Safety Nets and Canada

Dean Dad has an interesting observation:

I was reminded of that a few days ago, in a discussion with a Canadian colleague.  We have similar senses of humor, so we got to talking about The Kids In The Hall, SCTV, and national styles of humor.  (For my money, “Brain Candy” is a neglected classic of dark, dark, dark comedy.)  She offered the theory that Canada punches above its weight culturally because its social safety net -- health care most conspicuously -- makes it possible for people to take chances on creative careers.  As a result, they get Holly Cole, and we’re left with Adam Sandler. 

That was then expanded on in the comments

While I disagree with the specific point about Canada punching above its weight culturally (quick name a great Canadian film that's not "Strange Brew"), I do think that a robust safety net does make entrepreneurial risk taking more likely because people can afford to take the risk of starting a business without having to worry about losing health insurance or other benefits.
I used to have a state government job where this dynamic was apparent: the secretaries in the agency were fairly low paid, but had very good benefits. 3/4 of the secretaries in my officer were married to husbands who had their own small contracting or (vaguely) construction related business. They made much more than their wives made, but had no independent health benefits of their own  

I think that this is a neglected conversation.  The ability to take risks is not just driven by rewards but also by the costs of failure.  If you make the rewards extreme and failure punishing then you create incentives for cheating and "doing anything to win".

This effect shows up in a number of areas -- imagine you are a high school teacher diagnosed with a major illness.  In the real world, COBRA is unaffordable and unemployment is over eight percent.  You are teaching less well due to health issues.  One can see a lot of pressure to find a way -- any way -- to keep test scores above the retention threshold.

You can also see this with small businesses.  The reforms of bankruptcy law (making it harder to go bankrupt) and the cost of health care for those without insurance makes starting up a small firm really risky.  It makes a lot more sense to stay in your sub-optimal office job with the result that you have less innovation and dynamism in the economy.

These effects are just as predictable as free markets are and it can make a lot of sense to invest in ways to pool or mitigate the risk associated with being an innovator.

US Credit Rating

From Talking Points Memo:

From the S&P release ...

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

I am skeptical, as I said to Mark, that this measure will influence other countries all that much. Japan switched to AA+ and that did not hurt the US, rather it helped. What it really does it mean about 55% of the AAA sovereign debt in the world just vanished. The UK, Canada, Sweden . . . all of these countries are about to pay a lot less for their debt. That actually makes them more creditworthy and not less so so.

By the way, what do all of these countries have in common? They are willing to raise taxes to pay for debt. I remember when Canada began paying down its debt via a national sales tax. Unpopular as the move was, it moved the country firmly into surplus and prevented a ratings cut.

It is quite possible for a country to pay down their debt via internal revenue generation. The survivors on the AAA list are the countries that have been willing to make hard decisions to raise revenue rather than appeal for help.

Canadian Health Care

Aaron Carroll provides support for the Canadian Health Care system after comments by Paul Krugman. It is a pretty devastating critique (quality seems slightly higher) made even more so when you consider cost and universal access.

The universal access point is important. When people talk about fear and uncertainty (for business) as being a concern, I think it could also be an issue at the individual level. After all, the fear of an unexpected dread disease appears to be a major concern for most people. How much better would it be if we could eliminate these concerns by breaking the link between health coverage and employment while controlling costs in an effective manner?

The most startling thing in Dr. Carroll's graphs was that physicians are beginning to emigrate to Canada (on net). So even the medical care specialists (with requisite wage controls) seems to like the system.

RIP: Joel Rosenberg

Noted Canadian science fiction author Joel Rosenberg has died.

It is a poorer world without him.

A False Dichotomy

In a lot of discussions about health care systems, the Americans point to the Canadians and say "we don;t want that". Curiously, the Canadians point to the Americans and say "we certainly can't imagine that system being a good idea". But merely looking at these two (fairly extreme) examples is a fundemental failure of imagination. A lot of countries have developed health care systems and it would be remarkable if we couldn't learn a lot from them.

Consider a Libertarian's view of the French health care system:

What’s more, none of these anecdotes scratches the surface of France’s chief advantage, and the main reason socialized medicine remains a perennial temptation in this country: In France, you are covered, period. It doesn’t depend on your job, it doesn’t depend on a health maintenance organization, and it doesn’t depend on whether you filled out the paperwork right. Those who (like me) oppose ObamaCare, need to understand (also like me, unfortunately) what it’s like to be serially rejected by insurance companies even though you’re perfectly healthy. It’s an enraging, anxiety-inducing, indelible experience, one that both softens the intellectual ground for increased government intervention and produces active resentment toward anyone who argues that the U.S. has “the best health care in the world.”

The anecodates as to the efficiency of the system are pretty interesting as well. I can tell you from personal experience that the Canadians are unlikely to have the author's happy experience with universal short wait times.

