I’ve explained many times that an economy’s wealth and output depend on thequantity and quality of labor and capital and how effectively those two factors of production are combined.

Let’s look today on the labor portion of that formula. And since I’ve alreadyexpressed my concerns about the quantity of labor that is being productively utilized, now let’s focus on the quality of labor. In other words, we’ll look at the degree to which the workforce has the skills, knowledge, and ethics to be productive.

This is why education is very important, but also why we have big reasons to be concerned in the United States. Consider, for instance, the late Andrew Coulson’s famous (and discouraging) chart. It shows that politicians routinely increase the amount of money that’s being spent (on a per-student basis, American schools get more funding than any other nation), yet student test scores are both mediocre and flat.

But that’s just part of the story. We also have the national disgrace of substandard education for minority communities.

Here’s some of what Walter Williams wrote about the scandalous failure of government schools to produce quality education for minority children.

According to the National Assessment of Educational Progress, sometimes called the Nation’s Report Card, nationally, most black 12th-graders’ test scores are either basic or below basic in reading, writing, math and science. “Below basic” is the score received when a student is unable to demonstrate even partial mastery of knowledge and skills fundamental for proficient work at his grade level. “Basic” indicates only partial mastery. Put another way, the average black 12th-grader has the academic achievement level of the average white seventh- or eighth-grader. …In terms of public policy, what to do? …Many black parents want a better education and safer schools for their children. The way to deliver on that desire is to offer parents alternatives to poorly performing and unsafe public schools. Expansion of charter schools is one way to provide choice. The problem is that charter school waiting lists number in the tens of thousands. In Philadelphia, for example, there are 22,000 families on charter school waiting lists. Charter school advocates estimate that nationally, over 1 million parents are on charter school waiting lists.

The above excerpt from Walter’s column is scandalous.

The excerpt that follows is nauseating.

The National Education Association and its political and civil rights organization handmaidens preach that we should improve, not abandon, public schools. Such a position is callous deceit, for many of them have abandoned public schools. Let’s look at it. Nationwide, about 12 percent of parents have their children enrolled in private schools. In Chicago, 44 percent of public-school teachers have their own children enrolled in private schools. In Philadelphia, it’s also 44 percent. In Baltimore, it’s 35 percent, and in San Francisco, it’s 34 percent. That ought to tell us something. …Politicians who fight against school choice behave the way teachers do. Fifty-two percent of the members of the Congressional Black Caucus who have school-age children have them enrolled in private schools.

By the way, what happens when ordinary black children have a chance to escape the government’s monopoly school system?

Thomas Sowell has opined on the amazingly positive results that occur when black children have this opportunity.

We keep hearing that “black lives matter,” but they seem to matter only when that helps politicians to get votes… What about black success? Does that matter? Apparently not so much. We have heard a lot about black students failing to meet academic standards. So you might think that it would be front-page news when…ghetto schools not only meet, but exceed, the academic standards of schools in more upscale communities. …Only 39 percent of all students in New York state schools who were tested recently scored at the “proficient” level in math, but 100 percent of the students at the Crown Heights Success Academy school scored at that level in math. Blacks and Hispanics are 90 percent of the students in the Crown Heights Success Academy. The Success Academy schools in general ranked in the top 2 percent in English and in the top 1 percent in math. …Black students in these Success Academy schools reached the “proficient” level more than twice as often as black students in the regular public schools. What makes this all the more amazing is that these charter schools are typically located in the same ghettos or barrios where other blacks or Hispanics are failing miserably on the same tests. More than that, successful charter schools are often physically housed in the very same buildings as the unsuccessful public schools.

But Prof. Sowell echoes the point Prof. Williams made about poor children being trapped in bad schools because of limits on school choice.

If black success was considered half as newsworthy as black failures, such facts would be headline news — and people who have the real interests of black and other minority students at heart would be asking, “Wow! How can we get more kids into these charter schools?” …minority parents have already taken notice. More than 43,000 families are on waiting lists to get their children into charter schools. But admission is by lottery, and far more have to be turned away than can be admitted. Why? Because the teachers’ unions are opposed to charter schools — and they give big bucks to politicians, who in turn put obstacles and restrictions on the expansion of charter schools. …If you want to understand this crazy and unconscionable situation, just follow the money and follow the votes. Black success is a threat to political empires and to a whole social vision behind those empires. That social vision has politicians like Bill de Blasio and Hillary Clinton cast in the role of rescuers and protectors of blacks.

