Jalopy of economic growth

Governor Sandoval unveiled his recommended budget back in January and made it clear we would need to cut $258 million from higher education in order to balance the state budget (lost state appropriations plus lost Federal ARRA subsidy and amounts to 7.4 percent of higher education spending, excluding capital projects and debt repayment).

Naturally, higher education officials and their defenders in the state legislature have been rolling out a new strategy to prevent or lesson the budget cuts. Now they claim that higher education is the engine of economic development. Through higher eduction we can train a better educated work force, attract high tech companies, create jobs, and diversify and grow the economy.

Education and research in higher-ed hasn't changed much since the 19th century. What has changed are the number of jobs, beyond education and research, higher education thinks it is good at.

Check out some of the recent arguments in favor of education driving our future economic growth: Derby (former regent), Wixom (current regent), Dr. Eliot Parker (UNR economics professor), Parker again (this guy is always hung up on not having enough government employees relative to the rest of the nation), Dr. Rob Lang (UNLV sociology professor and Brookings Institution).

 To make a long story short, these people think higher education can do anything and do it better than anyone.  Need to run a retirement home - call Higher Ed! Need a golf course managed - call Higher Ed! Need a business park built - call Higher Ed! Need a rock concert - call Higher Ed! Need to incubate and develop entrepreneurial businesses - forget those venture capitalists who carefully weigh risks with potential returns to ensure a wise use of scarce resources and CALL HIGHER ED!

Basically, they are trying to do everything but educate and research - the primary function of the university.

Seriously though, if higher education is so good at doing all of this, why have private enterprise at all? Lets just have everything be run by higher education. Maybe you're starting to see how silly their argument really is? If not, keep reading as the facts just don't support their position.

There are fewer farmers per capita today than in the past yet they produce considerably more food and feed millions more people, all thanks to something I call "technological innovation"   Higher-ed, on the other hand, employs more people per student than ever before.

Basically these individuals see Nevada's struggling economy (fact), high unemployment rates (fact), large budget shortfall (fact), gaming dominant economy (fact) and assume this is because we don't have very many college graduates per capita (relative to the rest of the nation we have few college graduates, but it is a logical fallacy to assume our problems are because we don't have enough). Some argue that we don't spend enough on higher education, but relative to the rest of the nation, we actually spend above average already (see page 29).

Chancellor Dan Klaich was so sure about a positive relationship between higher education and economic growth and job creation that when he testified before the Nevada System of Higher Education Regents he claimed the relationship was "indisputable."

Since he's set the bar at "indisputable" all I have to do for now is cast a shadow of a doubt on this theory. This is very, very important because we're talking about the state's future and hundreds of millions of dollars that could be used elsewhere to boost the economy, improve lives, and create jobs. Over the next few decades this translates to billions of dollars so this is a big deal.

To that end I've done a few simple regressions. Yes, this is a simple analysis and a far more complicated and scientifically robust analysis can be done, just remember, I'm only trying to cast doubt on Klaich's "indisputable" claim. Also note, higher education hasn't bothered to do the scientifically robust study to even prove their own claim.

Here is what I find:

• There is no relationship between the percentage of college graduates in a state and unemployment rates
• There is no relationship between the percentage of college graduates in a state and economic growth since the recession started
• There is no relationship between the percentage of college graduates in a state and the state's budget shortfall
• There is no relationship between having a Top 100 university and net-migration
• There is a very small relationship between having a Top 100 university and a statistically higher unemployment rate.

These findings, at the very least, suggest there is evidence to dispute the "indisputable" claim that higher education can be the engine of economic development. What is needed is a more robust analysis on higher education and its relationship to the economy - an analysis higher education has yet to perform to prove its own bloated existence. Specifically, lets study the return on investment. Until these studies are done, higher education officials should drop the claim that they can help grow and diversify our state economy or even help create jobs.


Read my column in the RJ about this issue. 

