Archive for September, 2007
So Many Reasons Government Shouldn’t Fund Newspapers
The Columbia Journalism Review has an article suggesting that the government should step in and stop the red ink at the nation’s leading newspapers. Declan McCullagh has a great post enumerating all the many reasons that’s a bad idea. Here’s one of the most important:
Government money tends to come with strings attached. Sure, at first, a handout may seem free. But over time, that tends to change.
Look at the ongoing controversies over the National Endowment for the Arts. In response to controversial photographs (including a provocative retrospective of photographer Robert Mapplethorpe’s work) in an NEA-funded exhibit, Congress did two things. It reduced the NEA’s budget for the next fiscal year and then slapped a new restriction on the agency, saying that its grants must take “into consideration general standards of decency and respect for the diverse beliefs and values of the American public.”
Mapplethorpe was, of course, a brilliant photographer, and some of his work has inspired my own modest efforts. But the U.S. Supreme Court upheld the NEA funding restrictions as constitutional, concluding that they’re perfectly OK “when the government is acting as patron rather than as sovereign.”
That patrons can muzzle the recipients of their largesse should be no surprise. Last decade, librarians lobbied Congress to create the E-rate program, which levied taxes on Americans’ phone bills to pay for wiring schools to the Internet. It was an unalloyed, billion-dollar political win for the librarians — until Congress decided to force them to filter out porn if they wanted the cash.
They howled, they complained, they sued. They lost. The Supreme Court ruled in 2003 that the law “is a valid exercise of Congress’ spending power.”
It’s also worth noting that, as Mike Masnick has pointed out repeatedly, news gathering isn’t in decline. Only the portion of the news business that involves shipping people reams of ink-stained paper is having trouble. Most other parts of the news business are thriving. Cable and satellite news channels are thriving, news websites are seeing record traffic, and the blogosphere is providing hundreds of thousands of new sources for news and analysis. The trends in journalism are only alarming for people who think that journalism is synonymous with the print edition of the New York Times. Ironically, that attitude seems to be over-represented among the people in charge of educating the next generation of journalists.
John Berthoud, In Memoriam
We have lost a good friend in the battle for limited government with the passing yesterday of John Berthoud, president of National Taxpayers Union. John was a scholar, a leader in public policy in Washington, and the head of a very important institution that helps Americans understand the huge cost of their government. John was an extremely kind and honorable person, and he will be missed greatly.
TechCrunch Exposes D.C. Trade Association Advocacy for REAL ID
In an excellent post, Michael Arrington at TechCrunch notes the advocacy of the Information Technology Association of America in favor of the REAL ID Act, our nation’s moribund national ID law.
His title “Conflicts of Interest: . . .” draws out nicely the schism that ITAA’s advocacy for REAL ID creates for its membership. They work to serve us when they sell products directly, but work to hurt us when they sell surveillance infrastructure to the government. Helpfully, he also provides links to information about the House and Senate bills to repeal REAL ID.
Asked in the comments how he would characterize himself politically, Arrington replies, “hard core libertarian.”
Filed under: Foreign Policy and National Security; Law and Civil Liberties; Telecom, Internet & Information Policy
Those Silly Europeans
American politicians like to concoct silly ways to waste money and misallocate resources. But European lawmakers always seem to out-do them — perhaps because the Europeans have several centuries of additional experience with government.
A good example is a European Commission-led effort to promote multilingualism. The more substantive point is that the bureaucrats in Brussels are foolishly trying to pretend that English is not the language of international business. But the most amusing part of the EU Observer story is reading that the European Commission has a commissioner for multilingualism:
Europeans should learn more foreign languages and not think that a “lingua franca” — one language used internationally — is enough, EU commissioner for multilingualism Leonard Orban said on Wednesday.
What’s next, a commissioner for watching paint dry? A commissioner for shoelace regulation?
Filed under: Government and Politics; International Economics and Development
Three Cheers for the World Bank
I admit I’m committing an ideological sin, but the World Bank has released its 2008 “Doing Business” report, which ranks 178 countries on regulatory impediments to entrepreurship, and it is a first-rate publication. I realize the World Bank should not exist, and I’m quite aware that many of their activities in other areas hinder economic growth, but this report is very helpful in promoting regulatory competition among jurisdictions. I’ll atone for my sin by coming up with a reason to criticize the international bureaucracy in the near future, but this EU Observer story shows how Doing Business creates pressure for regulatory liberalization:
Thanks to regulatory reforms, Eastern Europe and Central Asia have surpassed East Asia for ease of doing business, a World Bank report says. The report, called “Doing Business” compares and ranks 178 economies and seven regions on the basis of ten indicators related to business regulations. …Several of the region’s countries have also overtaken some Western European economies. Estonia and Georgia for instance, the region’s two top performers, have surpassed most EU members and both hold a spot in the top twenty.
