Tuesday, December 21, 2010
Regulating the internet
Even though a federal judge ruled that the FCC didn't have the authority to regulate the internet, the FCC voted to grant itself that power anyway. Watch this Reason.tv video on why there is no need for the government to regulate the internet.
Sunday, December 19, 2010
Inconvienent facts
Clocking in to kill this persistently wrong opinion....again.
To recap, the Lied study believes that A) Nevada isn't performing well because education is not performing well. They believe education in Nevada is not performing well because B) we don't give education enough revenue. C) We don't give education enough revenue because we don't tax enough.
A) is true. We have last in the nation graduation rates, are among the worst in drop out rates, neither major university graduates half of its full-time students within 6 years and our education achievement in reading has been flat. That said, we've made some gains in math and Nevada has decent achievement levels for low-income children (relative to other states but in the end, everyone stinks here).
B and C are both false yet constantly repeated by the "tax-more" crowd. Let's review why in two simple steps.
1) Nevada's tax collection per-capita was HIGHER than many of the state's the Lied study suggests we emulate. Check the left-of-center Brooking Institution's data yourself. Nevada collects more taxes per-capita than Arizona, Utah, and North Carolina (and many others) - all states cited as having better systems of education and better economic outcomes. In fact, of Nevada's regional neighbors, only California collects more taxes per-capita.
2) We tax more than some of the states cited as good examples by the Lied study and as it turns out, we also spend more on education. Nevada's per-pupil spending on K-12 education is also higher than Arizona, Utah and North Carolina. Check the National Center for Education Statistics per pupil spending data (here for fall enrollment and here for daily average). Note, Nevada's total K-12 education spending is higher than North Carolina but operational spending is slightly lower... by $1 when looking at per-pupil spending by average daily attendance).
As for Higher Education, Nevada's education and research expenditures per-capita rank 15th in the nation according to the Delta Cost Project's report "Trends in College Spending" (see figure 13). Again Nevada beats Utah and Arizona, both states lauded for their research universities. North Carolina does beat us here, but Texas - a state with a fast growing high tech sector that was IGNORED by the Lied study (cherry picking perhaps?) - also spends less on higher education (and they get better results).
These two simple facts (ok, there are three) obliterate the Lied study's (and Las Vegas Sun's) argument that we need to tax more to spend more on education. Unfortunately, this tax and spend more narrative won't die no matter how many facts are shown to contradict the opinion.
Friday, December 17, 2010
Nanny of the Year
Watch the video above to see Reason Tv's first winner of the Nanny of the Year Award. If it is fun, tastes good and people like it, chances are they've banned it.
Tuesday, December 14, 2010
Teaching for the tests
Dr. Jay P. Greene has a great blog post on the false claims found within some recent New York Times and L.A. Times articles on the Gates Foundation findings on teacher effectiveness.
Apparently the Gates Foundation found a positive correlation between "teaching to the test" and value added gains on the state test. However, somewhere between the Gates Foundation and the newspaper printing room the correlation turned negative.
As Dr. Greene noted, the relationship between drilling students and other methods may be weaker, but it is still positive. It is possible that the Gates Foundation misinterpreted their own data or that the newspaper authors heard incorrectly.
Read Greene's thoughts here.
Saturday, December 11, 2010
Lied study may be wrong again
The recent Lied study recommending an increase in spending on education may be wrong on another count. The favored narrative among the political left is that Nevada's low tax status was once used to attract people to the state, but it may no longer be working. Instead, they argue, we should increase taxes and spend the revenue on new infrastructure and social services.
This narrative fails on two accounts. 1) Nevada is a middle tax state. Sure, residents pay less, but we tax, tax, and tax again, tourists and gaming (but even this impacts residents and the economy because dollars are taken out of job creation, wages, dividends and profits and put into the less productive, if not destructive, government sector). 2) Nevada isn't projected by Forbes or Moody's to be among the top ten states people are fleeing. It is one of many economic indicators, but for now it will suffice for this blog post and discussion.
Those states are:
Some of the states above suffer from high cost of living, high taxes and low job growth (New York and Ohio). Other states are suffering, in part, because of the BP oil spill (Louisiana and Mississippi).
So why are people fleeing these states? Moody's Analytics and Forbes Magazine noticed some patterns; among those patterns was, you guessed it, high taxes.
