Ayn Rand probably had a subplot about something like this, but deleted it as too implausible. https://t.co/18Igfs9CEK But it's real, folks.— Michael Munger (@mungowitz) September 21, 2016
@mungowitz Also, I'm a bit hacked off that I can't get good sushi at a nearby taco truck. Petition time! /2— Art Carden (@artcarden) September 21, 2016
My WTP for @mungowitz @artcarden to write article about seeing unseen demand is $5 dollars. What's unseen demand for healthy fastfood?— Pragmatarian (@Pragmatarian) September 21, 2016
@Pragmatarian @mungowitz Discoverable via market process and being filled by Subway, Chipotle, Taco Bell, & others. https://t.co/CcbgIjuOVx— Art Carden (@artcarden) September 21, 2016
@Pragmatarian @mungowitz Start a Patreon page, perhaps, with data guiding next project? Interesting.— Art Carden (@artcarden) September 21, 2016
@artcarden @mungowitz @Patreon based on stupid assumption that I equally value your articles... which implies that I equally value topics.— Pragmatarian (@Pragmatarian) September 21, 2016
@Pragmatarian @mungowitz Does Patreon allow bidding of any kind that would allow one to price topics?— Art Carden (@artcarden) September 21, 2016
@artcarden @mungowitz AFAIK granularity stops at creators. Assumption: you unequally value creators but equally value a creator's creations— Pragmatarian (@Pragmatarian) September 21, 2016
Smart assumption: I unequally value creators
Stupid assumption: I equally value a creator's creations
Smart assumption: I unequally value economists
Stupid assumption: I equally value Bryan Caplan's blog entries
Here's one of Caplan's recent entries... Value-Added and Social Desirability Bias...
What's up? I once again point my accusatory finger at Social Desirability Bias. Rewarding good teachers sounds a lot nicer than firing bad teachers. So when research comes along that potentially recommends both, pundits and politicians don't coolly crunch the numbers. They leap to the recommendation that's pleasing to the ear. So what if the original researchers find that firing bad teachers wins with flying colors? Move along folks, nothing to see here...
Assumption 1: parents equally value schools
Assumption 2: parents equally value teachers
Are these assumptions smart or stupid? Of course they are stupid. They are fundamentally stupid. Yet, does Caplan challenge these fundamentally stupid assumptions? Clearly he doesn't challenge the second assumption. Instead, he encourages/enables/empowers it. He argues that administrators can fire the bad teachers despite the fact that the admins don't actually know how much value the teachers create. Possible assumptions...
Assumption 1: admins are omniscient, they do know how much value teachers create
Assumption 2: how much value teachers create is a "minor" detail
In my opinion... both these assumptions are stupid. Are they equally stupid though?
It's actually pretty easy to visualize the basic economics of education. Here's how the current system looks...
Any given school consists of consumers (ie parents), producers (ie teachers) and an intermediary (ie a principal). The consumers give their money to the intermediary who gives more or less the same amount of money to each of the producers.
The problem with this system is that teachers are not equally valuable. Anybody who has ever been taught should thoroughly and completely understand that teachers are not equally valuable. Just like artists are not equally valuable. Just like economists are not equally valuable. As you can see in the diagram, teachers don't all produce the same amount of value. They aren't all Jaime Escalante. Except, we obviously don't know how much value he truly created.
The solution is to unbundle teachers...
Parents would be entirely free to decide which teachers they give their money to. The most valuable teachers would get the most money and the least valuable teachers would get the least money.
We can imagine that this is pretty much how Patreon works. There's no intermediary to decide how supporters' money is distributed among the creators. Supporters are entirely free to decide for themselves how much support they give to the creators. The more money a creator receives... the more value they create. Supporters are free to use their cash to communicate their perception of a creator's relative scarcity.
Is this how schools should work? Or is it more beneficial to bundle teachers together? Is it beneficial to protect teachers from the valuations of parents? Is it beneficial to protect teachers from the Invisible Hand? Would it also be beneficial to bundle schools together in order to protect them from the Invisible Hand?
Would Caplan argue that we should bundle Khan Academy and Marginal University together?
Does Caplan want to argue that he values both these lessons equally? Does he want to argue that he's just as valuable as Hayek?
The main lesson which the true liberal must learn from the success of the socialists is that it was their courage to be Utopian which gained them the support of the intellectuals and therefore an influence on public opinion which is daily making possible what only recently seemed utterly remote. Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this had rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds. But if we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost. The intellectual revival of liberalism is already underway in many parts of the world. Will it be in time? - Friedrich Hayek, The Intellectuals and Socialism
Even at the cost of lining up with Friedman, I’d be pleased if the idea that war is a mostly futile waste of lives and money became conventional wisdom. Switching to utopian mode, wouldn’t it be amazing if the urge to “do something” could be channeled into, say, ending hunger in the world or universal literacy (both cheaper than even one Iraq-sized war)? - John Quiggin, War and waste
Then I realized that they want a kind of unicorn, a State that has the properties, motivations, knowledge, and abilities that they can imagine for it. When I finally realized that we were talking past each other, I felt kind of dumb. Because essentially this very realization—that people who favor expansion of government imagine a State different from the one possible in the physical world—has been a core part of the argument made by classical liberals for at least 300 years. - Michael Munger, Unicorn Governance
Switching to utopian mode, wouldn't it be amazing if parents could give their money to any teachers in the world?
Switching to dystopian mode, wouldn't it be terrible if readers around the world couldn't give their money to J. K. Rowling?
