caught in a classic Mercantilist “you must buy our product” dirigiste scheme. The student loan debt that now exceeds credit card debt in the US is only the tip of the iceberg on what these dirigiste higher ed policies are really costing us.

Tomorrow I will talk about what dirigisme and a mercantilist approach by a country or state has historically done to innovation. The great driver of future prosperity.