Friday, July 29, 2011

Dr. Debt Ceiling: -or- how I stopped worrying and learned to understand the Tea Party

Kabuki-debt-ceiling-theater aside, Democrats and Republicans have long ago drawn their swords from the sheath regarding limited government vs. state, spending vs. tax, etc.. Each side betting no one will cross swords. Meanwhile each side compromising their way to spending the country into oblivion.

Then came along the Tea Party that bellied up to the bar and called the bet. Oh yes! The Tea Party decided to cross swords with the both of them! Now its “on”.

Sunday, July 24, 2011

Politicos and Rent Seekers: Manipulating Variables

What if rent seeking agents, over time, have discovered that consolidating gives them a higher probability of manipulating variables. However, consolidating under one special interest umbrella might be considered or challenged as collusion. A political party, meanwhile, identifies the consolidation strategy of rent seekers attempting to manipulate variables and purposely allows the political party to be a stealth collusion vehicle.

Suppose a political party seeking control actively recruits a massive coalition of special interest groups aka rent seekers. Each group has its own interest and those interests are quite diverse. The cohesive theme of the political party is not some common thread of ideology, the theme becomes a common thread of "funding".

How does a rent seeker find funding and/or special conditions? Funding and/or conditions are secured through politicos operating through the mechanism of government. Hence a particular political party deploys a strategy of purposely attracting diverse rent seekers then acts as the consolidation agent offering funding through politicos operating through the mechanism of government. That the political party seeking control is not acting on ideology to consolidate support, rather the political party becomes a stealth mechanism of collusion leading to funding to consolidate support.

Considering the above proposition, then funding and/or special conditions must flow from the particular politicos of the political party through the mechanism of government to the special interests. Any threat to the stealth collusion, meaning any disruption of funding, reduction in funding, and changes in special conditions must be averted. If a threat appears to the stealth collusion, the political party loses control and the rent seekers lose the ability to manipulate variables.

Lets assume for a moment that such a political party acts as a stealth collusion mechanism for rent seekers. Further assume that the political party wins election and gains the objective it seeks of control. The next step would be for the politicos of said political party to immediately and generously bestow funds and/or special conditions to the coalition of rent seekers. One would then assume a massive spike in government spending with such spending falling resoundingly with the rent seekers.

However, the model of stealth collusion of a political party purposely consolidating rent seekers with the aim of manipulating variables requires constant and consistent funding. Further, the rent seekers can not sustain "growth" unless additional spending is funneled in their direction. Hence a spike in government spending as political pay back for supporting the political party must be followed by additional spending to satisfy the rent seekers and the rent seekers' particular constituency.

The model of stealth collusion of a political party purposely consolidating rent seekers quickly becomes unstable as other people [politicos] spending other peoples' money [taxpayer] on a recipient class [rent seeker] soon becomes an un-financeable proposition (run out of other peoples' money). When the spending run-up becomes clear to James and Jane Goodfellow and government finances become increasingly precarious, then popular support swings to a funding cut back. However, when funding cut back proposals emerge and before such funding is cut back the rent seekers, acting in their own self interest, spend money and manpower in organized protests against funding reductions.

The eventual funding cut back then causes the political party, sponsoring the stealth collusion, to pick winners and losers among the consolidated rent seekers. The picking of winners and losers not only causes decent among all rent seekers making up the cabal, but dissention occurs between the final chosen winning and losing rent seekers.

One must consider if the above theoretical example does or does not seem familiar to current affairs.

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Social Security: can one lose a lost horizon?

Certain politicos are currently shaping a political argument that Social Security is an item that should be excluded regarding any debt reduction/debt ceiling negotiations. That Social Security’s mere existence is of benefit to the “greater good“.

‘Senate Majority Leader Harry Reid, D-Nev., attacked the bill as a "radical plan to kill Medicare and Social Security," and said House Republicans needed to know it was dead‘. (1)

Don’t reduce benefits but reduce benefits?

The fall back position of those advocating no reductions in Social Security benefits is that any changes to Social Security, if they must occur, the changes should come in the form of raising the retirement age qualification [which in fact is a reduction in benefits]. (2)

The history of don’t reduce benefits but reduce benefits.

When Social Security was first proposed by Franklin Roosevelt the plan would be completely voluntary. The plan is no longer voluntary and hence the voluntary benefit became a coercive state mandated benefit. However, one would only be taxed at 1% of the first $1,400 of income. Sorry, today the tax is 7.65% of the first $90,000.