So maybe we should be looking more broadly for examples?

Tenure and the end of mandatory retirement (Canada edition)

Frances Woolley has a nice post about the intersection between tenure and the lack of a mandatory retirement age in Canada. It is a different case than the debate in Canada. The background is that salary scales and tenure agreements (at Canadian Universities) were negotiated when there was a mandatory retirement age of 65. The removal of mandatory retirement was a windfall for professors who were already employed as they work under a salary scale designed for workers who would leave at 65.

In practical terms this can have a fairly important impact on budgets as it adds additional years of salary at the highest levels (often 2.5 x starting salary in a Canadian University). Frances has a nice chart here. The short term implications are stark:

Such a pay structure can be profitable as long as the pay structure is similar to the one shown in the diagram above, where the high costs of paying workers between 45 and 65 are counter-balanced by the low cost of paying workers between 25 and 45. But if the terms of the employment arrangement were changed so that workers stayed on until 75, the firm's pay structure would no longer be profitable: the costs of paying experienced workers more would exceed the gains from underpaying junior workers.

I think that there is an important balance between job security and balancing out employment contracts. In this case, due to regulatory changes, I think it would make a lot more sense if tenure elapsed at the traditional retirement age. In this case we have the reverse of what is happening in the United States for teachers -- the employment contract changed in mid-stream. I think it is consistent to argue, in both cases, that a change of contract terms should not result in a windfall for either party unless the change was by mutual consent.

Contractually obligated to mention Canada again

I'm as tired of it as you are, but as long reform movement advocates* keep bringing up Singapore, I feel someone has to point out that Canada is neck-and-neck with countries like Singapore (except in post-secondary education where it pretty much blows them away) and that Canada, which is a far better match for the U.S. culturally, historically and demographically, has achieved this by taking most of the steps the movement suggests and doing the exact opposite.

If we had a properly functioning debate on education reform in this country, movement advocates would expect to be presented with counter-arguments; they would even anticipate them. New examples would be sought out, positions would be refined and the intellectual framework of the reform movement would be stronger for it.

But we don't have a properly functioning debate. Hell, we don't really have a debate at all. Instead, we have a situation where advocates can talk about Singapore without anyone bringing up Canada, or about PISA without anyone bringing up TIMSS, or about lottery-based analyses without anyone bringing up peer effects (or placebo effects or volunteer effects or treatment/selection interaction or...). Instead of being challenged and having to prove themselves, these claims go directly into the conventional wisdom pile where they are accepted by smart, otherwise well-informed people like Seyward Darby, Ray Fisman and Jonathan Chait.

This is not likely to end well.

* For the distinction between advocating for reform and advocating for the reform movement, see here.

Damned Canadian Show-offs

From the aforementioned paper by Lane Kenworthy:

At the risk of repeating myself, if we want to use the experiences of other countries to help us improve our education system, the first place we should look is probably Canada, even if those experiences don't support the conventional wisdom.

"What is this 'Canada' of which you speak?"

Following up on Joseph's last post, I remember a discussion about careers I had with a group of friends including Joseph a few years ago. I was looking to make a change and Joseph asked if I'd considered the Canadian term for substitute teaching. I looked at him as though he had suggested I apply for a job scraping roadkill. It took several minutes for him to convince me that where he came from, substitute teaching was actually a sought-after career.

This is consistent with Canada's approach toward teaching in general. Canadians have long worked under the assumption that, if you give teachers security, respect and good salaries, you will attract good teachers. This is just one of the ways that Canada has done the opposite of what education reformers have recommended in this country. Here advocates like Joel Klein and Michelle Rhee insist that without charter schools and the option of mass firings the education system is doomed and yet, by the reformers' own favorite metrics, our northern neighbor consistently kicks our ass.

Demographically, economically, culturally and historically, Canada would seem to be the obvious country to look to when trying to determine the effectiveness of potential U.S. policies but it has been conspicuously absent from a number of debates. Before we start looking across half the world to countries with radically different situations and backgrounds, isn't it possible that we can learn something from a spot closer to home?

Oh, Canada -- another interesting omission in "Clean Out Your Desk"

We're back with our ongoing coverage of Ray Fisman's recent article in Slate which ran with the provocative tagline "Is firing (a lot of) teachers the only way to improve public schools?" (notice that he didn't say "a way" or "the best way").

If you tuned in late, here's what you need to know:

Dr. Fisman starts by discussing a presidential commission report from the early Eighties that said the damage done by our poor educational system was comparable to an act of war. This somewhat apocalyptic language has since become a staple of the reform movement. It grabs the attention, justifies big, expensive, untried steps and sets up a false dichotomy between action and inaction.

