Ed & Fed: an Empirical Evaluation  
By Martin Harris

Of all the not-even-mentioned-in-the-Constitution governance empires in the US today, two are of particular interest to your scribe. One is public education, particularly in Vermont, where the K-12 establishment has managed over the last generation to create once-unimaginable costs while producing no significant student achievement gains; the other is the Federal Reserve system, which has managed during its 95-year life-span since 1913 to evaporate 95% of the purchasing power of the dollar.

Both empires have skillfully maneuvered, up to now, to evade empirical evaluation of their actual performance. Quite unlike your quintessential private-sector widget sales-and-service guy, who lives or dies, economically, from the end-user evaluation of his product and/or service, both ed and Fed are pretty much immune to competition. Those parents who choose a non-public alternative for their kids’ education must pay for both the public system they don’t want as well as the private one they do; and those who would compete with the Fed in fiat-money-creation will be dealt with by a whole platoon of suit-and-sunglasses Chicago-looking Secret Service guys tasked to terminate all arbitrary, non-value-based paper money creation except when their client, the Fed, does it. Surprisingly, now, both are on the defensive.

In Vermont, I’d guess that it’s the combination of a down economy and a concurrent rise in the State property tax for schools (even Keynesians know better than to raise taxes during an earnings-dip) as the background to the edu-crat-created phenomenon of costs growing mostly because of staffing increases (??!!) even as enrollments shrink, which is causing the current angst. Parenthetically: so far, parents have seemed (to me) strangely unconcerned with their schools’ denial of responsibility for producing any particular level of proficiency in the students they’re paid to teach.

Nationally, I’d guess that it’s the combination of a down economy and a concurrent rise (more like a quantitative explosion, where the word ‘trillions’ has replaced mere ‘billions’ in the casual language of politicians) which has generated a fairly new grass-roots awareness of national debt and deficit levels and surprising new grass-roots opposition to what the Fed, egged on by its Congressional and Executive bosses, has historically been doing. There have been lots of "End the Fed" signs visible at those conservative-populist "tea parties" so disdainfully dismissed by the recent liberal-left majority.

Neither ed nor Fed will willingly address the empirical evidence of the (in)effectiveness of its enterprise. In the 28 October Rutland Herald, Superintendent Mary Moran wrote glowingly of  "our excellent public schools" and nary a mention of the actual student proficiency rates: according to actual NAEP test scores, Vermont (of which Rutland is a not-unusual part) students are posting scores in the low 200’s out of 500, meaning that well over half can’t make proficient, which means they can’t function at grade level. Excellence?

Similarly for the Fed, which won’t go near its 95-year actual track record, the empirically observed long-term pattern of diluting currency value out of 95% of its purchasing power, so that debt incurred now can be cheaply repaid later with inflation-devalued dollars by government, which is of course the unspoken motivation for Fed economists who clearly knew better in past years and know better now. The present Chairman, Ben Bernanke, said blithely to CNN (28 November) that "America needs a strong, non-political, and independent central bank [that’s his Fed and his job, of course] with the tools to promote financial stability and to help steer our economy to recovery without inflation" (emphasis added). Stability?

Just how and why Vermont educators can straight-facedly declare that their empire has produced "achievement excellence" and Federal Reserve economists can similarly assert that their empire has produced "currency stability" in stark contrast to all the empirical evidence against them, I know not. I do know, that during my years at a 30-student-average-class-size probably non-excellent junior high school, we learned, almost as an English side-bar, that "empire" and "empirical" come from different Romance-language word roots. Don’t quiz your recent grad on that. Likewise, the history shows that, in the 124 years of no-Fed monetary management before 1913, private banking caused a currency devaluation of only 12%. It takes a lot of chutzpah for the ed and Fed folks to declare otherwise, and to assert that they’ve earned and deserve continuing citizen loyalty, trust, and support. Etymology clue: chutzpah comes from non-Romance-language roots.

Martin Harris is a former Chairman of Citizens for Property Rights