Petrilli’s Regulatory Porridge

January 28, 2016

goldilocks

(Guest Post by Jason Bedrick)

Fordham’s Michael Petrilli offers new taxonomy for school choice tribes dividing the school choice world in three: Purists, Nannies, and Realists.

First, as Matt noted, this is not Mike’s first foray into Hemisphere Fallacy territory. (Or the second. Or even the third.) Like the guy who thinks anyone who is more religious is crazy and anyone who is less religious is a heretic, Mike thinks he has found the Perfect Goldilocksian Mean and everyone else is wrong. In Mike’s view, those who support more regulation than he does are paternalist Nannies, and those who support less regulation are utopian Purists, but the temperature of his regulatory porridge is just right.

Second, as I noted on Twitter, it’s adorable that Mike thinks he’s not a Nanny. He decries their “micromanagement” but he supports forcing private schools to administer the state test (de facto determining what is taught when and even how), as well as price controls that economists will tell you leads to shortages and obliterates the essential price signal (without which we may have competition, but we most certainly do not have a functioning market). He may fancy himself a “Realist” but, if these categories really mean anything, he just has minor disagreements with his fellow Nannies.

Third, Mike is engaging, once again, in the Means and Ends Fallacy. It goes something like this:

I think X is a problem. I believe Solution Y solves X. Group A opposes Solution Y, therefore Group A must not think X is really a problem.

Of course, this is a fallacy because it is entirely possible (as is the case here) that Group A agrees that X is a problem but doesn’t think Solution Y actually solves it. Mike thinks his preferred regulations solve the problem of bad schools, but we think those regulations are more likely to have adverse effects. More on that in a moment.

Mike accuses the “Purists” (those who, like Milton Friedman, conclude based on the evidence from nearly every other industry that markets spur innovation and lead to greater quality and efficiency) of being utopian. He writes:

Start with the Purists. I’m skeptical of all utopian visions, including theirs—one imagining that a full-fledged system of choice (perhaps through universal Education Savings Accounts) will yield greater innovation, productivity, and customer satisfaction—and produce better-educated young people to boot.

But there’s nothing utopian about that. We see that ESAs have already begun to produce greater innovation, productivity, and customer satisfaction. We don’t yet have any data on test scores or graduation rates, but we have no reason to believe that ESAs will underperform the many voucher programs that have produced positive results. No one in the free-market crowd is expecting miracles. We’re expecting the sort of incremental improvement that the market regularly brings about through the process of experimentation, evaluation, and evolution.

(For that matter, the most utopian schemes in education come from the Nannies. Can you imagine a more fantastically utopian scheme than “No Child Left Behind”? Is there a more utopian slogan than that anywhere in education policy? And did anyone in the administration really believe we’d ever achieve 100% proficiency in any state, let alone every state? Either they set up the nation to fail or they were delusional. Or perhaps they just set up the DOE for a naked power grab. But I digress.)

Mike’s central challenge to the Friedmanite crowd is the Payday Lender Problem. What do we do about bad private schools?

First of all, Mike doesn’t have a whole lot of evidence that the government does a better job ensuring quality than the market. Indeed, the Louisiana debacle should give him great pause about that article of faith.

Second, eliminating the least-bad option doesn’t guarantee a better option. Payday lending serves an important function in the market (in the Third World, we call it “microlending,” a concept for which Muhammad Yunus won a Nobel Peace Prize). Poor people who need funds to cover rent or buy food while waiting for payday often turn to payday lenders. If they repay the loan on time, the fees are generally marginal. If they repay late, the interest rates can be exorbitant, especially if (misleadingly) expressed in annual terms. (The interest is so high both because the loans are so small and because the rate of default is so high, which is why banks generally just refuse to lend to the poor.) But eliminating the payday lenders can have serious unintended consequences that make the poor even worse off. The payday lender may charge a steep fee for late payment, but at least Rocky Balboa doesn’t come break your legs.

Kicking a school with poor test scores out of a voucher program doesn’t guarantee those poor kids a seat at a better school. Rather, the state just eliminates that kid’s least-bad alternative. Even in Louisiana, where the voucher schools appear to be doing much worse on the state test than the district school alternatives, the families who chose those schools may well have had good reasons for doing so. Perhaps they were safer. Perhaps they had higher graduation rates. We don’t know. But those families chose them for a reason and they may well be worse off overall if deprived of that choice.

