• /
    • Archives / March 2010

Archives For March 2010

Antitrust Exam Question: Do the Major Institutional Investors Have an Antitrust Problem?

Thom Lambert —  30 March 2010

The Wall Street Journal is reporting that major institutional investors — CalPERS, CalSTRS, the Teacher Retirement System of Texas, etc. — have collectively adopted a set of recommended practices that is “rankling” private equity firms. Had I not discussed the article in my Antitrust class, I’d use it as the basis for an exam question. Here are the basics:

Private equity funds are normally organized as limited partnerships, where the investors are the limited partners (i.e., they lack management control, but their liability is limited to the amount of their investment in the firm) and the managers that make investment decisions are affiliated with a general partner, whose liability is unlimited. The rights of limited and general partners are set forth in a limited partnership agreement. The limited partners — largely institutional investors like pensions, endowments, etc. — typically compensate the managers by paying annual management fees and allowing them to collect “carried interest,” which is a share of the profits of the fund’s investment (assuming that the investment reaches a minimum rate of return or “hurdle rate”). Because limited partnerships are creatures of contract, all these arrangements are agreed upon from the outset. So are the rights of the limited partners.

In the last few months, a group of major institutional investors, the Institutional Limited Partners Association (ILPA), promulgated a set of investor principles that call for certain caps on fees, increased disclosure, particular methods for calculating carried interest, and greater investor oversight. The ILPA has 215 members controlling $1 trillion in private equity assets. In addition, the ILPA seems to be soliciting other (non-member) private equity investors to endorse its principles.

On first glance, this resembles a buyers’ side conspiracy: Multiple “buyers” of investment services have agreed not to purchase from “sellers” who do not adhere to preferred terms, including preferred pricing terms. If that’s what’s going on, then the arrangement among the institutional investors violates Section 1 of the Sherman Act, even if the parties to the agreement collectively lack market power. (See Footnote 59 of Socony-Vacuum.)

Not surprisingly, the members of ILPA insist that they haven’t “agreed” to withhold investments from funds that decline to follow the recommended principles. Instead, they say, their principles simply “reflect suggested best practices and are intended to serve as a basis for continued discussion among and between the general partner and limited partner communities with the goal of improving the private equity industry for the long-term benefit of all its participants.” They further maintain that “the authors, sponsors and the groups … that have provided an endorsement of these Principles are not specifically committing to (nor seeking the commitment of) [sic] any private equity investor to each and every outlined term.” Thus, they conclude, their mutual endorsement of a set of best practices does not constitute a contract, combination, or conspiracy to withhold investment funds from fund managers who fail to adhere to the recommended practices.

According to the Journal, though, the most prominent institutional investors are using these widely endorsed principles for more than just “a basis for continued discussion” with fund managers:

The nation’s two largest pension funds — the California State Teachers’ Retirement System and Calpers — have held discussions with each other about whether to insist that private-equity firms agree to the principles, according to people familiar with the talks. Texas Teachers has told at least one firm that the principles were non-negotiable and had to be accepted, according to people familiar with the situation.

Lawyers for private-equity firms also point to a public remark made by Calpers spokesman Clark McKinley in trade publication Pension & Investments. “We are collaborating with other investors in an effort to get better alignment with private-equity partners, including more favorable fees. This requires more than a unilateral action by any one investor,” Mr. McKinley said.

If the point of the principles is merely informational — i.e., to set forth a set of best practices that will minimize agency costs — then why solicit public “endorsements” of the principles? On this question, Mr. McKinley’s remarks are pretty revealing. They suggest that a single investor’s insistence on adherence to the principles wouldn’t work; fund managers would find other, more accommodating investors. But if all the major institutional investors adopted the same stance, the fund managers might have to give in to their demands. Could we infer an Interstate Circuit-like agreement from institutional investors’ parallel action in adhering to the principles?

If there’s no “agreement” to adhere to the principles themselves, could liability arise from the concerted action of signing on to the principles, thereby creating a “facilitating device”? I’m analogizing here to the data exchange cases, where the mere exchange of cost or price information among competitors can create antitrust liability even if there’s no agreement to adhere to specified prices. Data exchanges, unlike horizontal agreements to adhere to price schedules, are not per se illegal; instead, they are evaluated under a rule of reason that looks hard at the nature of the information exchanged (the degree to which it could facilitate price-fixing) and the structure of the market in which the competitors participate (the degree to which it is susceptible to cartelization). If a court were to analyze the principles as a facilitating device, it would likely examine their content — e.g., the degree to which they are specific enough to form the basis for price-fixing — and the “cartelizability” of investors in private equity funds. Under such a rule of reason analysis, liability is unlikely.

