For School Choice, in Chile and Elsewhere!

In her second term as president of Chile Michelle Bachelet is set to impose significant educational reforms to further her socialist agenda. An estimated increase of 1.5-2 percent of GDP on top of existing spending is supposed to improve the quality of and access to (higher) education and thereby reduce the problems of inequality and segregation.

Bachelet’s plan to provide “free” college education to all Chileans exposes her ignorance of the effect of such policies in other countries. It is a statist’s’ knee-jerk reaction: once we’ve identified a problem naturally all we need to do is throw a bunch of money at it and have the government point guns at people, and the rest will take care of itself! After all, the Danish taxpayer is forced to pay for everyone’s college tuition, and they are prospering!

Chile_EducationThis sort of simplistic stance on education completely ignores historical and empirical evidence that shows that the voluntary system in existence before the dawn of compulsory schooling already met the existing needs for education, or that modern public schooling is a lot more likely to increase social segregation. The latter is confirmed by Chilean figures correlating people’s addresses, incomes and test scores. Besides, we already know that putting more power into the hands of bureaucrats in faraway government buildings, where we can be sure their views and policies will be heavily influenced by special interest groups, will invariably reduce transparency, accountability and quality.

In the United States, for instance, this has lead to a ballooning student loan debt that now stands at $1.2 trillion or some $30,000 per student. In three decades tuition fees have risen by 1,120 percent, meaning that the same college degree today costs 12 times as much as in 1978. The total bill ranked up on behalf of the American taxpayer stands at $22 billion per year, much of which can be traced back to the government programs championed by Lyndon B. Johnson in the sixties as part of his “Great Society”.

The modern school system is largely based on a foundation laid by Iron Chancellor Otto von Bismarck in the late 19th century, with the aim of supplying his military with soldiers willing to follow orders unquestioningly. Should we be surprised, then, that our schools don’t produce critical thinkers and enterprising individuals? Is it any wonder how pervasive statism is in our society? If we were all forced to go to universities funded and run by Coca-Cola could we reasonably expect anyone to be critical of Coca-Cola?

In recent debates about education here in Chile we have heard some shockingly uneducated (pun intended) statements from officials, stating “we don’t know if for-profit education, selection or shared finance of schools and universities actually affect quality” and that “there is no recipe for quality”. The fact that these people are not only engaged in the debate but likely to exert If an objectively written book was ever published on the State’s involvement in schooling our children it might be titled “Government schooling: making every student equally miserable since the 1870s”. Should the Bachelet administration succeed in stripping away school choice the educational system will likely go down that very path.

As Murray Rothbard pointed out: “It is clear that the suppression of free instruction should be regarded with even greater horror than suppression of free press, since here the unformed minds of children are involved.” Chilean libertarians have their work cut out for them.


A Critical Look At a World Famous Welfare Program

Hailed by The Economist as a “much admired and emulated anti-poverty program”, the signature legislation of Brazil’s last president Lula da Silva was the Bolsa Família (Family Allowance) program. Aimed at alleviating the misery of the poorest segments of the population, the program provides financial aid to families and free education for children whose parents cannot afford to send them to school. The largest conditional cash transfer in the developing world comes with strings attached, though.

The eleven million families receiving the financial aid – on average $35 per month – commit to keeping their children in school, adhering to the government’s vaccination schedule, and taking them for regular health checkups. In a country plagued by persistent inequality and poverty widely blamed on an unjust system, the popularity of a program of direct wealth transfers to the least privileged should be no surprise. Still, might the superlatives expressed by the likes of The Economist have been a little overdone?

At first glance the numbers seem impressive; extreme poverty has been halved from nearly 10 percent to just over 4 percent, income inequality has fallen, and about one fourth of the population has benefited from the program. In addition, the initiative has been touted for its decentralized nature and target accuracy in reaching those in the most dire of circumstances. As Henry Hazlitt might have pointed out, however, there is more than meets the eye.

