Is The Economist Right about Vouchers?

The latest issue of The Economist notes that a mounting body of empirical evidence now favors school voucher programs over government school monopolies. This is eminently true, and it’s delightful to see some of the existing school choice evidence getting a hearing in a mainstream publication. So: jolly good show, wot.

That said, a magazine called The Economist should be held to a very high standard for accuracy, incisiveness, and perspective when it weighs in on the subject of market effects in education – to a higher standard than if the subject were taken up by, say, Vogue, Cat Fancy, or the New York Times.

With that in mind, a few corrections and clarifications are in order. Though Milton Friedman can justly be credited with kindling the modern, U.S. interest in vouchers, the idea was not “first suggested” by him in the mid 1950s. Perhaps the earliest explicit description of the idea is in Adam Smith’s Wealth of Nations, and it figured in the writings of other notable economists and liberal (in the classical sense) philosophers in the 18th and 19th centuries. Vouchers have, in fact, been in nationwide use in the Netherlands since 1917. This is a useful point to note because it shows that vouchers are not a recent concoction, or exclusively the brainchild of a libertarian economist.

Next, the Economist states that voucher programs “are running in several different countries without ill-effects for social cohesion.” It does seem that vouchers are more conducive to social cohesion than state monopoly schooling. Under vouchers, families can pursue both their common educational goals and their unique cultural and religious traditions, all without having to foist their preferences on their neighbors. This is quite different from the endless “school wars” that result whenever there is only one official school system (viz., U.S. battles over sex ed., school prayer, the teaching of history or reading or math, and the current favorite of pedagogical pugilists: the teaching of evolution vs. “intelligent design”).

But to say that voucher programs have no social ill-effects whatsoever is, perhaps, an overstatement. After the murder of Dutch filmmaker Theo Van Gogh in the fall of 2004 at the hands of a militant Islamist, one Dutch Muslim voucher school was bombed and another set ablaze. This is only the most violent and extreme manifestation of a broader unease among some Dutch citizens with the government funding of conservative Islamic schools. Over the past decade, there have been periodic efforts to either cap the number of such schools that can be opened, or to craft regulations so as to make their creation unlikely. This, of course, is a zero-sum game. Either law abiding Dutch Muslims can enjoy the benefits of their country’s voucher program, or they cannot. If they can, taxpayers who object to their teachings but are forced to pay for them anyway become frustrated and social tension results. If they cannot, the Muslim minority suffers second-class status and social tension results.

The reason for this lose-lose situation is that while vouchers lessen the amount of compulsion in education (as compared to government monopoly school systems) they do not eliminate compulsion altogether. Taxpayers can still be compelled to support schooling that violates their convictions. It is possible to promote universal access to the education marketplace with even less compulsion than is associated with vouchers, by means of a universal education tax credit program. I describe such a system here.

The Economist’s portrayal of the Swedish voucher program is also overly kind. “The only real restrictions imposed on private schools,” the magazine claims, “were that they must run their admissions on a first-come-first-served basis and promise not to charge top-up fees.” In reality, the regulations are much more onerous. Most notably, voucher schools must follow a state curriculum and are forbidden to charge tuition fees larger than the voucher amount (this is also true of the Dutch program). These restrictions all but destroy the prospects for specialization and the division of labor, and prevent free floating, market-determined prices from arising. These, as The Economist’s editors must well know, are essential components of free markets. Without them, no genuine market can exist.

Late last year, the Cato Institute published an Education Market Index, which measures roughly 100 characteristics of education systems (or education policies) and rates them on the extent to which a free market currently exists (or on the compatibility of a policy with the rise of a free education market). While the Swedish voucher policy does indeed outscore the Dutch one on this metric, as The Economist’s editors would have predicted, it does so by scoring 40 out of 100 as compared to the Netherlands’ score of 31 out of 100. As currently designed, neither program is conducive to the rise of a genuine education market.

Popularizing the theory and evidence on education markets is an area in which The Economist could well lead the way. If true to its name, the magazine could hold scholars’ and pundits’ feet to the fire when they mischaracterize existing weak school choice programs as markets. The magazine could also continue to draw attention to regions and niches where true free markets in education already thrive – India’s private schools serving the poor, for instance, or the growing worldwide, for-profit, largely unregulated market for after-school tutoring services. Such a rigorous approach to the subject in a mainstream magazine would be a unique and welcome contribution to the debate, and no-one is better equipped to tackle it.

What’s So Special About a Steel Cage Match?

I don’t know how many people reading this are professional wrestling fans – I’m not one – but I would imagine even people who hate wrestling are familiar with the vaunted “steel cage match,” in which the combatants are not only put in the ring together, but the ring is encased in a cage of steel. Wrestling fans love these things. Why?

This description from WWE Bloodbath: Wrestling’s Most Incredible Steel Cage Matches might make it clear:

The steel cage: It’s used as a barrier and as a weapon. It keeps the competitors inside and the interference outside. The Steel Cage Match is the most brutal form of confrontation.

