Month: July 2014

Time for a Third Bridge to Vancouver

Last week a conceptual plan for a new bridge over the Columbia River was unveiled at a public forum in Vancouver, WA. The plan, presented by Florida-based Figg Engineering, calls for a four-lane bridge east of I-205. The new bridge would have 144 feet of river clearance – the same as the I-205 Bridge — and include sidewalks and bikeways completely protected from highway traffic.

The financing is still to be determined, but could involve user fees, known as tolls. In fact, one option would be for the bridge to be privately owned and operated, paid entirely with tolls. Those drivers unwilling to pay could continue to use the Glenn Jackson Bridge, as they do today.

Oregon political officials are notably cold towards the idea of a third or fourth bridge over the Columbia. Local politicians believe that the two bridges we have now are all we should ever get – even though Portland is served by nearly a dozen bridges over the smaller Willamette River.

As the Portland-Vancouver region grows we will need much more bridge capacity. Since government won’t provide it, we should welcome this opportunity to pursue a private investment option.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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A free-market guru with ties to Portland

In honor of Milton Friedman’s 102nd birthday this July 31, below is Steve Buckstein’s op-ed in Friedman’s memory, which appeared in The Oregonian the day after he passed away in 2006.

Full text

A great champion of human liberty passed away on Thursday at the age of 94.  Milton Friedman won the Nobel Prize in economics in 1976, but he likely will be remembered more for his passionate devotion to individual freedom.

Friedman’s connection to Oregon was through his devoted wife Rose, a member of the Director family. He was born in New York City in 1912, the son of poor Eastern European immigrants. She emigrated with her family from Eastern Europe to Portland in 1913. She attended public schools and Reed College before transferring to University of Chicago. Rose and Milton met as graduate students at Chicago and the rest, as they say, is history.

They raised two children together and co-wrote three books on economics and public policy: “Capitalism and Freedom,” “Free to Choose” and “Tyranny of the Status Quo.” Rose also helped produce the 10-part PBS television series, “Free to Choose,” which introduced the power of free-market economic ideas to the general public here and around the world beginning in 1980. They published their memoirs, “Milton and Rose D. Friedman, Two Lucky People” in 1998.

Milton started his career as a young economist in the 1930s working for the New Deal Roosevelt administration in Washington, D.C. He worked in the U.S. Treasury Department during World War II before leaving government for teaching. He later said: “My experience in those years shaped the advice I regularly gave my graduate students in later years: by all means spend a few years in Washington — but only a few.”

Friedman issued that warning because he came to realize that government controls over prices, wages and production were both inefficient and violations of liberty. He described himself as “thoroughly Keynesian” back then but later said, “You know, it’s a mystery as to why people think Roosevelt’s policies pulled us out of the Depression. The problem was that you had unemployed machines and unemployed people. How do you get them together by forming industrial cartels and keeping prices and wages up?

More than perhaps any other modern economist, Friedman’s ideas were credited by Western leaders such Ronald Reagan and Margaret Thatcher, and free-market revolutionaries in formerly communist countries, as a driving force behind their efforts.

Milton Friedman was fond of saying that he was not a conservative. He did not want to conserve much of what our current political culture has to offer. He called himself both radical and libertarian. He was an early and strong advocate for abolishing the military draft, and he saw more harm than good in government’s attempts to outlaw peaceful human behavior such as drug use and prostitution.

Of all the ideas he advocated, none was more important to him than universal school choice, a concept he first wrote about in 1955. He and Rose founded the Milton and Rose D. Friedman Foundation to advocate for both public and private school choice.

I first met Milton and Rose when they attended the Ashland Shakespeare Festival in 1989. Just this past Monday I thought about what Milton would have said in response to a front page Oregonian story about how many citizen initiatives aimed at limiting the power of government had not passed in the recent election. The headline read, “Voters nip libertarian dreams across U.S.” If Milton had seen that, I think he would have responded, “It was the tactics that didn’t succeed in this election. The dreams, which are really American Dreams, live on.”

Milton Friedman, lover of liberty, is gone.  But his dreams, the dreams of countless people here and around the world, live on.

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Is There a More Flexible Way for Students to Invest in Themselves?

By Joel Grey

State Treasurer Ted Wheeler has proposed a new program intended to help Oregon students go to college in spite of the quickly ballooning cost of tuition. Under the proposed “Oregon Opportunity Initiative,” the state of Oregon could borrow money by selling general obligation bonds and then invest the proceeds. Students could receive grants or other subsidies from the earnings on this investment each year, while taxpayers would be responsible for paying back the bonds. The state must use all discretionary spending necessary to pay back bondholders with interest over thirty years. Bonds issued for this purpose likely would reduce the opportunity to bond for other critical needs of the state such as roads and bridges.

This proposal is potentially a costly mistake for Oregon and fails to prevent the inflated cost of education from growing even faster.

