Taxing Only the Rich Doesn't Raise More Revenue

      One of the byproducts of free people making different choices with their time, talents, and treasure is the unequal distribution of economic outcomes. I suspect that no western tradition generates more passion among occidentals than the concept of inequality.  Whether we like it or not, or whether it is true or not, many Americans believe inequality is one of America’s greatest moral failures.  In the first presidential debate between President Obama and Governor Romney, large segments of the discussion centered on the topic of taxing the rich more while preserving the relatively low tax rates for everyone else.  As we will see, the policy of taxing the wealthy significantly more is not new. I want to demonstrate from history why a steeply progressive tax code, where the rich pay significantly more and the poor pay significantly less, doesn’t achieve its intended purpose of raising more revenue.
 
     Our Founding Fathers weren’t big fans of the income tax. In fact, it wasn’t until 1913 that the 16th Amendment was ratified allowing the federal government to directly tax the incomes of individual Americans. The ensuing Revenue Act of 1913 called for a tax that ranged from a modest 1% on incomes exceeding $3,000 to 7% on incomes exceeding $500,000. It wasn’t long before a policy of “taxing the rich” significantly more was implemented. In order to pay for WWI, Congress passed a law in 1916 that raised the tax rates on incomes over $300,000 to 70%. Ironically, from 1916 until 1918, the number of Americans earning more than $300,000 dropped in half!  This caused President Woodrow Wilson himself to urge Congress to reconsider whether very high tax rates were productive in collecting revenue. Wilson said that, beyond some point, "high rates of income and profits taxes discourage energy, remove the incentive to new enterprise, encourage extravagant expenditures, and produce industrial stagnation with consequent unemployment and other attendant evils." In the midst of a deep depression and hundreds of thousands of Americans unemployed, those who successfully implemented the steeply progressive tax policy found themselves elected out of office.
     In contrast to the poor economy experienced during the Wilson administration from 1916 to 1920, the Roaring 20’s was a time of unprecedented economic prosperity. Americans both rich and poor were buying radios, washing machines and automobiles. Unemployment was virtually non-existent, and it was the first and only time in American history when blacks had lower unemployment numbers than whites.  What was the cause of such a positive economic turnaround? Many believe it was the reduction of excessive progressive era tax rates. The treasury secretary at the time, Andrew Mellon, convinced both President Warren G. Harding and his successor Calvin Coolidge, that the most effective way to raise tax revenues was to flatten the tax code. From 1921 until 1929, marginal tax rates shrunk from a high of 77% to 24%. The result? Record collections of tax revenues that were so large the government almost paid off the national debt.  As for getting the wealthy to pay their fair share, In 1918, when marginal tax rates were over 70% only 20% of taxes collected came from incomes over $300,000. However, by 1926, 65% came from top earners!  Mellon proved that the way to raise revenue was not to raise marginal tax rates, but to lower them enough to make work and investment meaningful to wealthy people. 
     At first glance lowering tax rates on high incomes for the purpose of raising revenue seems counterintuitive. However, Secretary Mellon knew that productive Americans would not produce if taxes were too high. Mellon wrote in 1924, “The history of taxation shows that taxes which are inherently excessive are not paid.”
     One of the ways that the wealthy produce less income is they invest in tax advantaged investments that are usually less attractive when tax rates are lower. Growth stocks, insurance annuities, sophisticated and expensive retirement trusts, and tax free municipal bonds, all become incrementally more attractive to wealthy people as their income tax rates increase.
     A second way wealthy people avoid income taxes is they invest overseas in countries where their investment income is taxed less. There are many countries where investment opportunities are unattractive when U.S. tax rates are low, However, at some point even risky overseas investments become relatively more attractive as tax rates on U.S. investment income are increased. 
     Finally, when productive people get taxed more, they produce less.  If you think I am fibbing, try this experiment at home. Tell your children that if they clean their rooms by noon on Saturday, you will take them all out for ice cream; however, whoever cleans their room first will be forced to clean the bedrooms of their less efficient siblings. Productive people tend to have less debt, so they don’t need much income to flourish.  When income tax rates are high, wealthy people spend more time in leisure activities and less time in activities that require them to pay excessive taxes on their productivity.  
     Art Laffer, a distinguished economist and advisor to Ronald Reagan, developed the concept of the Laffer Curve.  Laffer postulated that no revenue would be collected when tax rates were 0% (for obvious reasons), but he also believed no revenue would be collected at rates of 100% because no one would have an incentive to produce income. Somewhere between 0% and 100% lies a sweet spot where the greatest amount of revenue will be collected. History has demonstrated that tax rates above 24% tend to result in reductions of revenue collected.  With our national debt at unprecedented levels, our economy in dangerous waters, and our own economic futures uncertain, it is critical that we take into the voting booth with us an understanding and historical appreciation for tax policies that actually work. 

