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Milton Friedman on Education

Libertarian Economist


1969: Experiment with school vouchers

Our plan was to have OEO (Office of Economic Opportunity) serve as a laboratory for experimental programs, not as an entity that managed large operations in perpetuity. For example, OEO had tried a number of innovative approaches to education. Under my predecessors, to their credit, OEO had launched an experiment providing school vouchers for parents. The plan had the support of my friend Milton Friedman. Friedman and I believed that school vouchers could lead to improvement in public education by giving parents choices rather than forcing them to send their children to a particular school. OEO also had supported an experiment in performance contracting for teachers, an idea that was bitterly opposed by the politically active teachers' unions.
Source: Known and Unknown, by Donald Rumsfeld, p.125 , Feb 8, 2011

First proposed school vouchers to denationalize education

Both the imposition of a minimum required level of schooling and the financing of this schooling by the state can be justified by the "neighborhood effects" of schooling. The actual administration of educational institutions, or "nationalization" by the government, is much more difficult to justify.

Governments could require a minimum level of schooling financed by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on "approved" educational services. Parents would then be free to spend this sum and any additional sum they themselves provided 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. The role of government would be limited to insuring 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.

Source: Capitalism and Freedom, by Milton Friedman, p. 89 , Nov 15, 1962

Subsidize parental choice of public or parochial school

Denationalizing schooling would widen the range of choice available to parents. If, as at present, parents can send their children to public schools without special payment, very few can or will send them to other schools unless they too are subsidized. Parochial schools are at a disadvantage in not getting any of the public funds devoted to schooling, but they have the compensating advantage of being run by institutions that are willing to subsidize them and can raise funds to do so. There are few other sources of subsidies for private schools. If present public expenditures on schooling were made available to parents regardless of where they send their children, a wide variety of schools would spring up to meet the demand. Parents could express their views about schools directly by withdrawing their children from 1 school and sending them to another, to a much greater extent than is now possible.
Source: Capitalism and Freedom, by Milton Friedman, p. 91 , Nov 15, 1962

Vouchers give greater educational opportunity to the poor

[Some argue] that private schools would tend to exacerbate class distinctions. [But] ask yourself in what respect the inhabitant of a low income neighborhood is most disadvantaged. If he attaches enough importance to, say, a new automobile, he can, by dint of saving, accumulate enough money to buy the same car as a resident of a high-income suburb. And this goes equally for clothes, or furniture, or books, or what not.

But let a poor family in a slum have a gifted child and let it set such high value on his or her schooling that it is willing to scrimp and save for the purpose. Unless it can get special treatment, or scholarship assistance, at one of the very few private schools, the family is in a very difficult position. The "good" public schools are in the high income neighborhoods. The family might be willing to spend something in addition to what it pays in taxes to get better schooling for its child. But it can hardly afford simultaneously to move to the expensive neighborhood.

Source: Capitalism and Freedom, by Milton Friedman, p. 91-92 , Nov 15, 1962

Merit pay for teachers

With respect to teachers' salaries, the major problem is not that they are too low on the average, but that they are too uniform and rigid. Poor teachers are grossly overpaid and good teachers grossly underpaid. Salary schedules tend to be uniform and determined far more by seniority, degrees received, and teaching certificates acquired than by merit.

If one were to seek deliberately to devise a system of recruiting and paying teachers calculated to repel the imaginative and daring, and to attract the mediocre and uninspiring, he could hardly do better than imitate the system of requiring teaching certificates and enforcing standard salary structures that has developed in the largest city and state-wide systems. It is perhaps surprising that the level of ability in elementary and secondary school teaching is as high as it is under these circumstances. The alternative system would resolve these problems and permit competition to be effective in rewarding merit and attracting ability to teaching.

Source: Capitalism and Freedom, by Milton Friedman, p. 95-96 , Nov 15, 1962

Subsidize college by GI Bill method, not state institutions

Any subsidy should be granted to individuals to be spent at institutions of their own choosing provided only that the schooling is of a kind that is desired to subsidize. Any government schools that are retained should charge fees covering educational costs and so compete on an equal level with non-government-supported schools.

The adoption of such arrangements would make for more effective competition among various types of schools and for a more efficient utilization of their resources. It would eliminate the pressure for direct government assistance to private colleges and universities and thus preserve their full independence and diversity at the same time as it enabled them to grow relative to state institutions.

Source: Capitalism and Freedom, by Milton Friedman, p. 99-100 , Nov 15, 1962

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Page last updated: Oct 10, 2013