Does the Argument for Merit-Based Teacher Pay Have Merit?

Earlier this week, the teacher's union of Chicago began their strike. The teachers were offered a 16% salary increase over the next four years, but the unions countered with 30%. Let's take a look at the situation. The average Chicago teacher makes about $71K per year plus benefits. According to the 2011 Annual Financial Report from the Chicago Teachers' Pension Fund, the average Chicago teacher who works for the schools for thirty-plus years make $105,888 and receives an annual guaranteed pension of $78,756 (p. 110). The high school graduation rate in Chicago public schools is about 60% (which is well below the national average of 75.5%), the state of Illinois is $203B in debt and has a poorly managed public-sector pension fund (see Illinois' credit rating), the Chicago teachers work fewer hours than their counterparts in other urban areas, and these teachers are asking for more? 

Since most parents cannot afford a private K-12 education for their children, the government has a de facto monopoly on K-12 education. We know that the administrators (aka the bureaucracy) do not have the resources to do new hiring en masse to counter the fiscal insanity, so this strike will persist because the teachers know that they are immune from the normal forces of employment. Meanwhile, thousands of children in Chicago, especially poor children, are being deprived of an education. [Note: 52,000 students in charter schools are still receiving an education because their education is not affected by this nonsense.] While the unions continue to claim that they are doing this for the children (Hint: this is not about the children), I began to think about whether there is an alternative to having the primary factor of teacher's pay be based on years of service. What I would like to do now is examine the commonly prescribed alternative to the status quo: merit-based pay.

Merit pay is the idea that pay should be performance-based. Those who perform their job well based on performance criteria get bonuses and pay increases, whereas those who cannot perform to standards either get very low wages or the sack. Merit-based pay sounds like a great example of rational choice theory: the teachers are given incentive to perform better. The desire for a better pay check and bonuses motivates the teacher to teach better, which in turn, has a spillover effect to the quality of education the student is receiving.

This sounds wonderful, at least in theory. I hesitate to accept the idea in practice because I have a few apprehensions, and a lot of them are surrounded around the fact that not all school districts are created equal. Different school districts have different resources available, and on the aggregate, each school district has students from certain socio-economic classes. Suburban school districts tend to be more affluent, whereas too many urban school districts regrettably have severe funding issues. There is a lot of interaction between the quality of education and the overall socio-economic status of a given school district.

If there is anything we have learned from such creations as the U.S. Department of Education or No Child Left Behind, it's that a solution to solve education woes that is based on a centralized government doesn't work. School districts are just too diverse. Those who are involved in the local politics and the local school district are much more attuned to its own specific needs than some bureaucratic agency located out in Washington DC attempting to apply some one-size-fits-all solution. As such, the incentive structures should be tailored for each school district, or even each school itself, in order to better fit their needs.

One can argue that even if you have localized incentive structures, you're still not going to incentivize everyone. Some are going to need a much larger dollar amount to do the trick. Others won't be moved to do better than they're already trying because they're truly in it for the love of teaching. And having a positive impact on society and wanting a larger paycheck aren't mutually exclusive. However, those aforementioned preferences become irrelevant in the sense that as long as there is a net increase in motivated teachers, which I'd argue there would be, then the argument for merit-based pay is justifiable.

There is also the issue of the limitations of teachers. Teachers can only do so much. If the students don't want to learn or are dealing with problems outside of class, maybe only a tiny handful of teachers with the patience of a saint can pull it off. Even so, the teacher is still by far one of the most important factors to a child's education.

There is the argument that defining merit becomes next to impossible. Having localized incentive structures certainly diminishes this argument. The argument still has some weight because there are certain things (e.g., motivating a student to take the SAT and go on to college, student achievement gains) that are difficult to quantify. However, if you want to take this line of thought to its logical conclusion, then teachers can be hired randomly because who is to say that applicant X is any better than applicant Y?