(I put up the wrong P-score and t-stat, I've made the corrections and added the coefficients on March 1, 2011).

College attainment and unemployment in 2009: R Square:   0.002472 | Adjusted R Square"   -0.01789 |       P-value:   0.728982 | t Stat:: -0.34847 | coefficient: -0.02001 (no relationship)

College attainment and unemployment in 2010: R Square: 0.018938 | Adjusted R Square:  -0.00108 |       P-value:   0.335547 | t Stat:   -0.97256 | coefficient: -0.05136 (no relationship)

College attainment and GDP growth from 2008 to 2009:  R Square: 0.001985 | Adjusted R Square -0.01838 | P-value:   0.756201 | t Stat:   -0.31222 | coefficient: -0.01975 (no relationship)

College attainment and GDP growth from 2007 to the 2009:  R Square 0.001181 | Adjusted R Square:   -0.0192 | P-value:  0.81082 | t Stat: -0.24066 | coefficient: -.0.00026 (no relationship)

College attainment and budget shortfall:  R Square:   0.02046 | Adjusted R Square:    -0.00403 | P-value:  0.36617 |  t Stat:  0.914045 | coefficient: 0.002969 (no relationship)

Yes, college graduates are more likely to be employed than non-college grads, but across states there is NO RELATIONSHIP between college attainment rates and state unemployment rates (a very weak R2 and a negative adjusted R mean there is nothing really going on with the relationship at all). Why is this the case? It may be because so few jobs actually require a college degree. It may also be that we aren't adjusting for the age difference in college graduates. That is, new college graduates have higher unemployment rates than older college graduates. This is a plausible theory considering more and more people (both students and professionals) are watching the value of the college degree plummet (while debt to earn a degree rises).

Editorial Fail...again

The Las Vegas Sun criticizes Republicans, including Governor Sandoval, for holding on to the "no tax" pledge while Democrats propose meaningful education reforms. The Sun editorial staff writes,

... it was good to see Democratic lawmakers offer proposals Thursday that hold out promise for reasonable compromises that should be agreeable to Republicans while also recognizing the need to raise taxes to help elevate the quality of education provided in Nevada classrooms.

The reforms proposed by state Democrats? Make teacher tenure possible after 3 years instead of just 1 and require teachers to be evaluated, in part, by student value-added assessment data. Teachers with 2 negative reviews can be placed on probationary status and possibly removed from the teaching profession. These are needed reforms and I applaud Democrats for taking steps to actually improve education rather than focus only on spending.

So what is the problem with the Las Vegas Sun editorial?  The Las Vegas Sun editorial staff conveniently forget that Democrats were talking about passing these reforms LAST YEAR.... BEFORE SANDOVAL was even ELECTED. Democrats agreed to these policies thanks to Obama's "Race to the Top" grants which awarded states financial support for reforming education.

In other words, Democrats aren't coming to the table with new concession in order to get taxes to prevent budget cuts - THESE CONCESSIONS WERE ALREADY MADE to try to get the Race to the Top grant, LAST YEAR! 

The good news is more education reform is needed and Republicans should hold off on talking about raising taxes until Democrats come to the table with reform proposals they already haven't reached a consensus on.

Reform ideas:

• Vouchers or tuition tax credits (even if we limit them to low-income or special needs students for now)
• Charter School Institute (to regulate, oversee and sponsor charter schools)
• Eliminate the class size and book purchase mandates and let local schools decide how to use the resources
• True empowerment schools (decentralized, locally controlled with teachers, principals and parents deciding how resources are used, not central office bureaucrats).
• Open enrollment
• Parent trigger (parents take over failing schools and decide to close school, reopen school with new staff and leadership or convert it to a charter school).

Those poor underfunded teachers in Wisconsin

Even though several states prohibit at least some government worker collective bargaining (like Governor Walker of Wisconsin is proposing) the world hasn't ended. Government workers have not been tossed into a dingy factory and made to slave away on wages that can't even support sustenance based living.

