The Ongoing Horror of Cuban Socialism
Back in 2014, I compared the long-run economic performance of Cuba and Hong Kong.
Both jurisdictions were roughly equal about 60 years ago. But the data show a dramatic performance gap ever since the communists took power in Cuba,with Hong Kong (which was very pro-market back then) enjoying much bigger increases in prosperity.
Sadly, not much has changed in Cuba since I wrote that column.
The communist dictatorship is still there, and the economy is still socialist (notwithstanding even Castro admitting its failure).
And this means ongoing misery for ordinary people.
Here are some excerpts from a story published by Agence France-Presse.
Cubans are no strangers to queuing for everything from bread to toothpaste, often standing for hours under a blazing sun with no access to a toilet or drinking water, and always with the fear of leaving empty-handed. It is a daily ordeal Cubans have endured for about 60 years of communist rule…Cuba recorded an official inflation rate of 70 percent in 2021, when the economy recovered a modest two percent after an 11-percent drop in 2020, signaling the nation’s worst economic crisis in almost three decades. With government reserves dwindling, food imports — some $2 billion worth per year before the pandemic struck — had to be drastically cut back in the country of 11.2 million. …The shortages affect everyone; even the well-heeled have to contend with long lines, though they often pay other people to hold their place. …It is common for shops to have only two or three products at a given time, or none. Sometimes, people queue not knowing what, if any, product they will be able to buy that day.
Some defenders of Cuba blame the hardship on the United States, which imposes considerable restrictions on trade and tourism with Cuba.
I’m always happy when people recognize the downside of trade barriers, but blaming Cuba’s economic misery on the partial embargo is akin to a football team blaming its field goal kicker after getting shut out, 56-0.
Virtually all economists, including left-leaning ones, agree that bad Cuban economic policy is what’s causing deprivation and suffering.
Mary Anastasia O’Grady opined on this issue in her Wall Street Journal column.
Repression and propaganda are the only two things that Havana does well. …For decades, Cuba has blamed what it calls the U.S. “blockade” for island privation. Regime talking points have been repeated ad nauseam in U.S. media and beyond. …Why life for most Cubans is primitive in the 21st century is not hard to discern. Shortages caused by communism have been made infinitely worse during the Covid-19 pandemic because, as tourism dollars dried up, the regime naturally diverted diminishing hard currency to itself. There is no gasoline or diesel for ambulances… Military vehicles and secret-police cars are always ready to go. Nurturing the island’s nomenklatura also takes real money, as does caring for the children of elite kleptocrats who display their obscene wealth—like car collections, thoroughbred horses and luxurious travel—on social media. …Havana is sore because it doesn’t qualify for credit from the U.S. But Cuba is a proven deadbeat, having defaulted on hundreds of millions of dollars in debt to Russia, Europe, Latin America and Japan. The despots are pouting too because they can’t stick their snouts in troughs at the International Monetary Fund and World Bank.
Let’s close by looking at some long-run economic trends.
I started this column by charting the difference between Cuba and Hong Kong. But since Hong Kong’s economic attractiveness is being eroded by China, let’s instead see how Cuba compares to a handful of other nations.
I’ve previously compared Cuba and pro-market Taiwan, as well as Cuba and sort-of-pro-market Panama. Now let’s add sort-of-pro-market Botswana to the analysis.
As you can see, the Maddison data shows you don’t need perfect policy to get much better results than Cuba.
The moral of the story is that you get great results with lots of economic liberty, okay results with some economic liberty, and miserable results with almost no economic liberty (i.e., lots of socialism).
Which is the lesson of my anti-convergence club.
P.S. The AFP story from above included this hopeful sentence.
The government in Havana has said that boosting national production is the best way to deal with shortages and queues, and has slowly started opening the economy to private enterprise.
I certainly hope this is true, though I’m skeptical since previous promises economic liberalization have not been fulfilled (heck, they’ve even attracted mockery from late-night TV hosts).
P.P.S. Communism has always attracted dupes and apologists. In the case of Cuba, that list includes Bernie Sanders, Nicholas Kristof, and Nikole Hannah-Jones. And maybe we should add Jeffrey Sachs and some environmentalists to that list as well.
