Ep. 129: Researcher Profile – John Merrifield

August 20, 2019

John Merrifield unpacks topics in his book, The School Choice Wars (2001), and previews his new book, School System Reform: Why and How Is a Price-less Tale, coming out this fall.

Paul DiPerna: Hello, I’m Paul DiPerna, EdChoice’s vice president of research and innovation. Today I’m in the studio to introduce our listeners to a researcher I’ve known for nearly a decade now, I think. I’m here with John Merrifield, professor of economics at the University of Texas San Antonio and an EdChoice fellow.

John has been a professor of economics at UTSA for 32 years, retiring this year as professor emeritus. He is the editor of the School System Reform Journal and the past editor of the Journal of School Choice. He’s published School System Reform: Why and How is a Price-less Tale, Can The Debt Growth Be Stopped, The School Choice Wars, School Choices, Parental Choice as an Education Reform Catalyst: Global Lessons, Basic Economic Tools, and 55 peer-reviewed journal articles and several chapters in edited books in his primary teaching and research fields of education economics, public finance, urban and regional economics, and environmental and natural resources economics. He also has two books in the works. So, thanks a lot for joining me today, John.

John Merrifield: It is my pleasure, and beyond that, I was born a hamburger and raised a frankfurter, and I’m very grateful to be a citizen of this country.

Paul DiPerna: So, yeah, just talk a little bit about your background. You came here to the U.S. when you were five years old?

John Merrifield: It was 1960. I arrived on Thanksgiving Day in Austin, Texas. Actually a few days before that, arrived in New York, passed the Statue of Liberty on the SS United States, of all things, a now retired ship rusting away, I think in Baltimore. I just discovered these things just recently myself. It’s unbelievable. What a great country to have all this opportunity to do these great things.

It was a long journey getting to where I am, too, in this chair here across from you, talking about school choice. Because when I got to UT San Antonio in 1987, I was all about urban regional economics, and I’m discovering recently there’s significant school system and school choice dimension to that, but there wasn’t any when I got here. I was an environmental economist, and by golly, I’ve discovered that there’s some of that in school choice and school system reform recently with my association with Bart Danielsen, who’s head of Environmentalists for Effective Education. I work with him quite a bit.

But it wasn’t until the mid-‘90s at least, when I started to notice through my wife, who was a teacher, and some of the reading that I did in the School Reform News put out by the Heartland Institute, that there were some serious, serious problems amiss in our education system. My wife was coming home in tears telling me these horror stories, and then I would read about some of the basic economics of how our school system was set up and I was just stunned. Then I tuned in to some of the debate about it and it was utterly economically illiterate, and there’s still plenty of work to be done on that even now, almost 20 years later.

So, I thought, “Well, I’m having a good time being an environmental economist and an urban regional economist. But I also love low-hanging fruit, and so I’ve got to devote some more attention to school system reform and school choice,” and that’s how I got where I am today. That’s what I’ve been doing for most of the last 20 years.

Paul DiPerna: So, you’d say this was really a personal kind of journey where you saw this firsthand just through the experiences your wife had as a teacher, and then you saw the opportunity there as a researcher where there was just a lot of work that could be done, a lot of research questions to be explored.

John Merrifield: I’ve never been all that excited about filling up journals with things that only 10 people on Earth can read. It’s hard to survive as an academic when you’re not all that excited about that, but somehow I managed by writing a few books here and there.
Yeah, I just saw that the school system reform issue, which is basically the survival of our civilization issue, needed some economic literacy injected into it, that we needed to understand what markets were, and how price systems decided what we’re going to produce and how we’re going to produce it and where it’s going to get produced. All these basic things that I talk about in the first class day or two of my principles classes seemed to be totally beyond the reach of 95 percent of the people participating at a high level in deciding what our kids would be taught, how they would be taught, where they would be taught, and which ones would learn which lessons in which places.

Paul DiPerna: Yeah. Thinking about when you made this kind of shift, I guess as you said, in the mid-’90s—

John Merrifield: A totally professional remake, yeah.

Paul DiPerna: Is that when you met Milton Friedman? Was that—

John Merrifield: No, I didn’t meet Milton Friedman until well after that. I think the formative moment in pushing me kind of over the brink was I wrote a few letters to the School Reform News, and Mike Lieberman, as he’s usually called, Myron Lieberman, as he signed on his books, invited me to meet him at the Federal Reserve Bank in Dallas for a meeting. At that meeting in 1998, I think it was, we decided we were going to work on The School Choice Wars. At some point along the way, I can’t remember the exact reason, he decided he didn’t want to do that anymore. I don’t think it had anything to do with me. But I decided to persist in the topic and make it a sole authored book, and he was impressed that I did, and he was impressed with the result. The bug bit, and I’m hooked.

Paul DiPerna: Well, it’s fascinating. Around that same time period, that’s when he launched… He and Rose, his wife, launched our organization in 1996. So, I think, yeah, you were shifting, at least professionally, from one area towards studying school choice and education reforms and systems reforms, and then I think the Friedmans, they were doing their own… They were making their transition from academia to what was their next path, and really laying the foundation for our organization when we were known then as the Milton and Rose D. Friedman Foundation. Then just a few years ago, for some of listeners who might not be aware, we changed our name to EdChoice. But they continue to this day to be a huge influence on us as an organization, particularly on the thinking of universal school choice and making sure that all students are eligible for a range of school options.

