30 Aug 2010

The Problem With School Vouchers

Economics 32 Comments

In his laudatory review of Jacob Huebert’s new primer on libertarianism, David Gordon quotes this:

The independent schools would not be killed off by genuine market competition; they would be killed off by government privileges [i.e., approval by the government to receive voucher payments] to some schools — those willing to accept government control — and not others. A program that would do this cannot be called libertarian. (p. 126)

Unfortunately, a lot of “right-wingers” and even self-described libertarians think that the free-market position on government schools is to introduce vouchers. In their rhetoric, they claim that this will end the public school monopoly, return competition to the industry, give parents a choice, etc. And of course, the free-market guru Milton Friedman himself pioneered the idea, so who could doubt its libertarian bona fides?

But hold on a second. Let’s apply the rhetoric to other areas. “Hey, I think we should give real choice to American families! Everybody should get a voucher, paid for by taxpayers, to spend up to $10,000 on a new automobile. This will give poorer families a real choice, and the competition will spur car producers to offer new options in an effort to capture those voucher revenues.”

Obviously no free-market person would support such a plan; it would represent an unjust wealth redistribution among the population, and it would wreck the car industry. The government would have to continually revise its detailed regulations governing eligibility for the program, lest some shady people set up a scam whereby they would sell cardboard “automobiles” to a voucher recipient, and then split the $10,000 afterwards.

The same is true with formal schooling. If we started from an initial, free market in the “school industry”–with no mandatory attendance laws, no government funds, and no government interference with curriculum–then the voucher idea would smack of pseudo-socialism. It would horrify Tea Party people as much as ObamaCare.

Of course, the big problem is that the government ALREADY intervenes so heavily in the area of formal schooling. That’s why the voucher position seems to be a move back towards liberty.

But is it really? As Huebert notes, the widespread introduction of vouchers could very well destroy what’s left of the independent, private schools. The government would have to establish criteria for which schools were eligible for the vouchers, and which weren’t: Taxpayers would be outraged if Joe Blow set up a “school” where he just popped in DVDs all day, and collected checks from the government.

It’s true, the government currently intervenes in numerous ways with what private schools can do. But the government would have far more leverage if it could make its requirements tied to cash disbursements, as opposed to imposing blanket regulations. For example, if the government simply declared, “It is illegal to mention ‘Intelligent Design’ in the classroom,” there would be an outcry in certain areas of the country. But if the government said, “We will not give taxpayer assistance to any schools mentioning Intelligent Design,” then the opposition would not be as strong.

However, as more and more private schools succumbed to the temptation to accept voucher-funded students, the government’s stranglehold on curriculum would expand. In the beginning, there might be temporary improvements in standardized test scores and other criteria, for all the reasons that voucher proponents cite.

But another immediate impact would be a huge increase in the demand for education tax dollars. Parents who currently send their kids to private schools (or homeschool) would apply for the vouchers. Thus the government would be paying for kids in “public” schools, but also in private. Property taxes would have to go up.

In the end, when everything had settled down, the government would extract a lot more out of taxpayers than it does now. And the difference between government and private schools would have been eroded even further. The government would have effectively taken over all formal schooling.

It is understandable that parents in many areas of the country are disgusted with their government-run schools, and look to vouchers as a “free-market” solution. But this is a grave mistake. The only way to truly fix schooling is to get government out of it altogether.

Robert P. Murphy has a PhD in economics from New York University. He has a new book [.pdf] on principles of economics aimed at junior high school students, available for free download. His online course using this book begins September 8.

32 Responses to “The Problem With School Vouchers”

  1. Brandon Dutcher says:

    Good points. But if separation of school and state is the answer, how do we get there from here? If vouchers aren’t an intermediate step, how about tuition tax credits?

    • Ricardo Cruz says:

      As Brandon says, hard-core libertarians like David Friedman are strong advocates for complete school privatization. But they also favors school vouchers at the _margin_. It is not a libertarian system, but it is a _more_ libertarian one.

