Quality is a Market Notion
For generations, products have advertised themselves as "new and improved." Jim Fedako says that we are too quick to dismiss this phrase as a promotional boilerplate. The market really does generate unrelenting improvements in our living standards. Meanwhile, the public sector is forever promising to improve its services and products but every attempt creates only conflict and eventual stalemate. FULL ARTICLE
Comments (8)
Have you considered the existence of positive externalities coming from a better educated person, e.g. benefits for society that one can't monetize oneself?
Do you believe in the existence of any (positive or negative) externalities at all?
Published: April 7, 2006 11:34 AM
Meryn, just taking a breath means oxygen that cannot be used by someone else. There are *always* externalities. Your second sentence is a straw-man argument and therefore to be ignored.
A better educated person may or may not benefit those around them, because regardless of education the individual still retains the choice of what they wish to do with it. A highly educated gangster may even be more effective in their oppression of others than he would be if he had not received that education, thus an education could result in negative externalities.
It doesn't take a college education to leave other people alone and not take their stuff. Yet many confiscatory socialists are highly educated and have no qualms about destroying the lives of others if it advances their grand plans.
Published: April 7, 2006 11:47 AM
My second question is a bit off. I'm sorry.
"regardless of education the individual still retains the choice of what they wish to do with it."
Yes, but maybe it would be beneficial to society if he chose to use his skills to educate others as opposed to go into business. Because of the externalalites found in eduction (which I now assume you and me agree on) there will be less demand for the edutiation than would be economically optimal.
I don't know the size of these externalities, but I believe on that ground at least some subsidizing of education can be legitimized.
Also, because you can't subsidize any company that claims to be educating someone (maybe they're just providing entertainment), the government need to impose certain quality requirements to qualify for the subsidy.
I think a company providing better education should get a bigger subsidy.
I think that laying a bar at any quality level can't be good. I don't think it can be good for anything. There should be a continuum in subsidies where pure entertainers would get nothing and AAA-eductators get a lot (this would not only depend on the teacher, but also on his specific teaching activity, e.g. high school or college classes). Then leave it up to people to choose their preferred spending of their time and money.
Mises as teacher would now be a little less expensive (but more less expensive then a less knowledgeable teacher). Still, I think people wouldn't want to pay him to stand in front of a class of 8th graders.
Published: April 7, 2006 1:14 PM
You cannot know if the externalities of education exceed the externalities of the alternative forgone employment for the teacher, therefore you cannot justify subsidization. Additionally to subsidize education is to introduce bureaucratic control into education with all the destructive effect this has on quality and competition.
Published: April 7, 2006 2:55 PM
Your first sentence was enough to refute the "externalities" argument utterly, Urbanitect. Well said.
Published: April 7, 2006 5:57 PM
I had many highly educated teachers in my schooling days. Few of them could teach me much of anything except to know that I didn't want to be forced to sit in their classes.
Today I work for the government. I've lost all interest in doing a great job - it's better to fail and get more money next time. I gave up fighting the system long ago. Besides, I just hang around for the great pay and bennies. Why would it be any different with teachers? What government certification is going to produce good teachers. Heck, I got a masters degree, and that don't prove I could be a good teacher. And now, with the ADA, you might find you have to keep a teacher who stutters so bad as to be unintelligble, or maybe they got double the time to take the certification exams.
Only the certification of the market can work. Thankfully, I can sit around because I get paid by the poor fools who pay the taxes and still think we have a wise and frugal government. Better to rule in hell when there's no heaven to even serve in.
Published: April 8, 2006 6:57 PM
I'm sorry but I don't understand this article at all.
" education is best left in the hands of the free market. Under a free market, the allocation of scarce human qualities and knowledge will be matched to the desires and wants of man. Public school math teachers, gym teachers, librarians, etc., would be paid exactly what they produce; no more, no less."
Heres the problem for me.
As a lecturer in economics the first question I asked students was who is here to learn economics and who is here primarily to get a job that pays the big bucks.
Well they all say they want the job that pays the big bucks.
So I say, well you can't have both so I'm going to teach you what is tested and nothing more.
Therefore, rather than an economics education its more a crash course on rote learning an exam paper.
Now by doing this, we produce a lot of future economists. But at the end of the day they know bugger all about economics.
Thus, I produced but should I really be paid for it given the quality of what I produced?
Now having studied economics for over twenty years I can tell you straight that I am no different to the students I have taught. Namely, I don't understand economics either.
This is the reason why I beleive in the free market. Not because I think it has the ability to allocate scarce resources to their most efficient use. But simply because the economic problem of scarcity is too complex for governments, academics, or economists to deal with directly.
