Malcolm McLean for the Al

October 12, 2015

(Guest Post by Matthew Ladner)

You may have never heard of American entrepreneur Malcolm Purcel McClean, but you have greatly benefited from his work.  The son of a North Carolina farmer, McLean went into the trucking business. One day watching the process of loading a shipment of cotton from trucks to a ship, he had a rather brilliant but simple idea:

I had to wait most of the day to deliver the bales, sitting there in my truck, watching stevedores load other cargo. It struck me that I was looking at a lot of wasted time and money. I watched them take each crate off a truck and slip it into a sling, which would then lift the crate into the hold of the ship. Once there, every sling had to be unloaded, and the cargo stowed properly. The thought occurred to me, as I waited around that day, that it would be easier to lift my trailer up and, without any of its contents being touched, put it on the ship.

Eventually this idea evolved into simply taking the box rather than the entire truck and box onto a ship. In 1955 McLean rolled the entrepreneurial dice, buying  two WWII era oil tankers and securing a loan to purchase $42 million worth of docking, shipbuilding, and repair facilities. He refitted the ships and designed trailers to go both below or on the decks of the ships. In April  26th, 1956 his first loaded ship successfully set forth from Port Newark, New Jersey, headed for Houston, Texas.

You knew there would be a Texas angle in this story right? In any case that date is now regarded as a historical marker in maritime history. When McLean passed away in 2001, his obituary noted that the sea transport of goods had not changed much between the time of the Phoenicians and 1956. McLean’s shipping containers enormously decreased the labor and the cost of shipping goods by sea. In 1956 it cost $5.86 per ton for longshoremen to load cargo- McLean’s technique reduced that cost to 16 cents per ton.

Memo to the Bernie Sanders/Pat Buchanan/Donald Trump anti-trade Axis of Ignorance: an academic evaluation teased out the impact of containerization on the increase in world trade from that of tariff reductions. Containerization had a larger impact than free trade agreements, which means McLean deserves some of the credit for things like:





Like many successful entrepreneurs, the progress McLean brought had determined enemies- especially among unionized dock workers. Oh if we could only forego all of this progress, especially for the poor, so that we could go back to having more dock workers, more expensive goods and more global poverty! In 1980 the United States Supreme Court ruled against dock worker unions who were exploiting antiquated provisions to get paid for work that no longer needed doing.

McLean died a successful but publicity shy man who made the world a much better place while making a fortune for himself that captured only the smallest fraction of the prosperity unleashed by his innovation.

Bonus- innovators in construction have begun using shipping containers to make buildings like:





Nominations Solicited for the 2015 Al Copeland Humanitarian Award

October 12, 2015

It is time once again for us to solicit nominations for the Al Copeland Humanitarian Award.  The criteria of the Al Copeland Humanitarian Award can be summarized by quoting our original blog post in which we sang the praises of Al Copeland and all that he did for humanity:

Al Copeland may not have done the most to benefit humanity, but he certainly did more than many people who receive such awards.  Chicago gave Bill Ayers their Citizen of the Year award in 1997.  And the Nobel Peace Prize has too often gone to a motley crew including unrepentant terrorist, Yassir Arafat, and fictional autobiography writer, Rigoberta Menchu.   Local humanitarian awards tend to go to hack politicians or community activists.  From all these award recipients you might think that a humanitarian was someone who stopped throwing bombs… or who you hoped would picket, tax, regulate, or imprison someone else.

Al Copeland never threatened to bomb, picket, tax, regulate, or imprison anyone.  By that standard alone he would be much more of a humanitarian.  But Al Copeland did even more — he gave us spicy chicken.

Last year’s winner of “The Al” was Peter DeComo, the inventor of the Hemolung Respiratory Assist System.  To save a life DeComo had to trick border control officials to bring a model of his artificial lung machine into the US from Canada because the device had not yet been fully approved by the FDA.  DeComo won over a worthy field, including Marcus Persson, the inventor of Minecraft, Ira Goldman, the developer of the “Knee Defender,”  Thomas J. Barratt, the father of modern advertising, and Thibaut Scholasch and Sébastien Payen, wine-makers who improved irrigation methods.

The previous year’s winner of “The Al” was Weird Al Yankovic.  Weird Al beat an impressive set of nominees, including Penn and Teller, Kickstarter, and Bill Knudsen.