  2. Daniel Hewitt says:

    Health care is another good parallel. Paul Ryan’s “roadmap” for health insurance reform is nothing but corporatism, and it actually serves as a disservice to libertarianism because it’s sold as a “free market” plan.

  3. ADA says:

    The problem is further complicated by the fact that many (if not most) State constitutions declare “public” education as a right. You’d have to rewrite most constitutions to even consider going in the right direction.

    • Libertarian says:

      You’d have to redefine the notion of “right” in order to consider education as such.

      If you have a right to your property then the provision by a central authority of any good or service cannot be a right.

      • ADA says:

        yes, well the authors of the various constitution don’t really care for your theory of property, and neither will they concede that you have a right to your property. No State court in the world will ever recognize the notion of absolute private property. That would be death to itself.

  4. Gene Callahan says:

    “Obviously no free-market person would support such a plan; it would represent an unjust wealth redistribution among the population…”

    So, Hayek and Friedman are not “free-market people”? Or is what you meant “ancap”?

    • bobmurphy says:

      Where do they support car vouchers?

      • ChristianTrader says:

        I think the point is that they both supported school vouchers. A second claim is that free market does not imply ancap.

    • ADA says:

      Friedman advocated for school vouchers as an intermediate step towards complete privatization of education. So yes, Friedman would consider vouchers NOT a free market solution, but simply a step in the right direction, assuming all those things Murphy is suggesting about States setting limits don’t actually occur. Friedman is actually quite clear on this position

  5. Gene Callahan says:

    Bob, they did not think that all wealth distribution is unjust.

    • KP says:

      I thought Bob’s article made it clear that he disagreed with them (Friedman specifically).

  6. Brian S says:

    Bob, I’m going to have to disagree with you on this one. Vouchers are proposed as a way to diminish government power over education, and the clear intent is to move society towards free markets. You’re analogy fails because it does not have that intent.

    If you’re going to make the argument against vouchers as an ancap, you should tout the homeschool movement as an even more free. Beyond that, it seems to be gaining popularity at a much more rapid pace than school vouchers. Politically, it is more viable.

    • Ricardo Cruz says:

      Yep, for an economist, and an Austrian one at that, Murphy should show more respect for the marginal concept. The world won’t become libertarian from one moment to the next. If it happens, it will happen one step at a time. You want to gradually shift the “moderate” position more and more to the libertarian extreme. People are conservative at heart.

      Personally, even in conversation, I find it much more productive to argue against state administration first (i.e. in favor of school vouchers), and only against state funding second (and even then, in favor of a means tested approach).
      In my country, where health care is, in large part, state produced, I follow a similar line of thought.

      • ADA says:

        Murphy is simply arguing that replacing the current system vouchers will effectively institute a sort of fascist corporate system. If you think that is better or even “in the right direction”, fine! But don’t call it a free market solution as most of the advocates of vouchers do.

      • Libertarian says:

        There are two sides to every issue: one side is right and the other is wrong, but the middle is always evil.— Ayn Rand

        For the life of me, I just can’t see the point of conceding ANY ground to statists.

        • ADA says:

          And ironically, Rand herself conceded big times!

  7. Dan says:

    What happened to Gene? I feel like if I lived in his ideal world I would be subject to the wealth distribution ideas of some Roman dictator. I find it harder and harder to see him as anything other than a complete Statist, and I used to love his writings.

    • scineram says:

      So wich redistribution schemes did those dictators initiate?

  8. Connie says:

    The road to hell is paved with good intentions, as the saying goes…

  9. Ricardo Cruz says:

    “And of course, the free-market guru Milton Friedman himself pioneered the idea, so who could doubt its libertarian bona fides”

    Charles Murray (from the Bell Curve and Losing Ground hall of fame) said in an interview at c-span that Milton Friedman sent him a letter where he argued against school vouchers (which Murray had just defended in one of his books). I think he said that Friedman pointed out how education had been produced much more successfully when produced locally in American and British past.

    I think it was during the Q&A from one of Murray’s lectures at cspanvideo.org. If you wish, I will find you a direct pointer.