There can be certain measurements such as standardized test scores, attendance, portfolio assessments, consumer satisfaction reports by the parents of the children, or have an administrator directly monitor the teacher's progress and rate it. In a way, it is actually easier for teachers to come up with an incentive structure. Why? Because unlike many other businesses, the education sector is one of the few industries in which there is consistent and direct client-to-customer interaction, which gives educators and administrators the opportunity to come up with something even more concise. While there is no perfect way of going about a merit-based system, other industries, as well as private K-12 schools and institutions of higher education, create and use performance-based incentive structures with much success. I would take an imperfect merit-based system over the status quo in public K-12 schools any day.

There is not a public policy out there that can be considered "a silver bullet." However, I would consider the idea of performance-based pay to have more pros than cons. Even so, there is one major issue out there that makes it all the more untenable: the status quo. I mean this in specific regard to the public-sector teacher unions. If merit-based pay is implemented, then the unions lose much of their relevancy. That's just bad for business. Once in existence, a [bureaucratic] organization typically has the goal of self-perpetuation, hence what we are currently observing in Chicago. Even if one could get past the unions, there is still the matter of profound changes in the education bureaucracy, such as dealing with union contracts or the labor rigidity that comes with state licensing requirements. However, I would actually like to remain cautiously optimistic about the chance for real education reform. Although there would be initial costs to revamping the salary and pension structures, can this country really afford to continue with the status quo?

What It Really Means to Be Pro-Choice

I find it to be amazing just how careless and capricious people can be with labels, especially in the political realm. Negative labels such as "socialist" or "Nazi" are loosely thrown around to disparage one's opponents. Positive labels are used to make oneself look so great that attempting to argue against their stance comes off as a non-starter. As I was reminded while looking at the website for Reason Magazine, using the label "pro-choice" happens to be one of those positive labels. The label of "pro-choice" is really used to denote "pro-abortion." The purpose of using this device is so that when an individual disagrees with someone who self-identifies as "pro-choice," the disagreeing individual is thus labeled as "anti-choice." In a country that was founded on freedom and liberty, how can one oppose an individual's right to choose?

You would think that in libertarianism, a political philosophy that embraces the idea of freedom and allowing individuals make their own choices, the "libertarian stance" would be self-evident, but the truth is there is even debate in the libertarian world on this topic, especially with regards to the extent to which one considers the unborn child a life. Libertarianism strongly believes in the nonaggression principle, which essentially states my natural rights [of life, liberty, and the pursuit of happiness] end where your natural rights or the natural rights of any other individual begin. I have my own opinion on the matter, and I'm not here to resolve the hot-button issue of abortion.

What I wanted to do in the previous paragraph is use the most common [political] usage of the term "pro-choice" as a springboard for a further discussion. If those who claim to be "pro-choice," would they say that they're pro-choice on the following questions:

1. Is it acceptable to allow individuals to purchase a gun and carry it in self-defense?
2. Instead of requiring people to pay into Social Security, should people have the choice of investing in their own retirement account? 
3. Should parents be allowed to send their children to whichever school instead of having such immobility where many students are de facto trapped in the public school system? 
4. Does an individual have a right to smoke cigarettes or drink sodas greater than sixteen ounces, even if it's clearly an unhealthy choice?
5. Should people be able to buy SUVs and incandescent light bulbs if there are more "green alternatives" that emit less carbon such as hybrids and CFLs?
6. Is there a moralistic problem with forcing people to buy health insurance?
7. Should businesses be allowed to make the choice of outsourcing their labor overseas? 
8. Would you have a problem if people couldn't buy products produced in sweatshops?
9. Even in spite of the fact that "the rich" pay an extremely high amount in taxes that is arguably more than their fair share, should we scale back the tax burden so individuals have more freedom to do what they want with their money? On a similar vein, how about getting rid of wealth transfer programs such as welfare and food stamps so individuals have more economic freedom?   

