Ronald Reagan Archives - The Pursuit of Happiness

Reagan’s Legacy? ‘Privatization’ Is a Dirty Word

May 26, 2017

In the era of a billionaire president (namely Donald Trump), any discussion of privatization turns nasty, and it’s Ronald Reagan’s legacy that is getting beat up in the process.

Reagan was big on running the federal government more like a business, and proposed broad ideas to get the private sector to take over some of the jobs government was doing. These public-private partnerships helped pump the economy, and it seemed to make more sense for these jobs to be done by companies whose business it was to do this kind of work. In a 1986 message to Congress, Reagan wrote:

In most cases, it would be better for the government to get out of the business and stop competing with the private sector, and in this budget I propose that we begin that process. Examples of such ‘privatization’ initiatives in this budget include sale of the power marketing administrations and the naval petroleum reserves; and implementation of housing and education voucher programs.

During the Reagan era, privatization began on a broad level, and private-public partnerships were instituted in a variety of areas. Today, these arrangements vary from prison administration to school vouchers. As Gerard Robinson, the former commissioner of education for Florida and secretary of education for Virginia, explains:

Public-private partnerships remain an important aspect of doing business in America; private prisons are still part of our state and federal corrections landscape; 26 school voucher programs are operating in 15 states and the District of Columbia; and 21 tax credit programs are operating in 17 states.

But in the age of Trump, Robinson says, much of the talk about private companies, which earn billions providing services to the government, has turned toward an anti-capitalistic tendency: namely arguments like, if a company has a contract with the government, it shouldn’t be allowed to profit.

But is that even remotely realistic? For one, these types of relationships have in fact been functioning for more than 100 years, not without flaws but certainly more efficiently than government could do alone. Two, what would be the incentive for companies to do business if they can’t benefit from the service? They already are doing it more more cheaply than could be done by a parallel company created by government to perform the same function without benefit.

Three, as Robinson points out, it’s just more feasible for some government agencies to contract out some educational services while doing others in-house. He uses examples from public school arrangements, for instance, in the area of technology support. Let Apple and Microsoft handle student computer services, not the schools. Or how about student transportation?

According to a recent report from Bellwether, district-managed public school buses account for approximately two-thirds of the 480,000 buses that transport 25 million students in urban and rural school districts each year. Private companies such as First Student, Inc., which has a contract with 1,200 school districts and employs 57,000 people to drive 6 million students to school each day, are among for-profit service providers that compose the remaining one-third. Why do districts outsource transportation? According to the National School Transportation Association, ‘School bus contracting benefits schools and school districts nationwide. Outsourcing transportation redirects attention and financial resources back into the schools that were overburdened by the expense and administrative commitment of providing their own student transportation.’

Robinson lastly makes the case that some anti-privatization groups may not want to admit: public employees benefit from investing in the private sector. If you remove that profit margin, public employees lose out, both in terms of an upper salary limit and by not having profitable companies into which they invest their retirement savings.

According to an American Investment Council report regarding the investments of over 155 public pension funds in various equity markets, funds invested in private equity produce a median 10-year annualized return rate nearly 4 percent higher than those invested in public equity. For example, the Teacher Retirement System of Texas invested $16.41 billion in private equity, and came away with a 15.4 percent increase in their annualized 10-year return. The New York State Teachers’ Retirement System invested $8.26 billion in private equity, and garnered a 13.2 percent increase in their return. The point is that these teachers, and countless more, will be able to retire with some comfort based on the investment of their public pensions in the private equity market.

So having profitable companies that provide valuable services seems like a smart choice that works on both sides of the coin, complementing government services while also providing a revenue stream for government investments. Seems like a viable course of action, one currently threatened by anti-capitalistic forces.

What do you think?

How Airline Apathy Explains the Need for School Choice

April 9, 2017

If you’ve ever been stranded at an airport — or gotten involved in a debate over school choice — you can certainly empathize with Frederick Hess, director of education policy studies at AEI.

In a sarcastic and slightly cranky opinion piece, Hess details a bad stroke of luck with American Airlines that ultimately prevents him from delivering an important lecture despite trying every maneuver possible to rebook flights, book car rentals, and hightail it through an airport.

So I bolted off the plane, asking the ‘helpful’ lady guiding us to our transfer gates to please just let the gate know I was coming (she said she would). I didn’t make it. Well, by dashing up and down escalators and such, I actually made it there just in time, barely 10 minutes before departure—but the agent had already closed the door and was nowhere to be found. The idle American agent at the gate 20 feet over didn’t much care, even though an impartial third party might’ve thought I merited at least a modicum of consideration—given that I’d spent a big chunk of my day trying to juggle air reservations and rental car plans to accommodate American’s struggles.”

This kind of experience, unfortunately, isn’t all that rare. Travelers get the raw end of the deal at the mercy of airlines all of the time – even though they are paying for their airline ticket and trusting said airline with delivering them in a safe and timely manner.

So why is Hess’ experience important?

Because he makes an analogy that is an excellent window into the experience of many parents when it comes to their children being stranded in a school system that drops the ball time and time again. Only with education, the stakes are much, much higher, as Hess notes.

I’m annoyed today less because my flights were goofed up (which happens), and more because no one who works for the airline seems especially interested in doing anything about it. I would feel infinitely more chipper if I felt like someone really wanted to help ensure that the problem got solved. Instead, I’m staring at the face of a big, bureaucratic morass, a face which displays a remarkable lack of passion for doing the job well.

This happens time and again when it comes to big bureaucracies. Nobody seems all that concerned about helping out, preferring instead to spout lots of stuff about policy and procedure. We can never get hold of anyone who really seems to be in charge, and it can feel like the whole process is devoid of accountability or genuine human concern.

This frustration is at the heart of the school choice debate.

The bureaucracy of public education has been attacked and debated for years. There’s no changing that. And with bureaucracies of all kinds being laden with deficiencies, it’s not a surprise that education is also a victim.

As Ronald Reagan so aptly noted,

Every once in a while, somebody has to get the bureaucracy by the neck and shake it loose and say ‘stop what you’re doing.’

But it’s important that we not throw our hands up and end on a pessimistic, fatalistic view of education. The variable that Hess highlights is crucial to understanding the motive of school choice advocates – and the ability to improve Big Education by employing educators who work with passion and purpose. It’s not a question of for-profit motives, it’s about finding “smaller, more human-sized” school systems:

Hess is a physical traveler just as all parents navigate schools in the hopes of providing the best education possible to their children. If he had been given some semblance of genuine effort to help him reach his destination, Hess could have made his flight. Or even if he didn’t, he could have walked away knowing the best attempt was made by American Airlines to uphold their end of the deal.

That’s not asking too much, is it?

Likewise for parents, school children ought to be given every opportunity to receive the best education, not just the one they are stuck in because that’s where Mom or Dad pays rent or their mortgage. When kids are not afforded that opportunity because the bureaucratic mess of Big Education gets in the way and their education fails them, Mom and Dad become cranky too. Or downright angry, and justifiably so. Because we all know how important education is for setting a child up to pursue happiness and success.

What we all want, I think, in an airline—and a hundred times more in a school—is that professionals exhibit a passion for doing their job well. For figuring out smart ways to solve problems. For execution.

As for the children who’ve had the benefit of school choice, but still fail? Well at least they had access to their best shot. Just as flights will be missed, children will fail. There are countless reasons why. But having the confidence that every effort was made on his or her behalf is a whole lot more palatable than watching employee after employee halfheartedly clock in and out with no desire to help you reach your final destination.