Podcast interview with James Tooley on private schools meeting the needs of the poor

Recently I discovered the EconTalk podcast series, run by Russell Roberts of the Hoover Institution at Stanford University. Was delighted to see an hour long interview with James Tooley, author of A Beautiful Tree,  A Personal Journey into how the World’s Poorest People are Educating Themselves, which I’ve been reading. Great stuff here – most of us in the United States and Europe know private schools as almost exclusively for the wealthy.  His research provides ample evidence that this is not always true AT ALL.

EconTalk Podcast Series

EconTalk Podcast Series

Here is a quote from Mr. Tooley (thanks EconTalk for the transcript) to start you off:

I was in Hyderabad in South Central India. I was there doing consultancy work for the International Finance Corporation, the private arm of the World Bank. I was looking at elite private education, private education for the middle classes and the rich, because I’d become an expert in private education–that was my area of research. I was dissatisfied with this because for whatever reason, I was drawn to serving the poor. That’s what I felt my life should be about. And here I was looking at private education for the rich.

So, on a day off from my consultancy, I wandered down into the slums of the Old City; and sure enough–I had a hunch about what I might find, and I found a private school. A school, charging in those days what would be the equivalent of $1 U.S. dollar per month, serving a hundred children. I met these people; and then I wandered down another alleyway and found another school. And soon I was in contact with a federation of 500 of these low-cost private schools in these poor, largely Muslim areas of the old city of Hyderabad.

It was an amazing finding for me, because suddenly the two parts of my life came together. I could work concerning the poor, low income families and I could be exploring private education, too. But more than that, this seemed very exciting. Poor people were using private schools. Why? Why has no one told me about this? What’s going on here. And so I began a really exciting time in my life.

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Another reason to prefer voluntary solutions to social problems.

“The more you give the watchmen to do, the more tempting it becomes to corrupt them, and for them to let themselves be corrupted.” from recent Reason article by Tucille: What Do I Know About Corrupt Cops? My Family Owned a Few.”

And I think I’ll tune in for the upcoming Al Jazeera America piece on the militarization of our police in the US.  When I was growing up (in a smaller, relatively peaceful town), I perceived the police as being there to ‘serve and protect.’ But now I’m very aware that they can pretty much find a reason to arrest whomever they want, and they treat every encounter with a ‘citizen’ as a threatening one. Either there’s been a shift in the past 30 years or I’m just older and more cynical and more aware…

Social Enterprise – such a fabulous creation coming out of the free market

Social Enterprise – such a fabulous creation coming out of the free market

Why not solve social problems with for profit businesses?

Better than government options – private organizations can adapt, change and improve much more easily. If your organization messes up or is wasteful, someone else can compete with you and do it better. for government organizations – if you are wasteful or mess up, odds are there will be an investigation and then you’ll get MORE money and influence (think FEMA, think HHS, think Education, list goes on and on).

Better than non profits, perhaps? A for profit model gives you a sustainable income stream (often better than doing grant proposals, competing for donors in tough times). The modern publicly listed company is an artificial construct and most folks have forgotten the free market is capable of infinite other models. The social enterprise movement is a fantastic new approach. The idea that ‘for profit’ companies means your somehow compromised and unable to change the world is antiquated and false.  And the idea that maximizing shareholder value = money, well, why? Social Enterprises are voluntary associations – no one’s forcing people to buy shares, the profit goals are written into bylaws… More power to them. 

Bye Mom, off to school!

Bye Mom, off to school!

Here’s one I like: Kunskapsskolan – a private school “social” enterprise – aim for 10% profit each year, give 90% of revenues to school principals to manage. They have only gone into blue collar areas because, as the CEO says, they’re not catering to the rich. They want to improve school for the average child since public schooling is failing. Sweden overall isn’t a perfect model for education, but this social enterprise looks very promising.

http://cato.ramp.com/m/video/37049597/february-14-2011-featuring-peje-emilsson.htm

http://kunskapsskolan.edu.in/faqs/

Compassion and Minimum Wage – a silver lining?

Compassion and Minimum Wage

I ran across this column by Thomas Sowell today – pointing out that it isn’t true compassion to raise the minimum wage.  Those who are lucky enough to keep their jobs will get paid more yes, but jobs will disappear overall.  There will be a reduction in jobs available, increased unemployment as marginally valuable jobs are cut. It will put people out of work, and we should care about these people, too.