Even with the increased cost of college, higher education can still be a good investment for individual students. People with bachelor’s degrees likely will see their incomes increase by more than the cost of attendance over their careers. Because of this, it is unwise to eliminate part of the cost to the student by having taxpayers help fund their education. Students should pay for their own education, even if they are not paying at the time they are enrolled.

If the cost of college to the student is reduced, it creates a third-party payer problem: Because they are not directly affected by cost increases, students will worry less about the price of college, allowing it to inflate more over time. Conversely, if students are expected to pay for their education, they are more cautious about expenses and debt.

Even traditional loans have a third-party payer problem because costs are externalized to the future. Students have to pay eventually, but they don’t necessarily fully consider this because it is a long-term issue. While traditional loans lead to problematic student debt, there are other ways of financing education that don’t lead to third-party payer problems.

One viable solution to student debt was proposed almost sixty years ago by Milton Friedman: human capital contracts. A private person or institution, such as a bank or investment firm, pays for a student’s education. In exchange, the student pays a fixed percentage of income over a certain period of time. Human capital contracts would be more flexible than traditional loans. As a percentage of income rather than a fixed dollar amount, they would be less likely to be financially burdensome to the borrower and would thereby lower the rate of default.

Human capital contracts are also more flexible for the lender. Current federal loans treat all students equally in rates and borrowing limits. Private institutions could offer lower or higher rates based on an individual student’s career path or academic performance, allowing certain students to receive lower rates while riskier students are given higher rates.

Human capital contracts are likely to benefit lower-income students the most. It is very unlikely that those students could afford to pay for college up front, but they would have the same earning potential as anyone else in their field upon graduating. Human capital contracts would allow them to use these future earnings to make college attainable in the present.

While human capital contracts are also a third-party payer system, the private nature of the funding gives lenders an incentive to control their costs. They will need to ensure that students can pay back what they borrowed. The federal government doesn’t have the same incentive with its student loans because it doesn’t need to earn a profit.

Human capital contracts are not a silver bullet; nothing is. For example, they likely wouldn’t be useful for students who only intend to work part time or to become stay-at-home parents because lenders couldn’t recoup their investments. However, human capital contracts are a better choice overall for students and Oregonians when compared with the taxpayer-funded Oregon Opportunity Initiative. They would eliminate many problems of current loans, provide an incentive to view education as an investment, and control costs. All of this would help manage the expense of college long-term while still allowing students from any income bracket to attend college.

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

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The Portland Seed Fund: Lots of Fertilizer, Little Growth

By Joel Grey

The Portland Seed Fund (PSF) started in 2011 as a joint public-private venture intended to close a funding gap for entrepreneurs attempting to start a business. It invests $25,000 in each selected startup and reserves money for follow-up investments. The City of Portland, the City of Hillsboro, and the State of Oregon diverted tax dollars to underwrite the majority of the cost for the first Seed Fund and a significant portion of the second Seed Fund. This totaled $3.4 million through 2014.

Another $100,000 was proposed in the requested budget for the Portland Development Commission (PDC) this year. The 2014-2015 budget has been adopted but does not specify whether funding for the PSF is included. The PDC has ignored multiple requests for comment. The City of Portland and the Oregon Growth Account are the two biggest sponsors, both putting in $1.5 million or more.

Portland obtains its money from taxpayers directly; the Oregon Growth Account is a state-run venture capital fund using dollars appropriated from the Oregon Lottery.

The Seed Fund was promoted as a way for public entities to help private companies get started, with the expectation that the Fund would eventually earn money. However, it is not possible to determine whether the Seed Fund is earning a positive rate of return, or even what is being done with its money, despite the fact that it utilizes public funds.

The Seed Fund does not publicize which businesses are still open, and even when contacted did not respond to requests for its return on investment (ROI). The public entities were unable to provide the Fund’s ROI as well. The City of Hillsboro communicated that it was not able to invest directly, but had used an intermediary that would also receive any ROI. Various people at the City of Portland, including several at the City Budget Office and the PDC, were also unable to supply an ROI; some did not know what the ROI was and others have simply not responded to information requests.

Out of the 46 companies funded, most appear to still be open; but one has closed, another has moved to California, and two more appear to have closed, lacking corporation status, websites, and offices.

Regarding the funds spent by Hillsboro and Portland, Article XI Section 9 of the Oregon Constitution states: “[n]o county, city, town or other municipal corporation, by vote of its citizens, or otherwise, shall become a stockholder in any joint company, corporation or association, whatever, or raise money for, or loan its credit to, or in aid of, any such company, corporation or association.” Portland and Hillsboro got around this provision by giving their initial offerings to the Oregon Entrepreneurs Network, which then gave the money to the Seed Fund.

For the second Seed Fund, the City of Portland created its own intermediary, the Portland Economic Investment Corporation, which will be the group that handles the investment.

When asked, the City of Hillsboro said that it is not an investor; but by any standard of common sense it is. The city appropriated money for the Seed Fund, and the intermediary is just a screen. The money was always intended for the Seed Fund.