Why Obamacare is Bound to Fail

     The goal of the Affordable Care Act (ACA) is to matriculate 26 million uninsured Americans, many with expensive pre-existing conditions, into the current health care system where the numbers of doctors, hospitals, and insurance companies are shrinking. Because I understand the law of gravity, I know if I drop an object from a height it will fall towards the Earth. Similarly, because I understand the principle of adverse selection and the laws of supply and demand, I know that if not repealed, the ACA will end in failure.  Here is the sequence of events that will eventually lead to the ACA’s demise:
(1) The ACA will increase the per unit cost of healthcare for everyone.
(2)  Some fortunate Americans will see their increased premiums subsidized by their neighbors, giving those subsidized the illusion of a cost reduction.
(3) Some unfortunate Americans will see astronomical increases in their health insurance premiums and income taxes.
(4) Healthy middle class Americans will eventually drop their expensive coverage and opt to pay the less expensive “tax.” 
(5)  Insurance companies will incrementally leave the health insurance market until the whole scheme fails.    
      The Obama Administration and a Democratic majority in Congress can pass laws to suspend gravity or change the speed of light, but they will not succeed because physical laws are unaffected by human desire. Health Insurance operates by certain economic laws in the same way matter follows physical laws in the natural world. According to the economic laws of supply and demand, if you increase the demand for a good or service and the supply remains constant (or decreases), the unit cost for that good or service will increase.  Good intentions can’t change this economic reality. The ACA is going to increase the demand for health care by entitling unhealthy, expensive patients to unlimited access. Simultaneously, rational, healthy, and inexpensive patients are going to drop their expensive health insurance policies and opt to pay the cheaper “tax” instead. The ACA magnifies the insurance problem known as “adverse selection,” where only people needing immediate health insurance will buy it. Adverse selection will push the cost of health insurance to astronomical levels. Using price controls, the ACA will attempt to prevent insurance companies from raising their premiums, making the sale of health insurance a losing proposition (too few healthy people paying in, and too many sick people making claims). Many insurance companies will exit the health insurance market (like mine did recently) due to their inability to run a profitable business under the ACA. This will result in a reduction of quality as well as access to health care.
When Congress violates economic laws by artificially holding down the price of a good or service, they inadvertently reduce the supply of that good or service. In the early 1970's the government set the price of gasoline below market equilibrium, and the supply dropped overnight because gas station owners refused to sell gas at a loss. The same thing has happened historically with rent control. Whenever government uses its coercive powers to hold down rent prices below market equilibrium you get a predictable reduction in the number of landlords willing to rent property at a loss. We will have the identical experience with health care; governmental price controls will reduce the number of health care providers resulting in rationing and an erosion of health care quality and access. History is replete with examples of presidential and congressional failures using price controls to appease citizens ignorant of the laws of economics.
     Under the ACA, the unit cost of health care will rise for everyone; but, the cost increase of insurance premiums for lower income citizens will be paid by someone else, giving the voting poor the illusion that the ACA drove down costs.  If Citizen A is currently paying $400/month for health insurance that costs $400/month, but on 1/1/2013 he is charged $200/month for insurance that costs $500/month, Citizen A will think the ACA reduced the cost of health insurance when in reality someone else will be saddled with the increase. Unfortunately for Citizen B, he will experience a health insurance cost of $800/month; $500 for his own insurance and a $300  tax increase to subsidize his neighbor.
     Whereas government subsidies and price controls almost always lead to increases in the unit costs of regulated goods and services, free markets allow unit costs to drop for all Americans. The unregulated costs of Lasik surgery, laptops, digital watches, and flat screen TV's have dropped in unit price for EVERYONE. There has been no cost shifting for the aforementioned items, but instead universally experienced cost reductions in real terms for all Americans.  Poor people and rich people can buy a flat screen TV for prices much lower today than they could 10 years ago. The same can't be said for the overregulated health care market. The free market brings unit costs down and drives quality up for ALL consumers. Because the ACA removes most of the free market forces that drive costs down and quality up, everyone can expect higher costs per unit of health care and a simultaneous reduction in access and quality. I concede SOME Americans will have their expensive health care paid for by others, giving less educated citizens the illusion of a cost reduction, but the cost per unit will not decrease, due to the immutable laws of supply and demand and adverse selection.
      Most financially secure Americans aren’t stupid; they will figure out how to protect themselves from bad economic legislation.  Wealthy parents will encourage their adult children to apply for Medicaid, rationalizing such behavior as “We are paying for Medicaid anyway, so we might as well have our own children use it.”  Healthy citizens making more than 400% of the government’s designated poverty income level but less than $300,000, will quickly discover that dropping their health insurance coverage and paying the “tax” for not carrying health insurance to be in their best interest. The money they save from not carrying insurance (until the need it) will help offset their tax increases.  The very wealthy, who up until this point didn’t buy health insurance because they were able to self-insure, will now find buying health insurance cheaper than the tax for not carrying the insurance. Because the ACA forbids lifetime limits on insurance protections, the wealthy will be encouraged to let an insurance company shoulder their expensive financial risks cheaper than they could themselves before the ACA. For high income citizens, it would be foolish not to buy coverage under the ACA, especially if they have poor health. Just another example of how governmental ignorance of economics leads to silly policies that hurt the very people it tries to help, and helps the very people it tries to hurt.
      While it is true the American health care system is in need of a complete overhaul, the Affordable Care Act is not the answer. The ACA, if implemented, will fail due to the predictable economic laws of adverse selection and supply and demand.  When the ACA does fail, I hope we learn from our mistakes and consider using free market solutions that have reduced prices and increased quality and access wherever free markets have been allowed to operate. 

