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Archive for July, 2015

pictured: Milton and Rose Friedman. photo: Friedman Foundation for Educational Choice

Today CRI celebrates the 103rd birthday of Dr. Milton Friedman, a man who was ahead of his time in recognizing the need for school choice to be available to all children, so that more children would be able to obtain a quality education, suited to their needs, and not be forced to live in poverty merely because of how they were raised.

Dr. Friedman wrote about school choice in his book Free to Choose in 1980, and dedicated a full chapter to the idea that parents should be allowed to choose schools for their children. It was based on the market idea of economics- schools should not be seen as sacred government buildings dedicated to protecting adult’s jobs, but as forces which should strive to provide the best services to its “customers” (students), and if they fail to do this, then the school either needs to be reformed, or the students should be allowed to go to another school which better serves their needs. This choice should be allowed irregardless of the parents’ income, or residential zip code which too often constrains students, particularly poor students, in poorly performing schools with no way out.

Advocates of public education for all will insist that education should not be  “privatized” and left to the evils of “capitalism.” Yet notice how upper-middle class and upper-class families handle their children’s’ education- private schools, charter schools such as the Charter School of Wilmington, home school, boarding school (for the very wealthy), or top-performing public schools. Notice how wealthier families do not feel the need to be constrained by zip code? There is a reason for this. Despite bluster by opponents of parental choice about how “privatization” is evil, rich parents will choose that option because the school must compete for the parent’s tuition dollars. If the school performs poorly, or does not serve the child’s needs, the child will be removed from the school.

When a similar situation happens in public school, teacher’s union leaders, superintendents, and local politicians wax poetic about the need for more “investment.” Never mind that Delaware spends $23,000 a year per student. But, teachers in Delaware earn roughly $59,000 a year minus benefits. Clearly, most of the money spent per pupil doesn’t pay teachers, even as debates over raising teacher’s pay are played out in districts around the country. Where is this money going? Wherever it is, expect those getting this extra funding to fight back against any efforts to take their money away, no matter how weak their justification for more “investment” is.

The poor performance of too many public schools causes parents with the means to do so to pull their kids out of public school. The kids who are left are usually poor, come from dysfunctional homes or impoverished neighborhoods, and are not offered a clear pathway to success. Combined with the influx of new students coming from recently arriving immigrant families, many of whom live in homes where English is not the first language, and an endless number of “Visions”, mandates, and standardized tests, these schools are not going to be in position to best help the children.

The goal of school choice is not, as our opponents allege, to “dismantle” public education or somehow sell it to multinational corporations. The goal is to merely go back to basic principles of greed, ambition, and what motivates us. Monopolies, by definition (which is how a lot of public school districts are operated, especially in low-income areas), nearly always provide poor quality, high prices, and poor customer service, because the human need to do better falls flat when there is no reward for doing so. We do not suggest people intentionally fail or desire to see kids suffer, because we know the vast majority of teachers, counselors, principals, and other building staff sincerely want to see children do well. In fact, teachers and counselors, especially in private schools, make very little money because teaching is their passion. They know they will never get rich teaching or advising.

The problem is, there is a system in place which has made too many people too comfortable, too dependent on the system to continue, and too unwilling to consider alternatives out of fear of what might happen if there are serious changes to the status quo.

We point out that teens and young adults around the country choose colleges or learning institutions right for them. If the school is not a match, the student leaves and goes elsewhere, or goes to work or to the military. Federal student loans are offered to students who go to private colleges which compete with public ones. Yet public schools are still very much around. Clearly school choice for college has not destroyed public education, and it will not destroy public education in K-12. All that will happen is, some people who believe they have a guaranteed job might lose it unless they are pressured into the marketplace of ideas.

All this was Dr. Friedman’s vision: great schools for all, and a vision of the best, most competitive education system serving student’s needs, the way colleges compete. Today we honor a man whose foresight has inspired the rest of us to see nothing less than a great system of education, improving the economic opportunities of all students no matter their household income, neighborhood, or learning challenges.

Here’s to you, Dr. Friedman.

His quotes:

“Our goal is to have a system in which every family in the U.S. will be able to choose for itself the school to which its children go. We are far from that ultimate result. If we had that — a system of free choice — we would also have a system of competition, innovation, which would change the character of education.”
— CNBC Interview Transcript, March 2003

“It is only the tyranny of the status quo that leads us to take it for granted that in schooling, government monopoly is the best way for the government to achieve its objective.”
— “The School Choice Advocate,” January 2004

“Improved education is offering a hope of narrowing the gap between the less and more skilled workers, of fending off the prior prospect of a society divided between the “haves” and “have nots,” of a class society in which an educated elite provided welfare for a permanent class of unemployables.”
— “The School Choice Advocate,” July 1998

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There are many things we’ve been critical of in regards to our state government, but here’s one area where the state earned high regards from one of our associates.

The Heartland Institute published their 2015 Welfare Reform Report Card  which shows a serious effort by the state to control need-based-aid, often referred to as “welfare”, and to get people who are able to work into jobs and not let them sit around collecting a check while they smoke Newport 100s while their left-wing Statist advocates claim we need to spend more “to help the poor”. There is no shame in providing a safety net for emergencies, such as homelessness, immediate unemployment, physical or mental disability (which prevents work or basic living functions), and hunger.

