No Standing in Lines, Just Amazon Go

By Lydia White

Amazon has introduced its new line of physical stores: Amazon Go. Using a smartphone, consumers can swipe into the store, pick up their desired items, and exit—receiving an electronic receipt for their purchases and avoiding dreaded checkout lines. Many hail this new technology as promising and exciting, while others are concerned about the potential for job losses.

Such concerns overlook a fundamental aspect of free market economies: freedom of choice. While many will choose Amazon’s technology for convenience or cost, others may prefer not to out of regard for traditional retail job opportunities or other business or personal reasons. But regardless of these differences, freedom of choice serves everyone.

This holds true across industries. You can buy a BlackBerry or upgrade to an iPhone. You can hail a taxi or download Uber. The economy is not a zero-sum game.

Consumer decisions aren’t made in an ivory tower or executive board meetings, but by each of us in our daily lives. Businesses must cater to our needs to maintain mutually beneficial, voluntary transactions. No one is forced to shop in an Amazon Go store, and traditional shopping experiences will continue to exist as long as consumer demand for them exists.

So, whether or not you are enthusiastic about capitalism’s creative destruction, the choice remains yours.


Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Steve and Friedmans

Ten Years After Milton Friedman

One of the greatest minds of our era passed away in November 2006. This Sunday would have marked his 104th birthday. Milton Friedman won the Nobel Prize for Economics; but it was his ability to relate complex economic ideas in simple terms the average person could understand, and his devotion to liberty, that made him truly great.

Milton and his economist wife Rose spent literally decades researching, writing, speaking, and popularizing free-market economics and its connection to liberty and freedom. Rose actually grew up here in Portland, and it was my privilege to call her and Milton my friends.

This Friday, July 29th, the Friedman Foundation for Educational Choice will celebrate the 10th and final Friedman Legacy Day, which began after Dr. Friedman passed away. Rather than continue these annual celebrations, the foundation, created by and named after Milton and Rose Friedman, will move forward with a new name and a new strategic plan. Both will be announced on the foundation website, at www.edchoice.org.

Please join all of us at Cascade Policy Institute as we celebrate the lives and contributions of a great couple, and renew our commitment to promote their ideas and ideals, which include the goal of every child being able to attend the public, private, religious, or home school of their choice, with funding following the student.

Celebrating the “Christopher Columbus” of School Choice, Milton Friedman

School choice has entered a new world. Because Americans are increasingly vocal about providing parents with the ability to choose their children’s schools, states are adopting broad-based school choice initiatives. Those successes can be attributed to various individuals, groups, and campaigns nationwide. However, it is school choice’s “Christopher Columbus” who deserves recognition for starting this movement more than 60 years ago.

In 1955, the yet-to-be Nobel Prize winning economist Milton Friedman introduced his vision of school choice as a way to improve the quality of American education. His idea was simple: Give parents access to their children’s public education funding, rather than require they attend the government (public) schools nearest their homes.

“Governments could require a minimum level of education which they could finance by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on ‘approved’ educational services,” Friedman wrote in 1955. “Parents would then be free to spend this sum and any additional sum on purchasing educational services from an ‘approved’ institution of their own choice. The educational services could be rendered by private enterprises operated for profit, or by non-profit institutions of various kinds. The role of the government would be limited to assuring that the schools met certain minimum standards such as the inclusion of a minimum common content in their programs, much as it now inspects restaurants to assure that they maintain minimum sanitary standards.”

Because of vested interests in the education arena, including powerful public school teachers unions, Friedman’s suggestions were ignored. And, as a result, the cost of public education doubled while its academic performance stayed the same. As Friedman noted, that should come as no surprise because that’s exactly what monopolies do: They offer a product of similar, if not worse, value at a higher price than normally would be allowed if they had to compete in the free market.

But those days are over. Many states are broke, preventing them from dropping more money out of airplanes over public schools. And many parents are fed up, wondering why their kids are underperforming or unmotivated in K-12 schools and unprepared for their college courses and future careers.

Because of that sentiment and cash crunch, according to the Friedman Foundation for Educational Choice, named after Milton and his wife Rose, we now see over half the states with one or more school choice programs, consisting of vouchers, tax-credit scholarships, individual tax credits and deductions, and Education Savings Accounts.