Occupy Wall Street: Correct Sentiment, Wrong Target

      I recently watched an interview between Occupy Wall Street (OWS) organizer Harrison Schultz and Sean Hannity. I use the term interview in a general sense because Hannity wasn't very interested in hearing what 29-year old Mr. Schultz had to say. In Hannity's defense, Schultz came to the interview looking for a fight; however, I hold the more experienced Hannity to a higher standard. As an armchair philosopher, I am more interested in arriving at truth than I am at who wins an argument. Unfortunately, truth was the first casualty of this interview as both parties came out swinging from the beginning, yet every now and again a little flicker of light shined through the smoke and dust to reveal the younger Schultz has a point; the system is failing him and the rest of his generation. Young adults have every right to be angry; however, the focus of their anger is grossly misdirected. If he and his fellow OWS protestors continue to engage in violence, property damage, and animal-like behavior, they will fail in their cause to improve their future.
    

My dislike of Sean Hannity's particular interview style may give the false impression I am a supporter of the OWS movement; I am not. In spite of what Schultz tried to articulate as his own personal views on capitalism, I believe the OWS movement is a group of anarchist/socialists who believe they are entitled to the wealth of others who earned it. However, in fairness to Schultz, Hannity spent more time discrediting his guest than listening. If Hannity had thoughtfully engaged instead of viciously attacking the younger Schultz,  Hannity would have revealed Schultz didn't truly understand his reality. Hannity could have then explained that  Schultz's woes are the result of government, not corporate tyranny.

Young people have a legitimate gripe. They have few prospects for jobs and a government hell-bent on protecting its crony friends.  Schultz's tactics, worldview, and selfish pride are all flawed, and he would do well to spend a few years in the North Dakota oil patch to get his head and financial house in order. However, until his federal, state, and local governments: 1) stop enslaving young people with loans that are easy to obtain  but difficult to pay back; 2) end the requirements that employers  pay employment taxes, unemployment taxes, and workman’s compensation taxes  which make hiring young people cost prohibitive;  3) reduce the burdensome regulations that make starting a small business next to impossible for young entrepreneurs; and 4) stop heaping mounds of national debt on the shoulders of young people;  Schultz and his OWS friends will have difficulty respecting a system that seems to only work  for citizens over the age of 40.

While the OWS movement's current political niche seems to be in the far left fringe of the Democratic Party, young people aren't going to find any solutions to their problems there. The worst thing for them is even more debt and less economic growth. Democrat handouts like free education, health care and birth control may be appealing today, but responsible young people need to understand these goodies aren't really free; the bill just follows them into adulthood, and they will be forced to pay for them with interest when they start earning a living.