Filed under: General; International Economics and Development; Tax and Budget Policy
Tax and Spend 101
Today, as expected, President Bush signed the College Cost Reduction and Access Act, which cuts subsidies to lenders in major federal student loan programs (good) but then directs almost all the savings to Pell Grant increases, interest rate cuts, and loan forgiveness for lendees in public service jobs (all bad). One major reason Bush likely signed the bill is offered in USA Today:
The action allows both the Bush administration and Congress to say they have done something to ease the burden of paying for college, a popular political priority.
Yup. While Bush has for a long time called for Pell Grant increases to help truly low-income students, he said he didn’t like much of the rest of the bill, which simply throws more money at often well-to-do students and graduates. It’s likely he ultimately signed the bill, then, because it’s politically popular.
Of course it is: The middle-class-and-above students and families who will largely reap the benefits of this redirection of taxpayer money from lenders to students are a big voting bloc. But not only is that a bad reason to support this legislation – get ready for the tuition increases that will inevitably swallow any new buying power – but signing this bill into law seems to be little more than a continuation of the big-government, big-spending profligacy that’s helped put the GOP in a minority position that seems likely to get even smaller come November 2008.
Presidential Spending
Interest from an NYT reporter the other day prompted me to update data on federal spending by presidential term. The latest data show that the current President Bush is the biggest spender since Bush I, Ford, Carter, or FDR, depending on which spending category one considers.
The table shows annual average spending growth in real, or inflation-adjusted, dollars. It accounts for the different length of each president’s tenure. I have included data for Bush II’s first six years (FY2001 to FY2007).
Looking at the rows in the table:
- In overall outlays, Bush II is the biggest spender since Carter.
- In defense, Bush II is the biggest spender since FDR (not shown).
- In total nondefense spending (including entitlements), Bush I and Bush II both have records of big spending.
- In nondefense discretionary spending, Bush II is the biggest spender since Ford.
- Finally, in total noninterest spending, Bush II is again the biggest spender since Ford.
Comparing the first and last rows shows the difference that interest costs make. Bush II has benefited from low interest costs, which have partly offset high program costs in recent years. That has made Bush II’s fiscal record look a bit better than it actually is because the low interest costs are mainly thanks to four balanced budgets under Clinton.
But isn’t Congress responsible for federal spending? No, Congress shares the responsibility with the White House. Presidents set the overall tone for spending and they hold a powerful veto pen. Bush II’s big spending record, as shown in the data, is reflective of the big spending policy agenda set by his administration.
Open Networks and Regulation
Thomas Hazlett, professor at George Mason and one of the smartest people writing about telecom regulation today, has an interesting column about the iPhone that’s largely framed as a rebuttal to this Slate column by Columbia law professor Tim Wu. Wu’s column, published the week of the iPhone launch, argues that the iPhone isn’t truly revolutionary because like other cell phones, it’s a “walled garden.” It only works with AT&T’s wireless service, and it only offers the features that Apple and AT&T have approved ahead of time. A truly revolutionary phone, Wu says, would be an open platform that would allow third parties to develop new applications and services.
Hazlett, in contrast, feels that Apple’s walled garden represents the ingenuity of the market process:
Apple could have offered its device as an “open” platform, but instead chose (as with iTunes, iPods and Apple computers) to control how it builds, and how buyers use, its product. It aims for competitive superiority. Quashing its model bops the innovator on the head.
Unbundling phones from networks is suggested as a policy fix in the US. European phones, working with different Sim cards across carriers and borders, are the model. Innovation in the European Union is said to flourish. But the iPhone came first to the US, as did the BlackBerry and advanced broadband networks using CDMA data formats. That is not surprising given that US networks are afforded wide latitude in designing their systems. Licences in the EU mandate a GSM standard. What is recommended as “open” in fact deprives customers of a most basic cellular choice: technology.
Personally, I think they’re both right. Hazlett is right that government regulation of spectrum is a bad idea, and that robust property rights are far preferable. But Wu is right that open platforms tend to be more innovative than closed platforms. For example, during the 1990s the Internet’s open architecture allowed the creation of dozens of innovative startups like Netscape, Yahoo, and Google. The closed networks of companies like AOL and Compuserve simply couldn’t compete. There’s every reason to think a similar explosion of innovation would happen if it became easier for third parties to build new wireless devices and applications.
