Why the “Stimulus” Will Only Make the Recession Worse, & Why Government Should Not Attempt to Prevent Bankruptcy

May 3, 2009

1.

The “stimulus” package is based on the Keynesian premise that spending creates wealth. In reality, however, only production creates wealth; spending merely transfers it. Goods are created when matter is physically altered, and wealth–as opposed to goods no one wants or needs–requires that what is produced by those alterations is actually valued by consumers. Keynesian economics holds that government spending can create wealth when factors of production are idle–that is, when people are out of work and factories have unused capacity. The Keynesian reasoning is that if unemployed people were working and factories’ idle machinery was put to use, more goods would be created. While this is certainly true, the Keynesians completely overlook the fact that there is a reason why those factors of production are idle, and it isn’t that everyone except government officials following Keynesian economics have lost their minds. Increasing the material output of goods is only productive in terms of the creation of genuine wealth if consumers are willing to pay a price for those goods that is higher than the manufacturer’s cost of producing them. The idea of the “stimulus” gimmick is to trick both sides of transactions into thinking that this is the case when it isn’t: first, trick consumers into thinking they can afford to buy more than they really can; then, trick producers into thinking they are making a profit from their sales (to people who can’t afford the goods in the first place) without realizing they are actually producing at a loss. The result of this is that the material output of goods will, in fact, increase, while the creation of wealth–what actually matters–suffers.

On the demand side: Right now I am trying to spend less because I can’t afford as much as I could (or rather, as much as I was fooled by inflation into thinking I could) before the crisis. The Keynesian response to this is to cause yet more inflation–to give me paper money printed out of thin air in order to fool me into thinking once again that I can afford to purchase more than I actually can. On the supply side: car manufacturers have left their machinery idle, because they have judged that they can’t make a profit by using them to produce more cars. The Keynesian response to this is once again yet more inflation; give them paper money printed out of thin air in order to fool them into thinking they are making a profit when they really aren’t, thus tricking them into producing more cars.

This double-fakery does not produce any new wealth. It does not make anyone more prosperous, although it does temporarily create the illusion of doing so by causing a nominal increase in everyone’s revenues. Once the inflation caused by the process sets in, however, this illusion of prosperity disappears–and it becomes obvious that the scheme has accomplished nothing but to squander everyone’s real wealth. Consumers can’t really afford to buy new cars, even though the scheme fools them into thinking they can because their incomes have risen in nominal terms; and likewise, car manufacturers aren’t making higher profits in real terms than they were before, even though the scheme fools into thinking so because their profits have risen in nominal terms. Consumers are deceived into making purchases that they can’t actually afford, and producers are deceived into producing at a loss. As the newly printed dollars circulate through the economy, the cost of living and the costs of production begin to rise: and once this effect inevitably sets in, the fact that no one has actually been made more prosperous by the Keynesian scheme becomes obvious.

It is important to recognize that wealth is a subjective term–that is, it is relative to the scale of values of the individual concerned. Suppose for example that my scale of values is such that even though I would like to stay in my current apartment and purchase both a new computer and a new TV, after I pay my rent I can only afford one or the other. AndI would consider myself more prosperous living in my current apartment with only a new computer than I would moving into a smaller apartment so that I could afford both a new computer and a new TV.

Thus, my scale of values looks as follows:

