All entries for August 2005

August 30, 2005

Role of Microcredit

Frederic Sautet of The Austrian Economists has a good post on the role microcredit schemes can play in spurring development in poor countries. Frederic states that such schemes are beneficial but far greater benefits could be brought about by more fundamental changes.

While Steve and I agree that microcredit ought to be tried and developed, we share The Economist’s skepticism regarding its potential large success. It does bring financing at low cost to poor people, but it does not necessarily overcome the difficulty for poor people to enter formal economic relations. In our view, microcredit is just a band-aid solution to relieve poverty in the short run.

Read the post in full here.

Perhaps societal unrest concerning the institutional constraints encountered by the growing number microcredit users will generate momentum for their eventual reform. Few doubt the importance of fundamental institutional change, but it's important not to neglect potentially beneficial schemes in the hope that leaders will spontaneously enact reform on their own accord.


August 29, 2005

Pharmaceutical industry and consumers

Spurred by the recent Vioxx case, Alex Tabarrok of Marginal Revolution provides an opinion piece on the pharmaceutical industry and the role of the US Food and Drug Administration.

If aspirin were invented today, the U.S. Food and Drug Administration might not approve it. We should keep this in mind when thinking about Vioxx, Bextra and other pain-relief drugs that have recently been taken off the market. This is not to say that the new pharmaceuticals are “safe,” but rather that all pharmaceuticals involve tradeoffs. The real question is: who is to make those tradeoffs, patients and doctors or the FDA?

Read it in full here.

Along those lines, a quote from David Friedman seems appropriate:

Visibility is an important element in politics, and the FDA is a political institution. Given a choice between one tragedy on the front page and ten in the medical statistics, it inevitably prefers the latter. It thus has a strong bias in favour of overregulating, of stifling medical progress in the name of caution. (From 'The Machinery of Freedom')

August 28, 2005

Tesco's too big according to Wal–Mart

Tesco executives would no doubt expect some sympathy from a fellow mammoth such as Wal-Mart. The UK reatiler is facing the opposition from consumer and supplier representatives and is under the watchful eye of competition regulators eager for a new project; experiences Wal-Mart will be familiar with in the US. Empathy clearly has no part to pay in business relationships as illustrated by an article in The Times quoting Wal-Mart's president and chief executive.

THE increasing dominance of Tesco in Britain needs to be probed by the government, Lee Scott, president and chief executive of Wal-Mart has declared.

In an interview with The Sunday Times, Scott, who owns Asda in Britain, said that it was time for the government to act.

“As you get over 30% and higher I am sure there is a point where government is compelled to intervene, particularly in the UK, where you have the planning laws that make it difficult to compete,” said Scott.

“At some point the government has to look at it,” he added.

Read the article in full here.

The article mentions the plans Lee Scott has for competing with Tesco in the future. However, opening new stores, providing new products and offering a better price could be costly. Encouraging regulators to constrain opponents is far more desirable.


August 27, 2005

China's textiles – Debate continues

BBC news hosts the comments of numerous readers on the issue of EU disputes with China over the textile industry. It's good to see many people highlighting the reactionary, hypocritical nature of politicians behind the furore. Here's a good example –

These quotas simply mean that the EU politicians basically do not believe that people in the EU are able to make a conscious decision about what they value. If the quality of the Chinese products is too low, or the moral implications of buying Chinese too large, a customer in the EU can choose to buy 'European'; the Chinese manufacturers are not forcing anyone to buy their products; people do so of their own volition. This is called customer choice. The only time such a policy could be considered would be if the Chinese products are sold below cost in order to drive out the competition 'unfairly'; and this doesn't seem to be a possibility being discussed. Please trust that the people who elected you have the capability of making the right choices.
Kpdodo, Mauritius

Read the rest of the comments here.

I'd be curious to know what proportion of those seeking to curb trade with China genuinely think it's in the best long term interest of all groups (i.e. those ignorant of history and trade theory) relative to the number who, despite verbal platitudes, simply seek to placate the relevant special interest groups. If most fall into the former group, greater education is desperately needed. If the latter, the structure of incentives and constraints within government must be given more attention.


August 25, 2005

Belated comment on UK examinations

In the light of recent A-level and GCSE results, it's worth saying congratulations to those who've achieved the grades they desired. It's easy for those who've passed through the system to bemoan the 'falling standards', and reminisce about how hard exams were in their day. As many have highlighted, changes in exam difficulty, the new modular system and greater student effort have all contributed to the evolution in pass marks over time.

