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Wednesday, April 24, 2013

Consumer Driven Public Education

The current state of public education in the United States is not only an embarrassment, it is a national calamity.  According to the Organization for Economic Cooperation and Development, the United States ranks a lowly 18th out of the 36 nations whose education systems were evaluated.  Who is at the top of the rankings?  The answer is South Korea, where 93% of all high school students graduate on time.  This compares with the US where only 75% of the students receive high school diplomas.  But, actually the situation is much, much worse than that.  The fact is that many of those in the US who graduate from high school are functionally illiterate.  They have just been passed through the system.

The US is not in this sorry state of affairs because we do not have great teachers, or because we are not spending enough on education.  South Korea spends $3,759 (in US dollars) per student annually on education.  In contrast, the United States spends $7,743 per pupil.  It's not because parents, and the public in general, do not care about the education of American children.  The problem is the system.

Today the US ranks 4th behind Japan, China and Germany in automobile manufacturing.  The United States also ranks 15th in broadband access.  The United States will, of course, continue to fall further behind in manufacturing, broadband access, technological development and every other economic indicator if our public schools continue to deteriorate.

To better understand the situation, let's recall what happened in divided Germany.  East Germany was the showcase of socialism.  The East Germans lived better, produced better, than any other group of people living in the socialist paradise of the Soviet Union.  Since 1936 East Germans had lived under socialism, first under Hitler and then under the Communists.  Because they were hard working by nature, East German socialism is probably an example of socialism at its best.

Socialism is a weird invention built upon weird ideas.  Nowhere in a socialist system is there any mechanism to regulate or set a logical wage level or price for the goods and services produced.  And, of course, there is no reward or incentive to create or produce quality goods and services.  The only virtue of socialism (if you can call it that) is that, with the exception of the rulers, everyone lives in common misery.

All socialist systems are designed by ideologues who feel that they are not only smarter and wiser than the lesser members of their society, but also more ethically advanced.  Based on this false premise, they endeavor to create a "fair" society where everyone shares equally in the wealth of the society.  Of course, wealth is never expanded (as it is under capitalism), and there are no further advances in science or technology or manufacturing.  Worse yet, the those forced to live under socialism live a meaningless life of drudgery.  There is simply no hope of improving your family's economic standing under socialism unless you become one of the apparatchiks.

Fortunately, Germany gives us an opportunity to compare the results of socialism side-by-side with capitalism.  East Germany after World War II was the showcase of socialism and West Germany, in that same period, was the showcase of economic freedom, i.e. capitalism.  Both began at the same starting point—utter devastation from the war.  Neither one had an economic advantage over the other.

What happened?  West Germany became an economic powerhouse in a very short order.  Adapting a free market approach, Germany soon became the producer of some of the greatest automobiles in the world—Mercedes Benz, Audi, Porsche, BMW and Volkswagen.  From the top of the line to the bottom of the line these automobiles set the standard for the world in terms of quality, innovation, reliability, and performance.

On the other side of the border, in the socialist showcase of East Germany, progress was very slow, if at all.  In fact, after the wall fell nearly 50 years after the close of World War II, West Germans were shocked to find that nothing had changed in East German factories since the reign of Hitler in the 1930s.  But they should not have been surprised.  Socialism grinds economic production and innovation to a halt.  Not only were the factories operating with circa 1930 machinery, nothing had been done to update and maintain the infrastructure.  The telephone system was the same, the plumbing was the same, the electrical service was the same, the roads were the same, the railroads were the same, and the sewer system was the same.  And when I say the same, I'm referring to the fact that nothing had been done to update or even maintain this infrastructure.  The infrastructure had crumbled into total disrepair.  All of it had to be replaced at great cost by West Germany, after the wall came down.

It is no wonder that the only automobile produced in this socialist paradise was the Trabant.  To say that the East German Trabant was a poor car would be to give it far too much credit.  The Trabant was junk.  Quality was non-existent, it performed poorly, the two-stroke engine was inefficient and it was totally unreliable.  And, as bad as they were, they were almost impossible to obtain.

When you compare the Trabant to the automobiles of West Germany, you are comparing socialism in its purest form to capitalism.  Whereas the automobiles of West Germany were world leaders and every family had at least one, the Trabant wasn't as reliable as the Model A Ford and it certainly wasn't designed or built with as much quality.  Moreover, only a very few East Germans ever had enough money to purchase one.