(A business owner, whether he runs a restaurant, a non-profit, a laundromat, an accountant’s office, a corporation has to respond if costs change. Increasing the hourly wage = increase in expenses. People responsible for their organization have to either bring in more money to keep the same people employed, but that’s not always possible.  They’ll need to find a way to get expenses below income so they don’t go out of business.  We know that many will cut out jobs to make up for the higher costs.) The biggest groups affected are of course the poorest and the youngest.

Unemployed young people lose not only the pay they could have earned but, at least equally important, the work experience that would enable them to earn higher rates of pay later on.

When I was growing up and in high school, you could get a job and earn pocket money with a paper route, part time service job, lawn mowing… I see very few options for my own children to earn money outside of us or their grandmother creating jobs for them to do around the house. I tell them there are 3 ways to earn money: 1. labor, 2. producing a product/service someone is willing to buy, or 3. selling/exchanging their assets (toys, bike, etc.)

New kind of role model: Nick D’Aloisio built an app when he was 15 and sold his startup to Yahoo at 17.

Since working for someone else (1.) is no longer an option and since (3.) is usually a dead end, my kids are looking at (2) and seeing examples of young people (like Nick D’Aloisio) who created an app or set up a YouTube channel and made their fortune or at least their future.  We’re cultivating them as entrepreneurs.  This is a good thing! Innovation can help counter the economic malaise, can challenge the crony capitalists…

I’m hoping that the lack of jobs and employment for our youth has a silver lining and will cause more folks to take charge of their own economic lives, and create new opportunities.

The Myth of Liberal Compassion (David Limbaugh) – sort of gets to the point

I ran across a column by David Limbaugh from August called: The Myth of Liberal Compassion which was of course interesting to me, as that’s a big part of what sparked my blog here!

Once you wade through all the ‘Obama this, Obama that, I blame Obama’ noise and B.S., I think David Limbaugh has a point.  He basically says that Liberals are seen as compassionate, but when you look at the results of their policies, they are not helping the people they say they do.  I agree. 

David Limbaugh writes in his article: 

At some point, Obama and his fellow liberals need to be judged for the effects of their policies, not the grandiosity of their self-congratulatory rhetoric.

I’d say ALL politicians ‘need to be judged for the effects of their policies, not the grandiosity of their self-congratulatory rhetoric,’ not just liberals and Obama.

Intent matters more than outcomes in politics…It’s unfortunate that they can all use rhetoric and dress up bad results and government failures in big words…and get away with it and not have any significant consequences.

Aside: Sort of the heart of the problem – reading this book LeaderShift which suggests the 3 branches of government only work if a fourth branch exists – informed, actively engaged citizens holding the branches of government to account!

Anyway, It seems clear to me that routing charity and efforts to help those less fortunate through the government is misguided and not the best solution. Once we bureaucratize helping others and create government entities to manage it, private and local charity and efforts are starved out.

Private alternatives are more efficient, more innovative, able to adapt to particular societal changes, able to address individual situations, able to look at whether poverty is caused by misfortune or through consistent bad choices (situations that require different solutions and aid)…Private alternatives require less money/resources and are more effective.

I suggest that we wake up and stop this craziness of thinking that government is a nobler alternative, somehow not prone to human conditions of self interest, greed, bad incentives. I vote for a patchwork of voluntary, private sector organizations who can innovate, require much less in terms of funds compared to government alternatives which invariably become inefficient (you can’t kill anything off, end any programs, so it becomes costlier and costlier, and they stick around even if they stop working well)

This is a topic I’m very interested in – the paradigm says government is good, liberals are compassionate. Private sector is brutal, conservatives are selfish. This leaves no room at all for real solutions to helping people get out of poverty traps and thrive. Calling them lazy and dumb and dependent won’t get you very far either, if you want to change the default mindset and implement alternatives. Right now, any reform or voluntary alternatives that don’t fit the paradigm are ignored/dismissed/overlooked.

https://freemarketcompassion.com/2013/08/01/where-are-the-truly-compassionate-solutions-for-helping-others/

Note to David Limbaugh: aren’t you tired of blaming Obama for all problems… Obama this, Obama that. It’s a much bigger problem than one man and started ages ago, before he was born. Right now our paradigm is flawed and needs fixin.’

Where are the truly compassionate solutions for helping others.

I’m reading Marvin Olasky’s book called The Tragedy of American Compassion, which Steve Forbes’ and Elizabeth Ames’ new book referenced! I’d never heard of it, since in 1992 I was graduating from university and busy with so many things. I’ve been asking and asking (everyone who’ll listen) my ‘compassion and the free market’ questions, but never heard about it. And here’s a book that’s exactly what I wanted to find!

So my next few posts will be related to what I’m learning and reading.

