In July of 2005, while I was Chancellor of the Texas A&M University System, I wrote an opinion piece on school choice and competition. It ran in the Austin American Statesman on July 11, 2005, under the title "Competition is good-even for public schools." It ran the next day in the Bryan/College Station Eagle under the title, Schools need choice, competition.

That article is reprinted below:

In my first legislative session as chancellor of The Texas A&M University System, I was so focused on getting "our fair share" of higher education funds that I barely noticed the important effort to introduce choice and competition into Texas public education. The failure of that effort is arguably more detrimental to raising the educational achievement of Texans in the long run than the failure to approve tuition revenue bonds for needed university building programs.

Choice and competition work wonders. It wasn't that long ago that the introduction of high-quality Hondas and Toyotas into the U.S. market not only broadened the choices available to American consumers, but ultimately improved Ford and Chevrolet quality as well.

My first encounter with the idea of school choice and competition was in Milton Friedman's 1962 classic, "Capitalism and Freedom." Friedman has successfully advocated many market-based solutions to public policy problems throughout his distinguished, Nobel Prize-winning career. But in his 90s, he has singled out parental choice as his most important unfinished business and established a foundation to promote it.

In a June 9 opinion piece in The Wall Street Journal, Friedman summarized the frustrating history of getting choice programs adopted. He says the efforts usually start out with broad parental and public support as a means of dealing with at-risk students and failing school systems, but that organized resistance by trade union leaders and the education bureaucracy generally prevails.

I know firsthand how frightening competition can be to those long shielded from it. When the Monetary Control Act of 1980 required the Federal Reserve to begin charging for check services it had been providing free to financial institutions so private banks could better compete with us, I was only a month into my job as head of the Fed's Baltimore office. We promptly lost more than 40 percent of our check-processing business to private-sector competitors. But we eventually recovered most of it by improving our services and otherwise emulating private-sector profit incentives. Government monopolies are usually run by good people, but competition makes them better.

I met many fine students and teachers when I later became president of the Dallas Fed. We conducted an annual essay competition for high school students. We also sponsored a competition in which students studied economics and competed with mock meetings of the Fed's Federal Open Market Committee. I'm proud to say that our Texas teams won the national championship in three of the first four years we participated - Bryan High School in 1996-98 - and then Midland High School won in 2000.

The students I met through these competitions were awesome. But they were the cream of the crop. Although Texas has many excellent students in all its public schools, and has many excellent schools, it also has too many schools that don't measure up. Texas has a high dropout rate. Of those who do graduate, only half go on to college, and many of them require remedial work.

The Dallas Fed also conducts conferences and workshops to help teachers gear up to teach economics. I was pleased to learn recently that A&M System Universities and others, largely on behalf of the Texas Education Agency, actively support teacher education, not only by training new teachers, but also by helping existing teachers in nearby high schools raise their quality of instruction. I know that Texas has many competent and confident teachers. But, like the students I met, the teachers are probably the cream of the crop who self-select into improvement programs.

In contrast, I'm afraid that many teachers, being human, naturally fear competition and accountability. Even so, they owe it to the kiddos to suck it up and give choice and competition a chance. Courage is not the absence of fear, but the willingness to do what needs to be done despite fear. In this increasingly competitive, globalized world we live in, we can't afford to be second best. We can't afford to neglect improvement opportunities in order to remain in our comfort zone.

Many will say that I'm stepping over the line between higher education and public education - that I've stopped preaching and gone to meddling. Maybe so, but I do have a dog in this fight. If good players help make good coaches, then better prepared students are needed to help make Texas higher education world class. So, let's hope that, as our legislators grapple with the complexities of school finance, they will also try to find a way to introduce choice and competition into Texas schools.

Reprinted with permission of the Austin American-Statesman

My "grammar school," as they called them then, had three classrooms and an auditorium with a stage.  Three teachers, including the principal, taught grades one through eight in those three classrooms.  There would be a lesson for the first grade, with second and third graders also in the room, then a second grade lesson, with first and third graders listening in, and so on.  Each room had a pot-bellied stove, and we didn't get indoor plumbing until I was in the sixth grade.

I didn't know to feel deprived except that my mother, who had graduated from high school and had taken a few college courses and taught school some before I started, kept talking about sending me to a better school about 20 miles away.  I, of course, wouldn't hear of it.  She did, however, send me to the larger school five miles away when I was in the eighth grade rather than waiting another year for high school there.

I don't know what kind of arrangements had to be made, if any, to get permission for me to catch the high school bus. I don't recall it being a big deal.  What was a big deal that year was that I was the only new kid in the eighth grade, and it would be another year before my grammar school buddies would join me in high school. 

My new class had a room and a teacher of its own. I suppose I learned more there than I would have in my old school.  What stands out in my memory of that year, however, is a fight with school bully and my embarrassment at taking too long to cut some kindling to start the fire in the stove.  It was the first time I'd had the honor of being asked, but, because I didn't live on a farm like many of my classmates, I had no experience in that particular endeavor. I can still feel the humiliation coming back into the room late and short on wood.