Oregon is behind the curve, with no significant private school choice programs―yet. But widening charter school and online school options hopefully will soon lead to more school choice for all Oregon children. The most promising possibility here involves an update of Friedman’s original voucher idea, now seen as the “rotary phone” of the school choice movement. The school choice “smart phone” is now Education Savings Accounts. ESAs give parents and students even more choices, while replacing the old “use it or lose it” funding mechanisms with a market system. This system allows parents to shop for educational services and use their savings toward future educational needs of their children.

Limited Education Savings Account programs now exist in several states, and Nevada is on the verge of implementing a near universal ESA program that soon could be available to all its K-12 students. If achieved, this will be seen as the realization of Milton Friedman’s 60-year-old vision of full school choice for every child, at least in one state with more to follow.

But Friedman’s vision was not for school choice to be just another government program. He wanted to see school choice fundamentally change the way public education operates from its current structure that supports government schools and the adults who work in them, to a better model that empowers parents. He argued that if both rich families and poor ones could receive government funding when their kids use public schools, then both rich and poor should be able to receive that same funding to make educational choices outside the government school system.

It took America more than 60 years to reach today’s environment in which parent empowerment in education is celebrated more than ridiculed. Moving forward, around the country and especially here in Oregon, we should celebrate the new world that the school choice movement’s “Christopher Columbus” opened up for us.

Milton Friedman died in 2006. For the ten years since, Cascade Policy Institute and more than one hundred other organizations around the world have celebrated what has become known as Friedman Legacy Day each year on or around his birthday, July 31. This year marks the last such formal celebration. The Friedman Foundation for Educational Choice, which has sponsored these events to honor and reflect on the life and legacy of its founder, has announced that on the day of this year’s final formal celebration, Friday, July 29, it will unveil its new name and new strategic plan designed to move Milton Friedman’s school choice vision even more effectively into the future. Please join us as we celebrate both the man and his vision, and as we look forward to many more children getting the quality educations they have been so long denied in our one-size-fits-all government school system.


A version of this Commentary first appeared in Cascade Business News on what would have been Milton Friedman’s 100th birthday, July 31, 2012. Steve Buckstein wrote about Friedman’s ties to Portland in The Oregonian the day after he died in 2006.

Private Lenders Could “Pay-It-Forward” in Oregon

By Everet Rummel

The Oregon Higher Education Coordinating Commission is proposing a pilot program called “Pay-It-Forward.” Oregon residents could attend an in-state public university or community college tuition-free in exchange for paying a portion of their income annually for 20 years after graduation. The program, set to cover 1,000 students, is projected to cost the state between $5 million and $20 million per year for the next 20 years before becoming self-sustaining.

Proponents of “Pay-It-Forward” want to alleviate the problem of overwhelming student debt loads and make a college education more affordable. But should taxpayers cover students’ tuition when they are already directly funding public universities and student aid programs? Instead of microscopic pilot programs that throw more public money at the problem of rapidly rising tuition, there is a potential private solution to help finance higher education.

Milton Friedman originally proposed the concept of human capital contracts (HCCs) for the purpose of financing higher education. HCCs are privately funded financial instruments through which students receive funding for their tuition. In exchange, they pledge to pay a set percentage of their income annually for a set period of time after graduation. If they are ever unemployed or unable to pay, then they pay nothing until they have an income. If the payback period ends before the student has paid back the entirety of the sum loaned, the rest of the debt is forgiven. HCCs would go far beyond publicly funded “Pay-It-Forward”-type programs and traditional student loans by incentivizing informed educational decisions, forcing institutions to compete by controlling costs, and transferring financial risk to those who are better able to bear it.

HCC rates, the percentage of income that students must pay annually, and funds loaned would vary by the school attended, program of study, and academic achievement. Students attending schools and programs whose graduates tend to do poorly in the labor market would face lower rates but fewer funds. Students with lower academic achievement may have access to less funding. Those attending more expensive schools would receive more funds and higher rates only if their expected earnings are high relative to the costs of the education. Thus, rates and funds would incentivize students to seek more bang for their buck. Institutions, no longer reliant on seemingly unlimited government (taxpayer-funded) aid, would have to rein in costs and focus on improving academic quality. In sum, the availability of HCCs alone would tell consumers a lot about the economic value of various degree programs.