Notwithstanding everything written up to this point, the purpose of today’s column isn’t to argue in favor of school choice.

Yes, that’s critical for the nation and vitally important for minority advancement.

But I want to focus instead on the question of why school choice hasn’t become the civil rights issue of the 21st century. And to be even more specific, I want to explorethe scandalous decision by some people at the NAACP to betray black children.

The Wall Street Journal opined about this topic today.

The outfit that helped end segregation in public education now works to trap poor and minority kids in dysfunctional schools. Last month the National Association for the Advancement of Colored People introduced a resolution at its national convention in Cincinnati calling for a moratorium on charter schools… The resolution must be formally adopted at a board meeting later this year.

Here’s some very relevant data.

Some 28% of charter-school students are black, which is almost double the figure for traditional public schools. A report last year from Stanford’s Center for Research on Education Outcomes found that across 41 urban areas black students in charters gained on average 36 extra days in math learning a year and 26 in reading… Black students in poverty notched 59 more days in math. This is the definition of “advancement.” …A 2013 poll of black voters in four southern states by the Black Alliance for Educational Options found that at least 85% agreed that “government should provide parents with as many choices as possible.” …Another sign of support is the hundreds of thousands of black students nationwide who sign up for lotteries for a seat at a charter.

The conclusion is very unflattering.

The group’s real motive is following orders from its teacher-union patrons. …The National Education Association dropped $100,000 in 2014 for a partnership with the NAACP.

Jason Russell of the Washington Examiner was similarly scathing about the NAACP’s actions.

One of the few education reforms that has actually succeeded in helping African-American students get a better education is school choice, especially the growth of public charter schools. So it didn’t make much sense, to put it kindly, when the NAACP approved a resolution calling for a moratorium on new charter schools. …Jacqueline Cooper, president of the Black Alliance for Educational Options, told theWashington Examiner that…”The fact that the NAACP wants a national moratorium on charter schools, many of which offer a high-quality education to low-income and working-class black children, is inexplicable,”…Shavar Jeffries, president of Democrats for Education Reform, also criticized the NAACP in a statement. “The public charter school moratorium put forward at this year’s NAACP convention does a disservice to communities of color,” Jeffries said. …Steve Perry, founder and head of Capital Preparatory Schools,…said the national group is “out of touch even with their own chapters … This is more proof that the NAACP has been mortgaged by the teachers union and they keep paying y’all to say what they want to say.”

Since this has been a depressing topic, let’s end with an uplifting video from Reason TV about the success of various models of charter schools.

How To End Poverty in the South Bronx

P.S. Even though I’m not partisan, I understand that coalition politics are important. Reagan, for instance, had his three-legged stool of small-government libertarians, social conservatives, and military/foreign policy hawks. All three groups were united in the belief that their respective goals could be advanced by Reagan, even if they bickered with each other about the relative importance of various issues and occasionally had fights with each other (one of my first battles in Washington was advocating for a sequester during Reagan’s second term over the objections of the hawks, a battle that was repeated back in 2013).

With this in mind (and especially since the teacher unions bring a lot of campaign money to the table), I definitely understand why Democratic politicians are willing to sacrifice the interests of black families and their children by opposing education reform. I even partially understand why the NAACP feels pressure to accommodate the demands of teacher unions (and I fully understand, from the perspective of coalition politics, why the NAACP made absurd accusations against the Tea Party).

But surely there must be a point where coalition politics has to take second place and the interests of black families should be in first place (an issue addressed inanother great video from Reason).

P.P.S. Some folks on the left are willing to break ranks. Jonathan Alter wrote aboutcharter schools for the Daily Beast. Here are some excerpts.

…the backlash against education reform among liberals who should know better has been disheartening. …the top quintile of charters—the highly effective ones run by experienced and widely-respected charter operators—not only beat traditional public schools serving students in the same demographic cohorts, they often outperform them by 20, 30, or even 50 points on many metrics.

