Friedman, Milton – Page 2 – artdiamondblog.com

Liberal Democrat Hesburgh Condems Obama Administration’s Killing School Vouchers

My Chicago professor Milton Friedman proposed educational vouchers in Capitalism and Freedom, a great book based on lectures that Friedman delivered several decades ago at Wabash College at the invitation of my first economics professor, Ben Rogge.
Friedman’s belief was that parents generally care about their children, and will seek a good education for them, if provided the means to choose among credible alternatives.
Special interests are arrayed against this idea, but that does not mean that Friedman was wrong.
Another distinguished educator who supports vouchers (see below) is Father Hesburgh, who for many years was President of Notre Dame in my hometown of South Bend, Indiana.

(p. A19) If Martin Luther King Jr. told me once, he told me a hundred times that the key to solving our country’s race problem is plain as day: Find decent schools for our kids. So I was especially heartened to hear Education Secretary Arne Duncan repeatedly call education the “civil rights issue of our generation.” Millions of our children–disproportionately poor and minority–remain trapped in failing public schools that condemn them to lives on the fringe of the American Dream.

. . .
. . . , I was deeply disappointed when Sen. Richard Durbin (D., Ill.) successfully inserted a provision in last year’s omnibus spending bill that ended one of the best efforts to give these struggling children the chance to attend a safe and decent school.
That effort is called the Opportunity Scholarship program. Since 2004 it has allowed thousands of children in Washington, D.C., to escape one of the worst public school systems in the nation by providing them with scholarships of up to $7,500.
Despite its successes, it is now closing down. On Tuesday the Senate voted against a measure introduced by Sen. Joseph Lieberman (I., Conn.) that would have extended the program. Throughout this process Mr. Duncan’s Education Department and the White House raised no protest.
. . .
I know that some consider voucher programs such as the Opportunity Scholarships a right-wing affair. I do not accept that label. This program was passed with the bipartisan support of a Republican president and Democratic mayor. The children it serves are neither Republican nor Democrat, liberal or conservative. They are the future of our nation, and they deserve better from our nation’s leaders.
I have devoted my life to equal opportunity for all Americans, regardless of skin color. I don’t pretend that this one program is the answer to all the injustices in our education system. But it is hard to see why a program that has proved successful shouldn’t have the support of our lawmakers. The end of Opportunity Scholarships represents more than the demise of a relatively small federal program. It will help write the end of more than a half-century of quality education at Catholic schools serving some of the most at-risk African-American children in the District.
I cannot believe that a Democratic administration will let this injustice stand.

For the full commentary, see:
THEODORE M. HESBURGH. “A Setback for Educational Civil Rights; I cannot believe that a Democratic administration will let this injustice of killing D.C. vouchers stand.” The Wall Street Journal (Thurs., MARCH 18, 2010): A19.
(Note: ellipses added.)
(Note: the online version of the article was dated MARCH 17, 2010.)
Reference to the Friedman book mentioned above:
Friedman, Milton. Capitalism and Freedom. Chicago: The University of Chicago Press, 1962.

Support Grows for School Vouchers in D.C.

“Students from Bridges Academy in Washington, D.C., at a Capitol Hill rally last month in support of the city’s Opportunity Scholarship Program, which gives students from low-income families scholarships for private schools.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A2) The District of Columbia’s embattled school-voucher program, which lawmakers appeared to have killed earlier this year, looks like it could still survive.

Congress voted in March not to fund the program, which provides certificates to pay for recipients’ private-school tuition, after the current school year. But after months of pro-voucher rallies, a television-advertising campaign and statements of support by local political leaders, backers say they are more confident about its prospects. Even some Democrats, many of whom have opposed voucher efforts, have been supportive.
. . .
Many parents whose children receive vouchers say they are satisfied with the private schools they attend. During the 2008-2009 school year, about 61,700 students nationwide received vouchers, up 9% from the previous school year, according to the Alliance for School Choice, a pro-voucher advocacy group.
. . .
Created as a five-year pilot project by a Republican-controlled Congress in early 2004, the Opportunity Scholarship Program is the nation’s only federally funded voucher program. It is open to students who live in the long-struggling Washington school district and whose families have incomes at or below 185% of the federal poverty level — about $40,000 for a family of four. Recipients are chosen by lottery, although preference is given to those attending traditional schools deemed to be in need of improvement under federal law.
Joe Kelley entered his oldest son, Rashawn, in the first Opportunity Scholarship Program lottery in 2004, fearful about violence at the public middle school. Rashawn, now 17, received a voucher, and so have his three sisters. All attend a small, private Christian academy where they have been earning A’s and B’s. “It’s a lot of worry off of me,” said Mr. Kelley, a retired cook and youth counselor.
In an evaluation released in March, researchers found that in reading skills, voucher recipients overall were approximately 3.1 months ahead of eligible students who didn’t receive scholarships. But there was no difference in math skills, and voucher recipients from the worst-performing public schools got no boost in either subject.