The managers of the Fund have admitted “[t]he Seed Fund could exist without public money.” This begs the obvious question: Then why is public money involved? If a private enterprise can exist without public money, for what reason is the public money involved?

The Portland Seed Fund is an example of “mission creep” in government. The three jurisdictions that launched this Fund have important work to do in such areas as law enforcement and protection of property. There is no reason to spend public money on non-essential and highly risky tasks such as equity investing in new private companies. The Portland Seed Fund should be shut down, and a full accounting of its spending should be provided to taxpayers.

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

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A Prescription for Affordable Housing in Portland

A new issue faces Portland. City Hall is considering waiving development fees for developers of market-rate housing in the Old Town Chinatown district. Chinatown is Portland’s oldest neighborhood and has earned an unpleasant reputation. City Hall claims that waiving these fees, which cover a project’s impact on urban infrastructure, can stimulate building in Chinatown. In the past, only developers of so-called “affordable housing” have been granted this waiver.

Critics argue that this is an expensive subsidy for big businesses which aren’t providing affordable housing. However, they assume that market-rate rent is permanent, no matter how much housing is built. This may not be true. As the supply of market-rate apartments increases in Chinatown, the market rate can be expected to decrease. Essentially, housing is made affordable by supplying more of it.

Waiving fees deprives certain city bureaus of funds; but perhaps these funds could be better spent, in this case, by private developers. If the City wishes to revitalize Chinatown, it needs to encourage more people to live there, and the best encouragement is lower rent. This can be accomplished by decreasing development fees and encouraging construction. More housing and lower rents could be good for Portland.

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

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Oregon’s Prescription-Only Cold Medicine Law Needs a New Look

In recent years, Cascade Policy Institute has tracked and analyzed the effectiveness of a 2006 Oregon state law that requires all citizens to obtain a doctor’s prescription before buying pseudoephedrine-based cold and allergy medication.

Overall, our analysis found that the law produced a minimal impact on the state’s methamphetamine problem, based on the fact that not only did Oregon see a significant decline in meth lab incidents prior to the law’s passage, but that Oregon’s neighboring states experienced a similar decline in meth labs over the same time period without enacting such a prescription law.

Since Cascade published our study in 2012, Oregon’s meth problem has shown no signs of improvement.

Last month, Oregon’s High Intensity Drug Trafficking Area (HIDTA) program released its 2015 Program Year “Threat Assessment and Counter-Drug Strategy.” Within the report, a number of new data points and law enforcement survey findings cast fresh doubts on the 2006 law. Among the most troubling findings:

  • While the number of meth lab seizures remains low, volume confiscated in Oregon has grown dramatically since 2007. Ninety percent of law enforcement officials indicate crystal meth was highly available in their area.
  • Meth-related arrests in Oregon nearly doubled from 2009 to 2014.
  • According to Oregon law enforcement officials, meth is the drug that contributes most to violent crime and property crime and is the primary funding source for major criminal activity.
  • According to the Oregon State Medical Examiner Division, the number of fatalities related to meth use rose to a historic high of 123 deaths in 2013, over twice the number of fatalities in 2001.

By any reasonable measure, the 2006 law has failed in spectacular fashion. The newly released 2015 HIDTA report should compel Oregon policymakers to reexamine the law and look for anti-meth measures that actually will lead to progress in the fight against meth.

Oregon’s pseudoephedrine prescription requirement law is poor policy because it fails to address the fundamental causes of meth crime. Clearly, Oregon’s meth users and dealers have been able to bypass the prescription requirement in the same manner criminals have done so relative to prescription medicines, despite strict controls on those products. Meanwhile, law-abiding Oregonians live in one of two states in the entire country that prohibit over-the-counter purchases of popular and effective pseudoephedrine-based cold and allergy medicines. Those products offer powerful relief that allows patients in other states to avoid the costly hassle of making a doctor’s appointment and asking for a prescription.

It doesn’t have to be this way.

A number of other states, including Oklahoma, Alabama, and Kentucky, have experienced drastic success against meth criminals due to targeted legislative solutions that penalize criminals, not consumers. Each of those states employs an electronic pseudoephedrine tracking system that automatically blocks illegal pseudoephedrine purchases and provides law enforcement with critical evidence that leads to meth busts and arrests. Oklahoma, for instance, uses a meth-offender block list, which prohibits certain drug offenders from being able to buy pseudoephedrine products. Since 2012, the state has seen a decline in meth-lab incidents of more than 50 percent.

Oregon’s law enforcement officers regularly put their lives on the line to make our communities safer. Given what is at stake, elected officials have a responsibility to debate and pass legislation that fixes problems and improves the quality of life for the people they serve. Equally important, however, is the responsibility to make changes to laws that have failed to deliver results, especially when those laws inconvenience law-abiding consumers without solving crime-related problems.

It’s time to take a look at the prescription requirement law. The stakes are too high not to.

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

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U.S. Has the Worst Health Care? Not by a Long Shot

By Sally C. Pipes

Few complaints about the U.S. health care system are as common as the claim that we spend too much on health care and get too little for all that spending in return—especially compared to other industrialized nations.

