Suburban Opposition to Choice and the Money Misperception

Andrew Coulson has a great response to a recent “Best of the Web” column by WSJ’s James Taranto, which notes that there is widespread and self-interested opposition to vouchers from wealthier parents and homeowners.

I just wanted to add a bit about two things Taranto suggests are a major concern limiting school choice success; property values and taxes. He’s wrong on property values, but correct about taxes.

Coulson notes that the property value effects of choice are not as predictable as many political elites think, and that might help explain one interesting finding from my doctoral research.

In a large-scale survey of close to 2,900 respondents, I found that property value concerns were a negligible consideration in regard to school choice. In fact, around 40 percent of respondents think that property values will increase with school choice. Most of the rest think choice would have no impact at all on property values. And even high-income respondents without school-aged children believe, by 30 percent to 16 percent, that the adoption of school choice policy will increase property values in their area. 

Property values, in other words, do not seem to be an important drag on support for school choice. Coulson points to what does seem to be the major concern for higher-income suburbanites; cost.

Most people think that school choice will increase academic achievement and have other beneficial effects. But most people also believe, incorrectly, that choice will substantially increase costs. And why wouldn’t they? What new government program promising substantial improvements in anything ever cost taxpayers less?

Regression analyses reveal that cost concerns are the biggest drag on support. It should therefore come as no surprise that exposing respondents to an argument for school choice that emphasizes the cost savings was the most effective in increasing support for school choice.

If we want to make inroads with those who are skeptical of school choice, we need to do more to educate them on the fiscal benefits of choice.

Supreme Court Stands Up for Free Speech in California

Today, by a vote of 7-2, the Supreme Court overturned a California statute that prohibited employers from speaking out on issues relating to unions and labor policy.  The restriction even applied to the payment of salaries, speaking about unions to employees working on state contracts, and meeting with employees on state property to discuss union-related issues.  The statute, passed after intense lobbying by the AFL-CIO, applied to any employers who received over $10,000 in state program funds – including everything from MediCal reimbursements to payments for building roads and schools.  The only significant exceptions all relate to employer speech favoring union activity.

Cato filed a brief supporting the petitioners in this case – the Chamber of Commerce and a group of small business owners – to argue that 1) the case should be decided on labor law grounds because the National Labor Relations Act (NLRA) clearly prohibits state regulations of this kind; but 2) if the Supreme Court reached the First Amendment issue that the Ninth Circuit took it upon itself to decide (and decide erroneously), the statute should be struck down because it imposes an unconstitutional condition on the receipt of state funds and burdens private speech in an area unrelated to the programs for which the funds are given.  In the end, the Supreme Court correctly decided the case on NLRA preemption grounds – that California intruded on an area that is properly left to Congress’s authority –  noting its own 1976 determination that Congress had left unionization activities to be “controlled by the free play of market forces.”  As Justice Stevens aptly stated, California’s statute acted to regulate within “a zone protected and reserved for market freedom” and thus had to be struck down.

John McCain’s SimCity Energy Plan

For those of you not in the cultural “know,” Sim-City is a long-standing series of computer games which asks the player to essentially play the role of a Stalinist super-planner. What to build, where to build, and how people are to relate to all those buildings in your custom-designed city is up to you, the all-knowing, all-powerful uber-planner.

It’s all good fun in the privacy of your own home (I guess), but is this the sort of game we want the next President to play? I’m going to go out on a limb and say no. John McCain, however, seems to disagree.

Consider, for instance, John McCain’s call earlier this week for the United States to build 45 new nuclear power plants by 2030 and another 55 sometime after that. The first question that comes to mind is, why 45? Did the McCain brain trust engage in some high level economic computer modeling to discover that the optimum number of new nuclear power plants is not 42, 47, or some other number … but the nice, round number of 45? I’m going to guess that they did not. I’m going to surrender to my cynical alter-ego and posit that, if one were to ask the question, “Sen. McCain, how exactly did you come to the determination that the economically optimal number of new nuclear power plants is 45 new facilities over the next 22 years?” the answer you would get would likely be totally incomprehensible.

There are two ways we can go on energy policy. We can leave the decisions about what to build and when to build to market actors (disciplined as they are by hard costs and incentivized as they are by the pursuit of profit), or we can leave that task to political uber-planners who are not disciplined by either but are disciplined by campaign contributions, polling data, and periodic popularity contests. Call me a crazy ideologue, but I suspect that the economy would prove more efficient with the former rather than the latter approach.

Note: The reason we hear politicians like John McCain talk so much about the need for the federal government to promote nuclear power is because investors in the private sector take one look at the economics and run screaming for the hills. Investment banks tell utilities who want to borrow money to build these things that not one red cent will be coming their way unless and until the federal taxpayer guarrantees that the entire loan will be repaid in case of default. If nuclear power were such a good economic bet, those taxpayer guarantees would not be necessary.

NYT Feigns Concern over Cost Overruns in Massachusetts Health Plan

Today’s New York Times ran my response to the Grey Lady’s recent editorial on the Massachusetts health plan:

Your editorial lauds the Massachusetts health care reforms as “off to a good start” and “heartening.” The editorial addresses the reforms’ higher-than-projected costs thus:

“The shortfall occurred mostly because the state underestimated the number of uninsured residents and how fast low-income people would sign up for subsidized coverage. It is a warning to other states to keep projections realistic.”