My suspicion is that the expert panel for the Lied study fell into confirmation bias. That is, they saw the evidence they wanted to see to confirm their own narrative of how things work or how things should be. Personal bias toward greater government spending allowed them to see what they wanted to see and ignore evidence contrary to their own thesis.
They saw other states like Utah and North Carolina and how they invested in higher education and assumed that must be one reason why the high-tech and high paying jobs were flocking to those states. They looked at Arizona and saw two major research universities and concluded, that their success must be do to greater investment from tax dollars.
There is just one problem - they didn't bother looking up actual tax data. So lets look at the tax collection per-capita rankings from the Brookings Institution.Tax collection per capita tells us how much state and local governments are collecting in taxes per resident.
Toss in other low performers like California and Nevada with New York, Illinois, Ohio, Nebraska, Kansas, Iowa, Louisiana, North Dakota, South Dakota, and Mississippi and the average rank in tax-collection per capita is 23 (the rank rises to 25 if you exclude California and Nevada). In other words, the worst performing states in retaining residents are more likely to also be high tax states.
Compared to top performers like Arizona (a state Nevada says we want to be like) Utah (another state we claim to want to emulate), Texas, North Carolina (again another state the Leid Study says we should emulate) and Florida, their tax collection per-capita averages out to 35. In other words, the top performing states are more likely to be low tax states.
In fact, every state Nevada's political and expert class claims they want to emulate, taxes LESS than we do. In overall tax collection per-capita, Arizona ranks 38th; Florida 27; North Carolina 34, Texas 38 and Utah 40 - all top performing states are in the bottom half. Meanwhile, Nevada ranks 24th - we are in the top half of all states for tax collection per-capita.
In the end, there just isn't enough evidence to say "low taxes" are to blame or that "higher taxes" will solve our problems. People who are saying that are just trying to confirm their own biases at this point. In fact, it seems there is more evidence to suggest that low taxes per-capita are better. A more in-depth analysis may show low-taxes play a role, or none at all, but the fact remains that the states Nevada's elite class wants to emulate all tax less than Nevada.
So how do these lower tax states get the job done while Nevada falls flat on its face with more revenue per capita? The answer is simple and I've said it a hundred times. It is not about how much we should spend but rather, how effectively we should spend what we already have.
This narrative fails on two accounts. 1) Nevada is a middle tax state. Sure, residents pay less, but we tax, tax, and tax again, tourists and gaming (but even this impacts residents and the economy because dollars are taken out of job creation, wages, dividends and profits and put into the less productive, if not destructive, government sector). 2) Nevada isn't projected by Forbes or Moody's to be among the top ten states people are fleeing. It is one of many economic indicators, but for now it will suffice for this blog post and discussion.
Those states are:
- New York
- Illinois
- Ohio
- Nebraska
- Kansas
- Iowa
- Louisiana
- North Dakota
- South Dakota
- Mississippi
Some of the states above suffer from high cost of living, high taxes and low job growth (New York and Ohio). Other states are suffering, in part, because of the BP oil spill (Louisiana and Mississippi).
So why are people fleeing these states? Moody's Analytics and Forbes Magazine noticed some patterns; among those patterns was, you guessed it, high taxes.
Warm climate, low cost-of-living, pretty scenery... now only if we had the
low tax status like other growth model states...
low tax status like other growth model states...
My suspicion is that the expert panel for the Lied study fell into confirmation bias. That is, they saw the evidence they wanted to see to confirm their own narrative of how things work or how things should be. Personal bias toward greater government spending allowed them to see what they wanted to see and ignore evidence contrary to their own thesis.
They saw other states like Utah and North Carolina and how they invested in higher education and assumed that must be one reason why the high-tech and high paying jobs were flocking to those states. They looked at Arizona and saw two major research universities and concluded, that their success must be do to greater investment from tax dollars.
There is just one problem - they didn't bother looking up actual tax data. So lets look at the tax collection per-capita rankings from the Brookings Institution.Tax collection per capita tells us how much state and local governments are collecting in taxes per resident.
Toss in other low performers like California and Nevada with New York, Illinois, Ohio, Nebraska, Kansas, Iowa, Louisiana, North Dakota, South Dakota, and Mississippi and the average rank in tax-collection per capita is 23 (the rank rises to 25 if you exclude California and Nevada). In other words, the worst performing states in retaining residents are more likely to also be high tax states.