However, the fact that we have grades at all means a hierarchy of students is seen as desirable. Grades allow parties to make reasonable judgements as to a given candidate's ability. A hierarchy is only as useful as the number of divisions and the distribution of those results within those divisions. Therefore, claims that higher pass rates are automatically a good thing are naive. If increasing the number of students with an acceptable level of knowledge (for example a grade higher than an E) is our ultimate aim, far better to simply award students with a 'pass' or 'fail'. If simple pass/fail grades aren't sufficient, education ministers should heed the calls of school-heads nationwide for reform, rather than merely applauding as pass rates creep ever higher.

The proposed submission of individual A-level module marks is a step in the right direction. It's hard to conceive of a more effective hierarchy than the raw marks achieved by students. These will be of more use to external parties than a single letter. Such a simple modification to the application process is more desirable than a complete overhaul of the A-level system, which some have proposed.


August 23, 2005

Smoking and the workplace

BBC news reports on public opinion on proposed smoking bans

The majority of people in England and Wales back a complete ban on smoking in workplaces, a new survey has suggested. Action on Smoking and Health (Ash) and Cancer Research UK said 73% of the 1,000 people they surveyed said a ban should be applied without exception.

Ash director Deborah Arnott said: "The public wants action to end second-hand smoke at work.

"It now kills more than 600 people at work every year – three times the number of deaths from industrial accidents. And it causes many thousands of asthma attacks and episodes of illness. "The pointless and damaging exemptions for pubs and clubs must be dropped from the final Bill. Smoke-free legislation must be comprehensive if it is to be successful."

Below, I'll address another argument put forward by proponents of a blanket ban. It is said that current employment regulation exists to protect employees from employers who would otherwise provide a hazardous working environment. Therefore, shouldn't a ban on smoking in workplaces be included in current workplace legislation for the sake of consistency? There is ample evidence to suggest passive smoking is detrimental to ones health, so its prohibition would be in line with legislation enforcing regular maintenance of machinery and proper hygiene standards.

This argument isn't wholly accurate as smoking differs in nature to other potential workplace hazards.

On entering a building, it's not obvious whether surfaces are free of harmful bacteria, complex machinery has been properly serviced, the air is free of harmful gases, kitchens meet hygiene standards, etc. The building's owner will have a good idea of risks posed, but to a newcomer, its neigh impossible to tell. The building owner could lie and other parties would be none the wiser even years down the line. Workplace regulation thus aims to correct this information asymmetry. By setting enforceable standards new employees can have confidence in the safety of the workplace in spite of employer incentives to ignore risks.

In contrast, the presence of cigarette smoke is blatant. Employees may not be able to see bacteria on work surfaces but a fellow colleague lighting-up can't be missed. Because there's no hidden information here, parties can be reasonably expected to choose whether or not the risk posed by smoke acceptable. It is not the place of the state to protect citizens in all cases where some trade off must be made between risk and reward. Perhaps a new employee doesn't intend to work in the smoky environment for very long. Perhaps the employee is indifferent towards smoke, or enjoys it, despite its health impact. A blanket ban prevents such individual decision making, making elected and unelected officials arbiters of 'reasonable risk'.

Of course, it's easy to take issue with the cynical view of employers presented here. I very much doubt that in the absence of legislation employees would be forced to work 13 hour days in darkness, without overtime. It's rarely in ones advantage to have unhappy, unhealthy employees. Were employees a commodity to be disposed of at will, surely we'd see the majority being paid the minimum wage. It's also easy to ignore the possibility of private enterprises whose business would be to certify workplaces as 'acceptable' or 'unacceptable'. Such a market for information is currently unfeasible due to state mandated standards.


August 15, 2005

Rule of Law & Discrimination

In the light of US Supreme Court resignations and debate over new appointments, much has been made of the rule of law and adherence to legislative precedent. Lawrence Solum of the legal theory blog says this of the rule of law: "When the law is predictable and certain it can do a better job of guiding conduct". Itís thus said that judges should act in accordance with past decisions as the expectations of agents were formed on their basis.

Hayek stressed the importance of the rule of law, saying that judges should be limited to enforcing general rules, rather than creating legislation directed at a particular societal goal. These general laws would reflect established but unarticulated practices which already occur. For example, general codes of conduct discouraging theft and murder would have been in place long before judges were entrusted to enforce them. Feelings of injustice at the result of judicial decisions would therefore occur when general established rules had been broken – for example, awarding clemency to a well known thief, for no reason. By restricting law-making to the articulation and enforcement of already established rules, the concept of judicial activism was alien.

