Is Our Adults Learning?

Yesterday, David Brooks published an interesting essay in the New York Times entitled “Is Our Adults Learning?”  The basic premise behind his essay can be summarized in the following quote, “Government doesn’t profit from experience because of the way it goes about testing its policy problems. It should try learning the way businesses do.”

My purpose in posting this commentary on Brooks’ article is to challenge his presumption that it’s even remotely possible for the government to conduct itself like a business.  Avinash Dixit’s 1997 American Economic Review article entitled “Power of Incentives in Private versus Public Organizations” provides the framework for my critique.  In this (admittedly somewhat dated) academic journal article, professor Dixit takes on an earlier version of Brooks’ ideas as exemplified in Al Gore’s 1995 tome entitled “Common sense government”.  In this book, Gore argues for “reinventing”  government by measuring and  rewarding “results, not red tape.”  However, Dixit shows that the problem with Gore’s and Brooks’ platitudes about getting the government to act more like a business is that these “theories” fundamentally ignore the nature of government bureaucracy.  Dixit argues that “a distinct feature of government bureaucracies is that they must answer to multiple principals”, and he goes on to “… develop a model of a common agency to show how the interaction among many principals results in a loss of the power of incentives.”  To illustrate this, Dixit notes that in the real world, a government agency may be formally answerable only to the executive, but in practice Congress, courts, media, and organized lobbies all have a say.  He notes that one way to resolve this “weak incentive” problem at the federal level is to devolve political power to states or localities, where “…agencies can be so designed that each performs fewer tasks, thus reducing the externalities among the principals affected by its actions.”  So basically Dixit rigorously proves with the game theory the wisdom behind federalism!

In closing, it would seem that the least likely place for “decentralizing policy experimentation as much as possible to encourage maximum variation” to be successful would be at the level of the federal government.   The weak incentive problem identified by Dixit explains why government agencies are typically focused on red tape, and not results; it’s all about process and procedure, and rarely ever about results.

On the social scientific study of religion

I’d like to give a “shout-out” to University of Washington political scientist (and Baylor ISR Distinguished Senior Fellow) Tony Gill for his “Research on Religion” podcast series. Research on Religion (AKA “RoR”; see is a weekly podcast series which is devoted to the social scientific study of religion.

Since I commute regularly from my home in Austin, TX to my Baylor University office (which is located 1-1/2 hours away in Waco, TX), this gives me plenty of time to listen to podcasts. By far and away, my favorite podcast series is (not surprisingly) Econtalk (located at Both EconTalk and RoR follow a similar format, in that there is a new, roughly 1 hour long podcast every week that features an interview between the program host (Russ Roberts on EconTalk and Tony Gill on RoR) and a guest who has typically published a book or article on an important/relevant/timely topic.

Anyway, the direct iTunes link for RoR is The direct iTunes link for EconTalk is

Assorted Links (6/29/2010)

Here’s a list of articles that I have been reading lately:

Allan Meltzer: Why Obamanomics Has Failed –

“In The Wall Street Journal, Carnegie Mellon University economist Allan H. Meltzer says the Obama administration’s policies have introduced uncertainty about future taxes and regulations. This inhibits investment and job growth.”

If You Have to Be Wrong, How Can You Admit It More Easily? – Freakonomics Blog –

“Making admissions of error easier.”

Cash for Clunkers: A Retrospective

“Top-down industrial policy carried out through the sheer force of incentives is welcomed by behavioralist Washington.”

The Unemployment Insurance Crisis

“As of this summer, unemployment insurance trust funds in 30 states were insolvent.”

Fred Barnes: King of Pork—and Proud of It –

“In The Wall Street Journal, Fred Barnes writes that the late Robert Byrd made the most of his time in the Senate.”

Rupert Darwall: Britain Tries Fiscal Austerity –

“Rupert Darwall writes in The Wall Street Journal that Keynesianism goes out of fashion in London.”

Randy Barnett: The Supreme Court’s Gun Showdown –

“In The Wall Street Journal, Randy Barnett writes that thanks to five Justices, the right to keep and bear arms is now protected from state interference. And thanks to Clarence Thomas, an important clause in the Constitution has risen from the grave.”

Bill Wilson’s Gospel –

“The story of Alcoholics Anonymous teaches us about human nature and the kinds of social programs that do and don’t work.”

Congressional Budget Office – Distribution of Federal Taxes

“The federal tax system is progressive–that is, average tax rates generally rise with income. Households in the bottom fifth of the income distribution (with average income of $18,400, under a broad definition of income) paid 4.0 percent of their income in federal taxes. The middle quintile, with average income of $64,500, paid 14.3 percent of that income in taxes, and the highest quintile, with average income of $264,700, paid 25.1 percent.”

Is Academic Freedom Worth Its Price? – Project Syndicate

“In these hard economic times, when ordinary people are struggling to make ends meet, there is a nagging sense that universities are luxuries. In fact, universities may be the most consistently high-performing products of long-term capital investment.”

Review & Outlook: Kagan’s Commerce Clause –

“The Wall Street Journal says that Senators should ask Supreme Court nominee Elena Kagan if Congress can compel Americans to do anything?”

Drilling for Better Information –

“In The Wall Street Journal, Information Age columnist Gordon Crovitz says that the financial crisis and BP share a common attribute: regulatory failure.”

Fouad Ajami: Petraeus, Obama and the War in Afghanistan –

“In The Wall Street Journal, Fouad Ajami says that there is a mismatch between the general’s Afghan mission and the president’s summons to his countrymen.”

Review & Outlook: Triumph of the Regulators –

“The Wall Street Journal says that the Dodd-Frank financial reform bill doubles down on the same system that failed.”

Russ Roberts: Hayek: An Economist’s Comeback –

“In The Wall Street Journal, Russell Roberts of George Mason University comments on the revival of interest in the Nobel Prize winning economist Friedrich Hayek.”

How Christianity Created Capitalism

“It was the church more than any other agency, writes historian Randall Collins, that put in place what Weber called the preconditions of capitalism: the rule of law and a bureaucracy for resolving disputes rationally; a specialized and mobile labor force; the institutional permanence that allows for transgenerational investment and sustained intellectual and physical efforts, together with the accumulation of long-term capital; and a zest for discovery, enterprise, wealth creation, and new undertakings.”

Indiana ironing-board factory faces stiff competition from Chinese companies

This article provides an interesting case study which clearly illustrates various dysfunctional aspects of trade protectionism in the real world; in particular, how tariffs shield US companies from having to compete and innovate in terms of the goods and services that they produce and the business models that they employ.