1. Current apartment; new computer; new TV.

2. Current apartment; new computer.

3. Smaller apartment; new computer; new TV.

After the “stimulus” puts inflated currency into my pockets, I am fooled into thinking that I can actually afford to stay in my current apartment and buy both a new computer and a new TV. So I do so, thinking that the Keynesian scheme has made me more prosperous, because I think I can now afford to stay at position 1 on my scale of values instead of position 2. But eventually, inflation sets in; prices begin to rise, and I find that I can no longer afford to pay my rent–so I have to pack up my new TV and computer and move into a smaller apartment. I am now on position 3 of my scale of values instead of position 2. Had the “stimulus” not hoodwinked me into thinking that I could afford both a new computer and a new TV when I really couldn’t, I would’ve purchased only the new computer, and I would have remained able to afford the rent on my old apartment–thereby remaining as prosperous on my own personal scale of values as I possibly could given my real income. I would have remained on position 2, which is all that my real wealth allows me to sustain. But because I was tricked by the Keynesian scheme into buying both the TV and the computer, I am now positioned lower on my own scale of values than I would have been otherwise–I am now at position 3. I am less prosperous. Thus the scheme temporarily fooled me into thinking that I was at position 1, and then dropped me down to position 3, when in the absence of the scheme I could have simply remained at position 2. Of course, in reality the effects of the scheme are not so simple and clear cut. On the basis of a given nominal salary, an individual typically sustains a higher level of consumption–more eating out, golfing, going out to movies, and so on–than he would have had inflation not made him think he had more money than he really did; and in the end the individual is made less prosperous by this process without even retaining anything tangible in the end, in the way that I at least retained my new TV and computer at the end of this example. So, I use this particular example even though it is slightly unrealistic to show that even if individuals retain wealth after the effects of this scheme have run their course, they are still left worse off in the end than they otherwise would have been. These same principles apply to businesses, as well. If they are deceived by the “stimulus” into putting their idle machinery to use, they end up worse off in the end than they would have been otherwise. Just as my rent payment rose due to inflation, so too do business’ costs of production begin rising, as well as the interest payments on their loans. In the end, even if the scheme does accomplish its goal of increasing the material output of goods, wealth has merely been squandered, leaving everyone less prosperous than they otherwise would have been.

Another important point which Keynesians completely ignore by advocating this double-fakery scheme as a response to consumers saving their incomes instead of spending it is that savings actually do eventually get spent. The critical question is of the nature of the spending that is done–is money being spent on production, or consumption? As far as the creation of new wealth is concerned, money that is spent on consumption is a dead end; it represents no net benefit to society. You buy bread; you eat it. The bread is gone, and there is nothing left to show for it. But if you invest the money, it is spent on production–say, to pay wages to the bakery’s employees, who use it to buy bread for themselves. Money is spent to buy bread that is ultimately eaten in both cases; the question is whether it goes towards feeding a worker who is making more bread than he eats (he is being hired at a profit, and spending less than his income), therefore representing a net gain to society–or whether it goes towards bread that is simply consumed, therefore representing no net gain to society. To be clear, there is nothing wrong with consumption–we produce things, after all, because we want to consume them. But Keynesian policies are premised on the absurd notion that savings are simply “stuffed under a mattress” without being spent, when in reality most savings are invested in future production and therefore represent a beneficial and desirable contribution to the economy. Thus the “stimulus” does not only squander wealth and leave everyone off less prosperous than before, it does so at the expense of savings and investment that would have benefitted the economy had the “stimulus” scheme not squandered that wealth.

This crisis was created by too much consumption, too much debt, and malinvestment. What is needed for recovery is not for the delusion created by a “stimulus” to fake consumers into thinking that their incomes are higher than they really are while faking producers into thinking that they are producing at a profit when they aren’t–but for the economy to be allowed to readjust to external reality. Most crucially, this means allowing the liquidation of malinvestments businesses were fooled by prior inflation into thinking they could afford. Encouraging more inflation in order to retain the illusion that those investments still represent a profitable allocation of capital is the exact opposite of recovery; in fact, it is an expansion of the very thing that created the problem to begin with–and it will accomplish nothing except to make the corrections and readjustments to reality that inevitably must occur in some form another more painful than they would otherwise have to be. Liquidation, the single most important ingredient in the recovery and readjustment to reality of an economy hampered by inflation, is the very thing that a “stimulus” package prevents.

2.