Even if a court were to conclude that actual price-fixing had occurred, it’s hard to imagine that it would impose liability on the institutional investors:

Buyout executives acknowledge that even if there are legal problems with ILPA members’ conduct, there is likely to be little sympathy for the plight of private-equity firms.

“Even if there was an antitrust problem from a legal perspective,” said one senior private-equity executive at a large firm, “I don’t see the Justice Department coming to the rescue of Henry Kravis and Stephen Schwarzman.”

Still, I think, this arrangement could form the basis for a pretty good Antitrust exam question.

UPDATE: Danny Sokol pointed me to this release from law firm Bingham McCutchen (or is it just “Bingham” now?). The antitrust lawyers there appear to agree that there are some tricky antitrust issues here.

In antitrust, markets, private equity
permalink

"So when you listen to economists, you're listening to amateurs"

Josh Wright —  29 March 2010

So says David Zaring over at the Conglomerate — at least when it comes to the topic of regulation.  I don’t buy it.   Anyway, here’s the complete quote for context:

Economists love to suggest new regulatory structures (or, more often, why they will not work).  But, of course, they have no training in regulation, and the training they do have – in quantitative data analysis – has nothing to do with regulation.  So when you listen to economists, you’re listening to amateurs.  But perhaps everyone is an amateur in making governance proposals?  Consider political scientists.  Sure, they should understand how regulation works.  But I don’t think they do in a “here’s the proposal you ought to enact” kind of way.  At least, I haven’t seen much of that from them, and I suspect it is because they study governance institutions as they actually perform, not as they should be (and also because they are largely trained in quantitative analysis).  So that would seem to make room for lawyers, who do prescriptive work and do understand governance … but, then, there’s the question about whether those prescriptions are based in an identifiable skill set or just the musings of smart people.

So the more general point, and more interesting, point that is the subject of the post is the possibility of an “expertise gap” with respect to institutional design that neither lawyers, nor political scientists nor economists are properly trained to do.  Maybe.  Though there doesn’t seem to be any shortage of opinions from those groups on precisely how the Consumer Financial Protection Agency, for example, ought to be structured.

From reading the post, David might be surprised to hear that economic training (at least you know, back in the good old days) is about more than fixed point theorems and clustered standard errors.   Anyway, one thing that economists are and have traditionally been trained to think about is incentives.  For example, incentives within organizations like teams, or firms, and yes, even government agencies.  Of course, there is also public choice.  Here’s an example of economists thinking about how to organize economists in competition agencies.  Economists think hard about incentives of individuals and groups, and these insights can be incredibly useful for thinking about the way that regulation works — not just measuring its consequences.

Now — of course — offering useful insights about how different regulatory design might influence the incentives and decisions of various stakeholders is not the same as designing the regulatory structure.  No doubt that both political scientists and lawyers offer some valuable inputs to the production function as well.  But the claim that economic training “has nothing to do with regulation” seems wrong to me.  So does the claim that most modern economists spend their time talking about why regulatory proposals won’t work.   Of course, as an economist who has spent some time talking about why the CFPA proposal won’t work, perhaps I’m not the right person to ask.

In business, corporate governance, economics, financial regulation, regulation
permalink

"Like A Rain Dance That Produces No Clouds"

Josh Wright —  27 March 2010

My colleague Tom Hazlett, along with George Bittlingmayer and Arthur Havenner, provides some economic wisdom on why they don’t call it stimulus anymore:

Counter to the predictions put forward a year ago by the Administration, when it claimed that “more than 90 percent of the jobs created are likely to be in the private sector,” U.S. companies employed 3.9 million fewer workers in January 2010 than they did one year earlier. Public employment bucked the trend, staying constant even as governments contended with sharply reduced tax revenues. While the jobs held by those 22 million public workers helped support many families, the “stimulus” failed to trigger private sector employment growth.

In late 2009, the Congressional Budget office pegged employment gains due to the American Recovery and Reinvestment Act (A.R.R.A.) of 2009 at 600,000 to 1.6 million, while estimating its full cost at $862 billion.

