Hostile Takeover: Resisting Centralized Government's Stranglehold on America (28 page)

At the same time, we need to pursue a realistic strategy that forces more transparency and accountability and less self-anointed bureaucratic discretion at the Fed. This is the strategic tack Ron Paul has pursued. A big step in the right direction would be to audit the Fed fully, as Paul advocates. While the results of the limited audit were disturbing enough, just imagine what kind of mischief we would find through a true, comprehensive audit where nothing is off-limits. The Federal Reserve lending trillions to foreign banks may be just the tip of the iceberg.

Auditing the Fed would inform the American people about what the central bank is doing behind closed doors. The information revealed would likely help convince more Americans that the Fed has done more harm than good. An overwhelming 75 percent of Americans want a comprehensive audit of the Federal Reserve, according to a Rasmussen poll.
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This is a transparency issue that has transcended left-versus-right politics. Fiscal conservatives like Senator Jim DeMint of South Carolina, and a self-identified Democratic socialist, Senator Bernie Sanders of Vermont, have joined the libertarian Ron Paul in these efforts. A true audit should be one of the first things Congress pursues in January 2013.

The next step would be to downsize the Fed’s mission from “full employment” to a simple mission of stable money. The Fed has expanded its own job description to include maximizing employment, “supervising” banking institutions, “maintaining the stability of the financial system,” and “providing financial services to depository institutions.”
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Congress should direct the Federal Reserve to abandon its dual mandate and focus solely on providing a stable dollar. As should be painfully obvious, Ben Bernanke is not omnipotent, and the manipulations he has presided over are only making things worse. Much worse.

And then we should allow for the accountability and discipline that always arise from competition. “Immediately allow private individuals to put themselves on a parallel gold standard if they so choose,” proposes Larry White. “Ron Paul’s HR 1098, the Free Competition in Currency Act of 2011, is one approach: ensure the enforceability of contracts denominated in units other than fiat dollars, remove taxes on gold and silver coins that [Federal Reserve] notes do not face, and remove federal statutes that criminalize the victimless activity of minting distinctive private pieces of metal intended to circulate as money.”
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Relinking dollars to a valued commodity, preferably gold, would allow the free market to harness the forces of competing currencies to promote stable money. Under the gold standard, it becomes obvious when politicians spend way beyond their means, because they simply run out of gold reserves. Relinking the dollar to gold would decentralize the authority to determine the value of money, which in turn would
limit the amount of money that Congress can spend.
The Treasury and the Federal Reserve would no longer be able to create money out of thin air, preventing runaway inflation and rising prices of goods.

Winston Churchill famously said of democracy that it is “the worst form of government, except for all those other forms that have been tried from time to time.” In the same way, no monetary system is flawless. But, as Lewis E. Lehrman, senior partner at L. E. Lehrman & Co., has written, “empirical evidence of two hundred years of American monetary history shows that the true (or classical) gold standard has the least imperfect record as a stable monetary standard, because the dollar convertible to gold acted as the stable gyroscope of rapid economic growth.”
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TRY FREEDOM

“T
HE ESSENTIAL ELEMENT OF THIS REFORM IS FREEDOM,” WROTE MY
professor and mentor Hans Sennholz. “U.S. currency must be freed from government monopoly.”
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We have tried everything else. Why not try freedom? I think he would be proud to know that you and I, along with untold millions of Americans armed with better information and a newly democratized power to reform our government’s mistakes from the bottom up, are intent on doing exactly that.

CHAPTER 10
A T
EACHING
M
OMENT

Why can we afford wars and Wall Street bailouts but our education system is broken?

—Occupy Los Angeles Banner

I
ATTENDED
G
ROVE
C
ITY
C
OLLEGE, A PRIVATE LIBERAL ARTS SCHOOL
in Western Pennsylvania that accepts no federal funding. By the time I had enrolled, the U.S. Department of Education had already initiated legal action against the college for having refused to sign a Title IX “Assurance of Compliance.” Title IX of the Education Amendments of 1972 requires that “No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.”
1

Oddly, this costly legal action was aggressively pursued by the federal government, despite the fact that Grove City never violated Title IX—there was never any suggestion by anyone in or out of the federal government that Grove City had in fact broken either the spirit or the letter of the law. Grove City did not discriminate against women or anyone else. It was a coed school, and had been since its founding in 1869. Half of the student population at GCC was female, and so were many of the professors.

Grove City is where I met my wife, Terry. Thank goodness for coed institutions.