A new Commonwealth Fund report is the latest to indict U.S. health care. It pegs the American system dead last in a survey of 11 developed countries. But like virtually every other study that trashes the U.S. health care system, Commonwealth’s rankings rely on questionable assumptions, like giving weight to those systems that treat people equally rather than well. At the same time, Commonwealth ignores the problems that countries with socialized health care systems have actually treating people once they’re sick. And on that metric—that is, actually delivering care to those who need it—the United States is without peer.

The Commonwealth Fund report begins by asserting that the U.S. health care system “is the most expensive in the world.” It’s true that the United States spends a larger share of its Gross Domestic Product—17.9 percent, or almost $3 trillion—on health care than other countries. But by itself, that statistic means nothing.

The United States also happens to be one of the richest countries in the world. Once basic needs are taken care of, an increasing share of each extra dollar will go to what were once considered luxuries. That’s borne out by national spending data. Between 1990 and 2012, for example, spending on health care climbed 290 percent, significantly faster than overall GDP growth of 171 percent.

But household spending on live entertainment went up more than 500 percent over those same years, while spending on pets climbed 353 percent. By the Commonwealth Fund’s logic, America also faces a pet-care spending crisis. In contrast, spending on staples like food, clothing, housing, and furnishings climbed more slowly than overall GDP.

The Commonwealth Fund concludes that the United States “underperforms relative to most other countries on most other dimensions of performance” despite having the most expensive health care system in the world. But a closer look at those “dimensions” calls that claim into question.

Take infant mortality rates, where the United States typically places far down the list behind France, Greece, Italy, Hungary, even Cuba.  This comparison is notoriously unreliable, because countries either use different definitions of a live birth—or fudge their numbers. The United States, for example, counts every live birth in its infant mortality statistics. But France only includes babies born after 22 weeks of gestation. In Poland, a baby has to weigh more than 1 pound, 2 ounces to count as a live birth. The World Health Organization notes that it’s common practice in several countries, including Belgium, France, and Spain, “to register as live births only those infants who survived for a specified period beyond birth.”

What’s more, the United States has significantly more pre-term births than other countries. That fact alone accounts for “much of the high infant mortality rate in the U.S.,” according to a report from the Centers for Disease Control and Prevention (CDC). The CDC found that if the United States had the same pre-term birth rate as Sweden, our infant mortality rate would be cut nearly in half.

What about life expectancy, where the United States ranks below its peers as well? International measures of longevity typically fail to account for differences in obesity, accidental deaths, car accidents, murders, and the like, all of which shorten lives no matter how good a nation’s health care system is. The U.S. murder rate, for example, is far higher than all the other countries in the Commonwealth Fund study. The United States has a worse highway death rate than all but one of them. And U.S. obesity rates are more than double Canada’s and more than four times Switzerland’s.

A far more meaningful comparison of international health systems would take stock of how people afflicted with diseases such as cancer fare in different countries. And on this measure, there’s no question the United States stands above the rest. Five-year survival rates for breast cancer are higher in the United States than England, Denmark, Germany, and Spain, according to the American Cancer Society. In the United States, the survival rate for prostate cancer is 99.1 percent. In Denmark it’s 47.7 percent. For kidney cancer patients, the survival rate here is 68.4 percent. It’s just 45.6 percent in England—which the Commonwealth Fund ranked as the number-one health care system in the world.

Finally, the Commonwealth Fund study also ignores massive problems with actual access to care in the countries it heralds. Every citizen of a country with socialized medicine may have insurance. But that doesn’t mean they can get the care they need.

Treatment delays were so chronic in the United Kingdom, for example, that the government had to issue a formal requirement that patients shouldn’t have to wait more than four months for treatments authorized by their general practitioner. The Royal College of Physicians found that poor care—including doctors trying to keep costs down—caused nearly two-thirds of asthma deaths in the U.K. in 2012.

In Canada, the average patient seeking an elective medical service has to wait four-and-a-half months between being recommended for treatment by their primary care physician and actually receiving it. Waiting for care is the norm in Canada, even though Madam Chief Justice Beverley McLachlin of the Canadian Supreme Court declared nine years ago, in a ruling holding a ban on private health insurance in Quebec illegal, “Access to a waiting list is not access to health care.”

The Commonwealth Fund is right about one thing—the U.S. health care system is too expensive. But rationing care—as Commonwealth’s favored systems do—is not the answer. Oregonians should pay special heed to this warning since your “Bold Experiment That Failed,” the Oregon Health Plan rationing scheme, is still seen by many as a model for all of you.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.

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Leave Lodging Alone

By Everet Rummel

On July 2, the Portland City Council held a hearing on proposed amendments to the Zoning Code concerning short-term rentals. The council chambers were packed with citizens who support legalizing renting one or two bedrooms from a primary residence.