Of course, the government unions have to spin facts to make it seem like their members are also members of the underpaid working class poor (they make 30-40 percent more than the average American).

Recently the Las Vegas Sun ran a letter to the editor bemoaning the low-pay of teachers in Wisconsin. Without collective bargaining, they argued, teacher pay would fall even lower.

Actually, this has nothing to do with kids. Research by Dale Ballou and Michael Podgursky show that increasing teacher pay did not result in recruiting better teachers or better student achievement. We just pay more for the same pool of teachers. Thus, this is about teacher/government worker pay.

So what is the pay for a teacher in Wisconsin?

Well, according to Robert M. Costrell, a professor at the University of Arkansas, the average teacher in Milwaukee Wisconsin makes $100,005 in salary and benefits.

Yup, must protect $100,000 salary and benefits - ITS FOR THE KIDS! 

Tax the rich? Why?

To defend their own generous salary and benefits that are threatening to bankrupt states -  and rob "essential services" like welfare, healthcare and education - government workers are screaming TAX THE RICH!

Its nothing but spin. This isn't about government workers versus the rich, this is about government workers versus the rest of us.

Besides increasing taxes on the rich probably won't do much of anything in the long run. Check the chart out below. It shows federal income tax collection as a percentage of U.S. GDP. As you can see, even in this recession income tax collection as a percent of GDP isn't too much different than under Eisenhower (with a 92 percent top income tax - adjusting for inflation that would be a tax on incomes above $1.6 million a year). During our boom years income tax collection as a percentage of GDP was almost right on par with income tax collection under Eisenhower despite the top marginal tax rate falling from 92 percent to 35 percent.

But hey, we're also dealing with state and local government workers here, so lets look at state, local and federal income tax collection as a percentage of GDP.

Oh my, we're already paying more as a percent of GDP than under President Eisenhower....so how will raising taxes on the rich help? Not taxing the rich enough, IS NOT THE PROBLEM. The problem is that we're collecting more money but spending far more than we collect. The solution isn't to raise taxes on the rich, its TO STOP SPENDING MORE MONEY THAN WE COLLECT.

One more chart for the road. This next chart shows U.S. State and local income tax collection per-capita in 2005 dollar values. As you can see it shows the government is collecting more and more revenue per-capita (per person) even as the top marginal rate declines. We all make more money and the government takes even more of that.

Contrary to what the spin doctors in the government unions say, wee don't have a revenue problem - WE HAVE A SPENDING PROBLEM.

So what can we do to control costs? 

• Limit growth in government spending to no more than population growth plus inflation or to income growth
• Eliminate government union collective bargaining
• Eliminate defined benefit plans
• Bring healthcare benefits in line with the private sector
• Privatize government services (government sets objectives private sector agrees to meet those objectives for a lower fee than government current does the service) or privatize management. For example privatize motorpools, HVAC repair, carpenters, electricians, parks and rec. You could even use the private sector to manage welfare payments (seriously, just give the welfare recipients the money on a debit card). Create vouchers for K-12 and higher education.
• Use priority based budgeting

P.S., looking at top marginal tax rates is a red herring - you have to look at effective rates - the actual rate people pay.

Fighting for worker rights against the rich? Say what?

The far fringes of the left-wing are trying to paint the situation in Wisconsin as government workers versus the supper rich. The argument doesn't fly. This has nothing to do with the working class versus the rich and everything to do with the government class versus everyone else. The biggest irony being that government workers earn 30-40 percent more than the average American.

The result is that we see posters comparing Governor Walker and the Koch Brothers as dictators - usually depicted as Adolf Hitler (a man who described himself as a socialist, hated capitalism and opposed free markets). In other words, political, historical, and economic ignorance abounds.

Ignorance abounds in the political left about what defines the free market. Above is a description of crony-capitalism which is also called corporatism which in turn is a form of socialism.