What our current government protected crony capitalist system offers Harrison Schultz and his generation is an adulthood promising slavery. The only peaceful opportunity for them is limited government. By shrinking the size and scope of government at all levels, the next generation will be able to compete fairly in an economic system that caters to their strengths. Without burdensome debt, high taxes, and a mountain of government regulations to hold them back, the natural energy, creativity, and courage that is characteristic of youth  will provide Harrison Schultz and the rest of his generation all the economic security they will ever need.

The Trayvon Martin Shooting: Who Will Be Superhuman First?

     In the face of tragedy, humans have a basic need to make sense out of randomness. For some reason we all desire to understand why evil exists or why bad things happen to good people. It is no different in the case of the heartbreaking death that occurred in Sanford, Florida on February 26^th.  17 year-old Trayvon Martin, who is black, was shot and killed by neighborhood watch captain George Zimmerman, who is being profiled in the media as being white. (Zimmerman’s mother is Hispanic). The explanation for this killing has been the bitter charge of racism. While the police are still gathering evidence and a grand jury is scheduled to convene on April 10^th, the court of national opinion appears to have already arrived at a verdict:  White man George Zimmerman is a racist who killed Trayvon Martin because he was black.

     While it may be true the Sanford police didn't do enough to investigate Martin's death, the charge that Zimmerman is a racist seems a little difficult to make. Zimmerman’s background and associations cut across racial lines, and even his own racial identity isn’t easy to determine.  Based on the evidence I have seen thus far, I don’t believe George Zimmerman is a racist; however, I will let a jury decide whether or not he is a murderer or a man slaughterer.  What concerns me most about this case is the black community’s rush to assume Zimmerman to be a racist and the mainstream media’s willingness to feed that assumption.  Such charges, if proven unfounded (like the Tawana Brawley and  Duke lacrosse team allegations) will certainly erode the credibility of the black community in the eyes of whites who respect fairness and the rule of law.  

     It is difficult to tell from the mainstream media if a majority of black Americans are truly interested in interracial respect and trust. Let’s assume for the sake of this article that they are. If the Seminole County grand jury determines there is not enough evidence for a criminal trial, what will be the black community’s response? Will they take to the streets to destroy private property and attack innocent whites, or will they seek reconciliation and healing like Reginald Denny? If interracial trust and reconciliation are the goal, I hope the black community selects the latter and rejects  the former.

    It is possible Trayvon’s death could have been avoided if Sanford, Florida had different self-defense laws or more restrictive gun ordinances; however, I am not sure life in Sanford would be better or even safer. Commissioned police officers shoot innocent people more often than we can easily accept. While George Zimmerman’s history suggests a bent towards zealous law and order and vigilante justice, his neighbors appeared appreciative of Zimmerman’s interest and willingness to patrol their neighborhood.  In counties that have adopted less restrictive gun laws, there seems to be a correlation between an increase in concealed gun permits and a decrease in confrontational crimes. Activist groups in favor of more restrictive gun laws are latching on to the Martin case as they see it as an “I told you so” opportunity. Even though citizens have a self evident natural right to defend themselves, it’s possible Florida may succumb to the intense pressure and re-think their self-protection laws.   

       In the absence of criminal charges and a conviction, the only way Sanford, Florida (and America) will heal from this tragedy is for someone to blink first and lead with grace.  While I don’t know if I would ever be strong enough to do so personally, it would be superhuman for George Zimmerman to take personal (not necessarily criminal) responsibility for his part in the wrongful death of young Trayvon. Equally inspiring would be if Trayvon’s parents forgave George Zimmerman for his role in the same. Grace, not vengeance will calm the exposed nerves of this nation. Without forgiveness offered and responsibility taken, I am afraid the flames of American racial tension will only burn hotter.

Obamacare’s Birth Control Mandate and its Fallacious Defenses

     It has been a couple of generations since logic has been taught in public schools. Since then, the voting age has been reduced to 18 from 21, and the number of people claiming their primary news source is Saturday Night Live or Comedy Central has exploded. With Facebook and Twitter becoming important sources of political communication, many voters are being persuaded by fallacious (bad) arguments.  When it comes to politics, it has been my experience that the greater the number of fallacies required to persuade voters to support a particular policy, the greater the odds that policy will cause more harm than good. For the sake of demonstrating how fallacious arguments are often employed to persuade social media adopters to support governmental policies, I will use as an example the Obama Administration’s recent mandate that requires religious institutions, against their religious and moral convictions, to provide birth control and abortion inducing drugs to its employees.

