Perspective - December 2011

December 2011 • Volume 18 Number 12

Martin Luther

ALSO IN THIS ISSUE Oklahoma’s bureaucratic overhead problem Page 4 Injury-prone government employees Page 5 Income-tax phaseout would create economic boom Page 6 Are public school teachers underpaid? Page 10 Parents deserve preschool choices Page 11

I N

C A S E

Y O U

M I S S E D

I T

Brandon Dutcher

S

eminole State College offers a course called “Basic College Reading,” the goal of which “is to read at or above the 8th grade level.”

Gun control: A liberal Oklahoma state senator put 17 of 19 shots on target (5 head shots, 12 body shots).

Source: http://bit.ly/tYHNM7

Steve Jobs said school almost succeeded in “really beating the curiosity out of me.” huff.to/t2pGCI OCPA research fellow Steve Anderson, budget director for Kansas Gov. Sam Brownback, wants to nix the Kansas state income tax. bit.ly/vDGmVg Fort Smithians are already discussing the possible elimination of the Oklahoma income tax. is.gd/U15d4A Nearly one in five middle- and upper-income white th 4 graders in Oklahoma can’t read. bit.ly/uHYmr5 Former state Rep. Randall Erwin is the superintendent of the Clayton school district. He is being paid $90,240. bit.ly/uz1a7r Fewer than 1 in 4 Oklahomans are satisfied with public education’s return on investment. ocpathink.org/ articles/1526

JFK understood the Laffer Curve. bit.ly/sRVLJ7 More American students are majoring in visual and performing arts than engineering. shar.es/b8RJN A former Democratic congressman says voter fraud is commonplace and voter ID is the cure. is.gd/mmoz53 The Jenks school board is joining with the Tulsa Chamber to oppose reducing the Oklahoma income tax. ocpathink.org/articles/1591

Perspective

Will Oklahoma’s new center-right government spend more money than anyone in state history? ocpathink.org/articles/1588

In a recent panel discussion in Oklahoma City, national education reformers joined OCPA in calling for school reform and parental choice. bit.ly/uhjnAa The new Oklahoma Senate Democratic leader, Sean Burrage, has vowed to “oppose and vote against any and all efforts to increase taxes.” bit.ly/sJ1wvR The Obama Administration wants to build a “cradle to college” system. huff.to/uTDxID Economist Thomas Sowell says their arrogant, ignorant “payday loans” fascination makes liberals dangerous to the very people they think they are helping. bit.ly/u4Rzzi You can take “Jewelry I,” “Golf,” “Bowling,” and “Gymnastics” at Oklahoma Panhandle State University.

A new study by scholars at the American Enterprise Institute and The Heritage Foundation concludes that American public-school teacher salaries are $120 billion over market value. shar.es/biWlL Student-loan debt weakens family formation among Generation X. bit.ly/ooaWYf An OCPA distinguished fellow says some public-interest lawyers are fighting for liberty. bit.ly/ssch2Y Past OCPA speaker Steven F. Hayward says the public is souring on energy subsidies. shar.es/oXaiL Two out of five American children are now born to unmarried mothers. shar.es/ohcV8

December 2011 Vol. 18, No. 12 Brandon Dutcher ......................... Editor

Perspective is published monthly by the Oklahoma Council of Public Affairs, Inc., an independent public policy organization. OCPA formulates and promotes public policy research and analysis consistent with the principles of free enterprise and limited government. The views expressed in Perspective are those of the author, and should not be construed as representing any official position of OCPA, its trustees, research fellows, or employees.

OCPA STAFF

OCPA TRUSTEES

Michael Carnuccio ............................... President Joel Kintsel .................................... Executive VP Brett A. Magbee ....................... VP for Marketing Brandon Dutcher ............................ VP for Policy Karma Robinson .................. VP for Development Jason Sutton .................... Policy Impact Director Dacia Harris ............... Interactive Media Director Jonathan Small ................. Fiscal Policy Director Jennie Kleese ......... Development Events Manager Katie Cooke ..... Executive Communications Liaison Ashley Gill ............ Special Projects Coordinator Clara Wright ................... Hospitality Coordinator

FOUNDING CHAIRMAN

2

Kent Frizzell • Claremore David R. Brown, M.D. Ann Felton Gilliland • Oklahoma City Blake Arnold • Oklahoma City John T. Hanes • Oklahoma City Robert D. Avery • Pawhuska Ralph Harvey • Oklahoma City Lee J. Baxter • Lawton John A. Henry III • Oklahoma City Steve W. Beebe • Duncan Henry F. Kane • Bartlesville G.T. Blankenship • Oklahoma City Robert Kane • Tulsa John A. Brock • Tulsa Gene Love • Lawton David R. Brown, M.D. • Oklahoma City Tom H. McCasland III • Duncan Paul A. Cox • Oklahoma City David McLaughlin • Enid Jay T. Edwards • Oklahoma City Lew Meibergen • Enid William Flanagan • Claremore Ronald L. Mercer • Bethany Josephine Freede • Oklahoma City Lloyd Noble II • Tulsa