The World’s Most Perverse (but Perhaps Accurate) Observation about Cuba
Weird items sometimes show up in my inbox, and this clip from Nikole Hannah-Jones (creator of the academically shoddy 1619 Project) definitely qualifies.
She actually cites the economic wasteland of Cuba as a role model for equality.
Ms. Hannah-Jones said that Cuba’s results are because of socialism.
On that point, I’ll agree, though I think it shows why that collectivist ideology is so destructive.
Let’s look at some comparisons based on the Maddison data. This first chart shows how Cuba has fallen far behind Panama and the Dominican Republic, two other multi-racial nations in the region.
The key thing to realize is that Cuba was equal to (or richer than) those countries when the communists took power in Cuba.
But socialist policies have caused Cuba’s economy to stagnate and now Panama is almost three times richer and the Dominican Republic is nearly two times richer (and you can click here is you also want to see comparisons with Chile and Costa Rica).
In other words, Cuba is a role model, but not for anything positive.
Let’s drive that point home with another chart comparing three nations – Cuba, Singapore, and Taiwan – that were roughly equal back in 1959.
What makes this comparison especially instructive is that Cuba went for socialism and Singapore and Taiwan became pro-market reformers. So it should be no surprise that the latter two have far surpassed Cuba.
The same thing is true, by the way, if you compare Hong Kong and Cuba.
Let’s conclude by addressing one final point.
Ms. Hannah-Jones asserted that Cuba deserves praise for having equality.
I doubt that’s true since left-wing dictators usually steal lots of money while ordinary people suffer.
But even if she’s right and Cuba genuinely has equality, it’s only because socialism has impoverished everyone, including the ruling class.
Our friends on the left apparently think that’s something to applaud, as Margaret Thatcher observed, but I’d rather be part of a society characterized by an “unequal sharing of the blessings.”
P.S. Ms. Hannah-Jones may be even more wrong about Cuba than Bernie Sanders, Jeffrey Sachs, or Nicholas Kristof.
The Case Against Socialism, Part III
Part I of this series looked at socialism’s track record of failure, while Part II pointed out that greater levels of socialism lead to greater levels of misery.
For Part III, let’s start with this video on the economics of socialism.
If the world was governed by logic, there would be no need to address this topic for a third time.
After all, the evidence is overwhelming that capitalism (oops, I mean free enterprise) does a better job than socialism.
But it seems that we don’t live in a logical world. We have too many people who have an anti-empirical belief in bigger government.
And, if the polling data is accurate, the problem seems especially acute with young people.
I’ve wondered whether sub-par government schools are part of the problem. Are they mis-educating kids?
I don’t know if that was a problem in the past, but Richard Rahn warns in the Washington Times that it will probably be a problem in the future.
Recent polls have shown rising support for socialism and an increasingly negative view of capitalism, particularly among the young. …Most of those who say they support socialism are probably unaware that it has failed every place and time that it has been tried. …They may also not be aware that socialism relies on coercion to function… By contrast, capitalism relies on the voluntary exchange of goods and services… Last week at the NEA’s annual meeting, the delegates demanded that the union issue a study criticizing, among many things, “capitalism.” Has anyone thought through the alternatives – a system based on slavery or serfdom…? Under capitalism, investment and productive labor are allocated by individual consumer choice. …Under socialism, there is no good mechanism for meeting consumer demand; the socialist leaders decide what the people should have. There is no mechanism for creating and encouraging innovation – that is why socialist states normally only produce something new after it has already been produced in a capitalist country… So why then are the teachers’ unions advocating that capitalism be attacked, and socialism be applauded? The answer is simple, willful ignorance.
I’ve always supported school choice because I want better educational outcomes, especially for poor and minority students.
In recent months, I’ve wondered we also need school choice because of what teacher unions are doing on issues such as critical race theory and school re-openings.
Now it seems we need choice simply to protect kids from the risk of being propagandized.
P.S. Or protect kids from nonsensical forms of discipline.
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President Barack Obama announces the creation of an interagency task force for guns as as Vice President Joseph Biden listens on.Getty Images
Is Gun Control Dead?