And indeed, if you read Wu’s article closely, nowhere does it advocate government regulation. Wu’s article is about technology and economics, not public policy. It doesn’t say anything a libertarian couldn’t whole-heartedly endorse. Of course, Wu has argued elsewhere in support of government regulations to force wireless networks more open. And I think he’s wrong about that—you can listen to a conversation Wu and I had on the subject back in June here. But it’s entirely possible to agree with his technological point about the merits of open networks without jumping to the conclusion that government regulations are called for.
Indeed, I think it’s important that when libertarians argue in opposition to some government regulation, that we not fall into the trap of reflexively opposing the goal the regulation is trying to achieve. There are a lot of computer geeks who are passionate advocates of open networks because they believe (correctly in my view) that open networks tend to provide greater opportunities for entrepreneurship. The argument that closed networks are superior is not only dubious on its merits, but it’s also guaranteed to drive a lot of people into the arms of the pro-regulatory side. I think it’s far better to leave debates about network architecture to the geeks, and focus on the more fundamental point that government regulations inevitably have unintended consequences such as regulatory capture.
Health Outcomes & Equity: the U.S. vs. Canada
Former CBO director June O’Neill and Dave O’Neill have a working paper comparing health outcomes in the semi-socialized U.S. health care sector and the fully socialized Canadian Medicare system. From the abstract:
Does Canada’s publicly funded, single payer health care system deliver better health outcomes and distribute health resources more equitably than the multi-payer heavily private U.S. system? We show that the efficacy of health care systems cannot be usefully evaluated by comparisons of infant mortality and life expectancy. We analyze several alternative measures of health status… We find a somewhat higher incidence of chronic health conditions in the U.S. than in Canada but somewhat greater U.S. access to treatment for these conditions. Moreover, a significantly higher percentage of U.S. women and men are screened for major forms of cancer. Although health status, measured in various ways is similar in both countries, mortality/incidence ratios for various cancers tend to be higher in Canada… We also find that Canada has no more abolished the tendency for health status to improve with income than have other countries. Indeed, the health-income gradient is slightly steeper in Canada than it is in the U.S.
There’s also this interesting observation from their concluding comments:
The need to ration when care is delivered “free” ultimately leads to long waits or unavailable services and to unmet needs. In the U.S. costs are more often a source of unmet needs. But costs may be more easily overcome than the absence of services. When asked about satisfaction with health services and the ranking of the quality of services recently received, more U.S. residents than Canadians respond that they are fully satisfied and rank quality of care as excellent.
And this crucial caveat:
One important issue that we do not address concerns the large differential in per capita health care expenditures which are about twice as large in the U.S. Is the U.S. getting sufficient additional benefits to justify these greater expenditures and where should we cut back if cutbacks must be made? Alternatively, what would Canada have to spend to increase their technical capital and specialized medical personnel to match American levels or to eliminate the longer waiting times? And would it be worthwhile to them to do so? To answer these questions more research is needed…
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Whitman on an Individual Health Insurance Mandate
Economist and blogger Glen Whitman has an excellent article in the latest Cato Policy Report on the latest fad in health policy: requiring people to purchase health insurance, a.k.a. an “individual mandate.” Hillary, Arnold, Mitt, John . . . the kids, they just love this individual mandate! If you read only one article on the topic, let this be it.
Whitman adds a post-script to that article in a recent post:
Something I don’t mention in the article is why some free-market types support the individual mandate. In short, I think the reason is that they have given too little attention to the political dynamics of such a mandate, instead naively assuming that the mandate could be crafted once-and-for-all in a wise and lobbying-resistant fashion.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
More on Google/Doubleclick
Related to my last post, the New York Times‘ technology blog has an excellent write-up about the case that illustrates just how arbitrary the standards in antitrust merger reviews can be:
Google’s $3.1 billion deal in April to buy DoubleClick set off a wave of advertising acquisitions by Microsoft, Yahoo, AOL and others. All of those deals have been completed, but Google is still waiting while regulators in Washington and Europe consider the antitrust and privacy implications of its proposed combination…
Several consumer groups are opposing the merger because they fear that Google and DoubleClick will have too much information about Internet users. Most observers suggest that although the commission regulates privacy, its opinion of the merger must reflect antitrust issues only. The groups opposing the deal have argued that there are in fact precedents for the commission to take privacy concerns into account. (The Electronic Privacy Information Center, which is against the merger, lists many documents supporting its view here. Google’s take is here.)
