Happy Birthday, Milton

Today is the 95th anniversary of the late Milton Friedman’s birth, and I’ll be celebrating his contribution to the school choice movement this evening in a presentation at the Evergreen Freedom Foundation in Washington state (to be available via live web-cast).

Here are some opening thoughts I have for that presentation:

In the spring of 1998, I was wrapping up four years of work on my book “Market Education: the Unknown History.” The publisher asked me come up with a list of prominent people who might be willing to write blurbs for the jacket, and so I sat down and mulled over the possibilities. The first name that came to mind was Milton Friedman.

I’d read Dr. Friedman’s 1954 essay on “the Role of Government in Education” and been deeply impressed by it. Of course, I didn’t seriously think that he would have the time to read a hefty manuscript by an author he’d never heard of, but, I thought, what’s the harm in trying?

In what still seems to me a minor miracle, Dr. Friedman decided to give the manuscript a read, and in doing so helped to launch my career in education policy. In fact, just weeks after I had contacted him, and before I knew what he thought of the book, I received a last-minute invitation to share the stage with him, along with his wife Rose and economist and columnist Thomas Sowell, at the gala launch event of the Milton and Rose Friedman foundation in San Francisco. Of course I was incredibly excited, not to mention moderately terrified, at the prospect.

Just as we were about to walk onto the stage at that event, Dr. Friedman leaned close to me and whispered “It’s a fine book,” but then added in a somber tone, “except where you run-down vouchers in Chapter 10.” He looked at me earnestly for a moment, and my heart nearly stopped. For a second I thought that my as-yet-unreleased manuscript was about to be carved up by a Nobel laureate economist in front of a live audience of several hundred people. Then he smiled and added, “but we can talk about that later.” And so we did, on and off, until his passing late last year.

Dr. Friedman was always quick to say that he was a monetary economist by profession, and that his interest in school choice was more avocation than vocation. But though he wrote only a few non-technical works in the field of education, he was a seminal force behind the modern American school choice movement.

To understand his impact on this field, you have to go back to the early 1950s. At that time, even more so than today, advocacy of limited government and individual liberty had been outside the philosophical mainstream. Not just outside it. Not just on the shore looking into the mainstream. But buried in the bushes entirely out of view of it.

Milton wrote of this period that “Those of us who were deeply concerned about the danger to freedom and prosperity from the growth of government, from the triumph of welfare-state and Keynesian ideas, were a small beleaguered minority regarded as eccentrics by the great majority of our fellow intellectuals.”

Consider that barely 20 years before Milton wrote his essay on “the Role of Government in Education,” the National Education Association had declared that the time had come for, quote, “the frank acceptance of the collective economy.” Not only did early 20th century education philosophers oppose the privatization of their own industry, they advocated nationalizing most of the others.

It was into this intellectual milieu that Milton ventured his modest suggestion: that the goals and ideals of “public education” would be best fulfilled though the private sector, with the government intervening, only if and as necessary, to ensure universal access to the independent educational marketplace.

Milton has passed, but that modest suggestion has become an international movement backed by an ever growing body of interdisciplinary empirical evidence.

Thank you, Milton, and happy birthday.

Dr. Rudy

Rudy Giuliani’s health care reform agenda is showing a little more leg.

Evidently, the Republican presidential candidate is giving some speech somewhere today. All I know is that his campaign sent me an email with bullet points about how Hizzoner wants to use free markets to reform health care. Let’s see how he does!

Reforming the tax code. Rudy seems to endorse President Bush’s standard health insurance deduction, which would reduce government’s influence and make health care markets more free. He also talks about liberalizing the rules for health savings accounts (HSAs). But as I’ve argued elsewhere, were we to adopt a standard health insurance deduction, HSAs would be undesirable. Free-marketeers would want to eliminate them.

Government spending. Unfortunately, the email also speaks of “a Health Insurance Credit to low-income Americans,” which would increase government’s influence and make health care markets less free. Rudy speaks of block grants that are supposed to do many wondrous things. But he doesn’t tell us whether he would use existing federal spending (e.g., Medicaid and SCHIP) to create those block grants or simply create new categories of federal spending. Since he also talks about “[tying] Medicaid payments to a state’s success in promoting preventative care and tracking obesity for children,” one suspects he’s not talking about block-granting Medicaid.

Medical malpractice liability. Rudy says he wants “to end frivolous lawsuits without limiting compensation for real economic loss.” That’s the trick, isn’t it? He doesn’t say how he wants to do this. But any federal approach is going to be the wrong one. The Constitution doesn’t give the feds the power to alter states’ substantive tort rules. A free-market approach would let the states sort this out in the market for such rules.

Deregulation. Rudy says he’d make health insurance more affordable by letting people purchase lower-cost policies from other states – if your state’s regulations make health insurance unaffordable. I’m sorry, did the Supreme Court tell wine lovers that they can purchase vino from other states only if it’s unaffordable in their own state? Rudy says he wants to “bring greater accountability and efficiency” to the Food and Drug Administration’s drug approval process, but he doesn’t say how.

