Wednesday, May 06, 2009
Stimulus Money Destroys Incentives
Is it possible that the $1M Muscatine Schools will receive in stimulus money will destroy incentives to learn new skills or to work toward efficiency? Instead of going back to school and improving my algebra skills, I now might say, "I don't need the skills since the government has guaranteed my job." I read in Burton Folsom's book, New Deal or Raw Deal, that neighboring states bordering Tennessee grew more in income than the high subsidized Tennessee when the TVA was built to provide cheap power. According the the book, people had little incentive to move off the farm because energy was so cheap. I think the same is true with education. With no incentives, teachers will not improve.
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Wow! This looks like a book I need to read. I often see parallels between today and Ayn Rand's "Atlas Shrugged" and wonder if it would really come to that. My dad's small business is just taking off and on the verge of making a lot of money. He is considering holding it back because he sees the tax burden as not worth it. As a teacher that needs a job, I have been told most of the districts around here are still laying off teachers and using their money for building projects, it's very frustrating. Very interesting!
ReplyDeleteMr. Folsom was also on Fox and Friends, my favorite news. I can tell you that I love this book. On every page, the author gives several examples to prove his point and footnotes them too. You won't be disappointed.
ReplyDeleteAre you asserting that you are homo economicus? Or humans are per Folsom's Tennessee energy example? I would contend that a good teacher, that is rational and self-interested, would realize the long-run gains from brushing up their algebra, or what have you, rather than letting stimulus money, or something like tenure, etc. force them to be complacent.
ReplyDeleteConnor, you are assuming teachers care more than the cost of putting in extra work. Most teachers aren't Flad. Their inability to adjust their teaching styles to different types of students proves most consider the cost too high; however, throwing money at them doesn't fix the problem. We need to stop subsidizing failure, and start having school vouchers.
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