Sunday, January 28, 2007

Food Stamps

What constitutes an adequate K-12 education? How is it funded?

Those are the key questions of our education debate in Ohio these days. However, there is another buried assumption that I think merits discussion as well:

Should there even be such as thing as public schools - that is, school systems which are funded by taxes, managed by elected officials, and which have near exclusive rights to provide service to assigned geographic areas?

My answer to that question would be "NO!"

I have long been a proponent of a voucher system as envisioned many years ago by Milton Friedman. It works this way:
  • Government, at the appropriate level (local, state, national), collects taxes from its citizens and issues every single child in America an education voucher.
  • The child can take that voucher to any accredited K-12 school, and have it pay 100% of the basic tuition.
  • Schools are therefore funded entirely by what they receive in the way of vouchers, which can be redeemed for cash from the government.

In today's public school system, taxes are collected and paid directly to the taxpayers' local school district. The only way a student can make use of that funding is to go to the local public school. To a great degree, the public school has a government license to be the exclusive service provider to their school district (I acknowlege that there have long been private schools, and that there are some experiements with so-called 'charter schools', but these serve a minority of all students).

If this kind of system works so well, why don't we use it for food distribution? Instead of taking your own cash and going to the supermarket of your choice, everyone would be issued food coupons that could be used only at the government-operated commissary in your local community. You could choose not to use the coupons, and go to a private supermarket and pay cash, but you would be paying for the food coupons anyway. It would be hard for most to pay cash for food at the private supermarket when it seems free at the public commissary.

That is, of course, not what we do. Consumers take their cash and go to the supermarket of their own choice. Supermarkets compete with each other by offering choices in terms of variety, quality, convenience and price. And for those people in our society who cannot afford adequate food, we give them vouchers - called food stamps - which they can spend anywhere they like. The government sticks to the task of making sure everyone can buy food, and the food industry takes care of putting food on the shelves.

Why not the same thing with schools? In fact, rather than giving vouchers to everyone, let's give vouchers only to those who need the financial assistance. Everyone else would have to get out their checkbooks and write a tuition check every semester. I bet that would make folks more attentive to how much value they get for their education dollars. And it would make the education community be more responsive to their customers.

Well run school systems, if privitized, might thrive in this environment and even grow to operate schools across many communities. One would guess that the economies of scale might give larger school systems the opportunity to offer a wider variety of programs for the tuition dollar. But there might also be single-building schools that thrive because they avoid all the overhead of a larger system.

Badly run schools would presumably fail to attract students, and cease to exist. Perhaps someone else would buy the building(s) and start a new school. If the new operators perform well, they might succeed where their predecessor failed.

Because the performance of a school system is largely defined by the performance of its teachers, school administrators would be encouraged to pay really good teachers a premium salary to keep them from jumping ship. Similarly, ineffective teachers would be fired to make room for a new star. A school system which competes for students could not afford poor-performing teachers (or administrators for that matter).

Why is it that for college, we let kids and their parents have free choice where to attend school, but not for K-12? Do we suddenly become smarter consumers of educational services when our kids graduate from high school?

Yes, there are a lot of details to be worked out before we could convert wholesale to a voucher system (which I think I would prefer to call a "Free to Choose" school system in honor of Professor Friedman). But it can be done, and I believe the benefits make it worth the pain.

Or we can get rid of supermarkets. Seems like we should pick the same model for both.


  1. Hi Paul - I love how you're taking time to flesh out so much about education, even if I don't agree with all your positions. :)

    I did finally respond to the thorough comment you left on my blog and apologize profusely for taking so much time to do so.

    I'm not a fan of vouchers but I'm far past my bedtime right now. I hope to write more about this point at some time in the future but I would say that it boils down to me not having the trust that it could work.


  2. Jill:

    No question that a voucher program would have a number of details to be worked out, and would require ongoing government intervetion. However, I believe that intervention should be primarily in the form of school licensing, so that not just any yahoo can open a school and use it to capture voucher money ("hey kids, come here and we won't bother with all that books stuff, we'll just play on the computers all day').

    But it would be naive to think there isn't substantial corruption involved in the current system. Stop by my school website sometime and see how our school system is used as a pawn by the local mayor.

  3. Paul:

    Those that benefit from the broken system systematically confuse voters with circular logic and red herring. Your brilliant food voucher analogy clears away all of that nonsense.

    However, one thing puzzles me... words like "a number of details to be worked out" and talk of required government "intervention" (implied new interventions) would lead one to believe that we don't already have a good working model for a privatized education system. The truth is quite to the contrary; about 10% education is done by private schools, they are achieving better results at a better cost than that of public education. We need only to break-free of the current self-serving educational establishment to let this happen on a broader scale. No new laws or licensing required.

    Perhaps the only thing I can think of that might be an issue… is transportation of rural children. To this end, I’d be supportive of public funding of transportation (via private companies winning the business via annual bidding) for these hard to reach students.


    1. Thanks for your comment Bob.

      A "School Stamp" system - analogous to the Food Stamp system - would have a number of parameters to be worked out, including the most important one - the relationship between ability to pay, and the size of the voucher.

      It strikes me that the mechanism used for the "Free Application for Federal Student Aid" (FAFSA) is a pretty good model, as the algorithm incorporates not only income, but net worth. That is apparently a concern with the Food Stamp program - that folks with a high net worth can qualify for Food Stamps provided their income is low, which isn't a situation all that unusual in today's economy.

      Then there is the question as to how much a School Stamp should be worth. There is not a strong correlation between per-pupil spending and the quality of education delivered by a school system. Some of the best performing school districts in Ohio also have well below average per-pupil spending.

      Private schools have an advantage - they can refuse to take the most challenging kids, and can expel kids who are a problem. Our current public schools have no choices. So we'd have to think about what kind of non-discriminatory admission standards would have to be set for any school that chooses to accept School Stamps. Or perhaps every school, in order to get a state license to operate, would be required to accept a certain fraction of students who will be paying with School Stamps.

      One of the situations that got us to where we are is the sorting of regions into haves and haves-not, with school district boundaries being the line of demarcation. I think Elizabeth Warren made a powerful observation when she said that American's public school system is a really a system of private schools where the cost of admission is the the most expensive house you can afford.

      I think it's not only that - it's that the folks living in the suburbs also have to pay a big ransom every year to shelter their kids from 'those kids' in the urban core. That ransom is, here in Ohio, the state income taxes they pay to subsidize the urban schools, which in many cases operate a higher per-pupil cost than their suburban schools.

      This 'stealth' economic segregation is as harmful to our America as every other form of segregation has been. I'm a committed capitalist, and believe that a person has a right to enjoy the fruits of their success. But we're not talking about adults who should have to sleep in the bed they've made - we're talking about innocent kids, all of whom we want to be productive contributors to our society when they grow up.