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Why Are the Public Schools Failing and What Can Be Done?
July 5, 2001
Richard K. Vedder, John D. Merrifield


David J. Theroux

Good Evening. I’m David Theroux and I’m the President of The Independent Institute. I’m delighted to welcome you to our Independent Policy Forum program this evening. The Independent Policy Forum is a series of lectures, debates, and seminars that we hold regularly here at the Institute’s conference center in Oakland. As you know tonight our topic is, “Why Are the Public Schools Failing and What Can Be Done?”

For those of you who are new to the Institute, hopefully, you got a registration packet when you registered, and there’s information in there about our many books and other publications, future events. There’s a flyer you’ll find in there on tonight’s program and the next event, which we’ll be holding here on August 14th with Larry Elder, who’s a syndicated columnist and talk show host, and his topic will be “Truth and Propaganda in Politically Correct America.” So it’s the usual Larry Elder provocative topic.

We also invite you to become a member of the Institute, and there are all sorts of great benefits, of course, in addition to joining with us in what we do and becoming a supporter of our program.

After our program in August the next event will be probably in September. It’s not absolutely confirmed with the renowned psychiatrist, Thomas Szasz and his new book called Pharmacracy, which is a blistering critique of the healthcare Nanny State. Tom had a very good article in the past issue, not the current issue, but the past issue of our quarterly journal, The Independent Review, and I also wanted to show you—this is a previous issue of The Independent Review, which features an article by one of speakers, John Merrifield, and if you’re interested in this issue, which has a number of pieces on school issues, we can certainly arrange for you to obtain a copy.

Also in your packet you’ll find information about a program we hold each summer for high school students, which is this flyer here called the Summer Seminars in Political Economy. The program is going to be held in August, the 13th through the 17th. This year it’s being co-sponsored by Holy Names College here in Oakland, so for those students who are from out of the area they can stay at Holy Names, and also they can sign up for a one-hour college course credit in economics.

The instructor for the program is here tonight, Professor Joe Fuhrig, who is someplace here. There he is. Joe is at the Department of Economics at Golden Gate University and also at the University of San Francisco.

So it’s a program that I highly recommend for anyone who has children who are in high school or early college. It’s a program that’s designed to create a foundation of understanding the world that we live in, and the chances are very high that otherwise students will not get that in the schools, which is part of our topic tonight.

This evening, as you know, we’re here to discuss one of the most serious and widespread problems in American society, the failing performance of the public school system. For decades reformers have promised to improve the public schools, but by and large the costs continue to escalate while the quality continues to decline. A few recent newspaper headlines might give you an example of some of this. One read: “Threshold Lowered on Exit Exams—State OKs High School Standards Below What Was Originally Proposed.” Another read: “Abysmal Exit Test Results for 9th Graders—Most Flunk if 70% is a Passing Grade.” Another read: “Small Wars Plague the Schools—Teachers, District, Mayor Embroiled.” Another read: “Schools Add Security in Reaction to Violence.”

And one of my favorites, from San Francisco, was “30% of School Funding Missing.” And it was followed up with a series that you may have seen. Sixty million dollars misspent by four consecutive San Francisco school chiefs. I don’t know. If I was in business, and that happened, I’d think some changes would happen. But I guess not.

So why have efforts to improve the public school system been such failures? As the public schools have become more bureaucratized and politicized, is there something systemic in the way the schools are structured that is creating such outcomes? Which approaches are more likely to overcome the political and other obstacles to improve education? Which approaches best ensure that schools will be held accountable to parents and teachers? Which approaches have the greatest potential for fostering educational excellence? These are some of the issues that we’ll try to discuss this evening.

And to explore these two questions we have two excellent scholars with us. I hope everyone here will get a chance to pick up their two books that we’re featuring. One is called The School Choice Wars by John Merrifield, and the other one has a provocative title called Can Teachers Own Their Own Schools?

Our first speaker is Richard Vedder. Richard is a Senior Fellow here at The Independent Institute. He’s also distinguished professor of economics at Ohio University. He’s the author, as I just mentioned, of his monograph book called Can Teachers Own Their Own Schools? Professor Vedder is also co-author with Lowell Gallaway, also at Ohio University, of The Independent Institute book, Out of Work: Unemployment and Government in Twentieth Century America. It was a recipient of both the 1994 Sir Antony Fisher International Memorial Award and the 1994 Mencken Award Finalist for Best Book.

Professor Vedder received his Ph.D. in economics from the University of Illinois, and he’s been a senior economist at the U.S. Joint Economic Committee and a Visiting Fellow at the Center for the Study of American Business at Washington University. He’s the author of many top books, especially in economic history, labor economics. His hundreds of articles have appeared in an enormous number of scholarly journals. He’s also the author of pieces in such publications as The Wall Street Journal, The Christian Science Monitor and many other places. I’m very pleased to have a dear colleague, Rich Vedder. [Applause]

Richard Vedder

Thanks, David, it’s a real joy to be here with you. I’ve been associated with David Theroux one way or the other for close to 20 years—that’s hard to believe—and there are very few people in America—I’d put him in the top, if not dozen, two dozen, of people in America, in terms of promoting individual liberty and freedom in a very responsible fashion. And it’s always a delight to be with David and Mary Theroux and others at the Independent Institute, who are doing such a wonderful job.

I was reminded coming here tonight that to show how bad American education is, the most interesting idea that I received recently about how to improve public schools from a politician came not from George Bush, not come from Al Gore, not come from the Governor of California Gray Davis. It came from Vladimir Putin.

I was in the—this is true—I was in the Kremlin meeting with Mr. Putin last year, and Mr. Putin who has severe financial problems, out of desperation says, “You know, I think we’re going to have to do something about our schools. And I think we’re going to start charging tuition in our schools.” Well, it’s a start, you know. And have you ever heard an American politician suggest that? So when we looked to the Russians for guidance in anything, you know we’ve got problems.

Speaking of the Russians, let’s go back to October 4, 1957, more than 43 years ago. The Soviet Union launched Sputnik that day. And from that, Americans interpreted that as a sign that we were lagging behind in technology, we were lagging behind in education, and that our education system must be failing, because we’re behind the Russians in space, and out of that came a whole new bunch of federal programs, National Defense Education Act and so on, and whatnot.

Then move forward another generation to 1983. A government commission issued A Nation at Risk that said that America was doing a poor job in educating its children, and the nation’s economic and cultural leadership were at peril because of this deficiency.

Now come forward nearly another generation to now, July 2001. The evidence is, as David pointed out, that educational performance is little changed since A Nation at Risk that was issued 18 years ago, with very modest improvement in some indicators and none at all in others and in international tests, such as the TIMSS mathematical examination [Third International Mathematics and Science Study]. American students are in the second tier of nations down below some of the very poorest of nations. We, for example, consistently score lower than Hungary or Korea on these tests.

Indeed, a good case can be made that today’s students learn less than their grandparents did in the early post-war era. SAT scores, for example, are now lower than they were in the 1960s. Yet it is not for a lack of financial effort. Real per capita spending has tripled roughly in public schools since 1960. In economic terms, productivity has fallen by about two-thirds, at a time when the productivity in the broader economy has more than doubled. It actually takes a larger portion of the nation’s output to educate one public school child today than it did in 1960, despite massive economic growth. And we have little or nothing to show for it.

The inputs into producing educational services have tripled per student, but the outputs have remained at best unchanged. The productivity of schools, relative to the economy as a whole, has fallen by at least a factor of six. With a possible exception of prostitution, teaching is the only profession that I know that has had absolutely no productivity advance in the more than two thousand years since Socrates taught the youth of Athens. And I’m not so sure about prostitution.

Now supporters of public schools would disagree with the notion that the public schools are failing on at least two grounds. First, of course, the measurement of outcomes of education is difficult, and learning takes many forms other than those measured by standardized tests. There are non-intellectual objectives to schools we are told, such as promoting physical development, appreciation of the arts, promoting self-esteem—that’s a big one these days—and a sense of civic virtue—a little one these days.

