Friday, February 10, 2017

Who'da thunk it. Liz Warren and I agree


The Wall St. Journal excerpts from  “The Two-Income Trap: Why Middle-Class Parents Are (Still) Going Broke” (2003) by Elizabeth Warren and Amelia Warren Tyagi.

Any policy that loosens the ironclad relationship between location-location-location and school-school-school would eliminate the need for parents to pay an inflated price for a home just because it happens to lie within the boundaries of a desirable school district...

Short of buying a new home, parents currently have only one way to escape a failing public school: Send the kids to private school. But there is another alternative, one that would keep much-needed tax dollars inside the public school system while still reaping the advantages offered by a voucher program. Local governments could enact meaningful reform by enabling parents to choose from among all the public schools in a locale, with no presumptive assignment based on neighborhood. Under a public school voucher program, parents, not bureaucrats, would have the power to pick schools for their children—and to choose which schools would get their children’s vouchers.
I'm with her!

The right frames this issue as 1) parents/kids deserve a choice and 2) unions, and their water-bearers prevent that choice.

I think Liz brings up a the more important issue: funding. Right now, schools are mostly funded by property taxes. In affluent communities like mine, our town budget is $100 million annually. $80 million is for the schools. We gladly agree to property tax increases to fund more school (teachers, programs, facilities) because we know a 2% increase in taxes will protect the value of our home investment. I don't know what the average price of a home is in my town, but lets say, just for grins, that it's $100,000. If property taxes are 1% (about what they are in my town), that's $1,000 a year. If the town comes to me and says, we want to offer Spanish classes to 3rd graders and it will cost you an additional $50 (a 5% increase) I'll probably say yes because it will protect my $100,000 investment. Easy decision. Even worse. The federal government and the state government subsidizes me! Because my property taxes are tax deductible. Let's say the marginal rates my average townsperson faces is 25% federal and 6% state, it means the feds and states pickup a third of my tab.

In order to really blow up this system and in order to really get choice you need to remove the tax deductibility of property taxes AND remove local government control of schools. The teacher's unions are child's play compared to that. Imagine middle class homeowners across the nation suddenly facing a higher tax bill and uncertainty on home values when the link between location and schools is severed.

All of this might happen without Liz, or her acolyte Betsy DeVos. There are already vibrant markets in education delivered via the Internet: Khan Academy, Coursera, Wyzant, Chegg and others. And more are coming. Many colleges video classes and make them available to existing students, some to alum, and some share with other universities.

Of course, I'm trying to figure out how to make money on this since I'm a greedy capitalist pig.


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