An emerging sector of many local economies is “homesharing,” or renting space in your home to strangers on a short-term basis, usually for a few nights. Smartphone apps such as Airbnb allow owners to list their homes for renters to see. Homesharing is controversial because it remains informal in most places and presents a challenge to the status quo of residential living and conventional hotels.

In Portland, homesharing falls under traditional bed and breakfast regulations. These may be too expensive for the typical homeowner short on cash, so many homesharers operate illicitly.

In an effort to regulate homesharing and make compliance cheaper, the City Council has taken testimony from citizens. Sharers say renting provides them with supplementary income, allowing them to keep their homes or enjoy their retirement years. Renters benefit from low prices and a more authentic atmosphere compared with hotel rooms. Opponents of homesharing fear increased noise, diminished neighborhood safety, and that lucrative short-term rental prices would attract landlords to the market, making long-term rentals less affordable.

However, noise and safety issues probably can be solved by talking to your neighbors and complaining to the police if things get out of hand. A study by the Rosen Consulting Group shows that short-term rentals make up a small fraction of the total rental housing stock in San Francisco, so they are unlikely to affect rents.

With many benefits and low costs, the City should embrace homesharing and interfere with it as little as possible. Council members are infatuated with the idea of requiring sharers to have their homes inspected and licensed and to display their license numbers if they post an ad on Airbnb. But maintaining a listing of high-quality rentals is in the best interest of Airbnb. The site already offers refunds to guests who cancel due to rentals that fail to meet health, safety, and legal standards. Online branding is a powerful tool that may be preferable to city codes for promoting high standards among homesharers.


The hotel industry has expressed a desire for “fairness.” It wants short-term rentals to face the same tax and regulatory burdens as conventional hotels. However, hotels are in a better position to comply with taxes and regulations, which will disadvantage cash-strapped homesharers. A truly fairer route would be to reduce the burden on both hotels and homesharers alike.

The City’s discussions so far have ignored the fact that many short-term rentals include entire homes; and no one is sure how to address the question of rentals in apartments or condos, either. Portland is instead leaning toward working out these crucial details later. Given the enormous costs of regulating such a diverse and informal industry as homesharing, Portland should step back from over-regulating it.

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

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Portland Public Schools’ New Ombudsman Should Be Independent

By Joel Grey

In response to parent complaints, Portland Public Schools will create a new ombudsman position. An ombudsman is a person within an organization who provides accountability and investigates complaints.

It’s a good thing for public schools to have an ombudsman. An ombudsman is dedicated to listening to parents’ concerns and preventing abuses within the system. Accountability is important because people will often get away with whatever they are able to, and an ombudsman makes it harder to escape independent oversight.

The problem here is that the school district has placed the ombudsman within the public relations department, reporting directly to chief of community involvement and public affairs, rather than to the superintendent. The job of public relations isn’t to investigate and stop abuses within the system; it’s to improve the public’s view of the schools. Placing an ombudsman in a PR department makes it appear to parents that the position is just for show.

An ombudsman should be as independent as possible and report to the highest level of an organization―in this case, directly to the superintendent. This is what Newark Public Schools does, and it is a common practice. Without independence, the ombudsman may appear to parents to be simply a tool to placate their criticisms without effecting real reform.

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

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Milton Friedman’s Education Savings Accounts: The Future of Oregon Education?

By Stephanie Linn

“So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system.”

Milton Friedman

That quote from Dr. Friedman speaks to how evidence and inquisitiveness truly drove the Nobel laureate’s work—and how open he was to change, even if it involved an idea he supported…or created.

The “father of school choice” accurately predicted the modern voucher programs in Ohio and Wisconsin would spread to other states as vouchers demonstrated their effectiveness. Evidence, anecdotal and empirical, from such programs have ignited the interest of parents nationwide to demand similar opportunities for their children. Two decades after Friedman’s prediction, there are 51 school choice programs in 24 states and Washington, D.C.

Historically, vouchers have been the “face” of school choice and the most effective means of delivering education “so far discovered.” But with the advent of a new type of school choice—which might not even involve actual schools—that could change. And, for Friedman, that would be okay.

“Vouchers are not an end in themselves,” Friedman wrote. “The purpose of vouchers is to enable parents to have free choice, and the purpose of having free choice is to provide competition and allow the educational industry to get out of the 17th century and get into the 21st century.”

“Why not add partial vouchers?” Friedman asked. “Why not let (parents) spend part of a voucher for math in one place and English or science somewhere else.”

Education savings accounts (ESAs) do exactly that—and more—which is why the newly discovered ESAs best represent and drive Dr. Friedman’s vision for American education.

ESAs came into existence in 2011, when Arizona policymakers, with the help of the Goldwater Institute, enacted what are called Empowerment Scholarship Accounts. The ESA program allows parents to purchase a range of educational services, including therapies, tutoring, books, curriculum, and online learning programs for their child, using a portion of the funds that would have been spent on his or her public schooling.

