Vouchers or Subsidies?

Vouchers or Subsidies?
by Mark Anderson, Columnist

July 4, 2002

"Nothing will more quickly destroy independent Christian schools than state aid: their freedom and independence will soon be compromised, and before long their faith."

- George Bernard Shaw of the Socialist Fabian Society of England (quoted from The Oregonian on 10/20/82)

As the debate over school vouchers is back at the forefront, I felt compelled to write this article. I feel that it is my moral obligation to sound the trumpet and shout from the rooftop, as I see many of my conservative friends supporting the school voucher scheme. The establishment has Orwellianized our vocabulary - newspeak. Government expenditures are called investments. Tax cuts are called spending. School vouchers equal school choice. It is time to purge this sort of doublethink about freedom and cease obscuring what school vouchers really are.

There is no better way for the left to get what it wants than by controlling both "alternatives." The left markets one idea as ostensibly left wing and then the "opposing" idea, which has no diametrically different consequence, is also left wing, but clothed with right wing rhetoric. That is exactly what the left has done with the school voucher debate. The Delphi technique, or the hegelian dialectic, of thesis, "anti-thesis" and synthesis is at work here. Sadly, many rank and file right wingers fall into this false dichotomy trap. Who could disagree with "religious rights?" By pitting the teachers' union against the voucher crowd, the voucher crowd has been able to sell their message to grassroots conservatives. And since secular schools get government assistance, then how could we possibly be opposed to letting religious schools get government assistance as well? Just remember how government schools became secular.

The state, in order to assure a desired outcome, will offer up a "choice" between two pre determined "alternatives." This does not really give us a choice over the direction of government policy. Instead, we are told to choose between the two alternatives presented. In the case of school vouchers, we have a choice between either going along with the status quo or going along with the status quo, plus government subsidies for private schools. What conservative could possibly support the status quo? Rightfully, the status quo is marketed as left wing. However, truth becomes dissembled and recreated when the status quo, plus government subsidies for private schools, is packaged as right wing. We get a "choice" between the overt left wing "solution" and the less apparent left wing "solution." Absent from the debate is anything that involves getting the government out of education.

The word voucher is nothing but a fancy name for subsidy. School vouchers are the latest socialist scheme. One of the common arguments in favor of school vouchers is that parents, who pay taxes towards government schools anyways, should at least get a choice over where they want to send their kids to school. Choice is a great concept. I am all for choice as a free marketeer Libertarian. If parents are merely "getting their money back," then we must ask ourselves some questions.

First, if that is all that is happening, then why is the government taking the money to begin with? Second, let us assume that school vouchers are based on what you pay for taxes towards government schools. Now let us assume that everybody decides to capitalize on this opportunity to abandon government schools and take a flight to private schools. Obviously, since school vouchers would be based on what you paid in taxes, then the only people that could receive the voucher are net taxpayers. So who does this leave behind in government schools? Net tax consumers. If they are net tax consumers, then they are not taxpayers. If they are not taxpayers, then who is paying for government schools? Third, will people who do not have any kids in school at all qualify for a reimbursement? Fourth, will government employees, who have money deducted from their pay as "taxes," but don't really pay any taxes at all since they are tax consumers, also qualify for school vouchers? Fifth, will everybody qualify for school vouchers? Is this going to become the newest E-N-T-I-T-L-E-M-E-N-T? Will school vouchers be equal to what you paid in taxes towards government schools or will they equal the cost of tuition?

The only real way to ensure that property rights are secure and that wealth is not redistributed would be for a system where people pay for education with user fees. But if we are going to do that, then we might as well just completely separate school and state.

Many people believe that school vouchers will somehow create "school choice." This will not be the case. Choice is lost upon the completion of the process of taxation. The government handing out a voucher (subsidy), solely for the purpose of consumption, will do nothing but cause price inflation for private schools. That is at the very least. If vouchers are so great, then why don't we push for the government to just tax 100% of everything and distribute "living" vouchers to everybody? Vouchers for food, transportation, clothing, etc.

After all, if school "vouchers" are justified by the recipients because they paid taxes to begin with, then shouldn't every taxpayer be lined up at some government office to get some sort of subsidy in return? And taking this to its logical extreme, we should all get back 100% of everything we paid. But if we are going to get everything back, then why have the government take it in the first place? Furthermore, if every taxpayer ends up breaking exactly even by the time they get their return, then how could there even be government? We would merely be paying ourselves. Of course, that isn't even a reasonable assumption. There would, at the very least, have to be a government bureaucracy in order to administer giving everything back to us, which would require a handling fee going to the government. That means that we would not get everything back. That is also one of the huge inefficiencies with government. School vouchers will be no different. Rather than the consumer going straight to the provider, government becomes the middleman in the exchange and expropriates its handling fee.

Another fallacious argument is that it is better for the government to fund "private" enterprise as opposed to a government entity, as this is more "efficient." A government expenditure is a government expenditure. Whether it is a private entity or a government agency, if it receives a government subsidy it consumes taxes. Even if the government does not grossly interfere with private schools, by virtue of the fact that the private school would be taking a subsidy it becomes, in essence, just like any other government agency. Government increases in size by the amount of wealth it consumes and redistributes. If the government increases subsidies for a "private" contractor, that would be an expansion of government. Tax consumers, regardless of their label, pose the same burden and cause the same consequences on market activity. Private school government vouchers (subsidies) will not be making education more competitive. Far from having a privatizing effect on government schools, it will governmentalize private schools. Why doesn't the government just refrain from collecting the taxes in the first place? Because the dirty secret is that this has nothing to do with the government pursuing equitableness. School vouchers are not some means for the government to simply "give back" your taxes so that you can send your kid to a "private" school. I wrote an article called, How Socialism is INEXTRICABLY Linked to Our Monetary System. In that article, I explained in explicit detail how the government must keep spending in order to keep inflating the money supply. I encourage you to read it.

