Objective Scarcity and the Paradox of Productivity
In general, if you care about equality, you ought to be passionate about scarcity. As long as there’s not enough of some valuable commodity to go around, then whoever’s richest is going to end up getting it even if the income distribution is relatively flat. By contrast, when you make some category of goods plentiful, you necessarily end up curbing inequities. These days all kinds of Americans can afford a good television. Tragically, though, many Americans can’t afford a house in a safe neighborhood with a decent school that’s within a convenient commute of the central business district of a major city.
That’s Matt Yglesias again, pointing out (correctly) that just because Americans have plenty of food and cheap entertainment relative to just about any period in the past, that doesn’t mean there’s no such thing as poverty.
His solution to the problem of scarcity of good schools and safe neighborhoods, though, is to make more slots available for both – build more housing in good neighborhoods and make good schools educate more children. And this implicitly assumes that opening up more slots won’t change the character of either the schools or the neighborhoods – an assumption that sounds wrong on its face and that many would argue has been disproven in practice repeatedly (most dramatically with the failure of busing).
Here’s the thing. You can improve performance at a single school by attracting a higher caliber of student and/or a higher caliber of teacher. Similarly, you can make one neighborhood safer by attracting a higher caliber of resident and/or improving policing. But the only way to make all schools better in aggregate is to improve the caliber of students and/or teachers generally. The only way to make neighborhoods safer in aggregate is to improve the caliber of residents and/or improving policing generally.
And increasing the number of available slots in good schools or safe neighborhoods can only do this indirectly if at all. The implicit assumption seems to be that new students and residents will acculturate to their new schools and neighborhoods. But it’s at least as likely that the schools and neighborhoods are what will change – for the worse. If you recognize this, then what you have to be arguing for is not simply increasing slots, but giving greater scope and authority to good institutions. Give management of a high-performing network of schools the opportunity to take over a failing school. Give the precinct commander who’s cleaned up a tough neighborhood the job of police chief in a small city. And so forth. But even as you do these obvious things, you’re going to discover that these highly-effective managers succeed in part by selecting good personnel, personnel they select from a larger pool. And if they do a better job of getting rid of lousy teachers or cops, those people go elsewhere. And some other school or precinct gets just a little bit worse.
Public policy has limited leverage over the overall caliber of the student body or the resident population (immigration policy is one of the few levers it does have). It obviously does have some leverage over the quality (and quantity) of teachers and police officers, but even this leverage is relatively limited, and not only by obstructive unions or whatever your particular bugaboo is. It’s limited because talent is the scarcest commodity there is. And the price of talent is driven, most fundamentally, by productivity.
The paradox alluded to in the title of this post is that the cheap television sets are, in a very real sense, the cause of objective scarcity in schools. Productivity growth in big swathes of the economy has made our society objectively richer. In many, many professions, a single individual can generate much more output per hour than he or she could a generation or two generations ago. Teaching and policing, though, have experienced much less productivity growth than the economy as a whole. As you would expect, competition for employees with more productive sectors of the economy has resulted in rising costs combined with declining quality.
We could improve the quality of the teaching and/or policing pool nationwide by the combination of higher spending and more intelligent recruitment, training and management techniques. The result would be an overall better pool for these occupations, which should improve the quality of the service. On the other side of the ledger, we’d experience a deterioration in personnel quality in some other sector in the economy – which might be a good tradeoff depending on what that sector was. But even that will only buy us time. Costs will rise inexorably, and the more concerned we are with maintaining the quality of the labor pool in these essential services, the faster they will rise.
There are only three ways to avoid this trap. One is to cease pursuit of, or even reverse, productivity gains elsewhere in the economy. If the economy as a whole became less productive, professions like teaching would become more attractive – even at relatively lower wages. (It is worth noting that the Soviet Union had a very highly regarded schools system.) On the other hand, productivity is the most important driver of increases in national wealth, and so long as other countries are pursuing national wealth, our national power depends very directly on successfully competing with them. (It is worth noting that the Soviet Union no longer exists.)
