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Bryan Caplan wonders whether any movement towards more liberalized government services will counterintuitively lead to more statism in the long-run. Here is the mechanism he pictures:
1. If anything goes wrong, the market will receive all the blame. The political backlash could easily lead to policies more statist than ever.
2. In practice, the government will never implement a transparent free-market reform. Even an idea as simple as “give people the freedom to invest their own payroll taxes in a private account” will quickly morph into a kilo-page Congressional boondoggle. This further increases the chance that somethingwill go wrong. And when it does, the market will take all the heat.
I find plausible his speculation that privatizing social security could lead to policies intended to prop up the stock market, like TARP x 100. However, I have a hard time imagining how more school choice could backfire in a way that leads to more a more “statist” education system, another example that he gives.
One possibility is that states will be too lenient in the kind of schools are allowed to receive vouchers and students end up signing up for “virtual school” en masse. This in turn could lead to federal involvement in state education policy in an attempt to enforce standards. But these days organizations that oppose education reforms seem to be more powerful at the state and local level than the federal level. This means that, as it did with Race To The Top, more federal involvement seems just as likely to result in education reforms that move away from rather than towards a more “statist” education system.
My challenge for Bryan is this: tell me a conceivable story where more vouchers and charter schools lead to some sort of blowback that results in an education system that is more “statist” than the status quo.
One final interesting point is to note that this theory is a direct challenge to Tyler Cowen’s Marginal Revolution, where marginal steps in the right direction -and frequently free market ones- are all we have. I would be interested to see a response from Tyler on this.