Although the purpose of a bankruptcy proceeding is to allow creditors to collect as much of the money they are owed by a bankrupt company as possible, debtors benefit from bankruptcy proceedings as well, because after they pay off the part of their debt they are able to, what is left over is extinguished and they are allowed to go on with their lives. In a bankrupcty proceeding, creditors decide in collaboration with a bankruptcy court whether it is better to shut the bankrupt business down and liquidate its investments, or continue its operation under new and more efficient management. Creditors have greater financial incentives than anyone else to insure that the decision they make will maximize the long-term prosperity of everyone involved. Thus, if they judge that the business can still make a profit under better management (indicating that it is a productive allocation of society’s scare capital and labor), they will decide to have the business taken over by more efficient management. Only if they judge that the business can not continue to make a profit (and therefore is not a productive allocation of society’s scare capital and labor) will they decide that it is better for the bankrupt business to shut down and liquidate its investments. This process removes capital and labor from businesses which are managing them poorly and redirects them to businesses which are efficiently using them to satisfy consumers. This allows the labor and capital structures of society to be redrawn in alignment with the wants and needs of consumers–that is, in alignment with external reality. The only thing that interference in this process can accomplish is to allocate capital and labor less efficiently than otherwise, in a way that is not best suited to fulfilling the desires of consumers–thereby making the economy’s inevitable and necessary readjustment to external reality that much more prolonged and painful.

An economy in which rapid bankrupcty proceedings are practiced is one which is predominated by growing businesses, since incompetent businesses are stamped out, their labor and capital reallocated to businesses that are satisfying more consumers and can therefore make better use of them. Hence, even if particular workers are occasionally displaced by a bankrupcty, workers as a whole benefit greatly from the existence of an economy in which bankrupcty proceedings are practiced. Everyone else benefits because the process removes capital and labor from those who are mismanaging them, and puts them in the hands of those judged by creditors as most capable of putting them to productive use satisfying consumers.

It is counter-productive, wasteful, and immoral for any government to ever try to prevent bankrupcties. Bailouts deny the legitimate right of the creditors to collect what they are owed by the bankrupt company. To force innocent third parties to pay for a bankruptcy company’s failure represents a vile form of corporatism; it allows companies poorly managing capital and labor to stay in control of society’s scarce resources, and lowers the prosperity of the entire society as a whole. The institution of bankruptcy is an essential feature of a just and prosperous society, and it is most needed as a readjustment to the capital structure of society after the government has created misallocations of capital by increasing the money supply. Bailouts and “stimulus” packages are thus not only unjust and immoral, they represent a continuation of the very practices that caused the problem to begin with.

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Education Beyond the Bounds of Bureaucracy

April 9, 2009

“Children who know how to think for themselves spoil the harmony of the collective society that is coming, where everyone will be interdependent. Independent, self-reliant people will be a counterproductive anachronism in the collectivist society of the future.” — John Dewey, 19th century Socialist party member and educational philosopher whose ideas are still studied by teachers today.

Education is not a one-size-fits-all product. Every single child is unique, with his own particular talents, interests, strengths, and weaknesses. It is well-recognized for example that different children have different methods by which they learn the most efficiently. Some are kinesthetic learners, learning much more quickly and easily in an environment in which they can practice what they are being taught hands-on. Others are auditory learners, learning much more quickly and easily through class discussion and reading aloud. Still yet others are visual learners, learning much more quickly and easily when they can see what it is they are trying to learn either in writing or on video or in visual charts and graphs. But the State education camps do not–indeed, can not–accomodate each child’s unique pace and style of learning. Children of all methods and speeds of learning are stuffed into one room, forced to learn at the method and speed of the lowest-common-demoninator in the class. The quickest are deprived of the opportunity to excel, and the slowest are deprived of the attention they need.

Some children, although they do excel in one or more areas (say, math and science), have absolutely no interest whatsoever in some other area (say, history). In the State education camps, however, they are not allowed to proceed in the areas that interest them; instead, they are forced to continue memorizing dry facts (the dates of various events; the abbreviations of various chemicals) in those subjects in which they have no interest. What benefit does a future journalist gain from being forced to memorize the periodic table of elements? What benefit does a future engineer gain from being forced to write an essay on To Kill a Mockingbird? What benefit does a future mechanic gain from any of it? And what benefit does society gain from being compelled to spend thousands of dollars subsidizing this?

