schoolchoice1Although we have been conditioned to believe public school is a different animal, free markets work for education too.  In America, universities compete for scholarships, grants, and tuition dollars.  Consumers, not colleges, determine where those education dollars are ultimately going to be spent.  Unlike our centrally planned and taxpayer funded public school system, America’s university system is considered the best in the world.  Over the last 150 years we have experimented with government controlled school monopolies, and they have proven to be expensive, overly bureaucratic, and inefficient.  It is time we consider free market solutions to solve the problems that are inherent to our current public education system.

Treating education as an entitlement tends to destroy education’s value in the minds of its recipients.  According to the law of diminishing marginal utility, as a person increases consumption of a product (i.e. education) while keeping consumption of other products constant, there is a decline in the marginal utility (value) that person derives from consuming each additional unit of that product.  What this means is that the more we have of something the less we value the portions we possess above what we really want.

Let’s use the “all-you-can-eat” buffet style restaurant as an example.  These restaurants entice us with “all you can eat,” while knowing each additional plate of food provides less utility to us than the one before.  Despite their enticement, most people will eat only until the utility they derive from additional food is slightly lower than the original. For example, say you go to a buffet and the first plate of food you eat is very good. On a scale of ten you would give it a ten. Now your hunger has been somewhat tamed, but you get another full plate of food. Since you’re not as hungry, your enjoyment rates a seven at best.  Most people would stop before their utility drops even more, but say you go back to eat a third full plate of food and your utility drops even more to a three.  If you kept eating, you would eventually reach a point of total dissatisfaction, or ‘dis-utility.”  In education, the first plate of food is learning to read and write, as well as basic math.  Beyond the basics, most families don’t value additional education.  While this is a bold statement, public school student appreciation for education drops off dramatically with mastery of the basics, and parental disinterest in post- elementary school teacher conferences confirms this reality.  Whereas restaurant food bills are normally paid by the people eating the food, such is not the case for public education.  Instead, the bill is usually paid by someone else.  This lack of “skin in the game” by the consumers of public education further diminishes the value people have for it.

Realizing taxpayer funded education is susceptible to the law of diminishing marginal utility, I prefer a policy where citizens are not forced to pay for the education of families who don’t value it.  Instead, I support eliminating public education entirely and allowing the natural order to inspire families to pursue the education they deem appropriate.  It is wasteful to spend money on citizens who don’t value education, but it is wise to let families invest the money they normally pay in taxes towards education opportunities that already exist in the free market.  Public education in the 21st century is like bottled water: an unnecessary expense when quality education is readily available in so many other places at much lower costs.  Online academies, homeschool curriculums, and most private schools are much less expensive, usually more successful in equipping students for the 21st century, and far less controversial than public schools.  If education wasn’t a government provided entitlement, the free market would quickly provide the education resources necessary for citizens to function in the 21st century.

school-choice-1Evidence suggests that under a policy where taxpayers aren’t forced to pay for the education of their neighbor’s children, poor families would also have access to quality education through patronage.  At Whitefish Christian Academy (where I serve as board president), many struggling families who value education (and ensure their children work hard in class) have received tuition assistance necessary for their children to attend. Financially successful people in our community continually demonstrate their willingness to partner with hard working families and students who value education, like they do.  In spite of the efforts of public school monopoly advocates to paint successful Americans as inherently selfish, I suspect most communities possess citizens as generous as mine, particularly if they are freed of the burden of paying for public education.  Community rejections of school bond issues are usually indictments against the inefficiencies of public school bureaucracies rather than denials of education’s societal value.

The inequality created by America’s monopolistic public school system is apt to become our most pressing civil rights issue.  Recent popular documentaries like “Waiting for Superman” and “The Cartel” demonstrate that inner city communities value education as much as any other. They also reveal that public school monopolies are rejected as vehemently in poor minority neighborhoods as they are in affluent, predominantly white ones.  Teacher protests in Wisconsin and New Jersey have exposed government policies that favor teachers and school administrators over taxpayers and children.   Parents and students are quickly learning that better alternatives exist; however, the only thing blocking them from receiving a decent education in their neighborhood is their government protected public school monopoly.