The National Congress in Brasília

It does not take a genius to understand that since the government has no money to spend it has to fund its operations through taxation, the printing press, or by going into debt. In the long term, therefore, the Bolsa Família program cannot be said to contribute to real wealth creation. Worse yet, regardless of the preferred means of funding itself these government programs necessarily extract wealth from the private sector, thereby making society poorer in the long run. Any consumption whose origin is found in the artificial creation of illusory wealth only contributes to a reduction in living standards due to the absence of an increase in general productivity. Sooner or later the market corrects the unsustainable boom, and it’s back to square one.

The irony of government intervention, as famously pointed out by Ludwig von Mises in his critique of interventionism, is the invariable snowball effect of piling on new interventions aimed at solving the problems created by previous ones. History tells us this endless game of government whack-a-mole invariably leads to an economic and humanitarian catastrophe. But in the case of Brazil there is plenty more reason for skepticism besides the objections raised from a more academic standpoint..

The aforementioned fundamental problems are compounded by the fact that would-be contributors to real growth such as a good education system are still lacking. After all, boosting school attendance rates is one thing, creating an environment in which students can get a good education is another. In its Human Capital Report of last year the World Economic Forum ranked the Brazilian education system as among the 35 worst in the world, trailing such nations as Surinam and Botswana while just barely ahead of Bhutan and Kenya. Steady increases in government spending in the last decade have entirely failed to achieve a competitive education system even compared to other, poorer Latin-American nations.

Perhaps a cynic would call Lula’s program and his successor Dilma Rousseff’s support thereof a classical example of vote-buying through government handouts. That might not be so far off.

Why True School Choice Requires a Free Market

After pointing out the failures of public schooling here and here, now is probably a good time for the upside of the story. After all, given how broken the current system is, there have got to be better alternatives! And there are.

While modern technology has bettered the lives of hundreds of millions across the globe in many different ways, the education system has hardly been on the forefront in taking advantage of these revolutionary new tools. Which should be no surprise considering the heavy hand government has in schooling..

Yet the cracks are beginning to show, as an increasing number of parents consider homeschooling their children or free_market_educationat least sending them to private schools. Or, as a free market economist might put it; the market is starting to reject the public “education” system that persists in churning out ever dumber students despite rising tuition fees.

In the United States 73 percent of respondents to a public opinion survey said they support school choice. Furthermore, more than 6 out of 10 parents said they would send one or all of their children to a different school “if given the financial opportunity”. They also feel there aren’t enough school options for their children. On the other side of the pond, a UK government report found that “too many pupils drift, become disenchanted with school or get into trouble and drop out at 16”, and that “A large number of adults lack vital skills in literacy and numeracy”. In addition, British state education appears to entrench social segregation rather than improve social mobility.

Although no private school receives taxpayer funding most are still subject to the same regulations as public schools if they are to be formally accredited, meaning tuition fees can be very high. Consequently, homeschooling can be a more viable alternative for many parents. In fact, the number of homeschooled kids in the United States is rising steadily, and has been for several decades. Unfortunately not all parents in the world have that choice, as many governments mandate public education. And even those that do often find themselves under considerable peer pressure as a result of some of the common misconceptions surrounding homeschooling.

One of those misconceptions, and possibly the most persistent one, has to do with the perceived lack of socialization of homeschooled kids. After all, the theory goes, if you don’t go to public school you spend less time around other people, increasing your chances of becoming a social misfit. Still, the statistics don’t bear this out.

A 2003 research survey of adults who were homeschooled found that homeschool graduates are much more involved in their community, as well as more likely to be engaged citizens than the general population. Moreover, homeschool graduates were found to be more content and nearly all were glad to have been homeschooled, while more than 8 out of 10 said they would homeschool their children (74 percent already were). Needless to say, the above cannot be said to be typical of social misfits. In the words of the late Dr. Raymond Moore, author of over 60 books and articles on human development: “The idea that children need to be around many other youngsters in order to be socialized is perhaps the most dangerous and extravagant myth in education and child rearing today.”