In the State-education camps, children of all temperaments are forced into the same classes together; and thus, bullying is an experience shared by everyone who has been forced through the system. Nonathletic and overweight students are forced into the same gym classes as the more athletic ones; and for many children, it is no exaggeration to say that these are the worst years of their lives–some become so overwhelmed that they end up committing suicide or carrying weapons to school. The State’s education camps thus breed violence and hatred among a large number of children, and provide many of them with the setting for the most miserable years of their lives. Just last week (April of 2009), for instance, bullying led an eleven-year-old to suicide. GLSEN reported that this was at least the fourth suicide linked to bullying already this year.

“Is it not ironic that in a planned society of controlled workers given compulsory assignments, where religious expression is suppressed, the press controlled, and all media of communication censored, where a puppet government is encouraged but denied any real authority, where great attention is given to efficiency and character reports, and attendance at cultural assemblies is mandatory, where it is avowed that all will be administered to each according to his needs and performance required from each according to his abilities, and where those who flee are tracked down, returned, and punished for trying to escape–in other words, in the typical American high school–that we attempt to teach ‘the democratic system’?” – Royce Van Norman

In a society that has risen to untold levels of prosperity thanks entirely to one single economic factor–a consistently increasing specialization in the division of its labor–how does it make any sense to force each unique child through the exact same educational mold, indifferent to that child’s interests, talents, pace and method of learning? Shouldn’t the greatest degree of specialization be encouraged as early as possible, for the benefit of both the student and society as a whole? Shouldn’t each student be allowed to develop as far as he possibly can in his own subjects of interest–even at the detriment of subjects in which he has no interest? Shouldn’t each student be allowed to learn in his own particular way, and at his own particular speed? Wouldn’t society as a whole benefit as much as the individual student from a system which allowed the student to flourish in his own peculiar talents and interests, at his own distinct pace and in his own preferred method?

In an educational model imposed from the top-down by a faceless federal bureaucracy in the style of a Soviet monopoly, a one-size-fits-all education is indeed the only possible option. But imagine the prospects of a system where dozens or more schools, each free to set their own curriculum and offer any combination of classes they chose, competed in order to attract the attendance of students. Some schools would focus on english, literature, and journalism. Others would concentrate on science and mathematics. Still others might offer training in various trades–one might offer training in computer-repair skills and programming; another might offer training in such trades as welding and carpentry. Free to openly compete with each other to try to attract customers, and recognizing that their very existence depended entirely on the continued voluntary support of those customers, schools would be on a constant search for any and every innovation that could increase the satisfaction of parents and/or students. One obvious consequence of such a system would be that students who made no effort to learn, or disrupted class for other students, would not be tolerated for a moment–no school would want to lose the business of several students just because they tolerated a single disruptive one; and so, any report of bullying would be taken seriously and punished severely. Bullying and harassment would no longer be routine experiences that most children would have to suffer through.

A few hypothetical innovations that private enterprise schools might employ: students could be separated into separate classes based on their preferred learning method, whether visual or auditory. Visually-oriented students might learn the day’s lesson with graphs, charts, and written notes; auditory-oriented students with a lecture, and recorded audio instead of notes. Schools would likely put an end to the practice of grouping all children by age, opting to group them instead by their proficiency as well as their characteristic style and pace of learning. Some schools might remove sports from their curriculum in order to put more emphasis on education; others would retain them and use sporting events as an additional source of funding. While some schools might continue offering their education for nine-months out of the year, with two months out for summer and another month out between Christmas and other holidays, others could simultaneously offer their education year-round, offering three-week breaks every nine and thereby spreading its breaks more evenly throughout the year instead of concentrating them all during the summer. There would no longer be a debate over which of these systems should be imposed on the entire educational system from the bureaucracy down. Any other system or program demanded by a justifiably large number of customers would inevitably be offered by some entrepreneur seeing the opportunity to establish a new market or niche–and everyone would be free to make his own decision as to which system or set of programs he would prefer.