In the end, Mr. Lindsay writes that Google may well be forced to accept some limitations on its use of data about Internet users. It may be required in the United States to anonymize data about users after 18 months, something it already agreed to do with European regulators. And there may be some limits imposed on how data from DoubleClick’s ad serving system can be used by Google.
Now, as our own Jim Harper will be the first to tell you, there are reasons for consumers to be concerned about the data-retention policies of large Internet companies, Google included. But if new regulations about online privacy are needed, those regulations should be proposed and debated in Congress. It’s totally inappropriate for government regulators who are supposed to only be reviewing a merger on antitrust grounds to use the review as a pretext to single the company out for special, extra-legal privacy regulations. Whatever problems Google’s privacy policies might have, they’re certainly not attributable to monopoly power on Google’s part: even after the merger Google would have less than a third of the online advertising market.
Unfortunately, the lesson Google is likely to learn from this ordeal is the same one Microsoft learned a decade ago: you can never hire too many lobbyists. Regardless of what the law might say, Washington insiders will find ways to punish successful companies that don’t spend resources cultivating influence in Washington. Is it any wonder that Google has been pouring millions of dollars into a beefed-up Washington presence?
Dueling Antitrust Complaints
A decade ago, Cato scholars argued that the Justice Department’s antitrust case against Microsoft was a witch hunt instigated at the behest of Microsoft’s competitors. They also warned about the inevitably harmful consequences of the politicization of the technology industry. Once technology firms succeed in hobbling a competitor using antitrust law, other companies are likely to respond in kind, leading to a never-ending stream of antitrust litigation.
That prediction has been borne out in spades, as Microsoft, once a principled critic of antitrust law, has discovered the joys of using antitrust as a competitive weapon. This week we learn that Microsoft has enlisted the assistance of a public relations firm to build support for blocking Google’s acquisition of DoubleClick on antitrust grounds. Never mind that there are dozens of firms in the highly competitive online advertising industry, including aQuantive, a company Microsoft snapped up for $6 billion back in May.
Of course, Google’s hands aren’t clean either. In June, we learned that Google has asked the Justice Department to investigate Microsoft for “bundling” a search functionality with its operating system, despite the fact that desktop search has been a standard feature of operating systems for decades.
Unfortunately, we seem to have opened a Pandora’s Box that will be difficult to close. It’s a shame that Microsoft has backed down from its former, principled stance on antitrust, but it’s hardly surprising. Filing frivolous antitrust complaints is now just a part of doing business in the software industry. That’s great for antitrust lawyers, but it’s hard to see how anyone else benefits.
You Call That Rethinking?
In a maddening discussion with Robert Wright, AEI scholar David Frum promises a “rethinking” of his views on Iraq but, unsurprisingly, I suppose, provides no such thing. I’ll leave it to C@L readers to stomach as much of it as they can.
But at times like this, I am reminded of Anatol Lieven’s takedown of Eliot Cohen in The National Interest:
by contributing in this way to a hasty, poorly-planned military operation, it must be repeated that Dr. Cohen took on himself a measure of the moral, intellectual and political responsibility for precisely those U.S. administration mistakes in Iraq which he now denounces, and which have cost so many American lives. It is disappointing—though not surprising—that Dr. Cohen himself does not realize that this record demands from him, as an honorable man, a lengthy period of quiet, private reflection on his mistakes and the reasons for them.
Lieven is absolutely right, but if his advice were followed, housing prices in Northern Virginia could well plummet as the neocon commentariat flees for the hills to contemplate the err of their ways. We probably shouldn’t hold our breath.
Test Score Story the Media Will Miss
The latest 4th and 8th grade test scores for “The Nation’s Report Card,” or National Assessment of Educational Progress, were released this morning. They show improvement in reading and math, particularly at the 4th grade.
The story that the media will report will revolve around claims by No Child Left Behind advocates that their law is responsible for these improvements. In reality, NCLB almost certainly has little to do with these results, since they simply continue patterns that date back at least to 1990 — a dozen years before the law was passed.
But that’s not the real story. The real story is that none of these improvements have been persisting through to the end of high school. What families and business leaders care about is how well students are prepared for life and work at the end of high school. As the NAEP Long Term Trend results show, the mathematics achievement of 17-year-olds has been flat since 1990, and their reading achievement has actually declined. In fact, achievement among 17-year-olds is flat or declining in math, reading, and science since the first NAEP tests were administered in the late 60s and early 70s — despite the fact that real spending has doubled to more than $11,000 per pupil over that period.
