Civitas Review

New Civitas Study: True Cost of HS Diploma in NC is $150K; No Correlation Between Spending and Results


A new study released yesterday by the Civitas Institute evaluates government education spending and academic results across all local school districts in NC. A few key findings from the study include:

  • The statewide average total cost to taxpayer to produce each high school graduate is about $150,000. This factors in the expenses of educating children who end of dropping out. The figure does not include capital expenses, federal school lunch programs, debt service or transportation costs. Adding these costs can typically increase per pupil spending by up to 25 percent
  • Hyde County has the highest cost per diploma at $266,831, while Randolph County has the lowest per pupil costs to graduate at $114,129. Why the massive discrepancy?
  • More spending does not equal higher levels of academic results. When comparing the 20 highest spending districts with the 20 lowest spending districts, it is actually the 20 lowest spending districts that show better results

Check out the study and see where your school district ranks.

Former Commerce Secretary: Corporate Welfare About Elections, Not Jobs

15 continues its series examining North Carolina's web of corporate welfare schemes, in this article highlighting how taxpayer funds for corporate subsidies are heavily concentrated in the state's most prosperous areas.

Data from the state Department of Commerce shows far more taxpayer money flows to the counties doing the best economically than those that are more needy. Since 2009, the state announced more than $514 million in grants for projects in these tier three counties – 80 percent of the total value of grants announced. Tier one counties claim only 10 percent of that value.
Included in the article is a refreshingly honest admission by former state commerce secretary Jim Fain:
"There’s a line people use that politicians just like to go cut ribbons. Well you’re damn right they do. Because if they didn’t, they wouldn’t get elected again," Fain said.
Crony capitalism is first and foremost about the exercise of political power, and the self-interest of the political class. Any concern about the (completely unfounded) economic benefits of "economic incentives" is a mere afterthought.

Common Core: No Friend of STEM



The Commerce Department estimates that thousands of new jobs will be created in STEM fields in the next few years.  STEM – short for Science Technology, Engineering and Math is shorthand for various education initiatives designed to address a perceived lack of qualified candidates for technology-related jobs. To capitalize on these new opportunities, states will have to offer a full array of high quality math and science courses..

Many believe the implementation of Common Core standards with its emphasis on fostering coherent content and real-world problem solving skills will help to boost STEM enrollments.

The only problem is it isn’t working.

Last year a Pioneer Institute report showed how Common Core Math fails make students “college and career-ready or to make students ready to study in critical STEM fields. Last week American Enterprise Institute Researchers Frederick Hess and Michael McShane came to the same conclusion when they wrote:

Unfortunately, our K-12 education system is not preparing enough students to take advantage of this opportunity. One way we know this is by looking at passage rates on tests in STEM fields on AP exams. AP exams are given to high performing high school students looking to gain credit for college courses. Usually earning a 3 or better (out of 5) will be enough for a university to recognize that a student has mastered the content.

The top five states with graduating students who had passed one or more AP STEM exams were Massachusetts (16.0%), Maryland (15.9%), Connecticut (15.4%), Virginia (13.9%), New York (13.7%), and New Jersey (13.1%). In most of the best-performing states, not even one in six high school graduates had passed an AP STEM exam.

Hess and McShane continued:

 These results are disconcerting because not only are computer science jobs lucrative and available, they are also critical for national security, competitiveness and entrepreneurship. In addition, they often offer rewarding and flexible occupations. The Bureau of Labor Statistics predicts a 30% increase in demand for software developers over the next half-dozen years, a job for which average annual pay was over $90,000 in 2012.

These jobs will surely be filled — but not necessarily by an American. That means firms will either find ways to import those who can do the work or they'll export those jobs to places where skilled employees are plentiful. Either scenario is a loser for America and its youth.

If too few of our best students are even qualifying in these areas, new Common Core math standards that in effect lower the bar will only make things worse. .

Do we have the backbone to deal with an uncomfortable truth? Common Core math standards are not increasing the number STEM graduates.

News Series Investigates NC's Corporate Welfare Schemes

13 today launched an investigative series examining the use of economic incentives (i.e. corporate welfare) in NC. Of note in the article is the proliferation of government handouts not only in NC but nationwide.

Although not all these performance-based grants will fully pay out, the legislature's fiscal research division says the state has committed to paying out nearly $800 million through 2027.

And across the country, according to a 2012 New York Times investigation, state and local municipalities pay out more than $80 billion annually for incentive programs.

Unsurprisingly, yet still disappointingly, defenders of the crony capitalist schemes display economic ignorance to justify the greater concentration of economic control into the hands of the political class:

"If you want to be in the recruiting game today, incentives are part of the deal. If you don't have incentives, you are going to lose opportunities," Norris Tolson, who served as the state’s commerce secretary in 1997, said. "Some of the opportunities you lose you may not even know about."
Lost opportunities….that's an interesting concept. But don't folks like Tolson ever stop to think about the real opportunity cost involved when government does pay out incentives to politically-connected corporations? When the state bribes corporations, that money comes from taxpayers. Less money in the hands of taxpayers means less economic activity and lost opportunities. The higher tax rates imposed on those businesses not incentivized discourages investment, meaning more lost opportunities. When scarce resources like capital and labor are utilized by incentivized projects, they are no longer available for other potential investments; resulting in more lost opportunities.
Corporate welfare schemes are not all benefit and no cost. It is easy to see the ribbon-cutting ceremony and headlines when an incentivized company expands. But such efforts come at a very real cost of foregone investment opportunities and jobs elsewhere in the economy. I wrote last month about what it could look like if NC got out of the crony capitalist game and instead lowered taxes for all and treated all businesses equally.

How Savings, Not Consumption Spending, Grows the Economy


One way that progressive liberals argue in favor for higher tax rates on upper income earners is the observation that higher income households save a larger share of their income than do middle- and lower-class households. As such, the government should tax them more heavily and then distribute the funds to lower-income households who are more likely to spend the money. In their view, economic growth results when a greater share of the economy's wealth is spent on consumption, rather than saved.

This article by the Mises Institute's Dan Sanchez, however, exposes this line of thought for the wrong-headed fallacy that it is. The article, entitled "How Savings Grows the Economy", is based on a 1980's comic that clearly and concisely uses the example of three men stranded on a desert island to explain how savings form the foundation for a "virtuous cycle of growth".

Saving (delaying consumption) supports more capital goods, which boosts productivity, which creates more to save, and around he goes…..This Cycle of Growth, by the way, is the way living standards rise in a complex market economy as well.


Savings and capital benefit everyone, not just the saver and capital accumulator. The Cycle of Growth lifts the entire community. And so when egalitarianism and plunder discourage saving, it keeps the entire community down, hurting not only the savers, but everyone who might have exchanged with the savers.

The article is an excellent primer for the layman to understand how an economy grows, and to see through the progressive fallacies of encouraging consumption. Simply put, society can not consume its way to prosperity.