Likewise, there would no longer be any debate over such things as whether prayer should be allowed, or whether intelligent design or evolution should be offered. Each school would be free to set its own policy, and each student would be free to patronize the school of his choice. In regards to the allowance of prayer, each school would be free to either allow all religious expression, disallow expression of any religion, or even officially endorse a particular religious denomination and only take in students of that particular religion or lack thereof. Religious students who wished to get their education alongside fellow students of the same religion would be free to do so, and nonreligious students who wished to get their education as far away from religion as possible would be free to do so as well.

Given the freedom to innovatively compete, schools would find creative solutions to these problems that a federal bureaucracy never would have dreamed of. In response to the evolution-creation debate, one possible innovation might be to allow ninth and tenth graders to choose between an evolution or intelligent design class, and then bring both groups together in the eleventh and twelth grades for debate classes in which each group would try to defend its own position from the other. In such a hypothetical system, each student would understand both evolutionary and creationist ideas more thoroughly from both sides. But innovations such as these are never even discussed in regards to the public schools, much less implemented–and they never will be, because state-education camps don’t face a single one of the economic incentives that are so fundamental to the operation of a voluntarily financed, private enterprise school.

Of course, in all likelihood schools as a routine would publish statistics on the post-graduate successes of its students, in order to attract students through statistical demonstration of its proficiency in preparing individuals for sucessful careers. I personally find it unlikely that creationism would long be taught within such a system, because the number of people willing to voluntarily purchase creationist courses would drop rather significantly if and when statistics found graduates of creationist classes having little or no success in scientific fields. Individuals actually seeking a successful career in science would gravitate towards the courses whose graduates had the highest success rates; and programs teaching evolution would, in my humble opinion, fill this role rather quickly. Regardless, this issue would remain open for free market enterprise to decide. Besides, even if creationism is in fact wrong, the minds of devout religious creationists are unlikely to be changed by using the State to force those individuals into classes teaching evolution. Respect for individual choice and tolerance of opposing viewpoints are more important than shoving a particular viewpoint down people’s throats—particularly when the minds being thus forced aren’t planning on changing any time soon anyway. Individuals have the right to pursue their own happiness—and if that involves the voluntary purchase and attendance of courses on creationism, then so be it.

A state-education camp that is assured of subsidies and state teachers who are assured of being paid whether children are learning and parents are satisfied or not has no incentive whatsoever to improve its quality, cut its own wastes, please parents–or hell, even to teach children. The Supreme Court has ruled that the public schools that people are forced to subsidize through taxes in fact have “no duty to educate individual children.” Compare this to private schools like Sylva Learning Center that give a refundable promise to teach in two months what the public schools can’t teach in ten–for half the price.

Of course, some percentage of the children forced through the state system have no desire or intention whatsoever to learn anything–and yet society is forced to pay approximately $10,000 in taxes to drag them through the system anyway, so that they can accomplish absolutely nothing apart from making life more difficult for teachers and lessening the quality of education and amount of attention on all the other children in the system who are actually trying to make an effort. These children still end up dropping out of school and getting a job in manual labor despite their mandated “education.” This process is counter-productive in every conceivable way—it wastes taxpayer money; it wastes teacher’s time; it wastes the time of the rebellious and uncooperative children; and it lessens the level of individual attention (and, therefore, quality of education) for all the children in the system actually making an effort to learn. In a private enterprise system, it would be no loss that such children would not be forced through the system at taxpayer expense for twelve entire years—and it would be clear to those children that, education or none, their future is entirely in their own hands. Thus, every child attending a given class in a private enterprise system would have strong incentive to make the best effort he possibly could to learn and not be disruptive; and the school in question would have strong direct incentives to punish and prevent such practices as bullying, drug dealing, and harassment. That every single one of these incentives is absent from the state-education camps is surely accountable for the omnipresence in these camps of drug dealing and harassment. Society as a whole will be better off when those who actually want to learn are able to get the best and most personal education possible, while those who don’t and aren’t willing to make an effort aren’t forced with thousands of taxpayer dollars to pollute the entire system for everyone.