The 2012 winner of “The Al” was George P. Mitchell, a pioneer in the use of fracking to obtain more, cheap and clean natural gas. Mitchell won over a group of other worthy nominees:  Banksy, Ransom E. Olds, Stan Honey, and Alfred Fielding and Marc Chavannes.

In 2011 “The Al” went to Earle Haas, the inventor of the modern tampon.  Thanks to Anna for nominating him and recognizing that advances in equal opportunity for women had as much or more to do with entrepreneurs than government mandates.  Haas beat his fellow nominees:  Charles Montesquieu, the political philosopher, David Einhorn, the short-seller, and Steve Wynn, the casino mogul.

The 2010  winner of  “The Al” was Wim Nottroth, the man who resisted Rotterdam police efforts to destroy a mural that read “Thou Shall Not Kill” following the murder of Theo van Gogh by an Islamic extremist.  He beat out  The Most Interesting Man in the World, the fictional spokesman for Dos Equis and model of masculine virtue, Stan Honey, the inventor of the yellow first down line in TV football broadcasts, Herbert Dow, the founder of Dow Chemical and subverter of a German chemicals cartel, and Marion Donovan and Victor Mills, the developers of the disposable diaper.

And the 2009 winner of “The Al” was  Debrilla M. Ratchford, who significantly improved the human condition by inventing the rollerbag.  She won over Steve Henson, who gave us ranch dressing,  Fasi Zaka, who ridiculed the Taliban,  Ralph Teetor, who invented cruise control, and Mary Quant, who popularized the miniskirt.

Nominations can be submitted by emailing a draft of a blog post advocating for your nominee.  If I like it, I will post it with your name attached.  Remember that the basic criteria is that we are looking for someone who significantly improved the human condition even if they made a profit in doing so.  Helping yourself does not nullify helping others.  And, like Al Copeland, nominees need not be perfect or widely recognized people.


October 9, 2015

(Guest Post by Matthew Ladner)

I spent yesterday up in Prescott attending a meeting of the Classrooms First initiative, which is a panel put together by Governor Ducey to discuss school finance reform in Arizona. Arizona has both online learning programs and CTE programs that basically entail dividing the per pupil funding between a home school and an outside provider. As you might imagine, this gets messy.

On the digital side for instance schools and districts are not required to accept online courses by outside providers for credit. “How are we supposed to know whether the course was any good?” goes the refrain. Of course districts will happily accept online courses which they provided themselves- these of course have all of the necessary quality control and all. An outside observer however would struggle to discern that a district online course was any more effective than one provided by an outside provider.

So Arizona taxpayers foot the bill for all of this, and we have kids completing coursework but finding themselves denied credit for said coursework. Delightful.

CTE training has a different but related set of problems involving division of per student funding.

During this discussion it occurred to me that our state is about a third of the way through the birth process leading to an a la carte education for high school students.

Some people want our mom to stop pushing while we, er, figure things out or something. The contractions however will not agree to a pause. Lobbyist Jay Kaprosy noted that testing is moving in the direction of end of course exams, so we should consider moving the funding from the providers to the student to allow them to divvy it up among providers. A great many details would need working out to move to such a system and the Classrooms First council was understandably cautious (this topic is related but not central to their task) but my reaction:



Frank Zappa, the Hogs, and Me

October 8, 2015

Here is Frank Zappa during a 1975 concert at the University of Arkansas wearing a hog hat.  And below I am doing the same.  I knew we had a lot in common. (h/t Arkansas Newswire)

Are achievement tests a reasonable proxy for school quality?

October 7, 2015

In my final piece of this series arguing against the high-regulation approach to school choice, I’m going to discuss whether achievement test results are a reasonable proxy for school quality.  Achievement tests are at the center of the high-regulation approach.  They are used by regulators — whether authorizers, portfolio managers, or harbor masters — to identify good and bad schools, to determine whether they should be included as choice options, and to shape the goals schools should pursue.

There is no question that growth in student learning provides us with some useful information.  The problem is that school quality is much broader than just test score results.  I always understood that achievement tests were only a partial and imperfect indicator of school quality, but I used to believe that other aspects of school quality not captured by achievement tests were largely correlated with those test results.  That is, I used to think that if a school raised scores it probably meant that students were safer, more students would graduate, more students would learn productive values, and more students would go on to become successful adults.