Third, as Michael McShane explained previously, the market process has proven time and again to significantly improve absolute quality (and efficiency) over time:

Cars today are uniformly better than cars in 1950. They are safer. They are faster. They are more comfortable. They are more fuel efficient.  But it wasn’t a clear upward-sloping line to get here. People bought Edsel’s in the 50’s, Corvairs in the 60’s, Chevettes in the 70’s, Yugo’s in the 80’s, Suzuki Sidekicks in the 90’s, and Pontiac Aztecs in the 00’s. These were bad cars.

But “bad” has two meanings in this case, an objective one and a relative one. There are relatively bad cars out there today. That is, my hail-damaged ’05 Kia Spectra with no cruise control and a blown-out right front speaker is worse than Jay-Z’s Maybach on almost every calculable measure, relatively speaking. But my Spectra, which is still purring like a kitten after over 100,000 miles with darn near nothing more than oil changes, tires, and brake pads is a helluva lot better than the burn-out-after-five-years cars that automakers made for decades.  That’s absolute quality.

Markets work when the spectrum of relative quality drives improvements in absolute quality.  Someone sees my little tin can driving down the road and says “I want to buy a car that doesn’t look like it’s going to blow away in a stiff breeze” and cars get less tin-canny.  Someone buys a Ford Excursion and then gas prices go up and says, “I’m never doing that again” and cars get more fuel efficient. It’s a slow winnowing process, but over time it is superior to centralized systems, that, for example, made the Trabant in an essentially unchanged manner for over three decades.

Rather than thinking we can regulate bad schools out of existence, a better goal is to develop a system that continuously improves what we think a “bad” school is.

Mike Petrilli is right to be worried about kids who are in bad schools today, but the regulations he proposes to ensure that those students are attending relatively good schools interfere with the market process that could otherwise be driving up absolute quality for everyone (and, as Louisiana has shown, those kids may end up in low-performing schools anyway).

Imagine if government officials, following Mike’s logic, had decided decades ago that every low-income family should have access to a phone. Now, these Realist officials aren’t Nannies — they’re not going to have the government make the phones or micromanage the specs. They’re just going to ensure that everyone has access to a good phone, so they create a phone voucher but prohibit companies selling phones from charging more than the value of the voucher. What would have happened?

Well, there’s the seen and the unseen. We would have seen, perhaps, that everyone would have had access to a phone and many would have applauded that (although given the price controls, it’s likely that supply would not have met demand). But what we wouldn’t have seen was that the iPhone had not been invented. With no way to charge more than the meager voucher, there’d be no market for expensive smartphones. And that wouldn’t just have harmed the wealthy, it would also have harmed the poor. After all, Walmart now sells a $10 smartphone that has better specs that the original iPhone. Innovations that at first benefit the wealthier early adopters tend to benefit even the poor after a while.

In short, Mike’s admirable passion to help the poor immediately through state action may well harm them in the medium-to-long run without any guarantee of actually helping them in the short run. That doesn’t sound very Realist to me.

 

 

 


Protecting School Choice from the State

October 2, 2015

[Guest Post by Jason Bedrick]

As economists have understood for more than half a century, government agencies charged with regulating industries are often subject to regulatory capture. Rather than protect consumers from bad actors in the industries they were created to oversee, regulators too often develop cozy relationships with industry leaders and work at their behest to advance their interests. In Free to Choose, Milton and Rose Friedman detailed a particularly egregious example: the Interstate Commerce Commission (ICC).

Established in 1887, the ICC’s mission was to regulate the powerful railroad industry, which critics accused of engaging in cartel-like price fixing and market sharing. Instead, the railroad industry took almost immediate control of the ICC. The ICC’s first commissioner, Thomas Cooley, was a lawyer who had long represented the railroads and, as the Friedmans explained, many of the agency’s the bureaucrats “were drawn from the railroad industry, their day-to-day business tended to be with railroad people, and their chief hope of a lucrative future was with railroads.”

