Government Spending

The Father of Modern School Reform

Fifty years ago, Milton Friedman introduced the idea of school vouchers. Now he looks back on his legacy.


In 1955 future Nobel Prize?winning economist Milton Friedman kick-started modern education reform with an article titled "The Role of Government in Education." Bucking the "general trend in our times toward increasing intervention by the state" in virtually all economic and social activities, Friedman argued that universal vouchers for elementary and secondary schools would usher in an age of educational innovation and experimentation, not only widening the range of options for students and parents but increasing all sorts of positive outcomes.

"Government," wrote Friedman, "preferably local governmental units, would give each child, through his parents, a specified sum to be used solely in paying for his general education; the parents would be free to spend this sum at a school of their own choice, provided it met certain minimum standards laid down by the appropriate governmental unit. Such schools would be conducted under a variety of auspices: by private enterprises operated for profit, nonprofit institutions established by private endowment, religious bodies, and some even by governmental units."

Among other things, Friedman prophesied that an education system based on vouchers would minimize inefficient government spending while giving low-income Americans, who are traditionally stuck in the very worst public schools, a better chance at receiving a good education. Vouchers "would bring a healthy increase in the variety of educational institutions available and in competition among them. Private initiative and enterprise would quicken the pace of progress in this area as it has in so many others. Government would serve its proper function of improving the operation of the invisible hand without substituting the dead hand of bureaucracy."

Fifty years after Friedman's article appeared in the collection Economics and the Public Interest, proposals for education reform take many shapes: legally mandated performance assessments at the state and federal levels, means-tested vouchers, charter schools, homeschooling, and calls for universal vouchers or for the complete separation of school and state, to name just a few. Despite their many differences, what all proponents of radical and systemic change have in common is an emphasis on choice and competition as a means of increasing educational performance and parental and student satisfaction. As in so many other areas of economic and social thought, Milton Friedman's ideas have carried the intellectual day. To be sure, if and when those ideas will be put into widespread practice is another question.

At 93 years, Friedman is still fiercely dedicated to increasing the range and quality of education–and to decrying what he sees as the pernicious influence of teachers unions and other forces of reaction. In 1996 Friedman and his wife and longtime collaborator, Rose, started the Milton and Rose D. Friedman Foundation, an Indianapolis-based nonprofit designed to act as "a resource for parents and community groups who want parental choice in education." The foundation is online at; visitors to the site can read through a wealth of information on school choice, including Friedman's collected works on the topic.

Reason Editor-in-Chief Nick Gillespie caught up with Friedman by telephone in September. Comments should be sent to

Reason: What inspired you to come up with the idea of vouchers?

Milton Friedman: Nothing. (Laughs.) I mean there was nothing going on in the real world at the time that caused me to think of vouchers. I was writing a piece on the role of government in education, and I started to think about how government intervention tends not to work very well. I didn't put it this way then, but if government wants to subsidize something, it can subsidize either the producer or the consumer. Subsidizing the producer is the wrong way to do it because it creates a top-down organization, which is very inefficient. The better way is to subsidize the consumer, which is what vouchers do.

Reason: What would the biggest benefits be if vouchers were implemented in the way you originally discussed them in 1955?

Friedman: Let's be clear. There are many kinds of possible vouchers, but there are two basic varieties, which I label charity vouchers and educational vouchers. Charity vouchers are unfortunately what we've gotten mostly so far. They are intended for low-income people who are unquestionably the worst victims of our deficient school system. Charity vouchers help the poor but they will not produce any real reform of the educational system. And what we need is a real reform.

I want vouchers to be universal, to be available to everyone. They should contain few or no restrictions on how they can be used. We need a system in which the government says to every parent: "Here is a piece of paper you can use for the educational purposes of your child. It will cover the full cost per student at a government school. It is worth X dollars towards the cost of educational services that you purchase from parochial schools, private for-profit schools, private nonprofit schools, or other purveyors of educational services. You may add from your own funds to the voucher if you wish to and can afford to." (I try to avoid calling government schools public schools because I think that's a very misleading term.)

As to the benefits of universal vouchers, empowering parents would generate a competitive education market, which would lead to a burst of innovation and improvement, as competition has done in so many other areas. There's nothing that would do so much to avoid the danger of a two-tiered society, of a class-based society. And there's nothing that would do so much to ensure a skilled and educated work force.