The case made its way to the Supreme Court, which in 1984 ultimately sided with the Department of Education in its argument that Grove City students accepting financial aid through the Stafford Federal Loan Program (now called Pell Grants) constituted federal funding, even though the school had always refused direct federal funding. In his concurring opinion, Justice Lewis Powell notes that the Department of Education “has prevailed, having taken this small independent College, which it acknowledges has engaged in no discrimination whatever, through six years of litigation with the full weight of the Federal Government opposing it.”
2
The decision was limited, however. “According to the Court’s decision, only the financial aid/admissions office was subject to federal regulation, not the entire College,” according to David Lascell. “The
program
receiving federal assistance was subject to regulation, not the entire institution.”
3

CONTROLLING THE CLASSROOM

N
OT SATISFIED WITH THIS
C
OURT-IMPOSED LIMIT ON THE FEDERAL
government’s reach into the operations of private educational institutions, Senate Judiciary Committee Chairman Ted Kennedy put the Civil Rights Restoration Act of 1988 on President Reagan’s desk, and then the Democrat-controlled Congress overrode Reagan’s veto of the legislation. Kennedy’s legislation to “restore” civil rights was a congressional response to a case where no civil rights were actually broken based on the government’s own standard. But the net result was more federal control over higher education.

For me, the Department of Education’s legal mugging of my alma mater was a teaching moment. Maybe federal control of education wasn’t about educational quality at all? It certainly wasn’t about civil rights. Maybe more government involvement in education is always all about the protection of the power of insiders, quality be damned?

How is it that a small college in Western Pennsylvania triggered such a massive response from the federal government?
Because it refused to subjugate its independence to a federal blank check—submission to any and all of the government’s regulations of its operations now and in the future.
Having done so would have undermined Grove City’s ability to determine the school’s programs and curriculum free of federal meddling. It would have limited their ability to respond to their customers—the needs of students and their parents. Conceding control to federal bureaucrats would inevitably have increased operating costs (and ultimately the tuition paid by students) by forcing GCC’s administration to respond first to regulatory compliance and relegating the efficient delivery of education to a lower position on a list of actionable priorities.

The fight over Grove City’s refusal to fill out the required paperwork was not about the efficient delivery of education, and it wasn’t about the needs of students and their parents. It was about the ability of Washington, D.C., and certain special interests, to control education from the top down.

Today, the human costs of more centralization are easy to see, from kindergarten through twelfth grade, and in higher education. Like all centralized systems, top-down education has produced skyrocketing costs and falling quality. But the social costs of the government’s failures are far greater.

In few other realms of our society is the destructive power of centralized government more obvious—and tragic—than in public education. Obvious, because few topics have been discussed more extensively over the past several decades than the decline of U.S. education. Tragic, because we’re talking about the futures of our children, and because we’ve known the primary cause of the decline of education in this country for many years, but have yet to fix it.

Just as Milton Friedman predicted fifty years ago, education’s failure is the direct result of too much government. “Formal schooling is today paid for and almost entirely administered by government bodies or non-profit institutions,” he wrote in
Capitalism and Freedom
. “This situation has developed gradually and is now taken so much for granted that little explicit attention is any longer directed to the reasons for the special treatment of schooling even in countries that are predominantly free enterprise in organization and philosophy. The result has been an indiscriminate extension of government responsibility.”
4

The Department of Education has sought to improve what its own report described as “the mediocrity” of the educational system in 1983, but the response since has been more government solutions to government-caused problems. Centralized authority sees itself as the solution to all problems, so government’s role in public education—and increasingly higher education—has grown exponentially since 1983. Meanwhile, American students are paying the price as the system grows fatter on government-funded largesse.

U.S. students trail most industrial nations, particularly when it comes to math and science. Chinese, Japanese, and South Korean students are leading the way in the technological fields. The well-respected Program for International Student Assessment (PISA), given to fifteen-year-old students around the world, found that U.S. students place twenty-third and thirtieth in science and math, respectively.
5
American students scored slightly better in reading, ranking seventeenth in the world.
6

The quality of American education has been declining rapidly for the past several decades, in inverse proportion to increased government funding. Student academic test scores have hit all-time lows. In the high school graduating class of 2011, only 31 and 32 percent of students test
proficient
in reading and math, respectively.
7
Just 20 percent of fourth graders, 17 percent of eighth graders, and 12 percent of high school seniors demonstrate proficiency on the U.S. history exam, according to the National Assessment of Educational Progress.
8
In other words, the average American student becomes
dumber
on the subject of U.S. history as he works his way through the system.