  10. Season says:

    As a teacher in the public school system for 20+ years watching scores and achievements of public schooled students compared to the much higher scores of students in private schools (thus the push for privitation) coupled with the blaming of the public school teacher for all its problems (rather than addressing poor parenting skills), I’ve developed the perfect “voucher” plan which should satisfy all interested parties.

    At the beginning of each school year, each teacher in the public school system is awarded a number of “vouchers” based on their total class enrollment (teaches 25 students/day = 5 vouchers; 150 students/day = 30 vouchers). When a student is deemed to not be performing well in the public school setting either academically or attitudinally, their teacher will hold a conference with the parents and administrators and “award” them a voucher so that they may enroll their child in the private school of their choice…all tuition and fees covered at tax-payer expense.

    This procedure will quickly flush the public school system of its “problem students” who will receive a much better education in a private setting and allow the private system to learn to cope with an entirely new student body made up of those students who did not function well in the public system. Let them truly shine as the epitomy of “excellence” in the world of private schools! Immediately, we would see a positive change in scores of public school students, and educators once regarded as “bad teachers” would suddenly be elevated to the ranks of “good teachers” thus removing the need for struggling to develop standards to justify “performance based pay”! Class room sizes would become manageable again and teacher salaries would be allowed to rise to the level of a minor league baseball player!!

    Of course, taxes would need to be raised to accommodate the very high tuition fees of those students now attending privately operated schools (but now taking tax dollars) which would have two positive results. Parents footing the new tax bill would be more interested in learning parenting skills PRIOR to having children, and the private schools would develop an appreciation for the rules and restrictions placed on the public school teacher by government edict.

    There’s so much more that this system could accomplish, but one doubts that it will ever be given a thought or consideration. For instance, vouchers could simply be issued without funding…like the unfunded mandates that public schools must absorb…and let the private school increase its’ fund-raising efforts to accommodate their new students. Just call me “Walter Mitty”!!

  11. Season says:

    Ooops…this old teacher forgot to “spell-check” and misspelled “privatization”. My bad!

  12. Jeff Gough says:

    Shouldn’t further government controls over education be combated as a secondary issue if vouchers could be implemented? I think Rothbard addressed a very analogous situation in The Ethics of Liberty when he asked how a libertarian should feel about tax cuts when he “knows” the government will maintain its level of spending, thus increasing its debt. Rothbard decided the best strategy was to favor tax cuts as a small step in the right direction and then, when the time comes, favor a reduction in spending. What do you feel is the difference between this logic and favoring something along the lines of voting yes for more school choice through vouchers and then fighting against proposals for government intrusions in education, which may follow?

    “[I]n this age of permanent federal deficits, we are all faced with the problem: should we agree to a tax cut, even though it may well mean an increase in the deficit?…[S]ince taxation is an evil act of aggression, any failure to welcome a tax cut with alacrity undercuts and contradicts the libertarian goal. The time to oppose government expenditures is when the budget is being considered or voted upon, when the libertarian should call for drastic slashes in expenditures as well.” – Rothbard, The Ethics of Liberty

  13. Sirgwainep says:

    The obvious point that vouchers are returning to the tax payer money that government should not have taken in the first place. The car voucher would be sensible if the tax payer was already paying a tax for the public support of car dealers. Arguments such as this appears to me as another trivial non sequitor.

    • bobmurphy says:

      That’s not true for everybody. There are tons of people who would be getting more in vouchers than they pay in, in taxes. Think of all the property owners with no kids, who pay into the government school system.

      Also, you guys are all overlooking the fact that MUCH more total government money will flow into education if this goes through. Right now there are people who send their kids to private schools. Once the voucher system is enacted, wouldn’t they apply for a voucher?

      If there are rules to limit that, then at the very least all future parents will send all future kids to public school to get the voucher.

      So in practice, once the system is up and running, they will need to send vouchers for every kid that enters the school system. Right now, they only have to spend the per-pupil amount on all kids going to “public” schools.

      This is not a definitive move towards the free market. There are many respects in which this is a huge increase in government, from Day One.

