Claims that government-funded centre-based daycare and pre-kindergarten programs promote positive early-childhood development unsubstantiated; research remains inconclusive

By Ben Eisen of The Fraser Institute.

The Impact of Daycare Participation on Children's Development: A Review of Recent Evidence

• In recent years, Canadian governments have made large financial commitments to expand access to and participation in formal daycare centres. One of the stated rationales for these expenditures is that they will have a positive impact on child development.
• This study examines that premise by reviewing recent empirical research on the effects of participation in centre-based daycare and pre-kindergarten programs on child development.
• The review is illustrative rather than comprehensive. We selected studies based on their prominence, methodological credibility (randomized, quasi-experimental, or meta-analytic designs), and policy relevance.
• The results from the studies examined here are mixed. One study from Boston shows significant positive effects from childcare participation on academic attainment. But other studies from New Haven and Ontario as well as a meta-analysis from across OECD countries show null or mixed effects on child development outcomes. Studies from Quebec and Tennessee show negative results.
• Taken together, the recent evidence remains inconclusive about whether participation in formal childcare has an effect on children’s well-being and by how much. On balance, the studies reviewed here support the long-standing reality that evidence about the developmental effects from participation in centre-based childcare are mixed, often modest, and contingent upon a wide variety of factors.
• Policymakers should therefore be modest about any claims they make about the developmental effects from government expenditures designed to expand participation in centre-based daycare.

Friedman on Immigration: Setting the Record Straight (or why the “keyhole solution” of allowing immigration with restricted access to government benefits might be a good idea)

Christopher Freiman. 

"Even people who are otherwise enthusiastic about a free market in labor can get cold feet about immigration once redistribution enters the picture. Some are fond of quoting Milton Friedman, who famously (or infamously) said:

“It’s just obvious you can’t have free immigration and a welfare state.”

On this view, immigration is fine under fully free market institutions, but in the actual world with its abundant government-provided benefits, immigration restrictions are justified to protect taxpayers from the added expense that could arise if immigrants consume these benefits. But this conclusion is too quick, and even Friedman’s position is more nuanced than people on both sides of the immigration debate tend to realize. 

An initial point, though: the concern about the fiscal cost of immigration is overstated. For one reason, in the United States, most welfare spending goes to the very young or the very old. Immigrants, by contrast, are disproportionately of working age.  

Setting that point aside, Friedman’s own view wasn’t that immigration as such is harmful. He argued that legal immigration is the problem, precisely because it allows immigrants to access government benefits. By contrast, he thought illegal immigration was beneficial. As he put it: “It’s a good thing for the illegal immigrants. It’s a good thing for the United States. It’s a good thing for the citizens of the country. But it’s only good so long as it’s illegal.” Friedman’s reasoning was that illegal immigration enables mutually beneficial market exchange while limiting immigrants’ access to government benefits.

Now, many fiscal conservatives balk at Friedman’s recommendation—namely, if the overconsumption of government resources is the problem with lawful immigration, the solution is to encourage people to break the law. I understand this reaction, but I admit I don’t share it. In my view, whether it’s okay for someone to do something doesn’t depend on whether lawmakers give them written permission. For instance, did you know that it’s against the law to drive on Cape Cod’s National Seashore’s beach if there’s not a tire-pressure gauge in your car?  Nevertheless, I have no moral objection if you drive on the beach gaugelessly. Regardless of whether government officials approve, this is just a peaceful activity that doesn’t violate anyone’s rights.

Maybe you disagree with me. Still, as others have suggested, there’s another way to accommodate Friedman’s general idea: admit immigrants as lawful permanent residents but restrict their access to certain government resources. Economists sometimes call this a “keyhole solution”—if the problem is immigrants’ consumption of benefits, then design a policy that narrowly targets that problem rather than restricts their freedom to immigrate entirely. 

The main objection to this sort of policy seems to be moral rather than economic. Indeed, Friedman himself was asked about it and he replied that he found the proposal unappealing partly because it’s not “desirable to have two classes of citizens in a society.” That’s a good point. It’s unfair for a government to give some citizens taxpayer-financed benefits but not others. If two people live, work, and pay taxes within a country, government officials should treat them equally, which involves giving them both equal access to government resources. 

Notice, though, that a policy of immigration restriction also treats citizens and prospective immigrants differently—it gives citizens, but not immigrants, access to domestic labor markets, private associations, educational opportunities, and more. Consequently, a principle of equal treatment actually seems to imply open borders. Given that Friedman rejects this option, the task becomes that of identifying the second-best solution. (Also, it’s not clear that Friedman can square his objection to keyhole solutions with his endorsement of illegal immigration, which would presumably also create two classes in a society.)