This implies a price tag, at the median estimate, of about $800,000 per job. These forecast job gains are not permanent, but temporary. The Administration’s January 2009 forecast was that the A.R.R.A. was needed to reduce the path of unemployment for five years, when the unemployment rate – if we did nothing – would decline to the level projected with the “stimulus.” Using this five-year time horizon projects annual costs of approximately $160,000 per job.

That’s a rich bonus payment. The system is borrowing heavily to finance it. Deficits last year and this are running at 10 percent of GDP, easily the largest in post-WWII U.S. history. They are projected by CBO to remain at three percent of GDP in 2020 – when over 3% of GDP will be devoted to simply paying interest on the national debt.

The term “shovel ready” seems to have disappeared from the language just as quickly as it arrived. The idea that greater public borrowing would leverage capital expenditures to put the U.S. back to full employment is now replaced by boasts that Washington has saved Albany, Springfield and Sacramento from laying-off government workers. Whatever the value of that gold-plated jobs program, it is not “stimulus.”

Like a rain dance that produces no clouds, we are now into our fourth round of federal deficit creation – the automatic “stabilizers,” followed by the Bush (2008), Obama I (2009), and Obama II (2010) versions. With each dry day, the deficit dancing intensifies. When the rain finally falls, we will be told that the recovery is a tribute to the Keynesian Gods. But it’s already clear that something has gone wrong: the “stimulus” chant has fallen silent. Our dance on a fiscal cliff has lost its theme music.

In economics, markets, stimulus debate
permalink

The Market Responds

Michael Sykuta —  25 March 2010

The final vote hasn’t even been taken to “fix” the omnibus (or ominous) health care “reform” legislation that President Obama signed into law this week, and already the first volley of the market’s response has been sounded.  Today’s Wall Street Journal Online reports that “Prices of most Treasury notes and bonds were lower after relatively tepid demand … sending the 10-year note’s yield to its highest level since June.”

Seems the prospect of a $1 trillion dollar health care program and the debt it will require (despite the fabled “analysis” by the GAO), is already beginning to weigh on the suppliers of investment capital.  The WSJ piece goes on to quote James Caron of Morgan Stanley as saying, “The weightiness of supply [of treasuries] finally broke the camel’s back.”

No, I am not surprised. Nor should be anyone who has kept a clear view of the federal government’s spendthrift policies, exacerbated since the beginning of the Obama era. The only surprise may be at how quickly the market has reacted to the flood of federal debt offerings that have been stacked up on the horizon.

What’s in this for you, dear consumer? Higher interest rates and reduced access to credit. Now that isn’t necessarily a bad thing. Most Americans could use a diet from their leveraged spending habits. However, reduced credit does mean reduced consumption–i.e., lower economic growth. And it does mean that some productive investment is less likely to happen as higher interest rates reduce the present value of investments. This, dear consumer, is what is meant by “crowding out.”

The first volley is fired. There is only so much General Bernanke can do to protect the ramparts. Barring significant reductions in federal spending, look for continued “tepid demand” and commensurately higher interest rates over the next several months. Even if you aren’t one of those being directly taxed to support the new health care “law of the land,” you will be paying for it one way or another.

In economics, markets, politics, Sykuta
permalink

Maybe We’ll Get Us a Calorie Czar!

Thom Lambert —  24 March 2010

Yesterday, Todd predicted that Obamacare will result in greater government involvement in heretofore private decisions that impact health. Since the government is now going to pay (via insurance subsidies) for many more Americans’ health care, it has a much stronger interest in how they live. So do we taxpayers who must pay for the government’s largesse. As Todd explained:

Once I am paying for your health insurance, I suddenly care a lot whether you … eat that Big Mac for lunch instead of the salmon salad. In today’s new America, I suddenly really care how much junk food the people making less than $88,000 eat — I pay for every Dorito that crosses their lips. … (Evidence this is our future comes from the UK, where 75% of people in a recent survey supported greater government control over individuals’ food choices.)

This need to control people’s lifestyle choices in order to constrain spending on their health care explains Section 4205 (“Nutrition Labeling of Standard Menu Items at Chain Restaurants”) of the recently enacted health care legislation. Today’s New York Times and Wall Street Journal are both reporting on this little-discussed provision of the legislation. As both papers explain, the law requires chain restaurants (20 or more outlets) to display calorie information on menus, at the order counter, and at the drive-through.