In recent months, governments released prisoners and announced that some laws wouldn’t be enforced because of the coronavirus. Now, with protests against police misbehavior, we’re seeing governments fail to maintain law and order.
As suggested by this excellent Reason video, these developments bolster the case against gun control.
But does this mean politicians will be more supportive of the 2nd Amendment?
The answer (at least for anyone with an IQ above room temperature)should be yes.
From an economic perspective, one major goal is to change the cost-benefit analysis for criminals. If bad guys have to worry that good guys may be armed, that significantly increases the potential cost of illegal behavior.
A well-functioning system of law enforcement can help, of course, but that’s not a description of how things work in some communities – even in normal times, much less when there’s civil unrest.
But all this evidence and analysis doesn’t seem to matter for Joe Biden. A look at his campaign website shows support for a wide range of gun-control laws from the soon-to-be Democratic nominee.
…gun violence is a public health epidemic. …In 1994, Biden – along with Senator Dianne Feinstein – secured the passage of 10-year bans on assault weapons and high-capacity magazines. As president, Joe Biden will defeat the NRA again. …As president, Biden will: …Ban the manufacture and sale of assault weapons and high-capacity magazines. …Regulate possession of existing assault weapons under the National Firearms Act. …Biden supports legislation restricting the number of firearms an individual may purchase per month to one. …End the online sale of firearms and ammunitions. …Give states incentives to set up gun licensing programs.
What’s especially discouraging is that Biden apparently hasn’t learned anything about so-called assault weapons since 1994.
In a 2019 column for Reason, Jacob Sullum dissected Biden’s incoherent views on the topic.
Joe Biden…is still proud of the ban on “assault weapons”… Biden argues that it made mass shootings less common…, citing a study reported in The Journal of Trauma and Acute Care Surgery last January. But that is not what the researchers, led by New York University epidemiologist Charles DiMaggio, actually found.…The study…looked not at the number of mass shootings, as Biden claims, but the number of mass-shooting deaths as a share of all firearm homicides. The difference in total fatalities during the period when the ban was in effect amounted to 15 fewer deaths over a decade, or 1.5 a year on average, including mass shootings that did not involve weapons covered by the ban. …The causal mechanism imagined by Biden is even harder to figure out. He describes “assault weapons” as “military-style firearms designed to fire rapidly.” But they do not fire any faster than any other semi-automatic. …Under the 1994 ban, removing “military-style” features such as folding stocks, flash suppressors, or bayonet mounts transformed forbidden “assault weapons” into legal firearms, even though the compliant models fired the same ammunition at the same rate with the same muzzle velocity as the ones targeted by the law.
I wonder if Biden understands the policy he’s advocating.
Does he think that “assault weapons” are actual machine guns, capable of firing multiple rounds with one pull on the trigger (a remarkably common misconception among gun-control advocates)?
Or, if he understands that a so-called assault weapon is just like any other gun (firing one round each time the trigger is pulled), then why would he think anything would be achieved by banning some guns and leaving others (that work the same way) legal?
Perhaps most relevant, does he even care what the evidence shows?
The bottom line is that people are “voting with their dollars” for gun ownership for the simple reason that they know it’s unwise to trust government (either to protect them from crime or to respect their rights).
But that doesn’t mean their constitutional freedoms will be secure if Biden wins the 2020 election.
P.S. The good news is that there will be widespread civil disobedience if politicians push for new gun bans.
P.P.S. Another silver lining is that we’ll get more and more clever humor mocking gun control.
The Case Against Biden’s Class-Warfare Tax Policy, Part II
In Part I of this series, I expressed some optimism that Joe Biden would not aggressively push his class-warfare tax plan, particularly since Republicans almost certainly will wind up controlling the Senate.
But the main goal of that column was to explain that the internal revenue code already is heavily weighted against investors, entrepreneurs, business owners and other upper-income taxpayers.
And to underscore that point, I shared two charts from Brian Riedl’s chartbook to show that the “rich” are now paying a much larger share of the tax burden – notwithstanding the Reagan tax cuts, Bush tax cuts, and Trump tax cuts – than they were 40 years ago.