You said you had your interactions with Milton Friedman around the ’98, ’99—

John Merrifield: That was Myron Lieberman. But what you just said reminded me that… Here’s how I ran into Milton Friedman. Strange. Obviously this is a topic near and dear to his heart, especially at that time. Because as a result of the association with Myron Lieberman, I wrote a little op-ed on why teachers should be for school choice. I thought, “I’ll send it to Milton Friedman and see what he has to say.”

Well, he read it. He read it while waiting for a doctor’s appointment. And wow, I got it back. I guess we’re not on video, so my facial expressions don’t show. I got it back. I’ve not seen that much blood since the last time I slashed myself by accident. He marked that thing up. You know, passive voice, active voice, this and that. I had to remind myself, the only reason he did that is he cared about it and he thought that there was enough there that I was worth spending that time on.

Paul DiPerna: Tough love.

John Merrifield: Yeah, exactly.

Paul DiPerna: Tough love.

John Merrifield: Right, exactly. So, I thought, “Wow. He read it, he commented on it. Better get my act together.” So, anyway, so I did, and I sent him a copy of my book. He probably gets dozens and dozens of copies of my book, my School Choice Wars. I sent him an advanced copy in 2000, and he read it and he gave it an endorsement. So, I’ll proudly display that on the second edition that I’m working on now, that he endorsed the first edition.

I met him, can’t remember, once or twice after that. I think it was twice. I met him at a Friedman Foundation function in Los Angeles. Barely had a few words there. But then I invited him to chair a session. It was Western Economic Association in San Francisco, which he agreed to do, and I got to sit across the table from him for 20 minutes before the session, talking about a variety of things. So, that was awesome, and he gave me another dress-down after the session about how I presented my paper and all. Again, the same thing. He wouldn’t have taken the time to do it if he didn’t think it was important.

Oh, and the other time that I got to meet him, he invited me up to his apartment long enough to sign my copy of The School Choice Wars. So I have a copy of the book with his signature in the front of it.

Paul DiPerna: Oh, that’s very cool, yeah. I only had the chance to meet him very briefly one time. But my boss, Robert Enlow, who had a close relationship with Milton Friedman and Rose Friedman and other folks… My understanding is that they cared deeply about these issues around schooling, especially as they were getting older, and they would engage, and any critiquing was really, yeah, just because like you said, they cared so much about these issues.

Thinking about some of the work that you were doing, can you tell our listeners or describe a little bit about School Choice Wars? You mentioned it a minute ago. What led you to writing that book? You said that you had started it with Myron Lieberman and then finished it off on your own and published it in 2001. I just remember, that was when I first got out of graduate school and I was in my first job out of school. I just remember that making a big splash, because that was an important book, especially for education reformers and those who were studying school choice and other education reforms. It also was happening around the same time of Paul Peterson and his colleagues at Harvard who were producing those randomized control trial studies of the voucher programs. So, it seemed like there was some momentum around the issue. Can you tell our listeners a little bit about the book?

John Merrifield: It’s an amazing thing. I decided to beat up on both sides. The catchphrase for the book was, “There’s a lot of information being put out there, and a lot of it’s wrong, misleading and irrelevant.” So, obviously I’m very much pro-school choice. But there was a lot of mistakes being made by our side of this issue in promoting, hyping weak so-called experiments, and how that we were going to incrementally move from these very tiny programs progressively to larger programs. I thought we were going to get ourselves in trouble and really poison the well for what we really needed, the Friedman-style school choice where everybody had a choice and could top off their voucher or tax credit. In those days, there weren’t any education savings accounts yet. No one had thought of that yet.
That’s why I wrote The School Choice Wars. Because it’s one thing to battle your intellectual enemies. It’s another to wonder why the people on your side were doing things that would ultimately undermine the movement. I think we’ve made a lot of progress since then.

Paul DiPerna: I was going to ask—

John Merrifield: For a while, I thought I was the school choice advocate’s least favorite school choice advocate for having beat up on so many of them, but I see that I’ve made somewhat of a recovery.

Paul DiPerna: But in the almost 20 years, do you see that there has been… I mean, we’ve certainly seen a lot of progress on the legislative front, and so many more programs have been enacted since 2001, but just…

John Merrifield: We’re still making some of the same mistakes, but a lot of people have figured out, maybe in spite of me, maybe because of the book, that a lot of the things that they’ve been doing weren’t productive, and that some things that they had ignored mattered a lot. For example, the add-on onto the… In those days, pretty much just the voucher was the main vehicle. But that’s a critical issue, and that’s the difference between a centrally planned school system and one that can function, as all thriving industries function, based on the price system, where freedom by consumers and freedom by producers would produce a market price that was the far better way to regulate things than through the political process.

Paul DiPerna: Would you say that pricing signals and the pricing mechanism… In our conversations as we’ve had over the years, would you say that’s one of your big, main focus in terms of we still have room to grow and to do things better?