Nevertheless, the left-wing needs a super-rich villain. They've picked the entrepreneurial free-market capitalist Koch brothers to play that role. (Note: the Koch brothers are NOT responsible for the overly generous salary and benefit packages that threaten the finances of many states across the country, nor are the Koch brothers responsible for any negotiations with government unions).

I pointed out that the political left made a strange choice in choosing the Koch's to play the right-wing villain since they financially support things like ballet, cancer research and fund organizations which opposed the war in Iraq, support gay marriage and claim climate change is real.

Erin Neff, president of ProgressNow Nevada*, responded "Patrick I just want people to be aware of what stands in the way of progress. I think Kadhafi (sic) supports the arts, too. Your point?" 

In other words, the Koch brothers are dictators much like Gaddafi? I'm honestly not sure why she would make such a comment if she didn't think the Koch brother's were some sort of evil dictator not unlike Gaddafi.

If so, the amount of international relations, economics, and historical illiteracy necessary to make that connection is mind boggling. Let's review with a simple, albeit crude, comparison chart. Note you could replace "Gaddafi" with a host of dictators, including Hitler, as most dictators do not like free markets and capitalism. They like state-socialism which allows them to control major enterprises through state ownership.

As you can see, Erin Neff has more in common with Moammar al-Gaddafi than the Koch brothers would. In fact, since Erin Neff supports unionization of government workers - which implies the use of force to strong-arm the public and extract wealth for their own personal gain - she has even more in common with Gaddafi. Still, I would never suggest that she was LIKE Gaddafi, or Hitler, or any of the other world's greatest villains. Such arguments are inappropriate and ignorant.

*I'd post a link to ProgressNow Nevada but McAfee AntiVirus tells me her site is "high risk" and to use it "with caution."

Government unions, greed and stupidity

I'm a union leader, I want more and you're going to pay for it!

Yup, that is right. An officer of the United Federation of Teachers up in New York tried to skip out on paying for his meal at a posh restaurant because his portion of quail was too small (note: Quail is a small bird). I'd say more, but my friend Dr. Jay P. Greene has already said it best. UFT is best known for their love of STEAK (read pictures in this blog post carefully).

In other news, thousands of teachers skip school in Wisconsin to protect their right to extract wealth from taxpayers by force collective bargaining. As a result many schools had to close. Yup, teachers - who claim they don't do it for the money - force kids to stay home while they protest to protect their ability (and the ability of other government union workers) to sustain pay increases and protect their jobs (regardless of competence) even in times of economic trouble.

Beyond ending government worker collective bargaining (except for public safety officers) Republicans in Wisconsin will also outlaw unions from automatically collecting dues from worker paychecks while government workers will pay for a larger percentage of their unsustainable pensions and generous medical benefits.

If they really cared about kids they would have stayed in school and taught the kids

Government workers should not have collective bargaining rights precisely because the government itself has a monopoly on violence. That is, the government has the power to take income and wealth by force. Collective bargaining for government workers gives them an unfair advantage over normal citizens who have to foot the bill (and have choice in the matter) and that isn't fair or democratic.

Obama to end school choice in NCLB

President Obama wants to end the school choice provision in No Child Left Behind. What does he want to replace it with? Will this be a bad thing? Does it matter at all?

Read more on my article which is featured at the Heartland Institute's School Reform News.

Stimulus or waste?

Senator Tom Coburn from Oklahoma found $5.2 million in questionable spending right in my back yard. Senator Coburn writes in his Wastebook 2010,

Did you ever wonder where the flashy and colorful signs in Las Vegas go when they die? The city of Las Vegas has received a $5.2 million federal grant to build the Neon Boneyard Park and Museum, including $1.8 million in 2010. Over the last decade, Museum supporters have gathered and displayed over 150 old Las Vegas neon signs, such as those from the Golden Nugget and Silver Slipper casinos.