Specifically, the restaurants must display “the number of calories contained in the standard menu item, as usually prepared and offered for sale” and “a succinct statement concerning suggested daily caloric intake, as specified by the [FDA] by regulation….” In fact, the restaurants must provide the caloric content of each item on a salad bar: “[I]n the case of food sold at a salad bar … a restaurant or similar retail food establishment shall place adjacent to each food offered a sign that lists calories per displayed food item or per serving.”

I don’t know how effective this rule will be in getting people to eat more healthfully, but I suspect it will be fairly costly to implement. I’m also skeptical of the informational value of a “succinct statement concerning suggested daily caloric intake” — if such a thing is even possible. To generate a number resembling an individual’s optimal caloric intake, you would need to know, at a minimum, the person’s gender, age, height, weight, and activity level (see, e.g., these calorie calculators). I therefore can’t see how the FDA could formulate a “succinct” statement of optimal calorie levels. Of course, the folks at FDA are experts. Maybe they’ll find a way.

There has been some talk recently about whether the Obama administration has given up on the “libertarian paternalist” approach advocated by regulatory chief (and Nudge co-author) Cass Sunstein. Section 4205 suggests that it hasn’t.

While I’m skeptical that it will work, I sure hope it does. Otherwise, our dear leaders are likely to jettison the libertarian part of their libertarian-paternalism, and those nudges will become shoves.

In health care reform debate, markets, regulation
permalink

A proposed amendment to our Constitution

Todd Henderson —  24 March 2010

Ask any conservative what the problem with America is today, and the answer you will get is government spending. But ask that same conservative, or any conservative for that matter, what to do about it, and the shoulders will inevitably shrug. Politicians, including conservatives, simply cannot be trusted when they get control of the purse strings. The problem is a familiar one in law and elsewhere — it is called the pre-commitment problem. Political leaders can promise to cut spending, but can’t resist reneging on the promise when in power; governments can promise not to bail out banks, but know that they must when the manure hits the fan. (For instance, Fannie Mae bonds explicitly disclaimed  any government guarantee, but the bail out of Fannie Mae continues to cost us tens of billions of dollars.)

There are solutions. The most famous is when Odysseus lashed himself to the mast of his ship to resist the temptation to steer toward the Siren’s songs. What Odysseus did was raise the costs for any future action, therefore making it less likely. So how can we raise the cost for congressional profligacy?

We cannot just hold ourselves to the commitment to vote the bums out of office. This just moves the pre-commitment problem back one step and puts it squarely in our lap. Sitting here today, I might want to reduce the size of future government, but when the choice is to cut my benefits, it may be harder to vote that way. In addition, we might all collectively lament the growth in government (rising from less than 10 percent of GDP 100 years ago to over 40 percent today), but we might also all individually value the pork our representatives bring home to our district.

So what about a constitutional amendment setting a limit on the size of government? Our founders tried to do this, but instead of setting a dollar or percentage limit, they used enumerated powers. They thought telling the government what it could do (and what it implicitly could not do) would constrain the Leviathan. But this didn’t work. It worked for a time, but it was an imperfect pre-commitment device, as it has been eroded by hundreds of years of court rulings cutting the other way. Instead of telling the government what it can and cannot do, what about telling the government how big it can be.

I propose a new amendment to the Constitution:

“Spending by the federal government shall not exceed 25 percent of the Gross Domestic Product in that year, except in cases where Congress has declared war against another sovereign nation and such additional spending is essential to the defense of the Homeland.”

According to constitution expert Tom Ginsburg, this sort of constitutional provision would be unique in the world, which is odd since the growth of government is a universal problem. (Switzerland has a balanced-budget provision and a limit on tax rates that comes close.) But this wouldn’t be the first time that America has blazed a trail for solving an age-old problem.

In markets
permalink

The Case Against the Antitrust Case Against Google

Geoffrey Manne —  24 March 2010

We have just uploaded to SSRN a draft of our article assessing the economics and the law of the antitrust case directed at the core of Google’s business:  Its search and search advertising platform.  The article is Google and the Limits of Antitrust: The Case Against the Antitrust Case Against Google.  This is really the first systematic attempt to address both the amorphous and the concrete (as in the TradeComet complaint) claims about Google’s business and its legal and economic importance in its primary market.  It’s giving nothing away to say we’re skeptical of the claims, and, moreover, that an approach to the issues appropriately sensitive to the potential error costs would be extremely deferential.  As we discuss, the economics of search and search advertising are indeterminate and subtle, and the risk of error is high (claims of network effects, for example, are greatly exaggerated, and the pro-competitive justifications for Google’s use of a quality score are legion, despite frequent claims to the contrary).  We welcome comments on the article, and we look forward to the debate.  The abstract is here:

The antitrust landscape has changed dramatically in the last decade.  Within the last two years alone, the United States Department of Justice has held hearings on the appropriate scope of Section 2, issued a comprehensive Report, and then repudiated it; and the European Commission has risen as an aggressive leader in single firm conduct enforcement by bringing abuse of dominance actions and assessing heavy fines against firms including Qualcomm, Intel, and Microsoft.  In the United States, two of the most significant characteristics of the “new” antitrust approach have been a more intense focus on innovative companies in high-tech industries and a weakening of longstanding concerns that erroneous antitrust interventions will hinder economic growth.  But this focus is dangerous, and these concerns should not be dismissed so lightly.  In this article we offer a comprehensive cautionary tale in the context of a detailed factual, legal and economic analysis of the next Microsoft: the theoretical, but perhaps imminent, enforcement action against Google.  Close scrutiny of the complex economics of Google’s technology, market and business practices reveals a range of real but subtle, pro-competitive explanations for features that have been held out instead as anticompetitive.  Application of the relevant case law then reveals a set of concerns where economic complexity and ambiguity, coupled with an insufficiently-deferential approach to innovative technology and pricing practices in the most relevant precedent (the D.C. Circuit’s decision in Microsoft), portend a potentially erroneous—and costly—result.  Our analysis, by contrast, embraces the cautious and evidence-based approach to uncertainty, complexity and dynamic innovation contained within the well-established “error cost framework.”  As we demonstrate, while there is an abundance of error-cost concern in the Supreme Court precedent, there is a real risk that the current, aggressive approach to antitrust error, coupled with the uncertain economics of Google’s innovative conduct, will nevertheless yield a costly intervention.  The point is not that we know that Google’s conduct is procompetitive, but rather that the very uncertainty surrounding it counsels caution, not aggression.

In antitrust, business, economics, google, law and economics, legal scholarship, markets, scholarship, technology , , , , , ,
permalink

Varney's comments from the DOJ/USDA hearings [#dojusda #agworkshop]

Geoffrey Manne —  23 March 2010

The DOJ has posted the transcript from the recent DOJ/USDA hearings on antitrust in agriculture here.  I figured our readers might be especially interested in seeing Christine Varney’s comments (especially without having to slog through all 350 pages to find them!).  I have bolded some of the most interesting parts of her comments.

As a special bonus, at the end of this post, I also reprint some of the particularly choice comments on Chicago economics by one of the farmer panelists.  I leave it to readers to decide whether the juxtaposition has any deep meaning.  I will say this: Technological innovation, increasing economies of scale, shifts in international trade and its restraints, and demographic changes–among other things–have no doubt wreaked havoc on many small farmers and farm communities.  The same can be said of the buggy whip makers, Atari game system manufacturers, and polio hospital administrators, to name but a few.  It is probably impossible to separate the populist impulse to serve (or, for politicians, to appear to serve) the Jeffersonian farmer from the enforcement of the antitrust laws, and this is why antitrust in agriculture will continue to be so contentious and so problematic.

Do be sure to check out the farmer’s comments at the end of the post. Continue Reading…

In ag/antitrust workshop, antitrust, business, markets, politics , , , , ,
permalink

The dark side of altruism

Todd Henderson —  23 March 2010

Have you ever been tempted to buy a beggar a cup of coffee or a sandwich instead of giving money? If so, you have, like a young Anakin Skywalker, taken your first step to the dark side of altruism. Don’t get me wrong, I’ve been there too. The reason I offered food instead of (money for) vodka is because I wanted to “help” the beggar. From my lofty perch (that is, sober, housed, and employed), I wanted to impose my values on him. Like a father choosing broccoli instead of ice cream for his kids, I thought I knew better what was good for the beggar — what he really wanted if only his thought processes were rational.

At some level, this is sensible. If I am paying, either directly in the form of the handout or indirectly in the form of the obvious externalities from the beggar (e.g., crime, stink, etc.), then it makes sense for me to try to reduce these costs.