However, Statists from both major parties, but one in particular, have built a large web of government agencies which employ tens of thousands of public employees whose salaries and benefits drain the Treasury, and whose agencies continuously provide healthy individuals with a basic lifestyle that traps too many healthy, able-bodied people in a cycle of dependence, basically unable to get off the program to take care of themselves. They are then pressured to keep voting for those who redistribute the wealth, because those elected officials come into poor communities bearing horror stories of people dying in the streets, babies and pets going hungry, just before the world ends, if they vote for a candidate who wants to curb the perpetual welfare state. Have you noticed just how many able-bodied people who begin to receive these benefits keep earning them forever, unless encouraged to go find a job?

We at CRI believe human dignity and satisfaction best come from feeling a sense of worth to society as a whole, and being able to work a job which offers the ability to provide for oneself and one’s family, while also saving for future goals- a nice vacation, a house, a nice car, or whatever one desires and can earn through savings and interest. Even the argument over falling worker wages can be resolved using the principles of freedom- healthy market competition boosts worker’s wages by encouraging more hiring so there are more better-paying jobs than people, rather than what we have today, which is more people than better-paying jobs.

The Heartland Institute gave Delaware an overall grade of A- for welfare reform, going back to 2009 when Governor Markell was sworn in. We are ranked the 8th best state for welfare reform, dropping five places from 2008, largely because Delaware has done little to change its welfare reform policies while other states have improved theirs.

Some of their findings:

  • Delaware got top grades for work requirements and for “cash diversions”  (policies allowing case workers to give applicants lump sum cash payments to meet short-term needs), a B for service integration (organizing state human services in a way that allows coordinated, holistic, “one-stop” delivery of services and connects these services to the local community and employers), and C’s for aid limits and sanctions on those who don’t meet comply with eligibility requirements.
  • We spent $6,378 per recipient in 2013 (latest available data), and had just over 13,000 recipients of Temporary Assistance for Needy Families, which has declined 75% since 1996.
  • Where Delaware needs to improve is in anti-poverty measures. Close to 25% of Delawareans receive Medicaid, and sadly we have more children in poverty today than we had 20 years ago when the first set of welfare reforms was passed. Finding jobs for the unemployed poor has been an issue for Delaware, and Heartland ranked us 47th in finding jobs for those who are or were receiving TANF benefits. The only area where Delaware got strong ratings for anti-poverty was in having a low teen birthrate.

Heartland recommended Delaware adopt tougher time limits and do more to enforce them, and other eligibility requirements.

Overall, Delaware has done well in managing the welfare reform, in terms of having strong work requirements and helping people quickly and immediately, without losing control over monies disbursed. The state just needs to help people move off the bottom much faster than they are currently doing.

The photo of President Clinton is in the Public Domain and was taken from Wikipedia.

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Earlier today, the Department of Labor published a new rule requiring overtime pay for workers who make up to $50,400 a year are eligible for overtime pay if they exceed 40 hours a week.

The idea, championed by President Obama, is this: If more employees are eligible for overtime pay (the average American worker makes less than 50 grad a year), then businesses will either pay their hardest-working employees more, or hire more workers to avoid paying the additional overtime penalty. The DOL estimates about 5 million people will benefit from this new ruling.

So this is wonderful, right? It’s well-known that for many people, employers can require more than 40 hours a week at no extra pay because employees are salaried and not hourly. The Cato Institute offers an opinion:

“In the very short run, employers affected by this expansion may have little choice but to pay their employees higher total compensation; in the very short run, employers have few ways to avoid this added cost.

But in the medium term, employers will invoke a host of methods to offset these costs: re-arranging employee work schedules so that fewer hit 40 hours; laying off employees who work more than 40 hours; or pushing such employees to work overtime hours off the books.

And in the longer term, employers can simply reduce the base wages they pay so that, even with overtime pay, total compensation for an employee working more than 40 hours is no different than before the overtime expansion.

So, expanded overtime regulation will benefit some employees in the very short term; cost others their jobs or lower their compensation in the medium term; and have no meaningful impact on anything in the long term.

Is that a victory for middle class economics?”

We at CRI agree with Cato. Just like with every other “well-intentioned” government law, those who are likeliest to “suffer” from it (in this case, employers), will find a way around it, especially in the long-haul. Employees who demonstrate clear value will likely not have to worry about their jobs, but anyone who doesn’t demonstrate clear value should be concerned. While many will benefit right away with the increases in pay, new hires may find their base pay is lower, so their potential overtime is lower. After all, time-and-a-half for a worker at $8.50 an hour is much less than at $15 an hour.

Plus, those who benefit now could see hours cut or, if the overtime pay began to turn business revenues from a profit to a loss, the businesses will lay off employees to stay in the black. This is what’s happened for many people as a result of the ACA: turning full-time workers into part-time in order to avoid the penalty, or simply paying the penalty and dumping people into the health exchanges, since that’s cheaper than offering health insurance. And with insurance companies asking for premiums increases, things are not looking up for American workers.

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