Buzzwords. Yes, this is an entire category of health policy. Rudy believes in “creating” price and quality transparency. He wants to “invest in health IT to reduce medical errors, improve efficiency, and detect health threats” – including, quite possibly, whether your kids are a bunch of fatties. Also, “health insurance must be redefined to cover wellness as well as sickness.” (The passive voice notwithstanding, I’m fairly certain who will do the redefining.) Those goals are all well and good. But buzzword-based health care reform usually means that someone thinks they can orchestrate the health care sector better than a free market could.

Given Rudy’s free-market rhetoric, I’m underwhelmed. Still, this package puts him head and shoulders above any other presidential candidate I’ve heard from.

His plan would be dramatically improved if he dropped everything after the first bullet point (re: the standard health insurance deduction). But the other bullet points furnish enough wiggle room that I can see Rudy improving on them. Or … backsliding.

Here’s one place he could look for possible improvements.

Conversation with One of SiCKO’s WTC Rescue Workers

Today I noticed that Reggie Cervantes-Miller posted a comment to an oped I wrote for The New York Sun about Michael Moore’s film SiCKO. Cervantes was one of the three September 11 rescue workers that Moore took to Cuba for free health care.

In the oped, in which I spoke directly to Moore, I noted that every one of those rescue workers had health insurance on September 11, 2001, but lost their insurance when they lost their jobs.  I then wrote:

Why didn’t you tell your audience that the American government was largely responsible for that? After all, it is Congress that ties health insurance to employment by imposing a tax penalty on insurance that actually stays with you when you lose your job. If we got rid of those stupid tax penalties, people like Ms. Cervantes and Messrs. Graham and Maher could get coverage that sticks with them through the rough times.

Below is Cervantes’ comment in its entirety:

Why did you tell them, Michael Cannon that the reason I couldn’t afford the Cobra benefits was because the capitalist insurance company wanted 4 times what my employer paid for me to keep my insurance and I had to choose between rent and insurance while unemployed?

Of course our elected officials are still receiving money from lobby sources to promote their agenda.

Who have you written to Mr. Cannon, to request or demand that we be covered for necessary medical treatment to keep alive? Put your money where mouth is because Michael Moore did and you are only here to do us a disservice!

Reggie Cervantes

WTC Survivor Rescue Worker in Michael Moore’s Sicko

I submitted the following comment, which has yet to be posted by the Sun:

Reggie-

You’re right: COBRA can be of little comfort to people who actually need it. Right at the moment of greatest need – when you’ve lost your job and still need medical care – you learn just how much your employer’s health plan costs because they charge you the full premium. Actually, 102 percent. If you were charged more than that, someone was breaking the law (see here).

You’re also right that special interests have a tight grip on the politicians, which helps them block any real health care reform. But that is exactly why Mr. Moore’s prescription is so dangerous: the more control we give to the government, the more control we give to the special interests. The way I’m trying to help is by returning the vast sums of money controlled by the lobbyists and politicians to the people. That will impose much more discipline on the system, and far fewer people would end up in such dire straits.

If you’d like to talk about this more, you can find me at the Cato Institute’s web site.

To repeat what I told you, John, and Bill when we met in D.C… . well, I didn’t know how to begin to thank you then, and I still don’t.

Michael

State Debt Cracks $2 Trillion

New Federal Reserve data show that state and local government debt has topped $2 trillion. At the end of first quarter 2007, state and local debt was $2.050 trillion, which is up 9.6 percent from first quarter 2006.

State and local debt growth has been explosive since 2001. In Table D.1 (see link), you can see that debt growth has soared in recent years, compared to the more moderate growth rates on the 1990s.

This is disturbing because current strong tax revenue growth in the states should be allowing governments to pay down debt in a prudent fashion before the next recession hits.

In Table D.3, you can see that state and local debt increased just 21 percent for the entire decade 1990-2000. Yet between 2000 and 2006, debt soared 68 percent.

For further discussion, see   

http://www.cato.org/pubs/tbb/tbb_0706-37.pdf

CBO: Bush’s “Standard Health Insurance Deduction” Would Cover 7m Uninsured

In a letter to Senate Finance Committee Chairman Max Baucus (D-Mont.), the Congressional Budget Office estimates that President Bush’s proposed “standard health insurance deduction” would reduce the number of uninsured Americans by a net 6.8 million, including a net reduction of 0.5 million children without health insurance.  That’s a net figure, since the CBO expects some uninsured people would gain coverage while others would lose coverage because some employers would stop offering health benefits.

Not too shabby.

No doubt the Church of Universal Coverage will still condemn a standard health insurance deduction because it wouldn’t cover enough children or adults.  In their catechism, nothing matters as much as a paper guarantee of health insurance. 

My own heretical view is that government should not even be trying to achieve universal coverage.  Nevertheless, today’s CBO letter is a nice reminder that there are ancillary benefits to doing the right thing.