The point here, however, is not necessarily to make the case for one type of schooling over another. Regardless of one’s opinion on what is best for a child’s development, the issue is whether the current system truly provides parents with options. Given the laws many governments have put in place to force children into public schools, the answer is obvious. Fortunately there are still some countries where government regulation is a lot less draconian. Nonetheless, the very existence of a public school system as well as economic conditions aggravated by central planning, severely limit school choice even in those countries.

And that is why we need a free market in education.

The Failures of Public Schooling (Part I)

As detailed by Albert Jay Nock[1], the three ideas or principles historically underlying the theory of education are equality, democracy, and the notion that a literate citizenry assures good public order and honest government. With these ideas in mind, it is often concluded that schooling should be considered a “public good”, or even a right.

On the topic of equality it is fitting to echo the words of economist and historian Murray Rothbard:

“It is evident that the common enthusiasm for equality is, in the fundamental sense, anti-human. It tends to repress the flowering of individual personality and diversity, and civilization itself; it is a drive toward savage uniformity. Since abilities and interests are naturally diverse, a drive toward making people equal in all or most respects is necessarily a leveling downward. It is a drive against development of talent, genius, variety and reasoning power. Since it negates the very principles of human life and human growth, the creed of equality and uniformity is a creed of death and destruction.[2]

free_market_educationStill, it could be argued that the least we should do for equality’s sake would be to make schooling accessible for all children regardless of race, color, creed, or socio-economic background. After all, few would contest the argument that getting a good education generally increases one’s chances of being successful in life. But how does that relate to schooling? If equality were the overarching goal, why not have other necessities of life such as food, clothing and shelter – arguably more important than schooling – funded by taxpayers and their consumption mandated by law? Exactly what kind of equality are we talking about?

Understanding the term “equality” in the context of schooling to refer to equal access, let’s try to put the current situation in historical perspective. It is worth noting a few historical facts that help dispel some of the myths and commonly held beliefs many seem to have. What was education like prior to the dawn of “public”, mandatory schooling?

The supply of schooling in Britain between 1800 and 1840 was relatively substantial, despite educational institutions having to depend on private funds, mostly from working parents and the church[3]. Needless to say, education was in less abundant supply than today, just as can be said about virtually everything else. Yet the percentage of the net national income spent on day-schooling of children of all ages in England was higher in 1833 than after schooling had become tax funded and compulsory[4].

On the other side of the pond, before the dawn of taxpayer funded schools, the state of New York appointed five commissioners to analyze the common school system in the state. The commission acknowledged that in order to credibly make the case for public schools, it would have to prove that the existing system was failing to meet children’s educational needs. Except what they found was the opposite: “(..) there is a natural stimulus to education; and accordingly we find it generally resorted to, unless some great local impediments interfere” [5]. Schooling was already widespread!

Judging by their actions, though, government bureaucrats were nonetheless determined to intervene. The Free Schools Act of 1867 abolished rate bills (fees) in taxpayer-funded public schools, thereby bringing an end to the level playing field in which public and private schools had been competing freely. Predictably the effect was the crowding out of the private by the public sector[6]. The public school system was further strengthened by the introduction of laws for compulsory schooling[7].

Over time this monopoly has become so entrenched that any policy to re-introduce competition in whatever form would be, and has been, vehemently opposed by teachers’ unions like the National Education Association (NEA) and the American Federation of Teachers (AFT) and subsequently voted down by their political minions.  Naturally the same can be said about their European counterparts such as the NUT and NASUWT in Britain and the GEW in Germany, not to mention the global teachers’ union federation Education International (EI). These organizations lobby for and massively benefit from maintaining the status quo in education, keeping competition out of the market and prices artificially high.

But what of equal quality? In the current system the majority of children do end up attending school because (a) they are forced to and (b) the taxpayer is made to foot the bill. The current system also mandates that a central government set the educational standards for all schools within its borders, whether public or private.

Quality control is thereby put into the hands of bureaucrats in a faraway government building. The standards and requirements are passed on from the top all the way down to those actually in the field working with the children that are supposed to meet said demands, or fail. Conformity and obedience are rewarded while the creative, critical thinkers are deemed “difficult” if not given the label of having a mental disorder.