I’m sorry, but if states can low-ball the cost of reforms to get them enacted, and still get praised by the paper of record, that’s exactly what they’ll do. Some “warning.”

School Choice: What Would Bartlet Do?

The federal voucher program that enables nearly 2,000 children in the District of Columbia to attend private schools is facing opposition in the Democratic Congress and may be discontinued. Some people just can’t stand to think that kids might get educated outside the grasp of the government. 

The most honest, decent, and thoughtful Democratic president of modern times, Jed Bartlet, was surprised to find himself supporting vouchers on an episode of NBC’s “The West Wing.” Bartlet’s staff summoned the mayor of Washington, D.C., to the White House to plot strategy for his veto of a Republican-backed bill to provide vouchers for a few students in D.C. schools–and was stunned to discover that the mayor and the D.C. school board president both supported the program, as indeed Mayor Anthony Williams and School Board President Peggy Cooper Cafritz did in real life. Why? the president asked the mayor. “After six years of us promising to make schools better next year,” the mayor replied, “we’re ready to give vouchers a try….We spend over $13,000 per student–that’s more than anywhere else in the country-and we don’t have a lot to show for it.” (As Andrew Coulson wrote recently in the Washington Post, the real cost is actually much higher than that.)

Then the president summons his young personal aide to testify to the merits of D.C. public schools and gets another surprise:

Faced with the evidence, President Bartlet decided to do the right thing. Will Congress?

Should Suburbia Fear School Choice?

In a recent “Best of the Web” column, the WSJ’s James Taranto uncharacteristically ventures into the world of education policy. Suburban conservatives, he notes, often oppose school choice because they fear the impact of choice programs on their property values and their own children’s schools. “A voucher program,” he adds, “offers little to those who already have choice.”

Taranto, as always an astute political observer, is right that this perceived self-interest on the part of suburbanites is a serious hurdle for school choice advocates. Where he goes astray is in assuming that the perception is correct.

According to Taranto, parents who are wealthy enough to pick from among existing public school districts and private schools “already have” everything that a free educational marketplace could possibly offer them. That’s like saying upscale Soviet apparatchiks already enjoyed the benefits of capitalism because they could choose between a Lada and Yugo. The system of schools we have today is not a free market system. We have a legally protected 90 percent state monopoly school system with a small niche of non-profit schools mostly serving the religious education market due to the “free” government schools’ inability to serve that niche. This hobbled and distorted system no more captures the full panoply of options a true market would provide than the Yugo and Lada represented the full range of vehicle options in the capitalist West. Furthermore, no existing U.S. school choice program comes close to creating a genuine free market in education, as economist John Merrifield pointed out in a recent Cato Policy Analysis (“Dismal Science: The Shortcomings of U.S. School Choice Research and How to Address Them”).

Getting Americans to realize what they’re currently missing is indeed going to be a tough hurdle for school choice advocates. But it’s a hurdle that can be overcome.

As for the impact of school choice on property values, Taranto is right that there would likely be an important effect, but it is more subtle than he imagines, and there are countervailing forces he ignores. It is more subtle because property values and school district quality are not perfectly correlated. Some desirable places to live have better schools than others, and most homeowners do not currently have children in school. In otherwise desirable areas with mediocre or relatively poor schools, property values would go up, just as they would likely fall in expensive districts with relatively better schools. So, for some suburban homeowners the property value effect would be negative, while for others it would be positive. More importantly, well-designed market education reforms will generate very substantial state and local tax savings, year after year, because the current monopoly system is ridiculously expensive. Cato is about to release a study of the fiscal impact of a large-scale education tax credit plan, and it would save taxpayers billions of dollars in all five states analyzed. A one-time hit in property values may not seem so grim a prospect when offset by this falling tax burden. Most people own their homes for many years, and so would have plenty of time to reap tax savings.

Finally, the idea that a competitive education marketplace would lead to a mass migration of urban children into suburban schools is highly unlikely. Urban parents want the same things as suburban ones: good schools in their own neighborhoods. Urbanites do not commute to suburbia to go to Barnes and Noble or Starbucks. There are already good bookstores and coffee shops in our nation’s cities (in fact, there are good coffee shops in good bookstores in our major cities). Supply rises to meet demand in education as in every free marketplace. Once all families have the financial resources to easily choose schools, more and better private educational options will emerge in cities – just as has been the case with even the tiny Milwaukee voucher program. Most urban families will prefer good local schools to good schools in remote suburbs that would require long bus rides for their children.

He’s a Politician after All

This might be a shocker to many, but Barack Obama has admitted that he’s a politician after all. After calling NAFTA “a big mistake” and “devastating” just 2 months ago, the presumptive Democratic nominee now thinks that the trade agreement is not that bad.

He justifies this U-turn saying that “Politicians are always guilty of [overheated and amplified rhetoric], and I don’t exempt myself.” This is coming from someone who, on the campaign trail, has attacked those who would say anything to get elected.