Second, the environment in which we live has changed in a way that discourages learning. For example, the decline in the traditional two-parent nuclear family has had negative effects on student performance. And these criticisms or these points have some surface validity to them, but they’re essentially excuses for the current mediocrity of the schools. I believe the public believes that the overwhelming purpose of public schools is to provide universal instruction in the core subject areas. It is not to develop self-esteem, serve as a welfare agency, and so forth.

There’s no way of measuring it, but I would suspect that today’s young kids feel about as good about themselves, whatever that means, as the ones did 40 years ago, are roughly as patriotic, probably a little less honest and respectful of others, but for reasons related to the general decline in the nuclear family, a decline of religion, and so on.

In short the educational outcomes have not improved over time by any measure, and there’s no legitimate excuse for America’s poor test scores relative to other countries, or for the poor performance of public schools relative to private ones in the United States.

So why have our government schools failed? The answer is as simple as ABC. As to the A, as David mentioned, the schools lack accountability. Bad performance is not punished; good performance is not rewarded.

As to the B, the regulatory barriers to doing a good job are immense. Good people can’t teach, because they haven’t taken some inane education courses required to get a teaching certificate. Great teachers can’t lecture to big groups, because of class-size limits imposed by state mandates, and so on. The list goes on and on.

And of course as to the C, consumers of education lack choice. In many areas, that is to say, there’s a lack of meaningful competition.

In reality American schools, to go back to my initial point, American schools conform more to the Soviet industrial model of say 1970, than to the competitive American market model of today. Like Soviet industry, American schools tend to be government-owned and operated monopolies, governed in large part by distant bureaucracies, and like Soviet industry, performance is measured in physical units with little regard for quality.

As in the Soviet era, American schools are inefficient with no incentives to become more so. And like in Soviet Russia, the consumer is not sovereign and is even largely ignored.

Shortly after the Russian revolution, the great Austrian economist Ludwig von Mises predicted the eventual demise of the command socialist economy. Mises argued that there could be no economic calculation under socialism, that is to say businesses could not make efficient resource allocation decisions given the lack of market signals, incentives, and the like.

During the 1920s and ‘30s, Mises and Friedrich Hayek—who’s picture is upstairs, I think, on the wall somewhere, back here in the corner—debated opponents on this point. And ultimately as Mises and Hayek predicted, Soviet-style socialism did disappear with a whimper not a bang. Will the same thing happen to the modern American counterpart, government schools?

The demise of public schools is less clearly predictable, but the forces that Mises and Hayek talked about are operating to undermine the vitality of government education. American education does have a significant private component, although you could argue so did Soviet Russia with its private vegetable plots of farmers.

In a sense, home schooling is to America what the vegetable plots were to the Soviet economy of the 1970s. That’s the best analogy I can come up with. The efficient market-based sector in America has the ability, of course, to subsidize this inefficient government school sector indefinitely at, of course, a very real cost.

However, I will predict that over time several forces will be working to increase the popularity of private education, including for-profit schools, leading to some decline, and possibly, the ultimate demise of public schools as we know them today.

Before we do that, let’s talk about an alternative way of privatizing public education. Let’s talk about several ways first. The least radical approach of course is for public schools to simply contract out some services to private companies. Many public schools do that already to some extent with food and transportation, and maintenance services. They could extend this, however, and some have, to other areas of instruction or even to running the entire schools. Turning over the schools to private companies.

Another approach, of course, is to provide consumers with scholarship or vouchers enabling them to attend private schools, something that John Merrifield knows a great deal about. Reducing the incremental cost to consumers of that form of education.

A third public policy option that is gaining some favor, is to grant tax credits to cover part or all of private educational expenses. This too increases the relative attractiveness of private schools. A fourth approach is to encourage rather than discourage home schooling of children.

Today I want to mention, just for the sake of discussion this evening, an approach for private education that may have some potential, at least warrants some experimentation. In greater detail on my little approach that I’m going to suggest tonight and its limitations, which are real, can be found in the book that David mentioned, Can Teachers Own Their Own Schools? that Independent has published.

Let’s imagine a medium sized city that feels its schools are not living up to their potential, and that its school board somehow miraculously agrees with this assessment. Incidentally, I spent four years on a public school board and had to quit, because I was going to get psoriasis of the liver if I had continued. It really drove me to drink. It was quite an experience.

Anyway, let’s pose this mythical city has tremendous labor problems with the teacher unions. Acrimony is running high. Tests scores are running low. How could privatization solve its problems?

The school board goes to the teachers and says we’re going to give you the schools. They’re yours. We’re going to turn over the title to the buildings, the equipment, the supplies to you. We’re even going to give you some money. And here’s how it’s going to work. We’re going to set up, let’s say there are five elementary schools in this town, we’re going to set up five for-profit corporations. One for each school. Let’s say each has 400 kids in it. And let’s say the community’s per pupil education cost at the elementary level is $5,000, so that’s $10 million that they’re currently spending on elementary schools.

Now we’re going to create the Washington Corporation, the Adams Corporation, the Jefferson Corporation, the Madison Corporation, the Monroe Corporation. I named these after our first five presidents. And let’s say we’re going to give each teach 100 shares of stock in the corporation where she or he teaches for each year that they’ve taught in the school. We’re going to give the principal 200 shares. We’re going to give the janitors and other support staff 50 shares.

In an elementary school, say, with 24 teachers, a principal, and 10 support staff, perhaps 36,000 shares would go to the teacher, 4,000 to the principal, 5,000 to the support staff or 45,000 shares all together. If the building and so on is worth $2.7 million that’s a book value of $60 a share.

Suppose we’re going to try to sell another 15,000 shares either to staff members who want to buy more shares or to the public at $50 a piece. So that will raise some more working capital for the school, three-quarters of a million bucks.

So the school board will then sign a contract with the school corporation guaranteeing that for not less than five years that it will give $5,000 an annual scholarship to each child that attends this school with some increments in payments in future years. Now this is voucher system in essence, and I have mixed feelings about vouchers in some ways. But I’m throwing this idea out for discussion.

There will be a number of interesting transition problems to a system such as I’m proposing. I won’t go into them here. You’ve certainly got to get rid of existing collective bargaining agreements. They must be made null and void. Education regulations with the state must be declared inapplicable, and so on. There are issues relating to pension benefits and so on. I won’t go into all this.

Now, the schools can charge any tuition they want. To attract more students than the existing 400, one school might want to be the cheap school in town, charging only $4800 in tuition. The parents get a $5000 voucher, they pay $4800 to the school, and they pocket $200 and go to the liquor store. I don’t know what they do with that. That’s what the public school advocates will tell you they’re going to do with it. Another school might claim it is offering superior services and charge $5200 in tuition.

Now in order to cut costs in order to make a profit one school might use some of its cash to buy out some ineffective, older senior teachers who are a drag but expensive, say replacing $50,000-a-year teachers with new blood, new teachers making $25,000 or 30,000 a year. (By the way, my wife’s a guidance counselor. My wife’s sitting in the back and has been in the school business for 30 years. I, incidentally, have a public school son—a teacher who’s a son, a daughter who’s a public school teacher, a daughter-in-law who’s a public school teacher. I am inundated, surrounded by these people.) [Laughter]

So maybe instead of hiring a new elementary guidance counselor for $40,000 a year, this school will hire a retired social worker for $25,000. Instead of hiring a professional librarian for the school library, they’ll talk a mother or a parent to do it for $10 an hour. So the school will find ways to economize.

One school in order to attract students might hire a highly popular teacher away from another school and give them a signing bonus of $5,000, and a slightly higher salary. Another school might move to offer a traditional curriculum based on Core Knowledge of E.D. Hirsch or the Saxton Math Curriculum or something. Well, another school might offer a progressive curriculum, whatever that means.

One might require students to wear uniforms and have strict discipline and the other might say, “Do your own things, kids!” Another school might move to a faith-based curriculum. In short, each school will have incentives to cut costs and provide a curriculum and school environment that appeals to a large number of parents.

