Gresham's Law: Beyond Economics

pk makes little study of economics, but even pk had heard of Gresham's Law:Bad money drives out good.
bk's recent interest has had some impact on pk's ignorance, especially with bk supplying the library, but pk's skepticism that economics could possibly be a real science has been inveterate. Nevertheless one point really hits home for me. I quote from Section 7 of Murray N. Rothbard's What Has Government Done to Our Money?: [In a common view]

... the free market cannot be trusted to serve the pubic in supplying good money. But this formulation rests on a misinterpretation of Gresham's famous law. The law really says that "money overvalued artificially by government will drive out of circulation artificially undervalued money." Suppose, for example, there are one-ounce gold coins in circulation. After a few years of wear and tear, let us say that some coins weigh only .9 ounces. Obviously, on the free market, the worn coins would circulate at only ninety percent of the value of the full-bodied coins, and the nominal face-value of the former would have to be repudiated. If anything, it will be the "bad" coins that will be driven from the market. But suppose the government decrees that everyone must treat the worn coins as equal to new, fresh coins, and must accept them equally in payment of debts. What has the government really done? It has imposed price controls by coercion on the "exchange rate" between the two types of coin. By insisting on the par-ratio when the worn coins should exchange at ten percent discount, it artificially overvalues the worn coins and undervalues new coins. Consequently, everyone will circulate the worn coins, and hoard or export the new. "Bad money drives out good money," then, not on the free-market, but as the direct result of governmental intervention in the market.

Government monopolizes more things than money. Government mints dollars by fiat, controls values artificially. Government mints lots of things by fiat, artificially controlling more and more values: a school system, a postal system, justice, medicine ... We have to accept dolt after schmuck by government label: as quality leeches from the society: exported or hoarded (or, just as likely, extinct).
I post this at the InfoAll blog (as I develop it) because the first area I want to extend it to is education: schooling.

2005 03 09 insert: I think I started this well enough, but just as I arrived at my real start, here, other things drained my momentum. So, it doesn't get well done all at once. Life can be like that.

More Trust Misplaced: Gresham's Law in Education
Scholars got together, put their personal libraries relating to their profession onto a common table. Thus was Yale founded. The scholars were of course self-appointed, but the market ratified them: more than one, more than two persons who wanted to learn went to Yale. They gained thereby access both to the scholars' books and to the scholars. Graduates prospered, more people went to Yale. That's as free a market as was possible in Eli Yale's time. Other scholars had already gathered around precious manuscripts at Cambridge, at the Sorbonne. The more books there are, the more disciplines, the more important universities became.
Those earliest and early universities were based on a natural kind of gold standard for learning: the good scholars know who they are, tend to know each other; the government doesn't know who they are, except second hand.
Once upon a time gold and money were (not quite) interchangeable. Once upon a time quality and universities had some mutual acquaintance. But then government got into the game of mining education: by fiat of course.
The good scholars didn't leave Yale when the University of Connecticut was founded. One or two might have been lured, but not the bulk. No: new scholars had to be printed. Lots and lots of them.
With the population increasing, with leisure on the upswing, naturally, the number of scholars would have waxed; but not at the rate that fiat scholars were hired.
Metal coins wear naturally. Metal coins can also be clipped. The minting of coins can also be fraudulent, whether private or municipal.
Those thoughts I shall develop further (especially I wish to iterate the theme of goods and qualities overvalued artificially by government), but for the moment I want another tack in mind as well: no university has ever gathered all the best scholars. The most free marketplace has never contained all goods. Homeostasis operates in scholarship as it operates in all complex systems. Astronomers ganged up on Galileo. Physicists ganged up on Einstein. Doctors ganged up on Walter Reed ... Then they were converted. When Jesus visited Jerusalem for Passover the priests of the Temple were highly learned men. As a group they did not take to Jesus' teaching, refused to be wowed by the stories that accompanied him. The best university may represent in general the best scholarship, but may reject the very best scholar: or some percentage of the very best. The list of geniuses that Harvard didn't hire, or hired only to bounce is staggering. (That list of course can never be up to date: we, as a group, will never know who today's VanGogh is.) (That's why VanGoghs, the Gospels ..., become so valuable once they are reassessed.)

Additional scrap: Any society influences its consituent families in the education of the young. Necessity must influence learning in a society: so does culture. This culture insists on the teaching of the Torah, that culture insistes on the Koran, the other culture insists on the New Testament. One culture might prescribe martial arts for all males, another for all youthful members. Churches have evolved to insist all the more strongly on some aspects of curriculum. Having colonized morality, one religion might further try to colonize say agricultural techniques. Institutions tend to spread. The Jews’ Sabbath limits business to six of seven days.
Modern states colonize the secular, but there’s no stopping.
Money emerged from the complexification of markets. Then governments took over the money. Private coinage predates government issue. Schools too are older than government, but government mints its own version.

See my related piece on Inflation [link will have to be restored]. This all needs further exposition, but there’s a start.