That’s a question I was asked over at EdSpresso.com, to which I’ve just fired of the following answer:
Alas, no. In the short term, the charter schooling model lacks some of the essential characteristics of effective markets. I stressed competition in the cited op‐ed [about Warren Buffett’s gift to the Gates Foundation], but there are others I couldn’t mention for lack of space. Free‐floating prices and at least some direct payment of tuition by parents are two other crucial ingredients. Charters have neither.
Prices are the mechanism by which markets signal quality and encourage providers to offer the services most in demand. Without the ability to set high initial prices for effective innovations, innovation cannot be financed. Hence, the whole process by which markets drive improvements in quality is crippled. If there had never been $1,000 DVD players and cell phones, there would not now be $39 DVD players and “free” cell phones (when purchased with a service plan). On the flip side, when providers do not set their own prices there is no incentive for them to find ways of undercutting their competitors by offering similar quality services at a lower cost, eliminating a key incentive for efficiency. There are still other problems with charter schooling that I haven’t listed here (e.g. the likelihood of re‐regulation over time, if history is any guide) so that they do not represent a promising path to market education.
I’d be happy to be proven wrong by the march of events, but that’s the way it looks to me now.
When president Bush threw the idea of a federal school voucher program into his budget earlier this year, few people noticed and those who did rarely took it seriously. Well, it’s now a bill, though only a bill, and it’s sittin’ there on Capitol Hill…
Many good people in the school choice movement think this is a wonderful thing. Reluctantly, I must disagree. As I wrote in response to the president’s original proposal: federal school vouchers are a bad idea.
For supporters of limited government, Bastiat's What Is Seen and What Is Not Seen summarizes our fundamental lament:
When a government official spends on his own behalf one hundred sous more, this implies that a taxpayer spends on his own behalf one hundred sous the less. But the spending of the government official is seen, because it is done; while that of the taxpayer is not seen, because—alas!—he is prevented from doing it.
This difference leads to bigger government because the electorate is lulled into believing that big government offers great benefits to society while limited government and private decisionmaking offer little. If it were not for government, the thinking goes, people could not respond to emergencies, or the poor and unfortunate would have no protection and assistance, or there would be no economic development and community life.
But once in awhile, we can see what usually goes unseen. Credit my hometown of Washington County, Maryland, for a recent example.
I was watching the news and found rather disturbing the complaints of the journalists, who were shocked that U.S. law did not simply offer people in danger a free ride to safety at taxpayer expense. The U.S. Embassy in Lebanon was asking those who were being evacuated at taxpayer expense to sign a promissory note to reimburse the government for the evacuation. Some of the interviewed evacuees insisted that they be whisked away at taxpayer expense. (Those who complained about the lack of comfort on the ship were especially annoying. One complained that “My parents thought it was a cruise ship and it was definitely not a cruise ship.” Hey, sorry!) Under the theory that everything should be free, the government has announced that people who visit or live in dangerous places and are evacuated at taxpayer expense will not be charged a penny.
People who go to dangerous places (and Lebanon has been on that list for quite some time, both as a matter of common sense and as a matter of State Department designation) shouldn’t expect to be rescued from danger at the expense of the U.S. taxpayer.
Forbes today posts a terrific article looking at many of the peripheral issues surrounding the online gambling debate that I touched on yesterday. A few key passages:
Big credit‐card associations MasterCard and Visa have allowed issuing banks to prevent payments from going through to Internet gambling sites for several years by using specially coded computer software that identifies a vendor as an online gambling site. American Express also blocks transaction with gambling sites. The online payment service PayPal actually got into hot water over the issue and had to pay $10 million to the federal government two years ago to settle charges it helped facilitate illegal online gambling.[…]
But with billions of such payments made every year, compliance with a new set of monitoring laws will be difficult at best and financially onerous to say the least. Smaller banks would be hit harder than larger banks, which have the resources to build the compliance technology that would be needed to track payments and block them if need be. Smaller banks are already struggling with the additional costs of complying with stricter anti‐money laundering rules under the Patriot Act.
Blocking wire transfers through banks would force people to be more creative if they still wanted to use the online sites – for example, opening accounts in foreign banks or using non‑U.S. Internet payment services.
Certainly, the House bill, should it become law, would be a boon to PayPal because it essentially eliminates all other online payment service competitors from the U.S. market. That would include Neteller, a U.K.-based online payment service, whose stock was down 15% on the London Stock Exchange’s alternative investment marketplace, and Firepay, owned by FireOne Group, whose stock was off nearly 20% on London’s AIM market. Both those companies would have to give up their online gambling site customers if they wanted to do business in the U.S. “It’s a protectionist bill for PayPal,” says Cato Institute’s Radley Balko.
Not surprisingly PayPal, owned by eBay, enthusiastically supported last week’s legislation. Its only remaining competitor in the U.S. market would be Google’s fledgling Internet payment service.
But other financial firms have been supportive of the effort to clamp down on Internet gambling. In a statement Tuesday, MasterCard said the vast majority of its cards deny authorization for Internet gambling. “MasterCard will continue to work aggressively with all appropriate parties to combat illegal Internet gambling,” it said.
It isn’t surprising that the credit card companies are supporting the ban. They already agreed to block their customers’ access to gambling sites and offshore payment services years ago, under threats from the Justice and Treasury Departments, as well as from aggressive state attorneys general, particularly New York’s Elliott Spitzer. It’s a similar story with the larger banks, who can absorb the costs associated with the news legislation. Probably doesn’t hurt that it’ll deliver a blow to their upstart competitors, who will have to spend a higher percentage of operating costs to comply with the law than will the bigger banks.