Most importantly, risk and financial burden would be borne by borrowers and lenders, not the state and taxpayers. The majority of the risk would be transferred to lenders, who are in a better position than student borrowers to bear it. Meanwhile, students would be free to pursue their chosen career paths without worrying about fixed monthly payments that could ruin their future financial prospects. The risk of default would be arguably lower than what we face now. These points should be remembered as policymakers in Oregon and across the country consider the crisis of higher education debt. Perhaps the market―not the government―has  solutions. Human capital contracts may be one of them.


 

Everet Rummel is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Friedman Legacy Day 2014

Cascade Policy Institute cordially invites you to participate in this year’s Friedman Legacy Day. This annual, international event provides fans of Milton Friedman and lovers of liberty the opportunity to learn about the late Nobel laureate, to share his ideas, and to celebrate the impact they had on our country and the worldwide movement for freedom.

4 pm – 5 pm Policy Picnic on Milton Friedman with Steve Buckstein (SOLD OUT. Register below for our main event!)

5 pm – 7pm Complimentary food and beverages

We will also be holding a book fair and video showing!

The Future of School Choice in Oregon: Education Savings Accounts

School choice is widespread in America, including in Oregon—unless you are poor. Affluent families have choice because they can move to different neighborhoods or communities, send their children to private schools, or supplement schooling with tutors, online courses, and enrichment programs. Lower and middle-income families, meanwhile, too often are trapped with one option—a school in need of improvement assigned to them based on their zip code.

Some states such as Arizona, Wisconsin, and Florida have made significant progress toward providing more Kindergarten through 12th grade options for many children. Public charter schools (including online charters) and private school attendance made possible by state funded vouchers or tax credits are increasing families’ opportunities to find the right fit for their children. But these options are constantly under attack by those who represent the status quo: those who want the public school system to stay just the way it is, so it continues to provide virtually guaranteed jobs and benefits for certain teachers and administrators―regardless of the results achieved by the children they are supposed to serve.

Nobel Prize winning economist Milton Friedman first popularized the school choice voucher concept in his 1962 book, Capitalism and Freedom. Now, a new concept is capturing the imaginations of a new generation of parents and policy makers: Education Savings Accounts (ESAs). Going beyond the voucher or tax credit idea for school choice, ESAs introduce market concepts that help parents become active shoppers for educational services, thus improving their quality while reducing costs.

As Matthew Ladner, Ph.D. wrote in a major study for the Friedman Foundation for Educational Choice:

Education savings accounts are the way of the future. Under such accounts—managed by parents with state supervision to ensure accountability—parents can use their children’s education funding to choose among public and private schools, online education programs, certified private tutors, community colleges, and even universities. Education savings accounts bring Milton Friedman’s original school voucher idea into the 21st century.

ESAs differ from state-funded vouchers. Typically, parents can redeem vouchers only at state-approved public and private schools. In contrast, ESAs allow parents to choose among public schools, private schools, private tutors, community colleges, online education programs, and universities. In addition, ESAs allow parents to put unused funds into college savings plans, thus changing the “use it or lose it” mentality in the current public school funding system. ESAs promote user-based subsidies (like the food stamp program) rather than supplier-based subsidies that represent the current public school funding model.

Conceived of by the Goldwater Institute of Arizona nearly a decade ago, education savings accounts were first passed by that state’s Legislature in 2011 for special-needs children. In 2012 the program was expanded to children adopted out of the state foster system, children of active-duty military parents, and children in “D” and “F” failing schools. Last June, Arizona’s Governor signed a bill to expand ESAs to children entering Kindergarten and to increase funding for the accounts.

Nationally, school choice is becoming a more bipartisan issue as many Republicans are being joined by leading Democrats, such as former Clinton White House Press Secretary Mike McCurry. McCurry is now chairman of the national Children’s Scholarship Fund, which provides privately funded tuition scholarships to low-income elementary school kids. He describes the school choice movement as a rare example of centrism in our increasingly polarized American politics.

And, America’s newest U.S. Senator, Democrat Cory Booker of New Jersey, has long been a school choice advocate. Speaking back in 2001 for Cascade Policy Institute, Booker told Black students at Portland’s Self-Enhancement, Inc. how important school choice is for his fellow African Americans.

It is time for Oregon to move further toward school choice for every child, and ESAs offer an attractive way to start the journey. Already, our state has over 120 public charter schools that were made possible by passage of a 1999 bill in the Republican-controlled legislature that was signed into law by a Democratic Governor (John Kitzhaber).