John Merrifield: It’s just such a basic point, but it’s such an esoteric point, and people are so attached to the notion that they have to prescribe how things are done. A couple years ago, there was this line about how people don’t trust producers and consumers to regulate things independently. So, there’s a lot of that. So, yeah, it’s a very difficult sell, and I think I’m probably still one of just a handful of people that are openly advocating that whatever we do has to move forward in some way by exploiting and harnessing the price system as a way to orchestrate what’s taught, how it’s taught, for whom, and who gets taught. If we don’t do that, we’re going to be stuck in the central plan optimization mode, as I call it.

And that’s part of what we need to do, is to educate all of the technically brilliant people that are working hard to improve schools for kids, but are doing it in a way that’s ultimately not very likely to be very productive. If they’re not harnessing price signals in some way to signal either the consumers of schooling or the producers of it through a pricing mechanism, they’re involved in central plan optimization, which we know from all the central plans that have been tried throughout history for everything that ultimately, they collapse. Because there’s an incentive problem and an information problem that nobody’s ever figured out how to get around. Central plans bring out the worst in even the best people, unfortunately, eventually if not immediately. If we don’t have the price mechanism resolving imbalance between supply and demand and motivating market entry and exit, then we can only rely on regulation and tyranny that ultimately comes with that kind of power.

Paul DiPerna: Maybe pretend, just for an example, pretend like I’m a school principal or a teacher. How would you describe… How does the pricing signal work? How would an effective pricing system, pricing mechanism, work for school choice? How would it—

John Merrifield: Yeah, sure. I’m not sure this is something I would convey to a school principal per se, but here’s a good example. Let’s suppose a family’s watching TV one night, Mom, Dad, couple kids, and the sports broadcast comes on the news, and one of the kids just totally tunes out, leaves the room. The other kid’s just going nuts. He’s so into all of the statistics and everything. And Dad is an entrepreneur, and he scratches his chin and he says, “You know what? I bet there’s a lot of kids out there like my son, and probably a lot like my daughter that just left the room. If I started a school that taught math, reading, writing, and whatever through sports stories, some kids would be so jazzed about that, they’d break down the door to get in my school. And I bet,” scratching my fingers here in the dollar-sign mode, “I bet I could charge a pretty high tuition for that.” See, now we’ve got the capitalist brain functioning here.

So, sure enough, Dad goes out and starts the school. We can set aside for the moment whether it’s a charter school or private school having to charge the whole, fair or not. Admittedly, it’s going to be difficult for Dad to get people to enroll in the school if there’s a free alternative to it. But OK, let’s say that it’s so popular that kids are just pouring into that school, and Dad is making money just like crazy because it’s such a popular idea. Here’s the next—

Paul DiPerna: It’s less school with a new curriculum. It’s very innovative—

John Merrifield: A curriculum that’s based totally around sports.

Paul DiPerna: … and it’s based around sports story, OK.

John Merrifield: Yeah. Yeah. We’re not talking P.E. or jocks doing stuff. I mean, that can be part of it. We’re talking about kids excited about sports stories as a way to learn things, to be engaged in the three Rs, if you will, to be engaged in reading and writing and all of that. So, Dad’s making money like crazy doing this, because it’s popular with not a very large number of kids, but more than enough to fill up a school in his neighborhood at a pretty pricey tuition.

Guess what happens next in the free enterprise system? Somebody else observes Dad making big bucks selling that curriculum to kids, and he starts up a competing school to do that same thing, and that forces the tuition price down, eventually to as cheap as anybody can produce that kind of schooling. See, and that’s how the market system resolves those issues.

Paul DiPerna: So, there’s a check there…

John Merrifield: Exactly.

Paul DiPerna: … built into the system so that—

John Merrifield: Yeah, the first person is rewarded—

Paul DiPerna: … not going to be runaway capitalism or however you want to phrase it. People who might be worried about kids being left behind and being priced out of—

John Merrifield: Well, it’s possible that teaching stuff through sports stories is expensive. Might be hard to get teachers to teach that. Maybe they roll their eyes and they go, “Oh, goodness.” So, you got to pay them more to do that. So, it’s possible that that might cost a lot, and that maybe it isn’t available to some low-income kids that are sports nuts that would learn best by sports stories.

What happens? The philanthropists figure that out, and they say, “I’m going to make it possible so these low-income kids can go to this school that would really engage them in learning, whereas they’re really bored now in this one-size-fits-all public school.” So, either way that you look at it, just from the straight capitalism of the motivation to do this or the sort of perceived inequity of, “Hey, this could be expensive. Why can’t my kid have this? It’s not fair…” Well, we have the philanthropists that are now… Introducing some of the modern notions of school choice now, that they’re spending all their money supporting charter schools rather than supporting children directly.
If they no longer… If the market could decide the amount of things and the price of things, then the donors wouldn’t have to support the schools directly. They would be able to spend all their money supporting low-income children. And I’ve done some of the math that shows that there’s enough money right now being spent supporting charter schools staying in business to fund each low-income child that’s likely to want to choose for about $1,000. So, each child, from a philanthropist, on average could probably get about a $1,000 support payment to help them top off whatever government funding that they had to either go to a charter school… If they allowed topping off. That’s another subject, topping off at charter schools. Or at a private school that, say, charged $8,000 to teach this curriculum to them, whereas the amount of government money supporting, say, a voucher education savings account is only $7,000. Got to find $1,000 some place. Now, if their parents have money, no problem. But if their parents don’t have money, that’s where the donors come in, and they’re no longer committed then, under those circumstances, to underwriting the schools directly, now they can put all the…

Just a guess, one of the many research issues that we could do a survey on would be, how much additional money would donors come up with to do this if they were supporting low-income kids directly, as opposed to supporting chartered public school with their money, that a large fraction of the children that go to those schools, their parents could support them, that they’re not low-income kids.