Now teachers will require valuable assets. In the example I gave, in some cases, worth $100,000 or more, and in some cases, doubling or tripling the net worth of the teacher. Yet they will give up all the protections that they have as public employees. Tenure will end, unless the teacher-stockholders agree to keep it. The scheme, in effect, bribes the educational establishment to change its ways.

In the new environment, unions become almost irrelevant, as teachers own a majority of the stock in the school, and in effect, work for themselves. In a sense this is an ESOP, or an employment stock ownership plan proposal.

Presumably in such a system, costly educational fads, which come every two or three years down the pike. Have you noticed that they keep coming down every few years. Whole language one year; what is it now? Block scheduling. Do you know what block scheduling is? Block scheduling is big this year. I don’t know why. But for some reason. Teach kids in two-hour increments. Great idea for 13-year olds? Teach them two hours the same subject, wonderful idea? Anyway, so we have schemes. Reduce class size. Rather than reducing class size, our employee-owned school will probably increase class size in order to increase profits, and do so by hiring more lower cost teacher aides and tutors. Greater use would be made of distance learning. So we do actually introduce real technology change into teaching.

So this is what I propose and I have more on this, but I want you to hear John in a minute, so I’m going to stop on that.

Let me turn though, for a moment, to the growth in for-profit education in the United States because that’s what I’m proposing. Incidentally, the schools I’m proposing ultimately would probably find they need to have strong management. It might amalgamate or merge into something like Edison Schools or the Noble Learning Communities or some of the for-profit schools in America today.

But as an economic historian I have to note that both in the United States and in Great Britain, the industrial revolution had largely been completed before education became a public venture. Education was a private venture when England had the industrial revolution. England was the first nation in the world ever to get an income level way beyond what we might think of as subsistence on a sustained basis. That is it had been sustained for hundred of years, and it happened when the educational system was private, not public. There was no government money in education in England before 1830 and very little before 1870.

So the country became the world’s leading economic power. Eighty percent of the adults learned to read and write before they had public schools. In America, it’s more complicated, but essentially the same pattern, a little less clear. But up to the Civil War, the bulk of education in the United States was private.

Now we’ve had a revival of interest in private education, home schooling being a great example. But also for-profit schools are making a dramatic growth in the last few years. In August of 1999 for this book, I went up to Yahoo Finance, under their category schools, on the computer. And I added up the market capitalization of every company listed as a school by Yahoo Finance. At the time there were 22. The value of all of those companies, capitalization, market capitalization, was $7.4 billion. I did the same thing two weeks ago. The capitalization was $15.4 billion.

Most of these companies are listed on the NASDAQ. These are publicly listed companies. This excludes a lot of privately held companies. During that time, the NASDAQ declined in value. The Dow Jones stayed constant. So in this period where the stock market is at best holding even and maybe declining, we have more than the doubling in the market capitalizations of companies.

Sales in those two years rose by 55%. They’re going up 25% a year. And that’s gone on at least three years that we know of and longer. So this is a miniature dot-com kind of industry going on.

Incidentally, these companies collectively earned last year more than $100 million in profits, just marginally over a $100 million but they’re market capitalizations are $15 billion, which tells you there’s a price earnings ratio on average for these companies is more than 100 to 1. Now this suggests that the market has a very high assessment of the future of these companies or otherwise the stock prices wouldn’t be so high. Now the stock market occasionally misjudges things. Some people know.

Incidentally, one company in the group, the largest single company in the group, in the three-weeks since I did this calculation has had its own market capitalization grow by more than $1 billion. That’s the Apollo Group. What does Apollo Group do? University of Phoenix. And the University of Phoenix and Apollo Group is like many other companies, they’re not operating in the traditional K-12 market. They’re providing services either for younger or older persons, especially college age. There are 116,000 students now at the University of Phoenix.

Other companies like Sylvan Learning Systems provide supplemental instruction for K-12 students but not run many schools. Now there are schools, Edison Schools, Noble Learning Communities are two I mentioned, that operate specifically in the K-12 market.

Now the main reason why the college for-profit market is succeeding even more than the K-12 one, is that public colleges and universities charge tuition, often thousands of dollars annually, while the K-12 schools do not. Since there’s a lot of subsidization of graduate education within public universities, often there’s very little state subsidy provided for basic freshman and sophomore level education.

I suspect even at Berkeley, which is a good school, the freshman and sophomore—the cost of educating one more freshman at Berkeley is pretty low. They use grad students to teach most of them and so on. Anyway—David has a son at Berkeley so I had to make this point.

Anyway, moreover massive price discrimination by the public universities, which they call scholarships, I call price discrimination, means that upper and middle income students pay dramatically more tuition than lower income students. Thus private schools can often charge some students only modestly more than what the public schools do and offer an appealing curriculum.

Now there are five reasons why I think interest in for-profit schools may grow over time, even at the K-12 level. Let me mention them. I’m 85% done if you’re getting tired. With my students who I have some control over that I give grades to, I can brow beat them into sitting there. But you have the ability to get up and walk out, which scares the hell out of me. So I’m trying to keep you awake. [Laughter]

Now the first point I would make in this regard is that over time the increase in real income per capita—which has been going on since at least 1840, a feature of American economic history for the last two centuries—will continue, and as parents get wealthier, they want more for their kids, and they’re increasingly willing to pay and make big sacrifices to give their children an extra advantage. In a sense home schooling is a manifestation of that. Plus, they’re more and more willing to shell out thousands of dollars to places like the Edison Project or Edison Schools in order to educate their children.

Second, there is a nationwide movement to minimize spending differentials between public schools, of which California, of course, led the way. Sorendo vs. Priest, way back in late ’70s, led this trend. This aggravates the already existing willingness of affluent parents to send their kids to private schools, and in some cases to engage in home schooling. The good suburban schools aren’t quite as good any more, because of these various spending limits that are put on. They’re taxed to fund the poorer schools.

Third, voter support for public schools is based on a basic assumption that these schools are delivering needed services at a reasonable cost. The sharp declining efficiency of public schools has increased voter willingness to experiment with alternative forms of educational delivery such as vouchers and tax credits and so forth, moves that probably lower the financial cost of for-profit education relative to publicly provided alternatives.

And incidentally, another factor is that as our population ages, we are having increasing numbers of voters who are resisting to funding schools, because they have no children and so forth in the schools themselves. And related to that point, it is evident that there’s more and more research that the public is learning about by people like Peterson and Greene, of which one could be skeptical. But it does suggest that people that are going to private schools that are funded in an alternative way sometimes like them more.

Minority students in Milwaukee, for example – John is critical of the Milwaukee experiment, but I’ll mention it. The study shows that minority students in Milwaukee attending private schools financed in part by vouchers tend to learn more math and so forth. So all of these things are making the public more willing to consider alternatives to the current paradigm.

And over time—and I owe this idea to my colleague Josh Hal, an educational researcher who is sitting in the back—the number of public school districts has declined, leading to reduction in choice for citizens. The movement to consolidate districts. So it’s not as easy as it used to be move, to send your kid to another school, because you’ve got to go farther away and that often conflicts with jobs and so forth.

History tells us that inefficiencies and absurdities can exist for a long time when the public sector is involved. How long did it take us to even start to do anything about welfare? What, 50 years? Sixty years?

But at some point, either economics or politics or both sometimes forces true reforms. Reform of the public schools has been much discussed, and there’s been much activity but very little results. In part this is because some of the so-called reforms are really attempts by vested interests to increase their funding. The move to promote smaller class size fits into this category. The evidence is class size reduction is extremely expensive and generally ineffective way of improving learning. Yet the unions, of course, have embraced this reform with a vengeance. Modest reforms have been adopted, increasing accountability, reducing barriers, and increasing choice, and standards have been ostensibly raised.

Yet all of this reminds me of Mikal—going back to my Russian example again—of Mikal Gorbachev. Remember perestroika and glasnost? Ineffectual attempts to apply little bandages to a gaping wound. It’s like painting the rails of the Titanic during its maiden voyage. The system of public schooling faces fundamental flaws that minor tinkering will not fix.