OCPA FELLOWS Robert E. Patterson • Tulsa Bill Price • Oklahoma City Patrick T. Rooney • Oklahoma City Melissa Sandefer • Norman Richard L. Sias • Oklahoma City John F. Snodgrass • Ardmore Charles M. Sublett • Tulsa Robert Sullivan • Tulsa Lew Ward • Enid William E. Warnock, Jr. • Tulsa Gary W. Wilson, M.D. • Edmond Daryl Woodard • Tulsa Daniel J. Zaloudek • Tulsa

Steven J. Anderson, MBA, CPA Research Fellow

J. Rufus Fears, Ph.D. Dr. David and Ann Brown Distinguished Fellow for Freedom Enhancement

Vance Fried, J.D. Research Fellow

J. Scott Moody, M.A. Research Fellow

Andrew C. Spiropoulos, J.D. Milton Friedman Distinguished Fellow

Wendy P. Warcholik, Ph.D. Research Fellow

PERSPECTIVE • DECEMBER 2011

Look who’s talking.

OCPA’s speakers don’t disappoint.

John Bolton

William F. Buckley, Jr.

Gov. Jeb Bush

Gov. Mitch Daniels

Dinesh D’Souza

J. Rufus Fears

Steve Forbes

Tommy Franks

Former Reagan adviser Art Laffer, the visionary “Father of Supply-Side Economics” who helped trigger a worldwide tax-cutting movement in the 1980s, discussed the idea of phasing out the Oklahoma income tax at a meeting on November 29 at OCPA.

David Horowitz

Laura Ingraham

John Fund

Newt Gingrich

Gov. Frank Keating

Jeane Kirkpatrick

Rich Lowry

Ed Meese

Stephen Moore

Peggy Noonan

Marvin Olasky

Gov. Bill Owens

Gov. Sarah Palin

Star Parker

Michael Reagan

Rep. Paul Ryan

Joe Sobran

Thomas Stafford

John Stossel

Cal Thomas

John Walton

J.C. Watts

Walter Williams

Clarence Thomas Sen. Malcolm Wallop

Oklahoma Has Too Many Government Employees …

By Brandon Dutcher

I

n a new study (“Eliminating the State Income Tax in Oklahoma: An Economic Assessment”), OCPA and Arduin, Laffer & Moore Econometrics outline a bold tax-reduction plan which will not require draconian cuts in state government spending. And even the modest cuts it will require should not be difficult, given that Oklahoma government spending is currently at an alltime high (see chart).

Oklahoma’s current spending problem is in part a bureaucratic-overhead problem. According to the latest edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index,1 Oklahoma ranks a depressing 37th out of the 50 states in full-timeequivalent (FTE) public employees as a percent of the population. (Oklahoma should aspire to the #1 spot, which is the state with the fewest public employees as a percent of the population.)

Of course, Oklahoma’s public-sector-employment problem isn’t exactly breaking news. Researchers

ranging from Rex Pjesky (“Excess State Employees Harm Oklahoma’s Economy”2) to Chris Edwards (“Oklahoma’s Bureaucracy Among the Nation’s Largest”3) to Russell Jones (“Oklahoma’s BureaucraticOverhead Problem Persists”4) to the research affiliate of The State Chamber (“Table 12: State and Local Government Employment”5) have consistently pointed to the problem.

Oklahoma government officials often say they’re merely trying to “maintain core services.” But that talking point is wearing thin. What they’re maintaining is bureaucratic overhead—and they’re doing so on the backs of the hardworking taxpayers who elected them to do otherwise. % Endnotes 1 http://bit.ly/rXDuWT 2 http://bit.ly/rphmTh 3 http://bit.ly/sKcD0J 4 http://bit.ly/dKczWD 5 http://bit.ly/uwCpuj

Parties in Control when Spending Approved Source: Oklahoma Office of State Finance, Oklahoma 2010 Comprehensive Annual Financial Report, pp. 152-153, http://www.ok.gov/OSF/Comptroller/Financial_Reporting.html