Even though privatizing education is the most efficient way to improve education, I realize America isn’t ready for the idea of jettisoning taxpayer funded education altogether; therefore, I support a voucher system where each child is entitled to a set dollar amount of education paid for with a voucher.  Under such a program, each family is free to choose where their vouchers will be spent.  Families may choose to homeschool, enroll their children in private, parochial, or public school, or use the money to hire private tutors.  In order to continue receiving funds, I support the requirement that students demonstrate grade level proficiency before receiving more funds.

Free market competition in public education will improve it immediately.  For communities that lack the courage to do away with public education entirely, the voucher system is the most viable method for introducing free market competition into public education.  Because both poor and wealthy communities have voiced strong desires for school choice and equally loud impatience with public school costs and inefficiencies, vouchers are now politically viable.  Free markets have proven effective in providing the highest quality of goods and services at the lowest prices to the greatest number of people; therefore, I support the idea of a voucher system that promotes education choice.

Requesting Your Credit Reports: What You Need to Know

facIn my experience, checking your credit report regularly is one of the best ways to keep tabs on your identity and to prevent errors from becoming major hassles.  No one wants to deal with an incorrect credit report when they’re buying a home, and checking your credit reports often can help you nip potential issues in the bud before they wreak havoc on your credit rating.  For years now, I have been using  AnnualCreditReport.com, a truly free website that makes the process of monitoring my credit reports extremely easy.

Basically, there are three simple steps to requesting your credit reports.  First, just fill in your information, like name, address, etc.,  then pick the reports you want to see.  There are three major credit reporting bureaus, TransUnion, Equifax, and Experian, and they are all required by law to offer you one free credit report per year.   Next, request a credit report from one of the three.  I recommend requesting a report from one bureau every four months, so you’re getting a total of three reports per year staggered throughout the year. (For example, mark on your calendar to request a report from Experian in January, Equifax in May, and TransUnion in September).  Finally, once you receive your report, read through it carefully to ensure the information it has on you is accurate.

?????????????????????????????????????????When you get the report, you’ll want to be on the lookout for potential issues such as: credit charges you don’t recognize, lines of credit you didn’t open, applications for credit you didn’t make, or strange accounts and addresses you don’t recognize.  In addition to being possible errors, they may also be signs of identity theft.  The Consumer Financial Protection Bureau (CFPB)  has useful information on how to spot and address identity theft,   as well as useful information on what  to look for and how to report potential errors.  You might also check out  AnnualCreditReport’s resource page.

If you find errors or questionable information on your credit report, contact the reporting bureau directly to  have them fixed or removed.  If you don’t agree with what is reported, then dispute it.  The first time I requested a credit report years ago I discovered my parents’ financial information was being reported on my report. I contacted the credit bureau immediately and they promptly removed the incorrect information.

Don’t be a victim of bad information, errors, or identity thieves.  The best defense against issues on your credit report is vigilance.  Using the resources outlined above, you should have the tools you need to stay on top of your credit reports, and the information to take action as necessary.  No one wants to have to deal with errors on their credit reports, but it’s better to deal with any issues you find now, than when you need your credit report to buy a home, obtain a business loan, etc.  By proactively reviewing your credit report periodically you will stay ahead of errors and criminals, and quite possibly prevent a mole hill from turning into a mountain.

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Should I buy LifeLock?

JPG-LL_Brnd_Sig_hor_full_color21st Century society is incredibly efficient.  I am often amazed at how quickly my market needs are filled.  I can order practically anything online at Amazon.com and have it delivered to my house overnight.  I can book plane tickets, a rental car, and a hotel reservation at thousands of locations around the globe, and I can buy nearly anything, anywhere, without cash just by flashing plastic.  Unfortunately, increased efficiencies often result in reduced security.