That's socialism—poor quality, shortages, and general economic misery.  It stands in stark contrast to an economic system where freedom is the foundation.  Socialism never works, no matter how many times it is tried, no matter who designs it, no matter who operates it, and no matter what product or service it operates.  It is a total and complete failure.  Yet, otherwise smart people still cling to the utopian idea of socialism as something to be desired.

In a similar fashion, the systemic failure of American education has been brought about by government intervention at the highest levels.  The homogenization of education combined with a complete and total lack of competition will continue the decline in quality of education in the United States.  Again, it's not a matter of reform, or teachers or money, it's a function of a flawed system that will never achieve any level of excellence.  In short, American education is plagued—from grade school, through high school, and into college—with inevitable mediocrity.

But when you get down in the weeds and start talking about the individual failures, you are missing the main point.  American education is systematically designed to fail.  There is only one solution and that is consumer driven education.  You can't let the inmates run the institution and expect to produce excellence or sanity.  Excellence and quality always begin and end with a consumer driven free market solution.  Unless and until consumers, i.e. parents, drive education, it will continue to wallow in an intellectual wasteland surrounded by a moral abyss. 

If we don't trust socialists to design and build our cars or brew our beer, why in the world should we rely on a socialist system to educate our children?  Socialism ruins everything it touches, from health care to religion.  Have you ever wondered why Europe, for centuries the home of Christianity in the world, is today a nearly Christian free zone?  Authors of the book, God is Back, John Micklethwait and Adrian Wooldridge, contrast European Christianity with American Christianity.  They come to the conclusion that in Europe it is government support (i.e. control) of the various state religions that has neutered them.  When someone is born in Germany he or she is automatically a Lutheran, or in England that person would be an Anglican, or in Italy or Spain, he or she would be a Catholic.  In other words, it is something you become by birth, not something you actually buy into or make a personal commitment to.  How can there be any ownership of the mission of the church when it gets its support from the government?  In stark contrast, Micklethwait and Wooldridge mark the relative robustness of Christianity in the United States as being a product of free churches working hard to bring in converts and to undertake programs benefitting those inside and outside the church.  He sees their competitiveness with each other as a benefit to all participants.  Perhaps this explains why only 2% of those in Europe regularly attend church, while some 40% of Americans identify themselves as regular church goers.  In effect, religion in Europe has gone socialist and the result is the near death of Christianity.

Keeping that lesson in mind, if we want to create intellectually strong schools, we must introduce the competitive forces of the marketplace.  This is the central failing of our public schools at every level.  The funds spent directly on education by the federal government and the various state governments (collected through taxes) must be put into the hands of parents to spend for their children when and where they choose. 

After all, children belong to their parents, not to the government or to society in general.  Of course, that's not what many progressive/liberals believe.  MSNBC commentator Melissa Harris-Perry recently stated, "We have to break through our kind of private idea that kids belong to their parents or kids belong to their families and recognize that kids belong to their communities."  But government is not God and neither is Melissa Harris-Perry.  In fact, God made it clear in the Bible that children are a gift from God to their parents and children are to obey their parents.

So, what will happen if we take a consumer driven approach to education in America?  Competition is a wonderful thing.  It brings out the best in all participants.  All the children will not leave our public schools if we put parents in charge of deciding what school to send their children to and thereby decide what their children will be taught.  In fact, public schools, like their competition in the private sector, will have to be responsive to the wants and desires of parents.  Public schools will compete and become better and better, focusing on education, not social engineering.  And they will become trimmer, and more efficient and responsive to the needs of parents and their children.  Socialist monopolies are always bloated, inefficient, and mediocre by definition.  But, through competition, public schools and their private school competitors will become the best in the world at the primary, secondary, and collegiate level.

Such schools will become better run, and the teachers will become happier and more engaged, knowing that they have the freedom to do their very best.  All parties will win, especially the students whose parents can choose the right school to meet their particular needs.  It won't be a panacea, but free market schools driven by parents will return American education to the top of the heap.  Sure, some parents will choose the wrong schools for their children and their children will suffer.  The parents have the right to make the wrong choices for their children in a free society.  However, the bottom line is that by and large, many, many more students will advance and succeed under a free market, competitive educational system than they do today.  The big winners will be the poor, especially minorities, who will be able to escape the failing government schools to get good educations for their children.