4

PERSPECTIVE • DECEMBER 2011

… And Some of Them Appear to Be Injury-Prone

By J. Scott Moody and Wendy P. Warcholik

W

orkplace injuries and illnesses are a fact of nationally and for Oklahoma. doing business. As such, employers offer packNationally, state-government workers (4.6) and loages of sick time and disability benefits to employees cal-government workers (6.1) experience workforce as part of their overall compensation package. Yet injuries and illnesses at a higher rate than the privatethere is a growing disparity between such packages sector average (3.5). in the private sector and those in the public sector— In Oklahoma, the situation is less clear-cut. In the with the latter being more generous. private sector, the number of workforce injuries and One of the key tenets in economics is that incentives illnesses in Oklahoma (4.0) exceeds the national matter. All else being equal, we average (3.5). This private-secwould expect a worker with tor injury/illness rate exceeds The evidence suggests that more sick time would be “sick” Oklahoma’s state-government Oklahoma’s local governments more often to take advantage of rate (3.4) but falls significantly are incentivizing workers to the benefit. So if public sector below Oklahoma’s local-govtake sick time and disability. workers, on average, have ernment rate (7.1). more generous sick time and Overall, local government disability benefits, do they tend to be sick and injured workers experience the highest level of workforce inmore often? juries and illnesses when compared to all the major Recently released data from the Bureau of Labor private-sector industries, both nationally and in OklaStatistics shed some telling light on that question. homa. While there are certainly dangerous jobs at the Table 1 shows the number of workplace injuries and local level, such as police and fire protection, it would illnesses per 100 workers for all the major private-secbe a stretch to say they are more dangerous than all tor industries as compared to the public sector, both private-sector industries, especially construction, manufacturing, and trade, transportation, and utilities.

To put a finer point on it, the private-sector construcTable 1 Workplace Injuries and Illnesses per 100 Workers tion industry experiences a far lower rate of workforce 2010 injuries and illnesses ( 4.0 nationally and 4.2 in OklaIndustry U.S. Oklahoma homa) than does the construction subsector of local Private 3.5 4.0 Construction 4.0 4.2 government (9.5 nationally and 14.4 in Oklahoma).

Education and Health Services 4.8 5.3 The data provide evidence suggesting that Financial Activities 1.3 1.8 Oklahoma’s local governments are incentivizing Goods Producing 4.2 4.5 Information 1.8 2.0 workers to take sick time and disability. Local governLeisure and Hospitality 3.9 3.8 ments should undertake a thorough comparative reManufactuing 4.4 5.2 view of their workplace sick time and disability benNatural Resources and Mining 3.7 3.0 Other Services 2.7 3.5 efits to ensure that they are not out of line with the priProfessional and Business Services 1.7 2.1 vate sector. Taxpayers deserve this level of accountService Providing 3.4 3.9 ability with their hard-earned tax dollars, especially in Trade, Transportation and Utilities 4.1 4.9 State Government 4.6 3.4 these trying economic times. % Local Government Construction

6.1 9.5

7.1 14.4

Sources: U.S. Department of Commerce: Bureau of Labor Statistics; Oklahoma Council of Public Affairs

PERSPECTIVE • DECEMBER 2011

Economists J. Scott Moody (M.A., George Mason University) and Wendy P. Warcholik (Ph.D., George Mason University) are OCPA research fellows.

5

Income-Tax Phaseout Would Create Economic Boom

O

klahoma has the opportunity to establish itself as America’s premier destination for economic freedom by completely phasing out the state’s personal income tax.

In a new study (“Eliminating the State Income Tax in Oklahoma: An Economic Assessment”), OCPA and Arduin, Laffer & Moore Econometrics estimate that by phasing out the income tax over a 10-year period, Oklahoma could expect a significant increase in state GDP growth, personal income growth, and employment growth.

By gradually lowering personal income taxes, this proposal does slow the total growth in appropriations and in total tax collections. This is an outcome to be desired, especially considering how much the economy and state and local tax revenues would grow if the proposal were implemented.

Based on our analysis, Oklahoma could expect the following economic impacts with the proposed tax reform from 2013 through 2022 compared to a baseline scenario: • Oklahoma’s real annual personal income growth increasing to 3.27 percent in 2013 and accelerating to 5.65 percent by 2022—compared to real annual personal income growth of 2.39 percent in the baseline scenario between 2013 and 2022. In other words, by 2022 personal income in Oklahoma would be $47.4 billion, or 20.6 percent, larger than it would be without the tax reform.

• The annual growth rate of real annual GDP increasing to 2.95 percent in 2013 and accelerating to 5.44 percent by 2022—compared to 2.03 percent in the baseline scenario. In other words, by 2022 state GDP would be $53.4 billion, or 21.7 percent, larger than it would be without the tax reform.

• By 2022, the proposed tax reform would create 312,000 more jobs in Oklahoma than the number of jobs that would be created in Oklahoma under the baseline scenario.

Additionally, while the individual income tax currently raises more than one-third of total tax revenues

6

in Oklahoma, the dynamic revenue benefits created by the accelerated economic growth recaptures about one-half of the static revenue losses. Thus, while appropriated revenue growth would be slower under the proposed tax reform than it would be under the baseline scenario, total appropriated revenues for the state would grow over this time period.

From a theoretical perspective, the gradual elimination of the individual income tax would simultaneously improve two separate parts of Oklahoma’s economic environment: (1) It would eliminate the tax on individual income, thereby increasing the incentive to work, produce, and save in Oklahoma; and (2) it would reduce the overall cost of government on the taxpayer, reinforcing the positive incentives to work, produce, and save. The anecdotal evidence supports the statistical conclusions of our analysis. Those states that do not levy an individual income tax and/or levy a lower overall tax and expenditure burden consistently experience greater economic growth than the nation—and Oklahoma.

Based on both the statistical and anecdotal evidence, it is clear that Oklahoma’s economy would soar if the proposed economic plan were implemented.

Overall, Oklahoma’s current economic policies are good. According to the 2011 edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, Oklahoma ranked 14th—and that was before the personal income tax rate was cut to 5.25 percent (effective January 1, 2012). But the state’s Achilles’ heel remains the progressive personal income tax. Progressive income taxes filled with special interest loopholes and exemptions are especially bad. Progressive income taxes produce disproportionately large distortions and revenue volatility, and thereby seriously damage the economy. The damage they cause to the economy always reduces other tax revenues.

Oklahoma can significantly increase its economic competitiveness by phasing out its state personal income tax. Doing so would create a long-lasting economic boom, benefiting generations to come. %

PERSPECTIVE • DECEMBER 2011

The New Technology: Lessons from History History teaches us that technology can be a great force for human freedom, but it can also be used to strengthen despotism. In these remarks, adapted from his keynote address at OCPA’s recent symposium on digital learning, our distinguished fellow J. Rufus Fears says it’s up to us to decide.

T

here have been three great transformations in the way that knowledge is preserved and new knowledge is transmitted.

The first was the invention of writing. This occurred around 3000 BC, at the beginning of history, in Egypt and in Mesopotamia—the area we would call Iraq today. Monumental architecture was being created that led to the pyramids. Hydraulic engineering was developed that enabled large numbers of people to live together in cities and feed themselves. Copper tools were invented that enabled this monumental architecture to be constructed. Writing was developed, and so were complex government structures.

It was believed that a strong leader was needed to mobilize the labor to feed the people. In Egypt, Pharaoh was god. And in Sumerian cities like Ur, he was the chosen one and his word was absolute. It is almost as though, at one Friday afternoon meeting, he called in his advisors and said, “I think I’m getting cheated on taxes. I don’t think I’m getting all the tax revenues that are due to me. And all you’re doing is coming up with some estimates. I want a system by which I can record every penny that comes into my treasury, and I want it on my desk by Monday morning.” Thus was writing invented: to record taxes. And it created whole schools of bureaucrats.

That’s how writing came into being. To be sure, writing has served wonderful purposes. It could take down poetry like the Epic of Gilgamesh. It could take down Homer’s poems and transfer them from oral traditions into great poetry that we know today, printed.

But it came into being as a means of making despotism stronger. And that is always the great danger of all this technology you have before you, technology which you believe will make the world a freer place.

That is not necessarily so.

PERSPECTIVE • DECEMBER 2011

B

ut I want to focus on the second great transformation, the printing press, and specifically its impact upon education. And I’d ask you to go with me to October 31st in the year 1517. You are in Wittenberg, Germany, at the fairly newly created University of Wittenberg. Just as in our day, when we’re told that universities are the only means by which you’re going to achieve earthly salvation by getting rich, so too in 1517 were universities the key to success.

But they had an even more dominant hold: they were also the only way by which priests were trained that could save your soul. And in 1517 people cared deeply about their souls. Yes, you were greedy and wanted to get rich, but you cared about your soul and salvation. And that’s where the priests were trained.

But they also had faculties of law and faculties of medicine. And that’s what most people sent their kids to study for—they didn’t want to send you to be a priest because you wouldn’t make any money, but a lawyer or a doctor, that sounds great.

A young teacher, Professor Martin Luther, had been very successful so far in his academic career. He was a monk and was chairman of the department of theology. One day he was called into the dean’s office. The dean basically said, “Brother Martin, you know that Brother Thomas is ill, and you’re going to have to teach his course. We will give you a small grant of money so over the summer you can devote yourself entirely to study.”

“What am I supposed to teach?”

“The letters of Paul.”

“Well now that’s outside of my field. I haven’t really studied this.” (Professors never change.) But he agreed to do it.

