 Thanks for attending. Today's talk by David Bose will be the public school monopoly, Americans Berlin Wall. I first met David Bose in 1980 on the Clark for President campaign. I was working with the Libertarian Party of Pennsylvania and helped schedule some events for Ed Clark. Before that, David had worked on Ed Clark's campaign for governor in 1978. After the Clark for President campaign, David worked for the Keto Institute. He is now the executive vice president at the Keto Institute in Washington, DC. He's a writer and editor. He decides on what publications will be published by the Keto Institute in such diverse areas of public policy as regulatory policy, civil liberties, trade policy, monetary issues, foreign policy, and urban issues. David has had articles written in a number of publications, including The Wall Street Journal, New York Times, Washington Post, and others. His articles on drug prohibition have gotten him quite a bit of fame in my own family, because my father keeps sending the articles, red inked, saying, I don't agree with this. Tell this guy he's wrong. So I don't know whether. Actually, I think my father sent you a letter once about that. Anyway, today, David will be speaking on the education issue. He will be discussing support for educational choice sweeping America. He will be discussing this case for educational vouchers or tax credits and the political prospects for change. I give you David Bose. Thanks, George. I don't think George actually mentioned that he used to work at the Keto Institute, but he's gone on to much greater success since he left us, which is probably a lesson for a lot of us. It's a pleasure to be here. It's a pleasure to be back in California. We've many times regretted moving the Keto Institute from California to Washington to do the kinds of things we do. You sort of need to be there, but we have talked about whether we couldn't set up a San Francisco office and just fly in for Washington events and try to convince people we were there without actually being there. Fortunately, I've been doing a lot of traveling this month. In fact, last weekend, I was at the Keto Institute's Benefactor Summit at the Boulder's Resort outside Phoenix. I'll just put in a little plug. If any of you have $2,500 to give to the most effective libertarian think tank in the world, you too can come and spend the fun-filled weekend in luxury resorts with Milton Friedman and PJ O'Rourke and Hernando DeSoto and George Gilder and people like that. But the reason I really bring that up is to say that when I arrived in Phoenix a week ago, I've never had a more welcome reception from the whole town. As I walked through the airport, there were newspaper boxes. And every headline said, seven legislators indicted, staying rocks capital, legislature caught in scandal. And as we were arriving there for the event, we thought, well, what a remarkable coincidence. The Keto Institute coming to Phoenix, the very week that the legislators are all getting indicted. But I got to thinking about it, and I realized, well, it's not that much of a coincidence really, because we always have these things in luxury resorts. And we thought about Palm Springs. But as you well know, two state senators were convicted here not long ago. We thought about Padre Island in Texas. But of course, the Speaker of the House in Texas is under indictment for mail fraud. We thought about, I've always wanted to go to Charleston, South Carolina. I think the count there is 11 legislators under indictment right now. Andrea Rich suggested the CAT skills in New York. But of course, the Assembly Speaker in New York is under indictment for mail fraud. I did think of my home state of Kentucky. I mean, you don't usually think of it as a resort area, but I thought we could go to a nice bluegrass horse farm. But if you were gonna do one of those events on a farm, you'd want the Agriculture Commissioner to welcome you to Kentucky, and he's in jail. So I got to thinking about it. It was almost enough to make me lose my faith in government. After I reflected on it, though, I did go to my friend, Eric O'Keefe, who's very involved in the National Term Limitation Movement. And I said, Eric, this is gonna take a constitutional amendment to get term limitation passed. You realize how difficult that is. Or you're gonna have to go to every state and run an initiative and everything. Instead of that, why don't you just set up companies and bribe one-third of the legislature in each state every two years and get them out that way? And Eric's very clever about politics, and he thought for a minute and he said, that's not a bad idea, but the real way to do it is to bribe them to cut taxes. Then if they do, fine. And if they don't, you expose the bribery. So either way, we win. Anyway, it's nice to be here in a state where nobody was indicted this week, anyway. So let me go on and talk about the sign subject that I have today. I realize a lot of the pitch that I'm going to be making here, I've just written a long article on educational choice and I've drawn this mostly from that. And I realize a lot of it is sort of preaching to the choir here, but there's something to be said for preaching to the choir. It's not such a terrible thing. And besides, I hope that I will give you some facts and figures and analysis that may come up when you talk about educational choice or work on an initiative campaign or something like that. It's obvious why education is always a topic of discussion in the United States. Education is crucial to any society. In fact, I think you can say without education, a society doesn't have a culture because education passes on the values and the wisdom of the society. In addition, it makes economic growth possible. We talk about having to reinvent the wheel. Well, obviously, without education, you really would have to reinvent the wheel each generation. It's because we tell people what we've done so far and we can move on from there that we're allowed to have some kind of economic growth. Now, I think it's important to remember that education and schooling are not the same thing. You've probably heard the quote from Mark Twain. I never let my schooling interfere with my education. Books, newspapers, movies, television, experience, the advice of friends and family, these are all parts of education. However, in this talk, when I say education, I will probably mean schooling because that's the way we usually talk about it. There's been particular concern in the United States about education since about 1983. We had a big report that year on the disastrous state of education. Since then, we have had eight years of educational reform and there really have been some changes, which I'll talk about later, but we have very little to show for it, very little improvement in test scores or anything. The reason for that, obviously, is that it's time to learn as the Soviet reformers have learned that a