    Whenever we participate in a policy debate, it is important to first determine the main issue and its supporting arguments. In the case of the Obamacare birth control mandate, the main issue is whether or not the federal government can constitutionally use its powers of coercion to force citizens against their religious or moral convictions to pay for the birth control of their neighbors.  The arguments against using federal powers of coercion are primarily found in the U.S. Constitution. In Article I Section (8), the Constitution lists the powers of the federal government, and forcing citizens to buy goods or services against their will is not one of the listed powers. The 1st Amendment further states: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” In other words, the federal government can’t force people to practice or violate their religious beliefs. Now that we have looked at the arguments against the birth control mandate, let’s take a look at the arguments currently being used in its support.

     The first argument supporters of the Obamacare birth control mandate use is: “Obamacare doesn’t actually force religious institutions to provide birth control and abortion inducing drugs; it forces insurance companies to provide them.” This argument commits the “distinction without a difference” fallacy.  Similar to the statement, “I didn’t steal your car; I just took it without your permission intending never to return it,” the mandate’s outcome isn’t altered by changing the words used to explain it.  By (1) forcing all religious institutions to offer health insurance, and (2) forcing health insurance companies to provide birth control and abortion drugs, religious institutions are still being forced against their will to offer birth control and abortion inducing drugs to their employees , and  the 1st Amendment violation still exists. Unfortunately, many citizens untrained in critical thinking have been persuaded by this fallacious defense put up by the Obama Administration.

     A second fallacious argument supporting Obamacare’s birth control mandate is: “Because many insurance companies provide Viagra prescriptions for men, the government should force them to provide birth control prescriptions for women also.”  This statement commits the “false analogy” fallacy because the two cases aren’t similar enough to be analogous. The purpose of insurance is to transfer risk, not responsibility. The risk of erectile dysfunction treatment is considered in insurance theory to be uncertain and insurable; however, birth control is not. As such, insurance companies can actuarially price the risk of erectile dysfunction expenses in such a way as to not lose money; whereas providing birth control merely transfers the cost from some policyholders to all of them. Secondly, Obamacare doesn’t force insurance companies to provide erectile dysfunction treatment like the Obamacare mandate forces them to provide birth control. This is an important distinction when the main issue is about the constitutional use of government force.  In the Obama birth control mandate, there is no risk transferred, only expenses. Because erectile dysfunction treatment is seen as an insurable risk and birth control is not, the analogy between Viagra coverage and birth control breaks down, and the argument becomes fallacious.   

     The third fallacious argument proponents of the Obamacare mandate use is: “Most Catholics practice some form of birth control, so the Catholic church’s rejection of Obamacare’s birth control mandate smacks of hypocrisy.”  The Latin term for this type of bad argument is the “tu quoque,” or “you too” fallacy, but I will just call it the “hypocrisy” fallacy. The hypocrisy fallacy is not a rational argument because it attacks the source of the message as being faulty instead of the message itself. Here is an example:

Overweight health teacher: “It is important to eat portion controlled meals that include generous helpings of vegetables and avoid fatty or processed junk food.”

Cynical student: “Hey, Mr. Smith, your trash can is full of Twinkie wrappers and you are at least 50 pounds overweight; therefore, it must be a good idea for us to eat whatever we want.” 

     While it is more persuasive when a health teacher looks like a triathlete, his instruction on good nutrition isn’t less true just because the teacher is chubby. In the same vein, it would certainly be more persuasive if Catholics practicing birth control abstinence outnumbered those who professed it, but it doesn’t follow that the government has constitutional authority to force Catholics, in violation of their 1st Amendment rights, to pay for their neighbor’s birth control, just because a majority of Catholics use some form of birth control.