What that means is that the improvements in the earliest grades simply represent a shifting of when learning is happening, not an increase in what students ultimately learn. We are, in the hackneyed phrase, merely rearranging the deck chairs on the Titanic as it continues to slip beneath the waves.
That’s the sad but true story that the American people need to be told.
Cato Offers Home Study Course
The Cato Institute is now pleased to offer the Cato University Home Study Course, a self-paced, home study program, enabling you to spend time with brilliant minds in your home, office, or car; during a workout; while on vacation; or wherever and whenever you have an opportunity to listen and think. Immersing you in the thoughts and views of John Locke, Thomas Jefferson, Thomas Paine, James Madison, Adam Smith, Voltaire, John Stuart Mill, Henry David Thoreau, Ayn Rand, F.A. Hayek, Milton Friedman, and others, the Cato University Home Study Course offers you the opportunity to deepen your perspectives, knowledge, and insight on the growth of human freedom – and with it science, culture, and capitalist prosperity.
SCHIP’s Perverse Incentives
Picking the worst government program would be a huge challenge, but picking the worst funding system is much easier. Programs involving joint federal-state funding contain built-in incentives to expand the size of government because politicians at either level can buy more votes by expanding the program, knowing that they only have to pay (depending on the formula) a share of the cost. In other words, lawmakers can promise $1 worth of goodies for, say, 50 cents. This is one of the reasons why Medicaid is a fiscal disaster. It’s also why welfare reform was a step in the right direction (the old system funneled more money to states when they added more people on the dole, creating a terrible incentive system). Unfortunately, politicians generally make things worse rather than better, and a Wall Street Journal editorial (sub only) shows how the SCHIP program is encouraging more government:
Schip was created in 1997 to help insure children from low-income families, but it has since become a stealth vehicle to expand government control of health care. Schip expires next week, and House and Senate negotiators are hashing out a “compromise” that would expand the program by about $35 billion over the next five years (plus a budget gimmick concealing at least $30 billion). … Many states like New Jersey have been taking advantage of Schip’s “flexibility” and covering more affluent children, their parents, and even childless adults. In a tardy response to this trend, the federal Department of Health and Human Services announced in August that before states could further expand their Schip programs beyond 250% of poverty, they would have to enroll 95% of children below 200% of poverty. …For several years the number of uninsured New Jersey children under 200% has held steady, while New Jersey’s Schip rolls have grown by about 10% a year. One major reason is that the state continues to enroll families with incomes up to $72,275. … Governor Corzine could always tax his own residents to pay for this largesse. Then again, New Jersey already has one of the worst tax burdens in the country, and Trenton has raised taxes five times in the last six years. For the Governor, the political beauty of Schip is that it allows New Jersey to finance its spendthrift ways on the backs of more responsible states.
SCHIP’s Bootleggers and Baptists
Today’s Washington Post seems impressed that the State Children’s Health Insurance Program has made strange bedfellows:
A broad coalition — including liberal health policy advocates and their usual foes, the health insurance lobby — endorsed the SCHIP bill, urging House Republicans to get on board and the president to sign it…
The White House is looking increasingly isolated on the issue. America’s Health Insurance Plans, the largest insurance lobbying group, endorsed the measure yesterday, undercutting Bush’s contention that the bill is a step away from private insurance and toward government-run health care.
“It repairs the safety net and is a major movement toward addressing the problems that states and governors have been trying to address, which is how to get access for children,” said Karen Ignagni, the group’s president.
In a recent paper on SCHIP, I explain why the health care industry is lining up in support of a massive expansion:
Support for SCHIP (and Medicaid) expansion comes from an alliance of “bootleggers and Baptists.” Economists often explain support for government policies (e.g., restrictions on alcohol sales) in terms of those who truly believe in the merits of the policy (i.e., Baptists who oppose alcohol consumption) and those who benefit financially from the policy (i.e., the bootleggers who sell illicit alcohol).