bureaucratic monopoly doesn't work and that reform won't fix it. It doesn't require reform, it requires something more substantial. Albert Shanker, who is the head of the second biggest teachers union, the American Federation of Teachers, said recently it's time to admit that public education operates like a planned economy, a bureaucratic system in which everybody's role is spelled out in advance and there are few incentives for innovation and productivity. It's no surprise that our school system doesn't improve, it more resembles the communist economy than our own market economy. Well, if Albert Shanker says that, who am I to disagree? I think he's right, but if the Berlin Wall can come down, something nobody anticipated, surely we can liberate American students from the public school monopoly, something that nobody has anticipated we could do for some time. Let me talk first about how bad the schools are. You've heard the figures about SAT scores, they fell from 978 to 890 in a period of about 20 years. One explanation often given by the education establishment is, well, that's because more people started taking the tests, you know, other kinds of people, people who aren't as smart as the people who used to take the test. That might be a plausible answer. However, between 1972 and 1988, the actual number of students scoring above 600 fell by 30%, not the percentage, but the number in the United States fell. That would suggest that even at the top we're doing worse. And in 1988, fewer than 1,000 seniors in the entire United States scored over 750, which was less than half as many as in 1981. So just in the course of the 80s, during education reform, the number of students scoring at the very top on the SAT has dropped quite a bit. The average Japanese student now, the average Japanese student gets better scores on math tests than the top 5% of American high school seniors. There have been some interesting studies done of what people learn. Now some of these things, I think when I lecture to an adult audience and I mentioned some of these things, I'm sure there are people in the audience going, I didn't know that. But I think the relevance of these quizzes on what people know is when you're a high school senior or a college senior, you've just been studying these things. It's understandable that some of the details about Greek politics or something may have been forgotten 20 years later. But when you're a college senior, you would think you would have just been immersed in this kind of audience. So there have been studies for the national endowment for the humanities in places like that, that discovered that 58% of college seniors did not know that Plato was the author of the Republic. 54% didn't know why the Federalist Papers were written to ratify the Constitution. 23% thought that the phrase from each according to his ability to each according to his need appeared in the U.S. Constitution. That may of course reflect simply a realistic analysis of the way the American government works. A couple more statistics. 25% of college freshmen take remedial math, reading or writing courses. We're using college to teach the skills. Really they shouldn't have been taught in high school, they should have been taught in the eighth grade. Reading, writing and arithmetic is what they teach. 93% of the nation's biggest companies, I think that's probably the Fortune 500, say they are teaching basic skills to their new employees or they expect to be doing so soon. People say private enterprise could never handle education. It's already handling education. The kids get out of school and they go to be bank tellers and they're not capable of it and the company spends six weeks teaching them the reading and arithmetic that they need for entry level jobs in the workforce. Something they haven't learned in 12 years but the companies teach them in a couple of months. All right, so you give this critique and up to this point a lot of the governors, a lot of the education establishment would agree and they say so obviously we need to spend more money. In fact, the Washington Post just this week had an editorial which basically said, you know we can't identify exactly why but every other developed country in the world has a bigger government so they must be better off than we are. They started out by saying our students score less on education and then it was like in the middle of the editorial they remembered all the studies that show that more spending doesn't help education so they kind of switched to, but there's homelessness and crime and all sorts of problems and we have low taxes so it's gotta be connected. It's interesting how reactionary some of these people can be but let's talk about education spending. People say, well all right if we have a problem we need to spend more money on education which sounds plausible to the average person. Normally if you need better clothes or a better house or something you anticipate you probably have to spend more money on it. So we've been doing that. Real spending on education adjusted for inflation. Real spending on education has increased about 40% a decade for the last 40 years which is to say it's doubled every 20 years. There's been a 29% real increase in education spending during the 1980s. During the period of austerity under President Reagan a 29% real increase in spending. Per pupil the United States now spends $5,200 for elementary and secondary school students. That means the average school classroom represents the expenditure of $130,000 over the course of the year. Now there are figures showing that very little of it is actually spent in the classroom and I'll get to some of that later. The United States spends more of its GNP on education than such countries as France, Finland, Great Britain, South Korea and Spain but the students from every one of those countries outperform the United States. There are other countries that spend more of their GNP and there was a left wing think tank in the United States tried to make a big deal of this. Other countries spend more of their GNP therefore we're not doing as much as we should. The point of course is the United States has the highest GNP per capita. Therefore even though we do spend a lower percentage of GNP than some countries we're spending more dollars per student which is presumably the relevant measure of what you're getting if amount spent is what counts. People are beginning to figure this out. There's an education economist named Eric Hanischek who's written for both economic and education journals who studied all of the studies that purport to find relationships between all kinds of inputs and educational output and his conclusion was expenditures are unrelated to school performance as schools are currently operated. John Chubb and Terry Moe from the Brookings Institution whose book on some form of educational choice made a big splash partly because it's a very good book partly