Then again, your contribution would be tax deductible and hence some other tax relief would be gained. Sorry the contributions are by and large no longer tax deductible.

At least their would be a Trust Fund and the Social Security contribution would be sequestered and not part of the general operating fund. Under the Lyndon Johnson Administration the Trust Fund corpus was moved to the general fund and subsequently spent.

Well, at least the future income derived from Social Security would not be taxed. Ops! Under the Clinton Administration the retirement income proceeds of Social Security became taxable of which 85% can be included as income based on the total income of the recipient.

Who created a plan that doesn’t reduce benefits but reduces benefits?

Was Social Security just so much pie-in-the-sky dreamed up by the public who wanted a secure retirement? That in the end the public outcry for retirement security was just so much populist blather? Sorry, no. The public demanded no such plan. Really? Oh yes, almost every state-run retirement plan in the world is a concoction of politicos and by no means a grass root phenomena. That’s right, state run retirement plans are the brain child of politicos. (3)

Why were we not warned of a plan that doesn’t reduce benefits but reduces benefits?

Due warning was given. How so? W.R. Williamson, Travelers Insurance Company actuary testified before the House Ways and Means committee in 1935 explaining how the plan would incur deficits. That a major burden of deficits would be passed onto [in his 1935 actuarial estimate] to those in 1965 or 1980. (4) (5)

Can one lose something that was lost in the first place? Can one consider value lost where no value exists?

Exactly who values Social Security the most? If Social Security checks can not be sent out 08/02/2011 without raising the debt ceiling exactly where is the value to James and Jane Goodfellow? Is the value increasing debt? Increasing debt can be considered “value”? (6)

Arguably the “value” of Social Security is an illusionary political value of, by, and for the politico. How so? By convincing James and Jane Goodfellow that value exists, and that somehow, someway a concrete, sustainable, and asset based value is being taken away [that indeed represents value] politicos merely extend and pretend the illusion of Social Security.


Boehner pulls out of White House debt talks., 07/22/2011,

(2) The red-hot debate over raising the retirement age,, 08/02/2010

(3) Carolyn L. Weaver, The Crisis in Social Security: Economic and Political Origins, (Durham, NC.: Duke Press Policy Studies, 1982), p.33.

(4) Statement of W.R. Williamson, Assistant Actuary, Travelers Insurance C0., Hartford, Conn., House Ways and Means Committee, January 1935, pp.1013, 1014.

(5) Statement of W.R. Williamson, Assistant Actuary, Travelers Insurance C0., Hartford, Conn., House Ways and Means Committee, January 1935, p. 1014.

(6) Obama: Debt Ceiling Impasse Threatens Social Security, Veterans, Medicaid Checks. ABC news, 07/12/2011,



Thursday, July 21, 2011

Some federal workers more likely to die than lose jobs - USA Today

"Federal employees' job security is so great that workers in many agencies are more likely to die of natural causes than get laid off or fired, a USA TODAY analysis finds.

Death — rather than poor performance, misconduct or layoffs — is the primary threat to job security at the Environmental Protection Agency, the Small Business Administration, the Department of Housing and Urban Development, the Office of Management and Budget and a dozen other federal operations.

The federal government fired 0.55% of its workers in the budget year that ended Sept. 30 — 11,668 employees in its 2.1 million workforce. Research shows that the private sector fires about 3% of workers annually for poor performance, says John Palguta, former research chief at the federal Merit Systems Protection Board, which handles federal firing disputes.

The 1,800-employee Federal Communications Commission and the 1,200-employee Federal Trade Commission didn't lay off or fire a single employee last year. The SBA had no layoffs, six firings and 17 deaths in its 4,000-employee workforce." (1)

Link to the entire USA Today article appears below:


(1) Some federal workers more likely to die than lose jobs, Dennis Cauchon, USA Today, 07/19/2011

Monday, July 18, 2011

“Cutting Spending in the Tax Code” and “Tax Expenditures”.

Milton Friedman’s fourth category of spending is basically: other people [politicos through the mechanism of government] spending other peoples’ money [taxpayers] on other people [recipient class]. An implicit and explicit assumption is that “other peoples’ money” was produced privately, temporarily owned privately, then transferred to state from private hands via tax. That is, the public sector only exists due to a transfer payment [tax] from the private sector.