The “Baptists” behind SCHIP expansion are those who believe that the way to increase health care quality and access is for government to finance and control the delivery of care. An example would be left-wing advocacy groups such as Families USA. Expanding SCHIP and Medicaid to enroll more and more Americans serves their goal of eventually enrolling all Americans in government health care programs…
The “bootleggers” behind SCHIP expansion include those who stand to gain financially from greater government subsidies for health insurance and health care. They include several lobbying groups: America’s Health Insurance Plans, and the insurers it represents; the Pharmaceutical Research and Manufacturers of America and the drug manufacturers it represents; the American Medical Association and the physicians it represents; and the Federation of American Hospitals and the for-profit hospitals it represents. State officials who support SCHIP expansion, such as California’s Governor Schwarzenegger and the rest of the National Governors Association, also belong in the bootleggers category because increasing federal SCHIP spending benefits them politically: it enables them to provide new subsidies to voters at a fraction of the cost.
It would be nice if serious media outlets like the Post could acknowledge that the health insurance lobby has a financial interest in the legislation it supports.
Filed under: General; Health, Welfare & Entitlements
Politicians and Retailers Conspire to Impose Sales Tax Cartel
As reported by Tax-news.com, a collection of trade associations is calling on Congress to impose the so-called Streamlined Sales and Use Tax Agreement on all states. Their argument is that it is unfair to let online companies make tax-free sales to out-of-state consumers (states routinely choose not to tax their retailers who make such sales). There is an inequity in the current approach, to be sure, but politicians (with help from naive business groups) are picking the wrong solution. Creating a nationwide tax cartel – one that will require a massive invasion of privacy because of a database of online purchases — will insulate politicians from competition by making it extremely difficult for consumers to shop where taxes are lower. The right way to deal with the inequity is for states to apply their sales taxes (ideally at a low rate) on a non-discriminatory basis. In other words, the sales tax would apply to all sales made in a state, regardless of whether a good is sold in person or online, and regardless of whether the customer is an in-state resident or out-of-state resident. This would eliminate an inequity, preserve tax competition, and protect privacy.
The US National Retail Federation and nearly 100 retailers and trade associations are urging Congress to approve legislation making it easier to require internet merchants, mail-order houses and other “remote sellers” to collect sales tax across state lines. Coalition members are hoping to see action this fall on the Sales Tax Fairness and Simplification Act, which is pending in both the House and Senate. The measure would allow states that have implemented the Streamlined Sales and Use Tax Agreement to require that out-of-state merchants collect sales tax on merchandise sold to residents of their states. …While the Streamlined Sales and Use Tax Agreement went into effect on a voluntary basis in 2005, the coalition says that passage of federal legislation is needed before sales tax collection can become mandatory. Thus far, 22 states have passed legislation implementing the agreement. In addition, more than 1,000 companies have participated in the agreement voluntarily, and have collected more than $125 million in state and local sales tax that would otherwise have gone unpaid. The NRF helped draft the Streamlined Sales and Use Tax Agreement, and has long argued that remote sellers enjoy an unfair price advantage in situations where they are not required to collect sales tax. The NRF wants a level playing field where all retailers are subject to the same tax rules when their merchandise is sold from a store, through a catalog or over the internet.
SCHIP Helps NJ Family Afford Private School, Basic Cable
Click here.
Filed under: General; Health, Welfare & Entitlements
Potemkin School Reforms
Walter Isaacson, president of the Aspen Institute, has a piece on New Orleans education reform in the current issue of Time. In describing a system of increased public school choice and charter schools he writes that it is “a voucher system in all but name that blows up the monopoly.”
If by “voucher system,” Mr. Isaacson means a system in which:
- there are no market-determined prices (schooling is paid for entirely by the state and spending does not vary based on quality, demand, or any other market factor)
- there are substantial barriers to the entry of new schools (the need to for a state charter)
- schools can be closed for other than market reasons (charters are temporary and revocable)
- for profit enterprise is inhibited (non-profit charter boards can contract out to for-profit management firms, but do so solely at their discretion, inhibiting expansion)
- devotional religious school options are foreclosed
then, yes, you could call the N.O. model a “voucher system.” But to do so is to blur the distinction between a weak public school choice reform with only modest prospects and genuine market reforms which could spark the kind of innovation and excellence we have seen in every other sector of the economy over the past century.
Blurring that distinction is toxic to the school choice movement. If readers of Mr. Isaacson’s article take him at his word, and, five or ten years hence, fail to see dramatic results N.O., what will they conclude? They will conclude, mistakenly, that market reforms were tried and failed. In essence, Isaacson has built a straw man and given it to school choice critics to attack at their leisure.
So let us not use the word “voucher” to describe a hobbled public school choice program that does not even vaguely resemble the sort of free educational marketplace Milton Friedman had in mind when he wrote “On the Role of Government in Education” more than fifty years ago.
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets