I Wonder if It Is Possible to Teach a Billionaire Heiress about Opportunity Cost

I learned about opportunity cost as a child, although I had no idea that was the lesson I was being taught. In the spring of 1957, my parents needed to replace our 1947 Dodge.  My sister and I begged my parents to buy a car with four doors, so that we wouldn’t have to scramble to get in the back seat, and my father agreed, finally.  But he said that my sister and I would have to pay for what he believed was an extravagant splurge by giving up our allowance for the rest of the year. I don’t imagine we paid for those car doors with seven months’ worth of our dime allowance, but we did learn that in our family where we didn’t have a lot of money, if you really wanted to buy something expensive, you’d probably have to give up something else.

Years later in college when, as an English major, I took Economics 101 as an elective, I was astonished to discover that economists had actually created a name for that rule my father insisted we practice in our family. Very early in the semester, my professor Robert Haveman, taught us the concept of opportunity cost.  He must have believed this is a very basic concept, because in his little economics textbook, The Market System, Professor Haveman describes it on the third page: “Only a few individuals and no societies possess the means to obtain all of the goods and services they desire. Most of us have to pick and choose…. The decision is much easier if family income increases, but choice is still necessary. The cost of the new item may be considered the loss of the opportunity to spend that income for other purposes. This is the opportunity cost principle applied to individual consumer behavior.” Haveman continues: “The same principle applies to societies because of the scarcity of means relative to ends.”

Betsy DeVos inherited a fortune from her father’s car-parts company, and I presume that in Betsy DeVos’s family economic choices were easier than in my family—without obvious lessons on opportunity cost.  Maybe there could be not merely one car with four doors, but instead several cars filling a garage with four doors. It has certainly become clear that, as our nation’s new Secretary of Education, Betsy DeVos doesn’t grasp Haveman’s definition of opportunity cost as the concept applies to societies—in this case to school finance.

It happened again last week when DeVos visited the public schools in Van Wert, Ohio. The day after her visit, she had an OpEd column in the Cleveland Plain Dealer in which she complimented Van Wert’s schools. But after a few paragraphs she quickly forgot about the schools she had visited and began pushing her one idea: parents in Van Wert need more choices.  Here is what her column said: “Van Wert is a good school district. It is meeting the needs of many students. Yet the parents or guardians of nearly 20 percent of students who live within Van Wert’s district lines choose to send their children to a nearby district or to a different option in Van Wert instead.  In doing so, these parents are seeking the education that’s best for their child…. Every parent should have that option.  School choice is pro-parent and pro-student.”  Ohio offers public school districts the option to participate in cross-district open enrollment, through which students can take their state aid to a neighboring school district.  Apparently Van Wert participates in open-enrollment, and some parents in Van Wert transport their children to a neighboring town, though there has been a huge argument in the Ohio press since DeVos’s column was published about whether 20 percent isn’t a highly exaggerated figure for Van Wert’s participation in that program.

Betsy DeVos’s column indicates, however, that she missed the “opportunity cost” lesson Van Wert’s parents and educators tried to teach her. Van Wert, a small town near the Indiana border, is different from the urban, inner-ring, Cleveland suburban school district where my children went through public schools, but we have one thing in common: Ohio’s problematic method of funding schools.  For all of the thirty years I’ve known this system, our legislature has been dominated by people who have signed Grover Norquist’s pledge never to vote to raise taxes; many of our legislators also take pride in being members of the American Legislative Exchange Council (ALEC). In Ohio, our legislature has set it up so that we do not have unvoted tax increases. All tax increases including school levies must by voted on at the polls. And… in the DeRolph school funding decision, the courts faulted Ohio’s school funding for being “overly reliant on local property tax.”  And… embedded in our state constitution is a local property tax freeze. Our tax freeze means that any school levy cannot ever generate more real dollars for a school district than on the day it passes.  If property appreciates in value, the state rolls back the voted millage to keep the levy amount flat.