Paul DiPerna: Well, and so we do see, and we have seen since the late ’90s first starting in Arizona, tax-credit scholarship programs. So, you have these scholarship granting organizations, where they receive donations either from individuals or corporations, and then those donors then can offset their tax liabilities at some percentage that’s stipulated by whichever state. We have one here in Indiana, and Arizona has one as well where actually a higher percentage can be offsetting for tax purposes. I think 17, 18 states have tax-credit scholarship programs now. So, we already see there is this philanthropic and donor-driven assistance, particularly for those low-income, disadvantaged students. Even in the case of Arizona, where in some cases, scholarships can be combined or added onto to try to meet those tuition needs and so forth.

No, that was really a helpful example. Is there anything else you wanted to—

John Merrifield: Well, the tax-credit scholarships, usually that money goes either to parents that opt their kids out of the public school that they’re assigned to or to business, okay, that want to donate to a voucher-granting fund. So, that’s not philanthropy per se. People are maybe partially philanthropically driven.

The philanthropy that I’m envisioning stepping up, not with additional money, although that might be forthcoming, I believe it would be, would be like the Walton Family Fund and others, for example, that fund charter schools directly. That that money would then become available directly to fund children, which would top off the voucher that would possibly be forthcoming from a tax-credit scholarship program.

For example, suppose they could get, say, $5,000 from the tax-credit scholarship SGO, the Scholarship Granting Organization. But the school that they want to attend, say, charges $6,000. OK? So, wow, they’re a poor family. Well, $5,000’s not enough. They can’t find $1,000. Bingo. They’ve got a donor that provides funds, on an application basis, to top off their voucher to attend a school that charges more than the voucher amount.

Paul DiPerna: OK. Yeah, no, that could be a way to address some of the gaps between the tuition amount and the voucher.

John Merrifield: I mean, we need the philanthropists to step up and do that. We need to make it possible by relieving them of the burden of having to keep charter schools and other schools afloat. Because many states don’t fund charter schools at a high enough level to pay for many of the pedagogies that people want available in those states. So, the philanthropists then are… Since school’s free, getting into it is not a cost issue. It’s a, “I’m stuck on a waiting list” issue. So, the donors, if they want to have an impact, have to fund the schools directly. Which as you know, Milton Friedman says you should not do. You should subsidize individuals, consumers of something, never the producers of it if you can help it at all. But that’s the only way to make a difference as a philanthropist now with schooling being mandated to be free.

Paul DiPerna: Yeah, I’m glad you brought that up. Really at the foundation of school choice is really that notion, that idea, of separating the administration of schools from the financing of schools. I believe that one of his central tenets behind his school choice proposal was that those have to be disconnected for all sorts of reasons, economic, political, and otherwise. So, that’s really helpful to talk about your thoughts on pricing, and this topping off…

I mean, we’ve seen that some programs that have been enacted in the last five to 10 years have become more generous, and seem to be at least. Do you see the potential that topping off may not be as crucial an issue? If programs hypothetically do become… At least voucher and ESA programs tend to be more generous on average, or would the funds allowed for students… Who would most benefit from… I think you said that the population of students that would most benefit from this capability to add on funds would be the disadvantaged or low-income.

John Merrifield: Well, everybody would benefit, but they would benefit the most because they’re the most desperate in need of some differentiated instruction, some specialized schooling. The one-size-fits-all fits them the worst. So, if we can get them into a system where there is a diverse array of ways to teach things, diverse pedagogies, or diverse themes for schools to engage them in the content so they actually want to learn, yeah, we need to have the top-offs.

Now, certainly the higher the base funding amount that comes per pupil via public funding… The higher that is, the more frequently that competition will push the price down to zero, namely the government funding is enough. Now, if the government funding rises to a high enough level, then you start to get the reverse problem of overspending and surpluses in schooling is frills that are low-value, but the purveyors need to use them to compete for children at a very high price.

Ideally, what we would have is a government funding support level where most schools and nearly free. I think that a little bit of skin in the game I think is useful. But we want a government funding level where most schools are nearly free once the competition, the market entry and of that, has taken its toll. But we must always leave the possibility of topping off there, because that’s the way to handle ups and downs in the market that can happen faster than legislatures can change funding formulas.

For example, let’s say somebody has a pedagogy that they think it would help a lot of kids, and they think that it would cost, say, $10,000 per child. Right now, the per-people funding level from the government is, say, $10,500. Pretty dicey there, you know? If their estimate’s a little off, suddenly now they’re losing money and they have to become donor-dependent or go out of business. But if it’s possible to add on, then it’s okay. Because then suppose costs go up. OK, so we’ll charge $100 to go to this school instead of free.