For the full story, see:
ROBERT TOMSHO. “D.C. School Vouchers Have a Brighter Outlook in Congress.” The Wall Street Journal (Mon., October 19, 2009): A2.
(Note: ellipses added.)

George Shultz Sceptical of War on Drugs

George Shultz has a distinguished résumé. He was Dean of the University of Chicago business school, Secretary of the Treasury under President Nixon, and Secretary of State under President Reagan. Along with the late Milton Friedman, he is sceptical about the War on Drugs, and is willing to express his scepticism:

(p. A17) He has long harbored skepticism about interdiction as a solution to drug abuse in the U.S. Those doubts were prescient.
. . .
Mr. Shultz recalls what happened shortly after he left government, when his view that interdiction is not the solution came up after a speech to a Stanford alumni group.
Then, as now, he believed that we need to look at the problem from an economic perspective and understand what happens when there is high demand for a prohibited substance. When his comment hit the press, he says he “was inundated with letters. Ninety-eight percent of them agreed with me and over half of those people said I’m glad you said it, but I wouldn’t dare say it. The most poignant comment was from [a former member of the House of Representatives] who wrote and said I was glad to see your statement. I said that a few years ago and that’s why I’m no longer a congressman!”

For the full commentary, see:
MARY ANASTASIA O’GRADY. “George Shultz on the Drug War; The former secretary of state has long doubted the wisdom of interdiction.” The Wall Street Journal (Mon., OCTOBER 12, 2009): A17.
(Note: the online version of the article is dated Oct. 11, 2009.)
(Note: ellipsis added.)

55% of Nebraskans Favor School Vouchers

The Friedman Foundation mentioned in the passage below, was founded by Nobel Prize winning economist Milton Friedman who is often credited with creating the idea of education vouchers in his classic book Capitalism and Freedom.
Capitalism and Freedom was based on a series of lectures that Friedman delivered at Wabash College at the invitation of my much-missed mentor Ben Rogge. (Before teaching me economics in Indiana, Rogge was a native Nebraskan who earned his bachelor’s degree from Hastings College.)

(p. 4B) A majority of Nebraskans are open to school-choice reforms such as school vouchers and tax-credit scholarships, according to a survey made public Thursday by a national school-choice group.

“It really appears Nebraska is ready to start talking about school-choice reform options,” said Paul DiPerna, director of partner services for the Friedman Foundation for Educational Choice, which commissioned the survey.
The group partnered with the Nebraska Catholic Conference and other state and national groups to conduct the telephone survey of 1,200 likely voters.
Fifty-five percent of those surveyed said they favored school vouchers and supported a tax-credit scholarship system, which would give tax credits to individuals and businesses that contribute money to nonprofit organizations that distribute private school scholarships.

For the full story, see:
Dejka, Joe. “Support for school choice tax plan seen; An Indianapolis organization says its survey shows Nebraskans would back a pending bill.” Omaha World-Herald (Fri., Sept. 18, 2009): 4B.

“Stimulus” Did Not Stimulate

Source of graph: online version of the WSJ article quoted and cited below.

(p. A23) The nearby chart reviews income and consumption through July, the latest month this data is available for the U.S. economy as a whole.

Consider first the part of the chart pertaining to the spring of this year and observe that disposable personal income (DPI)–the total amount of income people have left to spend after they pay taxes and receive transfers from the government–jumped. The increase is due to the transfer and rebate payments in the 2009 stimulus package. However, as the chart also shows, there was no noticeable impact on personal consumption expenditures. Because the boost to income is temporary, at best only a very small fraction was consumed.
This is exactly what one would expect from “permanent income” or “life-cycle” theories of consumption, which argue that temporary changes in income have little effect on consumption. These theories were developed by Milton Friedman and Franco Modigliani 50 years ago, and have been empirically tested many times. They are much more accurate than simple Keynesian theories of consumption, so the lack of an impact should not be surprising.
. . .
Incoming data will reveal more in coming months, but the data available so far tell us that the government transfers and rebates have not stimulated consumption at all, and that the resilience of the private sector following the fall 2008 panic–not the fiscal stimulus program–deserves the lion’s share of the credit for the impressive growth improvement from the first to the second quarter. As the economic recovery takes hold, it is important to continue assessing the role played by the stimulus package and other factors. These assessments can be a valuable guide to future policy makers in designing effective policy responses to economic downturns.