In the upcoming February 2014 Oregon legislative session, Oregonians will have an opportunity to start down the ESA road with passage of the Education Equity Emergency Act (E3).* It will create Empowerment Scholarship Accounts modeled after the highly successful Arizona program. These scholarships will help level the educational playing field for kids with special educational needs, in foster care, or in low-income families. Scholarship recipients can use ninety percent of their state education funding for approved educational expenses like private schools, tutoring, education therapy, textbooks, online education programs, community colleges, universities, or college savings plans.

One E3 Act sponsor notes, “These students have had unique challenges in their lives and require enhanced educational flexibility to ensure successful degree attainment.”**

The Act is designed to impose no financial burden on the state or on the school districts that scholarship students currently attend. Scholarship participation will be capped at 0.5% of students in a school district unless a district chooses to allow additional participation.

Oregon has a history of bold experimentation in other policy areas. Now is the time to experiment with expanding the role of parents choosing and the market delivering better education for Oregon’s children. Education Savings Accounts will empower families to find better educational options, leave the “use it or lose it” funding mechanism behind, and save toward their children’s higher education. Altogether, ESAs will provide winning situations for children, their parents, and Oregon’s future.

* The Education Equity Emergency Act is in draft form as of January 7, 2014. The official bill language should be available before the session begins on February 3.

** From a letter by State Senator Tim Knopp to the Chair of the Senate Education and Workforce Development Committee Mark Hass requesting a hearing on the E3 Act during the January interim legislative hearing days. The hearing is tentatively scheduled for the afternoon of Thursday, January 16.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

 

“Friedman Legacy Day” Inspires Advocates for Freedom

Everybody can recall that one teacher who made a life-changing impression on them. For some it happened in grade school; for others, college. One individual, however, managed to influence individuals not only in the halls of academe, but in magazines, newspapers, television channels, the U.S. Congress, and even the White House. And still, after his passing, he is changing the world. On July 31, people across the world are celebrating “Friedman Legacy Day” on what would have been Milton Friedman’s 101st birthday. 144 local events have been planned, including 90 in the U.S. and 54 in 25 countries.

Milton Friedman is considered by many to be the most influential economist of the 20th century. His contributions have had a lasting impact on monetary policies, taxing models, government spending, and education reforms. Yet, even with the proven effectiveness of Dr. Friedman’s ideas, public policies have moved away from them in favor of a more centralized decision-making system. The case for individual freedom must be made again―and as strongly as Dr. Friedman did.

“Many people want the government to protect the consumer,” Friedman said. “A much more urgent problem is to protect the consumer from the government….The great tragedy of the drive to centralization, as of the drive to extend the scope of government in general, is that it is mostly led by men of good will who will be the first to rue its consequences.”

Nowhere is this more on display than in the current controversies concerning the IRS and NSA. Or take last year’s historic cheating scandal in Atlanta Public Schools. Government is becoming so big it is forgetting its boundaries and failing to do what it’s meant for: serving and protecting the individual.

That is precisely why Dr. Friedman, along with his wife, Rose, devoted his legacy to education reform, specifically to school choice. The Nobel laureate saw the grave ills a centralized, government-run system was having on our nation’s children, particularly on minority families, and determined that freedom of choice in education was the best alternative. And indeed it is.

States’ experiences, empirical research, and parental satisfaction are proving that a market-based approach to education is far better than a monopolistic structure. By focusing our efforts on education, just as Dr. Friedman did, we can reignite the drive toward individual freedom that has served our country so well.

Milton Friedman said that maintaining a free society “requires a willingness to put up with temporary evils on the basis of the subtle and sophisticated understanding that if you step in to do something about them you not only may make them worse, you will spread your tentacles and get bad results elsewhere.”

That is happening far too often today, as evidenced by our high unemployment rate, surging gas prices, ballooning health care costs, high food-stamp reliance, and unacceptable educational outcomes. And still, the reaction to such ills typically focuses on government doing more.

We remember Milton Friedman for his principled stance against government overreach. And we will continue to keep his voice alive. “Milton 101” is a lesson more Americans need to learn. Its teachings are simple, but its effects are profound. Those who learn them will be today’s Milton Friedmans—advocates for freedom, teachers of liberty.

Cascade Policy Institute is participating in the 2013 “Friedman Legacy Day,” a worldwide day of remembrance for Milton Friedman on what would have been his 101st birthday.