One way that the Russians may transition peacefully from Communism was by bribing the apparatchiks who controlled the party and businesses in the old regime. The bribes came in the form of almost free grants or shares in new companies and enterprises. The results haven’t been perfect. The Russians now, though at least, get goods in their stores, they can travel and they can make consumer choices.

Perhaps we should learn from the Russians. Make peace with our enemies of true education reform by bribing them. My ideas of turning schools over to the “educrats” may not be perfect, but it might provide a means of fomenting what Lowell Gallaway and I have called war between the rent-seekers. Dividing the rank and file teachers from their union bosses. If we can offer teachers something tangible, perhaps they will embrace attempts to introduce into education the forces of the market and competitive capitalism that have made us the wealthiest land that the world has ever known. Thank you.

David Theroux

Thank you, Rich. Our next speaker is John Merrifield, who is a research fellow at the Independent Institute. He’s professor of economics at the University of Texas at San Antonio. He received his Ph.D. in economics from the University of Wyoming and has been a planning analyst at the Illinois Bureau of the Budget, and has taught at the University of Illinois and the University of Hawaii. He is the author of The School Choice Wars, as I mentioned, and also of a forthcoming monograph from the Institute called School Choices: True and False. His articles and reviews have appeared in many scholarly journals including Public Choice, Public Studies, Policy Study Reviews, Journal of Labor Research, Journal of Business Strategies and many others. I’m delighted to introduce Professor John Merrifield.

John Merrifield

I can’t remember who told me that Richard would be a tough act to follow, but I now see why I was told. Gosh, normally after another speaker the audience is getting restless. No problem with that here.

What I’m going to address, since we pretty much addressed the reasons for the problems, is: why aren’t we doing something about it? What’s the problem with the school choice debate? Why aren’t we winning the debate?

I guess the short answer is that we’ve dumbed it down. We’ve forgotten what Milton Friedman first said back in the ’50s and then again, in his famous book in the ’60s: we need competition. And we need competition bad enough that we have to give choice to everybody. We’ve got to turn the money over to the parents—not any additional money, just the existing money. And if we do that we get the competition, and that’s the first part of my talk today, which is about the school choice fallacies.

We seem to think, or so you would think if you listened to the debate, that if you give any choice to anybody, suddenly you have competition. Far from it. There are basic ingredients in a competitive system—for example, limited tax credits, vouchers for poor kids, vouchers for low performing school students, charter schools, all the things that you hear an awful lot about. Competition does not exist in any way, shape or form in these places. Limited rivalry is what I call it.

Competition requires some contestability of market share. It requires flexible prices. In other words, people have to be able to decide what to charge for their services.

The issue of price flexibility is perhaps the most neglected issue of all. Places like Milwaukee, Florida, they say that the schools if they take a voucher (which by the way only goes to a limited number of poor kids), it has to be for the full amount of the tuition. The schools are not allowed to charge more than that. It’s probably the reason why Milwaukee is kind of stuck at about 10%, even though the vouchers are there enough for 15% of the kids. Because the schools have to be able to out-compete, or the private schools have to be able to out-compete public schools that have twice as much money. So the kids are in effect told if you can’t make it in the public school, well, give them a try but you can only have half as much money. They have to be able to do better on about half as much money.

It’s pretty tough. It’s better than the current system which exists in most places, where if a private school wants to succeed they have to be able to do better against somebody that’s not charging anything at all. They have to compete against somebody giving away something, which is both a testament to the miracle that there are even private schools, and a testament to how bad the system must be that people will forsake something that they spent thousands of dollars a year for that’s free, no additional charge to go, and either home school, which is an enormous time cost, that individual, non-specialized parents can out-compete education specialists on their own at home with a computer, and that they would forsake this thing that they spent a lot of money on already.

So we need price flexibility. We need for businesses to be able to form schools and not have to compete against somebody who’s giving away their product. That’s when we’ll have competition. There are some other, less important, ingredients you’ll read about in my book. But those are the main ones.

We have to have contestability, the ability to enter the market on a fairly level playing field, and the ability of the producers to charge tuition—maybe not any more than the voucher, but they need to be free to charge more than that if they want to.

By the way, one other point that I want to make about why the schools are failing now: We need choice not just to generate competition, but we need choice in order to deal with the fact that we’re different. We need schools not to have a one-size-fits-all mentality. The idea of assigning everybody that lives in the same geographic area to the same school is a recipe for failure. And it’s no surprise that when we treat everybody like they’re the same, and they’re not, that we utterly fail to educate them.

We need to give them a chance, the teachers and the students alike, to sort themselves out according to their differing interest in things, and sometimes their different abilities to handle different subjects. I’m not talking about tracking. I’m talking about the fact that some kids are better in math than others and some kids are slower in reading than others. We need to group them according to those different abilities.

We also need to be able to group them according to different types of ways to teach kids. Some kids handle high-tech learning methods better than others do, some kids don’t handle that well at all. We’re not going to succeed ever if we have a one-size-fits-all mentality.

I know that comes from the common school myth that we’re supposed to teach everybody the same thing in approximately the same way. And I suppose that worked reasonably well when you had a one-room schoolhouse. But with our society, as diverse as it is, and all the different technologies available to deal with these differences, it’s a recipe for failure.

Let me get into some of the other fallacies. Again, the first one was that any amount of choice yields competition. That’s a huge fallacy, and that’s why I object not to the Milwaukee voucher program per se but to the idea that it’s an experiment, and the idea that what’s going on in Milwaukee will tell us that vouchers as choice is an answer to our fundamental problem. It’s not. All it is, is a rescue program. If we recognize that, I’m all for the Milwaukee program—let’s rescue as many kids as we can. But it’s not an experiment. It doesn’t tell us whether choice can reform a school system. It’s too small and it doesn’t allow price flexibility. It only allows a few kids to have choice and they have to be poor.

We need for everybody to be able to have a choice. If we do that somewhere, then we can call that an experiment. Let’s just not call it an experiment. Therein lies my objection to it.

One of the big fallacies is that we had this idea that only a few schools are bad. We think that if we just move to the suburbs, everything will be fine; it’s only bad in the inner city. Sadly, this is not true. This is one of the reasons that we have trouble passing voucher programs, such as Prop 38 and Prop 174, both of which I have mixed feelings about simply because the private school kids would have only gotten half as much money, same problem that I alluded to earlier.

But it’s one of the reasons that we have trouble passing those kinds of things, because people are widely under the illusion that it’s only everybody else’s school that’s broken. “Give me some school reform that leaves my school alone but fixes everybody else’s school.”

If you’re going to transform the school system—and by that I don’t mean just totally privatize it, which would be all right for me—but I mean, transform it in the sense of incentives and accountability and not one-size fits all—if we’re going to do that, then we need to recognize that virtually all the schools are bad. Some are better than others, there’s no question about that. We rank them. We say, well, my kid goes to the best-ranked school in town. Well, good. You have the best item on the menu. But have you ever been to a restaurant where the best item on the menu was still pretty bad. Well, that may be the case. Your kid may be in the best school in the area, but it still may be not a very good school, given what should be accomplished with kids of a certain age. It may not be doing it.

Again, if the school is not specialized, inherently it will under perform. We’re all specialists in something. That’s why we’re so productive as a society. If schools would specialize, that alone would much increase their productivity.

Another similar fallacy is that only low-income kids need help. Again, this is similar to the fallacy that only a few schools are bad. No, the system is distorted for all. People have this false sense of security that if only they get out of the inner city, or they move to a private school, things would be better. The way that we run the system—it’s free if you go to a government run school, but you’ve got to pay twice otherwise—changes the whole system. It makes it bad for everybody other than, I suppose, the super rich that can send their kids to the $7,000 or $8,000 or more per year prep school. But most private schools are $2,000 or $3,000.

Those offerings are diminished by the fact that they’re competing against somebody free, that is, as we economists say, free at the margin. They’re not free. You know that from paying your school taxes. But they’re free in the sense that you don’t have to pay anything extra to send their kids there. And you don’t get any money back if you don’t. You’re not going to get a refund on your school taxes for home schooling or for sending them to a private school.

