Editor’s Note: Arrias takes on the bureaucracy this morning.

– Vic

McGuffey and the Federal Reserve

Without looking it up: what are the differences between Alexander Hamilton’s and Thomas Jefferson’s perspective on the role of the federal government?

Pundits often question the efficacy of Pentagon strategies, whether it’s Vietnam, tanker escort operations in the Persian Gulf, containing the Soviet Union, liberating Kuwait or fighting Islamic terrorist. And as a participatory democracy they have every right to question the DOD.

In fact, such questioning is important, and editorial remarks have caused meaningful review of strategies. Sadly, there is much less of this kind of questioning taking place outside the national security arena.

I was involved in discussions this past week that suggested that such questioning is long overdue across government. Consider 3 topics (though there’s a long list of possible subjects): the War on Drugs, Education, and the Federal Reserve.

President Nixon declared the War on Drugs in June 1971, after concerns were voiced about the rise in drug use on college campuses, as well as concerns about the number of GIs returning from Vietnam with severe addictions.

A University of Michigan study showed that, among high school seniors, 31% had used illicit drugs in 1975, this peaked at 39% in 1979, dropped steadily to 15% in 1992, then climbed to 25% in 1996 and has remained at approximately 25% since.

Various drugs came into and out of fashion during the past 46 years; cocaine use, for example, peaked in the 80s, fell steadily through the 90s, leveled off in the last dozen years, and now may be on the verge of increasing again; recent reports note the rise in opioid usage across the US. Since 1999, according to the CDC, drug poisoning deaths from illegal drugs has climbed from 8,000 to 32,000 – 11,000 from new opiates.

The US is currently spending (per the Drug Policy Institute) $51 billion annually on this “war,” but we seem no closer to winning now then we did in 1975.

What about education? The Department of Education was founded in 1979 to improve student performance. And, in 1981, for the first time in 18 years, average SAT score didn’t decline. But, by 1992 the average SAT score was still 5% lower than in 1960, though it’s risen slightly since 1992.

An American Institute for Research study in 2005 showed that 20% of college graduates had “only basic quantitative literacy,” meaning they would be “unable to estimate that their car had enough gas to get to the next station.”

Yet, the US spends more on education than any other nation, and also spends more per capita than any other nation. Since 1980 the average cost of a US college tuition has risen 1120% (as of 2012), twice the increase in healthcare costs.

What about the Federal Reserve?

Following bank panics in the late 1890s and early 1900s, the Federal Reserve was created to provide stability in bank credit, the goal being that by so doing, there would be fewer panics and value of the dollar would stabilize.

Between the founding of the republic and 1834 (58 years) there were 11 recessions, lasting on average just over 2 years. From 1834 until 1913 (79 years – there was no national bank), there were some wide swings in credit, and there were 20 recessions, each lasting a bit under 2 years. Since 1913 (104 years) there have been 17 recessions (the two worst in the nation’s history) lasting on average a bit over a year.

However, the value of the dollar, which grew fairly steadily from 1776 until 1913 has been falling since, and has lost some 90% of its value in the last 100 years.

The point is this: the United States has spent a great deal of time and effort – and money – on these three endeavors: illicit drug usage, education, a stable economy. The general goals are sound: end illicit drug use, improve education, and stabilize the economy. There are similar grand goals for every federal department and agency. But, as with DOD strategies, each should be questioned as to their output. It’s a grand idea to improve education. But maybe the federal government is the wrong organization to tackle the problem. What we’ve been trying for the last 40 years isn’t working. Maybe it’s time we try some different strategies.

As for the question at the beginning of the article: it’s in essence the heart of the ongoing debate in American politics. And it was a question on the 6th grade “graduation test” from McGuffey’s Eclectic Reader from 1836.

Copyright 2017 Arrias
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