In 2004, then-Secretary of Interior Gale Norton approved the federal money for this graveyard of glitter.12 In December 2010, the ―"Boneyard" plans to unveil its open-air museum with an adjacent park with benches, picnic tables, and a stage. Huge glittery letters from old signs spelling out the word ―neon in LED lighting will welcome visitors to the park. When asked, Bill Marion, Neon Museum president, glowed about the park, ―"Where else could you have a neon museum except in Las Vegas?"

Museum supporters say the Museum is a popular place for film shoots, fashion shows, and weddings.16 With Nevada‘s high unemployment rates, would it be more popular to figure out a better place in the state to spend the money?

Everyone for School Choice

Nevada's fast growing Hispanic population is quickly changing demographics in the Silver State. In fact, today Nevada's student population is already 52 percent non-white (interestingly Nevada's teacher population is still 92 percent white).

Right now many minorities, including Hispanics, vote Democrat. Unfortunately, Democrats in Nevada bow to the will of the teacher union which opposes almost every meaningful eduction reform. The unions function isn't to look after the needs of children, its job is to look after the needs of their members - i.e. adults. To that end they support policies which make public education nothing more than a job program for adults.

I'm sure many of Nevada's elected Democrats mean well, but I wonder how many would quickly change their minds if the union money stopped flowing into their election campaign coffers.

Better yet, I wonder how many would change their mind when their constituents demanded better schools and the right to choose a better school?

Hopefully Hispanics, African Americans, low-income Nevadans and everyone else in Nevada will stand up for their rights to choose a school rather than allowing unaccountable bureaucrats and union officials to dictate what is best for your own children.







Many congressional Democrats just ignore the people, unions are too powerful.








Dr. Howard Fuller supports school choice because it promotes social justice.








Gerard Robinson the Secretary of Education in the State of Virginia supports school choice.

Downfall of Nevada Higher Education

Officials in Nevada want higher education to be more like ASU, a university everyone makes fun of, including Adolf Hitler

The movie Downfall, about the last days of Adolf Hitler, enjoyed commercial success thanks, in part, to the lampooning of an iconic scene on the internet. The scene has been lampooned dozens of times with Hitler making funny remarks (through English subtitles) about all sorts of various matters from the Cowboys football team to Twilight, the pre-teen vampire romance novels.

In one particular video (click here to see it on You Tube), Adolf Hitler finds himself rejected from all the Pact-10 schools except Arizona State. ASU is a university that is universally made fun of - except in Nevada, where university officials inspire to be just as bad. Seriously, university officials in Nevada have actually stated that Arizona State is a unviersity worth emulating.

Yes, this very university:



Note: ASU is not even a top 100 university in the U.S. In fact, U.S. News and World Report ranks ASU 143 among the top 400 national universities. There is some good news, however. ASU spends fewer dollars per pupil than UNR and graduates more students.

Nevada's economy is suffering, but its not because we didn't spend enough on our universities. And if our economy is going to recover (and it will) it won't be because of our universities either...especially when they spend so much, accomplish so little and set their goals very, very low.

What happens when your budget drops 6 percent?

Uncovered footage of what happens when higher education budgets are slashed a world-ending 6 percent. Nevada won't recover. Heck, the world won't recover.

Compared to past board of regent meetings the one last week had substantially less meaningless hyperbole about how the sky will fall if budgets are cut. After three years of a major recession that has left 14 percent of the residents unemployed, we're still here (most of us anyway) and the world hasn't come to an end.

Leave it to the newspapers to over-hype the problem when the university officials are admitting they've overstated the problem in the past. Las Vegas Sun writes, "Using terms such as “doomsday” and “death sentence” to describe the impact of Gov. Brian Sandoval’s budget on higher education, the Board of Regents voted 13-0 Thursday to oppose the proposal"

Of course, higher education officials do think these budget cuts will be different from the last ones. These budget cuts, they believe, are the cuts that could set us back decades.