Unfortunately, the evidence is increasingly clear that test scores are only weakly correlated with all of these other desirable outcomes from schools.  All you have to do is look at yesterday’s post.  Schools that produce the largest achievement test gains are not necessarily the ones that produce higher graduation, or college-attendance rates.  And sometimes schools with unimpressive achievement gains make significant contributions to attainment and annual earnings when students join the workforce.  I used to think that this couldn’t be possible.  All of these happy outcomes had to be aligned.  They just aren’t.

If you are not persuaded by the evidence I reviewed yesterday on the disconnect between achievement results and other outcomes, I suggest you read an excellent book written by Nobel Prize winning economist James Heckman and his students called The Myth of Achievement Tests.

The problem is that the high-regulation approach needs achievement tests to be correlated with all of these other good outcomes.  If they are going to pick the school choice winners and losers based on test scores, then test scores need to be strongly predictive of other things we care about.  People have been very slow to accept the fact that test scores are only weakly correlated with later life outcomes because it would be so convenient if readily available and relatively inexpensive test scores could capture something as complex as school quality.  The fact that they don’t throws a monkey wrench into the entire high-regulation machinery.

The reality is that the average low-income parent has more complete information about their kid’s school quality than does the highly-trained regulator armed only with test scores.  When we wonder why parents are choosing schools that regulators and other distant experts deem to be “bad,” it is almost certainly because the parents know more about what is good and bad than do the experts.

The wrong response to recognizing that test scores fail to capture school quality sufficiently is to increase the set of high-stakes measures we collect.  We can’t fix the limits of math and reading achievement tests by adding mandatory “grit” surveys or other measures.  Even informed by a variety of measures, Chinese officials are no more effective in telling state-controlled banks how to allocate capital than portfolio managers are in determining how to allocate school options.  Decentralized decision-making is simply better than central planning.

The school choice movement has to remember that choice is what makes this reform work, not the regulation.  I’m perfectly willing to accept that some regulation is necessary and inevitable.  And I’m willing to make compromises to get programs adopted.  But the cardinal sin of the high-regulation school choice folks is that they believe that heavy regulation is the ideal and should be the starting point for political compromises.

The Brown and the Gray: It’s Already Started

October 7, 2015

Wonk action shot !!

(Guest Post by Matthew Ladner)

I had the opportunity to participate on a panel at the PIE Network conference in Scottsdale on a panel that used Arizona as the canvass to discuss important issues. A better look at this picture:

No special effects here this is an actual photograph of downtown Phoenix during a haboob– an Arabic word that roughly translates to “gigantic dust storm.” An haboob forms in a weather front in arid regions- thus in the picture your eyes are drawn to the beige dust cloud, note also the huge grey clouds in the background.

Fortunately you probably live in a place that won’t experience an Arizona-style haboob- at least not weather-wise. In terms of your state’s politics-get ready. It’s coming to get you.

Ronald Brownstein has written a series of articles in the National Journal about demographic change and inter-generational conflict under the theme of the Brown and the Gray. He describes the two massive generations: old and white Baby Boomers and above vs. young and brown population as two tectonic plates. The earthquakes have already started here in Arizona. Rather than dismiss Arizona as a remote backwater, you should pay close attention to what has transpired here and learn from our mistakes. Arizona’s demographics and attendant controversies lie in your state’s immediate future.

Regardless of which state you live in, over the next 15 years it will be getting much older and will have a significant increase in the Hispanic population, much of which will occur in the youth population. Paul Taylor’s book The Next America uses extensive polling data to paint a portrait of Baby Boomers as relatively wealthy but deeply miserable. Two sources of Baby Boomer anger: their Millennial kids still living in their house and a widespread view that the country has changed and no one asked for their permission. One cannot help but wonder how the inevitable grown up conversation about Uncle Sam’s $55 trillion in unfunded entitlement liabilities will worsen moods further.

MIT’s James M. Poterba performed a statistical study and found that an increase in the elderly population is associated with a decrease in overall public school spending, and that the effect is all the more pronounced if the ethnicity of the old varies from that of the young. Let’s concede that the Arizona N of 1 matches this story rather perfectly, but that it should be understood in a context of:

I am not inclined to weep if my state happened to expand public school staffing at a rate slower than the national average, given that the national average expanded staffing at a rate ten times greater than enrollment growth and received precious little for it in return in terms of student learning gains.