because it came from an institution that is perceived as liberal. Chubb and Moe concluded there is no connection between school funding and school performance. No connection at all. Think about the productivity of the education business. This is one of the biggest industries in the United States. Its system of production is at least 200 years old exactly the same format for delivering services that was used 200 years ago. The school day and the school year are geared to the rhythms of an agricultural economy which tells you something about the degree of innovation in education. We have more teachers per student than we did in the schools 20 years ago or 200 years ago. Now in any other industry this is the measure of productivity. Do you use more people or fewer people to produce the same amount of product? Well in education we clearly use more people and arguably to produce less product. Now we don't know for sure that in a free market we'd have fewer teachers per student but chances are we'd have seen some changes and we've seen virtually none. The book that we have coming out soon is called Education and the Inner City and I think all of these statistics on education don't begin to capture how horrible life in public inner city schools is. I think a better indication is the Washington DC high school valedictorian who was turned down for admission to George Washington University which is in DC and is not a first rank university but turned down a high school valedictorian because he got 600 on the SAT, a test where 400 is the floor. This is a kid who for 12 years had been told he was getting A's that he was number one in his class and he discovered after 12 years of this kind of investment that he had learned virtually nothing, that he had learned enough to get a 600 on the SAT. In New York there's a company that's currently offering bullet resistant vests for school children. That gives you an indication of what life is like in New York City schools. Yet urban schools are spending $6,000 to $7,000 per student for this kind of education. The people who know the public schools best are public school teachers. In Chicago 46% of public school teachers send their kids to private schools. Well over twice the figure for people who are not public school teachers. In Los Angeles it's 29% in Memphis it's 36% in Milwaukee it's more than half the public school teachers. Do not send their own kids to the public schools. I have a friend who is a moderately liberal journalist at a prestigious national publication in Washington. When he read an article I had done on this this was the one thing that struck him most in there. So I offer that to you with the suggestion that to people who didn't anticipate this this is a striking revelation that public school teachers have so little faith in the system that they're running. And here in California your own superintendent of public instruction Bill Honig as you know is an opponent of educational choice at least any kind of choice that includes private schools. But Bill Honig moved his own child from his San Francisco home to a home in Fremont California so he could attend a school there. Now I applaud Bill Honig for putting his child's educational needs above his own political agenda. But I think he ought to be asked at every public forum why other children shouldn't have the same option. Why don't the schools work? Well, you know the general analysis until the progressive era I think you could say we didn't really have a system of public education in the United States we had public schools we had tax supported schools in local communities. But it was the progressive reformers who came up with what they called the one best system or the one best school. Obviously the application of scientific rational professional principles to education would produce the one best school for everybody and that's what they gave us. It was essentially a socialist system. It was one system for the whole society centrally directed and bureaucratically managed with no relevance for competition or market incentives. Now that may have worked somewhat in the early 20th century but that system is still around today and it is a dinosaur in the information age. We have developed in every area except schools we have developed fantastically new ways of delivering information to people and yet the schools are still doing it the same way. They have computers in them now you know Safeway and Giant give computers to the schools but these are just toys used in the same kind of schools. They aren't integrated into the learning process. It's competition that forces people to develop better ideas. Every industry where you see change and dynamism it's obviously because it's competitive. The people in the public school system aren't necessarily bad people. They're people who face bad incentives. They have no incentive to change anything. In fact they have good incentives not to change anything. Another point is I think that when we talk about education you know in any other industry we treat the people from the industry as self-interested suppliers. When they ask for a subsidy, when they ask for protection sometimes they get it and there are reasons for that that aren't entirely because we don't understand what they're talking about but at least we know when the Ford Motor Company asks for a tariff that it is doing so because it will be in its interest and we don't assume automatically it's in anybody else's interest but when the suppliers of education tell us what we need we don't treat them as suppliers. We treat them as experts. We say well they know best. They're the education people. We would do well to think of them as self-interested people the way we think of people from any other industry. It's a very interesting point I think the different effects, the different consequences of failure in the public and private sectors. In the private sector the consequence of failure is you lose your job, your company goes out of business or whatever. If you only fail a little bit you may be able to recover, make your company work better and come back but you have to either change or you go out of business but what happens in the public sector? If an agency in the public sector fails that is to say students are getting less education or an agency that is supposed to eliminate drugs or reduce the incidence of AIDS but in fact drug use and the incidence of AIDS goes up what happens? The agency gets more money. Now what kind of an incentive structure is that? I'm not saying that in any one of these cases people go out and say let's not educate the kids because we might get more money or let's help more people get AIDS so we get more money for AIDS prevention programs but the incentive system is not very well designed. The socialist system, the bureaucratic system, the public schools are a bureaucracy. They are one of the most bureaucratic things in our society. Between 1960 and 1984 the number of students in the public schools fell. The number of teachers however rose 57% which could be good. It doesn't say much about productivity but maybe it means better education. The number of principals and supervisors grew 79% and the number of other staffers grew 500%. 