All Are Welcome Aboard!

When I started reading AEI director of education policy studies Rick Hess’s latest article, I feared a Stern-esque public defection. “Oh no,” I thought. “He’s about to denounce school choice as a failure without any consideration for what it needs to work.” Then came the pleasant surprise: Hess makes clear that school choice hasn’t produced transformative competition and innovation because, so far, almost no competition or innovation has been allowed to occur.

Pointing to everything from enrollment caps, to profit prohibitions, to suffocating bureaucracy in choice vehicles ranging from charter schools to voucher programs, Hess concludes that “the lessons are increasingly clear. If school choice is to enjoy a brighter future than wave upon wave of supposed school reforms, it is time for reformers to fight not just for choice but for good choices.”

I couldn’t agree more, and want to be the first to welcome Hess aboard the good ship Free-Market Education! We here at Cato have been sailing it for some time now, and offer all kinds of guides for anyone who wants to cruise with us, including the Cato Education Market Index; Dismal Science: The Shortcomings of U.S. School Choice Research and How to Address Them; and Markets vs. Monopolies in Education: A Global Review of the Evidence. We’d especially like to invite choice equalitarians to join us, those folks who want options for the poor but don’t see that choice’s real power can only be unleashed when schools are unfettered and choice widespread. Low barriers to entry for entrepreneurs, price change, the ability to make a profit, unsubsidized competition—all these things are critical to thriving industries that give us everything from iPods to dress shirts, but as scarce as Ecuadorean polar bears in moribund k-12 education. That’s not a coincidence.

Free markets work, Hess understands, but not when they’re in name only.

The Washington Post Visits Cato

In the Washington Post this morning:

Bailout Raises Libertarians’ Market Value: Cato Institute’s Scholars Pained and Pumped By Government Action

[F]aced with a proposed $700 billion government bailout of  Wall Street, this town’s most gung-ho libertarians and free-marketeers are reaching for their coffee and their keyboards. They are invigorated. The prospect of doom and ruination for everything they hold dear only makes them stronger.

Another $700 Billion

For the second time in six years, the Bush administration has asked Congress for nearly unlimited authority without an independent professional review of the evidence that led the administration to request such authority.

In making the case for the Iraq war resolution, according to Senator John D. Rockefeller, “the administration repeatedly presented intelligence as fact when it was unsubstantiated, contradicted or even nonexistent. As a result, the American people were led to believe that the threat from Iraq was much greater than actually existed.”

As it turned out, of course, no “weapons of mass destruction” were ever discovered.

The skeletal proposal for the Troubled Asset Relief Program states that “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this act without regard to any other provision of law regarding public contracts” – again without an independent professional review of the evidence that led the administration to request such extraordinary authority.

In both cases, the administration requested urgent congressional approval of these measures when members of Congress were anxious to go home to run for reelection. And a final irony: the total direct cost of the Iraq war to date has been about $700 billion, the same amount that the administration has requested to buy bad mortgages.

School Choice Talk

Thought people might be interested in a conversation I had yesterday with Norm Leahy of Tertium Quids, a free market issue-advocacy organization in Virginia, about school choice in that state and across the country.

More states are waking up to tax credits as the best bet for school choice; an education reform that saves kids, saves money, and has increasingly bipartisan support.

School Choice Q & A

This year’s SPN K-12 Education Reform Summit delivered yet another line-up of great information and hard questions. I’d like to follow up, belatedly, on one of the most important questions raised during the conference; are education tax credits more viable than vouchers?

If we hope to succeed against the power of the teachers unions and entrenched political interests, we need to approach this issue in the most careful, systematic, productive way we can. With that in mind, I’d like to pose a few questions that might shed some light on the debate …

How many voucher and credit programs serving at least low-income children have passed since 1995?

  • Since 1995, seven state-wide tax credit programs have been passed and all are still in operation. Two of these programs, in Arizona and Georgia, are universal-in-principle, and none are limited to special-needs. In 2008, Georgia passed a $50 million dollar program with no family income cap on student eligibility. Not included in the tally is a universal education tax deduction program passed in Louisiana in 2008.
  • Since 1995, four state-wide voucher programs serving (at least) low-income children have passed and only one survives. Only one universal-in-principle program passed, in Utah, and it was overturned. Not included in the tally is a Louisiana voucher program passed in 2008 for poor students in failing schools in New Orleans.

How many since 2005?

  • Since 2005, no state-wide voucher programs have passed that serve at least low-income children.
  • Since 2005, four tax credit programs have passed that serve at least low-income children.
  • Only one modern statewide voucher program – Ohio’s – serves students other than those with special needs or in foster care. Three additional modern programs – in Milwaukee, Cleveland, and New Orleans – serve students in those cities. Three statewide programs – in Florida, Colorado and Utah – were overturned by the courts or referendum.

How bipartisan is the support for vouchers and tax credits?

  • When Florida’s donation tax credit program was passed seven years ago, only one Democratic legislator voted for the measure. Last month, a third of state house Democrats, half the black caucus and the entire Hispanic caucus voted to expand that program.
  • Arizona, Rhode Island, and Iowa all passed education tax-credit initiatives in 2006, and Pennsylvania expanded its existing program. The Arizona, Iowa, and Pennsylvania bills became law under Democratic governors, and the Rhode Island business-tax credit was born in a legislature controlled by Democrats.
  • A government fully controlled by Democrats in Iowa—governor and both legislative houses—actually expanded the tax-credit dollar cap by 50 percent in 2007.
  • In contrast, Democratic governors have recently made serious attempts to de-fund voucher programs in Milwaukee and Ohio.

The Constant Bailer

Over the last couple of weeks, the nation has been understandably preoccupied with faltering financial houses and federal promises to save them. Save them, of course, for the public good, to the tune of roughly 700 billion taxpayer dollars. (Or is it 1 trillion taxpayer dollars? Oh, what’s a few hundred billion among friends?)

These happenings have inspired a lot of folks to declare truly free enterprise a failure and conclude that government must do more to “manage the economy.” But before we accept all that, let’s put the supposed failure of freedom—and magnificence of government—in a little context by considering something government has managed for a long time: public schooling.

In the 2004-05 school year (the latest with available data), the nation spent about $520 billion, adjusted for inflation, on public schooling, a figure that in two years would surpass the utterly atrocious $1 trillion some people fear taxpayers are about to eat saving investment bankers. And, of course, we’ve been paying through the nose for public schools for decades. But what do we have to show for it? Flat achievement, sinking international academic standing, and a lot more teachers and school employees living off the taxpayers.

Without question, from taxpayer and simple justice perspectives, the proposed rescue of private companies that took big chances and lost is unconscionable. It’s hardly, however, a sign that free markets don’t work. Indeed, considered alongside the perpetual bailout that is public schooling, it just highlights once again that government—the constant bailer—is the real problem, not a free market that would punish both bad bankers, and bad schools, if only it were allowed.