For quite some time, Tom Friedman of the New York Times has been harping about the enormous subsidies that we are providing to our Middle Eastern Islamofascist and other enemies in the form of exorbitant oil prices that finance their worldwide terror activities and the armaments that are killing Americans in Iraq, not to mention the intimidating tactics of anti-American regimes like Venezuela. He has coined the First Law of Petropolitics, which states that the price of oil and the pace of freedom always move in opposite directions. He is right, of course, about the problem. But his solutions—increased taxes, higher “extraction fees”, coerced oil conservation, etc.—are flawed.

A much better idea comes from Steve Forbes. He asks us to imagine the huge setback to our enemies if the price of oil were to return to the $25-30 per barrel range. What would be required to accomplish this? Return to the days of dollar linkage to gold. Forbes notes that, from the mid-1940’s to 1971, the price of oil barely fluctuated. Then came the inflationary 1960’s followed by the severance of the dollar’s formal tie to gold in 1971, which has been primarily responsible for the disruptive oil price volatility since then, exacerbated by inconsistent Federal Reserve money supply policy.

No less an authority than former Federal Reserve Chairman Alan Greenspan has pointed out to Grant’s Interest Rate Observer that American price levels registered little change between 1800 and 1929, and he seems to agree with the need for gold constraints when he remarked that “monetary policy, unleashed from gold convertibility (in 1933), had allowed a persistent over issuance of money.”

Forbes believes, and I agree, that a return to dollar-gold linkage would stabilize the dollar price relationship of oil to gold, moderate the disruptive oil price shocks to our economy, and severely curtail the capabilities of our enemies around the world.

“Americans want government to protect their current jobs and tell them where their next job, and their children’s jobs, will come from. But government is not good at that.”—Gene Sperling, former economic advisor to Bill Clinton.

Rich Karlgaard writes in Forbes Magazine that, for all the angst about the war in Iraq reflected in the election results last November, at the margin—the margin that gave the Democrats control of Congress—the winners were slow-growth independent populists. This view is gaining in currency. It’s a feeling that people want to slow things down and sort things out.

The above quote from Gene Sperling is a reflection on this sentiment, particularly as it applies to Schumpeter’s “creative destruction”, the concept that the dynamics of capitalism require a certain faith that the job destruction of today plants the seeds for the economic vitality and job creation of tomorrow. I heard these concerns at almost every stop around the state on our recent road show on education reform. People want to know where the jobs will be for these kids we are attempting to help graduate from high school with 21st century skills—skills for what? Sperling is correct—government is not good at giving people the comfort they want, and when it tries to be protective, it always causes distortions that make the situation worse.

Now enter what some have called the “Lou Dobbs wing of the Democratic Party” and the “new populism” of roll backs of the tax cuts for the rich, limits on executive compensation, various elements of intervention to diminish inequality in wealth creation, and the various “fair trade” proposals to limit the globalized impact of creative destruction. In addition to Congressional leadership on these themes by such as Barney Frank, they will be carried by Presidential hopefuls, most prominently John Edwards with his “two Americas” message. We’ll see if these messages truly resonate with the American people.

My sense is that they won’t, and that there is yet no real policy coherence to this demagoguery. But the noise will persist all the way through November 2008, and it would be nice if President Bush would get back on offense with his “ownership society” message to counter it. In a perceptive article in the Wall Street Journal, “Economics Is Not for Actuaries”, George Gilder suggests we remember Peter Drucker’s advice: “Don’t solve problems, pursue opportunities.” He further suggests that the key to future economic viability for our people is keeping the U. S. economy open to outside investors as our population ages and as the productive center of the global economy shifts toward Asia, and that “the only thing that matters is pursuing the opportunities of global economic growth”.

There have been a number of recent appeals to Texas policy makers from business-related groups such as the Governor’s Business Council and the Build Texas Program to overhaul the structure and enhance the accountability and funding of the State’s publicly assisted institutions of higher education. In addition, the leadership of the two flagship universities, UT-Austin and Texas A&M, have appealed to opinion leaders and policy makers to recognize their combined economic and research impact on the state and acknowledge their value-added in considering their respective appropriations.

All of these appeals are well taken, and Governor Rick Perry has now responded with his own policy recommendations to the Texas Legislature. There is a lot to like about his proposals, particularly the accountability measures that will require some type of “exit exam” for graduation and hold institutions responsible for the graduation rates of their students with incentive funding.

But there are at least three items of emphasis that seem to be missing. The first is illustrated by the advice offered to his successor by departing UT-Austin President Larry Faulkner in his State of the University Address in September 2005: “Your greatest challenge will be to work out a new, stable financial model for the long-term sustenance of the university. For decades, we have been drifting away from a model built on public higher education as a public good toward one that treats all higher education, even in the public sector, as a private benefit…..we are approaching a point of no return. Will the university be forced to become essentially private to sustain its quality?” I have my own thoughts about the public-private issue which I have previously expressed (August 2003, April 2005) but President Faulkner is implying the need for a long-term strategy for Texas higher education, one that has eluded us for many years too long. Maybe the recent appeals will prompt the necessary vision to come together, but I don’t see it in the Governor’s proposals.

Second, if higher education is to fully return to its role as a driver of the public good, this criterion should be defined in terms beyond simply economic impact. The American Council of Trustees and Alumni, in its 1998 booklet, “What Every Educated Person Should Know”, reminds us that the principle espoused by G. K. Chesterton, that “education is simply the soul of a society as it passes from one generation to another”, underscores a belief that a shared understanding, a shared knowledge, help unify and advance civilization and that, indeed, the American system of self-government is uniquely premised on the need for a citizenry so educated in order to sustain it. Regrettably, over the past several decades, there has been a breakdown in this commitment to a shared core of learning and understanding—of our culture, our ideas, our ideals, our history—in short, of the foundations of our civilization and how we can sustain them. There appear to be some initiatives underway directed toward the revival of a required core curriculum, and these should be greatly encouraged.

Third, we need much more accountability for the role of our higher education institutions in the preparation of teachers for our K-12 public school system. There are islands of excellence here, but, generally speaking, the traditional colleges of education are in bad need of overhaul. Our organization, the Texas Institute for Education Reform, has developed detailed policy recommendations on how to accomplish this enhanced accountability, but it needs much more attention from state political leaders and the leaders of these institutions, and the best way to get this attention is through tying accreditation and state funding to the value-added to enhanced student achievement by their graduates.

Again, I applaud the Governor for these initiatives; on balance, they are a big step in the right direction, but we need much more.

It has been almost a year since we announced the founding of the Texas Institute for Education Reform, and I thought you might have interest in a progress report. In December, we completed our statewide road show, which consisted of presentations and other speaking engagements to opinion and community leaders in 22 cities, along with op/ed placement, media coverage, and editorial board interviews in almost all of them. In this process, we directly reached approximately 1,300 leaders with our message of the urgency of the next phase of K-12 education reform. With the valuable assistance of our Policy Advisory Board, we have recently completed our policy development, which encompasses eight high quality policy papers covering the elements of reform outlined in our mission statement. These papers will very soon be posted on our web site and published in print on a limited basis. Currently, as the legislative session progresses, we are conducting policy briefings on a regular basis for key elected officials in Austin that emphasize the recommendations in our policy papers. I would welcome inquiries on our work from Pilgrim subscribers and friends. For more information on our mission and our people, please visit TIER at www.texaseducationreform.org.