Topic: Education and Child Policy

If Anyone Blames the Market, I Swear I’ll…

Right now, it’s very popular with politicians to blame the free market for our mortgage-driven economic woes. It’s also, as with most things popular among politicians, utter nonsense: Fannie and Freddie are Dr. Washington’s monsters, and DC has practically forced lenders to float loans to high-risk borrowers.

Of course, it’s not just in mortgages that the feds have been superheating the market, only to proclaim that they’re saving it every time they do something that will just make matters worse. They’ve been doing that in higher education for decades, delivering or guaranteeing loans targeted at high-risk borrowers, and the current credit “crisis” has done nothing to curb their enthusiasm. Heck, it’s emboldened them to do more.

You might recall something I wrote back in April about the Ensuring Continued Access to Student Loans Act, a fast-moving piece of legislation intended to shield any college student from the possibility that he or she might not be able to get a loan. Among other things, the act increased limits on several federal loans so that students could borrow even more, and loosened the eligibility guidelines for PLUS loans so that parents in significant mortgage arrears could still borrow college cash. It easily passed Congress, pushing significantly more money at ever-greater risks – and Congress has just extended it to 2010.

And people wonder why lenders make loans to obvious credit risks, and college costs keep on skyrocketing?

Unfortunately, some people in Washington never learn, or worse, know full well that pumping ever more money to big risks is a huge, dangerous distortion, and just don’t care. Case in point, this quote from Michael Dannenberg, senior fellow with the New America Foundation, lauding Senator Obama in a new AP article for proposing a new tax credit program—which includes a make-work “community service” payback piece—on top of all the other federal aid programs:

Michael Dannenberg, senior fellow with the New America Foundation and a former adviser to Sen. Edward Kennedy, D-Mass., says Obama’s proposals take the problem of college affordability more seriously than McCain’s. And he calls the tax credit a significant innovation.
“McCain’s message when it comes to increased tuition is, ‘You’re on your own,’” said Dannenberg, who has not worked for Obama’s campaign. “Obama’s message to families is, ‘We’ll give you more financial aid to help you with college costs, but your kids are going to have to help others.’”

Notice what taking a problem “seriously” means? Offering even more bankrupting government largesse! And who cares about the ultimate bill…until, that is, the reality of “no free lunch” ultimately forces it to come due.

In light of this, nobody, and I mean NOBODY, in Washington had better blame “market forces” for huge cost problems, inefficiencies, or just plain wasted money in higher education. Federal politicians, with their constant bribery of voters and special interests, have made our colossal financial messes, and they haven’t got a leg to stand on acting like they are the solution and freedom is the problem.

No Bailout Will Silence This!

Other than partying pirates holding thirty-some Russian tanks captive against an international armada of warships, the Big Abortive Bailout of Aught-Eight seems to have pushed every other news story out of the headlines. That’s almost certainly the case for education, where few stories are attracting much attention, and the edublogosphere has been eerily quiet.

Unfortunately for both the country and education-policy peeps, there’s a good chance our economic problems, and political efforts to make them worse, will continue to dominate our news for the foreseeable future. Thankfully, we here at Cato will be giving education a chance to get back on your mind, even if for just a few hours, bringing in a man whose ability to rile is not bound by anything as inconsequential as mere news! He is Charles Murray, and his new book, Real Education: Four Simple Truths for Bringing America’s Schools Back to Reality, has been getting lots of people’s goats and just not letting go.

On Wednesday, October 8, Murray will be at Cato defending his book’s thesis that we all have different intellectual endowments, and only a relative few of us are well-served by a school system that shoves everyone into ivy-covered walls. Responding will be Christopher B. Nelson, president of St. John’s College in Annapolis, MD, a school that features about as pure a liberal arts education—the kind of schooling Murray argues must of us don’t need—as you’ll find.

Bailouts, frankly, get pretty boring after awhile; Paulson this, $700 billion of your hard-earned tax dollars that, blah, blah, blah, blah, blah. But one thing that never gets dull is debating how best to educate our children. So register to hear Charles Murray today, and get ready to cogitate over something other than our economic mess—well, at least the immediate mess—come October 8.

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.

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.

It Depends on Whom You Ask

Over at NCLB Act II, David Hoff wonders why the No Child Left Behind Act is treated likes it’s radioactive, while yesterday he heard “no talk of trying to slay NCLB—or even make major changes to it” at the inaugural meeting of the U.S. Department of Education’s National Technical Advisory Council.

David, I think I have an answer: The administration that championed NCLB put the commission together. There’s probably a pretty good chance they purposely brought in people who are comfortable with Washington hamfistedly imposing “accountability” on K-12 education. At the very least, that explains what happened to my invitation to join the council.