What businessperson would ever continue to fund an investment that was not generating a positive return?
None would. If he or she did, they would be out of business—thankfully. That’s one of the benefits of capitalism. Businesses that don’t provide the goods and services that customers want, will fail. Thus, valuable resources are spared—for entrepreneurs who do provide products and services that people want.
The great economist Ludwig von Mises pointed out the state’s problem many years ago: It cannot calculate. Indeed, the stories from the Soviet Union’s glory days are legion. Soviet factories would produce thousands of items that no one wanted. But the factories were never shuttered, and the resources continued to be wasted.
The socialist community, Mises pointed out, “must cross the whole ocean of possible and imaginable economic permutations without the compass of economic calculation.”
For socialists and statists, “all economic change, therefore, would involve operations the value of which could neither be predicted beforehand nor ascertained after they had taken place. Everything would be a leap in the dark. Socialism is the renunciation of rational economy.”
Nevada’s public schools operate the same way, having renounced rational markets. And now Kenny Guinn and his big-government-loving friends want more taxpayer money to throw at the public school system—though it produces a substandard product and is unaccountable to the consumer marketplace.
When Kenny Guinn was running Southwest Gas Company, that company would have gone broke if he had followed the same principles he’s trying to impose now—channeling all available revenue into unprofitable ventures in order to “fix” them.
But now, the governor wants to bankrupt Nevada’s taxpayers in order to shovel more money to the public school system with the idea that education will improve if the public schools have more money. It won’t work.
The Clark County school system is the 6th largest in the country and “serves” three-quarters of the state’s K-12 students. The district chews through over $1 billion a year, but yet even with all that money, 30 of its schools are listed as “low-performing” and only three Clark County schools earned the “high-performing” designation. Pouring money into an unaccountable monopoly does not improve the product.
Guinn’s tax supporters continue to cry out that Nevada’s taxpayers are too stingy, that education funding should be increased to the national average. According to these folks, if funding for Nevada schools were increased to the national average, the schools would be fixed.
Really? It turns out that Nevada already spends the national average per student. As assemblyman Bob Beers points out on his Nevadabudget.com website, Nevada schools account for expenditures for books, chairs, desks and curriculum from their construction budget rather than from the operating budget, like most states. Thus, when the operating and construction budgets are combined, total spending per student in Nevada ranks 24th. Nevada teacher salaries (with benefits) are ranked 15th.
So the teachers and the school districts are getting plenty of taxpayer money. But are their customers satisfied? Hardly. Thirty-four states had higher test scores than Nevada, and 6,136 Nevada students (6.3 percent) dropped out of school during the 2001-2002 school year. And it turns out that’s the third best performance (third lowest percentage) since 1988-1989.
Lots of dropouts, low test scores, and Guinn thinks more money will solve these problems? More money per student is spent in New York, New Jersey, District of Columbia, Pennsylvania, Delaware and Rhode Island and those states have lower test scores than Nevada.
Public schools throughout the country are not performing, but are kept alive with an endless stream of taxpayer money. As Peter Brimlow points out in his book, The Worm in the Apple, “Public universities and colleges spend about $1 billion a year on ‘remedial education’—teaching students things they should have learned in high school.”
In a recent poll conducted by Public Agenda, 59 percent of college professors rated public schools as fair or poor. Most employers (58 percent) believed public schools are doing less than a good job. Nearly three-quarters of the employers rated the writing skills of public-school graduates as only fair at best. Yet in the same poll, 76 percent of teachers said “It’s a bad idea to tie financial incentives for teachers and principals to student achievement.”
If Kenny Guinn really wanted to do something for Nevada’s kids, it wouldn’t be a huge tax increase for state-run education.
He would get state government out of the education business.
Doug French, executive vice president with a Southern Nevada bank, is a policy fellow with the Nevada Policy Research Institute.