The proceedings are then handed over to Joel Klein. Klein builds on the verge-of-disaster theme by invoking the United States' low ranking on the Organization for Economic Co-operation and Development's PISA tests. I've commented at some length on the implications of citing PISA while completely ignoring the better-established and well-respected TIMMS even when the discussion shifted to elementary schools where the TIMMS scores would seem to be far more relevant. (The term cherry-picking did come up.)

For now, though, let's grant Chancellor Klein and Dr. Fisman the benefit of the doubt. Let's say we accept the premise that OECD's PISA rankings are such a good and reliable measure of the state of a nation's schools that we don't even need to look at other metrics. We'll even stipulate for the sake of argument that a bad PISA ranking is sufficient grounds for radical measures. With all of these conditions in place, take close look at the next part of Dr. Fisman's article:

What could turn things around? At a recent event that I organized at the Columbia Business School, Klein opened with his harsh assessment of the situation, and researchers offered some stark options for getting American education back on track. We could find drastically better ways of training teachers or improve our hiring practices so we're bringing aboard better teachers in the first place. Barring these improvements, the only option left is firing low-performing teachers—who have traditionally had lifetime tenure—en masse.

The emphasis on better teachers—through training, selection, or dismissal—comes from the very consistent finding that improving faculty is one of the best, most reliable ways to improve schools. If the person standing at the front of the classroom has raised the test scores of students he's taught before, he's likely to do so again.

But how do you get good teachers in the classroom? Unfortunately, it turns out that most evidence points toward great instructors being born, not made. National board certification may help a bit, a master's degree in education not at all. It's also difficult to pick out the best teachers based on a résumé or even a sample lesson. It takes a year or so before evaluators (and even teachers themselves) know who is really good at getting kids to learn, and few qualifications are at all correlated with teaching ability. Candidates with degrees from prestigious colleges—the type where Teach for America does much of its recruiting—do a bit better, but not much.

Here's the gist of Dr. Fisman's premise:

1. According to PISA (the test that trumps all other tests) the state of U.S. education is dire;

2. We need to improve the quality of our teachers "through training, selection, or dismissal";

3. So far, no one has found a way to make training or selection work.

If we want education to do well we might just have to start firing teachers en masse, and by "do well," we mean outscore other countries, which raises the question, "How do other countries find all of those natural teachers?"

Of course, comparing educational systems of different countries can be tricky but we should at least be able to look at Canada. It's a fairly large industrialized country. Not that different economically. Very similar culturally with a comparable K through 12 educational system that has to deal with English as a second language (huge immigrant population), relies on roughly the same type of teacher training/certification that we use and continues to pull teachers in with promises of good job security.

In terms of this discussion, the biggest difference between the two countries could well be Canada's somewhat reactionary approach to reform (for example, only one province, Alberta, allows public charter schools). With such limited school choice and no real attempt to clean out the deadwood from behind the podium, the Canadian educational system looks a lot like the American system before the reform movement.

And how is Canada doing on the PISA math test?

From Measuring up : Canadian Results of the OECD PISA Study:

One way to summarize student performance and to compare the relative standing of countries is by examining their average test scores. However, simply ranking countries based on their average scores can be misleading because there is a margin of error associated with each score. As discussed in Chapter 1, when interpreting average performances, only those differences between countries that are statistically significant should be taken into account. Table 2.1 shows the countries that performed significantly better than or the same as Canada in reading and mathematics. The averages of the students in all of the remaining countries were significantly below those of Canada. Overall, Canadian students performed well. Among the countries that participated in PISA 2006, only Korea, Finland and Hong Kong-China performed better than Canada in reading and mathematics. Additionally Chinese Taipei performed better than Canada in mathematics.

That puts them in the top ten (in science they were in the top three). Now let's review the United States' performance (quoting Dr. Fisman):

Despite nearly doubling per capita spending on education over the past few decades, American 15-year olds fared dismally in standardized math tests given in 2000, placing 18th out of 27 member countries in the Organization for Economic Co-operation and Development. Six years later, the U.S. had slipped to 25th out of 30.

How do we reconcile these facts with Dr. Fisman's argument? As far as I can see, there are only four possibilities (if I've missing some please click the comment button and let me know):

1. Though PISA is a useful test, international PISA ranking may not be a sufficient measure of a country's school system;

2. Teacher quality is not a major driver of national educational performance;*

3. Teachers are made, not born. i.e. it is possible to train people to be good teachers;

4. Canada just got lucky and beat the odds hundreds of thousands of times.

If this were a PISA question, I hope no one would pick number four.



* This is really is a topic for another post, but I would expect the administrator effect to overwhelm the teacher effect. Perhaps Dr. Fisman is going to follow up with a Slate article on firing administrators who produce lackluster test performance.