Daily Archives: 19 November 2011

Government-Guaranteed Loans and Taxes

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This is a brief tale of taxes and loans as they apply to American education.

In a time when our governments think the answer to correcting our public education system’s decades-long failure to improve our children’s education, as demonstrated by poor and unimproving standard test scores, is to continue their decades-long practice of throwing our taxpayer money at the system (what was it that Albert Einstein said about doing the same thing repeatedly and expecting different results…?), some of our state governments, and the good citizens therein, are rejecting the idea and doing something different.

As  The Daily Caller reports, in the recent special election in Colorado, the voters overwhelmingly rejected a ballot proposal that would have raised, yet again, taxes earmarked for public schools, when no discernable improvements from those increases were expected (by those taxpayers).

Florida, on the other hand, has been doing something different since the turn of the century: it’s lowered taxes by giving tax credits to businesses that donate to a non-profit  K-12 scholarship program that are equal to those donations.  The scholarships then are awarded to low-income families to help pay their costs in sending their children to private schools selected by those parents.  (Notice that phrase, too: “help pay.”  The families have to commit significant funds of their own; by having their own skin in this game, they have incentive to ensure their children do well in the new school.)

The effect of this Florida program is four-fold: the public schools, now having to compete for students, are doing a better job of teaching the children they retain.  The low-income families get better choices in how to get their children educated.  The state saves money: despite losing $1 in education tax revenues, it actually saves nearly $1.50 because despite the stereotype, it’s cheaper to educate a child in a private school in Florida than it is in a public school.  The local communities come out ahead because a dollar taken in taxes is only about six bits actually spent back into the local community due to the internal friction of the various government agencies each taking their taste of that tax dollar, whereas that same dollar left in the taxpayer’s hands is entirely spent in one form or another.

Now let’s look at government-guaranteed student loans for college (those guarantees, don’t forget, are covered by tax dollars from all of us).  What are these loans used for, and what should they be used for?

This table from The Daily Caller is instructive.

Bachelor's Degrees AwardedLook at this table against the backdrop of the global economic competition in which the United States is engaged.  From business, to resource development, to production, to defense, and everything in between, the United States needs well-trained and -qualified scientists and engineers.  What are our students studying?  Visual and Performing Arts.  Education(!?).  Social Science (how are we doing in this field, by the way?).  What are international students, the students of our competitors, studying?  Engineering.  Physical and Life Sciences.

If we’re going to have a government student loan program (I think we should not, but that’s another story), might it not be a little bit beneficial to target those loans in some way?  How about, if we’re going to commit our tax dollars to covering student loans at all, we at least use the program to encourage our students to study—and to stay with through graduation—the engineering and science, technology, and/or mathematics that will actually do our nation and our society some good, instead of just spotting our unformed (and uninformed) high school graduates the bucks they want simply to follow their bliss?

Health and Government

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There were two articles in today’s The Wall Street Journal that drew my eye.  In the first article, Joseph Rago interviewed John Lechleiter, CEO and Chairman of Eli Lilly & Co.

Mr Lechleiter offered these comments, among others:

In 1960 the average life expectancy in East Asia was 39…. In 1990, 30 years later, it was 67. Think about that. Does that explain the Asian economic boom? I think it might go a long way….  Wealth follows health, and it ain’t the other way around.

Lechleiter expanded on the point: longer, healthier, more productive lives, and more of them; more workers; an expanding middle class; more opportunities for the formation of capital—this virtuous medical-economic cycle is helping to generate the equally staggering growth in China and elsewhere in the region.

This could very well be a biomedical century, in the same way that the last was a physical and engineering century, with similarly explosive improvements in capability for taking care of our bodies and minds, and lives.  After a period of labor-saving device advances, now perhaps, a period of advances in  life- and quality of life-saving devices and techniques.

But maybe not in the United States.  Genentech’s Avastin is a drug that had been approved for use as a treatment option for women with metastatic breast cancer; that approval has been withdrawn by the FDA.  The rationale for the withdrawal is instructive:

The National Comprehensive Cancer Network, a highly respected consortium of U.S. oncology programs, has four times reaffirmed its recommendation that Avastin is “an appropriate therapeutic option.”

Perhaps the most telling passage in Dr. Hamburg’s apologia arrives when she rejects such practical expertise because the Cancer Network tries “to provide clinicians with ready access to synthesized information they can use in making patient decisions.” She says the FDA’s judgment is superior because its experts “have extensive qualifications in clinical trial design and evaluation.” Rarely are assertions of regulatory purism over the evidence and practice of the real world so chillingly blunt.

Further, Dr Margaret Hamburg, FDA Commissioner, while acknowledging that many women experience dramatic improvements with Avastin, insists that “it is not possible to determine if there is some subset of patients within the population as a whole that may have had a meaningful benefit.”

I suppose, though, there is a bright side to this.  It isn’t every nation in the world that has such august personages in their governments who personally know better than empirical evidence what the correct course must be.