I can continue with this line of questioning, but my point is that if you asked these questions to abortion proponents who use the label "pro-choice," they would overwhelmingly respond to these questions in the negative. If you were truly "pro-choice," you would have responded in the affirmative to most or all of these questions. However, that is not the political reality of the term "pro-choice." Invoking the "pro-choice" label while having the desire to deny choices in a multitude of instances is very disingenuous, to say the least. It would be more accurate for said individuals to use the label "pro-abortion, but that's not nearly as politically expedient as using "pro-choice." Rather than use "choice" out of political convenience, we should be working to actually make choices more readily available to the people.

Berachot 33b: Is Fear of Heaven Our True Expression of Free Will?

I finished reading the Talmud portion of the day (Berachot 33) a few hours ago. I would be lying if I said there was a degree of frustration with what was going on in the passages. One line I found brought up mixed feelings:

ואמר רבי חנינא הכל בידי שמים חוץ מיראת שמים

And Rabbi Chanina said: Everything is in the hands of Heaven, except for the fear of Heaven.

According to this Talmudic passage, the only choice we have is whether we have the free will to serve G-d out of fear (יראת), based on Deuteronomy 10:12. The first issue I have here is that יראת is commonly translated as "fear," although a closer translation would be along the lines of "reverence" or "awe." The second issue is that if you look at the rest of the verse in Deuteronomy, it ends with "loving Him and serving Him with all your heart and all your soul." While I don't deny the importance of having a sense of awe about G-d, I find that love needs to be the ultimate goal in one's spiritual practice.

If taken literally, this passage severely limits the idea of free will. Although I believe that belief in G-d has the potential to change one's behavioralism, fear in Heaven is not the only factor in one's free will. Free will extends well beyond a reaction to one's perception of G-d. This verse seems to conclude that "serving G-d" guarantees good behavior, and after observing enough people and looking at enough history, I know that is certainly not the case.

On the other hand, I know that the Talmudic rabbis were known for using literary devices, particularly hyperbole, to make a point. The rabbinic literature teaches us there are multiple mitzvahs that are so important that following them is as if the entirety of Torah were fulfilled. Those included, but were not limited to, tzedakah (Bava Batra 9a), not speaking lashon hara (Tosefta, Peah 1:2), wearing tzitzit (Menachot 43b), and circumcision (Nedarim 32a). A strictly literal reading not only contradicts many Jewish teachings, but also common sense. I will assume that Rabbi Chanina was using a literary device to emphasize the importance of recognizing the "fear of Heaven." From what I can gather, what Rabbi Chanina was trying to convey is that the choice that ultimately matters is how the aforementioned reverence for G-d affects our behavior.

Still Not Understanding Why the Government Needs to Fund the Arts

I was reading the Economist recently and came across a debate on whether the government should be funding the Fine Arts. As a libertarian, I knew that my initial reaction would be in the negative. However, I wanted to see if a case could be made in favor of the government subsidizing the arts. Although there might be some sub-points, the proponent's argument can be boiled down to the fact that supporting the arts is a positive externality. A creative society leads to innovation, which leads to overall growth of a society. I'm not questioning the causality in this instance. What I do want to discern is whether the government should be funding the arts in the first place.

A question that gets overlooked is "what is art?" It can be defined as an expression of human creative skills or imagination. That seems pretty broad of a definition, so for the sake of argument, it is best to re-frame the question as "what does one, i.e. society, consider art?" Answers that come to my mind would be such arts as classical or jazz music, opera, or even ballet. However, there is no clear-cut, unanimous agreement of what constitutes as art. Below is a "piece of art" I saw a few months ago at the Art Institute of Chicago. Do we classify this as art?

Should Blue Collar TV be considered art? How about pornography or a crucifix in a glass of urine, both of which would be considered highly offensive to many people's sensibilities? After all, one's idea of a masterpiece is another individual's idea of obscenity. The point I am trying to make at this moment in the discussion is that what we define as cultured, refined, or artistic is dictated by our personal preferences, which makes defining art a subjective matter.