For the full commentary, see:

JOHN F. COGAN, JOHN B. TAYLOR AND VOLKER WIELAND. “The Stimulus Didn’t Work; The data show government transfers and rebates have not increased consumption at all.” The Wall Street Journal (Thurs., SEPTEMBER 17, 2009): A23.
(Note: ellipsis added.)

“Build a Wall Around the Welfare State”

For a long time, I’ve been meaning to post a pithy comment on immigration policy from the Cato Institutes’s Bill Niskanen.
The comment was related to the proposal to erect a wall between the United States and Mexico, in order to reduce illegal immigration. Some libertarians favor open immigration. Others believe that so long as we have a large welfare state, open immigration would impose high costs on the taxpayer, and thereby reduce economic growth. (I believe that I read Milton Friedman supporting this latter position, in the year or two before he died in 2006.)
In this context, Niskanen’s pithy comment has appeal:

“Build a wall around the welfare state, not around the country.”

Source:
William A. Niskanen on 11/19/07 at the meetings of the Southern Economic Association in New Orleans.

Milton Friedman’s Legacy Was the “Remarkable Progress of Mankind”

(p. W13) With each passing week that the assault against global capitalism continues in Washington, I become more nostalgic for one missing voice: Milton Friedman’s. No one could slice and dice the sophistry of government market interventions better than Milton, who died at the age of 94 in 2006. Imagine what the great economist would have to say about the U.S. Treasury owning and operating several car brands or managing the health-care industry. “Why not?” I can almost hear him ask cheerfully. “After all, they’ve done such a wonderful job delivering the mail.”
. . .
I’ve been thinking a lot lately of one of my last conversations with Milton, who warned that “even though socialism is a discredited economic model and capitalism is raising living standards to new heights, the left intellectuals continue to push for bigger government everywhere I look.” He predicted that people would be seduced by collectivist ideas again.
. . .
A few scholars are now properly celebrating the Friedman legacy. Andrei Shleifer, a Harvard economics professor, has just published a tribute to Friedman in the Journal of Economic Literature. He describes the period 1980-2005 as “The Age of Milton Friedman,” an era that “witnessed remarkable progress of mankind. As the world embraced free market policies, living standards rose sharply while life expectancy, educational attainment, and democracy improved and absolute poverty declined.”

For the full commentary, see:
Moore, Stephen. “Missing Milton: Who Will Speak for Free Markets?” The Wall Street Journal (Sat., May 29, 2009): W13.
(Note: ellipses added.)

The full reference to the article by Shleifer, is:
Shleifer, Andrei. “The Age of Milton Friedman.” Journal of Economic Literature 47, no. 1 (March 2009): 123-35.

Philanthro-Capitalism Is Inefficient, and Betrays Shareholders

Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) One of the more interesting ideas found in this somewhat rambling book contends that “philanthropic” business activity is in fact at odds with what is best about capitalism itself and thus counterproductive.

Lawrence Summers, the former Harvard president and former Treasury secretary, states the difficulty succinctly: “It is hard in this world to do well. It is hard to do good. When I hear a claim that an institution is going to do both, I reach for my wallet. You should too.” He offers as an example Fannie Mae and Freddie Mac, government-created corporations that were supposed to achieve a social goal — affordable housing — while operating as businesses. They did neither well, eventually leaving their catastrophic debts for taxpayers to pay.

U.S. Circuit Court Judge Richard Posner, along with other contributors, notes that companies often suffer losses when they set out to address a social problem. If they could really make a profit by doing good works, the argument goes, they would no doubt already be hard at it. But if they do good works at the expense of profit, they will become less efficient, making themselves more vulnerable to competitors. Economist Steven Landsburg suggests that companies sacrificing profit to accomplish philanthropic goals end up betraying their shareholders, who rightly expect the best return on investment. Sometimes acting philanthropically will result in an indirect business benefit, such as improving worker skills. In that case, philanthro-capitalism might be in a company’s interest — but Judge Posner and others of like mind suspect that such instances are rare.