57% for the teachers, 500% for the non-teaching personnel. Chicago has 3,300 bureaucrats in the public schools not the teachers, not the principals, not the teachers AIDS but the bureaucrats in the central Chicago School of Bureaucracy. The Catholic schools in Chicago, Chicago's a heavily Catholic town. The Catholic schools serve 40% as many students in a larger geographical area with 36 bureaucrats. 1% of the number in the public school system. You find this pattern in small schools too. I have a 10 year old clipping from the Berkeley newspaper that I dug up in my files which said that the Catholic schools in Oakland, California serve 22,000 students with two central administrators. The schools in Richmond, California have 30,000 students and 24 administrators. So again, it's about a 10 to one ratio less than in the public schools and New York of course is always the best example for any of these things. John Chubb from the Brookings Institution tells a story about how he once told a reporter, you know the difference is like in New York they have 5,000 central bureaucrats in the public schools and they only have 50 in the Catholic schools which serve a slightly smaller clientele but about 20, 30% as many. And he hung up and he said, gosh, I wonder if that's right. I mean, I could be off and I wouldn't want that to get into print. So he started calling. He called the New York City Public School of Urocracy and said, how many people work there? And of course they said, you have to file a request in triplicate. And they went through all these things and he begged them and he said, I have a reporter who's on deadline. I really, they finally said, okay, okay we have 6,000 central city bureaucrats not 5,000 but 6,000. He then called the Catholic schools and said, how many central administrators do you have? And they said, we don't keep any figures like that. And he said, well, I really need to know. Isn't there somebody there who would know? The woman said, well, we just died and we don't have anything like that. But hold on a minute, I'll count. 25. So the ratio in New York City about 20 or 25% as many students and the number of administrators is 6,000 to 25 in the Catholic schools. Another problem with the public schools is the one size fits all problem. If the government may choose, they'd all be size 9D. When the government makes schools, they're all the same school. Monopoly requires a collective decision on everything. Should we have school prayer, afrocentric education, the Pledge of Allegiance, school uniforms, gay teachers, drug testing? Should we teach phonics or new math or Montessori? Well, there are arguments for both of these in several positions on each of these things but the government schools have to come up with one answer, at least in each system. Sometimes they try. I mean, they have come up with magnet schools. There's a school for gay high school students in New York. There are schools for black boys in Milwaukee these days. My favorite example is the alternative schools in the Washington suburbs. Alternative schools are those that emphasize reading, writing, and arithmetic. But at least they recognize there's a demand for that kind of school. And interestingly enough, I mean, this is the way public school choice works. These are like magnet schools. Parents wait in line three or four days, wives bringing sandwiches every eight hours to a husband who's sitting there in a lawn chair waiting to get his kid into a school that will emphasize reading, writing, and arithmetic. I mean, it doesn't occur to them, well, start another school this way or anything, the way it would in a private sector. There was a tax credit initiative in Oregon started by some libertarians last year. There was a Portland School Board official who tried to explain to the newspaper there why this wasn't a good idea. And he said, you know, public education is not like the free marketplace. In a free marketplace, you change your mix if your product is not selling. But public schools serve everyone, we can't change our mix, and that's the big difference. And I think he's got it right. They don't change anything just because their product doesn't sell. All right, I'm getting a little behind here. So let me skip forward a little bit here. We had a report on educational reform in 1983. The National Commission on Excellence in Education said there was a rising tide of mediocrity. After that, 250 state task forces in education were created, and in fact, there was a lot of reform. There was a lot of reform of inputs, as economists put it. There were stricter attendance rules, minimum grades to participate in extracurricular activities, stricter conduct rules, longer school days, more competence testing, more homework, higher teacher pay, longer school year. But what about outputs? Well, according to the test scores, no progress in reading, math, civics, or writing, despite all the change in inputs. The government schools have failed, and like Soviet factories, they are technologically backward, overstaffed, inflexible, unresponsive to consumer demand, and operated for the convenience of top-level bureaucrats. Like Soviet factories, they cannot keep up with the information age and the global economy. What we need in both areas, if we are going to get progress, is competition that will keep businesses on their toes, that will allow consumers to vote every minute and every day on what kinds of products they are looking for. One of the things that is essential to excellence in schools is autonomy for the school itself, particularly for the principal, who should be the CEO of a school, but usually doesn't have the authority to be that. John Chubb and Terry Moe found that autonomy is much more likely to be found in private schools than in public schools. They did a massive data study of all the information we know about high schools, and they found that it's very rare. It happens occasionally that you get a principal who is strong enough or willing enough to break the rules that he can actually run his school the way he wants to, but it's rare. In the private schools, that's pretty much the way it's done. You report to a school board, but the school board pretty well picks a principal because they trust him and they let him run it. So what we need to do is give competition a chance. Now everybody here knows that we'd be better off if government would get entirely out of education. No provision, no funding. Maybe the next best solution would be, well funding only for the poorest families, but not for anybody else. We're not gonna get to that stage in the near future. So given that, we know that private schools do a better job