He cites New Orleans as an example.

New Orleans is a good example of where charters, which now educate 95 percent of New Orleans public school students, are working. A decade ago, New Orleans had the worst schools in the country…The results in New Orleans are impressive. Over the last decade, graduation rates have surged from 54 percent to 73 percent, and college enrollment after graduation from 37 percent to 59 percent. (There’s also a new emphasis on helping those who attend college to complete it.) Before Katrina, 62 percent of schools were failing. Today, it’s 6 percent. The biggest beneficiaries have been African-American children, who make up 85 percent of New Orleans enrollment. The high school graduation rate nationally for black students is 59 percent. In New Orleans, it’s 65 percent, which is also much higher than the state average. Test scores are still low overall, but thousands more African-American students are taking the ACTs and doing better on them.

And even Newark.

What’s the worst development in economic policy of the Obama years?

• The faux stimulus scheme?
• The Obamacare boondoggle?
• The fiscal cliff tax hike?
• The Dodd-Frank bailout bill?

Those are all good answers, but if you look at the data from Economic Freedom of the World, a major reason for the decline in America’s score is that the rule of law has eroded.

In other words, the United States is becoming a place where clear and neutral rules are being replaced by arbitrary and capricious government power. And this is not a trivial matter. Issues related to the rule of law account for 20 percent of a nation’s grade – the same level of importance as fiscal policy.

In another worrisome development, the United States only ranked #19 as of 2014 in a global ranking of how well nations maintain the rule of law.

There are several reasons why America’s ranking is going down. To cite just a few: The arbitrary rewrites of Obamacare. The Operation Chokepoint fiasco. IRS regulations that overturn existing law.

And it appears the Obama Administration wants to go out with a bang.

The Wall Street Journal opines on a new regulatory scheme from the Treasury Department to boost the death tax burden by arbitrarily inflating the value of certain assets.

…before President Obama leaves office, his Treasury Department is rushing to implement a de facto increase in the federal estate tax. Since Congress does not agree that the Internal Revenue Service should suck more cash out of family firms, Treasury Secretary Jack Lew is up to his usual tricks, trashing established interpretations of tax law to bypass the legislative branch. Not even Mr. Lew has the gall to claim he can raise the federal death-tax rate of 40% without congressional approval. So the game here is to contrive ways to expose more of the value—or imagined value—of an estate to IRS revenue collectors. Last month Mr. Lew’s Treasury announced a proposed rule to close what it calls an estate and gift tax “loophole.” Until now, the IRS permitted realistic values for portions of closely held corporations and partnerships. …consider a minority stake with limited rights in a family business. While the business as a whole may have considerable value, how much would an investor be willing to pay for a small, illiquid piece of a private business that she can’t control? The typical answer is not much. On the other hand, the investor might pay handsomely for a controlling interest. The IRS has long recognized this reality and has allowed the discounting of interests in closely held businesses to more closely reflect what they could fetch on the open market, rather than simply assigning a percentage of a firm’s overall estimated value.

In other words, Obama’s Treasury Department wants to force heirs to pay tax on what they think an asset is worth rather than what it would fetch on the open market.

This regulatory scheme – if ultimately successful – will make a bad tax even worse.

And it also will be bad for the economy.

…what seems like a reasonable interpretation to some looks like a wasted revenue opportunity to the Obama Treasury. …As always, Mr. Lew and Treasury are happy to seize more wealth from the private economy. …But voters may ask how much economic destruction is acceptable in the name of such fairness. …the tax clearly encourages people to consume now rather than invest in the future. This means lower GDP over time and fewer opportunities for the poor, some of whom might want to work for family businesses. The Tax Foundation reckons that the economy would be 0.8% larger over a decade without the estate tax.

Here’s another example.

The Obama Administration has been shaking down banks for money because of supposed misdeeds leading up the government-caused financial crisis.

The various fines may of may not be legitimate, but what’s really troubling is that a big chunk of the money is then being steered to left-wing groups. Many of which are seeking to impact the political process.