In 1453 a new invention had become available, a printing press, almost certainly designed by Johannes

7

Gutenberg. This transformed the way knowledge was deeds. But in reading this, that’s not what Paul had transmitted. From the time writing had been invented, said: “For by grace you have been saved through a single person had to sit down with a clay tablet, pafaith, and that not of yourselves; it is the gift of God, not pyrus, or piece of parchment, and copy out word for of works, lest anyone should boast.” word an entire book. This was very laborious and very So again Luther went to his dean and the dean said, time-consuming, and it meant the number of books in “I told you not to read that book! I don’t want to hear circulation was very small and they were very costly. any of that in class.” But this was the word of Paul—the But Gutenberg changed all that. You could print word of God—speaking directly to Martin Luther. hundreds or thousands of books. You could sell a Well, as the fall came on, the situation became thousand books for what one parchment manuscript more difficult for Luther because the Catholic Church cost. You could reach the people at large. And there in those days had a system very much like the univergrew up a large reading public. Ordinary people saw sities have today—they never seemed to have enough to it that their children learned how to read because it money and they were always trying to get donations. was useful. And they had cheap textbooks, and cheap In particular, the pope at the time had to have a brand schools were opened up on a private basis. So by new church designed in the most modern fashion by 1517 there were a large numMichelangelo, the greatest ber of books in print. One of artist of the day. So they were In a very real sense, American the results of this was the deeply in debt. They would freedom traces to the courage of one man who changed history: growth of a whole class of go all over Europe and they Martin Luther scholars who devoted themwould come to a meeting selves to the study of ancient and say, “Brethren, we want Greek and ancient Latin, the poetry of Virgil and the you to give money to the Church.” poetry of Homer. Greek was relearned in Western EuAnd the response was, “What am I going to get out rope. (It had all but died out in the thousand years folof it?” lowing the fall of the Roman Empire.)

“Well, we have something here: indulgences. The Luther had learned some Greek, and the scholar pope, as the Vicar of Christ on earth, has an unlimited Erasmus had brought out a cheap edition of the New amount of grace that he can give out. The way we Testament in Greek. So now you weren’t reading what have this set up is, you’ve been a very bad person, St. Jerome, a very great man, had translated from correct? You’ll go to hell, you have no good deeds.

Greek into Latin. You could now read for yourself exNow for $500,000 you can be a Sponsor. However, your actly what Paul had said. And so Luther went to his wife is no angel either. (Oh yeah, we keep records.) dean and said, “You know, I’m going to spend the You can get her out for just a total of $750,000. That will summer reading this edition in Greek.” put you in the Silver Associates range. Now your What did the dean say? “Don’t do it! It’s something grandfather was a really bad person, and you are new and untried.” raising your kid to be a bad person. For $2 million you Well, Luther was a hardhead. The dean said, “Well, can be a Papal Friend.” be careful. Just read those to the class. I don’t want Luther heard of this and he was outraged. How any trouble with my donors.” could they sell grace? After all, it is given only by God. Luther resisted. He came to certain passages about So on All Hallows Eve, he nailed on the door of the the relationship between grace, faith, and works. How chapel a set of theses that he wanted to debate with did you get to heaven? The Catholic Church, a very the development officer. noble institution, taught that you needed both grace Eventually all this got back to the pope, and he said, and faith but also works—you had to have good “We have to stop this immediately. We have a big capi-

8

PERSPECTIVE • DECEMBER 2011

tal campaign going on. Look right outside of my office.

We have some crazy monk out there causing all of this trouble.”

So there was Martin Luther, a simple professor, arguing with the most learned theologians in Christendom. And he essentially told them: “I tell you with all respect, if you can show me anywhere in the actual words of Paul where he says you are saved by deeds and where you can sell indulgences, I will recant everything and you can burn me. But if you cannot show me in the Holy Scripture, the word of God, I take back nothing. Here I stand, I can do nothing else.”

Well, they found him guilty. They were taking him off to Rome to burn him when suddenly out of the dark woods of Saxony came a band of knights who rescued him and took him back to the duke’s castle. The duke asked him, “Can you translate this into German?” Luther said, “I’ll do it.” And very quickly he had a German translation that is still what is read in German churches today. Then he translated the Old Testament from the original Hebrew. And so it was that ordinary people, first in Germany, then in England and all over Europe, began to read the Bible for themselves. And it came into their hands only because of this new technology of printing.

And not all of them reached conclusions that their governments liked. Some were thrown out of their homelands, but there was a place they could go where they could read the Bible the way they wanted.

So they braved the ocean and came to the inhospitable shores of Massachusetts, and there worshiped God the way they wanted.