Children would not be the only group to benefit from a private enterprise in education. Teachers, in fact, would benefit greatly as well. One of the greatest reasons teachers’ wages are so low is because the massive waste allowed by the absence of profit-and-loss incentives in the public system has to be spread out across all of the state’s employees, thus lowering wages for all teachers all across the board. The first economic incentive a private enterprise school would face would be to lower its costs by cutting any wasteful or unnecessary expenditure. These lowered costs of operation would then be passed on to teachers, as schools competed to hire the most efficient staff possible by attempting to offer the best teachers higher wages than their competitors. Teachers with high success rates and good reports from ex-students would be more valued, and as such the school at which they were employeed would offer them the high wage justified by their proficiency. Teachers with low success rates and poor reports from ex-students would soon be let go or fired. Thus, free market schools would select and rewards its teachers for merit just as every other sector in the free market selects rewards its employees for merit. The profit-and-loss system would give schools the incentive to fire bad teachers, offer raises to better ones in order to prevent competing schools from attracting them with the offer of a higher salary, and cut wasteful spending wherever possible. This would also thus provide teachers with a direct incentive to teach as efficiently as possible and try to make their lessons interesting enough to keep their students’ attention; in other words, to ensure the success of their students in whatever way possible. Hence, the first effect of free enterprise in education would be to raise teachers’ wages across the board, as wasteful spending was cut and schools competed with each other for the best teachers; and the second effect would be for teachers’ wages to increase or decrease in direct proportion to their actual success in teaching, providing teachers with an actual incentive to increase their proficiency and give special attention and focus to each individual student. That every single one of these incentives is absent from the state-education camps is surely accountable for the overwhelming failure of these camps to educate American children in even such basic skills as reading and elementary arithmetic.

Now to provide an answers to a few simple objections.

1. “There are parents out there who just don’t care. They do not care if their kid gets an education; they do not care if their kids skip school. Some parent would rather them stay at home, stay in the yard, or work.”

First off, in a system in which parents actually had to purchase their child’s education (directly, instead of indirectly through taxation), parents would most definitely care if their children were skipping the education that they were having to pay for. Second, most parents plan to rely at least to some degree on their children to take care of them in old age. Third, not many parents enjoy the prospect of keeping their children “up” unnecessarily. Thus, only if a parent didn’t want his children to be able to leave home and become self-sufficient, didn’t plan on relying on them at all in old age, and planned on keeping them up at home himself for an indefinite period of time would he not want them to get an education that would lend itself to a successful career. Only if all these motives are found to fail might there be a need for negligence laws against failing to provide one’s children with an adequate education, and a free enterprise educational system would have room for such laws just as there already are negligence laws against failing to provide one’s child with sufficient food, water, and clothing, in the absence of government-operated, mandatory restaurants and clothing stores. Regardless, such laws may actually prove unnecessary. In early-eighteen-hundreds America, for instance, before public education had even been introduced, private educational attendance in Boston was recorded at 96% by a committee organized to study the issue.

This country was far more literate before education became a state province than it is today. In fact, if education had remained private, any proposal to turn it over to the state would shock all lovers of freedom. But now, Americans [have become] inured to the intellectual serfdom of state education. —Joseph Sobran

2. “In a private enterprise system, only the rich would be able to afford education.”

Even right now, with the limited market that private schools receive, the majority of them cost less than the public schools. It is crucial to realize that the state schools are not free; they are simply funded through taxation instead of voluntary payment. It costs $10,000 to send a single child through public high school. Private high schools, by comparison, average between $5,000 and $7,000 for a better education over the same period of time. And if private enterprise schools replaced the public schools, their greatly expanded market would provide them with a financial incentive to offer their services even cheaper. Is it better business to sell a service for $10,000 and attract 150 customers, or to sell that same service for $4,000 and attract 500? In this example, the school in question would increase its total income by half a million dollars by cutting its tuition by more than half. And in a free enterprise system, private schools would most likely operate on an even greater economy of scale than this, and would thus quickly lower prices even below these hypothetical rates. Here is a link to one of many studies demonstrating that the actual price of public schools is twice that of the average private school, and approximately equal to even the most elitist, expensive private schools in existence.