The second is to reduce the quantity of the service. Quality of live theater, for example, or of live orchestral music, has arguably remained high in spite of Baumol’s cost disease because there is simply less live theater and fewer orchestras around than there used to be, and they charge high enough prices to maintain high quality. Similarly, we could just teach fewer kids. Police fewer neighborhoods. To some extent, this is precisely what has occurred. This approach amounts to the secession of the more productive sectors of society from the rest of society, which will get progressively worse-educated and less personally secure. It is not an impossible outcome, but it is one that should be abhorrent to anyone with remotely progressive sentiments, or, really, any sense that we ought to have some degree of solidarity with our fellow citizens.
The third alternative is to pursue productivity gains in professions like teaching that have not experienced many such gains historically. There’s some low-hanging fruit here – better teaching and classroom-management techniques can increase the quality of instruction in a given period. Similarly, good collection and use of data can significantly improve the impact of policing by putting cops where they are most needed. But once that fruit is plucked, it’s not clear where you go for additional gains. Recall what productivity means: it means more output per hour. If we’re talking about teaching, that means getting more instruction out of each individual teacher/hour. This is much more difficult to do with teaching than with manufacturing – that’s why we haven’t done it. But that’s the question we have to be asking. (Yglesias has suggested in the past that smaller classes may make schools worse in aggregate because it means hiring more teachers which means, on average, worse teachers. But in the absence of productivity-enhancing innovations, there’s no reason to think that bigger classes would be better – rather, there’s some class size beyond which performance starts to deteriorate for any teacher.)
I’m on the board of a charter school. I believe that letting strong personalities create institutions, giving them scope to achieve their goals and holding them accountable if they don’t, is the way to grow strong institutions, and that strong institutions will deliver better services than weak ones. (And I believe that public policy has a variety of levers to make sure that these institutions genuinely serve everyone, as public institutions must, and should use those levers.) But I also recognize that “do more of what works” is a much, much more difficult mandate than boosters seem to realize.
I’m not really an education policy guy, but I think your comment on residential policy doesn’t really hold up.
If a neighborhood has a house sitting empty and it gets filled by an ordinary person, the caliber of the neighborhood is likely to rise even if the person has a ‘caliber’ below the neighborhood average. Your average person will be supporting the neighborhood in someways just by being there. If we’re talking about adding more housing, increasing density generally means more stores, parks, public pools, etc. Obviously those resources can get crowded out but in many cases amenities can get economics of scale, hence cities.
I think the key principle here is that in neighborhoods density can increase productivity. Now, adding supply of housing is likely to reduce property values, but that’s different than a neighborhood becoming less safe.
— Greg Sanders · Jul 20, 06:29 PM · #
What is a “higher caliber of resident?”
— matt · Jul 20, 07:17 PM · #
Greg: Yglesias, if I understand him, is talking about adding density to neighborhoods that are already successful, not to neighborhoods that are struggling: “what we want out of the world isn’t just for some neighborhood or other to become safer, but for more people to enjoy life in a safe neighborhood. That can be achieved through two kinds of actions. One is by taking not-so-safe neighborhoods and making them safer. But the other is by increasing the quantity of houses that exist in any given safe neighborhood.”
Let me make my point using Upper Manhattan as my example. Posit that housing has gotten very expensive on the Upper West Side, which is one major driver of middle class flight to (a) Harlem (gentrifying a historically poor and not-terribly safe neighborhood) and (b) Montclair, NJ (a leafy suburb). The first effect results in a steady “improvement” in Harlem – but that improvement involves progressively pricing the prior residents out of the neighborhood. If what you’re trying to do is help those residents afford to live in a safe neighborhood, you’re not doing it. And, obviously, middle class families leaving the city for the suburbs doesn’t help poor city dwellers.