The NEA only has a $146M budget for this year, which is a very small amount of money in comparison to the entirety of the US federal budget for 2012.  However, my response is this: I wouldn't care if the budget were $146M or $146B; it's simply money this country cannot afford to spend while dealing with debt issues. The issue with government intervention is much deeper than the fiscal issues. Why do some bureaucratic agents at the National Endowment for the Arts (NEA) get to decide which type of art is worthy of funding? If further public funding leads to crowding out private donations, then the government gets to decide what is appropriate art (i.e., censorship). That would be a violation of the First Amendment's freedom of speech. Based on legal precedent, America has been pretty good about preserving freedom of speech, which is why I'm not too worried about the government going in that totalitarian direction. Regardless, there is nothing in the Constitution that enumerates that Congress should fund the Arts. Article 1, Section 8, Clause 8 is in the specific context of preserving intellectual property rights (i.e., copyright laws).

Whether it's with funding Solyndra, "rescuing" Chrysler, or keeping your local symphony orchestra afloat, the government shouldn't be choosing winners and losers. If the government doesn't intervene, especially in these economic times, wouldn't that just be us waving the white flag and giving up on the Fine Arts? Of course not! However, you have to contend with those who disagree and think the government is the solution to everything because they believe that the free market is incapable of creating positive externalities. How do you think that artists such as Michelangelo, Shakespeare, or Francisco Goya made it? Through private benefactors. The Royal Academy of Arts in Britain has survived for over two centuries without public funding.

Even now in 2012, only 13% of arts funding in the United States comes from the government (page v of NEA document). The remaining 87% comes from two sources. The first is wealthy, private donors. The second is ticket revenues. The arts are largely treated like a private good, and it should be rendered as a private good. Much like any entrepreneur who wants to invest in a business venture, the artist has to prove his value to society. Not all art is good. Just because one calls himself an artist does not mean that any entity, whether it's the free market or the government, should sustain his livelihood just because it's called "art." If an artist cannot find a benefactor or produce enough revenue to keep up his business, he should fail, just like any other businessman.

As an example, I really love classical music, and I thus lament over its decline in this country. I personally think that all the money that goes into something like football or baseball is crazy, especially when considering the millions of dollars that the athletes make while so many Americans are struggling financially. However, I can explain the "ridiculousness" by the fact there is a high consumer demand for these sports (i.e., a lot of people like it and are willing to spend a lot of money on football-related and baseball-related goods and services), and if that is what the people want to spend their money on, they should be allowed to do so because that's the underlying premise behind economic freedom.

Conversely, I can explain the decline of classical music in economic terms, which can be either attributed to an over-saturated labor market (i.e., there are too many orchestras), the subsidizing of classical music caused the ticket prices to exceed the actual socially optimum benefit (i.e., tickets are too expensive because classical music was overvalued via the subsidies), a change in consumer preferences (i.e., less people like classical music than they used to), or obsolescence (i.e., technology caused the preference change from seeing live concerts to recorded music). If classical music aficionados are worried about the state of classical music, there will be more benefactors to symphonies and more people attending classical music concerts. If not, seeing live classical music will either become a luxury good or extinct.

By funding what is deemed the proper form of art that should be preserved, the self-prolcaimed cultural elitists in this country are essentially defining art. From hearing these proponents, you would think that art couldn't survive without a bureaucratic agency, in spite of doing just fine for centuries. Art is a part of culture, and culture is an organic process that reflects a given society in a given time period. That process should take place through the "spontaneous order" known as the free-market system. Anything short of that inhibits the free expression of the artist.

Hope You Enjoy the Long Waiting Line for Your Doctor!

I was reading the Wall Street Journal today, and I came across an article entitled Why the Doctor Can't See You. In the article, John C. Goodman points out a paramount problem with Obamacare: the health-care system cannot possibly deliver on the huge increase in demand for primary-care services. This means that Obamacare is going to provide such services as birth control, annual checkups, and reported just today in Reuters, there is the probability that Obamacare will also provide HIV testing. Those on the Left think that this is a benefit, but in reality, this is quite unsettling. Why?