Thanks to that policy in Arizona, we now have a customizable education system similar to what Dr. Friedman proposed toward the end of his life. Take, for example, Dr. Friedman’s thinking on how students could be using computers and the internet for academic purposes, which, at the time, was relatively an outside-the-box—more like outside-the-school—approach:

“The availability of computers has changed the situation, but not fundamentally,” Friedman said. “Computers are being added to public schools, but they are typically not being used in an imaginative and innovative way.…Innovative uses of computers and the internet would offer new paths to learning.”

Arizona’s ESAs are doing exactly that: Using data from the Arizona Department of Education, Lindsey Burke found that 34.5 percent of Arizona parents use ESAs to purchase multiple educational services to accommodate their children’s’ diverse needs. That is, they did not limit their children’s education to a traditional school building. Parents purchased online learning programs, tutors, therapies, and more. In their current form, vouchers and tax-credit scholarships, although valuable and effective for many families, do not allow such customization.

And Arizona parents have reported they are grateful for the flexibility ESAs afford them and the resulting improvement in their children’s lives. In fact, 90 percent of families reported they are “highly satisfied” or “satisfied” with the program (the remaining 10 percent were “somewhat satisfied”; none were dissatisfied). That is significant, considering 49 percent of families using ESAs were not happy with the services and educational opportunities afforded to their children in public school before they started using the ESA program.


Given the success of Arizona’s ESAs, it should come as no surprise more states are considering similar programs. It’s Dr. Friedman’s voucher prediction all over again: As such programs demonstrate their effectiveness, they spread.

In 2014, Oregon―along with eight other states―introduced ESA proposals. The most significant news this year came out of Florida, which last month became the second state in the nation to adopt ESAs. The Florida Personal Learning Savings Accounts will give children with special needs the opportunity to receive educational services outside of a traditional public or private schoolhouse setting. Florida families may soon experience the transformational power of customizable school choice programs in the same way ESAs have changed the lives of one Arizona family, the McMurrays.

Lynn and Tim McMurray’s youngest daughter, Alecia, now receives occupational therapy and other educational services using an ESA. Alecia’s sister, Valerie, has a mild form of cerebral palsy, which Lynn and Tim are able to treat via one-on-one tutoring, made possible by an ESA. Valerie has become so enthusiastic about her education that she will stop people on the street and tell them what she is learning, for which her mom is incredibly grateful.

“The freedom ESAs give our family is the biggest blessing ever,” Lynn said.

Oregon’s proposed ESA program could offer that same opportunity by giving parentsthe ability to find new ways to meet their children’s needs. That is why ESAs so effectively speak to Milton Friedman’s vision for education and its future: the freedom to choose and discover, both of which, together, improve the lot of everyday people.


Stephanie Linn is State Programs and Government Relations Director at the Friedman Foundation for Educational Choice. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization.

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The “Sharing Economy” Benefits Homeowners, Guests

By Everet Rummel

An emerging sector of many local economies is “homesharing,” or renting space in your home to strangers for a short term, usually a few nights. Smartphone apps such as Airbnb allow owners to list their homes for renters to see. Homesharing is controversial because it remains informal in most places and challenges the status quo of residential living and conventional hotels.

In Portland, homesharing falls under traditional bed and breakfast regulations. These may be too expensive for the typical homeowner, so many homesharers operate illicitly.

In an effort to regulate homesharing and make compliance cheaper, the Portland City Council has taken testimony from citizens. Sharers say that renting provides them with supplementary income, allowing them to keep their homes or enjoy their retirement years. Renters benefit from low prices and a more authentic atmosphere compared with hotel rooms. Opponents of homesharing fear increased noise, diminished neighborhood safety, and that lucrative short-term rental prices would attract landlords to the market, making long-term rentals less affordable.

However, noise and safety issues can probably be resolved by talking to your neighbors and complaining to police if things get out of hand. A study by the Rosen Consulting Group shows that short-term rentals make up a small fraction of the total rental housing stock in San Francisco, so they are unlikely to affect rents. With many benefits and low costs, Portland should embrace homesharing and interfere with it less.

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

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Seattle’s Giant Job Killer

By Erin Shannon

The city of Seattle made history last month with an ordinance that will force every employer in the city to pay every worker a $15 per hour minimum wage, which is the highest in the nation. But before progressives in Portland try to hold up Seattle as a model, they should watch what happens to workers there. The controversial wage mandate passed by Seattle’s City Council has not even been enacted yet, but it is already having a chilling effect on jobs.

Small business owners are expressing deep worry over the coming super-high minimum wage. Many of these job creators say they are holding off on opening new ventures or expanding their current business in Seattle, while others say they are delaying plans to hire new workers. A commercial property landlord says several of her tenant business owners may not renew their leases if the $15 wage becomes law.

As she puts it, “It’s just too expensive to operate in the city.”

Even business owners who have supported a higher minimum wage are having a change of heart. Jody Hall, owner of Cupcake Royale and respected progressive activist, initially supported a $15 minimum wage. But now she says the proposed policy is “keeping me up at night like nothing ever has.”