Rather than protect the consumers from the railroads, the ICC primarily protected the railroads. The ICC raised prices on consumers, shielded the railroads from state and local regulations, and even protected the railroads from outside competition. In the 1920s, the nascent trucking industry was emerging as the railroads’ most serious competitors. Like Uber against the taxi cartel, the lower-cost trucking industry benefited from the artificially high prices of the railroad cartel. And also like the taxi cartel, rather than seek deregulation, the railroad cartel turned to their friends in government to put the brakes on their “unregulated” competition. The bureaucrats all-too-happily complied. In 1933, the Motor Carrier Act gave the ICC authority over the trucking industry, which it used to limit the number of trucks that could operate on the roads and otherwise constrain the trucking industry. Fortunately, the railroad industry was significantly deregulated in the early 1980s and the ICC was abolished in 1995.

If regulatory capture is a common problem among the regulators of private industries, it can be even more acute when one government agency is overseeing other agencies. Bureaucrats at the various state departments of education tend to identify with the district schools they oversee and seek to protect them from outside competition. Lawmakers who support greater educational choice should keep this in mind when crafting choice policies. It is unwise to give an agency the power to regulate the primary competition to its core constituency.

Examples of state education agencies trying to undermine school choice initiatives abound. In Wisconsin, home to the nation’s first school voucher program, the Department of Public Instruction is currently subjecting private schools accepting vouchers to intrusive audits:

“I’ve been a CPA for 25 years and I’ve never seen anything like DPI’s approach to the audits of choice schools,” Noel Williams told Wisconsin Watchdog.

Williams, managing partner of Williams CPA in Milwaukee, has worked as an auditor for MPCP schools for 10 years. […]

“Although the law does allow DPI to follow-up with the auditor to clarify things that weren’t clear, in my opinion, DPI has grossly abused that power. Every one of the audit firms I’m acquainted with has gotten countless phone calls and emails on every audit report, requesting copies of data, clarification as to how they arrived at a conclusion.”

“It seems DPI’s intent has been to make it difficult and unpleasant to work with choice schools,” Williams said.

Indeed, the Wisconsin Institute for Law & Liberty and EAG News issued a report in 2013 detailing the Wisconsin DPI’s history of abuses against choice schools, including the use of audits to “harass and intimidate” them, withholding funding intended for private schools, forcing applicants to jump through hoops and provide lots of information and documentation not required by law, and more.

This summer, the Mississippi Department of Education initially limited the application period for the state’s new education savings account program to just 10 days in a move choice supporters called “unworkable” and “inconsistent with the law” which not only imposed no such application window, but actually stated that applications must be accepted on a rolling basis. The department eventually relented due to public outcry, but it’s unlikely to be the last of the DOE’s shenanigans.

Meanwhile, the New Hampshire Department of Education is trying to eliminate the town tuitioning program created by the village of Croydon (population 764). The village is too small to maintain its own school system so after 4th grade, it contracts with neighboring towns to provide schooling. In 2007, as its contract neared expiration, the village school board decided to pay for students to attend the district or private school of their family’s choice, similar to arrangements in nearby Vermont and Maine. However, the state DOE demanded that they cease and desist last fall. The town’s attorney, former NH supreme court justice Charles Douglas, argues that the state’s attempt to terminate the program is on shaky legal grounds. After nearly a year of negotiations, the state issued an ultimatum: terminate the program or the state will withhold its funding. The village is now trying to crowdfund a legal defense fund.

There are exceptions to the rule. The Florida Department of Education has a strong track record of supporting the state’s school choice programs. However, that could change as the political pendulum swings, as Indiana has demonstrated. And even where the top official at a state education agency support educational choice, there is no guarantee that the bureaucrats who preceded him or her will share that view or competently manage choice programs. Under John Huppenthal, Arizona’s DOE was ostensibly pro-school choice yet the agency repeatedly botched implementation of the state’s education savings account program.

Where some regulation or state program implementation is necessary, wise lawmakers have invested that authority in the state department of revenue, where the green-eyeshade bureaucrats are less likely to have an axe to grind against school choice than the state education establishment. Several states have already taken this approach, particularly for scholarship tax credit laws. Likewise, Nevada’s new education savings account is administered by the State Treasurer.

