Part 2: ‘Education and Capitalism’

May 15, 2013


School HouseBy Nancy Thorner – 

Following  Dr. Herb Walberg at the Heartland Author Series on May 9 was  Joseph Bast — certainly no stranger to those in attendance as president of the Heartland Institute — who continued the discussion as co-author of Education and Capitalism. Joe Bast studied economics at the University of Chicago and since 1984 has coauthored or edited nearly 100 policy studies and nine books.  Heartland’s first book, published in 1986, was on school reform. The authors, who included Bast, called for the adoption of tax credits.

Of all the policies issues covered by The Heartland Institute — budgets and taxes, education, health care, environment, technology — Bast said he considers education the most important issue of all as knowledge is the most important factor in determining a nation’s wealth, scientific progress, and economic freedom. Then too, students will grow up to be voters.

Education and Capitalism, related Bast, crossed over political party lines to appeal to liberals, conservatives, and libertarians alike. Half of the book is about education and the other half about capitalism. Bast’s and Walberg’s main thesis was that the nation is not getting better results in educating students because people don’t understand capitalism or economics, and therefore are afraid to use them to improve the nation’s schools.

Milton Friedman, a Nobel Prize winner in economic sciences, had this to say about Education and Capitalism:

This is a thoughtful, thorough examination of the virtues of capitalism and free markets as a way to organize elementary and secondary education in a democracy.

Joe Bast spoke primarily about vouchers, approaching the voucher issue from three angles:

1.  Vouchers as a strategy for chance.

2.  Vouchers vs. tax credits.

3.  Vouchers and regulations.

As a strategy for change, “vouchers are a means and not an end.”  This nation has done a poorer job of educating its young people than other countries around the world, with a huge gap existing between low-income and minority kids and white and high-income children.  An invasion of political correctness has seeped into public schools and has even been encouraged.  Not just reform is needed in public schools, but schools must be transformed to a whole new public level.

While public schools should be enhancing the product of education, we have allowed political interests to put their own interests before those of the children.  With a voucher program in place, through competition the political balance would shift away from unions and government-school defenders and toward parents and the education entrepreneurs seeking to meet their needs.  For those who oppose vouchers and view competition as evil, once they understand the educational results achieved by children involved in school choice programs — and these programs do work — school choice will cease to be a radical idea.

As to the fear that public schools would be disrupted through competition, vouchers can be defended as an effort to improve, rather than to abolish public schools.  Vouchers give parents an interim step, if they so choose.  Vouchers especially serve those children trapped in the worst government schools, which, incidentally, is where public support for market-based reform is the strongest.

Vouchers vs. tax credits:
Proponents of both agree that they must work together if either plan is to win legislative or voter approval.  Both vouchers and tax credits are ways to lift or reduce the penalty on parents who choose private schools for their children.

With tax credits parents pay tuition out of pocket first before applying for an annual tax credit, whereby with a voucher program the tuition is paid immediately.  Depending on how the legislation is written, the amount of tax credit allowed in some states is quite small (compared to the cost of private school tuition, especially if a family has more than one student in school) and varies from family to family based on the incomes and tax rates of parents.

There is nothing about tax credits that makes it more difficult for a state to impose its regulations and restrictions on participating schools than voucher programs, according to Bast. Both programs have to define what a “school” is, and both typically require participating schools to follow similar rules, adopt tests, and so on. One benefit of vouchers is that each time a student moves from a public school to a private school, the money “follows the child” and the public schools lose some funding. This helps taxpayers and puts financial pressure on public schools to improve in order to stay in business. Tax credits typically don’t take any money away from public schools.

As to the constitutionality of vouchers, the U.S. Court has given the green light as long as the money is given to the parents and not the schools themselves.  Tax credit plans may incur difficulty if tax credits are found to counter the Supreme Court decision that schools can be denied tax exempt status if they do not comply with affirmative action regulations in regard to enrollment and staffing.

In considering vouchers and regulations, both voucher proponents and opponents increasingly agree that excessive regulation and nonacademic mandates hurt the quality of government schools. It is wrong, however, to suggest that vouchers would open government regulators doors not currently open to them.  State constitutions already allow for heavy regulations of private schools, regardless of whether those schools receive government funding.  Private schools on the whole, however, still enjoy greater autonomy in all areas than do government schools despite efforts to bring them in line with public schools.

Vouchers are the most free market kind of privatization because they subsidize consumers and not producers. This makes it more difficult for the government to regulate schools. Bast pointed out that government places no restrictions on how people spend their Social Security checks, which makes it a good example of a voucher program that hasn’t resulted in increased regulations. Food stamps are, too.

Another way to prevent regulation of schools participating in a voucher program is for parents to press for good legislation that doesn’t mandate increased power over schools that participate in voucher programs.  A definite plus would be to have more parents involved in vouchers programs to promote an attitude that says: “Keep your hands off our schools!”  In so doing their combined efforts would form a large and very important interest group to oppose increased regulations.  Promoting quality does require the removal of regulations.

Education and Capitalism clearly shows that without a broader understanding of how and why markets work, small past steps in moving education in the right direction could be swept away.  Beware of government-inspired Common Core curriculum with its left-of-center educational standards and curriculum.  Should Common Core be imposed upon private schools, this nation will sink further and further into financial and moral morass as students embrace liberalism and vote accordingly as adults.

On Thursday, May 16 from 11:30 A.M. – 1:30 P.M. The Heartland Author Series will feature Keith Koeneman in First Son:  The Biography of Richard M. Daley.  For information call 312/377-4000.

The Heartland Institute ( is a 29-year-old national nonprofit organization based in Chicago.  Its mission is to discover, develop, and promote free-market solutions to social and economic problems

Tuesday, May 14, 2013 at 03:00 PM |    Permalink

Part 1 features Dr. Herbert Walberg, co-author of Education and Capitalism with Joseph Bast.



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