And neither banks nor credit card companies want to incur the wrath of the ban’s supporters in Congress, who some insiders I’ve spoken with say have made clear that how these industries approach the gambling ban might well effect the outcome of what the banking and credit card industries consider to be higher‐priority issues.
All of which means banks and credit card issuers are supporting the online gambling bill, even though it will raise the cost of doing business, and require them to infringe on the privacy of their customers.
Sausage‐making at its finest.
Can pharmacists have a conscience? Activists are demanding that Congress and state legislatures pass laws forcing pharmacists and other health workers to act against their own conscience in such matters as abortion, morning‐after pills, and gay parenting.
Some doctors say it violates their conscience to perform abortions or provide artificial insemination for unmarried or gay people. Some pharmacists believe that the morning‐after pill is a form of abortion, and their religious commitment forbids them to dispense it.
And now some patients and activists are demanding laws to force health professionals to dispense the care the patients want, no matter how it violates the health worker’s conscience. Activists who march for a woman’s right to choose want the government to overrule a pharmacist’s right to choose.
I was reminded of Arnold Kling’s question “Is Bioethics an Oxymoron?” when I read in the Washington Post the comments of official bioethicist R. Alta Charo: “As soon as you become a licensed professional, you take on certain obligations to act like a professional, which means your patients come first.” As I wrote in an online debate for Legal Affairs magazine,
this is an example of how one state intervention generates the demand for additional interventions. We say you can’t be a pharmacist unless you get a state license, and now you want to say that that license should empower the state to impose morally offensive obligations on those who were required to get the license.
Similarly, we require a prescription to get many drugs, including some forms of contraception. Why should a woman need a prescription for contraception? Why not just grant access to contraception by allowing it to be sold over the counter? Here we’ve created one intervention — the requirement that people get a prescription from a licensed doctor, which they must take to a licensed pharmacist — and it has led to a situation you don’t like, in which some tiny number of pharmacists are refusing to dispense a particular prescription. So you say we should have another rule, another regulation, another intervention.
As philosopher Loren Lomasky of the University of Virginia puts it in the Post article, “Freedom of conscience has been central to our political notions since even before the United States existed. People should not be forced into doing things that they find morally odious.”
Do the people who want doctors and pharmacists to be forced to provide abortions and morning‐after pills want anesthesiologists to be forced to participate in executions? I’d bet not. These activists want their moral values enforced by law, they don’t want a neutral rule that all doctors must obey the laws of the state. If they did take such a consistent position, of course, I’d still disagree: anesthesiologists shouldn’t be forced to participate in what they may regard as murder, any more than gynecologists should.
This seems like such a clear issue to me. Yet most of the people in the Post’s online chat about the issue were insistent that health workers must be forced to do as they’re told, regardless of their own conscience. Whatever happened to the liberal claims of individual autonomy, of the right of conscience, of the individual exercising his or her own mind? Gone with the wind, it seems, when liberals have the power to impose their values on other people’s consciences.
In a country of 290 million people and 14 million businesses, we should let these issues sort themselves out in the marketplace. Chances are that major drugstore chains like CVS and Walgreen’s are going to insist that their stores fill all prescriptions. If they have more than one pharmacist on duty at a time, then they may be willing to tolerate pharmacists who avoid filling certain prescriptions. If they do insist that all pharmacists be prepared to fill any prescription presented by a customer, then pharmacists who can’t accept such rules will have to look for jobs elsewhere. And if customers encounter a pharmacy that won’t give them what they want, then they will have to find another pharmacy.
A prime reason for freedom is pluralism. In the modern world we don’t all share the same moral and religious perspectives. The fact of moral diversity is a good reason for toleration and allowing people to sort themselves out in society according to their own moral choices. Freedom in a pluralistic society should mean that individuals get to make their own choices. Sometimes other people aren’t willing to do what we want them to do. But frankly, it’s involuntary servitude to force other people to work for us when they prefer not to. And it’s appalling that 141 years after the Thirteenth Amendment, some people still want to hold others to involuntary servitude.
The Washington Post reports that a federal program to help dairy farmers and ranchers hurt by drought has been expanded to benefit farmers untouched by drought conditions:
In all, the Livestock Compensation Program cost taxpayers $1.2 billion during its two years of existence, 2002 and 2003. Of that, $635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all, according to an analysis of government records by The Washington Post. None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned.
It’s a typical story of government handout programs. Under “pressure from ranchers and politicians in a handful of Western states that were hit hard by drought,” the Bush administration in 2002 created a fund to compensate them. Within days members of Congress were demanding that more counties be included, and they were. But that still wasn’t enough, and in 2003 Congress expanded the program to cover any kind of weather‐related disaster. And then President Bush declared that the shuttle explosion over Texas constituted a disaster, so that made more counties eligible. County USDA officials were pressured to find any kind of “disaster” that would qualify local farmers for handouts.
The Post has run other articles in this series, with titles like Farm Program Pays $1.3 Billion to People Who Don’t Farm and Growers Reap Benefits Even in Good Years. Yet even with front‐page stories in Congress’s hometown newspaper, the farm program rolls merrily along, handing out more and more subsidies with less and less plausibility.
It’s enough to make you a public choice economist. So the question is, why doesn’t it make Washington Post and other mainstream‐media journalists and editorial writers more skeptical about the benefits of government programs? A great deal of what we know about the failures of government, or way that politics really works, comes from mainstream journalists. Yet many journalists continue to assume that every problem in society suggests a government program to fix it.