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The Lighthouse


The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 19, Issue 33: August 15, 2017

  1. Closing the Knowledge Gap
  2. Better Deal, Bad Deal
  3. Debt Ceiling Follies
  4. P. J. O’Rourke and the Future of Liberty
  5. Independent Updates


1) Closing the Knowledge Gap

For all the standardized testing that American students are required to undergo, it’s astonishing how little we talk about the knowledge gap. But wait, you ask, aren’t new stories and commentary about academic underperformance common? Perhaps. But here we refer to a different knowledge gap—the chasm between student performance and parent’s misperceptions about that performance. Independent Institute Research Fellow Vicki E. Alger, author of Failure: The Federal Misedukation of America’s Children, assesses this gap in a recent post at The Beacon.

The size of the gulf is astonishing. Only about one-third of American eighth graders are proficient in reading and math, as measured by the National Assessment of Educational Progress, but a whopping 90 percent of parents think K-8 students are proficient or better, according to Alger. Parents’ misperceptions likely persist throughout high school, because “only 37 percent of high school seniors are deemed ready for college or the workforce, even though the country’s average high school graduation rate is 83 percent,” she writes.

What accounts for the disconnect between academic underperformance and parental misperceptions of proficiency or excellence? One factor is that parents often don’t receive the standardized test scores in a timely manner—sometimes not “until weeks before a new school year,” Alger writes. In addition, the results are often hard to interpret compared to a standard report card. Moreover, they are lacking in actionable information: even parents who manage to make sense of standardized test scores probably wouldn’t know how to begin getting their child back on track. The performance-perception knowledge gap—and its source in poor reporting to parents—is therefore a critical but neglected problem that should be made part of the nation’s school-reform debate.

Parents Lack Actionable Information about Their Children’s Academic Performance, by Vicki E. Alger (The Beacon, 8/8/17)

Failure: The Federal Misedukation of America’s Children, by Vicki Alger

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2) Better Deal, Bad Deal

Senator Chuck Schumer (D-NY) calls it “A Better Deal,” but the program of economic populism he unveiled last month in a Washington Post op-ed is anything but. In a lengthy takedown at The Beacon, Independent Institute Senior Fellow William F. Shughart II explains why Schumer’s promise of “better jobs, better wages, and a better future” is not one worth keeping—not in the way the senator wishes to fulfill it.

For starters, Schumer promises to create new jobs for workers to rebuild America’s crumbling infrastructure. However, the so-called infrastructure crisis is overblown, according to Shughart. Moreover, the last time we saw such a jobs program—part of the federal stimulus package meant to pull the economy out of the Great Recession of 2008-2009—it came with “inevitable waste, corruption and delays,” but hardly any long-term benefits for employment. As for wages, a new safety-net program such as a basic income guarantee, Shughart writes, “undermines incentives to participate in the labor force and to earn one’s own way in life.” Hiking the federal minimum wage to $15 per hour would prompt employers to offset the increase by cutting non-wage fringe benefits (such as help to pay for uniforms), cutting back hours, and increasing automation at the expense of hiring workers.

Finally, Shughart takes on Schumer’s promise to help workers through government subsidies to startups and workforce training. “Government institutionally is not capable of identifying and selecting the next new thing and, thus, cannot know where to ‘encourage innovation’ or what ‘advanced research’ merits investment,” Shughart writes. “Such decisions are made far better in decentralized market settings than by central planners.”

Not a “New Deal,” a “Fair Deal” or a “Square Deal,” but Supposedly a “Better Deal,” by William F. Shughart II (The Beacon, 8/9/17)

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II

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3) Debt Ceiling Follies

When Congress reconvenes in Washington next month, the nation’s senators and representatives will have a lot on their plate. But while healthcare, tax reform, immigration, government spending, and trade policy are sure to take up time, the issue likely to grab their immediate attention is the debt ceiling. The story you’ll probably hear most is that Congress has until September 29 (says the U.S. Treasury Department) or mid-October (says the Congressional Budget Office) to approve raising the statutory debt ceiling or else the Treasury Department will default on the federal government’s financial obligations and risk a sharp drop the stock and bond markets. The real story, however, may not be quite as scary, according to Independent Institute Research Fellow Craig Eyermann, creator of the Government Cost Calculator at MyGovCost.org.

Every year, Congress performs another episode of what Eyermann calls “government shutdown theater,” in which doors to the nation’s parks and monuments may be temporarily closed. This year’s performance may seem more dramatic than most. That’s partly because last June the Congressional Budget Office issued a statement explaining that the Treasury “will not be authorized to issue additional debt that increases the amount outstanding.” This lack of authority would seem to create two alternatives: either raise the limit or default on debt obligations. But Eyermann reveals that the feds have a trick up their sleeve.

If Congress fails to raise the debt ceiling, the Trump administration would pay the principal and interest owed to U.S. bondholders by reducing other categories of government spending. Many believe this would be illegal, but the administration would likely do this rather than risk the consequences of missing its scheduled payments. Trump may have (what he thinks is) the ultimate defense of this sleight of hand: The Obama administration had plans to do the same.

The Return of the Debt Ceiling, 2017 Edition, by Craig Eyermann (MyGovCost News & Blog, 8/14/17)

Video Series: Love Gov: From First Date to Mandate

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4) P. J. O’Rourke and the Future of Liberty

P. J. O’Rourke will be Master of Ceremonies for Independent Institute’s 30th Anniversary Gala for the Future of Liberty, September 22, at the Ritz-Carlton San Francisco. For some of his insights about the future, see his article, “The Future of the Economy: Self-Fulfilling Prophecies,” from the Winter 2016 issue of The Independent Review. If you’ve never seen him speak, please check out our archive of his appears at our Independent Policy Forum (here, here, and here). They are as educational as they are entertaining.

Please join us as O’Rourke helps us celebrate North Korean defector and human-rights activists Yeonmi Park, high-tech venture capitalist Timothy C. Draper and Nobel Laureate economist Vernon L. Smith. This is a great opportunity to meet people committed to promoting human progress—people like you!

A Gala for the Future of Liberty, September 22, Ritz-Carlton San Francisco

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5) Independent Updates

The Beacon: New Blog Posts

MyGovCost: New Blog Posts

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  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org