     Finally, I want to address the most logically deficient argument I have seen recently on Facebook to defend the Obamacare birth control mandate: the Rush Limbaugh/Sandra Fluke controversy. On February 29, 2012,  mega-popular radio talk-show host Rush Limbaugh made boorish comments  about 30 year-old Georgetown University law student (and political activist) Sandra Fluke, airing that statements in her speech at an unofficial Democrat Congressional event in support of free mandated contraceptives at Georgetown University made her a "slut" or "prostitute". This fallacious counter argument is known as a “red herring,” because it distracts or misleads citizens from the main issue in much the same way that a rotten fish can be used to lead bloodhounds off the hot trail of an escaped convict.  Let’s look at how this bad argument was played out in the media:

 

Main issue: “Can the federal government constitutionally use its powers of coercion to force citizens against their religious or moral convictions to pay for the birth control of their neighbors?”

Premise of counter-argument: “61-year old multi-millionaire Rush Limbaugh, using his powerful access to the mainstream media, verbally assaulted a young college girl, calling her a “slut” and “prostitute” when she courageously stood up for her heartfelt beliefs.” Rush Limbaugh is an obnoxious, mean-spirited butt-head;" therefore,
Conclusion of counter-argument: "The federal government has the constitutional authority to force citizens, against their religious or moral convictions, to pay for the birth control of their neighbors.”

     While the irrationality of the red herring fallacy is obvious after we labor to identify the main issue and the supporting arguments, such faulty reasoning is extremely persuasive when the majority of Americans aren’t critical thinkers.

     Social media is here to stay, and political operatives will only increase their use of it to garner voter support.  As long as American voters remain void of the necessary tools for critical thinking, many will be persuaded not by truth, but by bad arguments and questionable promises. Unless we make a concerted effort to train our minds to think critically and vote rationally, we run the risk of losing our republic to the rhetorical skill of power seeking demagogues. 

Socialism and Crony Capitalism

     In my political science classes in college, I learned that a socialist system is characterized by a strong central government that commands and controls the economy. For an economy to be considered socialist, the means of production only needs to be controlled, not necessarily owned, by a government. In a socialist economy bureaucrats set wages, control prices, create quotas, and regulate distribution. Buying and selling behavior is manipulated by central planners using tax preferences and disincentives.  

     Socialism is different than “free market” capitalism. In a truly free market economy citizens, not government bureaucrats, make the majority of economic decisions. Individuals rather than the  government determine prices, wages, levels of production, and distribution methods.  Free market economies rely on prices to be analog signals to indicate the accurate supply and demand for specific goods and services. When supplies are low, demand pushes prices up and producers are motivated to produce more, which pushes down demand, which lowers prices, etc..  What differentiates a socialist economy from a free market economy is centralized command and control or the absence of it.  

    When politics get involved, the proper definitions of economic terms can get confusing. While Democrats appear to prefer a centrally planned socialist system, and Republicans appear to prefer a free market capitalist system, history has shown both parties prefer the economic system known as “crony capitalism.”

     Crony capitalism is an economic system where individuals, acting through corporate entities, partner with a strong centralized government in order to enjoy the safety and profitability of a monopoly. Crony capitalism is NOT free market capitalism, but instead is more closely aligned with socialism.  Unlike free market capitalism, crony capitalism doesn’t mind bureaucracy, government regulation, or high taxes because the crony corporations are usually exempt by government decree. By picking and choosing winners and losers, strong central governments ensure their crony corporate partners have no real competition. Whereas the theoretical purpose of government involvement in a socialist economy is to ensure the fair and equal distribution of goods and services, crony capitalism uses government power to keep out competition and increase profits for the crony corporations.

     All name calling aside, it is difficult for me to align with either the Democrat or Republican Party. I prefer a free market economy with minimal government involvement in the marketplace; however, both parties continue to press for more government intervention.  While not perfect, free markets are responsible for the incredible prosperity we have enjoyed. Any political movement towards greater centralized government control will  diminish our chances for future economic flourishing.

Vouchers are a Free Market Solution for Fixing Public Education

         Although we have been conditioned to believe public school is a different animal, free markets work for education too. In America, universities compete for scholarship, grant, and tuition dollars. Consumers, not colleges, determine where those education dollars are ultimately going to be spent. Unlike our centrally planned and taxpayer funded public school system, America’s university system is considered the best in the world.  Over the last 150 years we have experimented with government controlled school monopolies, and they have proven to be expensive, overly bureaucratic, and inefficient.  It is time we consider free market solutions to solve the problems that are inherent to our current public education system.