Let me go back to the “few schools are bad” notion again. I was reading, as I was starting to work on my book, about some questions that are answered by, I think, 11th graders. It was what I regard as a simple math question: How much do you owe on a loan after a year? And you’re given the interest rate and the principal. Ninety-four percent of the kids couldn’t answer it. How many good schools can there be if you can’t say on a $1,000 loan at 10% interest that you owe $1,100 at the end of a year? So okay, again, you may be going to the best school in town and maybe the second or third best, but it still may not be very good unless all the kids in that school are in that 6%, I kind of doubt it.

So we need to face that piece of music or we’re never going to change the system. We’re never going to change it as long as people figure, kind of like Lake Wobegone, that all our kids are above average, all of them are wonderful, our schools are great, only the rest of the country suffers from this decay that we keep reading about, and these terrible disasters, some of which you’ve probably seen on Jay Leno’s “Jay Walking” where he answers simple questions and college students don’t know the answers. I don’t know how much he edits that. I hope an awful lot. If not, it maybe too late to win an election of any kind on this issue. People may not understand the most basic economic arguments. I hope not.

Another fallacy: It’s widely thought that if we give vouchers that pay the full cost of private tuition, that’s good enough. That with full-tuition vouchers, we eliminate the financial penalties, then we have competition. Now as I alluded to earlier, if you give vouchers out that cover these really cheap private schools, they’re still really cheap private schools, and the fact that they’re more efficient is all the more reason to give them at least equal money, if not more. Now that was the flaw in Prop 174 and Prop 38—that we were going to make the more efficient operations have to prove themselves on half the money. Hey, if they’re more efficient, let’s give them twice the money, not half the money, right? In what system do we give the least efficient operators twice as much money as the more efficient ones? No others that I know of.

Now I know what that was in there. It’s to try to appease some members of the system. That’s always a failure. What is it Winston Churchill said, “the appeaser is the one who hopes the crocodile will eat him last?” I think that’s right. There’s no point in appeasing teacher unions or some of these other groups. Again, I’d want to draw a sharp distinction between the teachers union and the teachers. Chapter 14 of my book is about how we can win over the teachers.

There’s no hope of winning over the teachers unions. They have every reason in the world to fight to the death. I mean, we’re talking about the officials in the unions against school choice, because it’s the end of them if this happens. But the teachers have every reason, unless they’re active in the union, to be all for school choice, because it will allow them to specialize and to compete for higher salaries and to do a whole bunch of other things that most of us think have something to do with being a professional. Things that I can do as a professor at a college—pick my textbooks, have something to say about curriculum, and so on—that current teachers don’t have much say in.

Another biggie, I call it the static world fallacy. Choice will occur from the existing school menu. I see this countless times in reading. The thought is that if we have a voucher system, it wouldn’t do any good because there are only a couple thousand spaces in private schools. Well, that may be a relevant argument against a minimal voucher system for only a few kids, or a little tiny voucher, but that’s no argument at all against a real Friedman-like voucher system in which each child would get the same amount, whether they attend a public school or a private school because that would change the menu of schools. The current menu is no indication whatsoever of what a real competitive system would look like. And we shouldn’t use the existing menu either to define what we think the choices are or how many will be able to exercise choice for any period of time.

Sure, it will be a few years until the private sector significantly expands. And in the first few years the private schools are going to exercise some additional discretion when they pick and chose among the flood of applicants that they will suddenly get. And there will be a lot of finger-pointing that says, “Look, we showed you. We said that these private schools were going to discriminate and cream and do all of that stuff.” And some private schools will at first. But given the profit incentive, there will either be a lot of privatization of existing buildings, or sharing of buildings, or new buildings. And it won’t take very long, because $5,000 or $6,000 per student times any size classroom is an awful lot more than they pay a teacher. There’s an awful lot of profit potential out there on the given spending. And there will be private spending if we allow, as we need to, schools to charge whatever they want above the voucher amount, if they want. And then there will be private money in addition to the public money that’s already there.

So current public and private differences are not that important. They suggest a few things that we can look for, but not very many. We need to transform the system. We don’t need a program to move children within the existing system. We need a change in the system. We need to overhaul the menu, not move from one menu item to the other one.

Therein lies a problem—the big problem—the school choice debate. It’s all thought of in terms of moving from one item on the menu to another one, rather than changing the menu, which is what we really need to do.

There’s some thinking out there that vouchers, at least the universal vouchers, where everybody can get them, will only help the rich. Quite the contrary. Even if we have the minimal vouchers that currently are targeted at poor people, they are only a couple of thousand dollars. Even if we have that, we can see from the private voucher programs that poor people stand in line to get these little vouchers that they have to supplement. With most of the privately funded vouchers, you have to come up with a couple of thousand dollars of your own and you have to be poor to qualify.

So even if we have the wrong kind of voucher program, namely much less than what the public schools are funded at, even that would benefit the poor more than the rich. The rich have halfway decent choices, especially the super rich. It’s the poor kids that have the abysmal, terrible choices. And poor families have already shown a huge willingness to sacrifice, to dig deep, to find a few extra dollars to move within the existing system, which if you read some of the Peterson-Greene stuff is not all that exciting. I don’t mean the work is not exciting. I mean moving within the existing system.

If you look at some of the schools in Milwaukee that the kids moved to, especially early in the ’90s when the program started, you would not get goosebumps to read about the shape that these private schools are in. Yet the plain fact of the matter is that the parents were aware of that and they were desperate to get out of their six, seven, eight, nine thousand dollar a year per student public school and into these, pretty frightening-sounding from the description in Peterson and Greene, private schools.

As school choice advocates, I don’t think we want to hold that out as the alternative to what we now have. We can do a lot better. And we will do a lot better if only we have a level playing field where all the kids get the same amount of money.

Another fallacy: Every school should accept any child. This goes back to my original point about specialization. You can’t have specialization, you can’t have schools doing different things, if you have a mantra that every school has to accept every applicant. Schools have to have the right to say, no, you’re not gifted and talented, sorry. Mom and dad won’t want to hear that. Some of them are living delusions of grandeur, that Johnny and Susie has never shown any brilliance before, but bye-golly, my kids got to be gifted and talented, and they’re going to go to a gifted and talented school. This may not be right. The school may have to say, look, you’re going to slow everybody else down. We can’t let you in.

Now that’s seen as discrimination quite often. It’s not discrimination. It’s saying that we have a large body of customers we intend to serve well, and we’re not going to let one other customer get in the way of serving all these other. What we need is a specialized system, in which there are some outstanding choices for each child. Not that every choice is halfway decent for every child, which is what we almost have now.

If you had specialized schools, you couldn’t have attendance areas, right? If a school was specialized in something, you couldn’t assign kids to it. Parents wouldn’t tolerate that. So we what are called comprehensively uniform schools in which they claim to be able to do every thing badly—they don’t say badly. But that’s what happens.

I use restaurant analogies all the time. (I don’t know why that is; I eat a lot. Thank goodness it doesn’t show too much.) But have you ever been to a good restaurant that had about ten different specialties? Now, there may be some out there, but the vast majority of good restaurants that I know of have one specialty. The mega-restaurants, and I can’t even think of any that have Japanese, Chinese, Greek, Mexican, Italian, all of those on the same menu: How good are they? Not very good.

Well, that’s what we have now: gigantic schools that try to handle the fact that kids are different by having tons of different offerings to send kids off into different directions. But what we need are smaller schools where parents get to pick and choose which schools their kids go to, with each school specializing in something. That means that some schools will be shunned by some but adored by others.

Another little aside: I was reading a few months ago a badly titled but well-written book by Helen Ladd and Ted Fisk, When Schools Compete: A Cautionary Tale. It’s about New Zealand schools. New Zealand has public school choice, universal charter schools, if you will. And they made this mistake that I was alluding to earlier in my presentation, about saying, well, you can choose, so there must be competition there. There are no prices, there are no profits and the government owns all the schools. Yet they claim that there’s competition, and they claim that since everybody wants to be in the best schools, since they’re all the same and run by the government, there’s the same problem. They’re comprehensively uniform. They’re not specialized to any great extent. They can’t because of politics.