If you want to get a glimpse into the power of schools that are parent driven, visit the website of St. Marcus School at  This school became possible because Milwaukee public schools were ranked 47th in the nation and because a liberal African-American state legislator championed choice in education.  Democrat Polly Williams put the welfare of the children ahead of the teacher's unions and, under her leadership, Wisconsin passed school choice for the children whose parents are in poverty.  Once her bill became law, the powers of competition were unleashed.  Located in one of the poorest areas of Milwaukee, today St. Marcus School has nearly 600 students and an incredible track record of success.  More than 97% of all the students at St. Marcus go on to get their high school diploma, and a large number of those graduates have gone on to get their college degrees.  Before St. Marcus, the graduation rate from high school was not only miserable, but of those who did graduate from high school, their academic achievements were limited.

St. Marcus School has broken the cycle of poverty in their community.  By promoting hard work, discipline, and providing quality education, the students of St. Marcus have a very bright future.  Academically, St. Marcus is modeled after KIPP (Knowledge is Power Program) schools that are found across the nation (  Thanks to many generous benefactors, including Bill and Melinda Gates, there are now nearly 100 KIPP schools across the nation breaking the cycle of poverty.  But, frankly, it is just a drop in the ocean.  Choice in education needs to be extended to all parents to the benefit of every school child in America and every teacher in America.  Everyone wins when competition exists.

Yes, monopolists will always complain and resist competition whether businesses or labor unions, but it is always to the detriment of the consumer.  As a liberal might put it, monopolies are not fair and in the case of education, they hurt the students the most.

School choice is a powerful and proven free market solution to the decline of public education.  Its triumph cannot come to soon.

Wednesday, April 17, 2013

The Night I Had Dinner with Terry McAuliffe

Yes, it's really true.  Kathi and I did have dinner with Terry McAuliffe one evening.  But, truth is, it wasn't quite the way it sounds.  There were just seven of us.  But, it wasn't pre-planned.  It was right during the Monica Lewinsky scandal.  We have a tradition in our family that when your birthday comes around, you get to pick the restaurant.  It was Kathi's birthday and she picked a Japanese Steak house in Northern Virginia.  Our son, Matt, joined us for dinner that evening.  We just happened to be seated with this nice young couple and their two very well behaved children. 

The other family was Terry McAuliffe and his wife and children, but out of context I did not recognize him.  They were just a nice family out to dinner.  We made occasional small talk during the dinner and then when the dinner was about finished, we talked some more.  It went the way a conversation goes with folks you have never met before until it came out that he had raised money for Dick Gephardt in Missouri.  That's when I mentioned that I had raised money for Missouri Senator John Ashcroft.  That sort of changed the tenor of the conversation.  Then when Terry mentioned that he had golfed with President Bill Clinton that day I realized who he was.  It was almost comical.  Here we were, quite by accident, sitting at the same table with Terry McAuliffe, the President's bag man.

It was actually quite entertaining.  He told us that the scandal didn't seem to bother the President or his golf game, but he did joke that his only friend at the time was Buddy, his dog.  Of course, McAuliffe had already gained quite a bit of notoriety himself for his fund raising prowess and for his "luck" at making some $18 million through his timely investment in Global Crossings.  As you may recall, McAuliffe invested $100,000 in a new high tech company and 18 months later that investment turned into $18 million.  It was sort of like the Hillary Clinton investment of $1,000 that turned into $100,000 in the space of a year's time.

McAuliffe cashed out and shortly thereafter, Global Crossings collapsed.  Stockholders lost everything, except for McAuliffe and a few insiders, of course.  The collapse was on an Enron scale, but because McAuliffe had the right connections the scandal eventually went away.  It pays to have friends in high places.

For those of you who remember Bobby Baker, Lyndon Johnson's fix-it man, McAuliffe fits into the same mold.  Baker was a Capitol Hill aide to Senator Johnson and thanks to the connections of the Senator and the wheeling and dealing of his aide, both Baker and Johnson got rich. 

Judicial Watch conducted an extensive investigation of the Global Crossings Scandal and from that investigation they reported that McAuliffe's connection to Global Crossings was much more than just an investment.  The CEO of Global Crossings was Gary Winnick.  McAuliffe arranged for Winnick to play golf with President Clinton.  Shortly thereafter, Winnick gave a $1 milliongift to the ClintonPresidential Library.

Apparently it wasa pay to play arrangement.  By 2001, Terry McAuliffe was in the news in regard to the Global Crossings scandal.  The story runs like this…Global Crossings was given a $400 million contract by the Pentagon.  However, it turned out that there were "irregularities in the bidding process" that resulted in the Pentagon cancelling the agreement.  Perhaps a better word than the sanitized "irregularities in the bidding process" phrase might have been shenanigans.  Anyway, when the contract was cancelled, Global Crossings collapsed.