So why’s a steel cage match such a big deal? Because without the cage the Hulkster or Rowdy Roddy might choose not to fight. With it, they have no choice.

OK, so what does any of this have to do with public policy, you ask?

Well, yesterday Sara Mead over at The Quick and the Ed wrote about the Khalil Gibran International Academy, a public school focusing on Arabic language and culture that the New York City Department of Education is trying to put in the same building as P.S. 282, a traditional public school. Opposition to the plan has been fierce, with objections ranging from concerns by P.S. 282 parents about losing space and services if they’re forced to share room with Khalil Gibran, to accusations that the academy will be a madrassa.

Here’s the passage in Mead’s post that really troubled me:

The most radical and evangelistic school choice supporters like to argue that choice will reduce social conflict around education because people who want schools to serve different social purposes can send their kids to different schools. But this ignores the fact that the mere existence of certain types of schools is offensive to some people, all the more so if those schools get public funding (and, yes, vouchers or tax expenditures in the form of tax credits are public funding). To the extent that greater choice leads to a greater diversity of educational options, we’re going to be seeing more controversy and conflict over these issues–at least in the near term–not less.

Mead’s conclusion makes little sense. For one thing, the history of education, which I lay out in the paper to which Mead links, makes clear that when choice has been allowed to work, it has helped to cool conflict where it has existed, and avoid it where it hasn’t. Government schooling, in contrast, has forced - and continues to force - regular confrontation. Moreover, logic suggests that defusing conflict would be by far the most likely outcome of choice, because with it no one has to fight. Sure, with choice people might fight more about specific schools because there will be a much greater variety of schools in existence, but the overall conflict will greatly decrease. Making this latter point clear is where wrestling comes in.

You see, the difference between education with choice and education without it is like the difference between a regular wrestling ring and a steel cage. With the former, people who have different values, educational goals, etc., might grapple over their differences – in a free society we are, after all, allowed to tell people that we don’t like them or what they are doing – but groups that are at odds with each other can get out of the ring. With the latter, in contrast, there’s no escape. People have to fight.

Of course, how choice is delivered will dictate how high or inflexible the ropes are on the non-cage ring. For instance, a voucher would still force one person to pay for part of another’s educational choices, making it hard for the two to get completely away from each other. A tax credit letting people choose whose education they’d support, however, would offer much more separation.

Unfortunately, Mead uses a situation that involves almost no choice to tar even the freest choice forms, which might explain her irrational conclusion that choice will, at least in the short run, create more conflict than the status quo. The Khalil Gibran Academy is, after all, a public school established by the New York City Department of Education, not a private school. Moreover, the department is trying to jam the academy into the same building as a pre-existing public elementary school. Clearly the problem here is the absence of choice for taxpayers and parents, not too much freedom.

Which brings us back to wrestling. Whenever you find your thinking getting fuzzy about whether school choice will produce less conflict than uniform government schooling, remember the difference between a regular professional wrestling ring and one in a steel cage. With the former, one can always avoid a fight. With the latter, there’s nowhere you can run.

The Same Old K Street

Jeff Birnbaum, who covers lobbying for the Washington Post, which is sort of like covering the Pope for the Vatican Observer, writes about “the other K Street” in a lengthy article. “K Street,” of course, is shorthand–or if you believe Wikipedia, metonym–for the lobbying industry.

According to Birnbaum, “the other K Street” is a building along K Street that has become home to a dozen or so well-funded left-Democratic lobbies–Campaign for America’s Future, Americans United for Change, Progressive Majority, Ballot Initiative Strategy Center, USAction, Political Action, etc. So that’s very different from the usual corporate lobbyists, right?

Well, let’s see. What K Street is really about is using political influence and the power of government to transfer resources from those who produced them to yourself or your clients. It’s about milking the taxpayers. It’s about using your political connections to impose your own agenda on the unorganized masses.

And by that definition, “the other K Street” fits right in with the corporate K Street. Special interests give them buckets of money, and they manipulate the political process on behalf of partisan, ideological, and interest-driven agendas–just like the corporate and right-wing lobbyists.

Michael Barone reminds us that it was Franklin D. Roosevelt’s aides who originally created “K Street” when they left the White House and went into business for themselves. They happily lobbied the permanent Democratic majority in Washington for the next 60 years or so. Now the taxpayers’ pinata is available to everybody.