In “Fiddler on the Roof,” someone asks the town’s rabbi if there is a proper blessing for the tsar. “Of course!” replies the rabbi, “May G-d bless and keep the tsar… far away from us!” Educational choice policies should be similarly blessed.

[Originally posted at Cato-at-Liberty.]


Governor Brewer signs two small ESA expansions

April 23, 2014

 

(Guest Post by Matthew Ladner)

The 2014 Arizona session is winding up, and Arizona Governor Jan Brewer signed two bills to improve the ESA program today.  Collectively these bills will keep the dependents of military children if their parents are killed in the line of duty, will make it easier for pre-school aged special needs children to enter the program without enrolling in a public school, and will make the siblings of eligible children eligible to participate in order to make it more possible for families to send their children to the same or at least nearby schools. The 2014 session marks the last rodeo for Governor Brewer, who is term limited.

Governor Brewer signed the ESA and a number of improvements into law, several tax credit program improvements into law, called for the creation of A-F school grades and fought hard for an earned promotion policy on literacy. She also vetoed a few choice measures here and there including a small tax credit measure today. She hammered through a temporary three-year sales tax ballot measure to increase to stabilize K-12 funding, but then stayed true to her word and stayed out of it while the alphabet soup groups made a complete hash of trying to create a permanent tax increase. Governor Brewer began Arizona’s first steps towards funding results rather than just seat time.  Let’s hope that further steps will materialize.

It’s been an incredibly difficult and tumultuous five years- the Chinese curse “may you live in interesting times” springs readily to mind. Several of the K-12 initiatives Governor Brewer supported remain a work in progress, making it feel strange to think that someone else will be exercising the duty of governor next year.  There has been a great deal of political blood spilled over some very difficult issues, but in my book, Governor Jan Brewer got far more right than wrong in K-12 reform.


Use the Force MOOC! A 2013 retrospective

December 26, 2013

(Guest Post by Matthew Ladner)

The after-Christmas but before New Year period is always dominated by “Year in Review” retrospectives, so why not join in on the fun? Here at the Jayblog we dig new options for students and parents, so let’s take a look back at 2013.

Digital learning continues to surge. No one has yet established the free online degree that some nutball predicted in 2009, but events are moving in that direction. Dhawal Shah of EdSurge leads us off with a review of the progress of Massive Open Online Courses (MOOCs) in 2013. Shah includes MOOCilicous charts like:

MOOC 1

 

and…

MOOC 2and…

MOOC 3

All of this is quite impressive given the first MOOC rolled out in 2011. Shah provides analysis and 2014 predictions, so go read the article. Events seem to be conspiring to take a very sharp pin to a higher education tuition bubble. One cannot help but wonder how long we will go on debating public funding for online high-school courses when, ahhh, Stanford is giving them away for free and you can, well, get college credit for them.  The logical side of Kevin Carey’s brain (the one that writes about higher education) turned in a useful refutation of the hand-wringing over MOOC completion rates.

Remember where you heard it first- the day is coming when more people will be watching university lectures online than Baywatch reruns.

Please note: I did not say it would be any time soon…

On the K-12 front, the National Alliance for Public Charter Schools published an evaluation of state charter school laws finding widespread improvement between 2010 and 2013. Bottom line: break out the bubbly. Thirty-five states improved their laws, only one law regressed. Seven states “essentially overhauled” their laws with major improvements-Hawaii, Rhode Island, New Mexico, Indiana, South Carolina, Louisiana, and Colorado. Ten more states-Florida, Illinois, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, North Carolina, and Ohio made “notable improvements” in their charter law.

Here at Jayblog we have our annual measure of success in the private choice movement the Forster vs. Mathews school choice dinner bet. Greg either doubled or tripled the standard in 2011, and followed up by easily surmounting it once more in 2012.

In 2013, ooops Greg did it again!  Three-peat!  Two new states (Alabama and South Carolina) joined the school choice ranks, North Carolina went BIG on reform, including two new voucher programs, Ohio and Wisconsin passed new statewide programs, Arizona, Georgia, Iowa, Indiana and Utah improved existing programs.