The first idea I see in the introduction:

“Americans in urban areas a century ago faced many of the problems we faced today, and they came up with truly compassionate solutions. We may not realize this, because only two kinds of books on the overall history of poverty-fighting in America are now available (emphasis added).  A few of the books argue that the free market itself solves all problems of poverty. The more conventional approach stresses government intervention to restructure economic relations. But neither kind emphasizes the crucial role of truly compassionate individuals and groups in the long fight against poverty.”

Aha! Already getting somewhere…

This is what I’ve been asking anyone who’ll listen to my spiel!  Why do we have this unspoken assumption nowadays that government is the place for compassion and helping others when it does it so badly and wastes an unbelievable amount of resources running a bad system? Why do we do this when we know codifying welfare kills innovation, other solutions, and inevitably the system will not be able to adapt an change as society and technology advances?

And why do the free-marketers not lay claim to all the voluntary compassionate activities and showcase them as alternatives to the welfare state? Why do they dismiss individual and voluntary groups working to help others – these are activities happening in the FREE market, whether for profit, non profit. Tom’s Shoes? The Salvation Army? United Way? Santa Barbara FoodBank? Jodi House? Millions of others? They certainly are not mandated, coerced governmental activities.  They are freely done and are organizations and people coming together to assist others. Yes, they’re being choked and starved out as government takes over, but clearly there is compassion and the will to help others showing in communities, still.

I went to FreedomFest this year (which was fantastic) and asked as many people as I could why Free Marketers don’t ever address the voluntary ways people and communities help one another and talk about the free market as providing better solutions to ending poverty. Well the answer: they ignore it as the best way to cure poverty is free markets where people can voluntarily exchange – this creates  value and more prosperity by far than other other system, and far more value than wealth transfers and charity…

Yes, true…I agree! But this doesn’t matter when you’re looking at suffering in the face. We need to talk about how one person who sees homeless people sleeping on the streets should/could help them. Saying ‘more prosperity and freer markets will cure this’, is not going to work. (I’m thinking of Arthur Brooks here – read his bit about how reason and the theoretical will never win an emotional argument).

So it’s time for someone to look a bit harder at to whether the possibilities that exist in the free market might work better than the centrally planned, blanket, non-compassionate, well-intentioned-but-with-massive-unintended-consequences, easily abused programs we have now…

Compassion and the Private Sector

Compassion & the Free Market

Proposal for creating/sparking a non-profit grassroots organization promoting the private sector as the best arena for solving social problems.

Goal:

 

Create and grow a new branch of the free-market movement that explores, showcases and celebrates private sector ideas and solutions for social problems and the ways in which people and organizations voluntarily demonstrate compassion, create community, and help others constantly.  Change perspectives on compassion and the free market – to be measured by counting participants, followers, and people who respond to outreach efforts (measure likes, audience, reach, shares, donations, press, interviews). Aim for 50,000 year one.

 

Background:

 

Government is widely and mistakenly seen as a benevolent provider of compassion and also as the only means in which to help those in need. The paradigm that “government is good and the free market is bad” is widespread and damaging.

Viable solutions and tangible results are overlooked, and often wither and die despite being valuable to society. There is a lack of awareness that the private sector encompasses individuals, non-profits, for-profits, and social enterprises, all of which regularly contribute resources towards solving and reducing social problems. This lack of understanding results in many people endangering the innovation, freedom and creativity needed to address social problems. Codification in a government function dooms us to a slow rate of change, de-humanization of charity, waste, and the same types of failure that existing in the free market, only longer lasting and more damaging. (cite Mark Pennington)

To date, ”pro-market” organizations and people have battled to communicate the message that the free market provides more well-being to everyone and is the best structure to ensure all citizens prosper. Many organizations are advocating a reduction in the functions handled by government and its growing presence in all aspects of life.

However, their standard arguments do not penetrate most people’s minds, as they fail to get past the  belief that somehow government is the only conduit for ‘good intentions.’ Benevolent intent behind new bills and pieces of legislation trumps reason every time, (cite Arthur Brooks). They tend to focus on government’s inefficiency, its coercive nature, discussing whether a particular bill will actually do what it is intended to do, etc. Alternatively, they will approve of people’s freedom to shape their own destinies on an individual level and leave it at that. They rarely showcase or promote free market alternatives to a particular issue in question, but instead reject government as a solution and leave the alternative at ‘the free market will sort it out.’

 

“Economic freedom produces unimaginable material prosperity, but it’s also the only economic form that encourages individuals to freely pursue their destinies, develop the character of self-responsibility, and strengthen communities.”