While I have more than my share of gray hair, I don’t think this qualifies me as an old grouchy white guy. I’m painfully aware that the future of Arizona rests on providing high quality education to all students-including Hispanics. Simply throwing money at a dysfunctional system may satisfy some sort of superficial need to show that you care, but it simply won’t do in terms of a solution. We need far more than symbolism.

I’m not sure how this story ends. The elderly depend heavily on government spending for health care and the young for education. Uncle Sam has a deeply troubling balance sheet and states have become very dependent on his largess. Deep-seated policy related pathologies define both health and education. A generational conflict over scarce resources looms, and it will have a barely if at all disguised ethnic subtext.

The only (relatively) happy path out of this fix lies in innovation-we need more effective and most cost-effective education and health care delivery systems stat. 

Our work has only just begun.


Does regulation improve the political prospects for choice?

October 6, 2015

In this series of post against the high-regulation approach to school choice, I have demonstrated that performance accountability is not typical of government programs and that heavy regulation drives away quality supply, hurting rather than protecting the students these regulations are meant to help.  If high-regulation is not the norm and does not help children, supporters of this approach might still favor it if they think it has certain political advantages.

For those interested in private school choice, two political advantages are claimed: 1) High-regulation addresses some  objections, winning votes among skeptics to improve the political prospects of passing and sustaining those programs; 2) High-regulation protects private school choice programs from the political damage caused by scandals and embarrassing outcomes.

Neither of these arguments is supported by experience.  Conceding regulatory measures to skeptics and opponents has hardly changed a single vote.  Backers of the Milwaukee voucher program thought they would get relief from legislative opposition if they accepted more burdensome regulation.  No votes have changed as a result and the program remains as precarious as ever.  Nor has regulation protected programs from scandal.  Judging from the steady stream of news reports about teachers in traditional public schools sleeping with students, it appears that no amount of background checks or government oversight can eliminate rare but regular instances of misconduct.  I’m not arguing against a reasonable and light regulatory framework, I’m just suggesting that higher levels of regulation provide little or no additional political protection.  Determined opponents can always find scandals to exploit and cannot be appeased with anything short of preserving the traditional public system.

I’m actually more worried that key backers of school choice are starting to abandon private school choice and focus all of their energies on charters.  High-regulation is the norm in charter programs.  You don’t have to worry about charter schools refusing to participate in a heavily regulated program since they have no alternatives.  And charters seem to be flourishing.  Charter programs exist in more states with more schools serving more students than do private choice programs.  Many important backers of school choice seem to believe that charters are also getting better results.  As Neerav Kingsland of the Arnold Foundation tweeted yesterday: “why is it the over-regulated charter sector that has had the most breakthroughs with low income students?”

Unfortunately, Neerav is mistaken.  Charters are not producing better results than private school choice.  High-regulation comes with a cost to quality.  Let’s consider rigorous evidence on how charter and private school choice affect educational attainment.  For reasons I will discuss at greater length in the next post, I think attainment is a more meaningful indicator of long-term benefits than achievement test results.  I’m aware of 4 rigorous studies of the effect of charter schools on attainment.  The general pattern among them is that programs producing large gains in achievement test outcomes are producing little or no increase in educational attainment.

Angrist, et al examined Boston charter schools and found significant benefits for charter students on MCAS, SAT, and AP performance.  On attainment they write:

Does charter attendance also increase high school graduation rates? Perhaps surprisingly given the gains in test score graduation requirements reported in Table 4, the estimates in Table 7 suggest not. In fact, charter attendance reduces the likelihood a student graduates on time by 12.5 percentage points, a statistically significant effect. This negative estimate falls to zero when the outcome is graduation within five years of 9th-grade entry. (p. 15)

Nor are results much better for attending college: “While the estimated effect of charter attendance on college attendance is positive, it is not large enough to generate a statistically significant finding.” (p. 16)  Angrist, et al do find a significant shift of students from attending 2 year to 4 year colleges, but we don’t know yet if that shift represents a positive development until we see whether they complete their degrees.  Shifting students to 4 year college for which they are ill-suited and from which they drop out does them no favor.