The author of this article is also an advocate of the free market, thought it would seem for reasons other than my own.
However to me he implies that it's possible to measure what someone produces and pay them accordingly.
Labour is a derived demand and cannot be treated like any other product.
Wages and salaries are determined not by what someone produces in terms of a tangible product. But indeed wages are determined by ones power to bargain.
So rather than persons being paid for what they produce as far as products go they are also paid in accordance with how well they measure up at the bargaining table.
POssibly people here can think of two people in the same occupation where the lesser skilled of the two who actually produces less is actually paid more?
Therefore, it could be that people are paid based on their bargaining power rather than their occupational skills and what they actually produce.
Here is an example. The experiments and research of Prof Fermi were fundemental to the Manhattan project. Were it not for his work with CP-1 the project may have failed. However, having fled Mussolinis Italy in 1938 his bargaining power with his employer was severely weakened.
Instead of getting paid what his collegues were, Fermi was paid less because his employers essentially told him do it for a lower price or go back to Italy - which they knew he could not do for fear of his life.
Thus his pay was not determined by his production but namely by his lack of bargaining power due to exogenous factors beyond his control.
Some may argue that he was indeed paid well because he didnt lose his life. But now we are talking in terms other than money, namely opportunity cost and yes government intervention may have ahd a bit to do with it as well.
The fact is though he "was [not] paid exactly what he produced.
And this is why claims that the price of wages r paid in accordance with what a person produces are mere folly.
Remember Keynes had a greater influence in the 1940's not because he produced better economics than Mises but because he was able to sell himself better.
Cheers
Note: the Fermi stuff is off the top of my head - will dig up some references though if anyone wants them.
Published: April 15, 2006 3:48 PM
I'm sorry but I don't understand this article at all.
" education is best left in the hands of the free market. Under a free market, the allocation of scarce human qualities and knowledge will be matched to the desires and wants of man. Public school math teachers, gym teachers, librarians, etc., would be paid exactly what they produce; no more, no less."
Heres the problem for me.
As a lecturer in economics the first question I asked students was who is here to learn economics and who is here primarily to get a job that pays the big bucks.
Well they all say they want the job that pays the big bucks.
So I say, well you can't have both so I'm going to teach you what is tested and nothing more.
Therefore, rather than an economics education its more a crash course on rote learning an exam paper.
Now by doing this, we produce a lot of future economists. But at the end of the day they know bugger all about economics.
Thus, I produced but should I really be paid for it given the quality of what I produced?
Now having studied economics for over twenty years I can tell you straight that I am no different to the students I have taught. Namely, I don't understand economics either.
This is the reason why I beleive in the free market. Not because I think it has the ability to allocate scarce resources to their most efficient use. But simply because the economic problem of scarcity is too complex for governments, academics, or economists to deal with directly.
The author of this article is also an advocate of the free market, thought it would seem for reasons other than my own.
However to me he implies that it's possible to measure what someone produces and pay them accordingly.
Labour is a derived demand and cannot be treated like any other product.
Wages and salaries are determined not by what someone produces in terms of a tangible product. But indeed wages are determined by ones power to bargain.
So rather than persons being paid for what they produce as far as products go they are also paid in accordance with how well they measure up at the bargaining table.
POssibly people here can think of two people in the same occupation where the lesser skilled of the two who actually produces less is actually paid more?
Therefore, it could be that people are paid based on their bargaining power rather than their occupational skills and what they actually produce.
Here is an example. The experiments and research of Prof Fermi were fundemental to the Manhattan project. Were it not for his work with CP-1 the project may have failed. However, having fled Mussolinis Italy in 1938 his bargaining power with his employer was severely weakened.
Instead of getting paid what his collegues were, Fermi was paid less because his employers essentially told him do it for a lower price or go back to Italy - which they knew he could not do for fear of his life.
Thus his pay was not determined by his production but namely by his lack of bargaining power due to exogenous factors beyond his control.
Some may argue that he was indeed paid well because he didnt lose his life. But now we are talking in terms other than money, namely opportunity cost and yes government intervention may have ahd a bit to do with it as well.
The fact is though he "was [not] paid exactly what he produced.
And this is why claims that the price of wages r paid in accordance with what a person produces are mere folly.
Remember Keynes had a greater influence in the 1940's not because he produced better economics than Mises but because he was able to sell himself better.
Cheers
Note: the Fermi stuff is off the top of my head - will dig up some references though if anyone wants them.
Published: April 15, 2006 3:49 PM