3 Things 3-29


Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it.

Thing One Just Some Facts About Income Inequality If you’re reading this, you’ve likely heard statements like these that appeared recently in the Wall Street Journal: “…Widening income inequality is a fatal flaw in capitalism and an “existential” threat to democracy..." "From 1967 to 2017, income inequality in the U.S. spiked 21.4%, and everyone from U.S. senators to the pope says it’s an urgent problem…” Phil Gramm and John Early, who wrote the article from which the quotes above was taken, have done extensive research on the subject and have determined that the argument is false at best and intentionally misleading at worst. Specifically, they point out that when all income transfers (Medicare, Medicaid, food stamps, and 100 other government transfer programs) are counted and net taxes paid are deducted, income inequality is actually lower today than it was 50 years ago. They note specifically that the bottom quintile of earners has seen its income rise by 300% when all the transfer payments from the various government programs are counted. The chart below clearly illustrates their assertion. The blue and gold lines are representations of the Census Bureau’s assessment of income inequality (both calculated without counting all of the various government efforts to combat it) while the black line takes those factors into consideration. The way we keep score matters – a lot.

Thing Two Just Some Facts About School Choice The National Association of Education Progress (NAEP) administers tests that measure, at the national level, the state level, and in some urban areas, what students know and can do in various subjects. The testing data they generate is sometimes referred to as, The Nation’s Report Card. With that information in mind, the results of a recent study conducted by researchers at the University of Arkansas are worth noting. According to the Wall Street Journal, The researchers developed an, “…Education Freedom Index to measure school-choice environments in the states and Washington, D.C. The index considers offerings for private school choice like vouchers and tax-credit scholarships, home-schooling, public school choice (i.e., ability to switch schools or districts), and charter schools.” The researchers found that good rankings in the index they developed were highly correlated with 8th-grade NAEP tests in math and reading. They further noted that "Higher levels of education freedom are significantly associated with higher NAEP achievement levels and higher NAEP achievement gains.” We all generally agree that a good education is essential to a good life. And we also all generally agree that our education system is failing lots of students. The conventional arguments for addressing the failure typically center on more per-pupil spending, but the researchers also noted that there was a statistically significant negative correlation between per-pupil spending and NAEP scores (not that correlation proves causation). In any event, the better argument seems to be more school choice. Generally better outcomes at all levels would seem to be an inevitable result. The data already tells us that the students who get to opt-out of a bad school and into a good one do better. And if the options for the public schools that lose students to choice were to get better or close, the ones that stayed open would have to get better and everybody would be better off. It’s time to get behind school choice. And don’t worry about the good teachers and administrators, we’ll always need plenty of good ones. By the way, don’t worry about the bad ones either, they’ll end up in jobs better suited to their capabilities.

Thing Three Just A Thought "There are the stories we tell ourselves and then there's the truth." - Unknown