Reason: Do you think America has become more stratified by class during the last 50 years?

Friedman: I do. We have been going from a rural or quasi-rural society to an aristocratic society. There's no doubt that in recent years the upper end of the income scale has enjoyed a much larger increase in income and wealth than the lower end.

Reason: Do you take any comfort that more graduating high school seniors go on to college now than in the past? About two-thirds go on to college now, which is up from 45 percent in 1960 and 50 percent in 1970. That would seem to indicate that more people have more access to more education.

Friedman: But about 30 percent of young people never graduate from high school. Moreover, if you look at the colleges that graduates go to, they differ enormously in quality. Many are close to glorified high schools.

Reason: What explains the ability of the U.S. economy to still be productive if we have poorly educated high school graduates?

Friedman: Part of the reason is immigration, especially skilled immigration. And while our government is much too big, we haven't gone as far down the wrong path as many other countries. More fundamentally, a small fraction of well-educated citizens can have a disproportionate influence on the productivity of the society as a whole. The victims of our defective educational system are not the well-educated but the poorly educated.

Reason: You're optimistic that real change is upon us. In a recent piece for your foundation, you and Rose write: "The pace is picking up. In 1995, Ohio introduced a voucher program in Cleveland–the first such program since Wisconsin adopted a limited program for Milwaukee in 1991. In 1999, Florida enacted an educational reform that included a pilot statewide voucher program for students in failing schools. In the past decade, Minnesota, Illinois, and several other states have enacted refundable tax credits that promote parental choice. Privately financed scholarship programs have flowered from the seed…in Indianapolis in 1991, and this list is by no means complete. Change is now occurring so fast that it is hard to keep up with it. The [teachers unions'] dam is buckling and will shortly break. The resulting flood will bring life-giving innovation and change to elementary and secondary education."

Yet out of about 45 million kids in K?12 schools, there are less than 1 million kids in charter schools and around 20,000 kids with some form of vouchers. In percentage terms, there are fewer children in private schools now than there were 20 years ago. So what underwrites your optimism that vouchers or other reforms are about to sledgehammer the status quo?

Friedman: I remain optimistic for several reasons. One, there is increasing dissatisfaction with the schools on the part of parents. Two, there is widening interest in and support of greater parental choice. Third, some 20 states or more have various kinds of voucher-type proposals under consideration. Part of my optimism comes from a belief that vouchers seem like such an obvious solution–and from my belief that the basis of the National Education Association's and the American Federation of Teachers' power is crumbling.

What are the bases of the teachers unions' power? There are two. One, they have managed to persuade the intellectuals that being against vouchers is part of the basic Democratic Party mantra. By using their money and large membership, the unions have gotten control of the Democratic Party platform; a considerable fraction of the party's presidential delegates, for instance, come from the teachers unions.

The Democratic Party should be the natural supporter of vouchers. In Ted Kennedy's words, the Democrats are supposed to be the "voice of the voiceless." The voiceless would benefit the most from full-scale universal vouchers. You know, if you ask the voiceless, they are all in favor of vouchers. So I think, sooner or later, the nearly religious support for the anti-voucher position will crumble.

The other reason the teachers unions will crumble is the teachers themselves. Against the odds, the unions have been able to persuade teachers that universal vouchers would hurt them. On the contrary, teachers would be among the main beneficiaries. We know that in government schools not much more than half of the money spent goes to the classroom. Almost half goes to administrators, bureaucrats, and the like. In private schools, a much larger fraction goes to the classroom. In addition, we know that working conditions are much more attractive in private schools. Despite lower average wages, the turnover rate [among teachers] is much lower in private schools than it is in government schools.

Reason: Can you describe the goal of the Milton and Rose D. Friedman Foundation?

Friedman: It's to increase the public's understanding and awareness of the need for parental choice as a way to reform the system of education. It's not a research foundation; it acts as clearinghouse for information. It's been doing very well: We have the financial support of a growing number of people, and we're reaching a widening group of people through newspaper mentions and that sort of thing. More important, the president of the foundation, Gordon St. Angelo, has been very active in all of the states that are moving in the direction of greater parental choice.

Reason: In an interview with Reason a decade ago, you said that the role you played in ending the military draft–you were on a presidential commission that recommended an all-volunteer army–was your proudest accomplishment when it came to public policy. If you succeed with universal vouchers and systemic education reform, where would that rank for you?

Friedman: It would rank first.?