What if a certain subset of politicos have an alternate view of “other peoples’ money”, in that, the money was never owned privately? Making this change in assumptions, the fourth category of spending becomes: other people [politicos] spending the state’s money [state owned] on other people [recipient class].

How could the money be viewed as never being owned privately? One must consider the following politico talking points: “cutting spending in the tax code” and “tax expenditures”. These talking points have been used extensively in the recent overall debt ceiling debate/spending debate. The two talking points are referring to tax deductions/tax preference items of one sort or another, which in essence are being referred to as a form of “spending/expenditures”.

Cutting spending in the tax code aka tax expenditures comes from the point of view that leaving certain sums of money in private hands, via the tax code, is an “expenditure” of the state’s money. The implicit assumption is that the money was the state’s money to begin with and the state is spending its money upon a recipient. Stated alternatively, the state is giving back something it had ownership of in the beginning.

Consider this point: “cutting spending in the tax code” and “tax expenditures”, viewed as the state spending its money upon a recipient, would then mean all monies were the state’s to begin with and whatever the state deems necessary for the recipient to posses is then determined by the tax code. That is to say, the money remaining for James and Jane Goodfellow is not determined as a transfer from the private sector to the public sector, rather the Goodfellow’ allowable remainder money is a transfer from the public sector [ownership sector] to the private sector [recipient sector].

Saturday, July 16, 2011

Beguiled: “putting wars on a credit card”.

Regarding the current debt limit debate between Republicans and Democrats occupying media headlines, an old taking point has been removed from the self and dusted off for an encore performance: putting two wars on a credit card along with the Bush Tax Cuts lead to the current $14 trillion national debt.

Concentrating on the assertion “putting wars on a credit card”, the implicit and explicit assumption is that war should be paid for as we go. The statement eludes to past wars somehow, someway having been paid for on an as-we-go-basis. That somehow the Iraq and Afghanistan wars [or war on terrorism] was an outlier in that it was a war(s) financed through debt whereas prior wars were not associated with debt.

Looking at the chart above, one notes the explosion in spending around 1915 and again around 1941. Those two episodes coincide with World War One and World War Two. The explosion in spending was done so in 1915 and 1941 on a pay-as-you-go basis? Wrong! Looking at the second chart [below] one can see an explosion in national debt beginning in 1915 and 1941.

Politicos like to frame an argument. The framing of a politico argument by no means requires fact. In many cases, the politico depends upon a notional and fact less based argument to make a political point. Hence “putting wars on a credit card” is somehow one of the prime movers of our particular national debt level at the current time, and that financing war through debt is something that never has happened except during the Iraq and Afghan wars, that this case of war is an outlier and should have been paid for on a pay-as-you-go basis like other past wars……is nothing more than fact less politico talking point.

There is no doubt that "war" in most cases is financed. The a financed war can certainly add to national debt. However, to single out a particular war as being the only war ever to add to national debt is sophistry.

Therefore, when one hears the talking point “putting wars on a credit card” in regards to the current national debt level one should disregard the argument as the implicit and explicit assumption that no prior war was financed through debt which is baseless and fact less. The attempt to make current wars some outlier of debt accumulation is to be beguiled.




Tuesday, July 12, 2011

South California? Yes, the 51st state!

"Jeff Stone, a Riverside County supervisor from Temecula, says he wants 13 of the state's mostly conservative counties to break away and become "South California".

The proposed South California would be made up of Fresno, Imperial, Inyo, Kern, Kings, Madera, Mariposa, Mono, Orange, San Bernardino, San Diego, Tulare and Riverside counties. That totals about 13 million people.

Riverside County's Board of Supervisors will consider the proposal tomorrow, according to the Los Angeles Times. If the board approves the plan, leaders will create a framework for secession and then host a statewide summit on the issue." -

Link to the entire article appears below:

Update 07/13/2011:

Government Sponsored Structural Unemployment?

If one reads the Richmond Federal Reserve essay The Rise in Long-Term Unemployment, Potential Causes and Implications (see link below) and peruses Table 1: Demographic Differences in Unemployment, the following observations are apparent:

(a) educational attainment clearly yields different average unemployment rates. Higher education levels yield lower unemployment rates,

(b) the unemployment rate in the construction sector exceeds 10%. (1)

Unemployment by Industry

By industry, construction has the highest unemployment rate. The unemployment rate in construction is 10.3% and the share, of which, that is long term unemployment is 42.8%.