Not only that, but the United States has a tax system that is more “progressive” than all other developed nations (all of whom also impose heavy tax burdens on upper-income taxpayers, but differ from the United States in that they also pillage lower-income and middle-class residents).
In other words, Biden’s class-warfare tax plan is bad policy.
Today’s column, by contrast, will point out that his tax increases are impractical. Simply stated, they won’t collect much revenue because people change their behavior when incentives to earn and report income are altered.
This is especially true when looking at upper-income taxpayers who – compared to the rest of us – have much greater ability to change the timing, level, and composition of their income.
This helps to explain why rich people paid five times as much tax to the IRS during the 1980s when Reagan slashed the top tax rate from 70 percent to 28 percent.
When writing about this topic, I normally use the Laffer Curve to help people understand why simplistic assumptions about tax policy are wrong (that you can double tax revenue by doubling tax rates, for instance). And I point out that even folks way on the left, such as Paul Krugman, agree with this common-sense view (though it’s also worth noting that some people on the right discredit the concept by making silly assertions that “all tax cuts pay for themselves”).
But instead of showing the curve again, I want to go back to Brian Riedl’s chartbook and review his data on of revenue changes during the eight years of the Obama Administration.
It shows that Obama technically cut taxes by $822 billion (as further explained in the postscript, most of that occurred when some of the Bush tax cuts were made permanent by the “fiscal cliff” deal in 2012) and raised taxes by $1.32 trillion (most of that occurred as a result of the Obamacare legislation).
If we do the math, that means Obama imposed a cumulative net tax increase of about $510 billion during his eight years in office
But, if you look at the red bar on the chart, you’ll see that the government didn’t wind up with more money because of what the number crunchers refer to as “economic and technical reestimates.”
Indeed, those reestimates resulted in more than $3.1 trillion of lost revenue during the Obama years.
I don’t want the politicians and bureaucrats in Washington to have more tax revenue, but I obviously don’t like it when tax revenues shrink simply because the economy is stagnant and people have less taxable income.
Yet that’s precisely what we got during the Obama years.
To be sure, it would be inaccurate to assert that revenues declined solely because of Obama’s tax increase. There were many other bad policies that also contributed to taxable income falling short of projections.
Heck, maybe there was simply some bad luck as well.
But even if we add lots of caveats, the inescapable conclusion is that it’s not a good idea to adopt policies – such as class-warfare tax rates – that discourage people from earning and reporting taxable income.
The bottom line is that we should hope Biden’s proposed tax increases die a quick death.
P.S. The “fiscal cliff” was the term used to describe the scheduled expiration of the 2001 and 2003 Bush tax cuts. According to the way budget data is measured in Washington, extending some of those provisions counted as a tax cut even though the practical impact was to protect people from a tax increase.
P.P.S. Even though Biden absurdly asserted that paying higher taxes is “patriotic,” it’s worth pointing out that he engaged in very aggressive tax avoidance to protect his family’s money.
President Joe Biden Will Be Bad, but a President Kamala Harris Would Be Worse
Joe Biden has a very misguided economic agenda. I’m especially disturbed by his class-warfare tax agenda, which will be bad news for American workers and American competitiveness.
The good news, as I wrote earlier this year, is that he probably isn’t serious about some of his worst ideas.
Biden is a statist, but not overly ideological. His support for bigger government is largely a strategy of catering to the various interest groups that dominate the Democratic Party. The good news is that he’s an incrementalist and won’t aggressively push for a horrifying FDR-style agenda if he gets to the White House.
But what if Joe Biden’s health deteriorates and Kamala Harris – sooner or later – winds up in charge?
That’s rather troubling since her agenda was far to the left of Biden’s when they were competing for the Democratic nomination.
And it doesn’t appear that being Biden’s choice for Vice President has led her to moderate her views. Consider this campaign ad, where she openly asserted that “equitable treatment means we all end up at the same place.”
The notion that we should strive for equality of outcomes rather than equality of opportunity is horrifying.
For all intents and purposes,Harris has embraced a harsh version of redistributionism where everyone above average is punished and everyone below average is rewarded.
This goes way beyond a safety net and it’s definitely a recipe for economic misery since people on both sides of the equationhave less incentive to be productive.