Governor Brian Sandoval has proposed cutting $213 million in general fund appropriation to higher education. According to figures obtained through NSHE officials, NSHE's total spending for FY 10 and FY 11 came to $3.469 billion.

I'm not sure if there are any other additional cuts, but $213 million out of $3.469 billion is just 6 percent.

6 percent reduction isn't huge...at least not in a world of rational thinking adults.

UPDATE: Officially the loss of state appropriations and the one-time federal ARRA subsidy comes to $258 million for the biennium. This comes to about 7.44 percent of current NSHE spending (excluding debt repayment and capital projects). Yes, some of the money is dedicated to certain projects, but not all of it, not even most of it. $258 million is a lot of money, but a 7.44 percent reduction in revenue is manageable.

Missed this video, but not 2010.

Higher education probably won't help our economy

Bloated, wasteful and ineffective is no way to grow an economy

As the rest of the Nation recovers Nevada’s economy still seems to slide further and further into the abyss. Nevada has the nation’s highest unemployment rate (over 14 percent). We also face a significant budget shortfall. The general fund revenue for the state budget is projected to be $5.3 billion for the next biennium – current spending is $6.4 billion.

Governor Sandoval has proposed cutting the budget and implementing reforms – most notably for education. Higher education in particular is slated for a 7 percent cut in state appropriations (17.5 percent if you include the lost ARRA federal subsidy).

To discuss the magnitude of the cuts the Board of Regents called a meeting on February 3, 2011. After three hours of testimony the only solutions presented were 1) close class sections, 2) reduce enrollment and 3) terminate faculty.

Oh no, budget cuts... Again.

The colleges and universities of Nevada have also been rolling out a new PR campaign. They’ve argued “invest more in us and we’ll help grow and diversify the economy.”

The relationship between higher education and positive economic growth is “indisputable” claims the state’s higher education chancellor Dan Klaich.

Its not at all clear that higher education can help grow Nevada’s economy. Naturally, a more educated work force can be more productive and earn higher incomes. But that assumes we're actually educating people in the first place. It also assumes that jobs are created just because of education quality rather than a host of other factors.

First of all, states with top tier universities like California, New York and Michigan are bleeding residents and jobs. Its not just these three, a host of other states with top universities are also struggling to create jobs and keep residents. Between 2000 and 2008 the combined net migration rate for states with an Ivy League school was -2.5 million. Nevada, with its 3rd and 4th tier universities, had a net migration rate that was higher than the combined rate of all 32 states with a top 100 university. In fact, having a Top 100 University as ranked by U.S. News and World Report means a state also averages a statistically higher unemployment rate (nearly 3 points higher than not having a top 100 university).

University officials in Nevada are making a very basic logical fallacy. They are seeing Nevada's economic struggles (fact) and assuming that Nevada's low percentage of college graduates (fact) must be a reason why the economy hasn't diversified and recovered. This fallacy leaves them believing they're the saviors of Nevada, thus, we can't cut their budget.

Conveniently, they forget the fact that prior to this economic crash Nevada sustained high economic growth, population growth, high income-per capita, and below average poverty rates for DECADES, despite having a "poorly educated" populace.

There is probably a more robust positive relationship between higher education spending

and keg stands than with economic growth.

It is especially unlikely that further investments in higher ed will boost Nevada's economy when the Universities spend so much already and produce very little in return.

UNLV spends $19,000 per FTE student and only graduates 48 percent of the full-time students within 8 years. Meanwhile, UNR spends over $34,000 per FTE student and graduates merely 54 percent after 8 years.

At the Regents meeting I pointed out that UNLV and UNR spend more money per-pupil and employ more adults per-pupil to do the same job. According to Dr. Jay Greene’s report “Administrative Bloat at American Universities” both UNLV and UNR grew their employees faster than the student body between 1993 and 2007. UNLV saw inflation-adjusted spending per-pupil rise 59 percent while UNR saw spending rise 21 percent.