So let’s say you build lots of new units in the Upper West Side. Yes, that’ll drive down housing values in that neighborhood (and, to a lesser extent, across the city) – but that’s fine; that should make it easier for middle-class families to stay in the neighborhood. Stemming flight to Montclair is good for the city. We’ve also reduced gentrification in Harlem; residents who would previously have been driven out get to stay. But the neighborhood doesn’t get an infusion of capital, and doesn’t get safer. It seems to me if the goal is safer housing for the people who live in Harlem, we’ve still failed.
So: suppose the new units we build on the UWS are specifically designated for low-income residents – or suppose we give vouchers to Harlem residents to move wherever they like and build lots of new housing on the UWS to bring down prices. Whether more people live in “safe” neighborhoods depends very much on what happens to the neighborhoods where voucher families move. That’s hard to predict – there are a lot of variables involved – but there’s certainly lots of anecdotal evidence of big negative effects. There seem to be considerable “momentum” effects in neighborhood quality – a less-safe neighborhood that is improving often continues to improve while a more-safe neighborhood that is declining often continues to decline, I suspect in part because both buyers and sellers project out current trendlines into the future.
Gentrification would actually be a big benefit to residents of poor neighborhoods if they were predominantly property owners, because they would participate in the gains in housing values when they sold out and moved away (to somewhere safer than their old neighborhood was but less expensive than their neighborhood has become). But I would assume these neighborhoods are places where a disproportionate percentage of the residents are renters rather than owners.
My point was a simple one. You can increase the supply of housing that is a short commute to the center city by increasing density. That may well have substantial economic and ecological benefits. Whether it means people who live in currently poor, unsafe neighborhoods will be able to afford to live in safe ones is much more questionable.
— Noah Millman · Jul 20, 07:44 PM · #
Noah: Thanks for the detailed response.
First off, I entirely agree about the interpretation of Yglesias as adding density to successful neighborhoods. So in that case, my hypothetical with an empty house happens sometimes, but isn’t really typical.
I’d argue that there are a few mechanisms by which the economic benefits of shorter commutes could translate into safer neighborhoods. Increasing commercial foot traffic, turning commute time into time spent in the neighborhood, and a broadened local tax base all directly contribute to the safety issue. However, I don’t have magnitude figures on those, so I’ll try to get to your larger point.
More on point, I think your model may miss out on spill over effects. Being near a nice neighborhood has benefits of its own and adjacent areas often take advantage of this when advertising, admittedly at times deceptively. I’d say as density increases, the benefits of being adjacent can also increase.
There are obviously limits there, Baltimore Maryland is locally notorious for having good neighborhoods next to bad. That said on a recent trip to L.A. my wife and I stayed in Little Tokyo and could see new nice looking apartments going up in an adjacent area that was literally part of Skid Row.
Allowing neighborhoods to grow can mean more houses at the UWS and, if my hypothesis holds improvements in Morningside heights. In turn the improvements in Morningside heights could then spill over to Harlem. I don’t know Manhattan neighborhoods that well, so maybe I just falsified my hypothesis with that proposal, but that’s a risk I’ll take.
So, as you say, that just might mean more middle class in the suburbs. How is that increasing the overall housing supply? Well, I’d say that the spillover effect is proportionate to density. I’m living up around Columbia Maryland now and I’d say that the safety and desirability of adjacent housing developments matters less to me than when I lived in comparatively more dense Silver Spring. There’s fairly few places to walk to and local mass transit options are terrible so I just don’t know a lot of the surrounding areas that aren’t arteries.
So in short a good neighborhood in a city offers hope of improving adjacent neighborhoods. A good neighborhood in a car-oriented suburb is more isolated from a safety perspective, even if the marketing logic applies there as well.
Now the isolation of exurbs and to a lesser degree suburbs are sometimes what people want, spill over effects can be good as well as bad. However, I’d say that in part because we’re getting the policy right we’re seeing an urban renaissance in many parts of the country. That gives me hope for establishing zones of safety that slowly grow denser and expand. In turn, I think we should make sure that regulations don’t get in the way of that process.