I’m not the only one to be taken aback by Harris’ dogmatic leftism.
Robby Soave, writing for Reason, is very critical of her radical outlook.
Harris gives voice to a leftist-progressive narrative about the importance of equity—equal outcomes—rather than mere equality before the law. …Harris contrasted equal treatment—all people getting the same thing—with equitable treatment,which means “we all end up at the same place.” …This may seem like a trivial difference, but when it comes to public policy, the difference matters. A government shouldbe obligated to treat all citizens equally, giving them the same access to civil rights and liberties like voting, marriage, religious freedom, and gun ownership. …A mandate to foster equity, though, would give the government power to violate these rights in order to achieve identical social results for all people.
And, in a column for National Review, Brad Polumbo expresses similar reservations about her views.
Whether she embraces the label “socialist” or not, Harris’s stated agenda and Senate record both reveal her to be positioned a long way to the left on matters of economic policy. From health care to the environment to housing, Harris thinks the answer to almost every problem we face is simply more government and more taxpayer money — raising taxes and further indebting future generations in the process.…Harris…supports an astounding $40 trillion in new spending over the next decade. In a sign of just how far left the Democratic Party has shifted on economics, Harris backs more than 20 times as much spending as Hillary Clinton proposed in 2016. …And this is not just a matter of spending. During her failed presidential campaign, Harris supported a federal-government takeover of health care… The senator jumped on the “Green New Deal” bandwagon as well. She co-sponsored the Green New Deal resolution in the Senate that called for a “new national, social, industrial, and economic mobilization on a scale not seen since World War II and the New Deal era.” …she supports enacting price controls on housing across the country. …The left-wing group Progressive Punch analyzed Harris’s voting record and found that she is the fourth-most liberal senator, more liberal even than Massachusetts senator Elizabeth Warren. Similarly, the nonpartisan organization GovTrack.us deemed Harris the furthest-left member of the Senate for the 2019 legislative year. (Spoiler alert: If your voting record is to the left of Bernie Sanders, you might be a socialist.)
To be fair, Harris is simply a politician, so we have no idea what she really believes. Her hard-left agenda might simply be her way of appealing to Democratic voters, much as Republicans who run for president suddenly decide they support big tax cuts and sweeping tax reform.
But whether she’s sincere or insincere, it’s troubling that she actually says it’s the role of government to make sure we all “end up at the same place.”
Let’s close with a video clip from Milton Friedman. At the risk of understatement, he has a different perspective than Ms. Harris.
Since we highlighted Harris’ key quote, let’s also highlight the key quote from Friedman.
Amen.
P.S. It appears Republicans will hold the Senate, which presumably (hopefully?) means that any radical proposals would be dead on arrival, regardless of whether they’re proposed by Biden or Harris.
P.P.S. Harris may win the prize for the most economically illiterate proposal of the 2020 campaign.
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Will Biden’s Class-Warfare Tax Plan Lead to an Exodus of Job Creators?
After Barack Obama took office (and especially after he was reelected), there was a big uptick in the number of rich people who chose to emigrate from the United States.
There are many reasons wealthy people choose to move from one nation to another, but Obama’s embrace of class-warfare tax policy (including FATCA) was seen as a big factor.
Joe Biden’s tax agenda is significantly more punitive than Obama’s, so we may see something similar happen if he wins the 2020 election.
Given the economic importance of innovators, entrepreneurs, and inventors, this would be not be good news for the American economy.
The New York Times reported late last year that the United States could be shooting itself in the foot by discouraging wealthy residents.
…a different group of Americans say they are considering leaving — people of both parties who would be hit by the wealth tax… Wealthy Americans often leave high-tax states like New York and California for lower-tax ones like Florida and Texas. But renouncing citizenship is a far more permanent, costly and complicated proposition. …“America’s the most attractive destination for capital, entrepreneurs and people wanting to get a great education,” said Reaz H. Jafri, a partner and head of the immigration practice at Withers, an international law firm. “But in today’s world, when you have other economic centers of excellence — like Singapore, Switzerland and London — people don’t view the U.S. as the only place to be.” …now, the price may be right to leave. While the cost of expatriating varies depending on a person’s assets, the wealthiest are betting that if a Democrat wins…, leaving now means a lower exit tax. …The wealthy who are considering renouncing their citizenship fear a wealth tax less than the possibility that the tax on capital gains could be raised to the ordinary income tax rate, effectively doubling what a wealthy person would pay… When Eduardo Saverin, a founder of Facebook…renounced his United States citizenship shortly before the social network went public, …several estimates said that renouncing his citizenship…saved him $700 million in taxes.