Inflation, unlike deflation, requires an inflator. Deflation can happen entirely within the construct of the free market - aside from the fact that some previous inflation had to take place. There is also no in between inflation and deflation, except where deflation has been allowed to run its course and has completely reversed all previous inflation. This means that if the government stopped inflating, we would have deflation. Deflation, contrary to popular belief, is not recessionary, nor is it a bad thing. However, if deflation were allowed to run its course, the money masters would be out of work and the government would have given up its most useful and malignant means to expand itself - the power to inflate. The only job of the money masters is to figure out how much they want to inflate. If deflation were allowed to run its course we would also end up deflating our way back to a gold standard. Horrors for the statists!

I can assure you that much like the Bush "tax rebate," which even went to non-taxpaying government employees and did not bear any resemblance to a tax cut, school vouchers will be nothing but the latest government subsidy scheme by which the government will be able to continue to inflate. Rather than simply allow parents to keep their money in the first place, the government needs a voucher scheme for the express purpose of spending all newly created money into existence. The implications of this will be horrendous - especially for private schools. As the government spends money, this will mandate a tax liability being imposed on somebody in the future. Furthermore, the expenditure itself is a tax. As I have discussed in my previous articles, inflation is nothing other than a tax. Whether the government takes the money you have in your possession or whether they simply duplicate your money, thus devaluing what you do have in your possession, makes no substantive difference. It all confiscates wealth. There is one difference, though. When the government has the power to inflate this brings with it unbridled power. Our purchasing power seemingly comes from the government. As the government distributes this new money to one group of schools and parents, this simultaneously diminishes the purchasing power of all other schools and parents. Rather than the next group protesting taxation by inflation, the usual result is that the other schools and parents demand their subsidies, as that seems to be the only way they can now afford to put their kids in private schools.

Not that I trust the Bush administration, but even granting the voucher supporters the premise that there will be no strings attached to these "private" school subsidies right now, who is to say that there won't be with a regime change? What if Hillary Clinton becomes President? By then, schools and parents will be entrapped. Whether it is individual parents or schools that receive the subsidies, it will make no difference. Fast forward a few years. Parents, only able to afford private schools because of the voucher they receive, have moved their kids out of government schools. Private schools now have more kids, more staff, and bigger facilities - dependent on this source of revenue. Parents absolutely do not want to send their kids back to government schools - dependent on this source of revenue. All it takes now is for the government to make this continued stream of subsidies contingent upon parents sending their kids to government approved "private" schools. The schools their kids are already in will not want to lose that source of revenue, so they do what seems necessary by following state mandated guidelines. And the private schools that opt out of the government's trap will eventually not be able to compete.

Brief History on Vouchers

The idea for vouchers was not the result of an independent, grassroots movement of patriotic Americans. The idea for vouchers originated inside the Department of Education. Of course, the Department of Education's idea of vouchers for parochial schools was not a newly inspired idea.

In 1959, France created a partnership with private schools. The rhetoric employed by the French politicians was eerily similar to the rhetoric we hear today. They said their goal was to give parents "freedom of choice." Meanwhile, the National Education Federation, the teachers union in France, said that the partnership would do things like "siphon off funds from public schools" and "injure state schools."

In 1982, President Francois Mitterand took complete control over all "private" schools that were beneficiaries of government assistance. The private schools that did not accept government aid were not affected. All of the "private" schools that did receive aid are nothing other than complete government schools now - governmentalized and unionized.

This should be a good lesson as to how the government, especially once it inculcates dependency on itself, can entrap private schools.

Conclusion

The very best case scenario that can unfold with vouchers is that the amount the government spends on "private" education comes without strings attached (including at any time in the future, which is impossible to foresee) and is deducted from the original amount that was appropriated for government schools. Being these funds, in the form of vouchers, would be used solely for the purpose of consumption; this would cause industry specific (private schools) price inflation. That would harm parents who already have children in private schools. The good thing is that it would not necessarily cause greater overall inflation, as the amount spent on private education was deducted from government education.

Even the best-case scenario is not even a step in the right direction. It is a safe prediction to make that no money will leave government schools, we will definitely see the cost of private schools increase, there will be an overall increase in taxation by inflation, and at some point "private" schools will become indiscernible from government schools. The only difference between the "private" school and the government school will be the address.

Government schools will not be downsized. Even though many government schools receive parts of their funding on a per pupil basis, all that is necessary is to increase the amount of per pupil funding. Does anybody really believe that the government will give schoolteachers a pay cut? So if, somehow, parents did manage to siphon funds from government schools, then the rest of everybody, including individuals who in no way use government schools, would just be slapped with a heavier tax burden. In fact, the voucher recipients would still be paying taxes to government schools by, at the very least, the inflation tax. And remember, government in no way downsizes by simply alternating the target of their expenditure. A voucher is a government subsidy.

Our goal, as paleolibertarians and paleoconservatives, should be nothing other than downsizing government. A government voucher is nothing other than a euphemism for a government subsidy. This does not downsize government. Rather than fighting for the government to fund private education, we ought to be fighting to have the government defund all education. I refuse to pick one of the two sides being advertised. Instead, I am going with a third way: downsizing government. Pseudo market schemes will not work. To hell with the voucher scheme! ***

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