However, itís possible that states acting in accordance with the rule of law have permitted decisions which go against contemporary views of justice. In the past, repression of blacks, women, left handed people, etc. have been seen as justifiable. General rules restricting the freedom of such groups would have been in line with the publicís sense of justice. Would Hayek have deemed these policies just? Should a judge going against precedent to favour such minority groups be deemed reckless?

A piece of the puzzle is missing. After all, the rule of law could be said to exist in a state which systematically seizes the property of those with surnames beginning with Z, but that isnít necessarily a good state of affairs. The rule of law is highly desirable, but so too are property rights and individual liberty. A state that values universal liberty as well as the rule of law wouldnít permit repression of minority groups as described above. Such a state wouldnít permit the seizure of property even if itís done in a structured way. A predictable judiciary with whom the public agree isnít sufficient for a free society.


August 13, 2005

Secondary Schools and Selection – Response to comments

Below, Iíll address some points raised by a commenter on this post about sorting secondary school students by ability.

1) Objections raised included the shortage of empirical evidence showing all groups benefit from ability sorting. Two examples of papers (which disagree with me) on the issue were kindly highlighted and can be found here and here.

Rather than contradicting my original premise, the papers highlighted a number of issues worthy of consideration before putting sorting into practice:

Attitudes of classes Ė Reasons for sorting should be explained clearly beforehand. Those in lower tiers should be reassured that theyíve been separated in order to devote more attention to their specific needs, not in an attempt to stop them dragging others down. Children should be assured that their position isnít set in stone, with strong relative performance being grounds for movement to higher sets.

Teacher attitudes and assumptions Ė Student sorting may have yielded poorer results for less able students due to teacher underestimation of group ability. If teachers choose not to push students, settling for a mediocre set of results, their fate is sealed.

Grouping mechanism Ė Diversity of abilities within groups should be considered. Mechanical procedures, such as skimming off the 10% in a given class will yield negligible results if a large proportion of students are in the bottom tail of the sample. Similarly, sorting by ability is pointless if thereís little difference in overall ability anyway (the case for subjects which are rarely conceptually difficult: arts, social studies)

Any deterioration in the performance of those not in top groups will be down to issues such as the above. If theyíre addressed before sorting takes place, thereís little or no reason to expect the performance of the less able to deteriorate. Evidence may show those with most ability donít benefit hugely, but donít forget theyíre at the upper bounds of ability anyway. With solid implementation of ability groups, tradeoffs between the performance of the most able and those of everyone else are redundant Ė everyone gains.

2) Another objection regarded the importance of discussion within groups and learning from the insights of others. Splitting groups by ability may impact the quality and scale of such cooperative learning. Taking this argument to its limit, a world in which everyone has a private tutor, dedicated to his/her academic improvement would be wholly undesirable.

This simply isnít the case if you allow for discussions with teachers rather than limiting them to the role of orators. Discussion is great, but in the real world oneís peers rarely come up with ideas which couldnít have been put forward by the group leader who has most likely studied the topic in question at length. Regardless of group numbers, a teacher who understands the topic can coax ideas out of students and bring new arguments to their attention. My experience suggests group size is a poor indicator of overall participation and quality of discussion. Participation and discussion are a function of enthusiasm and interest Ė itís either there, or it isnít. In any case subjects conducive to segregation by ability (e.g. abstract topics like physics & maths) tend not to require discussion or debate anyway.

3) Finally, the idea of indivdualised learning schemes was highlighted. This system allows the student to take control of the learning process, while teachers spend the majority of their time resolving problems rather than dictating notes. Students are given enough material to ensure boredom or lack of challenging material isnít an issue.

Though a worthy ideal, I question its use in all circumstances. Teacher driven learning has its place, particularly for subjects which are more challenging conceptually. Paper or computer based self-learning materials are not an adequate substitute for watching someone explain information verbally, gauging responses from students in real-time, and adjusting their pace and the number of examples given accordingly.