And in Jamestown and in Philadelphia and all over this new land they read the Bible the way they thought it should be read. And when the time came, they looked at the Bible and they said, “We don’t think King George has any power over us. Yes, Paul says that the powers that be are ordained of God, but he also says they ought to be good rulers. George III is one of the worst rulers we’ve ever had.” So in pulpits all over this country, from 1763 onward, they read the Bible as they saw fit, and ministers said, “You owe your allegiance to your conscience, and your conscience tells you to

PERSPECTIVE • DECEMBER 2011

rebel. You’re going to set up a government of ‘we the people,’ not ‘I the king.’ And you’ll have a Declaration of Independence that mentions God four times.”

And so a vast wave of freedom flowed first from this country and then to other parts of the world. And in many ways it traces to the courage of one man who changed history: Martin Luther.

T

he third great transformation—after writing and the printing press—is one we see all around us: technology and the Internet. We need to decide if this is going to be a great tool for human freedom, if it’s going to carry a message, or if it’s going to become nothing more than a means of cheap communication, a means of advertising, and instead of ennobling the soul, bringing down the idea of the soul through cheapening the idea of what truth is. After all, anything can be put up on Wikipedia. What is truth? It’s whatever is on Twitter today.

So it is up to us to decide whether human freedom will grow ever greater with this new technology, or whether it will become a mechanism for despotism and dehumanization. And we are the people to make the choice. % J. Rufus Fears (Ph.D., Harvard University), a classics professor at the University of Oklahoma, serves as the Dr. David and Ann Brown Distinguished Fellow for Freedom Enhancement at OCPA.

“Just as the iPod compelled the music industry to accommodate its customers, we can use technology to force the education system to meet the needs of the individual student. … We must approach education the way Steve Jobs approached every industry he touched. To be willing to blow up what doesn’t work or gets in the way. And to make our bet that if we can engage a child’s imagination, there’s no limit to what he or she can learn.”

—Rupert Murdoch, “The Steve Jobs Model for Education Reform,” The Wall Street Journal, October 15, 2011, http://on.wsj.com/rpO5JB

9

Are Public School Teachers Underpaid?

By Lindsey M. Burke

M

y colleague at The Heritage Foundation, Jason Richwine, along with co-author Andrew Biggs of the American Enterprise Institute (AEI), has published a groundbreaking new paper on teacher compensation. The authors find that public school teachers “make total compensation 52 percent greater than fair market levels, equivalent to more than $120 billion overcharged to taxpayers each year.”

Bob Costrell, the discussant at the public event at AEI last month to present the findings, noted that Richwine and Biggs’ research significantly contributes to the existing literature on teacher compensation. In doing so, it shatters three myths that have driven policy in the wrong direction for decades.

Myth No. 1: Teachers are constantly tempted to leave the classroom for high-paying private-sector jobs. We’re told that teachers are tempted into higherpaying professions; that it is a teacher’s sense of commitment, not high compensation, which tethers them to the classroom. Teachers, as former AFT president Sandra Feldman once argued, “are being lured to other professions with handsome salary offers.” The NEA’s Kim Anderson even responded to the Richwine/ Biggs study by stating that “talented individuals turn away from this rewarding profession because they are forced to choose between making a difference in the lives of students and providing for their families.”

For the average teacher, however, this isn’t the case. Switching from a non-teaching job to a teaching job increases workers’ wages, on average, by 9 percent; transitioning from teaching to non-teaching, by contrast, results in a wage decrease of 3 percent. As Richwine and Biggs observe, it’s “the opposite of what one would expect if teachers were underpaid.”

Which brings us to myth number two …

Myth No. 2: Teachers are underpaid. Richwine and Biggs’ finding that teachers are paid above market value runs contrary to what we so often hear—that teachers are, to quote Secretary of Education Arne Duncan, “desperately underpaid.”

10

While it’s true that public school teachers earn less, on average, than similarly credentialed non-teachers, Richwine and Biggs note that traditional skill measures, such as years spent in school or level of degree, do not lend themselves to an accurate salary comparison of teachers to non-teachers. The “wage gap” disappears when teachers and non-teachers are compared using objective measures of cognitive ability, as opposed to years of university education.

Beyond paper qualifications, comparisons of public school teachers to their private-school counterparts provide more evidence that public school teachers are compensated above market value. The authors find that “with all observable skills held constant, public-school teachers nationally earn 9.8 percent more in salaries than private school teachers.”

But it’s the benefits that are the biggest factor. Biggs notes in National Review Online: “The BLS benefits data, which most pay studies rely on, has three shortcomings: It omits the value of retiree health coverage, which is uncommon for private workers but is worth about an extra 10 percent of pay for teachers; it understates the value of teachers’ defined-benefit pensions, which pay benefits several times higher than the typical private 401(k) plan; and it ignores teachers’ time off outside the normal school year, meaning that long summer vacations aren’t counted as a benefit. When we fix these problems, teacher benefits are worth about double the average private-sector level.