Educational Needs by Industry

The construction sector educational attainment/needs are exactly what dynamic? Could not find a U.S. breakdown however found this breakdown: Employment Snapshot - Construction, New Zealand Department of Labour. (2) One can see from the New Zealand report that educational attainment/needs in the construction industry is heavily weighted to unskilled labor.

Government Sponsored Structural Unemployment?

If you make the assumption that the construction sector requires many low skilled workers for much of its needs, and you factor in a government induced residential/commercial construction bubble, then was a group of workers [some subset] then induced to skip skill enhancements [vocational school, etc.] to enter a low skill occupation? That is, why absorb the cost of skill enhancement when a relatively high paying job awaits requiring low skills?

Government Failure

Considering the above proposition, and now that politicos point to structural unemployment and the need for government sponsored retraining, is the politico argument in essence a sub-government failure of the the original government failure: government sponsored cheap money bubble along with government induced social engineering schemes related to mortgage attainment leading to construction bubble resulting in structural unemployment? (3)

Stated alternatively, that a rise in structural unemployment, to some extent, is related to other politico failures through the mechanism of government. And, on queue, the fix to the politico failure is another politico program [government sponsored retraining].





Thursday, July 7, 2011

Public School Test Cheating: Extend and Pretend?

“Atlanta: Award-winning gains by Atlanta students were based on widespread cheating by 178 named teachers and principals, said Georgia Gov. Nathan Deal on Tuesday. His office released a report from the Georgia Bureau of Investigation that names 178 teachers and principals – 82 of whom confessed – in what's likely the biggest cheating scandal in US history.

This appears to be the largest of dozens of major cheating scandals, unearthed across the country. The allegations point an ongoing problem for US education, which has developed an ever-increasing dependence on standardized tests.”

‘The Atlanta cheating scandal also offers the first most comprehensive view yet into a growing number of teacher-cheating allegations across the US, reports of which reached a rate of two to three a week in June, says Robert Schaeffer, a spokesman for the National Center for Fair & Open Testing, which advocates against high-stakes testing.

It's also a tacit indictment, critics say, of politicians putting all bets for improving education onto high-stakes tests that punish and reward students, teachers, and principals for test scores.

"When test scores are all that matter, some educators feel pressured to get the scores they need by hook or by crook," says Mr. Schaeffer. "The higher the stakes, the greater the incentive to manipulate, to cheat." ‘ (1)

Testing is a High-Stakes Political Bet that Punishes or Rewards?

Sounds very straight forward does it not? That tests are too monumental regarding rewards and punishments and hence cheating occurs. That the system and processes themselves causes the problem. Open and shut case: remove the testing rewards and punishment and hence remove the cheating.

The Counterintuitive Proposition

Public school K-12 education is a late stage collectivist model delivered through monopoly. Late stage collectivist models, by their very nature, suffer from rampant shirk, enrichment of the power purveyors, and abysmal results. Its the nature of the beast.

The beast has become a magnet for reports regarding its many, many problems. The mounting number of reports threatens the continuation of the collectivist model delivered through monopoly.

Given there is no way to reverse rampant shirk due to the base collectivist model in its late stage, and there is no way to reverse abysmal results due to the nature of late state collectivist models, and monopoly delivery is the only way to protect enrichment of the power purveyors……the natural result is final late stage collectivism and the process of making-up results.

The cheating or made-up results, rather than being a school system or teacher reaction based upon reward/punishment, may well be an entire model reaction. Stated alternatively, the US public school model, being a last stage collectivist model delivered through monopoly, in reaction to criticism and constant finger pointing, must raise results or else the model finally gets replaced by a free enterprise model with monies assigned to students [voucher proposition] rather than monies assigned to institutions.

Hence in order to extend, one must pretend.

Below is a link to an additional report: Investigation into APS cheating finds unethical behavior across every level - Atlanta Journal Constitution


(1) America's biggest teacher and principal cheating scandal unfolds in Atlanta - Christian Science Monitor

Wednesday, July 6, 2011

A Ten Minute Primer Regarding Politicos Framing the Tax Increase Argument: “The Required, the Needed, and the Necessary”.

Ruling Through Talking Points

Many politicos begin debate positions regarding Medicare and Social Security with the phrase “the government promised” or “government promises”. Other politicos begin debate propositions regarding Medicaid, welfare, food Stamps, and unemployment benefits with the phase “social safety net”.

What About Those Talking Points?

First and foremost, as pointed out long ago by Milton Friedman, government does not think, discuss, nor take action. Politicos through the mechanism of government think, discuss and take action. Hence government does not promise. Only politicos promise.