The Global Flat Tax Revolution Continues

A column in Canada’s Globe and Mail reviews the successful shift to flat tax systems and appropriately notes that tax competition is a key reason for the adoption of better tax policy:

In one of its first acts last year as an independent country, Macedonia (population: two million) legislated radical tax reforms. On Jan. 1, 2007, the country introduced a flat-rate tax of 12 per cent on both personal and corporate income, matching the rate introduced two years ago by Georgia (population: 5.6 million). On Jan. 1, 2008, Macedonia will cut its rate to 10 per cent - and achieve one of the lowest tax rates in the world. Macedonia’s tax revenues will almost certainly rise. The country’s new, young (age: 36 years) free-market Prime Minister, Nikola Gruevski, cites the phenomenon of voluntary compliance that accompanies flat-tax regimes. “This reform will decrease tax evasion,” he says, “and encourage people to meet their obligations to the state.” As Russia (population: 144 million) vividly demonstrated when it adopted a flat tax (replacing a 40-per-cent rate on personal income with a 13-per-cent rate) in 2000, low rates are persuasive tax collectors. Russia’s revenues rose 25 per cent in the first year, 25 per cent in the second year, 15 per cent in the third year. People who violently resist getting scalped will submit voluntarily for a trim. …Around the world, tax rate competition is getting keener. Countries that resist flat-tax reform are nevertheless lowering rates. Poland (population: 37.5 million) has moved three-quarters of the way to a flat tax - with a single rate of 19 per cent for all corporate income, capital gains, dividends and self-employed individuals. Spain (population: 40 million) has introduced a flat rate of 18 per cent for all income derived from savings. Effective this year, Iceland (population: 300,000) taxes all personal income at a flat rate of 32 per cent - which appears high because it includes municipal as well as national taxes. It now taxes capital gains, dividends, interest income and rental income at a flat rate of 10 per cent.

Time for Taxpayers to Sing the Blues

Blue corn isn’t subsidized like white and yellow corn, and that’s just not right. Or so say the blue corn growers. Cindy Skrzycki’s “Regulators” column in the Washington Post today is the sort of thing that ought to make you a libertarian. So many lawyers writing so many regulations, with clauses and sub-clauses. And it’s all nonsense.

So here’s the problem:

Under the regulatory system that determines which crops qualify for inclusion in Department of Agriculture support programs, blue corn is an orphan. According to the department rulebook, it isn’t even considered corn because it’s not yellow or white, the only versions of the food that are eligible for federal agricultural loans and crop payments.

This means that farmers who grow blue corn, which is made into the blue-corn tortilla chips that many of us love to dip into a nice salsa, aren’t growing “real” corn, so they don’t qualify for loan or other support programs, according to the government. 

Now you might think this is no big deal since blue corn sells for about twice what white and yellow corn do. But the growers feel hurt and victimized and, you know, invisibilized. They want to be an official government-recognized crop. And, you know, get the loans and subsidies. Like popcorn got in 2003.

But fear not. Rep. Dennis Cardoza (D-Calif.), chairman of the House subcommittee on horticulture and organic agriculture (seriously), is listening. He’s promised the blue-corn growers that he’ll try to address their needs in the current farm bill.

And then taxpayers can subsidize premium organic blue corn, lest this great nation ever run out of blue-corn tortilla chips in a national emergency.

The Real “Reading First” Scandal

Secretary of Education Margaret Spellings will testify before a House Education Committee hearing tomorrow, and the hottest topic for her appearance on the hot-seat will be the federal “Reading First” program. A centerpiece of the No Child Left Behind act, Reading First is a billion-dollar-a-year initiative to improve language instruction in the early grades. The idea behind the program was to encourage districts to adopt scientifically proven teaching methods, but it seems to have netted roughly a million bucks for people on the Dept. of Ed.’s payroll in the process. The Department’s inspector general, John P. Higgins Jr., has made several criminal investigation referrals to the Justice Department as a result.

As government scandals go, this is tepid stuff. A million dollars? Individual states and school districts around the country have often mismanaged or defrauded taxpayers of comparable or larger sums.

The real Reading First scandal is that anyone would imagine that a bureaucratic school system bereft of competitors and immune to market incentives could be made to adopt and consistently implement effective educational practices on a vast scale, let alone sustain them over time or improve upon them.

Anyone familiar with the research on so-called systemic reform is aware that implementation quality matters as much or more than program selection. If teachers are not committed to and well trained in the selected methods, they will not effectively implement them and will not persevere with them over time.

A case in point is the federal ”Follow Through” experiment of the late 1960s and early 1970s, which put a score of different pedagogical methods in head-to-head competition. The number one method, by far, was called Direct Instruction, or Distar. As soon as “Follow Through” officially ended, most of the schools that had been using Distar abandoned it, and their test scores eventually fell back to pre-follow-through levels.

So the real question is, how do you simultaneously achieve all of the following:

  • Encourage the consistent identification and/or development of effective methods
  • Hire, train, and maintain a staff of teachers capable of properly implementing those methods
  • Ensure that, once adopted, effective methods are not displaced by the latest pedagogical fad

The only way to do that is to create powerful incentives that pressure school administrators and teachers to do these things. The only system that consistently creates these incentives is a competitive education marketplace. Until we have a market, dreams of the pervasive use of effective pedagogical methods in American education will remain just that: dreams.