— Congressman Paul Ryan

“Only free enterprise encourages and allows each of us to define our destiny and earn our success.  Only free enterprise encourages true fairness based on merit and opportunity. And free enterprise is the only system that can lift up the vulnerable and those who have fallen on hard times by the millions—by rewarding entrepreneurship and encouraging charity.”

 

—  Arthur Brooks

I believe that most of us who live beyond survival mode, those with enough resources for food, shelter, and basic security, are compassionate by nature to others. Both Paul Ryan and Arthur Brooks above mention community and helping others, but don’t go so far as to contrast what is seen in the voluntary part of society to that which is legislated or run by government.

 

I believe human beings have a moral and instinctive desire to help our fellow man. Fellow man may mean family, colleagues, peers, the local community, people in other countries. But in any case, evidence is widespread that human beings who prosper at some level voluntarily do contribute to their wider community. Very few of us are true individualists, able and willing to live entirely for our own benefit. These examples, existing all around us are the area that requires study, encouragement, publicity, and attribution to individuals acting freely, ergo as part of what we call the free market.

 

Supporting community, charity, compassion and helping others is something that lives and breathes and thrives in the free market in millions of ways every day. The free market means the part of our society where individuals voluntarily create and exchange.

 

Examples of Free Market solutions to explore, showcase and celebrate as part of private sector:

–       Toms Shoes – social enterprise that has embedded into its for profit company a core goal of helping poor children around the world in a practical way – providing shoes. Voluntary exchange, voluntarily created organization. Buying a pair of their shoes is also a contribution.

–       Beito – From Mutual Aid to the Welfare State – historical analysis of how some current social need functions of government (i.e. unemployment benefits) were handled successfully by the private sector.

–       Churches, Synagogues, Elks, Kiwanis, Rotary, Girl Scouts, soup kitchens, homeless shelters, corporations (Starbucks gave $250,000 to Oklahoma tornado relief last month), religious organizations…

–       Non-profits such as Care International, Oxfam, Catholic Relief Services –offering  microloans through village savings groups (Mutual Aid societies of modern day? ) that create sustainable cycle and fund more loans (social enterprise)

 

ACTIVITIES:

  1. Spark conversation, dialogue, and discussion on the ways individuals and groups of individuals (through non-profits, social enterprise, for profits) are helping to address social problems and have alternatives to government codified programs.
  2. Create and disseminate materials and a structure for others interested in this topic to use to start discussion groups, meet ups, grassroots organizations, pages.
  3. Create a way for people to contribute content, stories and examples of free market compassion that can be shared and explored as examples of innovation and results.
  4. Create and expand this premise into a body of work that can be published on this topic – Compassion and the Free Market
  5. Tap into grassroots for engaging, innovative content – video, audio, humor – crowdsource effectively messages that will resonate with people.

 

Required

  1. I am looking for people interested in working on a team to develop and expand this premise and also look for and possibly counter objections. Also looking to determine the best for-profit parallel organization to create a sustainable income stream beyond donations
  2. I need a research assistant who can verify sources, examples, stories and ensure our work has integrity and doesn’t become simply another blind belief system.
  3. $200,000 – funds for 12 months for initial research, outreach, organization. 2 people…

 

 

“Doing nothing for others is the undoing of ourselves.”
― Horace Mann

 

“Compassion is not weakness, and concern for the unfortunate is not socialism.”
~Hubert Humphrey

 

“Why are the Agreeable Anti-Market?”  – Bryan Caplan blog post http://econlog.econlib.org/archives/2009/07/why_are_the_agr.html

 

Humans – naturally happier when they help others?

http://www.psychologicalscience.org/index.php/news/were-only-human/real-good-for-free-the-paradox-of-leisure-time.html#comment-7003

 

Helping those in Need – Arthur Brooks

http://arthurbrooks.aei.org/learn/earned-success/

 

Liberals and Markets – Bryan Caplan

http://econlog.econlib.org/archives/2010/03/liberals_and_ma.html

 

“Homeless to Harvard” – a community came together to provide for a high school student, outside of government. Example of human nature and compassion

http://www.cato.org/blog/homeless-harvard

 

Portrait of a Modern Feminist: Amity Shlaes – historical analysis of Calvin Coolidge as president and prosperity from reducing government

http://iwf.org/modern-feminist/2790812/Portrait-of-a-Modern-Feminist:-Amity-Shlaes

 

THE COSTS OF PUBLIC INCOME REDISTRIBUTION

AND PRIVATE CHARITY

http://mises.org/journals/jls/21_2/21_2_1.pdf