Charting a New World of Educational Freedom

School choice has entered a new world. Because Americans are increasingly vocal on providing parents the ability to choose their children’s schools, states are adopting broad-based school choice initiatives. Those successes can be attributed to various individuals, groups, and campaigns nationwide. However, it is school choice’s “Christopher Columbus” who deserves recognition for starting this movement more than 50 years ago.

In 1955, Milton Friedman introduced school choice as a way to improve the quality of American education. His idea was simple: Give parents access to their children’s public education funding, rather than require they attend the government (public) schools nearest their homes.

“Governments could require a minimum level of education which they could finance by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on ‘approved’ educational services,” Friedman wrote in 1955. “Parents would then be free to spend this sum and any additional sum on purchasing educational services from an ‘approved’ institution of their own choice. The educational services could be rendered by private enterprises operated for profit, or by non-profit institutions of various kinds. The role of the government would be limited to assuring that the schools met certain minimum standards such as the inclusion of a minimum common content in their programs, much as it now inspects restaurants to assure that they maintain minimum sanitary standards.”

Because of vested interests in the education arena, Friedman’s suggestions were ignored. And, as a result, the cost of public education doubled while its academic performance stayed the same. As Friedman noted, that shouldn’t come as a surprise because that’s exactly what monopolies do: They offer a product of similar, if not worse, value at a higher price than normally would be allowed if they had to compete in the free market.

But those days are over. Many states are broke, preventing them from dropping more money out of airplanes over public schools. And many parents are fed up, wondering why their kids are underperforming or unmotivated in K-12 schools and unprepared for their college courses and future careers.

Because of that sentiment and cash crunch, last year a historic number of choice programs were enacted across the country. Substantiating that momentum, the Wall Street Journal called 2011 “The Year of School Choice.”

Today, 18 states and the District of Columbia provide some type of private school choice for their residents. And more states continue to come online. Already in 2012, Virginia has joined the school choice “family;” New Hampshire’s legislature has passed a school choice measure; Florida and Arizona expanded their programs; and Louisiana dramatically increased the scope of its school voucher program. Oregon is behind the curve, with no significant private school choice programs―yet. But widening charter school and online school options hopefully will soon lead to more school choice for all Oregon children.

Of course, no state has followed Friedman’s vision entirely―i.e., school choice for all families. Indiana and Louisiana are close, in that both make more than half their states’ student populations eligible.

But Friedman’s vision was not for school choice to be just another government program. He wanted to see school choice fundamentally change the way public education operates from its current structure that supports schools to a better model that empowers parents. Both rich families and poor ones can receive government funding when their kids use public schools. And both rich and poor should be able to receive government funding for their kids to use vouchers.

It took America more than 50 years to reach today’s environment in which parent empowerment in education is celebrated, not ridiculed. Moving forward, the late Milton Friedman’s voucher idea is more important than ever, for it is the tool advocates can use to navigate the new world for school choice they helped discover.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, which is participating in July 31st Friedman Legacy for Freedom Day, an international event celebrating the late Milton Friedman on what would have been his 100th birthday.

After a Century of Friedman, Parents Should Be “Free to Choose”

By Erin Mae Shiffler

Nobel Prize-winning economist Milton Friedman would have turned 100 years old on July 31. This will be an opportunity to remember his accomplishments and to celebrate his legacy. Dr. Friedman was thoroughly invested in the cause of educating children by fixing our current school system. He once said, “The only solution is the same solution as we found everywhere else―which is competition. The essence of an effective television industry, an effective telephone industry, an effective computer industry, or an effective mail delivery industry―you name it―is competition. That’s what we need to get in schools.”

Friedman promoted competition among teachers themselves, as well as among schools. By allowing competition, successful and innovative teachers would earn more for their efforts. Schools would obtain more students, and therefore additional revenue, to educate those students, if they were good schools. Poorly performing schools would lose students until they found ways to improve.

Unfortunately, we have not seen this kind of system in Oregon because teachers unions and lobbyists protect teachers at the expense of what is good for students. As parents who want a better education for our kids, we need to promote Dr. Friedman’s ideas in order to push against the current stagnant system. To learn how teachers unions stand in the way of real education reform, and to see if your local representatives are holding back or trying to improve your choices and your child’s education, visit www.statusquolobby.com.

Erin Mae Shiffler is a research associate at Cascade Policy Institute, Oregon’s free market public policy think tank.

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