Chris Cardiff, of the National Center for Independent Education, has calculated that if every single one of the 16 million poor and lower-middle-class children in America were provided with a $1500 scholarship to a private school, the cost would come to $24 billion. This is less than 8% of what is currently spent on public schooling nationwide. Even on top of a tax burden surpassing 40%, Americans already donate more than $216 billion dollars to charity each year–and an additional $37 billion is raised in addition to this in private donations to higher education. Raising the mere $24 billion needed for the education of the poor in higher-quality private schools would be no problem at all, especially once Americans received the $316 billion dollar tax cut that would accompany the abolishment of government-operated schooling. The business community itself, because it benefits from the existence of a market of well-educated workers, would be likely to donate to schools that taught students skills that made them into valuable workers. Many businesses already have to spend a great deal in order to educate their workers themselves; so, in a private enterprise system, these resources would simply be redirected to the private sector. What about children in isolated, rural areas? A full education from kindergarten through college is already available through correspondence, video, and the Internet; and if this avenue was proven useful, like anything else proven useful in the free market, it would expand. All of these factors and more would increase the ability of poor and/or rurally isolated students to get an affordable, high-quality education.

“Many companies have moved operations to places with cheap, relatively poorly educated labor. What may be crucial, they say, is the dependability of a labor force and how well it can be managed and trained, and not its general educational level, although a small cadre of highly educated creative people is essential to innovation and growth.” — Thomas B Sticht, president and senior scientist, Applied Behavioral and Cognitive Sciences, Inc; Oct 23, 1989

Beyond the fact that private schools would offer affordable and effective education to a wide market, it must also be recognized that every citizen does not actually need an entire high school education. Manual labor is an economic necessity, and there is little justification for forcing every single manual laborer through twelve years of the same science and history classes, with taxes appropriated from other citizens. As a final example: in New York, an entirely private and completely free education was offered to students by a group of teachers working in an abandoned store under the name, “Harlem Prep.” These teachers offered their curriculum to the poor black students that the state system had failed and discarded as hopeless. After four years of Harlem Prep’s program, over ninety percent of these poor students, who had previously been rejected by the public school system, went on to receive a college diploma and then hold successful careers. How did the public school system respond to this? By shutting Harlem Prep down.

3. “But we’ve always had public schools!”

Not so. Mr. Matthew J. Brouillette, President of the Commonwealth Foundation in Harrisburg, Pennsylvania and former Director of Education Policy for the Mackinac Center for Public Policy, writes: “From the outset of the first settlements in the New World, Americans founded and successfully maintained a de-centralized network of schools, up through [the late eighteen hundreds]. Early America was arguably the freest civil society that has ever existed. This freedom extended to education, which meant that parents were responsible for, and had complete control of, their children’s schooling. There were no accrediting agencies, no regulatory boards, and no teacher certification requirements. Parents could choose whatever kind of school or education they wanted for their children, and no one was forced to pay for education they did not use or approve of.”

National compulsory attendance laws for public schools were not established in America until the late eighteen hundreds. The Commissioner of Education who passed these laws—William Tory Harris—had this to say about his accomplishment, in 1908: “The great purpose of school can be realized better in dark, airless, ugly places . . . Our schools have been scientifically designed to prevent over-education from happening . . . The average American [should be] content with their humble role in life, because they’re not tempted to think about any other role. Ninety-nine [students] out of a hundred are automata, careful to walk in prescribed paths, careful to follow the prescribed custom. This is not an accident, but the result of substantial education—which, scientifically defined, is the subsumption of the individual.” Harris, in these quotes, clearly expressed his pride at the fact that the public education system was succeeding in its goals of stifling private initiative and independent thought, turning its students into “automata.”

This article so far has contained only a small amount of speculation on something for which there are literally an infinitude of possibilities. In reality, a fully free market in education, subject to the same innovative forces that gave society such things as electricity, cell phones, the ipod, and laptop computers, would develop innovations far more creative and effective than I could ever try to imagine or speculate about in a simple short essay. “It’s time to admit,” Albert Shanker, President of the American Federation of Teachers writes, “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.”