of educating. Our task should be, how do we make private schools available to more people? We ought to anticipate a flourishing supply of new schools, not the same kinds of schools just being created again, but we ought to be looking to see the Catholic Church, the Black Muslims, the YMCA, Urban League, the Operation Push, City Corp, and Xerox, and Silver Learning Centers, and the American Association for the Advancement of Science, and Phillips Academy, and Boston University, all running schools, and find out which ones work better. To do that, you need a program of educational choice, which would mean that instead of simply funding public schools and making them available to people in the neighborhood, the government would pay or reimburse parents who paid for each child's education at any school the parents chose. Now, you could do this program at the federal, state, or local level. There have been proposals to do it at the federal level with some of the funds for disadvantaged children. It seems to me that the state level is the logical one. Increasingly, state governments provide the most funding for education. A statewide program obviously gives you more choices than a local program would, and we don't really want to centralize education any further by making it a federal program. So logically, I think you do this at the state level. The best, the easiest system is a voucher plan. Under a voucher, the state government would say, for each child, we will give his parents or guardian a voucher that is good for a certain amount of money for education. He can take it to a public school and the public school will take that voucher and nothing else, or he can take it to a private school and the private school can decide whether that's full payment or whether you have to add something on in order to go to this school. You could set the voucher at any level. In Milwaukee, they set it at $2,500. 2,500 I think is a good figure because it's about half of what the public schools charge or spend, and therefore it dramatizes the cost difference. It also is more money than most private schools charge. Now, obviously, Phillips Academy charges a lot more, but most Catholic schools, most fundamentalist schools, most minority-run schools, you can get in for 2,500, maybe $3,000. According to, one of the things the education establishment likes to say is that this would cost the school's money. Well, of course, it would immediately because there are 10% of the students who are already in private schools, assuming they're eligible for the voucher, they claim it. And that money is a net loss to the government. But according to one study of a D.C. Tax Credit Initiative a few years ago, if as few as 8% of additional students left the public schools, the city would start saving money because the voucher is only half of what they're spending. So every time a student leaves, they save some money. One of the biggest concerns about vouchers, of course, particularly for us, is that it might lead to further state regulation of private schools. And if you end up with all the rules that prevent principals from running their own schools in the public schools, you could end up with the private schools turned into public schools. We don't want that. So one alternative that's been suggested is tax credits. Instead of a voucher that would be, in effect, a check from the government to the school, I would pay to send my own child to the school of my choice, and then I would put on my income tax return that I have done that and take that as a tax credit so there would never be a transfer of money directly from the government to the school. It would be more clear that this is my money, not the government's money. One of the problems with that is what about the poor? What about poor people who don't pay taxes? Or as Polly Williams from Milwaukee points out, what about poor people who simply don't have $2,000 to put up upfront to get it back next April? Well, one way you can solve that is to make it a refundable tax credit. That gets you into the problem of government handing out transfers. Another possibility is to say that any person or business can take a tax credit. I don't have any children, but I'd certainly be glad to pay for the education of three children at private schools rather than give that money to the DC government. Businesses could do the same thing. That gets complicated to explain, particularly in an initiative campaign if you have to explain how that's gonna work. And I have a feeling that that complication is the reason that we will see the choice movement moving toward vouchers because it's a lot easier to explain to people what it means. So I would say the regulation problem can best be solved particularly when it's an initiative. We're gonna write the initiatives. We have to write in as careful rules for regulation as possible to try to limit the potential for regulating the private schools. And Clint Bolick who's been involved in a lot of these campaigns says, one important thing to remember is it's okay to make the private schools meet performance requirements because they all can. What we shouldn't do is try to mandate anything, number of toilets, what subjects they have to teach, how many teachers they have, anything like that. Don't regulate any inputs. Tell them they have to meet a certain performance standard and outputs. Now even performance standards create problems. Is the performance standard going to say you have to have learned long division in second grade? There are education theorists who think kids don't need long division in the second grade. They'd be better off getting it in the fifth grade. So there are always gonna be problems like that. And I would just say we should try to minimize the regulation. And at any point when people propose one, look for a way to make it less obtrusive. A lot of people are talking these days about public school choice. You even get governors talking about being able to choose between public schools. Not private schools, but you can choose any public school in the state to go to. President Bush has endorsed this. Interestingly enough, this is the plan for market socialism that was very popular in the 1930s. This was supposed to have been the answer to Mises and Hayek. Well, we'll have socialism, but it'll be market socialism. These ideas have been discarded in Eastern Europe, but they've been hooked up in the White House recently. You know, the problem is what is the incentive? Think about the incentive structure in a system of public school choice. I'm a principal of a public school. Why would I want this? Why would I want anybody coming to my school? Additional students are a hassle. I don't get any more money. If I do a good job, I can't set up a school across town and collect the profits from both of them, which I would do if I had a good pizza shop. So the incentive is that I don't really want any of these extra students, and I'm