Compared to top performers like Arizona (a state Nevada says we want to be like) Utah (another state we claim to want to emulate), Texas, North Carolina (again another state the Leid Study says we should emulate) and Florida, their tax collection per-capita averages out to 35. In other words, the top performing states are more likely to be low tax states.
In fact, every state Nevada's political and expert class claims they want to emulate, taxes LESS than we do. In overall tax collection per-capita, Arizona ranks 38th; Florida 27; North Carolina 34, Texas 38 and Utah 40 - all top performing states are in the bottom half. Meanwhile, Nevada ranks 24th - we are in the top half of all states for tax collection per-capita.
You get the picture.
In the end, there just isn't enough evidence to say "low taxes" are to blame or that "higher taxes" will solve our problems. People who are saying that are just trying to confirm their own biases at this point. In fact, it seems there is more evidence to suggest that low taxes per-capita are better. A more in-depth analysis may show low-taxes play a role, or none at all, but the fact remains that the states Nevada's elite class wants to emulate all tax less than Nevada.
So how do these lower tax states get the job done while Nevada falls flat on its face with more revenue per capita? The answer is simple and I've said it a hundred times. It is not about how much we should spend but rather, how effectively we should spend what we already have.
Friday, December 10, 2010
Spending more money won't improve student achievement
UNLV's Lied Institute for Real Estate Studies released a white paper on the expert opinions of 40 business leaders, government employees and educators. There are always serious problems with expert opinion panels, but for now we'll leave that alone.
The paper concludes that Nevada needs to diversify the economy in order to improve economic growth and reduce unemployment. To do that we need a better system of education, they argue. I believe this is a long term solution, not a quick fix, but let's continue How do we improve education? They argue that since Nevada languishes at the bottom in spending, student achievement and graduation rates that it must all be related. Thus we need to spend more money on education in order to improve education quality. They also conclude we don't tax enough either. Both conclusions are false and are unsupported by the facts.
While it is true that Nevada spends less than the national average and ranks close to the bottom, it is not necessarily true that spending more money will produce greater achievement. In fact most education researchers tend to agree that spending and student achievement are either not correlated or so weakly correlated that it is no longer an effective means of improving student achievement
We also know that it is a complete myth that Nevada doesn't tax enough. The report was careful to cite a Tax Foundation study which shows Nevada residents pay low taxes, but the Lied white paper ignores total taxes paid - a statistic found within the very same report (I pointed this out ages ago and people keep ignoring it). According to the Tax Foundation, Nevada ranks 22nd for total tax collection per capita (see table 6 on page 9) Additionally, the left-of-center Brookings Institution ranks Nevada 24th in total tax collection per-capita.
How much residents pay in taxes doesn't matter if state and local governments also collect a lot of taxes from corporations or tourists. Many on the political left in Nevada like to focus on resident taxes - which basically amount to our property taxes and not much more. Of course, the government collects far more in taxes than just this.
Back to per pupil spending: Does spending more money improve student achievement? If so, how much?
I've run eight regressions, and could do many, many more. In these regressions I looked at the National Assessment of Educational Progress (NAEP) 4th Grade Reading Scores and compared them with the National Center for Education Statistics per-pupil spending figures.
For the NAEP data I used a cross-tabulated report to control for Free and Reduced Lunch (FRL - a proxy for low-income students), English Language Learners (ELL) and students with Learning Disabilities (SD). The analysis looks at Non-SD/Non-ELL/FRL students (low-income students without disabilities who are not English language learners) and Non-SD/Non-ELL/Not-FRL students (middle to upper income students who are not learning disabled nor English language learners). This allows me to create apples to apples comparisons across states.
For the eight regressions, I've compared the 2007 achievement scores with the total per-pupil spending in 2007 and also with the increase in per-pupil spending between 2003 and 2007 (2003 is the first date available in which all states took the NAEP. 2007 is also the last date for per-pupil spending scores).
Here is what I found: No regression showed a strong relationship between spending and student achievement. In fact, the strongest correlation demonstrated that spending can only explain about 3.6 percent of the variance in student achievement. This means that at the very best, something else is explaining the other 96.4 percent of student achievement (like teacher quality, parental involvement, standards, school choice, etc).
Of the eight regressions three regressions were statistically significant and positive while three were statistically significant but negative. Two were not statistically significant at all. Overall, because of the very weak relationships (both positive and negative) we cannot conclude that spending will boost student achievement, at least with 4th grade reading (I'm sure further analysis will yield very similar results).