Thanks for inspiring me to think this through. I need to start gathering some of the relevant research so I’m less reliant on conjecture and personal experience.
— Greg Sanders · Jul 20, 08:43 PM · #
Yglesias was the victim of a violent racial hate crime while walking down the street in May about a mile north of the U.S. Capitol. It’s hardly surprising or reprehensible that he’s looking for ways to transform D.C. so that intellectuals are less likely to get beaten up by thugs due to their race.
— Steve Sailer · Jul 20, 09:20 PM · #
On the other hand, the old Harvard philosophy major is prone to trying to come up with Kantian universal rules to solve his own personal problems. Washington D.C. is not at all like most of the U.S. Matt is trying to speed up the demographic transformation of Washington D.C. toward its obvious future of being a rich, safe, nice, not very black place. There are a whole lot of white people who would like to move to D.C. if housing were a little cheaper and if gentrification were allowed to proceed more rapidly. Having a whole bunch more white people on the street in D.C. would mean that a lone white walker would be less likely to get knocked down due to his race.
On the other hand, what would make D.C. safer is not exactly the recipe for improving Montclair, NJ or Memphis, TN or most other places in the U.S.
— Steve Sailer · Jul 20, 09:28 PM · #
As for teacher productivity, it would strike me that key to fairly successful East Asian techniques, such as Kumon, is incessant drill. That would seem to be something that could be better handled by computers than teachers, with teachers simply there to help students with misconceptions too rare for the computers to figure out.
— Steve Sailer · Jul 20, 09:31 PM · #
Put ‘em in camps!
— Stevie Sail-yer · Jul 20, 10:18 PM · #
Greg: I don’t really disagree with anything you wrong, but I think we’re arguing at cross-purposes. What’s happening right now in much of America is that the urban core of major cities is recovering substantially – and poor people are moving out. Where are they going? In some cases to older inner suburbs that are in decline; in other cases, to entirely different parts of the country (African-Americans from the Northeast and Midwest with roots in the Southeast have been returning to the land their parents and grandparents left in meaningful numbers).
My point was basically this. A shortage of housing in the Upper West Side is one of the things driving gentrification in Harlem, making Harlem safer but also increasingly pricing existing residents out of that market. More housing on the UWS might not retard this process – it might, instead, retard movement to the suburbs (like Montclair, NJ), with Harlem gentrification proceeding apace. But it’s that process of gentrification that is pricing poor people out of Harlem. If you want them to live in a safer neighborhood, you have to look at the neighborhoods where they wind up and how they fare.
Yglesias was writing about poverty, and that one of the scarce resources that poor people lack is access to affordable housing in safe neighborhoods that are a reasonable commute to employment in the city. If you build more housing in the city, and spend more on public transportation, you will definitely have more housing at a reasonable commuting distance. Whether that housing is affordable for poor people though is a question, and that’s a question intimately bound up with whether the neighborhoods are actually safe – if they are safe, they will be more expensive, and the commutes that poor people face may actually increase.
One solution to the problem Yglesias is pondering that was tried in the 1990s and 2000s was increased use of housing vouchers instead of public housing. The evidence on how well this worked at breaking up concentrations of poverty in unsafe neighborhoods is at best equivocal. The primary effect seems to have been the process of transformation I described above, where the city center improved and the inner suburbs declined. I suspect one major reason is my posited “neighborhood momentum” effect: when you demolish a public housing project, homebuyers perceive the neighborhood to be improving, and act accordingly; when housing voucher recipients move into a neighborhood, homeowners perceive the neighborhood to be declining, and act accordingly; and thus each trend – gentrification and decline – accelerates.