We know that Rowling is a superstar. But we only know that she's a superstar because lots of people around the world were completely free and more than happy to spend their money on her books.
What do we know about teachers? We know that they are not equally valuable. And we also know that there's at least a gazillion of them. Therefore, according to the law of truly large numbers, it's a given that at least one of those teachers should be an algebra superstar. It's a given that at least one of those teachers should be a geography superstar. It's a given that each and every significant subject should have at least one superstar teacher. There should be just as many superstar teachers as there are superstar authors. Just in case it's not abundantly clear... by "superstar" teachers I mean that they would be as filthy rich as superstar authors.
The manufacturers first supply the neighbourhood, and afterwards, as their work improves and refines, more distant markets. - Adam Smith
When the buyer goes to the market, he wants to find it abundantly supplied. He wants the seasons to be propitious for all the crops; more and more wonderful inventions to bring a greater number of products and satisfactions within his reach; time and labor to be saved; distances to be wiped out; - Frédéric Bastiat
We've made pretty decent progress at wiping out distances but it's not like any of the teachers who've put their classes online are getting filthy rich.
A while back I e-mailed Alex Tabarrok and suggested that Marginal University create a video about the free-rider problem. I also suggested that they try and determine the multitude's WTP for potential topics. I'd certainly be happy to pay $5 in order to try and move the free-rider problem higher up on their list of potential topics. Wouldn't it be so cool to see a list of their potential topics sorted by the multitude's WTP for them?
In my tweet to Art Carden and Michael Munger I said that the Invisible Hand weeds but rarely plants. If the Invisible Hand does not do most of the planting then it logically means that the Visible Hand does most of the planting. Voila! Here I am! Planting this blog entry. My decision to do so wasn't based on the multitude's WTP for this topic... it was based entirely on my own WTP for this topic. But it's not like I ignored or disregarded the multitude's WTP for this topic... I don't even vaguely or remotely know what the multitude's WTP for this topic actually is.
After I publish this entry... will it be easy to discern the Invisible Hand's verdict of my product? Nope. Thanks to the free-rider problem... ignorance is bliss. Really? Ignorance of the Invisible Hand's verdict is bliss?
I'm guessing that Caplan is correct that there's a social desirability bias. But as far as a bias against markets is concerned... it seems like a really good idea to consider the notable exceptions. We really don't hear people complain about...
1. artists being supported on Patreon
2. J.K. Rowling being a superstar
Same thing with this guy...
I'm a millionaire, I'm a multi-millionaire. I'm filthy rich. You know why I'm a multi-millionaire? 'Cause multi-millions like what I do. That's pretty good, isn't it? - Michael Moore
How many liberals complain that he's a superstar?
Ok... so... despite the fact that I've done a terrible job of presenting/sharing/organizing the evidence... it should be more than adequate to point us in the right direction.
We'll use all this evidence to think big but start small. We'll create a website! At first the website will consist entirely of videos created by Marginal University and videos created by Khan Academy. Members of this website will each have to pay $1/month... but they'll be free to choose which videos they allocate their pennies to. Knowing the relative value of the videos would allow...
1. the most valuable videos to be featured on the homepage
2. members to sort the videos by their value
It would actually be the Invisible Hand that would decide which videos were valuable enough to put on the homepage. And it would actually be the Invisible Hand that would sort the videos by their value. How cool would that be?
Of course we could also allocate our pennies to potential topics. This would allow the Invisible Hand to guide the planting. Which would mean less weeds.
The website would cover its costs and pass the rest of the money onto Marginal University and Khan Academy.
If this utopian model turned out to be possible and practicable in the physical world... then we would gradually add more and more educators and their products. Bryan Caplan, John Quiggin, Art Carden, Michael Munger and others could add their educational products (blog entries, articles, papers, etc) and we'd be free to allocate our pennies to them.
As the supply of valuable products increased... more people would join the website. And as more people became members... the most valuable products would get more money. This would encourage more educators to join the website. As the supply of valuable products increased... so too would people's WTP and the monthly fee. It would be a virtuous circle of incentives and education. It would be an accurate and amazing feedback loop.
Hmmm... anybody want to argue that the website wouldn't need a monthly fee? It would just need to give members the ability to...
1. put money into their digital wallets
2. spend their money on their favorite educational products
That wouldn't be a bad argument. Right now it's not the easiest thing in the world to allocate a quarter to Marginal University's video about prices. In other words, there's a barrier to payment. There's an obstacle to spending. Would eliminating this obstacle facilitate the Invisible Hand? Of course it would! If giving the video a quarter was as easy as giving it a "thumbs up"... then I'd sure be happy to do so. I'd be surprised if I was the only person in this boat. How cool would it be to see a list of all the people who were willing to allocate some money to the video?
Eliminating the obstacle to spending would eliminate the forced-free-rider problem. And it's entirely possible that the forced-free-rider problem is a lot larger than anybody realized. Which means that it's entirely possible that eliminating the barrier to payment would allow the Invisible Hand to turn the most valuable educators into superstars.
In any case, there's more than one way to skin a cat. We can apply the Invisible Hand to formal education... or we can apply the Invisible Hand to informal education. I think that applying the Invisible Hand to formal education would be a Herculean task. It would be far less Herculean to apply the Invisible Hand to informal education. Even though it would be a lot easier to apply the Invisible Hand to informal education... the potential benefits would be massive. People would be able to easily see, understand and really appreciate the Invisible Hand. What happens when everybody really appreciates the Invisible Hand? Utopia. Heaven on Earth.