October 28, 1993
"Milton Friedman Notwithstanding, Proposition 174 is Just Too Big a Risk"
San Jose Mercury News
By Timothy Taylor
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I SHOULD be a natural vote for Proposition 174, the school voucher initiative. It is my fate to live among economists, reading, writing, teaching and editing economics for my daily bread and the monthly mortgage payments. When forced to consort with non-economists, I am usually the designated defender of market forces, free trade, the invisible hand and all the rest.

So why am I planning to vote against market forces in the public education industry?

The most thoughtful and persuasive case in favor of Proposition 174 was written more than three decades ago, by the brilliant economist Milton Friedman as Chapter 6 of his 1962 book "Capitalism and Freedom." Reading his essay again is like stepping into a time warp; it could have been written yesterday.

Back in 1962, Friedman described a voucher plan: "Governments could require a minimum level of schooling financed by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on 'approved' educational services.... The role of government would be limited to ensuring that the schools met certain minimum standards, such as the including of a minimum common content in their programs, much as it now inspects restaurants to ensure that they maintain minimum sanitary standards."

What of the argument that what schools really need is more money for buildings and teachers? Friedman responded more than 30 years ago: "This seems a false diagnosis. The amount of money spent on schooling has been rising at an extraordinarily high rate, far faster than our total income. Teachers' salaries have been rising far faster than returns in comparable occupations. The problem is not primarily that we are spending too little money -- though we may be -- but that we are getting so little per dollar spent."

As Friedman saw it, a market-oriented system would attract better teachers: "With respect to teacher's salaries, the major problem is not that they are too low on average -- they may well be too high on the average -- but that they are too uniform and rigid. Poor teachers are grossly overpaid and good teachers grossly underpaid."

And further: "If one were to seek deliberately to devise a system of recruiting and paying teachers calculated to repel the imaginative and daring and self-confident and to attract the dull and mediocre and uninspiring, he could hardly do better than imitate the system of requiring teaching certificates and enforcing standard salary structures that has developed in the larger city and statewide systems."

What about the effect on children from poor neighborhoods? Friedman discusses the problem of a poor family in a slum with a gifted child. "Unless it can get special treatment, or scholarship assistance, at one of the very few private schools, the family is in a very difficult position. The 'good' public schools are in the high-income neighborhoods. . . . Our present school system, far from equalizing opportunity, very likely does the opposite. It makes it all the harder for the exceptional few -- and it is they who are the hope of the future -- to rise above the poverty of their initial state."

Friedman's brief essay is packed with other interesting points. He notes that if many private schools existed, parochial schools might actually end up at a disadvantage, if parents express a preference for a secular education. He argues that a voucher system might increase total spending on education, since interested and involved parents would be more willing to support schools financially.

I do believe that a number of public schools perform dismally in the most basic sense: After 12 years, they turn out too many illiterate and innumerate students. In an information-intensive, knowledge-based, high-tech economy, that institutional failure can cripple a young person's prospects.

But when all is said and done, I can't make myself believe that Proposition 174 is the answer.

For example, Friedman wrote of how the government would guarantee minimum standards, but Proposition 174 has no real guarantees to offer. Because of the cost of offering vouchers to those already in private schools, Proposition 174 could cost the state $1 billion or so, money that it doesn't have.

Furthermore, starting a school is not like starting a restaurant or a dry cleaners. Markets work best when there are many competing suppliers, when new suppliers can easily enter the market, and when customers can readily evaluate the product and shift between suppliers as they wish.

But choosing a child's school, or deciding to shift a child from one school to another, is a lot tougher than deciding where to have dinner on Friday night. Starting new schools is tricky; yet without new schools, especially in areas where the schools are presently worst, there won't be enough student spaces to offer a real choice.

Although Proposition 174 supporters have not provided a convincing image of how education markets would work, the education establishment is not arguing in especially good faith, either.

For example, advertisements against Proposition 174 often talk about the lack of minimum standards for voucher schools. This sudden support for standards would be more persuasive if it were applied to the existing public schools. But how ineffective does a teacher or administrator have to be before their pay is cut? How bad does a school have to be before it is shut down?

It is hugely ironic to hear the education establishment, which continually argues for spending increases for schools, now take the line that an educational reform costs too much. If a ballot initiative simply called for spending money on teacher's salaries, would the teachers' unions still think it cost too much? With or without 174, California's K-12 school enrollment is going to expand by about 1.8 million students in the next eight years, an increase of 35 percent. Starting a functioning school wouldn't be easy for Proposition 174 supporters -- but the current system does not seem well-prepared to take on the enormous task of finding the necessary teachers and facilities, either.

My no-confidence vote on Proposition 174 stems from sheer timidity. I prefer medium-sized reforms; grand revolutions have too many unexpected, unpleasant consequences. But I do worry that without the threat of 174, or something like it, those who run California's public schools will block any sort of significant reform.

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