That’s thought of now by some people as what competition would do here. Many think that everybody would stampede to the good schools and abandon the bad ones. But you wouldn’t have that if you had a specialized system. Because you’d have the stampeding going in both directions. If the school you’d been going to specialize in something that you couldn’t stand, you’d leave. But maybe they’re going to specialize in something that somebody likes, so people that were somewhere else are going to go there. So instead of having this one-way stampede from the not-so-good to the better, like they have in New Zealand (which they predicted would happen anywhere where there is competition), just limited rivalry is all that’s going on there. Instead you have cross traffic. The same school that some people are abandoning because they don’t like what they’re doing there now because they’re specialized in something that doesn’t work for their kid. Other people are flocking there.

That’s what we need. We don’t need a school system in which every school is okay for every kid. We need a school system that has a great school for every kid, or maybe a couple. This means most of the schools are not going to be okay for your kid. Fine. Leave. Again, you can locate near the best one. If you have a large family, you might have some transportation problems. But remember, schools will be smaller too. So you may be near several.

Currently, schools are much too big. If you’re located near one, you’re probably far from many others. So we don’t want to have a system where we think that schools discriminate if they don’t accept every child, because if you force that on them then they can’t specialize.

Another problem: It’s widely written that the Supreme Court or the state supreme courts will decide whether vouchers are constitutional. Well, that comes from this static-rule fallacy that I was talking about earlier. And the thought is that all the private schools are religious now, or almost all, so if we don’t allow vouchers at religious schools, why have vouchers? If the Supreme Court says the First Amendment says we can’t have vouchers for sectarian schools, well then, why have vouchers?

Well, that’s a huge fallacy because I think it would be a mistake for them to rule that. I’m not a legal scholar by any stretch, but I think it would be a mistake in the sense of freedom and the people’s ability to choose. And just because if you pay taxes and you like a sectarian school, you shouldn’t be discriminated against, right? You should have your voucher or tax credit or whatever like anyone else. But in case they do that, we don’t want to give up all hope. Just because the non-sectarian, secular part of the private school sector, is microscopic now, doesn}t mean it can’t grow. And if you had a competitive education industry and funded all children the same out of the common pool, our school taxes, the secular part of the private school sector would explode in size.

So again, I’m not advocating that we give up on church-run schools having vouchers used there—I don’t know what the Supreme Court is going to do. And many states have a Blaine amendment, which I’ve been told by several people means that they can’t have vouchers in their state. Back in the 1800s, James Blaine tried to get into the U.S. Constitution a bar on sectarian schools getting any government money, even indirectly. He failed, but he did succeed at the state level in several places.

So a Blain amendment is not a reason a state can’t have a competitive education industry through vouchers or tax credits or direct payment or any other method. It’s just a reason until the amendment’s repealed, if it can be, to not have the sectarian schools in a voucher program. But you can still have a competitive education industry, you’ll just have to discriminate against the parents that feel strongly that their children should have a religious education.

Another fallacy: Contracting out is real privatization. Far from it. Again, contracting out a school to be managed by a private company often means there’s still no control over prices. There’s still not really any free entry. It’s still regulated. And you’re beholden to the public school authorities who can yank your contract at any time. Some have. So you still have to be politically sensitive. Contracting out is not anywhere near real privatization. What Richard Vedder suggested is, I think, the real McCoy, and we need something like that.

And the last, but definitely not least, fallacy: School choice is a gamble. Now usually when you gamble, you have something at risk. [Laughter] Now please tell me what it is you would miss out of the current system if we were to have freedom to take your share of the education dollars wherever you want. Again, I’m not advocating that the government cease running schools. Personally, I feel that would be wonderful if that happened. But I’m not advocating it. All I believe is that parents should have the right to take their kid to whichever school. If they like the one that the government runs, that’s fine. They can take their share there. And if the school manages to attract enough dollars to stay in business, that’s super.

So this idea that we need to be cautious, go slow, and these so-called experiments where a few kids get vouchers, and then we compare their test scores to somebody else to supposedly tells us whether the vouchers work—we don’t need to be cautious. Competition tried and true has worked, not only throughout our economy all the time, but has worked through out history. When Richard Vedder cited two examples, our country through about 1840 and England about the same period and other periods. Read Market Education by Andrew Coulson [Editor’s note: Also see transcript of Independent Policy Forum with Andrew Coulson et al., “What Should Be Done with America’s Schools?”], a wonderful book that describes many other episodes where there was no government schooling at all, and kids got better educated than they do now with all our school taxes and government schools. How did the poor kids get? Charity.

Again, I know that’s one of the reasons that I’m not going to go out and campaign for that. We’re going to put them at the mercy of charity? Well, I’m not going to go campaign for that right now. But the fact of the matter is, it worked better than our current system. Charity-run schools have worked better—kids have had a higher degree of literacy than they have now.

So school choice is not a gamble. Continuation of the status quo is truly frightening. So the certainties associated with that are much worse than any uncertainties, any downsides that someone might think could happen if we introduced competition. So there’s a minimum step we need and that’s competition. Beyond there, we can quibble over it. But we need to have those minimum conditions and nothing less will do, and we need it done in a hurry for reasons we see all around us all the time. It may be too late to win this debate. I hope not. But we’ve got to win a vote, which means you’ve got to be able to make the argument a couple of seconds long on a billboard or a radio commercial. And I’m not sure that’s possible. I hate to end on a pessimistic note. I hope it’s still possible. And I’m going to do everything I can in my power to make it possible. [Applause]

David Theroux

So we have time for some questions. Two points I might make before we start. Carl has the microphone, and if you wait for the microphone and talk into it. Hold it horizontally. That will help with the acoustics.

I just want to mention that for those of you who did not know, about a year and a half ago we held one of a policy forum with Andrew Coulson and featured his book with two other speakers. If you’re interested that information is on our Web site and you can access it.

The second thing is the mention of the idea of having private vouchers, which is a program we operate also here called the Independent Scholarship Fund. This particular program is aimed at students in Alameda and Contra Costa Counties, and provides up to $1,500 per child to pick the school of their choice. We’re now working with about 100 schools and we provide about 200 scholarships currently. We’re hoping to greatly increase that, but the number of applicants is about five times or more. There’s a huge demand for these kinds of options.

So let’s start with questions. How about the gentleman right there?

Audience Member 1

Yes, I was curious. How do you explain the failure of public education and reconcile that with the dynamics of our economy? We have the most dynamic economy in the world, I think, and it’s also technologically the most dynamic. I’m a very big fan of privatization, but I just don’t know in my mind what is going on here? Are the kids learning something else in our schools that we can’t account for?

John Merrifield

You don’t need that many chiefs. It’s the old chiefs and Indians story, and we don’t have many chiefs, and we import a heck of a lot of them. Plus private schools, home schooling, there’s incredible competition for home-schooled kids to go to colleges, because they’re so much more prepared. That’s a large part of the story.

And then there’s the Abraham Lincoln explanation, namely that you can excel without an education, or formal one, as many people do. I went to public school. So it’s not like it’s a death sentence. But there are people who succeed in spite of any system, and some succeed by escaping it, but some succeed even though they’re in it. And so that’s enough to make our economy work pretty well, although I’m not sure we can keep stealing the brains from the rest of the world as a major component of the success that you described.

David Theroux

Do you want to handle some of that?

Richard Vedder

Well, picking up on that very last point gets to another topic that David and I have a common interest in: immigration. One thing that keeps the economy going, that sort of makes up for some of the failures of the educational system, is that we are able to import a significant number of very talented people from other parts of the world. And I, for one, support that. But it’s a sort of safety valve that gives us some protection against the inadequacy of the educational system.