So, you need to have some margin of error there so that entrepreneurs feel safe in entering a market with an innovation. Plus initially, they’ve put up probably a lot of money into product development. They probably initially need to be able to justify their investment, to charge a lot to secure a return on their investment before the copycat entrepreneurs descend on the situation, like that sports school scenario that I described. Dad, the first inventor, he probably needs to get rich off of that. I mean, at least charge a lot off of that, just to cover his developmental costs and to induce others to think about the same thing and to follow him. But then after a period, okay, now we’re going to let the wolves come in there and say, “OK, I love your idea. I can do that, too. By the way, we’re going to charge less than you and put you out of business unless you can match us.” Sometimes the copycat entrepreneurs are more efficient at delivering the product than the originator of it, and so they may put him out of business.

Paul DiPerna: Well, and that’s because they probably learn from the mistakes or—

John Merrifield: Well, he could do that, too, but sure.

Paul DiPerna: … the trials and tribulations.

John Merrifield: Yeah. Yeah, sometimes looking from afar.

Paul DiPerna: So, those early adopters or the leaders tend to… Yeah, they can be… Yeah.

John Merrifield: We need that top-off possibility for all kinds of different margins. It’s never totally irrelevant. I’ve heard people in San Antonio, where I’m from, talk about this issue and say, “It seems unseemly to let the rich,” which they assume it’s just going to be the rich. They haven’t thought through the philanthropy part of the topping off. They think, “OK, topping off. Only rich people can do that. It’s unfair to give them an advantage that they can have better schooling than others.” So, they say, “Let’s just jack up the government funding level enough so that we can ban the top-offs.”

No. That’s not… I mean, we should have equitable funding. Children, no matter where they go, nondiscrimination. Same amount of money should follow them everywhere. There should always be the room to top off. Because no weighted student formula or any other formula can capture the full diversity in what makes a child learn better, and it might cost a little bit more than what somebody’s guess is.

Paul DiPerna: Just to play devil’s advocate a little bit, I was going to say, could an alternative to the top-off possibility be indexing or having an automatic escalator? You know, annual, almost like—

John Merrifield: Absolutely.

Paul DiPerna: Like a cost-of-living index, or something like that where—

John Merrifield: Most schools should be free or nearly free. Absolutely.

Paul DiPerna: … it’s fluid from year to year. It’s out of political hands for the most part. It’s something that’s automatic and adjusts to market circumstances.

John Merrifield: That’s a possibility. Yeah, you should still definitely allow the topping off against the uncertainties and such. But sure, you could do that. The criteria is that most of the schools should be nearly free. That should guide, either automatically or informally, the budgeting of it. But some pedagogies are just going to cost more than what we can do for everybody, and we shouldn’t put those off-limits just because we think that top-offs are unseemly. It’s not such a bad thing when the wealthy get to be the first to have something, and they’re the first to put their kids at risk on a new pedagogy that may be a little risky.

Paul DiPerna: Well, that’s actually… I think that’s a really important point, is that there’s a risk, or there can be for those people who are trying new, innovative things. That is the trade-off. But there can be a huge payoff, too, that benefits not just a certain income bracket. I mean, technologies. And even thinking about healthcare and medicine that is targeted to a very specific population and adopters, either through circumstance or by means. But then eventually, it opens up and it spreads-

John Merrifield: We need the process to start, yeah.

Paul DiPerna: … and it becomes much more accessible to a lot of people. I mean, which I know our organization, on that principle of universality, we want options to be available to all students and by all means. I know that’s where you come from, too. I think it’s a really interesting topic that is something that a lot of folks will be thinking about. Especially thinking about the next generation of school choice programs and evolving programs at the state level. What would you say has made you either optimistic about the future around school reform and systemic reform, and anything that maybe makes you wary or gives you some pause?

John Merrifield: Yeah, well, some of this does take a little bit of—

Paul DiPerna: It could be recent, or it may be farther back.

John Merrifield: Yeah, yeah. Well, I’m always optimistic, just because of the great country we live in. So, I mean, that’s the main thing that drives me. At some level, these concepts are simple enough and they derive from a fundamental principle, namely nondiscrimination. Our school system exists. Public education is not our public school system. Public education is a concept that says we value all children, and that all of them need schooling that works for them. So, I think that may prevail over the struggle to message this, which I’m afraid grows because our literacy level, especially for economics, seems to be rising.

So yeah, we’re in danger here, but the concepts are still simple enough that hopefully we can win in one state, at least, and demonstrate this at a high enough level that it’ll do as Milton Friedman said, and the wildfire will be ignited once we demonstrate it somewhere.
I’m afraid what demonstrating is going to turn out to… Well, I’m not afraid, but I’m hopeful in a sense that we can demonstrate it not by its educational prowess, because that’s going to take a while. We can transform a school system. It won’t show that it’s a lot better and by what standard people will dispute the statistics and all that. That takes a long time. But what’ll happen right away when we convey universal school choice to every person in a given place is that people will flock into there, and there’ll be an economic development explosion. That’ll be the first sign that school choice works, it’s something important, namely to rescue the poor places in our inner cities by conveying at least school choice to those populations. Then eventually in time, 10 or 15 years after the economic development benefits have been seen, we’ll see the schooling benefits, too.