gonna try to get out of having them. Sure, there's a little prestige value. I would be embarrassed as a principal if everybody left my school. But if I still got my paycheck, we know from, you know, I think we know generally that that's not a good enough incentive to make system work. Myron Lieberman, an education researcher who studied public school choice, says as far as he can tell in no public school choice system so far has any principal or any teacher been fired. There have been schools that collapsed because nobody would go to them, in which case the principal is put in charge of another school. So this is a cop-out on the part of the public school establishment in which you try not to let him get away with it. Myron Lieberman in one of his books did an interesting discussion of public school choice, and I wanna quote you what he said. Let us assume that a company owns 90% of all the grocery stores in a state and controls all the assets of those stores. Company policies, which can be changed at any time govern the products the stores sell the days and hours they are open, the territories they serve and a host of other matters. Shoppers can legally patronize the stores owned by other companies, but the cost of doing so is prohibitive, even if those stores are conveniently located and have high quality merchandise. Moreover, shoppers must pay for the products sold by the dominant company stores whether they patronize those stores or not. Let us also assume that the dominant company uses various means of discouraging potential competitors from entering the market. It requires entrants to offer certain products, operate stores of a certain size, locate stores in certain areas, provide their employees with certain benefits and meet other expensive and time consuming conditions. Well obviously that's not competition and if you add on to what he's described, the layers of bureaucracy and central planning, the inability to fire unproductive employees and the difficulty of opening and expanding outlets, obviously you're not getting the benefits of competition in a system like that. What we've gotta do is give poor people access to non-government schools. Now what I've tried to do in my article that's in this upcoming book is go through some of the objections to educational choice that you hear a lot and I will try to run through them very fast here because I do think it's important to think about each one of these. The defenders of the education monopoly have thrown up a smoke screen of charges against vouchers and tax credits. Now most of these are the same complaints that you always hear against competitive capitalism. And in fact I say in the book if American history had evolved differently so that education was provided privately with school stamps for the poor but food was sold in government-run grocery stores with assigned geographical areas and a central grocery authority in every city and a state department of public nourishment in every state laying down the rules. The nourishment establishment would be saying to us today of course private enterprise can provide education but food is different. It's vitally important. Consumers wouldn't know how to choose the proper food. You'd never be sure there was a grocery store in your neighborhood and so on. Liberty Magazine recently speculated about an alternative world in which telephone service had always been run by the government. And they quote somebody in 1990 saying but Mr. Freeman how could private industry possibly provide telephone service? Why with eight million operators we still can't get decent phone service. The post office phone system will never be privatized. And the article goes on to say ever since Michael Faraday had invented the telephone in Britain governments had built giant showy telephone systems each trying to outdo the others with the mightiness of their networks. Elaborate palaces of communication adorned world capitals. Massive cables with millions of wires carried signals across the country to those congressional districts fortunate enough to have one of the giant national telephone bases. Border translation stations staffed with thousands of bilingual specialists hummed with the commerce of the planet moving vital data between financial nerve centers in mere hours. It would be hard to imagine private firms running such a massive system. The point is that whatever enterprise the government chooses to monopolize will become a massive bureaucratic undertaking and we will not be able to imagine how it could possibly be run by the private sector. It's just too big. The only real way that education is different from other industries is that the government runs it so that it is expensive, inefficient and stagnant. Now let me tick off some of these specific objections to educational choice that you will hear. You will hear that choice is unconstitutional because it involves giving money to religious schools. It seems to me the best rebuttal of this is the GI Bill. After World War II soldiers were allowed to go to any college they wanted to including Notre Dame and other Catholic colleges with a voucher. That's what the GI Bill was. In 1983 there was a Supreme Court decision Mueller v. Allen which said that tax deductions for sending your children to religious schools were okay that that did not unduly entangle government in religion. A voucher program where I take my voucher and go to a Catholic school, it seems to me is no different from my taking my social security check and tithing to my local church. In either case the money is going to me and that may be a bad idea but the point is it becomes my money and it is no more a transfer of government money to the public, to the religious school than the GI Bill was. Another point, this is one of my favorites is that choice won't help unaware parents. You know it's never the person who's saying that to you who's incapable of choosing a school for his child, it's always somebody else. And there's obviously a lot of paternalism if not actual racism in this charge. It's never the parents in Beverly Hills who can't choose schools for their children. It's the parents in Watts, you know. They wouldn't know how to choose schools for their kids and they're getting such good education now you wouldn't want to risk that. But you know those people they might not be able to choose. Well I think one answer to this is that my mother was a very careful grocery shopper. I remember she used to sit there every morning with the papers, she clipped coupons, she compared prices, she checked out the produce, she'd go to three different grocery stores in one day. I don't do any of that. I double park in front of the Safeway and I run in and grab what's available. I don't check prices, I don't check the quality of the produce or anything. But because there are shoppers like my mother in the grocery market, I can be reasonably sure that my local Safeway is competing for their