         Treating education as an entitlement tends to destroy education’s value in the minds of its recipients.  According to the law of diminishing marginal utility, as a person increases consumption of a product (i.e. education) while keeping consumption of other products constant, there is a decline in the marginal utility (value)  that person derives from consuming each additional unit of that product. What this means is, the more we have of something the less we value the portions we possess above what we really want.

       Let’s use the “all-you-can-eat” buffet style restaurant as an example.   These restaurants entice us with "all you can eat," while knowing each additional plate of food provides less utility to us than the one before. Despite their enticement, most people will eat only until the utility they derive from additional food is slightly lower than the original. For example, say you go to a buffet and the first plate of food you eat is very good. On a scale of ten you would give it a ten. Now your hunger has been somewhat tamed, but you get another full plate of food. Since you're not as hungry, your enjoyment rates a seven at best. Most people would stop before their utility drops even more, but say you go back to eat a third full plate of food and your utility drops even more to a three. If you kept eating, you would eventually reach a point of total dissatisfaction, or 'dis-utility.” In education, the first plate of food is learning to read and write, as well as basic math. Beyond the basics, most families don’t value additional education. While this is a bold statement, public school student appreciation for education drops off dramatically with mastery of the basics, and parental disinterest in post- elementary school teacher conferences confirms this reality. Whereas restaurant food bills are normally paid by the people eating the food, such is not the case for public education. Instead, the bill is usually paid by someone else. This lack of “skin in the game” by the consumers of public education further diminishes the value people have for it.

      Realizing tax payer funded education is susceptible to the law of diminishing marginal utility, I prefer a policy where citizens are not forced to pay for the education of families who don’t value it.  Instead, I support eliminating public education entirely and allowing the natural order  to inspire families to pursue the education they deem appropriate. It is wasteful to spend money on citizens who don’t value education, but it is wise to let families invest the money they normally pay in taxes towards education opportunities that already exist in the free market. Public education in the 21^st century is like bottled water: an unnecessary expense when quality education is readily available in so many other places at much lower costs. Online academies, homeschool curriculums, and most private schools are much less expensive, usually more successful in equipping students for the 21^st century, and far less controversial than public schools. If education wasn’t a government provided entitlement, the free market would quickly provide the education resources necessary for citizens to function in the 21^st century.

     Evidence suggests that under a policy where tax payers aren’t forced to pay for the education of their neighbor’s children, poor families would also have access to quality education through patronage. At Whitefish Christian Academy (where I serve as board president), many struggling families who value education (and ensure their children work hard in class) have received tuition assistance necessary for their children to attend. Financially successful people in our community continually demonstrate their willingness to partner with hard working families and students who value education, like they do. In spite of the efforts of public school monopoly advocates to paint successful Americans as inherently selfish, I suspect most communities possess citizens as generous as mine, particularly if they are freed of the burden of paying for public education. Community rejections of school bond issues are usually indictments against the inefficiencies of public school bureaucracies rather than denials of education’s societal value.

         The inequality created by America’s monopolistic public school system is apt to become our most pressing civil rights issue. Recent popular documentaries like, “Waiting for Superman,” and “The Cartel,” demonstrate that inner city communities value education as much as any other. They also reveal that public school monopolies are rejected as vehemently in poor minority neighborhoods as they are in affluent, predominantly white ones. Teacher protests in Wisconsin and New Jersey have exposed government policies that favor teachers and school administrators over tax payers and children.  Parents and students are quickly learning that better alternatives exist; however, the only thing blocking them from receiving a decent education in their neighborhood is their government protected public school monopoly.  

  Even though privatizing education is the most efficient way to improve education, I realize America isn’t ready for the idea of jettisoning taxpayer funded education altogether; therefore, I support a voucher system where each child is entitled to a set dollar amount of education paid for with a voucher. Under such a program, each family is free to choose where their vouchers will be spent. Families may choose to homeschool, enroll their children in private, parochial or public school, or use the money to hire private tutors. In order to continue receiving funds, I support the requirement that students demonstrate grade level proficiency before receiving more funds.

     Free market competition in public education will improve it immediately. For communities that lack the courage to do away with public education entirely, the voucher system is the most viable method for introducing free market competition into public education. Because both poor and wealthy communities have voiced strong desires for school choice and equally loud impatience with public school costs and inefficiencies, vouchers are now politically viable.  Free markets have proven effective in providing the highest quality of goods and services at the lowest prices to the greatest number of people; therefore, I support the idea of a voucher system that promotes education choice.