Paul DiPerna: You mentioned Bart Danielsen earlier during our podcast, and he’s looked at those kind of questions—

John Merrifield: Yeah, we both have in writings.

Paul DiPerna: … and I know that’s something that, yeah, the two of you have ongoing work together. Could you maybe describe if there’s anything that the two of you have been working on, especially as school choice plays into or could factor into economic development?

John Merrifield: Well, we’ve mapped out Tennessee and Texas to show where all the places are, under different sets of constraints and assumptions, that should be given school choice as an economic development tool. In other words, we’ve shown, for all the major cities and some rural areas, where the poverty is.

See, this is a very unique and powerful anti-poverty tool, because it makes people actually live in the place that you want the economic development to be. I’m going to give you an example of what I mean. In San Antonio, we attracted a Toyota plant some years ago, with huge fanfare. I’m sure it’s benefited the city, and I’m sure it’s benefited the state, although maybe not enough to pay for all the goodies we gave away. But it didn’t benefit the place where the plant is. It’s still a desperately poor place. And I suspect the reason is the employees, and probably the executives, won’t tolerate the school systems of South San Antonio. Not that the North San Antonio is much better, but it is better, and so they probably commute across San Antonio every day, polluting the air and creating traffic jams as they go, to reach their jobs sites in South San Antonio at the Toyota plant. I’m going to collect the zip codes one of these days of all the workers that work there and demonstrate that.

But that’s a time-worn story. Economic development is attracted to a certain place in terms of new businesses. But then the people with any money don’t bother to live there. So, there isn’t much economic development to the small-scale places, the neighborhoods, that desperately need it. It goes to the city at large and to the places in the city that are already doing pretty well. So, we’re segregating our cities by making choice mostly still based on where you choose to live. Then all you do is choose which comprehensively uniform, gargantuan school is best, whereas a choice-based system based on tuition rather than housing cost would create a dynamic menu of diverse schooling options as diverse as the school children population. That’s what we desperately need.

Paul DiPerna: Mm-hmm, mm-hmm. Bart, he did a report for us a couple of years ago looking at a charter school in Orange County, the Orange County School for the Arts, and doing analysis over time, and just how the economic development around that community changed over time pretty dramatically. That really showed me how there is this economic development argument for school choice and, as you mentioned a minute ago, that there is also an environmental case for school choice that’s connected to the economic development side. That was just fascinating work that he’s done. I’m really glad to hear the two of you will be looking at those kind of questions.

John Merrifield: It’ll help with global warming.

Paul DiPerna: Yeah.

John Merrifield: I mean, really, it’s something to harness. A lot of people are concerned at the city level with their global warming policies and—

Paul DiPerna: Or the local carbon—

John Merrifield: Carbon footprint. Here’s a way to help. Improve your school system. Make it possible for people to have good schooling where they are, if not through their public schools, through school choice, and there’ll be a lot less traffic jams generating emissions, and a lot less driving around than there is now.

Paul DiPerna: One of your ideas along these lines is that a voucher or an ESA should be targeted to the place or the geography—

John Merrifield: If necessary, if we have to target it, yeah.

Paul DiPerna: If it has to be targeted, to the place rather than by other types of student demographic.

John Merrifield: Yeah, the only acceptable, I think, type of targeting… By acceptable, I mean as a catalyst for school system reform, is targeting of poor places. Which means everybody in the poor place gets the school choice option. The reason everybody has to get it is the main initial reason for it is to keep the relatively richer people, middle and upper-income people, from leaving those places, and to attract middle and upper-income people to those places. Meanwhile, everybody’s got school choice. So, the people that can’t leave those places get a ride on the improved schooling options that result from the actions, and in some cases, inactions of the middle and upper-income people, by staying there when they were about to move.

Paul DiPerna: I know we’re going to probably have to wrap up in the next five minutes, but I wanted to make sure we talked about your new book that’s coming out this fall. Can you tell our listeners a little bit about what the title of the book is and what it’s about?

John Merrifield: Yeah. Sure. I’d love to. Thanks for asking. Yeah, the title of the book is, School System Reform: Why and How Is a Price-less Tale, dash between “price” and “less.” Because the reason we’re in the mess we’re in… I mean, a central reason for it that leads to a lot of the more visible reasons is that there are no prices on the various elements of our school systems, which is 90 percent the public school system and 10 percent private, and 9 percent of the 10 percent is church-run, so it’s not based on investment and profit-seeking like most of the economy is.

We have a system, frankly, in this country as well as most of the modern world, and probably the whole world, but there’s no data for me to know for sure, that school systems throughout the world are mostly price-less. Therefore, when there aren’t prices to orchestrate production and consumption, the only other alternatives are either chaos or central planning, and central planning, as you know, has a lot of chaos in it. So, we see that by not allowing tuition to be charged, by not paying teachers according to supply and demand, by not allowing easily movement from public to private within our current system, we see all kinds of terrible effects that cascade into other terrible effects that I wish we had enough time to get into.

But let me get into one aspect of it, namely the equity aspect. It is not inequitable to allow, ultimately, improvement in the prospects of the poor, to allow schools to charge what the market will bear. I know that some people are gasping out there to hear that. But there is the market entry mechanism that will drive the price down to what it actually costs to do whatever it is, and then we can rely on the philanthropy to fund the top-offs where necessary, rarely in most cases, based on funding we already are committing to schools, to support the low-income children.