Their skepticism echoes Milton Friedman’s objections to “corporate social responsibility,” expressed in a 1970 article that is usefully reprinted in the book’s appendix.

For the full review, see:

LESLIE LENKOWSKY. “Bookshelf; The Do-Good Marketplace; Reducing poverty, improving lives – maybe ‘philanthro-capitalism’ is just another name for capitalism.” Wall Street Journal (Fri., JANUARY 2, 2009): A13.

The book under review is:
Kinsley, Michael, and Conor Clarke, eds. Creative Capitalism. New York: Simon & Schuster, 2008.

Vaclav Klaus: The Czech Republic’s Free Market Crusader

“President Vaclav Klaus of the Czech Republic is known for his economic liberalism.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A6) To supporters, Mr. Klaus is a brave, lone crusader, a defender of liberty, the only European leader in the mold of the formidable Margaret Thatcher. (Aides say Mr. Klaus has a photo of the former British prime minister in his office near his desk.)
. . .
As a former finance minister and prime minister, he is credited with presiding over the peaceful 1993 split of Czechoslovakia into two states and helping to transform the Czech Republic into one of the former Soviet bloc’s most successful economies.
But his ideas about governance are out of step with many of the European Union nations that his country will lead starting Jan. 1.
While even many of the world’s most ardent free marketeers acknowledged the need for the recent coordinated bailout of European banks, Mr. Klaus lambasted it as irresponsible protectionism. He blamed too much — rather than too little — regulation for the crisis.
A fervent critic of the environmental movement, he has called global warming a dangerous “myth,” arguing that the fight against climate change threatens economic growth.
. . .
Those who know Mr. Klaus say his economic liberalism is an outgrowth of his upbringing. Born in 1941, he obtained an economics degree in 1963 and was deeply influenced by free market economists like Milton Friedman.
Mr. Klaus’s son and namesake, Vaclav, recalled in an interview that when he was 13, his father told him to read Aleksandr Solzhenitsyn to better understand Communism’s oppressiveness.
“If you lived under communism, then you are very sensitive to forces that try to control or limit human liberty,” he said in an interview.

For the full story, see:
DAN BILEFSKY. “A Fiery Czech Is Poised to Be the Face of Europe.” The New York Times (Tues., November 25, 2008): A6.
(Note: ellipses added.)

“Firms that Made Wrong Decisions Should Fail”

Anna J. Schwartz.

Source of image: online version of the WSJ article quoted and cited below.

(p. A11) Most people now living have never seen a credit crunch like the one we are currently enduring. Ms. Schwartz, 92 years old, is one of the exceptions. She’s not only old enough to remember the period from 1929 to 1933, she may know more about monetary history and banking than anyone alive. She co-authored, with Milton Friedman, “A Monetary History of the United States” (1963). It’s the definitive account of how misguided monetary policy turned the stock-market crash of 1929 into the Great Depression.
. . .
These are not, Ms. Schwartz argues, the same thing. In fact, by keeping otherwise insolvent banks afloat, the Federal Reserve and the Treasury have actually prolonged the crisis. “They should not be recapitalizing firms that should be shut down.”
Rather, “firms that made wrong decisions should fail,” she says bluntly. “You shouldn’t rescue them. And once that’s established as a principle, I think the market recognizes that it makes sense. Everything works much better when wrong decisions are punished and good decisions make you rich.” The trouble is, “that’s not the way the world has been going in recent years.”
Instead, we’ve been hearing for most of the past year about “systemic risk” — the notion that allowing one firm to fail will cause a cascade that will take down otherwise healthy companies in its wake.
Ms. Schwartz doesn’t buy it. “It’s very easy when you’re a market participant,” she notes with a smile, “to claim that you shouldn’t shut down a firm that’s in really bad straits because everybody else who has lent to it will be injured. Well, if they lent to a firm that they knew was pretty rocky, that’s their responsibility. And if they have to be denied repayment of their loans, well, they wished it on themselves. The [government] doesn’t have to save them, just as it didn’t save the stockholders and the employees of Bear Stearns. Why should they be worried about the creditors? Creditors are no more worthy of being rescued than ordinary people, who are really innocent of what’s been going on.”

For the full story, see:
BRIAN M. CARNEY. “OPINION: THE WEEKEND INTERVIEW with Anna Schwartz; Bernanke Is Fighting the Last War.” The Wall Street Journal (Weds., OCTOBER 18, 2008): A10.
(Note: ellipsis added.)