Why think that a policy of open immigration with restricted access to benefits is better than outright exclusion? The reason, in brief, is that admission with conditions treats prospective immigrants betterthan exclusion. A policy of open immigration with restricted benefits at least gives people the option to move, and it’s hard to see how giving someone a new option could make them worse off.

Here’s an analogy. Suppose John is entering the job market. One employer offers him a job with health insurance and a retirement plan. The next day, he receives another offer—this one comes with no benefits, but a much higher salary. Even if you think he should take the first job, it seems perfectly permissible to offer him the second. John is no worse off for having another option. If he doesn’t want to take it, he can simply decline it. And if he does prefer higher pay without benefits, he’s clearly better off for having the option.

John’s case is analogous to the case of a prospective immigrant who expects to earn significantly more by moving to a country where her access to government benefits is limited. If she prefers having access to a wider range of government-provided benefits in her current country to having higher earnings but fewer benefits in a new country, she can decline to move; in this case, she is no worse off for having the option. But if she prefers higher earnings with fewer benefits, the option makes her better off.  Just as it’s permissible—indeed, probably good—to offer John the extra option, so too is it permissible to offer prospective immigrants the extra option. 

It’s also worth highlighting another important aspect of restricting immigrants’ access to benefits rather than restricting their movement entirely. Admitting immigrants as lawful permanent residents removes the threat of deportation, among other consequences, that accompanies undocumented entry into a country. Even if you agree with Friedman (as I do) that the keyhole solution of admitting immigrants with reduced access to benefits isn’t totally fair, it’s still more fair than denying prospective immigrants the option of safely moving at all."

The Editorial Board of the Washington Post explains what shouldn’t – but, alas, what nevertheless today does – need explaining: Government-run grocery stores will fail to improve the lives of their customers

From Cafe Hayek.

"The economics of public stores are fraught. By lowering prices below the market rate, stores struggle to fulfill surging demand and shortages become inevitable. That was the case at Kansas City’s Sun Fresh Market, which closed last year after wasting $18 million of taxpayer money.

Sourcing and stocking perishable food products is a complex business with notoriously thin profit margins. Despite claims by progressives that grocery stores price-gouge, profit margins usually fall between 1 to 3 percent. Partly that is due to shoplifting. Finding good real estate will also be costly in a city with scarce availability. (Whole Foods is owned by Amazon, which was founded by Post owner Jeff Bezos.)

Promising free stuff sounded nice on the campaign trail, but someone needs to pay for it. When his predecessor tried to trim spending on libraries, Mamdani called it “cruel.” Now that he’s in charge, his preliminary budget plan calls for nearly $30 million in library cuts. Those and many other cuts are probably necessary to get the bloated city budget on a more sustainable footing.

…..

The mayor has said before that his grocery idea would be “political experimentation.” But as the Big Apple faces a $5.4 billion budget shortfall and Mamdani threatens a 9.5 percent hike in property taxes, it’s foolish to spend money studying a foregone conclusion."

Would Adam Smith Support the Jones Act?

Why The Economist is wrong about Smith’s stance on protectionist maritime laws.

By Caleb Petitt of The Independent Institute. 

"In an article in The Economist, it was claimed that Adam Smith would likely have supported the Jones Act because he supported the Navigation Acts. This claim is wrong on two counts. First, the idea that Smith supported the Navigation Acts is either overstated or entirely false. The Navigation Acts did not have a single aim or apply to a single sphere of commerce. Rather, they were seen both as promoting defence and opulence, and the clauses can largely be divided into those that apply to trade with Europe and those that apply to their colonies. There are four combinations of spheres of regulation and reason for regulating that could have been used to support the Navigation Acts: (Colonies, Opulence), (Colonies, Defense), (Europe, Opulence), and (Europe, Defense).

Smith clearly rejected support for the Navigation Acts for three of the four reason-sphere combinations. He advocated the relaxation or repeal of the Navigation Acts as regulations on the colonies, rejecting them as sources of defense and opulence. He also clearly stated that the Navigation Acts, as they related to European trade, were harmful to British opulence, leaving only European regulations for defensive purposes as the only possible justification for the Acts.

The European regulations were also meant to regulate trade specifically with the Dutch, not European trade generally. Smith acknowledged that the Navigation Acts were targeted at the Dutch, but also believed that they had not hindered Dutch trade, had not helped England in her wars against the Dutch, or reduced Dutch naval power. The Navigation Acts targeted the Dutch because the Dutch were the principal country engaged in the carrying trade, a country moving goods between two foreign countries, which was seen at the time as a uniquely beneficial manner of trade. That means Smith undermined a reason for supporting the Navigation Acts when he argued against the idea that there was anything special about the carrying trade.

Smith’s acknowledgment and emphasis of the point that the Navigation Acts were targeted against the Dutch also undermined support for the Navigation Acts further undermined support for them. The Dutch were strong rivals and dangerous enemies when the Navigation Acts were passed. But since then, Dutch and English interests were harmonized with the Glorious Revolution, which positioned France, not the Netherlands, as England’s chief rival. Even if Smith thought the European regulations in the Navigation Acts were effective, which appears unlikely, he certainly saw that the regulations against the Dutch were outdated in the wake of the Glorious Revolution. 

Second, regardless of Smith’s view of the Navigation Acts, Smith would be appalled by the Jones Act today because the empirically demonstrable impacts of policies shaped his policy views. You could not simply say a restriction on free trade was justified for national defense to get Adam Smith on your side; you had to show that it worked. 

For example, Smith was very critical of the herring bus bounty, which was said to improve Britain’s defense by increasing Britain’s sailors and shipping. He did not say that defense was a bad justification, but said that the bounty was too large, that it encouraged fraud, that it was not well adapted to the Scottish mode of fishing, and that it increased the price of a staple food. 

If Adam Smith looked at the impact of the Jones Act today, he would see that Jones Act vessels cost dramatically more to build than comparable foreign ships, they drive up prices, particularly in non-contiguous states and territories, and that the American ship-building industry is virtually non-existent. It would be easy for Adam Smith to see that the Jones Act has not established America as a ship-building nation, has not promoted its defense, and has done more harm than good."

Should Policy Restrict Share Buybacks?

By Jeffrey Miron.

"Many politicians believe that corporate share buybacks create “perverse” incentives for firms to prioritize short-term investments over future ones. The 2022 Inflation Reduction Act included a 1 percent tax on all buybacks, and President Trump recently issued an executive order to prohibit share buybacks for underperforming defense contractors.

Recent research, however, shows that

legalizing share repurchases increased investment by 8.0–9.8 percent among public firms … [and] improved public companies’ access to equity capital.

Moreover, the firms receiving these investments

tended to be younger, smaller, and higher-growth, and typically held less cash … suggest[ing] that legalizing share repurchases allowed capital to flow from cash-rich, mature firms to cash-needy firms with greater growth opportunities.

These results make sense: Shifting cash from firms that do not have immediate productive uses to firms that do is good for economic efficiency. Inhibiting this shift stifles corporate investment and growth."

Jason Furman on AI contestability

From Marginal Revolution.

"This ease of switching has forced companies to pass the gains from innovation on to users. Free tiers now offer capabilities that recently would have seemed almost unimaginable. OpenAI pioneered a $20-per-month subscription three years ago, a price point many competitors matched. That price has not changed, even as features and performance have improved substantially.

One recent analysis found that “GPT-4-equivalent performance now costs $0.40/million tokens versus $20 in late 2022.” That is the equivalent of a 70 percent annual deflation rate — remarkable by any standard, especially in a time when affordability has become a dominant public concern.

And this is only the foundational model layer. On top of it sits a sprawling ecosystem of consumer applications, enterprise tools, device integrations and start-ups aiming to serve niches as specific as gyms and hair salons.

Users aren’t the only ones switching. The people who work at these companies move from one to another, a sharp contrast to work in Silicon Valley during the era of do-not-poach agreements."

The Atlantic’s Critique of Homeschooling Ignores the Real Education Crisis

By Corey A. DeAngelis. Excerpt:

"The Atlantic recently ran a story headlined “He Was Homeschooled for Years, and Fell So Far Behind.” It profiles Stefan Merrill Block, who was homeschooled in his early years and later struggled to catch up once he entered traditional schooling. But one rough experience doesn’t invalidate an entire movement that is delivering superior results for millions of families across the country.

Homeschool students are outperforming kids in government schools by a wide margin. Brian Ray’s peer-reviewed systematic review in the Journal of School Choice examined dozens of studies on the topic. Seventy-eight percent of those studies found homeschoolers scoring significantly higher academically than their public school peers. They beat traditional school kids by 15 to 25 percentile points on standardized tests. These solid results hold up regardless of family background, income level, and whether the parents ever held a teaching certificate.

Government schools deliver exactly the opposite outcome. In Chicago alone, there are 55 public schools where not a single kid tests proficient in math. They spend about $30,000 per student each year and still fail to produce basic proficiency. The Nation’s Report Card shows nearly 80 percent of US kids aren’t proficient in math. That’s the real crisis staring us in the face, and it demands accountability from the system that claims to serve our children."