This all means that when inflation naturally occurs, and the state fails to increase its contribution, parents in every school district must create and fund a political committee to go out and campaign for the needed tax increase. The levies sometimes fail, and the parents have to try again, and sometimes again and again.  But inflation keeps occurring and when levies fail, school nurses and librarians begin to cover several buildings, and students on high school football teams have to pay to play. When a levy finally passes, it is very often to get back what was lost—to bring back the librarian to every school library, to make football free, to reduce class size in Kindergarten back below 22 students. In this financial climate—the very definition of opportunity cost—it is difficult for a school district afford something new and glitzy, something like the championship robotics team Van Wert’s voters have managed to fund and that we all learned about last week when Betsy DeVos visited Van Wert.  I learned to understand this public example of opportunity cost back between 1988 and 1991 when I organized a grassroots, door-to-door campaign for three school levies—with 700 volunteers each time ringing doorbells to convince neighbors to vote “yes.”  Then in 1993, I co-chaired a successful levy campaign after two failed attempts. Across Ohio, school levy fights, to be successful, have to be constructed to pull the community together on behalf of the public—the community and all of its children.

Erica Green, the NY Times reporter who traveled to Van Wert to cover the Betsy DeVos school visit, listened carefully. While I know she does not have an in-depth understanding of the school funding complexities behind the comments she reports in her article, she captures some of the urgency of the parents and educators who described the dedication of the Van Wert community to its public schools. Green notes the community’s pride in having passed its levies. She describes what Linda Haycock, newly elected from western Ohio to the state school board said to Betsy DeVos: “Spending federal money or any other taxpayer funds on vouchers for private school tuition is looked on harshly… ‘really theft’…  ‘It’s saying we passed a levy to go to our school district, and it’s really going somewhere else.'”  And Green continues: “Van Wert educators said they believed their biggest threat was school choice. An expanded voucher program would be ‘potentially catastrophic’ for the district’s finances, said Mike Ruen, the district’s treasurer.”

Teachers and school administrators alike carefully explained what would be the implications for Van Wert of the federal budget cuts proposed by DeVos’s Department of Education. Green describes the early childhood literacy specialist telling Betsy DeVos about how any reallocation of Title I funding to support expansion of school choice would undermine a program that helps very poor children with early literacy. Green quotes the school superintendent telling DeVos, “We struggle every day to make ends meet.” Green reports that an elementary school principal told DeVos, “Our funding is the blood, sweat and tears of our community, and we are held accountable for that.”

The parents, teachers, superintendent, and school treasurer in Van Wert were explaining to Betsy DeVos the essence of Professor Haveman’s lesson on the public implications of opportunity cost: “Only a few individuals and no societies possess the means to obtain all of the goods and services they desire. Most of us have to pick and choose.” In Ohio, we already have some school choice and we don’t want it expanded.  Our long experiment with vouchers has meant that tax dollars are taken to support private school education. Charter schools—unregulated and out of control in our state—have created another drain on scarce public school resources. And, as we saw in Van Wert, there is also the option for school districts to participate in cross-district open enrollment. When Betsy DeVos preaches about giving all parents a choice to have the education services they desire, I wonder whether she actually understands that sending money away from the public schools to privatized alternatives removes essential services from the public schools that serve 90 percent of our society’s children.

In a recent column in the Appleton Post-Crescent in Wisconsin—another ALEC-dominated state, where Governor Scott Walker and the legislative majority also adhere to the anti-tax pledge Grover Norquist has encouraged them to sign—Jane Parish Yang, a member of the Fox City Advocates for Public Education, defines the meaning of the public—“how a nation comes into being by shared events and shared values, and how, in our case, a community comes into being with a ‘deep, horizontal comradeship’ and strength from all young people being educated in order to become productive citizens. The founding citizens of Wisconsin knew that shared, democratic values from a public education open to each and every student would be the basis for the community flourishing because of that shared experience. But what would those same founders make of present-day Wisconsin, in which a segment of the citizenry rejects public schools… and wishes to segregate itself within its own traditions but at public expense? That is what proponents of so-called school choice are asking the public to agree to: we choose, you pay.”

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5 thoughts on “I Wonder if It Is Possible to Teach a Billionaire Heiress about Opportunity Cost

  1. Ohio is experiencing a phenomenon, which has also occurred in Indiana, and several other states which have instituted school choice. School choice/vouchers work! Parents who choose to participate, and enroll their children in the schools of their choice, are delighted. Indiana has experienced phenomenal growth, and is now the number 1 state in school choice. Ohio will expand choice opportunities, and parents will accept the vouchers, and find the schools of their choice.

  2. Pingback: Roosevelt University Study: Rapid Charter Growth Has Cannibalized Chicago Public Schools | janresseger

  3. Pingback: Broken Record Betsy | janresseger

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