Hall told KUOW/NPR radio she now has “serious second thoughts” about a $15 minimum wage, especially since Seattle would be “going it alone” with a wage that is significantly higher than any other minimum wage in the nation.

Her second thoughts about a $15 minimum wage mandate have led to second thoughts about expanding her business. She had planned to open a new business in Seattle this year but has tabled the idea for now. Hall says if she considers any new locations in the near future, they will be outside the city limits.

That is one way a high minimum wage often kills job opportunities, by eliminating them even before they are created.

A city-commissioned study says a $15 minimum wage would help low-wage workers and reduce poverty. But the mandate can help only people who have jobs; this study omitted any estimations of the impact on employment. A subsequent study by a Seattle economist predicted significant job losses.


It would seem the Seattle economist has been proved right early. The $15 wage is not yet in effect, and it is already pushing businesses into neighboring cities and killing jobs in Seattle, as business owners stop growing their companies and hiring new workers.

Employers cannot pay workers more than the value of their output. If an employer must pay a worker $15 per hour, he must ensure the worker produces at least that amount in economic value, or the employer will be forced to reduce the cost of labor in the only legal way remaining, by cutting benefits or hiring fewer people.

That’s what is happening in SeaTac.

Northwest Asian Weekly reports employees subject to the narrowly passed $15 minimum wage law in that Seattle suburb say they have lost benefits such as 401(k) plans, paid holidays, paid vacation, free food, free parking and overtime hours. One hotel waitress said she is earning less now because tips have decreased since the high wage law. In many cases these benefits, plus the previous minimum wage, added up to more than workers receive under the $15 wage law.

As one SeaTac worker put it, “It sounds good, but it’s not good.”

SeaTac’s $15 minimum wage has been in effect less than six months, and workers in that city are discovering the high-wage mandate comes with a steep cost. In Seattle, a minimum wage has not even gone into effect, and employers are already adjusting by canceling plans to expand and hire new workers. We can expect many Seattle businesses to cut benefits as SeaTac employers had to. Others, especially small businesses, will be forced to lay off workers.

“$15 Now!” is the battle cry of activists in Seattle. A more accurate slogan would be, “It sounds good, but it’s not good for workers.”

The last thing workers need is fewer jobs.


Erin Shannon is Director of the Center for Small Business at Washington Policy Center in Olympia, Washington. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in the Puget Sound Business Journal.

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Common Sense this Independence Day

I’ve taken two tours of Independence Hall in Philadelphia. Though it was full of vivid history about the signers of Thomas Jefferson’s Declaration, I don’t recall seeing much about a relatively unsung hero of the American Revolution, Jefferson’s friend Thomas Paine, who stirred the new nation to action.

In the months before our country declared independence from his native England on July 4, 1776, Paine anonymously published what became an instant bestseller, his pamphlet Common Sense. Later that year, after the war for independence had started, Paine began publishing a series of pamphlets known as The American Crisis, which began with these now-famous words:

“These are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country, but he that stands now, deserves the love and thanks of man and woman.”

In Common Sense, Paine wrote,

“Society in every state is a blessing, but government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.”

He argued for free trade and individual liberty with phrases that captured the imagination of his adopted countrymen.

Paine and Jefferson realized that government and society are not synonymous. They argued that government’s purpose is to protect the inalienable rights of the individuals that make up society—so-called negative rights that don’t put a burden on other individuals beyond their obligation not to violate them. They understood that any positive rights granted by government must be paid for by diminishing someone else’s right to life, liberty, or property. What would they think of today’s politicians in Washington, D.C. and Salem, Oregon who propose law after law ordaining right after right?

In the introduction to Common Sense, Paine wrote,

“[A] long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defence of custom. But the tumult soon subsides. Time makes more converts than reason.”

Paine and Jefferson didn’t wait for time to convert people. We at Cascade aren’t waiting either; we’re providing the intellectual ammunition today’s freedom fighters need to win new peaceful battles for liberty.

Many Americans believe modern society requires more government control; we believe just the opposite. Free individuals are perfectly able to run their own lives today, just as they were in 1776. Paine and Jefferson would be dismayed at the size of modern governments, and so are we.

Read Common Sense and The American Crisis this Independence Day, and remember what the holiday is really all about.


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

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Supreme Court Says: Starting a Business Doesn’t Make You Lose Your Religious Freedom

Do you lose your religious freedom because you’re running a family business? On June 30, the U.S. Supreme Court said no. In a 5-4 decision, the Court ruled that David and Barbara Green and their family business, craft chain Hobby Lobby, cannot be required by the government to include forms of contraception to which they object on religious grounds in their company health insurance policy.

The Affordable Care Act (ObamaCare) currently directs most employers to include coverage of all contraceptives, sterilization procedures, and some potentially abortion-inducing drugs and devices, at no cost to the user, in their employee health insurance plans. If employers don’t comply, they face fines of $100 per day, per employee. For Hobby Lobby, that would have added up to about $475 million a year.