Stay tuned for part two with which we’ll start 2014 in style!

Nock, A.J. (1932). The Theory of Education in the United States. Rahway, NJ: Quinn & Boden Company. p. 27.

[2] Rothbard, M.N. (1999). Education: Free & Compulsory. Auburn, AL: Ludwig von Mises Institute.

[3] West, E.G. (1996). The Spread of Education Before Compulsion: Britain and America in the Nineteenth Century. Digital version available here.

[4] Ibid.

[5] The Common School System of the State of New York. (1851). Report by S.S. Randall and the New York Dept. of Public Instruction. p. 18. Digital version available here.

[6] West, E.G. (2000). Public Education and Imperfect Democracy. p. 4. Digital version available here.

[7] Ibid.

What Has Government Done to Our Education?

Few people today, regardless of nationality, ethnicity, political persuasion or socioeconomic background, will dispute the importance of education. When it comes to the quality and provider of that education, however, a lot more disagreement is to be expected. And affordability is another issue altogether, especially when making comparisons on a global scale.

Tuition fees
American students pay by far the highest tuition fees, at an average of nearly $14,000 per year, compared to roughly $7,700 in Australia, $5,974 in Canada, $5,288 in England and Wales and only $900 in Germany. The lowest average annual tuition is paid by the Danes at $530. In fact, Danish public universities are fully taxpayer-subsidized and charge no fee at all even to foreign students, as long as they are EU citizens. Wonderful as this may seem from an accessibility standpoint, the quality of higher education in Denmark has for years been an issue of public debate – not to mention the fact that the sector as a whole is largely underfunded.

Quality of education
Though differing educational standards make an across-the-board quality comparison on a global scale a gruesome task, some measure of quality can be deduced from such global university rankings as compiled by Times Higher Education and the Global Higher Education Rankings project. These rankings consistently include dozens of American universities in the world’s best 100, making them by far the most prevalent.

This might lead one to conclude that students in the United States can at least rest assured knowing they have access to high-quality education in exchange for their exorbitant tuition fees. It should be noted, however, that the number of degree-granting institutions in the United States stands at nearly 4,500, compared to only about 400 in Germany, nearly 200 in Australia, 165 in the UK, and less than a hundred in Canada. Seen in that light, higher education in the U.S. turns out to not nearly be as successful as the raw data suggests, but rather more comparable to other developed countries’ performance. The question, then, is what makes a U.S. degree so extraordinarily expensive?

educationIf you like your education, you can borrow tons of money to keep it
In order to answer that question one would need to go back in time, to the advent of Lyndon B. Johnson’s “Great Society” in the 1960s. A host of government programs championed by the Johnson administration and supported by the progressive majority in the House of Representatives not only produced unaffordable welfare programs but also laid the foundation for unaffordable higher education.

Proponents of government intervention in education will dismiss this suggestion and point to the lack of consensus in the literature as to what causes tuition fees to rise. And it is true that there is no incontrovertible proof that federal tuition aid alone drives up the cost of higher education, partly because of the diverse ways in which public and private universities are organized and operated. Yet basic economics (and common sense, for that matter) has it that when demand for a product or service rises while the supply remains the same, its price has nowhere to go but up. And what do grants and loans do? You guessed it.

From the standpoint of accessibility providing grants and loans for higher education seems like a laudable plan. In that respect, the aforementioned Danes appear to be among the most fortunate people in the world. After all, they have unlimited access to higher education! When it comes to quality, though, there isn’t much to brag about; not a single Danish university is listed in the top 100 of the world. Maybe “free” education is not the way to go for those seeking high-quality education?

On the other side of the pond, total U.S. student loan debt now stands at $1.2 trillion, or nearly $30,000 per student. In three decades tuition fees have risen by 1,120 percent, meaning that the same college degree today costs 12 times as much as in 1978. In addition to leaving many young people tens of thousands of dollars in debt before they have even started to make any money, the American taxpayer is on the hook for more than $22 billion per year.