“Finally, public-school teachers have much greater job security, with unemployment rates about half those of private-school teachers or other comparable private occupations. Job security protects against loss of income during unemployment and, even more importantly, protects a position in which benefits are much more generous than private-sector levels.”

When considering the benefits public school teachers enjoy—job security, health benefits, and plush pension packages—the “totality of the evidence” suggests that

PERSPECTIVE • DECEMBER 2011

teachers are not underpaid, and are actually, overpaid.

Myth No. 3: We aren’t attracting enough teachers.

Well, myth number three is actually a half-myth. During the AEI discussion, Costrell also pointed out that the median number of qualified applicants per teaching position is 15:1. So while there is actually excess supply, there is wide variation by field. While there are only four applications for every available speech and language pathology position, there are 129 applicants for every elementary (K-6 teacher) position.

Teachers should be paid fair market wages, but the current system prevents teachers from being

rewarded based on their performance.

Research shows that teacher quality is one of the most important factors in increasing student achievement. Effective teachers should be handsomely rewarded for the impact they are having on a child’s education. By reforming compensation policies in a way that accounts for the abilities of great teachers to improve student outcomes, we will ensure excellent teachers are richly compensated, and mediocre teachers have a strong incentive to improve. % Lindsey M. Burke is a senior policy analyst at The Heritage Foundation.

Parents Deserve Preschool Choices

By Brandon Dutcher

I

n each of the last two years, thanks to a specialneeds scholarship bill signed by Gov. Brad Henry and an equal-opportunity scholarship bill signed by Gov. Mary Fallin, parents have been given more educational options for their children from preschool to high school.

In 2012, let’s give the parents of preschoolers even more choices.

Some may think this unnecessary, given the popularity of Oklahoma’s government-run preschool program. Enrollment is high, and parents enrolling their four-year-olds (and in some cases three-year-olds) aren’t bashful about telling reporters how much money they’ll be saving in daycare costs. I suppose one could say they are “choosing” this “popular” program. As George Bernard Shaw taught us, “a government which robs Peter to pay Paul can always depend on the support of Paul.”

And even though this expensive middle-class entitlement is voluntary, what’s not voluntary is the average Oklahoman being forced to work three months a year in order to pay the federal, state, and local tax collectors—who in turn pay the salaries of lots of grown-ups who look after these little tykes.

Education reporter Mike Antonucci once asked, “If the government, under the force of law, takes money from my paycheck every month to supply me and

PERSPECTIVE • DECEMBER 2011

every other citizen with a Yugo, and I choose not to spend additional personal income on a Chevy, am I ‘choosing’ the Yugo?”

A SoonerPoll question from August 2011 may shed some light: “In two important ways, Oklahoma is a national leader in early childhood education. First, among all the states Oklahoma has the highest percentage of four-year-olds in state-funded preschool programs. Secondly, Oklahoma is one of the few states that offer a tax break for stay-at-home parents.

Assuming there is a limited amount of money, which of the following do you think should take precedence: Increasing the amount of money spent on preschool programs for four-year-olds, or expanding the tax break for parents who stay at home with their four-year-olds?”

Oklahomans prefer the tax break by a margin of 55 percent to 31 percent.

Parents want more choices. Here’s how Gov. Fallin and the legislature could deliver.

Phase out the Oklahoma income tax over 10 years and replace it with nothing. This will supercharge Oklahomans’ family budgets while still allowing the state budget to grow (as demonstrated in a new OCPA report, “Eliminating the State Income Tax in Oklahoma: An Economic Assessment”).

If policymakers can’t bring themselves to ax the tax, then expand the child tax credit referenced in the

11

SoonerPoll question above. Another option would be an early education tax credit—model legislation is available from the Cato Institute, the Home School Legal Defense Association, and the American Legislative Exchange Council (ALEC).

In addition, create Arizona-style Education Savings Accounts, but for preschoolers. These would allow

parents to redirect some of the public-school funds allocated for their preschooler to the educational options of their own choosing (again, ALEC has model legislation).

The government shouldn’t have a monopoly on “early childhood education.” It’s time for Oklahoma to diversify its preschool portfolio. %

Source: W. Steven Barnett, et al., “The State of Preschool 2008,” National Institute for Early Education Research, at http://nieer.org/yearbook/pdf/yearbook.pdf (February 12, 2010)

12

PERSPECTIVE • DECEMBER 2011

Liberty Gala Features Gov. Mitch Daniels

By Brett A. Magbee

T

he 2011 Liberty Gala held on October 6 at The Renaissance Hotel and Convention Center in Tulsa was a special event. KWTV News 9 Anchor and KOTV Channel 6 reporter Ed Murray welcomed attendees and introduced OCPA chairman Dr. David R. Brown.