But the dark side of caring is the perversity of this control. Once we start thinking this way, the creep towards totalitarian nannyism is hard to resist. Once I am paying for your health insurance, I suddenly care a lot whether you get an abortion, have that gender-switching surgery you’ve always wanted, or, most ominously, eat that Big Mac for lunch instead of the salmon salad. In today’s new America, I suddenly really care how much junk food the people making less than $88,000 eat — I pay for every Dorito that crosses their lips. And, for the record, I hate this about me and about New America. (Evidence this is our future comes from the UK, where 75% of people in a recent survey supported greater government control over individuals’ food choices.)

The problems with altruism are well documented. The IMF for years tried to control the internal policies of countries that it bailed out or loaned money to. These attempts were failures, both because the experts don’t always know what they think they know and because the meddling inevitably involves backlash, power grabs, corruption, and so on. (The IMF has abandoned these policies.) This instinct was also a source of the eugenics movement. Once we think of people as cost centers instead of autonomous individuals, the cost-benefit calculations can lead to some disturbing results. German posters from the eugenics era provide a nice example.

The battles ahead for New America are likely to be just as dirty. The battle over abortion in the Stupak Incident is just a preview of what is to come as every interest group wanting to feed at the trough, remake America, press for rights they hold dear, and so on, head for Washington to convince our dear leaders why the rest of the country should or should not pay for their pet project.Whatever the negative impact of me acting as a control freak is on my neighbor the beggar will be dwarfed by the nation as control freak. At the individual level, the control we try to exercise might actually be a good thing. But multiply it by 300 million, centralize it in Washington, and unleash the forces of public choice on it, and watch the beginning of the end of our freedom.


In markets
permalink

Don’t Like the Texas Board of Education’s Brainwashing? There’s a Simple Solution.

Thom Lambert —  21 March 2010

Lots of liberals, such as Wall Street Journal columnist Thomas Frank and folks from the Huffington Post and People for the American’s Way’s Right Wing Watch, are all up in arms over the Texas Board of Education’s recent efforts to push Texas’s public school curriculum in a decidedly “conservative” direction. As Todd and Josh noted, the Board recently voted to require high school economics curricula to cover the ideas of free marketeers F.A. Hayek and Milton Friedman. The Board also called for curricula to put less emphasis on that godless Thomas Jefferson and more on Protestant reformer John Calvin; to replace the term “capitalism” with “free market system” (apparently on grounds that the former term is often used derisively, as in “You capitalist pig!”); and to include consideration of the “unintended consequences” of a number of such “liberal” initiatives as the Great Society, affirmative action, and Title IX.

Given the massive size of the Texas public school system, the curricular changes ordered by the Texas Board of Education are likely to influence textbooks used all across the nation. Thus, liberal critics contend, a small group of right-wingers in Texas is effectively pushing their own contestable values and beliefs on schoolchildren all over the country. That’s troubling, they say.

And they’re right. Who are these folks to decide that your children or mine should learn more about Christian theologians John Calvin and Thomas Aquinas and less about deist founding father Thomas Jefferson? While I agree with Todd and Josh that Hayek’s ideas are worth learning in a high school economics class, I think it’s troubling (and I’m certain F.A. himself would concur) that this is happening because some know-it-all elites in Texas decided that Hayek’s ideas are worthy and others’ aren’t.

But there’s a simple solution to this problem: Get the government out of the curriculum-setting business altogether. We could take the money the government spends running its own schools and give that money to parents to spend on the education they think their child should receive. At a minimum, we could let parents who want to opt-out of a government-sponsored school take the money that would have been spent on their child’s public education and apply it to tuition at another school. This sort of system would not only improve educational standards by enhancing the competition public schools face, it would also permit parents to control the substantive content of the education their children receive — to avoid indoctrination they deem offensive or wrong. We could, of course, have some basic standards for schools that receive tax revenues (e.g., they would have to produce students that perform adequately on skills and knowledge tests, etc.), but this decentralized approach could avoid the thorny values issues that are inevitable when any small group of government elites — be they conservative or liberal, religious or anti-religious — decide what matters will be taught and how.

Unfortunately, many modern liberals (though not the ones whose children are trapped in failing public schools!) reflexively oppose school choice. Thomas Frank, for example, refers to vouchers as one of those cold-hearted capitalist innovations that oppress the populist masses. And just this week, 54 of 59 Democratic (or Democratic-caucusing) Senators voted to kill the popular voucher program in the District of Columbia.

Maybe all this mess in Texas will at last convince these so-called liberals to finally become pro-choice on something other than abortion.

In markets
permalink