Paul DiPerna: Just thinking about our listeners, is there another industry or another sector where you could make a parallel, kind of compare, where it was price-less but then pricing signals or pricing mechanism became more transparent, and therefore there was more information coming to consumers?

John Merrifield: You know, right off the top of my head, I can’t think of a system we’ve rescued from price-lessness lately. What I can tell you is that we’re in the same mess in healthcare. A book came out recently by John Goodman whose title is Priceless, which is about healthcare and how there are prices on things in healthcare, but they’re hard to monitor. Sometimes you’re obligating to paying before you see what the price was. So, we can derive some information from healthcare, because there’s been some reforms.

But the solution, I think, is the same, frankly, to healthcare as well as K–12. Because equity, and sort of this notion of it’s a right to schooling and a right to healthcare, is sort of the same between the two of them. We need a two-sector solution. One is, hey, you’re guaranteed a spot. No charge. But if you want to opt out to whatever the free market can provide, whatever central planning can deliver… That’s what we need to move to, both in healthcare and in education, is to have a nondiscrimination between the people that want to be in one part of the system versus the people that want to be in the other part of the system. I think both will, frankly, thrive.
One of the things that we saw in Edgewood when I studied that, or I saw what Bart Danielsen documented for Orange County, California, was the Edgewood school system in San Antonio… Philanthropists made it possible to offer vouchers to everybody there for a period of 10 years. When he did that, suddenly an Edgewood address became very, very valuable. They built new housing in the Edgewood area for the first time in decades. It’s a very poor part of San Antonio area.

Paul DiPerna: You did a ton of Edgewood research.

John Merrifield: Yeah, I was the person that did that research. The trailer parks filled up right away. They built new apartments, they built new homes. It was thriving. And the punchline here is the public school systems got better, and families—

Paul DiPerna: From the competition—

John Merrifield: Well, not—

Paul DiPerna: Competing for students?

John Merrifield: You know, I’m glad you asked that question, because I don’t think there was any competition going on there. I went through 10 years of school board minutes. Not a mention of the voucher program by the school board. Not one. One questioner at one of the meetings brought it up and was quickly dismissed.

What happened, I believe—more research needs to be done—was that the Edgewood schools improved because they had a less heterogeneous student population to have to deal with. The outliers that were not successful in the Edgewood schools left. As a result of that, it became easier to teach those that were behind. It was a more homogenous… Fewer extremes, fewer bored, acting out, fewer overwhelmed children, fewer bored children in the classrooms. Because they’re the ones that took the vouchers and left.

So, we can count on public school improvement through school choice even if there isn’t any competitive response, which I think is frankly kind of heroic to expect one. People have done research that they claim has shown a competitive response—

Paul DiPerna: Usually small, moderate, positive effects.

John Merrifield: Right. But I think they’re mostly sorting and publicity effects. We have yet to resolve that issue. Competitive effects would be fine. But the point here is that we will get public school system improvement from school choice without competitive effects. By removing the children who are not thriving there, we will make the teachers’ lives much easier than they are now with all the differentiated instruction that’s expected from them that they are unwilling or unable to deliver.

Paul DiPerna: But you’re not saying that students are going to segregate themselves or… Because what we’ve seen, at least in the research, is that if anything, private school choice programs, they’ve had an integrating force—

John Merrifield: No, I’m not suggesting anything at all about segregation or integration. I’m saying that somebody that’s in a math classroom, for example—

Paul DiPerna: They’re basically going to the schools that just-

John Merrifield: … that’s struggling, saying, “I need to get out of here.”

Paul DiPerna: … meet their needs.

John Merrifield: And when that person’s out of there, they’re no longer acting out or doing whatever they did when they were in that room, and so the teacher is more successful with everybody that stays behind. It doesn’t have anything to do with color or income.
You see, when you have a public school system classroom, it’s a random sample of everybody that’s the same age in that neighborhood, in that attendance area. Which is an almost impossible teaching mission, to teach a room full of everything from A to Z in terms of what engages them, ways in which they learn… All of that lumped together in the same room because they just happen to be the same age. It’s a completely insane way to teach children. They need to be ability-grouped by subject, OK? Not just ability group. That’s tracking. That’s a no-no. Ability group by subject.

Children are diverse. They’re smart in some things… I know I sure am. Hopefully smart in something. I know I’m pretty dumb in some things, too. I turn that over to the car mechanic and the computer nerd and all of that. They handle that, because I’m totally helpless there. But there’s some other areas where… And I think most people are the same way. But we don’t do that in our public school system classrooms. We just throw them all in there and say, “Teacher, do differentiated instruction. Be successful.” And some teachers are unbelievable, they’re able to do that. The vast majority, from what I’ve read, say, “I can’t do that,” and they don’t try.

Paul DiPerna: But I think there is some… My understanding, and I’m not that familiar… Although my former boss a long time ago, Tom Loveless… You wrote The School Choice Wars. He wrote The Tracking Wars book. I just remember conversations with him and learning about the differences between tracking and ability grouping. My understanding is that yeah, in the elementary grades, it’s maybe more of that kind of randomness in terms of where students are assigned for classroom learning and what teachers they get. But then as they get to middle school, junior high, high school, that there is more of that ability grouping that’s going on, if not tracking.