The Judicial Watch report goes on to state, "Like Enron, Global Crossings had artificially inflated its stock price while executives engaged in massive stock selling in the year leading up to filing for bankruptcy. While Global brass made billions, employees lost their life's savings as their 401(k) retirement plans were casualties in the Chapter 11 filing."

But, McAuliffe escaped scot free and $18 million richer.  Again, it pays to have friends in high places.

There's no doubt about it, McAuliffe has had an amazing career.  At just 22 he was the national finance chairman of the Jimmy Carter re-election campaign for President.  Carter lost the election in a landslide, but then, after graduation from law school, McAuliffe landed on his feet as a founder of the Federal City National Bank.  Just three years later, at the tender age of 27, McAuliffe was elected President of the Bank.  Why, because McAuliffe, like Bobby Baker, understood how to use his political connections to garner large bank deposits and to make big loans.  It was crony capitalism at best, and shady wheeling and dealing at worst.  But Terry McAuliffe wasn't finished, in fact he had just begun.

He set up a real estate company in Florida, and once again, using his political connections persuaded the trustees of union pension funds to invest millions in his little venture.  This time the political connections weren't sufficient and the real estate company was unable to re-pay a $6 million loan from the International Brotherhood of Electrical Workers.  This time the Department of Labor sued and in 2001 the trustees were forced to pay the union $4.95 million.  Once again, McAuliffe escaped without a scratch.

When Bill Clinton got elected President, McAuliffe hit his stride.  It was a simple approach.  You had to pay to play.  If you wanted to have access to the President, you had to pay up, and if you wanted special connections inside the Administration that would be financially beneficial to you, you had to shell out.  Selling a night's lodging in the Lincoln bedroom at the White House was small potatoes for McAuliffe.  He had bigger fish to fry and he got even richer in the process.  After the Clinton years, McAuliffe played an instrumental role to obtaining backing for Global Crossings.

McAuliffe's most recent enterprise was a heavily subsidized electric car venture.  He tried to arrange for a sweetheart deal in Virginia providing special treatment for Chinese investors, but when he got turned down by Virginia, he simply moved his action to Mississippi.  McAuliffe's company, GreenTech, was supposed to begin production of tens of thousands of electric cars by 2011, but it didn't happen.  In fact, the company has now been sued by the county in which it resides for back taxes.  And, oh yes, no electric cars have come off the production line.

Seeing the handwriting on the wall, McAuliffe quietly resigned from GreenTech last December.  He stole off into the night with no public notice at all.  And now he claims no knowledge of unpaid taxes or the financial mess he left behind.  And so the saga of Terry McAuliffe goes.  Others lose their life savings, but McAuliffe walks away richer than ever.

And now this paragon of virtue wants to serve in the same office held by Patrick Henry and Thomas Jefferson—Governor of the Commonwealth of Virginia.  What a disaster that would be.  I could see someone like McAuliffe running for Governor of Louisiana.  He would fit right it with the Longs and Governor Edwards and all the other shady characters that have served as Governor of that state.

But knowing McAuliffe's penchant for a grand vision, I'm sure he must feel that being Governor of Virginia would put him in a lot better position to run for President than to try to run from Louisiana. 

Maybe McAuliffe can win.  I certainly hope not.  We don't need a wheeling-dealing Governor, we need a man of principles and dedication to the rule of law as our next Governor.  And we are blessed with the opportunity to elect just such a man, Ken Cuccinelli.  What impressed me the most about Ken as Attorney General was his commitment to the law and to the Constitution of both Virginia and of the United States. 

Early on he was called into a case involving one of our state universities.  He did not agree with the position taken by this particular university, but he concluded that it was lawful and within the Virginia Constitution.  He vigorously defended the University and won the case.  That is character.  Too many judges and AGs let their political views take precedence over existing law and the Constitution.  In the case of the law, it should not make any difference whether you are a conservative or a liberal.  If you believe in the rule of law, then the outcome will be the same.  However, if you allow your political perspective to corrupt your judgment, the rule of law suffers.  And when the rule of law suffers, our entire society is wounded.

Do you really want a Governor with the questionable past of Terry McAuliffe?  What a stark contrast his character is to that of Ken Cuccinelli.  I would be embarrassed to see McAuliffe buy his way into the Virginia Governor's mansion.  Governors Henry and Jefferson will roll over in their graves if that happens.