The migratory habits of rich people make a difference in the global economy.
Here are some excerpts from a 2017 Bloomberg story.
Australia is luring increasing numbers of global millionaires, helping make it one of the fastest growing wealthy nations in the world… Over the past decade, total wealth held in Australia has risen by 85 percent compared to 30 percent in the U.S. and 28 percent in the U.K… As a result, the average Australian is now significantly wealthier than the average American or Briton. …Given its relatively small population, Australia also makes an appearance on a list of average wealth per person. This one is, however, dominated by small tax havens.
Here’s one of the charts from the story.
As you can see, Australia is doing very well, though the small tax havens like Monaco are world leaders.
I’m mystified, however, that the Cayman Islands isn’t listed.
But I’m digressing.
Let’s get back to our main topic. It’s worth noting that even Greece is seeking to attract rich foreigners.
The new tax law is aimed at attracting fresh revenues into the country’s state coffers – mainly from foreigners as well as Greeks who are taxed abroad – by relocating their tax domicile to Greece, as it tries to woo “high-net-worth individuals” to the Greek tax register.The non-dom model provides for revenues obtained abroad to be taxed at a flat amount… Having these foreigners stay in Greece for at least 183 days a year, as the law requires, will also entail expenditure on accommodation and everyday costs that will be added to the Greek economy. …most eligible foreigners will be able to considerably lighten their tax burden if they relocate to Greece…nevertheless, the amount of 500,000 euros’ worth of investment in Greece required of foreigners and the annual flat tax of 100,000 euros demanded (plus 20,000 euros per family member) may keep many of them away.
The system is too restrictive, but it will make the beleaguered nation an attractive destination for some rich people. After all, they don’t even have to pay a flat tax, just a flat fee.
Italy has enjoyed some success with a similar regime to entice millionaires.
Last but not least, an article published last year has some fascinating details on the where rich people move and why they move.
The world’s wealthiest people are also the most mobile. High net worth individuals (HNWIs) – persons with wealth over US$1 million – may decide to pick up and move for a number of reasons. In some cases they are attracted by jurisdictions with more favorable tax laws… Unlike the middle class, wealthy citizens have the means to pick up and leave when things start to sideways in their home country. An uptick in HNWI migration from a country can often be a signal of negative economic or societal factors influencing a country. …Time-honored locations – such as Switzerland and the Cayman Islands – continue to attract the world’s wealthy, but no country is experiencing HNWI inflows quite like Australia. …The country has a robust economy, and is perceived as being a safe place to raise a family. Even better, Australia has no inheritance tax
Here’s a map from the article.
The good news is that the United States is attracting more millionaires than it’s losing (perhaps because of the EB-5 program).
The bad news is that this ratio could flip after the election. Indeed, it may already be happening even though recent data on expatriation paints a rosy picture.
The bottom line is that the United States should be competing to attract millionaires, not repel them. Assuming, of course, politicians care about jobs and prosperity for the rest of the population.
P.S. American politicians, copying laws normally imposed by the world’s most loathsome regimes, have imposed an “exit tax” so they can grab extra cash from rich people who choose to become citizens elsewhere.
P.P.S. I’ve argued that Australia is a good place to emigrate even for those of us who aren’t rich.
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Question of the Week: Which Department of the Federal Government Should Be the First to Be Abolished?
I was asked last week which entitlement program is most deserving of reform.
While acknowledging that Social Security and Medicare also are in desperate need of modernization, I wrote that Medicaid reformshould be the first priority.
But I’d be happy if we made progress on any type of entitlement reform, so I don’t think there are right or wrong answers to this kind of question.
We have the same type of question this week. A reader sent an email to ask “Which federal department should be abolished first?”