Andy Koenig of Freedom Partners has a column in the Wall Street Journal with some of the unseemly details.

The administration’s multiyear campaign against the banking industry has quietly steered money to organizations and politicians who are working to ensure liberal policy and political victories at every level of government. The conduit for this funding is the Residential Mortgage-Backed Securities Working Group, a coalition of federal and state regulators and prosecutors created in 2012 to “identify, investigate, and prosecute instances of wrongdoing” in the residential mortgage-backed securities market. In conjunction with the Justice Department, the RMBS Working Group has reached multibillion-dollar settlements with essentially every major bank in America. …Combined, the banks must divert well over $11 billion into “consumer relief,” which is supposed to benefit homeowners harmed during the Great Recession. …a substantial portion is allocated to private, nonprofit organizations drawn from a federally approved list. Some groups on the list—Catholic Charities, for instance—are relatively nonpolitical. Others—La Raza, the National Urban League, the National Community Reinvestment Coalition and more—are anything but. This is a handout to the administration’s allies. Many of these groups engage in voter registration, community organizing and lobbying on liberal policy priorities at every level of government. They also provide grants to other liberal groups not eligible for payouts under the settlements. …The settlements also give banks a financial incentive to fund these groups. Most of the deals give double credit or more against the settlement amount for every dollar in “donations.”

Needless to say, diverting money to political allies sounds like the kind of chicanery you’d find in a banana republic, not an advanced western society.

But it gets worse.

Here’s another Wall Street Journal editorial on an additional bit of regulatory/tax overreach by the Treasury Department. It deals with the Obama Administration trying to stop “inversions” by unilaterally changing the rules in ways that will hamper sensible business practices for all multinational companies.

The Treasury Secretary…wants to prevent “earnings stripping,” in which companies allegedly make loans from their overseas businesses to their U.S. subsidiaries to minimize taxes. The feds succeeded in destroying the proposed merger of Pfizer and Allergan. But we warned in April that the Treasury plan would be “ugly for everybody,” imposing new costs and paperwork burdens on companies that never had any intention of moving overseas or stripping earnings. And sure enough, from small S corps all the way to Exxon, the afflicted have been explaining how the new rules will make it more expensive and difficult to do even routine business functions like cash management. …the banks hate this rule too. By limiting their ability to move money across borders to meet customer demand and respond to market stress, it could force them to violate other regulations, or worse. A July letter from Citigroup, Bank of America and J.P. Morgan Chase to Treasury officials warned the rules could make “financial services groups more fragile in times of financial stress, thereby creating risk to the financial stability of the United States.” …If Mr. Lew were reasonable, he’d drop this misguided assault on American business and work with lawmakers to craft a corporate tax reform that ensures U.S. companies never want to leave the U.S.

A report in the New York Times highlighted some of the legal issues involved in this issue.

The U.S. Chamber of Commerce filed a lawsuit on Thursday to block new rules issued by the Obama administration that prevent American corporations from merging with foreign-based companies and moving their headquarters abroad to save on taxes. The business group, along with the Texas Association of Business, filed the lawsuit in federal court in Austin, Tex., saying the administration was overstepping its authority in issuing the rules. …“If the defendants’ rule is permitted to stand, it is not just mergers that will suffer — it is the rule of law, and the certainty and stability required for effective commerce, markets and economic growth, that are truly threatened by the defendants’ unauthorized and unlawful action,” the plaintiffs said in their filing. …“Although it might seem esoteric, this action is a clear case of federal executive branch officers and agencies bypassing Congress and short-circuiting legislative debate over a hotly contested issue,” the lawsuit says.

Ugh. At least Hillary Clinton is proposing to change the law in pursuit of bad policy on inversions. Obama just waves his magic wand.

Let’s wrap up by refocusing on why the rule of law is a fundamental building block of a free society. Back in 2014, I shared a very good video from Learn Liberty about the importance of the rule of law.

That video is a compelling explanation of why it is good to have clear rules, along with limits on the arbitrary power of government officials.

Indeed, it’s probably no exaggeration to assert that rule of law is the greatest contribution of western civilization.

Here’s a movie clip (courtesy of FEE) that makes this point.