There is a literature out there, and how accurate it is, who knows. John Bishop at Cornell for example, has argued that our productivity slowdown in America that happened after about 1970 was at least partly caused by the decline in the quality of American schooling. And that as the economy becomes more a skill-based economy, based more on mental effort and less on physical skills, the importance of schooling becomes greater. And home schooling is a safety valve as John mentioned. Immigration is another safety valve. We’re looking for ways to get around the system of which these are two; home schooling and immigration are two good examples.

Audience Member 2

Richard you didn’t mention charter schools at all.

Richard Vedder


Audience Member 2

But in the context of the environment in which we find ourselves? I mean, the political environment and the evidence that we’ve had about the public’s inability to understand and buy into anything that resembles choice, like the voucher initiatives that have failed so miserably, not only in California but also in Michigan. And the tremendous amount of education it’s going to take to get through to people who don’t understand economics at all, much less understand anything you said tonight. [Laughter]

It seems to me just from the point of view of me putting the camel’s nose under the tent, that if you go the charter route, and I have just read today something by Paul Hill about charter districts, not charter schools, but charter districts, where the whole district, because it’s so dismal, is made into a charter, and exactly what you were talking about John, which is the choice of curriculum is made available. So that you have a Montessori school, you have a traditional E.D. Hirsh school, you have any number of choices that are charters within a district where parents can chose to send their kid to the best school for them. The ideal thing would be if every school in this country had a curriculum that was appropriate for any child in this country.

David Theroux

Please tell us your question for either of them.

Audience Member 2

I’d like to know how they respond—what they have to say about charters in that context.

John Merrifield

Well, it certainly is a system that’s far superior to our own, but I’ll quote from book a gentleman that I have included in the dedication, that charters are a detour and a devastatingly bad one. That doesn’t mean that they’re not better than what we have. And it may turn out that they’re the only game in town, and that‘s as far as we’re going to get. But they lack those ingredients that we need for competition to create a dynamic of continuous, relentless improvement. They may make some initial improvements, but then they may be stuck there. That’s what I’d like to avoid. But certainly, I have an open mind on that, again, because it may be the only game in town. We may need to ride that horse as far as it’s going to go, because there may not be another horse.

Richard Vedder

That gets to the issue of the sort of the political strategy, and I agree exactly with John, charter schools are a far inferior system than the model that we’re talking about. For example, prices are critical, as John mentioned. The fact that schools can charge different prices is critical to mention. That’s not even involved at all. But at the same time, I agree with the thrust of your question.

I spend a lot of time dealing with state legislators. I do a lot of speaking to legislative groups, and when push comes to shove in the short run I’d rather have a charter school system than not have a charter school system. So I’m asked well, what do you think about liberalizing charter schools? My answer is I’m all for it, because going back to John’s last point, what risk is there in tinkering with the system? The current system—you can’t get any worse. You can’t go downhill. Anything you do is going to be equal or better than what we have. And what Lisa Keegan and the Superintendent of Public Instruction is doing in Arizona with charter schools I think is a step forward and I support it and I’d like to see it.

But it does take away the impetus to truly call it radical reform that brings about true competition and true diversity, so I agree with your comment that you do get away from the one-size-fits-all mode when you have charter.

Audience Member 2

Just one final comment. An ideal charter law is quite some distance away from the vast majority of states. A leader of a charter group, I can’t remember the name of the group, said she had yet to see a regulation that charters are really exempt from.

Audience Member 2

If you want to get a decent education you have to start with decent teachers. On each of your plans what happens to teachers’ salaries? That’s one question I have. And the other is Special-Ed kids. Kids who have special needs: sometimes the costs of their services approach six figures each. What happens to those kids under each of your models? And what do the parents do with those kids?

John Merrifield

Well, first of all, those kids need specialized services, not a little enclave in a school where they are part of the time, and then the rest of the time they’re put in with other kids to pretend that they really aren’t that different from them—the mainstreaming. First of all, there are federal funds. My book says that they should continue to benefit from those federal funds as supplements to the vouchers that everybody gets. And as a safety valve both public and private should provide money to supplement those vouchers for the truly special-needs kid.

Now the actual number of special-needs kids is way overblown by the current system. Because if you have a giant school, there will be a lot of kids that are going to be far from the so-called average or mainstream kid, and some of them are going to be taught by methods that just don’t work for them. There’s nothing wrong with them; a different teaching method for them would work fine. But they’ll be labeled “special ed,” and medicated in some cases, when all they need is a different environmental, methodology, subject matter—some different arrangement under which they could thrive. So the number of special-ed kids would drastically decrease. They would be handled better by educational specialization and the remainder should be helped by the federal funds already targeted for them, and they should have larger vouchers, or tax credits or whatever.

Richard Vedder

Now, you can give large vouchers to special-ed kids. If you gave say a $5,000 voucher to an ordinary student, you could give a $30,000 one to a special-ed kid. But you get into some problems with that, which we have right now. I wrote a story for the Wall Street Journal that got me more trouble than anything I’ve ever written, called America the Disabled.

Right now there are certain incentives to being labeled disabled. If you’re learning disabled, called LD, you can have all kinds of special rights. You can have individual meetings. And set up individual—what do they call it, Karen?—IEPs. IEPs. You have a right to an IEP. And I can get an IEP. All I have to do is have a kid who’s learning disabled. So the number of students classified as Special-Ed has soared relative to the total population for this reason.

One thing on the competition teachers salary. Mr. Hall in the back and I wrote an article for the Journal of Labor Research, a journal John writes for. We found that teachers’ salaries, public school teacher salaries, are enhanced by greater competition from private schools, simply because there are more people out there looking for the teachers’ services. There’s more competition for the teachers’ services. So if anything, it tends to push salaries up. So if I were trying to start wars with the teacher union, and I’m all for it, by the way. That would be one thing I would be doing with the rank and file. Your leadership is trying to deprive you of opportunities to teach in other types of institutions, which may be preferable, not only for money reasons but for other reasons as well.

David Theroux

Right over here.

Audience Member 3

I remember being a consumer of public school services in the 1950s, and a very satisfied consumer, to the extent that when I moved into the Ivy League at least for my freshman year I felt that the quality of my education had gone down. Now when it came time to chose for my own son where to put him in school, I naturally thought, especially now that I’m living in a somewhat richer neighborhood than I grew up in, that I would put my son into a public school from which he would derive an education at least equal, if not superior, to the one that I received.

I was, as you probably know, severely disappointed. And in fact I’ve noticed a lot of people who are staunch believers in public school education tend to think about, if they’re my age, their own public school education. And perhaps they haven’t really looked into that which their own children are receiving. Something happened between the 1950s and today. I mean, as a free-market advocate I look at my public school education, and I can’t figure out how it was as good as it was, and that’s actually one question I still have for myself. But I think the more interesting question is. what happened to public school education?

John Merrifield

Oh, I can address that in general form. First of all government by definition is politics, and politics is about passing rules, and so the number of rules has increased. And that diminishes the degree to which people can make choices, both as providers and as consumers.

In addition to that there’s just so much more politics involved in so many of the decisions now. If you look at another great book, Public Education: An Autopsy, by Myron Lieberman, he talks, and it’s true, you can read in there about any number of interest groups that have veto power over just about anything and what that’s done to things like curriculum and textbooks. All the hoops that they have to jump through and what’s that done to the content, and as a result, you have these wishy-washy materials that are merely what you can get past the veto groups. So instead of having historically accurate content, for example, in a history book, you have to put a little bit of something in there for everybody to make them happy. It totally distorts history, but it throws a bone to everybody. The short of it is, it’s a progressive disease, and it’s progressing more rapidly now because there are so many more factions involved in the various parts of the process.

Richard Vedder

It’s a multi-faceted thing. I incidentally graduated from schools in the ’50s, and of the 30 students in my elementary sixth grade class, 12 went on to earn Ph.D.s. And I went to a public school. So I have the same fond feelings you did. That’s why I ran for a public school board and almost committed suicide shortly after, thinking I was going to help people. [Laughter]

But you can’t underestimate the debilitating effects that so-called education colleges and all have too. There is a strong anti-intellectualism as Diane Ravitch and others have pointed out, among those people who do most of the teaching of teachers. And it’s just another factor to this—a self-esteem movement that believes the purpose of school isn’t to teach facts. “It’s wrong to teach the state capitals. Why should kids learn the names of the state capitals by rote memory? That’s silly. They can look it up on the Internet.” I mean, this is the mentality that goes through. I think it’s useful to learn the multiplication tables. I think it’s useful to know that the capital of California is Sacramento.