John Merrifield: There used to be a lot more of it, but it was the wrong kind of ability grouping. It was more like ability grouping not by subject. It was just sort of a homogenous designation of high-performing, low-performing, never mind that they’re high-performing only in some things and not other things. That’s not…

See, one of the main problems with that, and the reason that it went away, is it’s stigmatizing. “Oh, you’re in the dumb kids. You’re with the smart kids.” Most kids are some of each. If every once in a while they’re in the high-flyers math room, OK, but maybe later in the day they’re in the low-flyers classroom with reading. Then we don’t have these stigma effects that if we track people just one-dimensionally…
That’s another issue. There’s way too much one-dimensional thinking when it comes to schools. Now that we have all the public schools, the public schools, the all try to do basically the same thing. So, it’s easy to say, “This is a high-quality school and this is a low-quality school.” What if we had a system, the one we need, of a diverse menu of schooling options as diverse as our schoolchildren? How would we know whether a school was high-quality? You would have to say, “For whom?” Yeah. That’s the conversation we need. We need to not be able to designate schools as politicians and researchers. Ah, but as parents, we need to be able to designate schools. “This is a high-quality school for my child.” They can make that judgment. “This school that a lot of my friends like, other parents… I would never send my kid to that school.”

Oh, that’s another thing that came out of the Edgewood program. The enrollment in the Edgewood system rose at the same time that the enrollment in the voucher program went up. People are thinking the kids with the voucher, they’re coming… The first couple years, yeah. But then when people started flocking into the system, they weren’t just anti-public school families. What they noticed is, “Susie does just fine in her assigned school. She’s a mainstream kid. Oh, but Joey doesn’t do well. We need to move to Edgewood. Susie’ll go to the public school. Joey will take a voucher.” So the enrollment in both schools went up. It was an amazing thing to see. We thought one would go down as the other one just matching going up. No, the one went down a little bit, and then the other one… The vouchers went up for five years until they started to run out of money, and then they stopped taking new kids, and then so it started… And that’s exactly when the public schools started their-

Paul DiPerna: Taper off a little bit.

John Merrifield: Went down again, started going down again in terms of performance.

Paul DiPerna: In terms of performance. Going to have to sign off here in a couple minutes. One thing I wanted to ask. Since you just retired this year, you have a long history, impressive publication and teaching record at UTSA, and so assuming that some of our listeners may be in graduate school, thinking about graduate school, or early on in their career in academia, do you have any advice for folks who are just at the beginning of their career and thinking about research opportunities that may be out there, or just things to consider professionally in higher education?

John Merrifield: Well, my first advice to all my students is always first figure out what you’re passionate about, and that’s what you ought to do. That’s the most important thing. You don’t want to wake up every morning to real work. Any job has real work in it every once in a while-

Paul DiPerna: Right. Of course.

John Merrifield: … but yeah, you want to wake up to… Then you’re going to be productive, and the money will take care of itself.
The other advice I’d give is follow the low-hanging fruit. Figure out where the basic needs are not being met. In this area, intellectually it was, “Hey, we need an economist that’s actually a price theorist.” That’s the role that I’m trying to take. There’re other economists in this realm, but I think the vast majority, I’m trying to think of one that’s not, is basically participating as an econometrician. Another statistician who engages in school system reform or school choice that just happens to have a Ph.D. in economics.

But back to your question about the graduate students. Find what you’re passionate of, follow the low-hanging fruit, and if the bug happens to bite you for school system reform, there’s a lot of low-hanging fruit there. For those interested in economics but maybe not school system reform or this area, if you’re good at communicating, either with drawings or just with English, we need you. Because there’s a lot of good to be done in this specific area, or just any area, just commuting basic economic fundamentals to the general public. Read about Henry Hazlitt, one simple lesson. There was a man, now deceased, that was great at translating important things into newspaper-level-

Paul DiPerna: And very, very, very complicated concepts and ideas.

John Merrifield: Yes. Yeah. We need more people that can do that, whether it be for school system reform or any area.

Paul DiPerna: OK. No, that’s great. No, I think that’s a nice positive note for us to wind up this podcast. Any other last words, maybe that we didn’t have a chance to cover?

John Merrifield: Well, the fun never ends unless you let it. That’s something to live by, especially in this area. Because it’d be very easy to get depressed when you see a lot of things going on, and the kinds of ways that some people are, frankly, willing to make a living in this area acting against the best interest of children, unfortunately. I think some of them know that. Some of them, I think, maybe actually think that a pro-monopoly system is good for kids. We need to change their minds. We need to work with them. That needs to be our number-one priority, is take the good people and let them know that they’re pointing in the wrong direction at the moment.

Paul DiPerna: All right. Well, John, thank you for this time to have a conversation over our podcast. To our listeners, please be sure to subscribe to our podcast on platforms like SoundCloud, Apple Podcasts, Google Podcasts, and others for more of our coverage for new school choice research, education reform, policy chats, and more.

Thank you for listening, and we’ll see you back soon with more EdChoice Chats.