Postrel and Cowen on Schooling

Tyler Cowen praises and excerpts a post by Steve Postrel about the signalling model of schooling and the rising cost of University level education.  

In it he attacks the signaling model on education but talks a lot about rigor and the lessening for rigor in a negative way.  

 
If schooling is about capital formation shouldn’t rigor be reduced over time as new discoveries about how to educate and new technologies come on line?

If the goal is to teach more people more of what they need to know to live a better more productive life we should never focus on rigor.  We should rather focus on what is learned. Instead of talking about rigor we should discussing that students need to learn more information, more important information and develop better skills. Once you mention rigor, though it can be a tool to get people to learn more, I think signaling because rigor is an indirect goal. Rigor in the non-signaling model in never the goal, learning is the goal and we are not sure that rigor always increases learning (see Robert Frank).

Sumner: "Lower inflation during recessions is a sign of procyclical monetary policy, i.e. policy failure"

Scott Sumner writes:

Lower inflation during recessions is a sign of procyclical monetary policy, i.e. policy failure.

Yes! I do not know why pop econ is so counter to this.  If we are producing less due to investment mistakes or supply shocks or whatever, prices in general should go up as supply goes down. The fact is that sometimes inflation is good and sometimes deflation is good.

 
One proof that inflation is sometimes good is that farm and petroleum economies are doing good (North Dakota has very low unemployment).  Employment is high in food and petroleum producing areas, and as for real wealth production is up and rising. 

Let me address another thing to my fellow conservatives.  You think that debt is bad and that people and corporations should pay down their debt but you fret about the rise in base money.  Well since money is created be debt wont we need much more base money if everyone gets wiser and uses less debt?

Now a big problem is that monetary policy is controlled by voters and though relatively lower home prices are good and needed but to home owners, who are mostly voters lower home prices are a negative and so they want lower food and gasoline prices and higher home prices.

The Prepaid verses Postpaid Healthcare

http://theincidentaleconomist.com/wordpress/cnn-com-why-emergency-rooms-dont-close-the-health-care-gap/comment-page-1/#comment-27536

http://www.cnn.com/2012/05/07/opinion/carroll-emergency-rooms/index.html

There have been a number of stories in the media lately detailing how far hospitals will go to collect on unpaid medical bills.

Most of our insurance premiums is not insurance against above average cost but prepaid healthcare. So advocates of prepaid healthcare must explain why it s preferable to prepay than to pay after receiving care.

Problems with paying after care:

1: It can be difficult for the provider to collect.
2: Lack of ability to make decisions in certain emergency situations.
3. in some cases it causes people to wait longer than optimal to get treatment.

Problems with prepaying:

1. Encourages overuse.
2. Encourages quixotic attempts to extend the lives if the terminal.
3. Discourages self treatment.
4. Aligns providers and patient against payer.
5. Allows providers to more easily collect for care that failed to benefit the patient.

A benefit of paying in the rears is that should motivate the providers to get the patient back to a productive state.

Note the state could pay Providers after care in cases of bankruptcy putting certain limits on how the bankrupt can spend on other things .

Tyler Cowen has Another Post Saying that Euro is in Danger

Tyler Cowen has another post saying that Euro is in danger and that if it falls it could badly hurt the European and world economies.

It looks to me like central banking is at the root of the problem.  Central banking seems to me to be prone to crisis.
1. Central banking appears to have feedback problems.
2. It is not easy for the central banks to get the money into the economy where it is needed.
3. People trust the central banks so much that they prefer money assets to real assets in times of crisis. It seems to me that it would be better if they mistrusted money and so bought real assents instead.
4. Central banks are subject to the whims of the median voter, who knows nothing about banking.

Incidence of Taxation

Scott Sumner has another great post that includes this gem:

(I kid you not, many students think a tax will be passed on to consumers, but a subsidy will be pocketed by corporations.  Why you ask why, they actually think it’s in the corporation’s interest to pass on tax increases, and pocket subsidies.  By which logic a $20 tax combined with a $20 subsidy, i.e. a “nothing,” would cause prices to rise by $20.  Go figure.)

People are easily confused about the incidence of taxation.  I have a hard time convincing my fellow landlords that in our competitive market the renter pays the property taxes. The landlords are outraged at the level of the property tax and they seem to want to stay outraged.  On the other hand the renters, who should be outraged, are completely unaware that they are paying the tax but at least when I tell them the light comes on.  Much of the art of modern democratic politics is to hide the costs from the majority of voters and show the benefits.


As an aside, the other day I was listening to a local radio show and one of our local politicians was going on and on about how the property tax more progressive than the sales tax as a self evident given and so we should suport the optional discretionary millage, but here in Florida there is something called the homestead exemption.  The homestead exemption, exempts the first, I think it is $60,000 of the value of a home owner's primary resident from taxation but most poor people live in rentals which are fully taxed, there rental market is very competitive here so the renter pays every dime.  This makes the property tax more regressive that it otherwise would be. On top of that food is exempt from the sales tax and poor spend more on food than others.  Bottom line it is not clear that the property tax in Florida is more progressive that the sales tax and I bet that that politician does not know either.

Government and the Sub-prime and Financial Crisis

The left likes to blame economic freedom for the great recession and so they say we need more government control to avoid it happening again but Government is subject to the same problems that caused the sub-prime and financial crisis. Even getting some money from the federal Government and with the power to tax some local Governments are going bankrupt!


IMO the problem is that the current monetary system is not robust they disruptions.  It has serious feedback problems.  I think that we need to move to a competitive monetary systems were the incentives are to counteract a contraction.  

Medicaid and Marginal Tax Rates

Medicaid eligibility for a single parent with one child ends abruptly at about $18,000/year income.

Suppose having medicaid is worth $300/month to a person making $17,000/year.  $300/month is $3,600/year,  if the person earns $1,000/year more he is $2,600 worse off.

So why not offer all Americans health insurance with a deductible based on their last years income as outlined here.  That would eliminate the this big problem and perhaps push people to better control medical expenses.

One argument against such a system is that it would leave people with too little money in years with high medical expenses but Here is a story about a guy lives a middle class life on $7,000/year.