Next we have the proposition of the “social safety net”. There is a massive difference between a social safety net based upon the collectivist welfare state and the social safety net proposition being based upon a temporary nonrecurring stop gap measure.

Politico Promises, The Mechanism of Government, Political Time Horizons, Dependency Politics, and Other Peoples’ Money

One must explore the politico argument based upon required, needed, and necessary in relation to politico promises delivered through the mechanism of government based upon the welfare state dependency proposition. The politico proposition of required, needed and necessary is related to the concept of spend then tax. It is also very much related to politico promises made through the mechanism of government in conjunction with short term politico election time horizons. Finally the proposition does have an insidious long term politico horizon of developing a dependent constituency, through the use of other peoples’ money, that perpetuates the politico class aka ruling class.

Politico Promises through the Mechanism of Government

The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. - Thomas Jefferson

Politicos have long known that they can promise one group that poses a special political interest a benefit by extracting value from a highly diffused group of tax payers. One dollar from a million tax payers, taxpayers that will not lobby against a one dollar tax increase, can then be easily bestowed upon a group that is of special political interest to the politico or group of politicos. Hence we immediately create the politico promise by means of the government mechanism by merely having the mechanism of government extract tax and have the mechanism of government bestow a benefit elsewhere.

Politico Time Horizons

Politicos have a very short political time horizon which is known as the next election. Three basic strategies present themselves to politicos in relation to their short term political time horizon: (a) exactly what well organized political constituency [rent seekers] can be bestowed a benefit that will result in votes, campaign contributions, and campaign volunteers? (b) what prior politico produced dependency group can be framed as though the politico is protecting or enhancing the group all the while to gain votes [prior politicos producing a dependency groups for current and future politicos], (c) create a new dependency group.

Since the politico’s political time horizon is short, any promises must have an immediate effect to fit the short time horizon. Hence long run cascading economic unintended consequences of politico promises are of no interest to the politico as short term first stage economic consequences are the quest. One might go on to say that the politico has no real interest in the benefits or costs of such promises to the affected recipients or taxpayers financing such a plan, the only benefit of interest is to the politico is votes leading to election or re-election.

Dependency Politics and Other Peoples’ Money

Politicos long ago discovered the ability to generate dependency constituency by promising other peoples’ money. Stated alternatively, through notional propositions and verbal virtuosity the redistribution of income and wealth are championed by politicos to help the have-nots and build a vibrant middle class. However, the redistribution of income and wealth has nothing to do with helping or building. Rather, redistribution of income and wealth is merely a spending conduit for politicos. Stated alternatively, politicos need other peoples’ money in order to finance spending promises.

With the spending conduit in place politicos coercively, through the mechanism of government, take monies from one group and promise the monies to another group. The receiving group, known as the recipient class, is given the money based on two concepts: (1) build a government bureaucracy to distribute the money hence creating a dependent bureaucracy [employment-dependent and hence politico-dependent upon the continuation of the promise to distribute to the recipient class], (2) a recipient class that grows dependent on the promised money and hence dependent upon the continuation of the promise. The politico then creates two dependent political constituency groups.

The Required, the Needed, and the Necessary

The summation of politico promises past and present are now framed as required, needed, and necessary. Speeches, rallies, commercials, and essays are presented regarding the dire need for the promises. That the promises are required, needed, and necessary or else ominous consequences await.

In essence the required, need, and necessary politico argument is really an argument for the continuation of the politicos’ exercise in political constituency building with other peoples’ money. The dire and ominous consequences are in fact the particular politico or group of politicos defeat at the polls as the end of the spending means the end of the promise leading to the end of the political constituency purchased though other peoples’ money.


James and Jane Goodfellow and John and Jane Q. Public have long complained that politicians are crooks. What the Goodfellow’s and the Public’s need to do is finish the thought and confess they have been systematically duped.

The state is the great fiction by which everybody seeks to live at the expense of everybody else. - Frederic Bastiat, 1850.

Tuesday, July 5, 2011

"The Just Do Your Job Act"....The 792 Day Budget Train Wreck

‘So, after what is believed to be an all-time record 792 days of waiting, the Senate Democrats have finally produced a federal budget plan. Or have they? There's no public document yet, but earlier this week Senate Budget Committee Chairman Kent Conrad of North Dakota triumphantly announced: "We've reached an agreement after weeks of work."