So 2013 was a fine year overall for choice, grading on the curve of comparing it to past years. Compared to the needs of the country, this is all still painfully slow, so…


Wolf and Witte Slam Ravitch on Milwaukee School Choice

January 18, 2013

Dwight Howard winning the 2008 Slam Dunk Contest.

As I’ve said before, I’m trying to avoid writing about Diane Ravitch because I think it’s now clear to all sensible people that she has gone completely nuts, lacks credibility, and was probablnever much of a scholar.  But I just can’t resist posting a link to the editorial my colleagues Pat Wolf and John Witte wrote today in the Milwaukee Journal Sentinel.  Wolf and Witte are responding to an earlier op-ed by Ravitch in which she declares:

Milwaukee needs one public school system that receives public dollars, public support, community engagement and parental involvement.

Vouchers and charters had their chance. They failed.

Wolf and Witte actually review the evidence on Milwaukee’s choice programs, including their own research.  They conclude:

Our research signals what likely would happen if Ravitch got her wish and the 25,000 students in the Milwaukee voucher program and nearly 8,000 children in independent charter schools were thrown out of their chosen schools. Student achievement would drop, as every student would be forced into MPS – the only game in town. Significantly fewer Milwaukee students would graduate high school and benefit from college. Parents would be denied educational choices for their children.

That’s not a future we would wish for the good people of Milwaukee.

There’s no point in trying to persuade Ravitch or her Army of Angry Teachers, since they abandoned rationality a long time ago.  But Wolf and Witte have done an excellent job of equipping sensible people with evidence that could help inform their views about school choice in Milwaukee.  Angry blather and bold (but false) declarations cannot compete with actual facts.

[Edited to correct typo in title.]


Anrig’s Premature Epitaph Four Years Later

June 27, 2012

 (Guest Post by Matthew Ladner)

Some of you will recall Greg Anrig’s Washington Monthly article combining a teacher union talking point reading of the evidence on school choice with some grousing in the school choice ranks to declare school vouchers as “An Idea Whose Time Has Gone.”

Having trouble remembering? Fortunately the Century Foundation. Mr. Anrig’s employer, has quite helpfully preserved a record on youtube. You can be the 125th or so person to watch the video:

Hmmm….”grinding to a halt…” But wait, there is more-part deux!

There’s even more video on youtube, but these two constitute plenty of rope. I’ve never met Anrig, but I’d be willing to bet that he’s a decent chap who loves his mother, his country and his alma mater. He isn’t the first person nor will he be the last to make a bold but utterly mistaken prediction. I almost feel bad about writing this post.

Almost but not quite…

After all, Andrew Rotherham sagely predicted at the time that Anrig would regret writing the article. So here is a map of the states with private choice programs on the date of Anrig’s Washington Monthly piece:

After the win in New Hampshire yesterday, the map looks something like the one below. Mind you, this underestimates the progress of the parental choice movement, as several states created multiple programs.


More on Milwaukee School Choice Research Results

March 5, 2012

I wrote last week about the release of the final research results from Milwaukee’s school choice program.  On Sunday the Milwaukee Journal Sentinel devoted its entire editorial page to a discussion of those results.  Check out the succinct summary of the findings by Patrick Wolf and John Witte.

Also be sure to check out the response from the head of the teachers union, Bob Peterson.  His rebuttal consists of noting that many students switch sectors, moving from choice to traditional public schools as well as in the opposite direction.  He thinks that this undermines the validity of Wolf and Witte’s graduation rate analysis, but he fails to understand that the researchers used an intention to treat approach that attributes outcomes to students’ original selection of sector regardless of their switching.  And on the special education claim he simply reiterates the Department of Public Instruction’s (DPI) faulty effort to equate the percentage of students who are entitled to accommodations on the state test with the percentage of students who have disabilities.

For more on how DPI under-stated the rate of disabilities in the Milwaukee choice program by between 400% and 900%, check out the new article Wolf, Fleming, and Witte just published in Education Next.  It’s not only an excellent piece of research detective work on how DPI arrived at such an erroneous claim, but it is also a useful warning to anyone who thinks that government issued claims provide the authoritative answer on research questions.  Government agencies, like DPI, can lie and distort as much or more than any special interest group.  They just do it with your tax dollars and in your name.


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