reboot the republic daily August 16, 2010

Digital Education vs. The Ruling Elite

Posted: 16 Aug 2010 03:21 PM PDT

From Lew

Ruling elites as recently as 1600 appealed to God to justify their continuing rule. This was called the divine right of kings: rulership beyond any earthly court of appeal. That began to be undermined in the second half of the seventeenth century. A century later, Enlightenment democratic theory had replaced the divine right of kings. The divine right of Parliament or the divine right of the People replaced it.

This forced a major strategic change on the ruling elite. The ruling elite has to pretend that it does not exist. It formally acknowledged the legitimacy of the People as the final court of appeal. This involved training and screening the judges.

Basic to maintaining this deception has been control over the media. Also vital has been control over the schools – compulsory attendance laws, teacher certification, tax funding, and school accreditation. Above all has been control over textbooks.

This control is ending in the area of printed media, especially newspapers, which are dying. Control over TV news is fading. Digits are killing them. Now control over education is about to be undermined. Same reason: digits.


I have recommended to Ron Paul that he hire a director of curriculum development in one of his educational organizations. The director should then contract with Ph.D.s to create a comprehensive K–12 curriculum. Once it is ready, Paul’s organization can post it online for free. I have presented this plan here.

Some parents will want courses taught live. Paul could also put together a faculty of graduate students with M.A. degrees or retired Ph.D.s to provide real-time lectures. The exams can be administered digitally. Record-keeping is digital.

He could charge a minimal $250 per course and split the money 50–50 with the faculty member who teaches it. This should be a profit-seeking venture. It could easily generate $25,000,000 a year. I have explained this here.

Free academic software now allows this. It’s called Moodle. Any medium-size organization can now afford to create an online high school or even a university with this open source software. The Mises Institute now has its own online program called Mises Academy. People pay a minimal $250 to take a weekly class. Dr. Tom Woods is teaching a course on Roosevelt’s New Deal this fall.

The existing system of government-funded education is facing a technological challenge. The Web can deliver content for free. The model for this is Salman Khan’s wonderful Khan Academy. Students from all over the world start with 1 + 1 = 2, and go from there through calculus. It is all done with free 10-minute YouTube videos.

He did this in his spare time just because he wanted to. Now he has funding to create an entire curriculum.
In contrast, this is the model of today’s high school.

Right? Right! You know it. I know it. We have known it all our lives. It never improves. It gets more expensive. It gets less efficient. We know it has no hope. Every few years, reformers announce a “new, improved” approach. It is not widely adopted, and wherever it is adopted, scores get worse. They will call for reforms forever. The system will just get worse.

It is paid to get worse. Tax money is automatic. No one stands up locally and runs for the school board on this platform: “Let’s cut the budget by 10% next year, and another 10% the year after next.” That would be considered the equivalent of blasphemy. Yet we know the tax-funded schools will not improve. Anyone who is so naïve as to believe that the Next Great Reform will be successful throughout the country probably ought to be institutionalized – at a minimum, he should be kept away from sharp objects.


The problem has been that private schools, also burdened with physical classrooms and buildings, are expensive. Not many parents have been willing to pull their children out of the tax-funded schools and enroll them in a private academy. They grin and bear it. “Our schools are not like those other communities’ schools. Ours are highly rated.” Really? Rated by whom? When? Using what methodology? How long ago?

Who produces the textbooks? New York publishing firms staffed by anti-capitalist Leftists? The same textbooks used in those other communities’ schools? You don’t say!

With the Web, a PDF file can be downloaded for free. This PDF can be a textbook. If it’s in the public domain, it’s free. You can print it out. Cost: toner and paper. Maybe you will want to buy a 3-hole punch and a $7 binder. After all, that 3-hole punch is a permanent investment. Amortize it over a 30-year period. You can afford it.

Do you want a video-based course? Salman Khan offers them.

How about MP3 audio files? There are free MP3 hosting sites. Anyone can post lectures.

MIT has put 2,000 mini-courses online for free. Did you know this? It’s here.

Local colleges have resisted this. If you were a faculty member of Podunk State University, would you want the whole world to see you and your peers online, 24×7? Would you be confident that parents and students would then be willing to pay $50,000 to get a degree from your backwater institution?

So, university faculties are now in a difficult position. They must justify the absence of online lectures and course plans. Silence is embarrassing. The story of MIT’s program is getting out. They will have to argue that MIT’s online curriculum is a fluke, that a normal university would not be wise in posting its lectures and course notes for the general public to view free of charge. Yes, MIT can do this, but it’s different. It’s different because. . . . Well, anyway, it’s different. It’s not fair to use it as a model. Why not? Because it’s the best. The academic world knows it’s the best. As an MIT T-shirt says: “Harvard: Because not Everyone Can Get into MIT.” The best doesn’t count.

By the way, Salman Khan went to MIT and then the Harvard Business School. Now look what he’s done. What’s Podunk State to do?

Podunk State knows it is delivering a substandard product. It knows that it can keep its doors open only because tax money subsidizes its program. If it is possible to provide digital education, with digital exams, digital grading, and digital record-keeping – and it is – then what does Podunk U bring to the table that (say) the 100 best colleges and universities could not do better? What is the justification for Podunk State?

Accreditation. That’s it? That’s it.

The collegiate system is a cartel. It is now being threatened by the University of Phoenix, with its 500,000 students at (probably) $10,000 each per semester. The academic community sees the threat of profit-seeking universities. With 15,000,000 students enrolled, it would take only three-dozen University of Phoenixes to teach them all. Let’s be generous. Say that 100 schools could do this. What would happen to the other 4,000?

Cartels always collapse. Only the threat of government violence against “cheaters” can sustain cartels. The collegiate cartel in the United States is maintained by a series of Federal government-recognized but privately run accrediting agencies – agencies staffed by members of the cartel. Here is the list.
What breaks cartels? Price competition.


Decades ago, management expert Peter Drucker observed that whenever a new production technique lowers costs by 90%, it comes to dominate. The old producers can fight it, but they cannot prevail.

He said that existing producers can fight by pointing to the prestige of owning an expensive version. This is an appeal to the rich. It is an appeal to status. If you want an example of the status-dominated argument, see the response of the faculty at the University of California, Berekey, to the sensible suggestion that the campus offer distance-learing degree programs.

People who are really self-confident about their status do not play this game. I remember seeing an interview of Denzel Washington. He showed his watch: a Casio. “It cost $35, and it keeps perfect time.” That kind of statement sends a chill down the spines of people working for Rolex.

Today, the cost of delivering a good education has fallen by far more than 90%. It has fallen to the cost of bandwidth. Bandwidth keeps getting cheaper.

Back in 1997, Drucker gave an interview to Forbes. In that interview, he offered this assessment and prediction.

Thirty years from now the big university campuses will be relics. Universities won’t survive. It’s as large a change as when we first got the printed book.

Do you realize that the cost of higher education has risen as fast as the cost of health care? And for the middle-class family, college education for their children is as much of a necessity as is medical care – without it the kids have no future.

Such totally uncontrollable expenditures, without any visible improvement in either the content or the quality of education, means that the system is rapidly becoming untenable. Higher education is in deep crisis.

If he was correct, the large physical universities have only 17 years to go.

Do I think they will disappear this fast? No. Why not? Because control over education is the #1 control device of the ruling class. It is even more important than the control over central banking.

The American educational system absorbs something in the range of 6% of the country’s GDP, which means over 10% of the private sector’s output. The finished product is a curriculum built on the presuppositions favored by the ruling class. State-funded institutions teach respect for state funding and the bureaucrats who control the flow of funds.

If state-funded education were ever to end, the major means of control by the ruling class would end. The ruling class will not surrender this control without a fight. But it will lose this fight.

The tools of this fight are digital. The basis of this fight is ethical: the right of parents to control the content of their children’s education. The state-funded bureaucrats know this. They have fought ever since the foundation of the modern educational system in Prussia after 1810 to insulate their class from political control, while collecting tax money. This is the basis of the doctrine of academic freedom. It means freedom from interference by taxpayers and politicians.

By severing payment from control, the educrats have gotten themselves a sweet deal. Like the Congregational ministers in New England before 1819, they are on the state’s payroll, but they insist on autonomy.

The cost of this arrangement is skyrocketing. The educational cartel is facing a revolt. Parents who don’t like the content of tax-funded education are breaking ranks. They are teaching their children at home. This was fought by the states in the 1980s, but a series of court cases undermined the laws against home schooling.

Now budget cuts are forcing public school districts to adopt distance-learning programs. This is the death knell for the system. The tax-funded schools are facing budget ceilings. Meanwhile, education is getting steadily cheaper.

Dr. Art Robinson’s Robinson Curriculum costs $200 for K–12. It’s a one-time payment for the entire family. Yet it could be placed online and given away for free. The curriculum is self-taught. Students who pursue it can quiz out of two years of college, as his children did. They can enter college as juniors at the age of 16.

Of course, a wise parent will not send a child off to college at age 16. So, the child can take the last two years in a program such as Louisiana State University’s distance learning program, or at Excelsior College, a private online campus.

Total cost of college? Under $11,000. The student can work part-time and pay his way through college.

Or else he can ask his parents to foot the bill of a conventional on-campus program ($50,000 to $250,000). He can also take on $20,000 in personal debt, which is now the national average.

If he flunks out, all this money is down the drain. Yet about half of students who enroll as freshmen do not graduate.

Which approach makes more economic sense?

What are you buying? An education or a shot at status? Is it a Casio or a Rolex?

There are not many Rolex-type watch firms. There are only about three-dozen Rolex-type universities. They enroll about 2% of the college population.

What is the future for the 4,000 others? Extinction or adjustment to the world of digits.

Digits are cheap.


This is a digital dagger at the heart of the ruling elite. As this spreads, it will be the end of the nearly monolithic educational worldview, a worldview that rests on the assumption that ideas must be controlled, and that this control is best accomplished through screening. Such screening procedures must be in the hands of gatekeepers. These gatekeepers must be certified by other gatekeepers and protected by the state.

The Internet has destroyed most of the walls that give power to control over the gates. The center will not hold. The many competing views of how the world works will act as acid for the worldview of the power elite.

The historical mark of the collapse of the strategy of gatekeeping, after 5,000 years, was Matt Drudge’s 1998 story about “Newsweek,” which had suppressed the story of the unnamed intern and Bill Clinton. Soon, she was named. Then Clinton was impeached. His Teflon charm let him avoid conviction, but his reputation never recovered. He will always be remembered as the smiling rogue with a roving eye and a cigar. This is not what a member of the ruling elite expects after his successful lifetime effort to shinny up the greased pole of political success. It takes all the fun out of it.

We need an image that represents the digital transformation. I think it ought to be Alex Jones’s bullhorn. He posts those video clips of him and some of his supporters standing outside a Bilderberg meeting or some other closed-door conclave of the ruling elite. He has his trusty bullhorn in hand. He shouts at them. He tells them that the People are watching. They don’t know what to do about this. The video will be on YouTube within a few days – maybe hours.

Are the People watching? A few may be. Probably not all that many. They are watching funny videos, or pornography, or some other entertainment. But, from the point of view of the ruling elite, nobody is supposed to be watching a Jones video. They hate him and his bullhorn, but they can do nothing about it. Yes, someone hacked Jones’s YouTube video of “The Obama Deception” in mid-July, removing it after 6,000,000 hits, but that merely annoyed him. It did not stop him. It is back up.


We are living in the era that will go into the textbooks. If I had the influence to name it, the way that historians designated 1946–1991 as “the Cold War,” I would call 1995 “the end of the gatekeepers.” It is the Berners-Lee era, but that reference is too obscure.

Every ruling elite rules on behalf of a basic idea, and this idea usually has a slogan. I think the ruling idea today is this: “the mixed economy.” Digital technology and state bankruptcies are going to unmix it.

Karl Marx called capitalism’s system “the cash nexus.” Others summarize it as “money talks.” I call it price competition.

The ruling elite has justified its claim to sovereignty and therefore legitimacy in terms of superior technological wisdom – the unique possession of an elite. One institution stands as a testimony against such a claim: Wikipedia. I think it will still be around in 2100. I don’t think today’s ruling elite will be.

Gary North [send him mail] is the author of Mises on Money. Visit is also the author of a free 20-volume series, An Economic Commentary on the Bible.


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  2. Tom Harkin: Education Too Important Not to Mortgage Our Future
  3. Education: Too Important for a Government Monopoly

Video: Judge Napolitano – The Government Lies to You!

Posted: 16 Aug 2010 11:20 AM PDT

Government Bullies Shut Down Little Girls Lemonade Stand

Posted: 16 Aug 2010 08:01 AM PDT

From Oregon Live

It’s hardly unusual to hear small-business owners gripe about licensing requirements or complain that heavy-handed regulations are driving them into the red.

So when Multnomah County shut down an enterprise last week for operating without a license, you might just sigh and say, there they go again.

Except this entrepreneur was a 7-year-old named Julie Murphy. Her business was a lemonade stand at the Last Thursday monthly art fair in Northeast Portland. The government regulation she violated? Failing to get a $120 temporary restaurant license.

Turns out that kids’ lemonade stands — those constants of summertime — are supposed to get a permit in Oregon, particularly at big events that happen to be patrolled regularly by county health inspectors.

“I understand the reason behind what they’re doing and it’s a neighborhood event, and they’re trying to generate revenue,” said Jon Kawaguchi, environmental health supervisor for the Multnomah County Health Department. “But we still need to put the public’s health first.”

Julie had become enamored of the idea of having a stand after watching an episode of cartoon pig Olivia running one, said her mother, Maria Fife. The two live in Oregon City, but Fife knew her daughter would get few customers if she set up her stand at home.

Plus, Fife had just attended Last Thursday along Portland’s Northeast Alberta Street for the first time and loved the friendly feel and the diversity of the grass-roots event. She put the two things together and promised to take her daughter in July.

The girl worked on a sign, coloring in the letters and decorating it with a drawing of a person saying “Yummy.” She made a list of supplies.

Then, with gallons of bottled water and packets of Kool-Aid, they drove up last Thursday with a friend and her daughter. They loaded a wheelbarrow that Julie steered to the corner of Northeast 26th and Alberta and settled into a space between a painter and a couple who sold handmade bags and kids’ clothing.

Even before her daughter had finished making the first batch of lemonade, a man walked up to buy a 50-cent cup.

“They wanted to support a little 7-year-old to earn a little extra summer loot,” she said. “People know what’s going on.”

Even so, Julie was careful about making the lemonade, cleaning her hands with hand sanitizer, using a scoop for the bagged ice and keeping everything covered when it wasn’t in use, Fife said.

After 20 minutes, a “lady with a clipboard” came over and asked for their license. When Fife explained they didn’t have one, the woman told them they would need to leave or possibly face a $500 fine.

Surprised, Fife started to pack up. The people staffing the booths next to them encouraged the two to stay, telling them the inspectors had no right to kick them out of the neighborhood gathering. They also suggested that they give away the lemonade and accept donations instead and one of them made an announcement to the crowd to support the lemonade stand.

That’s when business really picked up — and two inspectors came back, Fife said. Julie started crying, while her mother packed up and others confronted the inspectors. “It was a very big scene,” Fife said.

Technically, any lemonade stand — even one on your front lawn — must be licensed under state law, said Eric Pippert, the food-borne illness prevention program manager for the state’s public health division. But county inspectors are unlikely to go after kids selling lemonade on their front lawn unless, he conceded, their front lawn happens to be on Alberta Street during Last Thursday.

“When you go to a public event and set up shop, you’re suddenly engaging in commerce,” he said. “The fact that you’re small-scale I don’t think is relevant.”

Kawaguchi, who oversees the two county inspectors involved, said they must be fair and consistent in their monitoring, no matter the age of the person. “Our role is to protect the public,” he said.

The county’s shutdown of the lemonade stand was publicized by Michael Franklin, the man at the booth next to Fife and her daughter. Franklin contributes to the Bottom Up Radio Network, an online anarchist site, and interviewed Fife for his show.

Franklin is also organizing a “Lemonade Revolt” for Last Thursday in August. He’s calling on anarchists, neighbors and others to come early for the event and grab space for lemonade stands on Alberta between Northeast 25th and Northeast 26th.

As for Julie, the 7-year-old still tells her mother “it was a bad day.” When she complains about the health inspector, Fife reminds her that the woman was just doing her job. She also promised to help her try again — at an upcoming neighborhood garage sale.

While Fife said she does see the need for some food safety regulation, she thinks the county went too far in trying to control events as unstructured as Last Thursday.

“As far as Last Thursday is concerned, people know when they are coming there that it’s more or less a free-for-all,” she said. “It’s gotten to the point where they need to be in all of our decisions. They don’t trust us to make good choices on our own.”


Related posts:

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  2. Why I Hate Bureaucrats
  3. New Bill Gives Obama ‘Kill Switch’ To Shut Down The Internet