David Theroux

It is? Let me write that down.

Richard Vedder

[Laughter] I destroyed my own argument. I’ll shut up.

David Theroux

This gentleman right here.

Audience Member 4

Getting back to the question that Gisele Huff asked earlier. How do we get the message out? You mentioned earlier that the message has been dumbed down. What is a good way of getting it out to the voters at large? Is it something like: If we build it, they will come? And by virtue of it working, more people will get involved and there will be a critical mass?

John Merrifield

Well, I’m certainly not a expert on making political messages, but if it were up to me, my starting part would just be a non-discrimination argument. I mean, that seems to be a big seller that wins court cases and it moves legislation. Let’s treat everybody the same as a starting point. If their parents want a deluxe product, let them spend their money on that. But a starting point should be: all children should be treated equally by their government. And if we do that, we’re at least half way there.

Richard Vedder

You raise an interesting political question. A thought occurs to me. There may be a threshold level, politically. Right now we have 14%, 15% of our kids not publicly educated in the United States. It was about 11% 10 years ago. It’s really not risen much. It hasn’t changed much, but it’s going up some because of home schooling, because those are non-publicly educated, and that’s now more than 3% of the total. It seems to me that if you get a large enough mass of voters that are not part of the public school establishment and another mass of senior citizens who are sort of disenchanted with the schools for a variety of reasons, thinking of them the way they did when they were younger people, and so on, maybe you will get this critical mass that leads to the voters simply one way or the other saying no.

And at the moment that’s happening all over, and the things that are saving the public schools right now are the courts. They’re resorting to the courts because the normal political process is not providing enough bucks in many states. So this equalization movement that’s going on all over the country is resorting to the courts to get what they can’t get politically. But I don’t know if that’s a sustainable long-term strategy.

Audience Member 5

I’d like to ask a question about GAT education. I teach GAT mathematics in Union City and I notice that—

David Theroux

You have to define that first.

Audience Member 5

Gifted and Talented—although, by the time the children reach me, most of their interest in asking questions about mathematics has really been beaten out of them. I mean, if our Silicon Valley depended upon their ability to do creative work, we would be in big trouble. Which makes wonder: when you’re saying we don’t need that many chiefs, will it continue in that direction? That’s one. And the other one is: if we specialize, won’t we naturally bring out the gifts that kids have in them already that aren’t recognized by the current program?

John Merrifield

A resounding yes.

Richard Vedder

Yes. I agree with that. However, I do think that whole area of gifted and talented is an interesting area, because although a lot of schools play lip service to the area, the whole notion that the common school, that we’re all to be treated equal, sort of runs against the notion of gifted and talented. And the favorite word among educrats is elitism. I’m sick of that word. I love elitism. I’m for it. We should all rejoice in elitism. And sometimes this hurts programs like this politically, although I don’t know how it is here in California. In Ohio it’s a problem. My wife was a talented and gifted coordinator for—I think she lasted 62 days because of the politics.

Audience Member 5

It exists in name only in a lot of places.

Audience Member 6

A lot of your ideas are very sympathetic, and I’d just thought we’d bring it down to a practical problem. My daughter teaches 31 5th graders in an inner city in Oakland, and in it, one-third of them are Chinese-speaking, one third are Spanish-speaking and one-third are deprived kids, many of whose parents aren’t together, some of them live with their grandparents and some live day to day in different communities. What are the conditions under which your plans would deal with each of those 31 kids? Because I think there’s something at the bottom of our feelings of skepticism about your plan, feelings that there’d be some kids that would be really left out. I’m sure you’ve thought about the conditions. I’d just love to have you articulate them.

John Merrifield

Well, first it’s a mistake to force them all to be in the same classroom, because they have different issues to be addressed, and specialization is the first part of my proposal. Students need to be where the teachers are specialized. Students would not get individual attention, but they would have enough similarities so that you could probably have a school for each one of the different conditions that you generally described. That would be the first part of it. And the other part is to create the ability to move, which would create the other part of the competition hammer, namely that you could lose your customers if you don’t address them.

You see, now they’re captives. Their needs are not being addressed; the issues that plague them are ignored. “Captives”—that’s not the right word for most of them but for some of them that’s correct. But their issues need to be addressed not in a way that says, “You all need to be the same, so we’re all going to teach you the same and make you the same, one way or the other,” which is the current mindset. It needs to be, “You’re all different and so we’re going to deal with you with that reality in mind.” I know that’s an overly simplistic answer, but that’s what you have to do. And there are going to be some significant problems from the fact is that we can’t all start them off back at six years old.

Richard Vedder

I don’t disagree with everything John said, but I do agree with public school teachers who say that the students today in many cases are coming from more disadvantaged backgrounds than a generation ago, not in the sense of income, incomes are higher. But more broken families. And families do make a difference. But we shouldn’t let that be an excuse not to try new experiments, a new paradigm, because the old paradigm isn’t working. The fact is the people who are most disadvantaged by the current system are those coming from these very dysfunctional family backgrounds, or untraditional family backgrounds, broken families and so on.

As to the immigrant experience, I’m thinking back on the early 20th century New York City, of all of the Italians and Hungarians and so forth who came in and were thrust into classrooms with no bilingual education or anything, and it took them awhile and there was disadvantage, and it was tough. But by gosh, they learned. There’s no reason it can’t happen.

David Theroux

Two more questions.

Richard Vedder

He’s an immigrant by the way, he’s from Germany.

David Theroux

The one in front.

Audience Member 6

Professor Vedder?

Richard Vedder


Audience Member 6

In the 19th century when public schooling was started in this country, public money was to be used for the purpose of education, but they also made the calamitous decision to set up public structures, public apparatus to carry out these, and the teachers became public employees, subject to public authority. In the imaginary school system that you described just now, would there be a break in the authority of the school boards over these teachers? You described it as an incorporation.

Richard Vedder

Yes, in my ideal in the long run there would be no school board. In the long run, in fact, if I were czar, the constitutional amendment on schooling would say that education of children is a responsibility of parents. Period. And might go on and say a little more. [Laughter]. Mostly like government can not spend money. I really think that in a pure world we’d be better off having no government involvement whatsoever.

David Theroux

Thank you. The lady back there.

Audience Member 7

I think the problem that I see with my friends and such is that those children whose parents don’t give a damn are the kids who need it the most. But I think there has to be a message that those children will be taken care of, and I think that would solve a lot of it. But leaving it up to the parents is not going to do it for those kids, and I think every one is quite aware of that.

John Merrifield

Well, a lot of parents will continue to send their children to the nearest school. And just like we all free-ride on careful consumers in various things we buy, many parents will free-ride on other careful parent consumers, just like when you walk down the grocery store shelf and pick up things. You get good products even if you don’t read the label—because other people do.

Richard Vedder

That’s why they’re there.

John Merrifield

And so, you get a safe car because some people pay attention to that even if you don’t think about it very much. So it doesn’t take a very large number of discriminating consumers to create a competitive and a pretty good system for everybody.

Richard Vedder

I agree.

David Theroux

I want to thank both of our speakers tonight, Richard Vedder and John Merrifield for their talk. [Applause] This is obviously a huge issue and there’s a lot that needs to be done and I strongly encourage you to get a copy of each of their books, Can Teachers Own Their Own Schools? and The School Choice Wars,because they’re critically looking at ways to make a real difference and that is what’s needed. And to be able to advance this kind of thinking is what’s going to make the difference. So if you’re interested, there are copies upstairs. Both of them would be delighted to autograph copies for you, if you so choose. I also want to thank all of you for joining with us and making our program tonight so successful. Copies of John’s paper are right here if you’re interested in getting a copy. And thank you all for joining with us. We hope to see you again in our next program. Good night.


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