Identity theft is a serious threat, and it continues to be the number one complaint received by the Federal Trade Commission, with American consumers reporting losing over $1.6 billion to fraud in 2013.  By now, most folks have heard about the security breach at the national department store Target, where identity thieves broke into Target’s computer system and stole personal information on thousands of customers who had used credit and debit cards at Target stores.  The threat is real, and with this threat comes a heightened level of anxiety.

In the last few years clients have asked me about LifeLock, a company that claims to help customers prevent identity theft.  For $110 per year, LifeLock promises to pay up to $1 million in expenses to restore a person’s stolen identity.  They also promise to monitor your accounts for suspicious activity, scan for potential identity theft threats, respond to cases of identity theft, and track your credit score for possible problems.  Sounds like a pretty good deal, but is it?

Unless you are a high risk target (e.g., you are going through a nasty divorce, recently fired a disgruntled accountant, or you frequently hand out to strangers your personal identifiable information), I think LifeLock is unnecessary.  In many cases, your bank or credit card companies already offer you protections (check with your financial institutions for more information), against stolen identity, and you can monitor your own credit report 3 times a year through annualcreditreport.com for free (submit a credit report request to each of the three credit bureaus listed on the site once per year staggered every 4 months).

Having LifeLock is a lot like wearing a belt with suspenders.  It really isn’t necessary, but it does make folks feel more secure.  It is rather expensive insurance relative to the monetary risk, but its cheap price of $10.00/mo does make some folks sleep better at night.  Rather than hire LifeLock, I prefer to practice personal security instead.  I use cash for most purchases, and I only occasionally use credit cards; this reduces the risk of credit or debit card information being stolen.  I am careful about who I share my personal information (like account numbers, social security number, or my computer passwords), particularly over the phone with people I don’t know or trust, and I monitor my financial statements closely for unusual activity.  I think the best defense against identity theft is personal vigilance, and by taking a proactive approach, I can spare myself the extra cost of having LifeLock remind me to be careful.

I encourage everyone to take responsibility for securing their personal identity, but it is doubtful LifeLock is necessary for most people.

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Socialism and Crony Capitalism

Socialism-FailsIn my political science classes in college, I learned that a socialist system is characterized by a strong central government that commands and controls the economy.  For an economy to be considered socialist, the means of production only needs to be controlled (but not necessarily owned) by a government.  In a socialist economy, bureaucrats set wages, control prices, create quotas, and regulate distribution.  Buying and selling behavior is manipulated by central planners using tax preferences and disincentives.

Socialism is different from “free market” capitalism.  In a truly free market economy, citizens—not government bureaucrats—make the majority of economic decisions.  Individuals rather than the government determine prices, wages, levels of production, and distribution methods.  Free market economies rely on prices to be analog signals to indicate the accurate supply and demand for specific goods and services.  When supplies are low, demand pushes prices up and producers are motivated to produce more, which pushes down demand, which lowers prices, etc. What differentiates a socialist economy from a free market economy is centralized command and control or the absence of it.

When politics get involved, the proper definitions of economic terms can get confusing.  While Democrats appear to prefer a centrally planned socialist system, and Republicans appear to prefer a free market capitalist system, history has shown both parties prefer the economic system known as “crony capitalism.”

Crony capitalism is an economic system where individuals, acting through corporate entities, partner with a strong centralized government in order to enjoy the safety and profitability of a monopoly.  Crony capitalism is NOT free market capitalism, but instead is more closely aligned with socialism.  Unlike free market capitalism, crony capitalism doesn’t mind bureaucracy, government regulation, or high taxes because the crony corporations are usually exempt by government decree.  By picking and choosing winners and losers, strong central governments ensure their crony corporate partners have no real competition.  Whereas the theoretical purpose of government involvement in a socialist economy is to ensure the fair and equal distribution of goods and services, crony capitalism uses government power to keep out competition and increase profits for the crony corporations.

All name-calling aside, it is difficult for me to align with either the Democrat or Republican Party.  I prefer a free market economy with minimal government involvement in the marketplace; however, both parties continue to press for more government intervention.  While not perfect, free markets are responsible for the incredible prosperity we have enjoyed. Any political movement towards greater centralized government control will diminish our chances for future economic flourishing.