It's not because Obamacare is going to provide more universal health insurance coverage. In spite of the fact Obama already promised that no one would lose their insurance under the new or that universal health insurance would be provided, I already know that based on CBO estimations, Obamacare will cause many to lose their insurance.

Thus in this instance, not only will more people be insured, but more services will be provided. More health services are great. What can possibly be wrong with that? When the government subsidizes something (e.g., birth control, college loans), the decisions consumers make are distorted. With regards to covering services under health care, the impression left is that these services are free. To quote Milton Friedman in a cliché-like manner, "there is no such thing as a free lunch." When the mentality is that "I don't have to worry because my insurance will cover it," what results is a price spiral in the health care market due to the increased demand.

When demand outpaces supply, the result is a shortage. It is bad enough that prior to any discussion about Obamacare, there was a shortage in doctors. With the bill in place and the government becoming more and more intrusive in health care decisions, not only are there many physicians who want to pull out of business because the bill stifles their ability to make their own decisions about their own practice, but the Association of American Medical Colleges is predicting a physician shortage of 130,600 by 2025. Even when using the "more simplistic" competitive market model, I'm not at all surprised that the economics matches up with the projected losses. If the New York Times can pick up on this, then you know something is going on.

Regarding the pro-Obamacare mentality, Uwe Reinhardt points out that "it's a strange theory that having no insurance coverage and ability to pay for healthcare is better than having insurance coverage but having to wait for a doctor's appointment to get non-emergency care." As long as proponents are able to sleep at night because "doing something was better than maintaining the status quo," I suppose having longer waiting lines is perfectly acceptable.

Decreased Carbon Emissions & How Capitalism Helped the Environment, Again!

Earlier this month, the US Energy Information Administration (EIA) came out with a finding saying that America's carbon emissions haven't been this low since 1992. It might seem as if I'm a bit behind on the news. However, this response is not because of the EIA, but rather because of an article that AP published yesterday evening that I found on NPR. The second paragraph is what particularly caught my eye:

Many of the world's climate scientists didn't see the drop coming, in large part because it happened as a result of market forces rather than government action against carbon dioxide, a greenhouse that traps heat in the atmosphere. 

It'd be a safe bet that reading that would cause a gag reflex for many environmentalists because "government wasn't the solution." The main "culprit" was that the natural gas market opened up through technology and innovation. As the article points out, there are other factors such as methane emission or effects of drilling. Without going into the whole fracking debate, the markets have provided what can be categorized as a short-term solution to the problem. Although environmental policy has to be envisioned on the long-term, there is still reason to be optimistic for two reasons. One is that the trend shows a retardation in carbon emissions. The second is that with this extra time, the private sector can continue to innovate within that time period and come up with more green technology.

This begs a more fundamental question: how is it that the "free market" system succeeded and the government failed on this one? I thought businesses, especially those corporations, were exploitative and whose sole purpose was to maximize profit. That's part of the problem: letting the anti-capitalists on the Left dictate the narrative on capitalism.

Capitalism produces more good than harm because of its conservationist ethos. Choice theory is the idea that people respond based on incentives and maximizing benefits. Although it does not explain all of behavior, especially given the irrationality behind the thought processes of many individuals, it is nevertheless a solid foundation upon which one can explain much of behavior. In this scenario, we can look at both the individual and the business to figure out why from a microeconomic standpoint, individuals are incentivized to conserve resources.

The basic premise behind economics is that there are a limited amount of resources, and thus, we need to figure out the best way to allocate those scarcities. In a capitalist society, there is adequate information to determine the prices via supply and demand. Businesses have an incentive to use as few resources as possible, largely due to the fact that it cost more money. Let's use the Coca Cola company as an example. There was a time where they used glass bottles. However, when the aluminum can came along, the company used those. Why? Although saving the environment ends up being a wonderful by-product in any example I can give, the truth is that it takes less energy to produce, re-use, and recycle aluminum than it does glass. A business is incentivized to be efficient, whereas the government, for a myriad of reasons, does not face the same incentive scheme.