For example, to boost non-FRL student scores to the Florida average, Nevada would need to increase its spending by $20,338 per pupil. By the end of the next four year period we would need to rise from $8,662 per-pupil to $29,020. This would cost the state an additional $17.08 billion per biennium - an amount that is roughly equal to the entire state's budget during the biennium. As you can see, spending more money on education is NOT cost effective...if greater student achievement is your goal.
But there is a problem. Almost every state increased spending and almost every state increased per-pupil spending. Since the relationship between increasing spending and increased scores is so incredibly weak its worth looking at whether increasing spending is correlated to high raw scores. When looking at the spending increase between 2003 and 2007 and the end results in 2007 the relationship turns negative.
This means, the more you increase spending the worse the performance.
For example, relationship with the 2007 4th grade reading score for non-SD/non-ELL/FRL children and the per-pupil spending growth between 2003-2007 is negative. The analysis shows that the less states that increased spending between 2003 and 2007, the higher the score would be by 2007. For every $755 less the states spent between 2003 and 2007 they saw an additional 1 point gain by 2007. The total score for non-SD/non-ELL/non-FRL students and spending growth is also negative.
Since all the relationships, positive or negative, turned up contradictory and very weak, we can conclude that there really is no relationship between spending and student achievement. Devoting more money to K-12 education when it is not expected to produce any additional gains will not help the economy as the money could be used elsewhere to create jobs and wealth.
More analysis can and should be done, but the evidence that has been collected thus far suggests that the Lied Institute's panel recomendations may actually retard, not help, Nevada's economic development.
In other news, although Nevada's FRL and non-FRL students ranked 42nd and 48th in overall achievement for the 2007 4th grade reading test, our respective achievement growth between 2003 and 2007 ranks 6th and 9th. Pretty good achievement gains for such a low spending state, wouldn't you agree?
The paper concludes that Nevada needs to diversify the economy in order to improve economic growth and reduce unemployment. To do that we need a better system of education, they argue. I believe this is a long term solution, not a quick fix, but let's continue How do we improve education? They argue that since Nevada languishes at the bottom in spending, student achievement and graduation rates that it must all be related. Thus we need to spend more money on education in order to improve education quality. They also conclude we don't tax enough either. Both conclusions are false and are unsupported by the facts.
While it is true that Nevada spends less than the national average and ranks close to the bottom, it is not necessarily true that spending more money will produce greater achievement. In fact most education researchers tend to agree that spending and student achievement are either not correlated or so weakly correlated that it is no longer an effective means of improving student achievement
Nevada is struggling, but spending more money on K-College education, rather than trying to figure out how to spend existing resources more effectively, may actually retard our economic recovery.
We also know that it is a complete myth that Nevada doesn't tax enough. The report was careful to cite a Tax Foundation study which shows Nevada residents pay low taxes, but the Lied white paper ignores total taxes paid - a statistic found within the very same report (I pointed this out ages ago and people keep ignoring it). According to the Tax Foundation, Nevada ranks 22nd for total tax collection per capita (see table 6 on page 9) Additionally, the left-of-center Brookings Institution ranks Nevada 24th in total tax collection per-capita.
How much residents pay in taxes doesn't matter if state and local governments also collect a lot of taxes from corporations or tourists. Many on the political left in Nevada like to focus on resident taxes - which basically amount to our property taxes and not much more. Of course, the government collects far more in taxes than just this.
Back to per pupil spending: Does spending more money improve student achievement? If so, how much?
I've run eight regressions, and could do many, many more. In these regressions I looked at the National Assessment of Educational Progress (NAEP) 4th Grade Reading Scores and compared them with the National Center for Education Statistics per-pupil spending figures.
For the NAEP data I used a cross-tabulated report to control for Free and Reduced Lunch (FRL - a proxy for low-income students), English Language Learners (ELL) and students with Learning Disabilities (SD). The analysis looks at Non-SD/Non-ELL/FRL students (low-income students without disabilities who are not English language learners) and Non-SD/Non-ELL/Not-FRL students (middle to upper income students who are not learning disabled nor English language learners). This allows me to create apples to apples comparisons across states.
For the eight regressions, I've compared the 2007 achievement scores with the total per-pupil spending in 2007 and also with the increase in per-pupil spending between 2003 and 2007 (2003 is the first date available in which all states took the NAEP. 2007 is also the last date for per-pupil spending scores).