Until now, the Obama Administration has not allowed any conscience accommodation to owners of for-profit companies who object to the contraceptive services mandate. Even the Administration’s religious exemption is so narrow that it does not apply to most religiously affiliated institutions, including communities of Catholic sisters. The only government accommodation for which most religious employers could qualify is the ability to have a third party provide contraceptive services outside the employer-provided insurance program, if the religious employer objects to providing them itself and is willing to sign a waiver authorizing this arrangement. However, this option is not available to for-profit employers.

The Becket Fund for Religious Liberty, the nonprofit public interest law firm representing Hobby Lobby’s owners, explained its clients’ suit this way:

“The Green family has no moral objection to the use of 16 of 20 preventive contraceptives required in the mandate, and Hobby Lobby will continue its longstanding practice of covering these preventive contraceptives for its employees. However, the Green family cannot provide or pay for four potentially life-threatening drugs and devices. These drugs include Plan B and Ella, the so-called morning-after pill and the week-after pill. Covering these drugs and devices would violate their deeply held religious belief that life begins at the moment of conception, when an egg is fertilized….

“The Green family respects the religious convictions of all Americans, including those who do not agree with them. All they are asking is that the government give them the same respect by not forcing them to violate their religious beliefs.”

Under the Religious Freedom Restoration Act (RFRA), passed by Congress in a nearly unanimous vote in 1993 and signed by President Clinton, the government must demonstrate that a law serves a “compelling interest” and is the “least restrictive means” of achieving that interest before it can burden someone’s free exercise of religion. It appears that this standard was key for the majority ruling in Burwell v. Hobby Lobby this week. The Green family had argued that by forcing the federal contraceptive services mandate on their company, the government was requiring them to run their company at odds with the way they live out their faith, thus unduly burdening their free exercise.

By ruling in the Greens’ favor, the Court has recognized for the first time that a for-profit corporation can have religious rights under federal law or the Constitution. Justice Samuel Alito stated on behalf of the Court: “The plain terms of RFRA make it perfectly clear that Congress did not discriminate…against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs….Our responsibility is to enforce RFRA as written, and under the standard that RFRA prescribes, the HHS contraceptive mandate is unlawful.”*

“This is a landmark decision for religious freedom,” said the Greens’ attorney, Lori Windham. “This ruling will protect people of all faiths….You can’t argue there are no alternative means [of accommodating employees who want full access to no-cost birth control] when your agency is busy creating alternative means for other people.”

Justice Anthony Kennedy, concurring with the majority, said, “Among the reasons the United States is so open, so tolerant, and so free is that no person may be restricted or demeaned by government in exercising his or her religion.”

Americans shouldn’t have to fear that they would have to run their family businesses in ways that seriously conflict with their faith and moral values just because they incorporated. As Timothy Sandefur of Pacific Legal Foundation succinctly put it before the ruling, “Whatever one thinks of the constitutionality of the ‘contraception mandate’ itself, the Supreme Court should make clear that the First Amendment applies to everyone.” In affirming that business owners have religious rights, the Court appears to have done that.

*The Court specified that its ruling in Burwell v. Hobby Lobby applies only to “closely held” companies. Closely held companies are owned and controlled by a small number of investors, perhaps five or fewer individuals, who are often family members or the founding management. The Wall Street Journal reports that about 90% of companies in the U.S. are closely held.


Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Understanding and Defending Your Property Rights—And Why It’s So Important

Please join us for Cascade’s monthly Policy Picnic led by Pacific Legal Foundation’s Christina Martin on July 14, at noon. An attorney, Christina was a project director at Cascade Policy Institute before joining Pacific Legal Foundation.

For decades, your property rights have faced major challenges from local, state, and federal regulations. Now, the U.S. Supreme Court has begun to push back. Come learn about recent property rights cases to better understand your rights, why they are important, and what you can do to protect them.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early.

Sponsored By

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The Portland Seed Fund: Boom or Bust?

By Joel Grey

The Portland Seed Fund started as a public-private venture intended to close a funding gap for small loans to entrepreneurs. The City of Portland, the City of Hillsboro, and the State of Oregon provided a majority of the funds for the first Seed Fund and a significant portion of the second Seed Fund. It was sold as a way for public entities to help private companies begin, with the expectation that the Fund would earn money.

At this time, it is impossible to say whether the Fund has earned a profit because that information is not publicly available, and none of the public entities involved could give an answer when asked what the return on investment had been. The first person I contacted at the Portland Development Commission said the Seed Fund didn’t sound familiar. The City Budget Office also didn’t initially recognize the name of the Seed Fund, but a budget analyst eventually contacted someone at the PDC. However, that person has not responded.

The conclusion from all of these conversations is that there is little or no accountability in place to ensure that taxpayer money is being well spent, nor is there a way for taxpayers to see how their money is being spent.

Ultimately, there are professionals who risk private money in venture capital firms. Government entities shouldn’t play venture capitalists with taxpayer funds.

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

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