Thereís no reason why learner driven methods canít be used in conjunction with teacher led sessions within groups split by ability. Thatís in fact what used to happen in mathematics classes at school. A concept would be explained, examples given and questions of varied difficulty set for students to get on with. The teacher would then address individual questions, leaving everyone else to get on with it. The ability split remained important because a) It limited the number of students in a group and thus allowed all questions to be answered b) answers to queries raised by many could be addressed to the group as a whole via more explanation, or demonstration. In a mixed ability class, such further explanation of more difficult issues would be redundant to many and would reduce time available to answer more basic questions.

Other criticisms regarding my comparison of teachers in fee paying schools to those in state schools, and the need to aim for an ideal even if it's unattainable will be addressed later.


August 07, 2005

More on Secondary Schools

In this post, I stated that wide diversity of ability within schools isnít desirable if pupils are to reach their potential. Introducing less able students to a selective school thus cause results to deteriorate rather than pulling up those at the bottom. Here Iíll briefly talk about the source of student motivation within fee paying schools, a point ignored by the author of the article that spurred my original post.

Schools that have mostly deprived and unmotivated children, by contrast, drag everybody down. And schools that have mostly bright children from affluent homes pull everybody up. That is why rich parents are willing to pay school fees.

The last sentence isnít wholly accurate. A school culture which values performance is much the result of school fees, rather than something that would exist in their absence. A fee paying school must guarantee results above average if it is to remain in business. Teachers are likely to spend more time on lesson preparation, supplementary teaching outside of class time and will consciously push students beyond whatís strictly on the syllabus. Thatís not to say non-fee paying schools are incapable of such things; some achieve comparable if not better results. However, itíd be naÔve to think incentives schools have to encourage pupils and produce results are uniform.

Not only do schools have an interest in producing motivated students, but so do the parents themselves. Arguably, their role is far more important. When paying upwards of £7000 per term to educate a child, parents will take a much greater interest in performance. They will study reports to a greater degree, perhaps contacting teachers with concerns. Theyíll tell their children roughly whatís expected of them, making sure that homework, coursework and exam revision are not ignored.

Is it possible to create a similar culture of achievement and commitment to results within underperforming state schools? Is it possible to inspire interest in a childís schoolwork amongst parents whose most significant outlay is perhaps the morning school run? The social engineering efforts of many governments leave me doubtful. Whatís certain is that the current systemís malaise will persist so long as selective/fee paying schools are blamed for bad performance and criticised for being elitist.


August 04, 2005

Secondary Schools and Selection

Peter Wilby of the Guardian writes about education standards in comprehensive schools and the relatively poor results of those from deprived backgrounds. Below, Iíll comment on one of Peterís central ideas.

Secondary schools that have a "balanced intake" – a mix of rich and poor, able and less able – are the ones that do best. They raise the performance of the less able children and children from poor homes (not necessarily the same thing), with little or no detrimental effect on brighter children.

Read the article in full here.

Teachers are trained to handle students with varied temperaments, and abilities. Being able to manage a class with moderate to large variance in ability isnít the same as maximising the potential of each pupil. I attended a fee paying selective school in which the average pupil would be more capable than someone chosen randomly. Even in such an environment differences in ability were clear.

At times, I only just followed what was being taught whilst some struggled and others were visibly bored by the teacherís pace. In subjects such as mathematics this led to students being split into Ďsetsí of varying ability. Such divisions can be seen in schools of all types and suggest that the author is naÔve in thinking diversity in ability is key. Depending on the difficulty of topic, diversity will lead to segregation. Perhaps the author has an idealised view of the world in which better pupils band together to help those whoíre struggling; or maybe less capable pupils are inspired by the performance of others and double their work rate. Without meaning to sound too cynical my schooling experience suggests such cooperation would be limited in scale.

Teachers cannot easily spend time helping less capable students, whilst moving along fast enough for the median pupil and concurrently challenging the most able pupils. Homogeneity allows teaching thatís focused on the needs of the particular group; not split between the needs of many. Itís odd that the authorís idea of Ďbestí performance is limiting or accepting a small drop in the performance of the most able.

The truth is that if Labour really wants to improve social mobility, it has to be very bold indeed, perhaps using some kind of "banding" system that allocates fixed numbers of children of different abilities to each school, and possibly also a fixed quota of children on free meals. The old Inner London Education Authority had just such a system and it was abolished because the middle classes hated it. Labour may also have to introduce formal quotas to get more deprived children into elite universities.

Wilby's tacit acceptance that the potential of some students may be curbed is unacceptable and his suggestions (above) for improving the performance of the poor are naive. Wilby fails to address the source of motivation and culture within different types of school; a point I'll discuss in a later post.


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