BLAMING PARENTS FIRST

P
ARENTS TRUST THAT WHEN THEY HAND OVER THEIR CHILDREN TO
government-run schools—for which they pay ample taxes—they are at the very least in good, safe hands. But even this assumption is proving wrong. Inner-city schools are particularly plagued with violence, gangs, and disruptive behavior. The
Philadelphia Inquirer
found that more than 30,000 serious violent incidents have taken place in the Philadelphia school system over the past five years. On any given day, the newspaper found, 25 students, teachers, or staff members were beaten, robbed, or sexually assaulted in the 155,000-student school system.
9

Districting requirements designed to prop up the centralized model force many parents to send their child to a dangerous public school just because it’s close to where they live. Some have taken desperate measures to ensure that their child goes to a safe school. But, just like any top-down model, the system punishes those who disobey. Ohio mom Kelley Williams-Bolar was sentenced to ten days in a county jail and three years of probation for the heinous crime of registering her two daughters at her father’s suburban Ohio address to get them out of a failing Akron school and into the successful Copley-Fairlawn district.
10

Akron city schools are some of the worst schools in Ohio. Nearly every school within the system is dangerous and underperforming. The Ohio Department of Education reported that the Akron system failed to make Adequate Yearly Progress, receiving passing ratings on only four of twenty-six state benchmarks. The Copley-Fairlawn district, however, achieved Adequate Yearly Progress and had passing ratings in all twenty-six indicators.
11
Williams-Bolar was trying, as any mother might, to help her daughters get a good, safe education; and the state threw her in jail for it.

Can you blame her? Williams-Bolar says that she decided to enroll her daughters in a better school district after her home was burglarized. She is a single mother who wanted her daughters to have a better life filled with more opportunities for success. The sobbing mom told the court, “I was just trying to keep my kids safe. That was my objective.”
12
Put yourself in her shoes for a minute; wouldn’t you do the very same thing?

Violence is hardly exclusive to inner-city schools. It affects every school district nationwide. Schools are failing to provide a safe learning environment for children. A survey conducted by the U.S. Centers for Disease Control and Prevention found that 11.1 percent of youth nationwide report having been in a physical fight on school property within the last year.
13
The study also revealed that 5 percent of students admitted that they did not go to school for one or more days within the past thirty days because they felt unsafe at school.
14

Poor results and an unsafe learning environment might help explain America’s troubling high school dropout rate. An estimated 1.3 million young Americans drop out every year.
15
More than one in ten U.S. high schools is considered a “dropout factory,” which means that no more than 60 percent of high school freshmen make it to their senior year.
16
Only 25 percent of high school students in Detroit public schools graduate within four years.
17
Loretta Singleton, who dropped out of her Washington, D.C., public school, described it as violent and dull. She says that “girls got jumped. Boys got jumped, teachers (were) fighting and hitting students. . . . They were teaching me stuff I already knew . . . basic nouns, simple adjectives.”
18

The high school dropout phenomenon has major economic and social implications. On average, a high school dropout will earn about $260,000 less than a high school graduate in his or her lifetime.
19
Dropouts are also more likely to be incarcerated, unemployed, or dependent on government social programs. Seventy-five percent of state prison inmates are high school dropouts.
20
This ultimately results in higher taxes to pay for the rising costs of social programs and prisons.

The sad truth is that public schools are even more segregated by race and class than they were four decades ago.
21
This is because our communities are still largely divided by these two demographic factors, and the centralized model depends on a rigid location-based approach. Education is generally regarded as the best way out of poverty, but children in poor areas are trapped in failing schools that aren’t teaching what they should. Many parents in the inner cities cannot afford to send their child to a high-quality private school or move to an area with better public schools. This makes it extremely difficult for a child to break the cycle of poverty.

It’s not untypical of teachers and others who work inside the system to blame parents for many of the failures of that system.
Parents don’t take enough interest in their child’s learning,
they complain. But the reality is far more complicated. Certainly, there are bad parents, and their lack of interest contributes to the problem. But the centralized system, bristling at unwanted interference, tells parents: “Don’t worry; we’ll take care of everything.” As with health care decisions, and saving for retirement, we are constantly told that some third party will take care of it. If you want a better choice, if you want to be part of the decision-making process, if you want to see your options, you are typically greeted with silence. “We have this. We are the professionals,” parents are told. When parents get desperate for a better choice, the system comes down on them.

Just ask Kelley Williams-Bolar. She went to jail for taking an active interest in her daughters’ education.

SPEND MORE, GET LESS

S
INCE AS FAR BACK AS
M
ILTON
F
RIEDMAN’S TIME, THE GOVERNMENT’S
answer to poor public education results has been the same: spend more money. We’ve been told for decades that “properly funded,” monopoly schools would yield better results. It’s the taxpayers’ unwillingness to spend what is required that is to blame for the fact that Johnny can’t read. But the more we spend, the less the system seems to yield.