I guess this is what is meant when people talk about a target-rich environment. We have an abundance of candidates:
- Department of Education
- Department of Agriculture
- Department of Energy
- Department of Veterans Affairs
- Department of Transportation
But if I have to choose, I think the Department of Housing and Urban Development should be first on the chopping block.
Raze the building and put a layer of salt over the earth to make sure it can never spring back to life
I’ve already argued that there should be no federal government involvement in the housing sector and made the same argument on TV. And I’ve also shared some horror stories about HUD waste and incompetence.
- HUD engages in racism and social engineering.
- Urban renewal projects destroy neighborhoods and foment corruption.
- HUD subsidies are grotesquely wasteful.
- There are epidemic levels of waste, fraud, and abuse at HUD.
Heck, I even made HUD the background image for my video on the bloated and overpaid bureaucracy in Washington.
It’s also worth noting that there’s nothing about housing in Article I, Section VIII, of the Constitution. For those of us who have old-fashioned values about playing by the rules, that means much of what takes place in Washington – including housing handouts – is unconstitutional.
Simply stated, there is no legitimate argument for HUD. And I think there would be the least political resistance.
As with the answer to the question about entitlements, this is a judgment call. I’d be happy to be proven wrong if it meant that politicians were aggressively going after another department. Anything that reduces the burden of government spending is a step in the right direction
Milton Friedman on Spending
October 3, 2020 by Dan Mitchell
I identified four heroes from the “Battle of Ideas” video I shared in late August – Friedrich Hayek, Milton Friedman, Ronald Reagan, and Margaret Thatcher. Here’s one of those heroes, Milton Friedman, explaining what’s needed to control big government.
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Why Milton Friedman Saw School Choice as a First Step, Not a Final One
On his birthday, let’s celebrate Milton Friedman’s vision of enabling parents, not government, to be in control of a child’s education.
Wednesday, July 31, 2019
Kerry McDonald
EducationMilton FriedmanSchool ChoiceSchooling
Libertarians and others are often torn about school choice. They may wish to see the government schooling monopoly weakened, but they may resist supporting choice mechanisms, like vouchers and education savings accounts, because they don’t go far enough. Indeed, most current choice programs continue to rely on taxpayer funding of education and don’t address the underlying compulsory nature of elementary and secondary schooling.
Skeptics may also have legitimate fears that taxpayer-funded education choice programs will lead to over-regulation of previously independent and parochial schooling options, making all schooling mirror compulsory mass schooling, with no substantive variation.
Friedman Challenged Compulsory Schooling Laws
Milton Friedman had these same concerns. The Nobel prize-winning economist is widely considered to be the one to popularize the idea of vouchers and school choice beginning with his 1955 paper, “The Role of Government in Education.” His vision continues to be realized through the important work of EdChoice, formerly the Friedman Foundation for Education Choice, that Friedman and his economist wife, Rose, founded in 1996.
July 31 is Milton Friedman’s birthday. He died in 2006 at the age of 94, but his ideas continue to have an impact, particularly in education policy.
Friedman saw vouchers and other choice programs as half-measures. He recognized the larger problems of taxpayer funding and compulsion, but saw vouchers as an important starting point in allowing parents to regain control of their children’s education. In their popular book, Free To Choose, first published in 1980, the Friedmans wrote:
We regard the voucher plan as a partial solution because it affects neither the financing of schooling nor the compulsory attendance laws. We favor going much farther. (p.161)
They continued:
The compulsory attendance laws are the justification for government control over the standards of private schools. But it is far from clear that there is any justification for the compulsory attendance laws themselves. (p. 162)
The Friedmans admitted that their “own views on this have changed over time,” as they realized that “compulsory attendance at schools is not necessary to achieve that minimum standard of literacy and knowledge,” and that “schooling was well-nigh universal in the United States before either compulsory attendance or government financing of schooling existed. Like most laws, compulsory attendance laws have costs as well as benefits. We no longer believe the benefits justify the costs.” (pp. 162-3)
Still, they felt that vouchers would be the essential starting point toward chipping away at monopoly mass schooling by putting parents back in charge. School choice, in other words, would be a necessary but not sufficient policy approach toward addressing the underlying issue of government control of education.