Even with individuals, the idea of providing property rights is better than communal property or some less extreme variant thereof. Again, it boils down to incentives. Some might like wallowing in filth, but a clear majority of individuals like a more pristine place to own. Since it's the individual's property, the incentive to maintain its overall quality is much higher. That means a better use of resources, especially since the individual is bearing the costs. Without that cost-bearing, the individual's incentives are distorted, which more often than not leads to overconsumption and inefficient use of resources. If the goal is environmental preservation, capitalism is a superior option.

I want to conclude my thoughts here because at this time, I only wanted to provide a primary overview of "capitalism and environmentalism." There are many sub-topics that can be addressed separately.

Capitalism is normally not seen as a solution because capitalism is not portrayed positively. By using a different way to conceptualize capitalism, it can be at the forefront in the marketplace of ideas, and thus bring viable solutions to our environmental issues.

Berachot 13b: Yes, Being Too Pious is Possible

I notice that I haven't blogged in a while. Plus, the re-commencement of the Daf Yomi cycle made me want to see how often I can crank out some thoughts on a recently-read Talmudic portion. If it occurs frequently enough, I might have to have a separate blog for Talmudic thoughts. But for now, I'll just shoot for once a week, b'li neder.

Tonight, I was fortunate to be able to have a Skype study session with a good friend on yesterday's Talmud portion of Berachot 13. We're at that point where the rabbis discuss whether to say the Shema with kavannah, in which language, and even the appropriate posture in which to say the Shema. The Talmud is a highly tangential text. Some of the tangents are very close to the initial Mishna's argument; others are way out in left field. There was one tangent of peculiar interest in Gemara 13b. Symmachus (סומכוס בן יוסף) says that one who extends the ד in the word אחד while saying Shema is rewarded where his days and years are extended. This passage is followed by a story of where Rabbi Yemera was seated before Rabbi Chiyya bar Abba:

ר' ירמיה הוה יתיב קמיה דר' [חייא בר אבא] חזייה דהוה מאריך טובא א"ל כיון דאמליכתיה למעלה ולמטה ולארבע רוחות השמים תו לא צריכת

Essentially, R. Chiyya bar Abba was excessively extending the ד. Rabbi Yemera's response was "Once you have crowned Him in your thoughts over everything above, in Heaven, below, on earth, and in the four corners of the heavens, you need not extend any further." In other words, "enough is enough," or as I like to put it, "There is too much of a good thing, even piety." Jews need to serve G-d out of love and should not accept moral passivity. I'm certainly not going to argue that. However, there is a point where one can take noble intentions too far. It's a problem we see in today's Orthodox Judaism, and one of its primary manifestations is replacing chumra (strictures) with din (law). This is not the mindset of every Orthodox Jew, to be sure, but it has become more prevalent over time. When piety is set as the baseline, it becomes virtually impossible to adequately practice Judaism according to the standards set today.

Rabbi Yochanan is later mentioned in the Gemara during the discussion on whether one can lay on one's back while reciting the Shema. The normative ruling is that it is prohibited. However, R. Yochanan was able to recite it while lying down while slightly leaning because he was corpulent (i.e., really, really overweight), and any other posture would have caused him much duress. Based on the aforementioned mentality, I would metaphorically wager that if R. Yochanan were around now, he would have to "toughen up" and get out of bed to say the Shema.

When realizing that there is too much of a good thing, we not only have to remember that there are certain times when leniencies are acceptable (and yes, at times, preferable), but also remember that halacha is the means by which a Jew serves G-d, not an end in itself. In short, a Jew is supposed to do as many mitzvot without going overboard. Given the status quo, I guess that's easier said than done.