Here is what I found: No regression showed a strong relationship between spending and student achievement. In fact, the strongest correlation demonstrated that spending can only explain about 3.6 percent of the variance in student achievement. This means that at the very best, something else is explaining the other 96.4 percent of student achievement (like teacher quality, parental involvement, standards, school choice, etc).
Increasing per-pupil spending only explained 3.6 percent of the variance in student achievement growth between 2003 and 2007. In other words, the relationship between spending and achievement is very, very, very weak at best.
Of the eight regressions three regressions were statistically significant and positive while three were statistically significant but negative. Two were not statistically significant at all. Overall, because of the very weak relationships (both positive and negative) we cannot conclude that spending will boost student achievement, at least with 4th grade reading (I'm sure further analysis will yield very similar results).
For example, to boost non-FRL student scores to the Florida average, Nevada would need to increase its spending by $20,338 per pupil. By the end of the next four year period we would need to rise from $8,662 per-pupil to $29,020. This would cost the state an additional $17.08 billion per biennium - an amount that is roughly equal to the entire state's budget during the biennium. As you can see, spending more money on education is NOT cost effective...if greater student achievement is your goal.
But there is a problem. Almost every state increased spending and almost every state increased per-pupil spending. Since the relationship between increasing spending and increased scores is so incredibly weak its worth looking at whether increasing spending is correlated to high raw scores. When looking at the spending increase between 2003 and 2007 and the end results in 2007 the relationship turns negative.
This means, the more you increase spending the worse the performance.
For example, relationship with the 2007 4th grade reading score for non-SD/non-ELL/FRL children and the per-pupil spending growth between 2003-2007 is negative. The analysis shows that the less states that increased spending between 2003 and 2007, the higher the score would be by 2007. For every $755 less the states spent between 2003 and 2007 they saw an additional 1 point gain by 2007. The total score for non-SD/non-ELL/non-FRL students and spending growth is also negative.
Since all the relationships, positive or negative, turned up contradictory and very weak, we can conclude that there really is no relationship between spending and student achievement. Devoting more money to K-12 education when it is not expected to produce any additional gains will not help the economy as the money could be used elsewhere to create jobs and wealth.
More analysis can and should be done, but the evidence that has been collected thus far suggests that the Lied Institute's panel recomendations may actually retard, not help, Nevada's economic development.
In other news, although Nevada's FRL and non-FRL students ranked 42nd and 48th in overall achievement for the 2007 4th grade reading test, our respective achievement growth between 2003 and 2007 ranks 6th and 9th. Pretty good achievement gains for such a low spending state, wouldn't you agree?
Thursday, December 9, 2010
Government waste, yes it exists
According to the Las Vegas Review-Journal, a legislative audit uncovered some potentially criminal spending irregularities. For example, one contractor was paid $350 an hour for 25 hours worth of work in one day - I guess I was wrong, government is really efficient; after all who else can work 25 hours in a 24 hour day?
All joking aside, yes, government waste exists, but we can't leave it up to government alone to find its own waste. This is why the entire government checkbook needs to be put online in a searchable database. This will allow citizens, and the media to comb through government spending to get a better idea of how our money is being used.
This is also why we can't buy into that $3 billion shortfall figure, or the $2.7 billion figure from Senator Horsford. Those figures automatically assume that every dollar spent last year was necessary - including the outrageous "sweetheart" contractor fees paid to retired government employees.
To learn more read the LVRJ article here.
Monday, December 6, 2010
Higher Education graduation rates
The National Center for Education Statistics released a report on post-secondary attainment. The paper found that 49 percent of the 2003-04 cohort received a certificate or degree after six years of study. 31 percent of students attained a bachelor degree while just 15 percent remained after six years to continue their studies. A whopping 36 percent earned no degree at all.
The data suggests that UNLV and UNR are above average institutions of higher education - but this data also includes community colleges and the private for-profits congressional Democrats went after this summer. When looking at national research universities, UNLV and UNR fail to graduate half of their students after six years - thus they are below average (average 4 year public university graduates 59.5 percent of their students after 6 years).
I'm also not convinced we need to spend more money on higher education - especially since we've increased spending faster than inflation and student enrollment growth combined. The fact that 36 percent of all students recieve no degree, not even a certificate, suggests we may actually be over-invested and over-expanded.