In both education and housing, we’ve tried for decades to solve problems associated with poverty by moving poor people around so they have more opportunity to go to already-existing good schools and to live in already-existing good neighborhoods. That’s what I understood to be what Yglesias was saying we should do: build more housing in good neighborhoods so poor people can afford to live there; provide more slots for poor children at good schools so they aren’t stuck in the bad schools in their districts. And there’s not a lot of evidence that this works. There is evidence that better policing significantly reduces crime in poor neighborhoods, which is a big benefit to poor people who live there; there’s also evidence that better teaching and school-management practices significantly improve educational outcomes at schools with lots of poor students, also a big benefit. But these “better practices” are expensive. And they will probably keep getting more expensive, precisely because they are labor-intensive and productivity growth elsewhere in manufacturing and services is continually driving up the cost of labor. And they will get more expensive with scale because one way they work at a small scale is by hiring the best people from the available labor pool, and the bigger you get the less you can rely on this method – you have to start improving the quality of the pool as a whole. Which is hugely expensive. Which means we have to run faster and faster on these fronts just to stay in one place.
— Noah Millman · Jul 21, 03:09 PM · #
Steve: it makes sense that greater use of computers would yield big educational productivity gains. But nobody seems to be doing this. Chris Whittle’s original vision for the Edison Schools was pretty much exactly what you’re talking about, and it flopped, and Edison abandoned the model. Nobody seems to have a great product for the homeschool market either, which is large and growing and, you would think, would be exceptionally receptive to anything that would leverage the nonexistent teaching staff through the use of technology. So either this is a huge opportunity waiting to be exploited, or it’s not as easy to do as it sounds.
— Noah Millman · Jul 21, 03:16 PM · #
What Noah says isn’t exactly wrong, but it remains true that a greater supply of better housing makes better housing cheaper, and it is easier for the poor to get cheap things than expensive things.
— Pithlord · Jul 21, 08:07 PM · #
It’s funny that 25-30 years ago Apple was seen as mostly a computer company for the K-12 market. But in Steve Jobs’ second go-round, they’ve almost completely abandoned leadership in that market, while focusing instead on the 35% of the population with college diplomas. Obviously, this second grand strategy (focusing on selling to society’s winners) has proved vastly more profitable.
— Steve Sailer · Jul 21, 08:59 PM · #
Traditional computer keyboards were not particularly amenable to traditional schoolroom math, but the iPad ought to be able to be used with traditional pencil and paper methods of doing math.
— Steve Sailer · Jul 21, 09:04 PM · #
As I’ve said for a long time, the Apple advantage is that it’s a class-signalling device that people don’t explicitly think of in those terms. It’s a way to demonstrate that you’ve got money that comes with plausible deniability as a feature.
— Freddie · Jul 22, 03:22 PM · #
You guys are all trapped in the cave.
The obsession with measurement of outcomes and management of process has been a fruitful and liberating one. It has literally delivered the goods. But the mindset that has lead to increased productive capacity has cost us something.
We have been pretending to ourselves, as Keynes suggested, “that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.”
Here we are, Keynes’ grandchildren, surrounded by abundance, but we have not yet learned to “once more value ends above means and prefer the good to the useful.”
I say this because if we had truly learned to value ends above means, the narrow focus on “performance” in schools would be seen as the false idol it so clearly is. What is the desired product of our schools? I think you know that the answer is not really high performance on a given metric or battery of metrics.
It is the cultivation of good, just, and loving human beings – of “beautiful hearts”, as Shin’ichi Suzuki put it. Just as it is now time, in the economic realm, to restore the right names to fair & foul, to cast aside the distorted GDP metric (which values the overproduction of industrial corn, and its processing into cheetos and pepsi, and the use of plastics into soda bottles which will be simply thrown away, causing long-term ecological harm – and calls this ‘economic growth’), it is time in the educational realm to let go of our obsession with process & metrics and think about what our desired ends are.
I contend, too, that our anxiety about GDP and economic growth and our obsession with a narrow definition of educational productivity our closely linked in a dynamic relationship. Continuing to cling to one will inhibit us from more closely examining the other.
