The New Frontier of School Choice


(Guest post by Greg Forster)

OCPA’s Perspective carries my article on ESAs as the new frontier of school choice. I point out how ESAs are an improvement on vouchers:

But vouchers have a hitch. They create a perverse incentive for private schools to jack up tuition to the maximum voucher amount. While they create a marketplace for education, they take out half the equation of any good marketplace. With vouchers, schools compete to attract students, but they compete only on quality, not on price.

That may sound good if you have romantic notions about money having no place in education. But, as Milton Friedman would be the first to tell you, prices are a critical source of information that we need to be good stewards of our resources. They tell us about the scarcity of things relative to the demand for them. High prices cry out to providers, “devote more resources to providing this service!” Low prices say, “this isn’t needed as much.”

Part of me is sad to see Milton’s idea eclipsed by something better. Milton himself, of course, would have been delighted. He knew that he didn’t know everything, and that the whole point of freedom is for better ideas to nudge out worse ones.

Still, it’s important to honor the great men of the past, and so:

It’s not every day someone outsmarts Milton Friedman; indeed, people tangled with his brains at their peril. When he argued against mandatory peacetime military service in a public hearing, he was confronted by a general who said, “I don’t want to command an army of mercenaries.” Quick as a wink, Milton replied, “Would you prefer to command an army of slaves?”

That general’s experience was not unique—in fact, it was the opposite experience that was literally unique. When Milton’s wife, Rose Friedman, died, we at the Friedman Foundation included the following sentence in our list of her accomplishments: “She is the only person ever known to have won an argument with Milton Friedman.” Rose was a formidable economist in her own right, but we all considered this her most impressive achievement.

As always, would love to hear what you think!

PS Proof that Milton would be glad!

9 Responses to The New Frontier of School Choice

  1. Jason Bedrick says:

    You’re not giving Friedman his due! In fact, he basically came up with the ESA idea himself:

    “Moreover, there’s no reason to expect that the future market will have the shape or form that our present market has. How do we know how education will develop? Why is it sensible for a child to get all his or her schooling in one brick building? Why not add partial vouchers? Why not let them spend part of a voucher for math in one place and English or science somewhere else? Why should schooling have to be in one building? Why can’t a student take some lessons at home, especially now, with the availability of the Internet?”

    Sounds like an ESA to me!

  2. matthewladner says:

    As a member of the AZ team that cooked up the first ESA program, I have no hesitation whatsoever in saying we were all deeply in Friedman’s intellectual debt- even though none of us were aware that he or anyone else had made similar proposals!

    In fact, in Matthew Ridley’s The Evolution of Everything he details how almost every invention you can name had a number of other people on the verge of a patent for very similar products when the patent was granted. Reading through that chapter I thought to myself “Yep- just like ESAs…”

  3. matthewladner says:

    Oh and nice casino reference btw! I went to the New Frontier in its dying days, and let’s just say they had a chalk board in use as their Sports Book. The owner apparently sold it for a ton before the bust, whereupon it became a hole in the ground, but then scooped up the much newer TI for a fraction of his price for the NF during the bust.

    Timing is everything….

  4. matthewladner says:

  5. The US education industry operates in a legal/institutional environment which includes: …
    1. Compulsory attendance statutes (truancy) applied to children
    2. Compulsory education (educational neglect) statutes applied to parents
    3. State (government, generally) subsidization of sub-adult education
    4. State operation of schools
    5. Policies which restrict parents’ options for the use of the taxpayers’ sub-adult education subsidy to schools operated by State (government, generally) employees
    6. Assignment by district
    7. Minimum wage laws
    8. Child labor laws
    9. Unionized public-sector employees

    Every one of the above policies reduces parents’ education options.
    Some of these policies exist in every US State. Every US State features some of these policies. Some States feature all of these policies. With minor qualifications, every relaxation of the restrictions that political authorities place on parents’ power to define “education” for their own children will enhance overall system performance.

    Milton Friedman’s thinking evolved between the 1955 essay “The Role of Government in Education” and his contributions to Enlow and Ealy __Liberty and Learning: Milton Friedman’s Voucher Idea at Fifty__. Edwin West convinced Friedman that the State added nothing positive to the education industry. Charters, vouchers, tuition tax credits, etc. are stepping stones on the path to a minimally-regulated market in education services.

    • Greg Forster says:

      It’s true that Milton moved away from the view that education is a public good. Key to this was Tooley and Dixon’s evidence that even very poor parents can and do make financial provision for education even in places where government does not compel this or even forbids it. Here I differ with his later view, because I am not a libertarian and I don’t think government action can be limited only to providing public goods.

  6. I’m not sure we disagree. I’m not sure we need to agree on fundamental premises to share a path for a while.

    The “public goods” argument does not, alone, support a welfare-economic case for a government role (subsidization, regulation, direct operation) in an industry. Every good or service is a public good to some degree and in some dimension. If a lighthouse (the classic example) is a public good then so is a pretty girl walking down the street, radiating beauty (she brings a twinkle to the eye of this old man, anyway). In this case and in many others, providers of the public good have sufficient incentive to supply the good without subsidization.
    Some public goods become public bads when the State provides them. If a lighthouse is a public good, then so was electronically broadcast news a public good (the Beeb) before the advent of digital encryption, yet government provision of news is a threat to democracy. If democratic control of government is a public good, then government provision of broadcast news is a public bad. I suggest that education fits in this category for strongly similar reasons.
    However much we question the premises of any policy,prudence, indeed, will dictate that policies long established should not be overthrown for light and transient causes or even deep and fundamental causes if an easy path allows low-cost-incremental change. We do not have to engage fundamental questions to move policy in a favorable direction (although moral clarity helps maintain a sense of direction). “Control” is a continuous variable, as is cost. I hope that legislators will shift support toward parent control as the costs of the current system mount, but we have seen how far into the dirt insiders will drive institutions (Soviet agriculture, Detroit public schools, etc.).

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