If it's true, this would be big news. There was no Senate Democratic budget last year, and this year's budget was supposed to arrive no later than April. But here we are at the start of July and a budget is merely rumored to be arriving. Even the usually sympathetic New York Times and Washington Post were starting to poke fun at the Democrats for this dereliction of duty.

Mr. Conrad said the Democrats had a plan ready back in April that was "good to go." But he and his colleagues weren't at all ready to go because Democrats couldn't get a majority to agree on a proposal. Meanwhile, over in the House, freshman Rep. Ann Marie Buerkle introduced a bill titled "The Just Do Your Job Act," which cut off payments to the Senate Budget Committee until a budget is approved. In the two-year period without a budget, the Senate Budget Committee spent $12 million. "Even the Libyan government passed a budget," Ms. Buerkle decried.

The latest purported budget is expected to save $4 trillion over 10 years, with half of the deficit reduction coming from spending cuts and the other half from tax increases. Those tax increases are expected to include higher profits taxes on oil and gas companies; loophole closings for high-income filers; and perhaps a three-percentage-point increase in the income-tax rate on millionaires, which was in an earlier draft. The Bush-era tax rate cuts for those making more than $250,000 would be gone, too.

On spending, Democrats announced what they wouldn't cut rather than what they would. Medicare, Medicaid and Social Security are pretty much off the table, Sen. Barbara Boxer of California told the Hill newspaper. In other words, expect deep cuts in the military budget. Like Ms. Boxer said, Democrats "know what our priorities are." ‘

-- Stephen Moore, Wall Street Journal Political Diary 07/01/2011

Friday, July 1, 2011

Public School Shenanigans vs. the Voucher-Student-Consumer

A very interesting observation set forth by John B. Taylor in his book Getting Off Track, how government actions and interventions caused, prolonged, and worsened the financial crisis is the cheap money bubble created by the Federal Reserve set the stage for the financial shenanigans that followed leading up to the financial crisis. No cheap money bubble, no environment for shenanigans. That is a most excellent point. If you create an economic environment for shenanigans, don’t be surprised by the ensuing shenanigans. (1)

Taylor’s observation is applicable to public education in the United States. How so? Milton Friedman pointed out the environment for public education shenanigans long ago in his 1955 essay The Role of Government in Education. That is, Friedman introduced the voucher concept, in that, the money should follow the student rather than being bestowed upon the educational institution. By bestowing the money upon the educational institution you create an environment for shenanigans. (2)

Friedman further advocated that this new consumer, the voucher-student-consumer, should be free to choose what educational outlet he/she will spend the money upon. That is, Friedman advocated freedom of choice in schools so the new voucher consumer student had a competitive educational market place competing for his/her business. The student then having the ability to make exchange at the point of mutual self interest.

A basic problem in K-12 education and also in higher education is the failure of funds to reach the classroom (student). Money is funneled away to top heavy in numbers and well paid administration with Cadillac health care plans and defined benefit retirement plans. Many instructors, professors and classroom teachers also have first class benefit plans and the same defined benefit retirement plans. Moreover, professors have tenure (life time appointments) and teacher unions and organizations make it near impossible to remove non-performing public school teachers.

Further, top heavy administration, top shelf benefit plans, lavish retirement plans, and employee entrenchment are not going away any time soon. Nay, nay! The situation is perpetuated by public education employees along with their associated organizations and unions voting for, campaigning for, and providing funding for politicos that will continue the status quo. -Or- voting for and supporting politicos that will perpetuate the environment for shenanigans.

Going back to Milton Friedman, we need to revisit Friedman’s fourth category of spending: Other people (politicos), spending other peoples’ money (taxpayer), on other people (recipient class). The recipient class in this case being public education employees. Hence the environment for shenanigans is closely related to the “other peoples’ money” phenomena. (3)

However, the public education environment for shenanigans is to a major degree mitigated by a simple proposition set forth in 1955 by Friedman: the money should follow the student rather than being bestowed upon the educational institution. The voucher-student-consumer , now given the power to be a rational consumer [holds the purse strings with the freedom to choose], is going to demand that the money arrives at the classroom level for his or her education. A supply will quickly follow.

The voucher-student-consumer will quickly put an end to the shenanigans.


(1) John B. Taylor, Getting Off Track, how government actions and interventions caused, prolonged, and worsened the financial crisis.

(2) Milton Friedman, The Role of Government in Education.

(3) Milton Friedman, Four Catagories of Spending.