      • ADA says:

        In theory, there need not be more money involved if public schools operated also by the voucher system. That is, if public schools were entirely funded by vouchers also. Of course that’s a dream, so you’re right. In practice, the public school will demand its regular secure fundings while the State will have to begin to finance private schools as well.

        It’s like what has just happened in Israel. They instituted the negative income tax of Friedman, and guess what? They now have both the old welfare system AND the negative income tax. Surprise, surprise….

        • bobmurphy says:

          I’m not sure I follow you. The proposal is for the “public” schools to compete with the private ones, for the voucher-dollars. That’s why teachers’ unions are so against vouchers; they’re worried the government schools will lose funding and will have to cut salaries.

          What I’m saying is that there will be more total children sucking on the taxpayers, under the voucher system. Right now, I send my kid to a private school. If next year the government starts giving public school parents vouchers for their kids, to be spent either at public or private schools, then why wouldn’t I say, “I’m switching my kid to be in public school next year. I want my voucher. OK, on second thought, I’m going to spend the voucher on a private school”?

          At the very least, every new kid that is born, is going to get a voucher when he becomes of school age. The only exception would be parents who want to send their kids to private schools that don’t meet the criteria for voucher-worthiness.

          • ADA says:

            Yes but if the public school really did compete for the vouchers, then you’re not suppose to fund the public school if you send your child to private. So if we envisioned a hard and sharp transition to the voucher system, we should expect to see an immediate decline of public school funding for all those kids who are currently attending private schools.

            Obviously, this is all nonsense. A voucher system would probably be enacted parallel to the current system, sort of how you’re envisioning it. I think.

            • bobmurphy says:

              Right, under the standard proposals, the amount of government money that went into Public School A would go down, probably sharply.

              But my point is, the total amount of government money being paid out (in the form of vouchers) would be sharply higher than the current amount the government spends on public schools. So it’s not a “move toward the free market” at all, in that respect. The government would be spending a lot more on education.

  14. Avram says:

    “Right now, they only have to spend the per-pupil amount on all kids going to “public” schools.”

    Your entire argument rests on that one bad way to calculate the size of the voucher.

    Lets say I became dictator and instead did:

    1. Calculate the voucher as follows:

    Voucher = Total spending on public school system / Total amount of people under 18 in USA

    2. Sell every public school asset to the highest bidder:

    3. Every child gets one voucher

    How on earth would I not be rolling back government? Spending must stay the same as I used the entire school age population of the US. If anything it will be much lower because a) not everyone will claim their voucher and b) no more huge bureaucracy costs. Its a great first step to completely eliminating government from schools as from here on the voucher could slowly be reduced or just left to whittle away in the tides of inflation.

    I’m not sure about you but the way I see it any step to reduce government no matter how small is a good step. So to completely dismiss vouchers because you’re using a silly way to calculate them is destructive to the end of liberty.

    You could have just as easily said “vouchers can be a good first step to rolling back government but doing them in XYZ way is bad. Instead I propose ABC as an alternative which would satisfy those scared from quitting welfare cold turkey and market supporters and lead to further roll back later on ” But no instead you go all out and make it look like anyone who agrees with vouchers is some kinda Obama supporter or something.

    Maybe instead of focusing on destroying sound short term _achievable_ libertarian policy that will make it easier for people to see the benefits of markets you should instead focus on furthering Austrian Economics, which you are very good at.

    • bobmurphy says:

      OK, but that’s not the voucher plan anybody is proposing. A lot of current supporters of vouchers (who send their kids to government schools) might denounce the policy you are suggesting, since their kid right now gets (say) $5,000 per year from the government, but under your plan would only get a voucher for $1,200.

      By the same taken, if “implementing school vouchers” included abolishing the IRS, I might be for it. But that’s not what anyone has in mind when they talk about school vouchers.

      Notice you are trying to have it both ways. You are getting mad at me for being a dogmatic purist, and not trying to play the game in realistic political alternatives to the status quo. And yet, you yourself are proposing something that would never pass and is not currently in the same ZIP code as voucher proposals.