Krugman - Erroneous - But I Repeat Myself

In a recent column, Paul Krugman, the NYTimes' Nobel Laureate columnist, attempts to make the point that less government is a bad thing.  To illustrate his point, he suggests that Texas is in deep trouble as indicated by high school drop out rates and child poverty rates.

Mr. Krugman apparently lacks the nuance needed to evaluate exactly by Texas has a problem with childhood poverty as he neglects to discuss any factors beyond government spending...such as a porous border and a flood of illegal aliens...that might contribute to childhood poverty.

However, it is true that childhood poverty is a problem in Texas.

Trouble arises when one takes a closer look at the high school drop out data.  Bryan Preston of the PJ Tattler links to a couple of credible data sources to make the point that at least on the subject of high school drop outs, Texas isn't exactly in the worst of conditions.  Mr. Preston is careful to point out that the data is from adjacent years, so the comparison isn't perfect.

However, Mr. Krugman's argument is significantly undermined when you look at actual drop out rates and state spending per pupil.

The chart above shows both data sets.  The states are arranged from lowest grade 9-12 drop out rates to highest.  The spending per pupil is on the blue line.

Texas, the object of Mr. Krugman's fevered nightmares, is highlighted with red data points.

You should note the two green data points that were not included in the original data for grade 9-12 drop out rates.  I obtained those two pieces of information directly from government web sites from each respective state.  Vermont's data was for grades 9-12.  Pennsylvania's was for 7-12.

What can we learn from this data?

First, it should be patently obvious that the grade 9-12 drop out rates have absolutely nothing to do with per pupil spending.   In fact, if you check the trend line that I added, it appears that there is a slight negative trend where states that spend the most per pupil end up with the highest drop out rates.  More dollars simply does not cause better outcomes.

Second, given the Krugmanian imperative that these two pieces of data define the relative merit of government spending, we should obviously conclude that significant cuts in education spending must be undertaken with all haste.

Or we might adopt a more nuanced view that perhaps the many states face a range of unique challenges that renders meaningless any comparison between per pupil spending and drop out rates.  Such a nuanced perspective would acknowledge that there are other factors that affect educational outcomes such as the cost of living.  It would also acknowledge that there are other, more meaningful educational outcomes that could be measured.  And finally it should also acknowledge that "more money" does not necessarily result in "better government performance".  At least, insofar as educational outcomes are concerned.

There are a few other interesting tidbits to be noted.

- Alabama is 44th in per pupil spending but is 5th in grade 9-12 drop outs
- Alabama spend about 2/3s of what New Jersey spends to achieve the 2nd lowest drop out rate
- There are 14 states that spend more per pupil than Texas yet have higher drop out rates
- Washington D.C. and New York spend twice what Texas spends yet have significantly higher drop out rates.  [7.1%, 5.3%, and 4% respectively]
- Michigan, my state, is 14th in per pupil spending and 50th out of 51 on the list in drop out rates.

I'd like to suggest, without any supporting data, that there is such a thing as too much government.  Consider the now-defunct Soviet Union.  While western concepts regarding tax rates and regulatory oversight do not translate well to the Soviet model, I think we can safely say that the Soviet Union had near total fiscal and regulator control by the government.  To say that they had "too much government" is an understatement.

Now consider the current trends of people flocking from high tax and high regulation environments like California and New York to places with lower taxation and lower regulatory environments like Texas.  While neither California nor New York is anywhere near being a fiscal or regulatory Soviet-styled state, they clearly have significantly higher tax and regulatory burdens on businesses and people when compared to the rest of the country.

It should be noted that both California and New York face significant economic challenges that are closely tied to government spending obligations while Texas continues to grow while keeping government costs under control.

There is such a thing as too little government.  Effective government regulations and other programs help foster an entrepreneurial environment whereby that most elusive of qualities, "trust", can be assumed.

There is also such a thing as too much government.  Where a multiplicity of ever increasing tax and regulatory burdens hampers not only economic growth, but the ability of the individual to live a fulfilling and self-determined life. 

Somewhere in between the two is the best place to be.

At the moment, we have more than is prudent.  When even one area of government experiences unsustainable growth, we find that our resources are diverted from other productive endeavors.  Noting the difficulties in Wisconsin, is it better to cut spending for social services to maintain educator pay and benefits?  Might we be better served by restraining government spending so that individuals might experience a better quality of life.  Might Sister and Brother perform better in school if Mom and Dad have more money in the household budget and thus provide a better life for their family?

The fact that we have a detrimental surplus of governance has escaped the inimitable Mr. Krugman.  One continues to hope for his moment of illumination.  Until then, expect his space in the NYTimes and beyond to be of little value to those that make up the community of reality based individuals.