Dobbie and Fryer examine the results of a single charter school in Harlem, the Promise Academy.  Like Angrist, et al, they find large achievement test gains but little benefit for attainment.  Dobbie and Fryer find a higher high school graduation rate after 4 years of the start of 9th grade, but it disappears by 6 years. (p, 18)  College attendance benefits are also fleeting: “Similar to the results for high school graduation,however, control students eventually catch up and make the treatment effects on college enrollment insignificant.”  Dobbie and Fryer similarly find a shift toward 4 year colleges, but again this result is ambiguous. Four year college should help students obtain more schooling but they report “The number of total semesters enrolled in college between lottery winners and lottery losers is small and statistically insignificant.” (p. 19)

Tuttle, et al’s recent evaluation of KIPP charter schools also finds large achievement test gains for charter students but little or no attainment benefit.  Tuttle and her team at Mathematica make two types of comparisons to assess the progress of KIPP high school students.  In one they find: “For new entrants to KIPP high schools, we also examine the probability of graduating within four years of entry. We find that this group of KIPP high schools did not significantly affect four-year graduation rates among new entrants.” (p. 36)  When they examine students who continued from KIPP middle schools into KIPP high schools, they find a small but statistically significant drop in the rate at which students drop out — about 2 percentage points. (p. 39)

Booker, et al examine charter schools in Chicago and Florida and find significant benefits in educational attainment as well as higher earnings later in the workforce — at least for Florida charter students.  They write: “In Florida, the charter high school students show a consistent advantage in absolute terms of 8 to 11 percentage points from high school graduation through a second year of college enrollment.” (p. 22)  On later earnings they find: “Charter high school attendance is
associated with an increase in maximum annual earnings for students between ages 23 and 25 of $2,347—or about 12.7 percent higher earnings than for comparable students who attended a charter middle school but matriculated to a traditional high school.”

Before the high-regulation folks get too excited about the Booker, et al results as vindication of their approach, they should note that these charter schools did not produce impressive achievement test results.  Booker, et al write:

The substantial positive impacts of charter high schools on attainment and earnings are especially striking, given that charter schools in the same jurisdictions have not been shown to have large positive impacts on students’ test scores (Sass, 2006; Zimmer et al., 2012)…. Positive impacts on long-term attainment outcomes and earnings are, of course, more consequential than outcomes on test scores in school. It is possible that charter schools’ full long-term impacts on their students have been underestimated by studies that examine only test scores. More broadly, the findings suggest that the research examining the efficacy of educational programs should examine a broader array of outcomes than just student achievement. (pp. 27-8)

In the high-regulation approach, these charter schools might well be identified as the “bad” schools for failing to improve test scores, and yet they are the ones that produce long-term success for their students.  In the high-regulation approach a portfolio manager or harbor master might kick these schools out of the program or restrict their growth for failing to produce achievement gains.

Let’s briefly review the results from the three rigorous examinations of the effect of private school choice on educational attainment.  Unlike the charter research, they all show significant benefits for attainment.  Wolf, et al examined the federally funded DC voucher program.  They found little benefit for voucher students on achievement tests but those students enjoyed a 21 percentage point increase in the rate at which they graduated high school.  Cowen, et al examined the public funded voucher program in Milwaukee and found a 5 to 7 percentage point increase in the rate at which voucher students attended college.  And Peterson and Chingos examined a privately funded voucher program in New York City and found that African-American voucher recipients experienced a 9 percentage point increase in attending college.  There was no significant benefit for Hispanic students.

If the high-regulation folks wanted to ditch private school choice to go all-in on charters, they would be making a horrible mistake.  The evidence suggests private school choice is producing stronger long-term results.  In addition, among charter schools, the kinds of schools that high-regulation folks like the most are the ones producing weaker long-term outcomes.  Focusing only on charters making the biggest achievement score gains would miss those charters with more modest achievement results but truly impressive attainment outcomes.  Charter schools offer the illusion of getting the benefits from choice without too much of the messiness markets.  As it turns out, central planning among charter schools is no easier than central planning among traditional public schools.

In addition to losing quality if key choice backers were to support charters to the exclusion of private school choice, there are obvious political advantages to backing both types of choice.  Private school choice has helped make the world safe for charters by taking more of the political heat.  We wouldn’t have the same expanding charter sector were it not for the credible threat of even more private school choice.  And the choice movement would be wise to spread its bets across a variety of approaches to expanding school choice.  No one knows the ideal political strategy or regulatory scheme, so having a variety of different approaches allows us to learn about how these different methods for expanding choice are doing.  We need choice among choice.


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