According to the U.S. Department of Education, UNLV’s inflation adjusted credit-hour costs have risen 90 percent while fees increased a whopping 771 percent over the last decade. At UNR the increase was 80 percent and 290 percent respectively.

How can anyone consider UNLV or UNR to be a wise investment? Spending more and more money to employ more adults to do the same shoddy job will not grow our states economy. At best it will do nothing at all. At worst, it may actually retard or reverse economic growth.

My two minutes of comment were up at that point, but the damning facts keep piling up. The Lied Institute at UNLV released a rather shoddy report calling for more “investment” in higher education, pointing two Arizona and Utah as states to emulate. I've blasted the report to pieces here and here.


Failing to conduct even the most basic literature review or even analysis on state spending, the Lied Institute researchers failed to notice that Nevada already spends more on education and research per-pupil than Utah and Arizona (see figure 11 on page 29).

In particular the Lied Institute researchers and Brookings Institution Mountain West have called on lawmakers to emulate Arizona State and the University of Utah.

ASU spends $28,000 per-pupil on “Education and General Expenditures per FTE” according to the Education Trust. That is $6,000 less than UNR, Nevada’s flagship university. As much as Arizona State is made fun of for their low-quality, they spend less and graduate more of their own students than UNR.



The University of Utah does in fact get the lion’s share of resources in Utah – spending over $50,000 per FTE. Embarrassingly, their 6 year graduation rate is 51 percent. They make Arizona State – a university lampooned by everyone including SNL and the Daily Show - look like Harvard AND a bargain.



Worse still may be the quality of, at least some, of the faculty in Nevada. One professor employed at the University of Nevada – Reno wrote me via Facebook to accuse me of believing what I do because I’m paid to believe it. Of course he “believes with all [his] heart in the mission of the university” and is “proud of [the university's] progress” and success.

After pointing out the irony – he has called for higher taxes to fund his own employer where he makes $143,000 a year – I asked him exactly what the university’s mission was and what does he mean by success.

Just 12 percent of UNR’s students are considered low-income (Pell Grant recipients) and just 11.6 percent are underrepresented minorities (white non-Hispanics make up just 56 percent of the population in Nevada and less than half of the K-12 student population).

I wondered if the mission was to spend $34,000 a year to graduate half the students within 8 years – the vast majority of whom were middle/upper class and white.

If that his definition of success and progress, then I think the Klan might agree with him. Or at least the Joker...

Nevada needs to rethink the higher education paradigm because being bloated, wasteful and ineffective is no way to grow an economy.

Vouchers 2.0

My friend and mentor, Dr. Mathew Ladner, released a report last week on a brilliant idea called "Education Savings Accounts."

The idea is very simple: Give parents the money and let them decide how best to use it for their child's education.

Instead of directly funding local public schools, the money is deposited into a privately managed account. Parents can withdraw the money to pay for approved expenses such as public school, private school, private tutoring, school supplies, or even invest the money in a college savings account (529 account) to pay for future college tuition. Better yet, you could do all of those things with the money in the same year.

Why not attend a public school for art and music and a private school for college level math and science? Why not used any potential savings to hire an after-school tutor at one of the private tutoring joints like Kaplan and even save the remaining money in an account that grows overtime so your child can afford college tuition?

Since parents have multiple options of how to use the money, schools and tutors must not only compete by offering a superior service, they must also compete on price.

Best of all, since the money is given to the parent - and the parents are then given a host of options on how to use the money - the ESA is most likely constitutional in Nevada. In fact, the idea avoids all the constitutional problems raised by the Arizona Supreme Court when they struck down the special needs voucher program in 2009.

Arizona, btw, is the only state with a Blaine Amendment (which prohibits public funds from being used to subsidize religious schools and organizations) that has also had a voucher program declared unconstitutional.

Dr. Ladner talks about the idea a little more, plus a little historical background on progressive secular education, over at jaypgreene.com