business and therefore providing me with reasonably good prices and that will clearly be true in the education market. If 20% of the parents in any particular neighborhood are paying attention to the quality of education, other parents will free ride off them and be able to find good schools. Another criticism is that choice would enhance segregation. We have more segregated system. Well in the first place inner city schools are already segregated. In Manhattan for instance, 90% of the students in the public schools are black or Hispanic, 80% of the children in the private schools are white. So anything that moves some children from public schools to private schools is likely to enhance integration. In addition, studies have found that there is more integration within the private sector schools than in the public sector schools. And besides, I think you have to ask what's more important, the racial balance or the quality of education. One of my favorites is there aren't enough schools. You know, there's only 13 private schools in Cleveland and they're all full. So what would we do if we let more kids go to private schools? And people just can't see that somebody would build more schools. You know, VCRs will never work because there aren't enough video stores. Well, there are now. In fact, there are too many now. They're closing all over the place. But people just can't see that with education. You have to keep explaining to them. See, if more people could afford it, then more people would start schools. Another complaint is that you're giving up on the public schools. Well, one answer to that is yes, that's right. But I caution you that in public, that doesn't work. It's very clear that the polls in Oregon showed that the Education Tax Credit Initiative failed there largely because people thought it would hurt the public schools. And most of their kids go to public schools and they don't think of themselves as the people who would go to private schools and they don't wanna hurt the public schools. So I think there are a couple of answers to that. How many kids are going to graduate uneducated while the public schools administrators say, give us just a little more time to get this system working? You have to focus on the individual student. I had a couple of parents tell me once, we don't believe in private school choice. We believe in public school choice, but we don't believe in vouchers and we believe in the public schools. These were very rich people. So I was kind of surprised. You know, I figured I'd have them here. I said, where are you sending your kids to school? And they said, the public schools. And I was kind of taken aback because these people are from New York. And I said, the public schools? And they said, yes, that's right. When our children got school age, we moved to Scarsdale so we could keep them in the public schools. Well, the answer is of course, these people had a voucher plan. It's just the voucher cost them $500,000 and most people can't afford that. So what we need is cheaper vouchers. Anybody who can move to Bel Air can get a good school. People who can't afford Bel Air can't. Another point I think it's important to make to people is there really isn't much downside risk at least in the inner city schools. They are so bad that even if they become, you know, all the good students leave and it's only the bad students, there isn't really much risk of things getting worse there. People are graduating from high school, unable to read and write. How much worse could it be? Isn't it worth taking a chance on the possibility this would help? Let me talk just briefly about the politics of educational choice. The 1990 Gallup polls said 62% of parents or 62% of Americans favored school choice. It was 72% of non-whites and it's more the younger the adults are. It's 72% among the youngest and 54% among people over 50. I guess I'd better skip over all of these examples of things that are going on right now and just mention the one most important one in Milwaukee. Polly Williams, the black democratic state representative from inner city Milwaukee. Chairman of Jesse Jackson statewide campaign in 1984 and 1988 is a very articulate, powerful spokesman for black and minority interests in Milwaukee. She got fed up with the lousy public schools with 15 years of busing that simply involved, she said, putting black kids on buses and sending them to schools that were mostly black anyway somewhere else. She came up with a plan. Her plan was to allow 1% of the students of Milwaukee to qualify for a plan. They had to be below the poverty line, but even at that can only be 1% of the students to get a $2,500 voucher that would allow them to go to a private school. The courts, of course, the education establishment went into the courts. They tried to stop it on substantive grounds in the courts and they lost. They've now tried to stop it on procedural grounds, the method they used to pass it in the legislature. It's been a very revealing experience for Polly Williams. For one thing, none of the white Democrats in the legislature supported her. She ended up passing this plan with black Democrats and white Republicans. She didn't expect that. She says of her fellow Democrats now, they say they're liberal, but whenever it comes to empowering black people, they stab us in the back. We want self-determination, not handouts and dependency. The courts, one of the claims in the courts was why these private schools have no accountability. Well, of course, what kind of accountability do public schools have? They didn't get away with that. 300 students managed to get into this program in the first year, in between court decisions so that the program was alive for a moment. And I would hesitate to claim that any program was working after one semester, but the New York Times was quicker to jump into it. They sent somebody there and they did a half-page story in the New York Times in December that sounded like Polly Williams had written it herself. This is a news story. The story read, among other things, Wisconsin school officials say it is too early to assess the program officially. But as the program's first semester draws to a close, the parents of the 345 students who managed to transfer speak in jubilant tones about their children's progress. Directors of the six participating private schools describe a relatively smooth transition and seven-year-old Jevon Williams, for one, says that for the first time he looks forward to school. Jevon's mother says that the public schools bored him giving him baby work, but that urban day school has challenged him and turned his energy from fighting to learning. It's obvious from reading this story that the private schools are providing both more discipline and more creativity to the kids who are going there. Another parent says that the public schools gave his two daughters rote learning, but that the Woodland School teaches them to reflect