And while there may be objective scarcity in the market for desirable housing, to adopt the view that educational “talent is the scarcest commodity there is” is a deeply pessimistic, and probably self-perpetuating, view. Teaching is demanding. It requires self-awareness, observational skills, and energy. But it is not like trying to create a flying car or a cheaper rocket launch system. Lots of people can do this. If we keep telling ourselves that good teachers are rare, and bad ones abound, and the only way of distinguishing sheep from goats is measuring student performance on standardized tests, then we will end up with lots of bad teachers. Argue for your limitations, and sure enough, they’re yours.
And the obsession with productivity & performance is dangerous. Because the trend is to optimize the desired product (test performance) in relation to the inputs. And so you end up searching for superstar teachers, who can wrangle great scores out of thirty-odd not-so-promising kids. And, in just about every flavour of mainstream narrative (progressive, conservative, pro-charter or pro-Great American Public Schools), that’s a good thing. The different camps will argue about questions of funding & organization, but everyone agrees that a super-teacher raising performance is what you want.
What if you weren’t staring at test scores, trying to optimize that problem?
Maybe you would start by saying, really, teaching children and youth is not rocket surgery. And what they need is more contact. More, not less, interaction, with perhaps more than just one adult person at a time. And rather than anxiety about the scarcity of talent, we would see an abundance of opportunity. Perhaps each classroom would have two or even three teachers – a “master”, “journeyman/woman”, and even the odd nineteen or twenty year old “apprentice”. Or maybe those aren’t even the right names or frame for the reality of more participation, interaction & contact with people.
We are obsessed with the growth and flourishing of our post-industrial economy (which, let’s admit, has solved the scarcity problem in the West/North) to the detriment of furthering the growth and flourishing of young people.
I have followed Scene writers for a long time now (I remember Gideonblog) and continue to be impressed with Noah’s (and Reihan and Jim and others’) intelligence and public-mindedness. But there are assumptions (foundational ones) that I think are misleading, harmful, and especially just not worth the candle. For instance, Noah says:
For what purpose, Noah, do you wish to ensure that the U.S. is pre-eminent in national wealth and power? Why should the actions of other nations determine the priorities of United States citizens? What other goods (not material goods, but good things) should Americans sacrifice or value beneath the constant increase of national wealth?
I contend that it is worth considering trading off some portion of potential growth in national wealth to pursue other ends.
Another:
Productivity, again, understood in the narrow sense. (Robert F. Kennedy made the elementary point against this understanding at the University of Kansas.) Perhaps if the economy were less productive, but we focused attention on human growth, potential, and experience, we would have better schools, less crime, and poorer bankers. The point against the Soviet Union is well taken, but remember also that the USSR had a gigantic, expensive military. Perhaps the lesson for the USA is not: do not leave potential productivity gains on the table or your national power will wither and your state will collapse, it is: do not throw your national wealth into a gigantic global military empire – your state might collapse.
Ultimately, my point (and convincing the TAS writers & audience of it is probably a futile project) is that further pursuit of GDP growth will have diminishing returns – and potentially, cross the threshold into negative return on investment – on the well-being of Americans. Obviously it’s not an original one. Now, I don’t consume much mainstream media (especially not television) but my guess is that my argument is well outside the bounds of the conversation. I think it should be more widely argued and introduced, because the widely-shared view that we should just hang on & continue to see foul as fair and fair as foul is going to end in disaster.
A parallel project of mine is to change the rules of the dialogue. The prestige of economics in our discourse about society and social problems affects the language we use, which in turn shapes our thought. I perceive (maybe I’m wrong) that in order to be taken seriously in a number of circles, you have to speak (and think) in a narrow and particular way. And a lot of people end up limiting, or disowning, or forgetting about important parts of their whole selves and values in order to keep up to speed and stay current in the debate. I want smart influential people to eschew the exclusive use of the language of “sophists, economists, and calculators” and restore a balanced discussion of who we are, what we want, and how we ought to get there.
I don’t know why I picked this post to nail my comments on. Sorry to barge in.
— Tim · Jul 31, 02:18 AM · #