Four years later, in 1960, I graduated third in a class of 33, behind Sheridan Thompson and Winnie Jenkins, and I didn't think it was fair that boys had to compete with girls for grades.  As I recall, only three people in my class went on to college.  Not going to college was never an option for me, not because of my Mother, but because of my Dad.

My Dad dropped out of school after the seventh grade to work in the sawmill. He also hauled timber out of the North Georgia mountains, and, at one point, hauled oranges up from Florida.  Some time in my pre-school years he rented an old building across the road from our tiny house and opened a "filling station." At about the time I started to school, he built a truck stop on the top of the hill about a quarter mile up the road.  His idea was that trucks would naturally slow down as they climbed the hill and would be more likely to stop. 

His marketing campaign was two hand-made signs out front: "Free Coffee to Truckers" and "3 Cent Discount to Truckers," i.e. three cents per gallon of gas (gasoline) or diesel fuel.  He left it up to the truckers whether to show the discount on the receipt or not.  I pretty much grew up at that truck stop from the first grade to college, working the night shift full-time during my last two high-school summers.  Later, I would say I was raised by long-haired waitresses.

Doyal's Truck Stop was open 24 hours a day, 7 days a week-the 24/7 abbreviation wasn't around then as I recall.  The day was divided into two 12-hour shifts, the day shift and the night shift.  When the night man who pumped gas didn't show up, my Dad would have to work the night shift in between his two day shifts-dozing was inevitable, but sustained sleep was not possible.  

My Dad's lack of education showed up in several ways:  he had a check writing machine so he wouldn't have to write out the amount of the checks in script.  His writing was pretty much limited to numbers and his signature.  He had no accounting or control system to speak of; so he pretty much had to be present to keep employee theft down.  On those few occasions when my mother talked him into going to Sunday school with us, he would have to practice reading the assigned Bible verses in case he was called on.  My Dad was not dumb; he was smart, actually.  But he lacked "book learning."

What I'm leading up to here is that my Dad had to work very, very hard to make a living, and, because of that and for as long as I can remember, his mantra was "Bobby, you've got to go to college so you won't have to work as hard as me."  There simply were no ifs, ands or buts about it.  He viewed education in very practical terms.  It was the way out of poverty and manual labor.  A "good education" was the only road to an easier and better life.

These early lessons in the value of education didn't come hard to me.  They made sense to me when I was five years old, and they kept making sense. They were intuitive.  How could you argue with the obvious? I grew up assuming that everybody with eyes could see how the world works, and that, as soon they could afford it, they would insist on their kids graduating from high school. By affording it, I mean as soon as they could do so without the extra hands on the farm.

I apologize to the readers, if any, for getting stuck in the fifties.  I've had Georgia on my mind lately because of the current issue of high school dropouts in Texas and how school choice might help fix the problem.  I couldn't help thinking of my Mother's modest and partially successful effort to exercising choice on my behalf.  But, just to complete the story . . .

I graduated from high school in 1960, from the University of Georgia in 1963.  I won a National Defense Education Act fellowship (thanks to Sputnik) and went on to graduate school.  I later got a Ph.D. in Economics and became an economist at the Richmond Fed.  I had a 36-year career at the Fed, including the 1991-2004 period as President of the Federal Reserve Bank of Dallas.  I served the next two years as Chancellor of the Texas A&M University System, before coming to my current job with the National Center for Policy Analysis.

When I was President of the Dallas Fed, we had several educational programs for high school students and teachers, and I became aware of the excellence of Texas' best.  I thought I had been a pretty good student in high school, but my experience paled in comparison to most of the Texas students I met who were finalists in our essay contests and Fed Challenge competitions.  I knew I was just meeting the "cream of the crop" of Texas students, but it wasn't until I became Chancellor that I realized how far down the other end of the spectrum reached.  Most public Texas universities are accepting high school graduates that require considerable remedial work before they are able to work at the college level. Our high schools are turning out some of the best graduates in the world and some of the worst in terms of achievement.

I still didn't realize how bad the situation was until I recently saw a study on Texas high school dropouts sponsored by the Milton and Rose Friedman Foundation. It estimates the average high school graduation rate in Texas at approximately 67 percent, with much lower rates in the major urban school districts. While the main victims of this appalling statistic are the dropouts themselves, they also impose large extra costs on Texas taxpayers. Counting just three categories of costs– reduced tax revenue, higher Medicaid costs, and higher incarceration costs–Texas taxpayers spend more each year on dropouts than they spend on them while they are still in school. The study goes on to estimate the substantial savings to taxpayers by reducing the dropout rate through only a modest program of school choice.  You can download the study, The High Cost of Failing to Reform Public Education in Texas, at www.friedmanfoundation.org/txfiscal.pdf.