and analyze and be creative. One of the mothers, Gail Drager, says, I'll rob a bank if I have to to keep from sending my daughter to a public school again. So this is how well it's working there. There was a tax credit initiative in Oregon. It failed. It learned some valuable lessons from it, including that you have to make it look like you are not attacking the public schools. People just will not go for that. It'll be back on the ballot in Oregon or somewhere else. In Epsom, New Hampshire, a libertarian, a graduate of the Kato Summer Seminar a few years ago, got a $1,000 tax credit program through the Epsom City Council. Now I think $1,000 is too small. It doesn't pay for very many schools and it's gonna be claimed by people who are already sending their kids to private schools and then it's gonna look like it's a subsidy to the rich. I think you need a bigger one than that. But it's something happening there. In Chicago, there is a lawsuit. There's one of these educational equalization lawsuits demanding that the state equalize the cost of education across the whole state. A group of 27 low income parents have hired Clint Bolick of the Landmark Center for Civil Rights to represent them in a friendly amendment lawsuit that says we don't wanna wait for the state to do this. We want the state just to give us the money and let us go find education on our own. So they're trying to argue under the Illinois Constitution that since they have a right to quality education, according to the Illinois Constitution, and since the state is not providing that, they should be given the money to go out and get it on their own. So these are the things that are happening. There are some other interesting things going on. I wanna make one last point and I took this point from John Chubb and Terry Moe's excellent book. At the end of the book, they ask, is choice a panacea? You're always supposed to say for any public policy proposal, of course it's not a panacea. And they say, however, reformers would do well to entertain the notion that choice is a panacea. It has the capacity all by itself to bring about the transformation that for years, reformers have been seeking to engineer in myriad other ways. There's a prominent conservative education critic, Chester Finn, served in the Department of Education. And he said in a speech recently, a full policy agenda for education reform will entail 10 or a dozen significant changes. I draw curriculum, for example, from California and accountability from South Carolina and New Jersey. Choice from Minnesota, school site management and parent control from Chicago and Miami. Alternate certification of teachers from New Jersey, school level report cards from Illinois, teacher career ladders from Tennessee, no pass, no play rules from Texas, parent education from Missouri, and so on. Well, I think this is the equivalent of telling an Eastern European reformer that his country needs double entry book, keeping high tech factories, a better telephone system, property rights in free markets, train managers, foreign investment in a stock market. The point is property rights in free markets will bring about all those other things in the same way that educational choice will bring about all these other things. So far in the Soviet Union and in education reform, we have had a lot of glasnost but very little perestroika, a lot of talk, a lot of complaints, but very little real change. It's time to give all parents the same opportunity that rich families have to choose good schools. And I think the most important point about this is that children would finally be able to attend schools that meet their needs and make learning an exciting experience. I mean, it's really a dramatic achievement to make learning about the world around you a boring experience. And yet the schools have managed to do that. I think schools could do a better job if they had to meet the needs of the customers. Thank you. Yes. Yes, and all of your talks, you have not mentioned. That's the part I left out. Millions of children end up to see some consideration in the formulation of vouchers or tax credits going to people who are homeschooled. I'd also like to see those programs encourage homeschooling. Well, that's gonna be difficult. I did mention homeschooling in my notes here. Nobody really knows how many kids are doing it. It could be as many as a million. And I think one interesting thing about homeschooling is it kind of got started in the 60s. And we haven't seen too many people graduating yet who have gone through homeschooling. I think when we do, we're gonna see them acing the SATs, outperforming educated children in colleges. And what that's gonna tell us is that there's nothing very magical about teaching children. It's not really that hard to do. The remarkable thing is failing on a massive scale to do it. And so I think homeschooling is important in that way. However, in Oregon, they managed to scare homeschoolers away from that initiative by saying, you know it will lead to more regulation of homeschooling. So I'm not sure. I think we have to do a lot of consulting with homeschoolers as to whether they wanna be included or whether they would rather just be left alone because if you're allowed to take a tax credit or a voucher, who are you paying it to? You have to show them that you've spent something. I mean, maybe you could cover the cost of your textbooks or something. But then they're going to want to test and they're going to want to inspect and you may be better off just staying out of it. But I would basically wanna consult with the homeschoolers and see what they think about those choices. Yes. How would you overcome the political power of the teachers? Well, it's a difficult thing. One thing, again, I think is to try to make it clear that we're not attacking teachers. That we believe teachers are given bad incentives. We believe that a lot of creative teachers would like to be able to teach better and they're not able to because of schools that make them adversaries of students and adversaries of principals. What we find is that in private schools, teachers and principals consider themselves colleagues much more than they do in the public schools. So I think we wanna get that across. But also I think we can still assume the unions will spend a lot of money to defeat these things. And so we just have to, that's where initiatives come in that you can go around them. Have time for one more? All right. Okay, right here. My understanding is several different questions. And also, there's a system going on. I am also aware that there's, I don't remember the guy's name, one of the people in the legislature is trying to introduce a bill in California that says that any school district whose test scores are less than average must open up the funding to private schools. Well, that sounds like an interesting proposal and I would encourage all of you to stay on top and stay in touch.