Vouchers as a First Step
In their book, the Friedmans presented the potential outcomes of their proposed voucher plan, which would give parents access to some or all of the average per-pupil expenditures of a child enrolled in public school. They believed that vouchers would help create a more competitive education market, encouraging education entrepreneurship. They felt that parents would be more empowered with greater control over their children’s education and have a stronger desire to contribute some of their own money toward education. They asserted that in many places “the public school has fostered residential stratification, by tying the kind and cost of schooling to residential location” and suggested that voucher programs would lead to increased integration and heterogeneity. (pp. 166-7)
To the critics who said, and still say, that school choice programs would destroy the public schools, the Friedmans replied that these critics fail to
explain why, if the public school system is doing such a splendid job, it needs to fear competition from nongovernmental, competitive schools or, if it isn’t, why anyone should object to its “destruction.” (p. 170)
What I appreciate most about the Friedmans discussion of vouchers and the promise of school choice is their unrelenting support of parents. They believed that parents, not government bureaucrats and intellectuals, know what is best for their children’s education and well-being and are fully capable of choosing wisely for their children—when they have the opportunity to do so.
They wrote:
Parents generally have both greater interest in their children’s schooling and more intimate knowledge of their capacities and needs than anyone else. Social reformers, and educational reformers in particular, often self-righteously take for granted that parents, especially those who are poor and have little education themselves, have little interest in their children’s education and no competence to choose for them. That is a gratuitous insult. Such parents have frequently had limited opportunity to choose. However, U.S. history has demonstrated that, given the opportunity, they have often been willing to sacrifice a great deal, and have done so wisely, for their children’s welfare. (p. 160).
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Voucher Programs Today
Today, school voucher programs exist in 15 states plus the District of Columbia. These programs have consistently shown that when parents are given the choice to opt-out of an assigned district school, many will take advantage of the opportunity. In Washington, D.C., low-income parents who win a voucher lottery send their children to private schools.
The most recent three-year federal evaluationof voucher program participants found that while student academic achievement was comparable to achievement for non-voucher students remaining in public schools, there were statistically significant improvements in other important areas. For instance, voucher participants had lower rates of chronic absenteeism than the control groups, as well as higher student satisfaction scores. There were also tremendous cost-savings.
In Wisconsin, the Milwaukee Parental Choice Program has served over 28,000 low-income students attending 129 participating private schools.
According to Corey DeAngelis, Director of School Choice at the Reason Foundation and a prolific researcher on the topic, the recent analysis of the D.C. voucher program “reveals that private schools produce the same academic outcomes for only a third of the cost of the public schools. In other words, school choice is a great investment.”
In Wisconsin, the Milwaukee Parental Choice Program was created in 1990 and is the nation’s oldest voucher program. It currently serves over 28,000 low-income students attending 129 participating private schools. Like the D.C. voucher program, data on test scores of Milwaukee voucher students show similar results to public school students, but non-academic results are promising.
Increased Access and Decreased Crime
Recent research found voucher recipients had lower crime rates and lower incidences of unplanned pregnancies in young adulthood. On his birthday, let’s celebrate Milton Friedman’s vision of enabling parents, not government, to be in control of a child’s education.
According to Howard Fuller, an education professor at Marquette University, founder of the Black Alliance for Educational Options, and one of the developers of the Milwaukee voucher program, the key is parent empowerment—particularly for low-income minority families.
In an interview with NPR, Fuller said: “What I’m saying to you is that there are thousands of black children whose lives are much better today because of the Milwaukee parental choice program,” he says.
“They were able to access better schools than they would have without a voucher.”
Putting parents back in charge of their child’s education through school choice measures was Milton Friedman’s goal. It was not his ultimate goal, as it would not fully address the funding and compulsion components of government schooling; but it was, and remains, an important first step. As the Friedmans wrote in Free To Choose:
The strong American tradition of voluntary action has provided many excellent examples that demonstrate what can be done when parents have greater choice. (p. 159).
On his birthday, let’s celebrate Milton Friedman’s vision of enabling parents, not government, to be in control of a child’s education.
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