The data suggests that UNLV and UNR are above average institutions of higher education - but this data also includes community colleges and the private for-profits congressional Democrats went after this summer. When looking at national research universities, UNLV and UNR fail to graduate half of their students after six years - thus they are below average (average 4 year public university graduates 59.5 percent of their students after 6 years).
I'm also not convinced we need to spend more money on higher education - especially since we've increased spending faster than inflation and student enrollment growth combined. The fact that 36 percent of all students recieve no degree, not even a certificate, suggests we may actually be over-invested and over-expanded.
Saturday, December 4, 2010
College tuition inflation
Kelli Space went to Northeastern University for $49,000 a year to earn a degree in sociology - a junk degree like History, Political Science, Psychology and more. Yes, I say junk because there are few jobs that require these degrees and most jobs people get with these degrees can be earned with any degree, or no degree at all! I should know, I have degrees in History and Political Science and am embarrassed to say I went to an engineering school to earn them. I "only" accumulated about $36,000 in debt (and that includes earning a Masters degree as well).
Today, about 66 percent of all students leave college with debt, that is up from 45 percent in 1993. Today the average debt load for an undergraduate degree is about $24,000.
Kelli amassed $200,000 in debt for a mostly worthless college degree. I'm not feeling 100 percent sorry for her, she went to an uber-expensive private school and earned a junk degree. That wasn't smart, but she may have been mislead.
First, someone at the University did not properly explain Ms. Space's job prospects and the cost-benefit of earning a cheap degree at an expensive university. Northeastern comes across as a cruel university (most are actually and that includes the public schools). They took the young lady's money knowing she would struggle to make ends meet once she graduated. Yes, colleges, universities, professors and administrators are self-interested and greedy too.
Second, Kelli wasn't thinking clearly either. Her payoff matrix (weighing the cost and benefits) was thrown off because she had easy access to money. Being able to take in subsidized loans pushed her into taking stupid amounts of money for a ridiculous degree. It artificially lowered the cost of the degree and delayed the date of her having to realize the full cost of her mistakes.
Finally, what in the world are the student loan makers thinking? $50,000 a year in loans to someone who will make about $30,000 to $40,000 a year (or likely less) in their first job....if they can find one - that is ludicrous!
Would Kelli have worked on that degree at that University if she didn't receive government subsidized loans (that is, the loan companies did not have their loans guaranteed by the government and/or forced Kelli to start repayment immediately)? What if lenders were more responsible (and they would be if their loans weren't backed by the government and if the government didn't pay a portion of the interest while the student was in school)? Would they have given Kelli such massive loans for a sociology degree given the salary expectations of this career field? The answer is probably no, to both.
The combination of Universities using students as moneybags - taking their money and providing little value in return, relative to the cost - and government subsidized loans are driving up college tuition at a rapid rate.
Students are taking on more debt for degrees that are worth far less than the debt amassed. Sound familiar? It is, think housing bubble. Easy access to money, low lending standards and a government push to get everyone into housing pushed up housing prices to astronomical levels. People bought into houses that were artificially inflated and wen the bubble popped everyone realized they were holding onto cheaper real estate.
The bubble will pop for higher education too and it will dramatically reshape the brick-and-mortar university landscape. The pop will force thousands of people out of their university job, as the institutions downsize and restructure to meet new demands - high quality at a low cost. Tuition and fees will drop and hopefully universities will be forced to treat students as customers rather than additional sources of revenue.
Of course, efforts by state governments to pump more money into the university system and the Obama administration to take over the student loan business and funnel more money into student loans will only inflate this bubble further. In other words, the inevitable pop will only be that much more painful.
Read more about tuition inflation in Nevada here.
Thursday, December 2, 2010
Greed
Greed. The political left blames all the economic problems on greed. If they could just regulate greed away the world would be perfect. We could have social justice and equal incomes and poverty would be eliminated. What utopia!
The problem is that greed is a natural human emotion. We're all greedy, no matter what political or economic system you divine. You cannot get rid of greed from the human emotion no more than you can get rid of love.
So how do you ensure that greed (self-interest) can produce good, rather than harm? The answer lies in, and only in, the use of free markets, private property and capitalism. It is the invisible hand Adam Smith described two centuries ago. Under a free market people act in their own self interest by serving the needs of others. They are compelled by competition, prices, and profits, to produce a better product or service than their competitors. In a free market, serving the needs of others, is the only way we can put bread on our own tables.
Watch the video above to see Milton Friedman talk briefly about greed.
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