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School Vouchers Are Basically Food Stamps

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In modern America, government schools are one of the last remaining truly socialist institutions. And when I use the term socialism, I'm using the technical and old-school definition: government ownership of the means of production. 

Although private schools do exist in America, schooling in general — especially at the pre-college level — is overwhelmingly delivered by government-owned institutions called "public schools." 

Few other industries in America are operated this way, and this is true even when we include products and services essential to human life and safety, such as food and housing. 

While the US did flirt with creating a large number of government-owned housing projects during the 20th century, housing is nearly all privately owned in the US today. Most government "affordable-housing" programs take the form of subsidies that go to private owners, whether for-profit owners who receive what were once officially called "Section 8" vouchers, or via other subsidy programs. 

Similarly, food production and grocery institutions are overwhelmingly private as well. Nearly all Americans, when they go to a store to buy food, do so at a privately owned shop of some kind. In this case, of course, there are also government subsidies, but they take the form of vouchers often referred to as "food stamps."

Schools are one of the rare cases in which is simply assumed by a great many people that a government should be directly delivering a good or service through a government-owned facility instead of through subsidizing a private institution. 

Are Vouchers the Answer? 

Advocates for school vouchers would like to move away from this state-owned model by relying on a voucher system for education. This is already done to an extent in higher education, with subsidized loans, and even with outright grants for certain low-income households who send students to private colleges. 

RELATED: "Trouble with Vouchers" by William L. Anderson

On a certain level, it is hard to object to this plan — when compared to the government-ownership model. 

Imagine, for example, if other industries were run like government schools.

In this scenario, every neighborhood has a government-owned (i.e., taxpayer funded) grocery store in it. There is also a much smaller number of private grocery stores. Imagine also that every neighborhood has a large number of government-owned houses, and there is also a much smaller number of private houses. 

Imagine, then, that some reformers came along saying "hey, instead of selling government-owned food and housing, let's just give everyone a voucher and let them buy food and housing from whoever will accept the vouchers!" 

Having several grocery stores to choose from is in most cases likely superior to a situation in which one has only the choice of a single government-owned store. 

There is, however nothing novel in this observation or in the suggested solution. It's just the food-stamp model. 

So let's not kid ourselves. Voucher advocates are simply advocating for a food-stamp model in education. It's no more innovative than that. 

And while it's a good thing to avoid monopolistic government-owned institutions, that's where the advantages of vouchers end. In spite of this, school voucher advocates have long pushed the policy by claiming that a voucher system will somehow wean people off government money for education over time. And yet, there's no evidence to suggest this would actually happen. The use of vouchers for food has only gone up over time, because that's what government spending programs usually do:

Choice is good, but unless the plan also reduces the overall role of government spending in schooling, no meaningful difference will occur in terms of state dominance of the industry. We'll still be facing an enormous number of workers and institutions who will depend on government taxation and spending. 

After all, if most everyone is shopping at ostensibly private grocery stores using government vouchers does it really matter if the store if technically privately owned? No real marketplace would exist because most consumer spending would depend on government vouchers. As William Anderson writes

Vouchers are nothing more than another rendition of Oskar Lange’s "market socialism." They are an attempt to "play market" using socialist hardware...

The same is true of schooling, and vouchers may simply result in adding a patina of "marketness" to a system that remains driven by government spending. 

"Voucher-ization" Can Only Cut Government If Overall Spending Is Cut

Fortunately, in the real world, in spite of the existence of food stamps, government spending is not the primary driver of the grocery industry. This is because food vouchers — while now used by one in seven Americans — are still only a small part of the grocery marketplace.  Most grocery-store transactions remain, more or less, market transactions.

In the realm of schooling, however, only ten percent of students go to private schools. 

Thus if everyone attending public schools were suddenly given vouchers instead, we'd end up with a situation in which 90 percent of consumers were still spending government money. It would be analogous to going to a grocery store in which 90 percent of shoppers were using food stamps to get their groceries. 

Obviously, there would not be much of a private industry in any real sense of the word. 

The reason that grocery stores remain largely private is that food stamps are means-tested, and only go to a small percentage of consumers The same is true of housing. Housing vouchers aren't simply handed out to every taxpayer. They only go to certain groups of people, who comprise a relatively small minority of housing consumers. For most people, housing is purchased or rented in a transaction that, for now, can still be described as largely private. 

Similarly, to bring any meaningful change to schooling, education vouchers would have to be reduced to just a small part of the schooling marketplace. If they are not, then we end up with a situation akin to one in which everyone receives a housing voucher or food voucher from the government each month. 

Were that the reality, the grocery industries and housing industries would be almost totally reliant on government subsidies. They would become essentially government industries, just as — thanks to government defense spending — aerospace and military contractors are essentially government industries today.  Massive amounts of income and wealth would have to be confiscated, processed, allocated, and then spent by consumers — after government bureaucrats take their cut. Wealth would be funneled from other industries into these favored industries, crowding out other industries, goods, and services. Prices of intermediate goods and services used by schools would be inflated by the increased government demand. 

RELATED: "Four Reasons Why Government Spending Is Even Worse Than Taxes" by Ryan McMaken

All of this occurs regardless of whether education spending is done through vouchers or direct spending on government schools. The main problem is the spending, not the means by which it is distributed. 

The only antidote to this is to actually cut government spending and to reduce its relevance in the education marketplace. A voucher system may be offer an advantage in terms of choices offered. The same is likely true in a health care system in which vouchers-funded hospitals would be preferable to government-owned hospitals. By itself, though, introducing vouchers means nothing in terms of shrinking the size of government. The only meaningful change will come with a reduction in spending. And that's true whether there are vouchers or not. 


Contact Ryan McMaken

Ryan McMaken (@ryanmcmaken) is executive editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power and Market, but read article guidelines first. Ryan has a bachelor's degree in economics and a master's degree in public policy, finance, and international relations from the University of Colorado. He was a housing economist for the State of Colorado. He is the author of Breaking Away: The Case of Secession, Radical Decentralization, and Smaller Polities and Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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