Is it worth it?
The situation may not be so bleak in other developed countries, but when is the last time you heard someone rave about how great their education was? Besides, given the heavy hand government has in education, it is no surprise our educational institutions are hardly known for churning out independent critical thinkers likely to question existing systems and paradigms. On the other hand, plenty of high school and college dropouts turned out just fine. Does that mean dropping out guarantees success in life? No, but neither does a college degree.

Stay tuned for some ideas on educational reform.

The European Union: Bailing Out Banks, Politicians While Sticking It to the People

– May 2010: Greece receives an initial €110 billion bailoutEuropean Soviet Union
– November 2010: European governments bail out Ireland to the tune of €85 billion
– January 2012: Second €145 billion Greek bailout deal announced
– November 2012: Spain borrows €37 billion to restructure four of its weakest banks
– March 2013: Cyprus narrowly avoids exiting the euro, securing a €10 billion loan

Who’s next? That question seems to be on everyone’s mind as the fundamentals under the eurozone appear weaker and weaker with every new bailout; what country will the European Financial Stability Fund provide “stability” to next?

Meanwhile youth unemployment in Greece is over 60 percent, with Spain not far behind at 55 percent. Nearly 4 out of every 10 young Italians and Portuguese are unable to find a job, as well as 3 out of every 10 Irish. Young jobseekers in France are struggling too, with 1 in 4 being unemployed. Slovenia and Cyprus are in the same boat – or should we say life raft?

The old continent is facing a crisis on multiple levels and much of it can be traced back to the behemoth known as the European Union – or, as I like to call it, the European Soviet Union (see here). I won’t go over the catastrophe of the single currency again as I don’t want to repeat myself. Still, much more remains to be said about the ongoing crisis in Europe, the central question being: where do we go from here? Needless to say, the power-hungry EU bureaucrats’ solution is more “harmonization” i.e. more power in their hands to exercise still further control over the people. Never mind that the incessant centralization of power in Europe is at the very heart of the problem.

The European Union was supposed to bring “peace, prosperity, education, justice” and whatever other rosy buzzwords politicians and EU advocates could dream up. Today it is obvious that it has done a lousy job at that. From Athens to Madrid, people are taking to the streets to voice their discontent with the EU overlords that want to control every aspect of their lives while dodging taxes and receiving generous pay and benefits.

Considering the growing hatred of and intolerance towards immigrants, the flaring up of anti-Semitism in countries like Hungary and German Chancellor Angela Merkel recently being portrayed as Hitler by Greek protesters; to claim that Europe has become more peaceful since the inception of the EU would be quite a stretch. Much of this, it can be argued, is due to the economic misery evidenced by the aforementioned statistics. The initial increase in (fake) prosperity artificially created by the policies devised in Brussels came to an abrupt halt years ago.

As far as education goes, let’s hope the current crisis will stimulate young people to educate themselves in an effort to better understand why they are struggling to find a job and make a living. This kind of education might well turn out to be more important than anything they could ever hope to learn in college. The word justice is unlikely to come up in any scrutiny of the workings of this tyrannical system we call the European Union.

Martin Schulz, member of the European Parliament, was quoted by Reuters as saying: “If we have €700 billion to stabilize the banking system, we must have at least as much money to stabilize the young generation in such countries [referring to Spain]”. Well guess what Mr. Schulz? We don’t have that money. In fact we never even had the first €700 billion to begin with! The last thing we need to remedy this problem is for the European Union to step in and “solve” the issue. All we need the government – whether national or supranational – to do is to get out the economy and get out of our lives. Doing more of the same while expecting different results is what Einstein rightly defined as insanity.

“Union” is not exactly the first word that comes to mind in describing current events in Europe.  The EU is the brainchild of a small elite and has never enjoyed the widespread support of the European people. More recent events must lead even the staunchest supporters of European integration to have serious reservations as to the feasibility of this grand European experiment. The fate of that experiment will be sealed by the people deciding whether or not to put up with playing the role of guinea pigs.