Dr. Brown greeted guests and encouraged those in attendance to spread the word about OCPA and its work to the four corners of the state. After his remarks, Tulsa native Steve Arnold gave the invocation and led in the Pledge of Allegiance. Then Phena Hackett sang a beautiful rendition of “God Bless America.”

Next, OCPA president Michael Carnuccio took the

stage to introduce guests. He acknowledged our men and women who have served or are currently serving in our armed forces for their unselfish sacrifices for our country. Law enforcement personnel and public officials were cited for their protection and betterment of our communities. OCPA trustees and contributors were thanked for the continued support of the organization. He then acknowledged the staff and made a special presentation to Margaret Ann Morris, who has retired as vice president of development after nine years of service to OCPA. Next, OCPA trustee Daryl Woodard, owner of

Indiana Governor Mitch Daniels

Phena Hackett sings “God Bless America”

Photographs by Andy’s Fine Portraits, Tulsa, OK

Master of Ceremonies, KWTV News 9 anchor Ed Murray

OCPA chairman Dr. David R. Brown

Steve Arnold delivers the invocation

PERSPECTIVE • DECEMBER 2011

OCPA trustee Daryl Woodard

OCPA president Michael Carnuccio recognizes Margaret Ann Morris

13

Gov. Daniels talks with attendees

David and Ann Brown with Gov. Daniels

OCPA fiscal policy director Jonathan Small and Tulsa World reporter Randy Krehbiel

Woodard Technology and Investments and president of SageNet-Tulsa, introduced Gov. Mitch Daniels, who received a warm welcome from those in attendance.

In beginning his remarks, Gov. Daniels noted, “Justice Brandeis said that in a democracy the highest office is that of citizen. Every one of you in this room has stamped yourself as a citizen of the first order. And I think it’s obvious but bears repeating that Dr. David Brown, who I’ve known and admired for the work he has done nationally, has given the very highest demonstration of citizenship—set a paradigm for citizenship in this state as well as across America. He deserves all the credit and thanks we can ever give him.

Thank you for having me, David, and thank you for what you’ve done.”

Daniels stated he is concerned for the future of our

14

EJ and Wade Phillips

Cynthia and Ed Watson

Kim Montgomery and Bruce Vande Lune

nation. “I believe we are facing a survival-level threat to the nation. ... It is most obvious and most immediately manifest in the debts we have piled up. I tell audiences all the time, I’m happy to have a philosophical discussion or debate with you anytime you want, but for right now how about we agree this is an arithmetic problem. You can believe in big government or small, a free-market system or some kind of managed whatever they call it, but it doesn’t matter. We have a mathematical issue here. No, you cannot run any enterprise, small or large, private or public, with the debt levels we are soon to be trying to finance in this country.”

He went on to ask “the most important question of all: What kind of people will we be? What kind of people are we? Are we the kind who gave birth to

PERSPECTIVE • DECEMBER 2011

Photographs by Andy’s Fine Portraits, Tulsa, OK

Cathy and Mark Archambo Stacey and Don Freeman

Ann and Robert Gilliland with Gov. Daniels Sarah and Donnie Perkins Gov. Daniels with Dana and Tom Harnson

Gov. Daniels with Bill Price

Bob Sullivan

Gov. Daniels with Ron Bussert Dan Zaloudek

Charles Sublett

Students from Regent Preparatory School of Oklahoma

liberty in the first place, who insisted on their freedom even at the risk of their security—in the initial instance, the most serious of risks of life, liberty, and their sacred honor. Or, would we prefer to be looked after, and to see our historic freedoms whittled away? You know, so much of this has happened already. It happens gradually, sort of boiled-frog fashion. Some folks haven’t even noticed how their sphere of individual dignity has been shrunken. We are sort of desensitized to it.”

Gov. Daniels discussed the processes they put into place in Indiana after he was elected governor. “We start from the question, should government be doing what it’s doing at all in the first place? This emanates, of course, from a conviction that the highest value in life, the highest value for which government comes

PERSPECTIVE • DECEMBER 2011

Gov. Daniels with Bill Warnock

into existence, is to protect the freedom and dignity of each and every human being God put on this earth, and so we start by asking what is absolutely necessary for government to do. We start from the premise that government should never take a dollar from a free citizen without an essential reason for it.”

Gov. Daniels received a standing ovation at the end of his remarks and was presented a bronze sculpture of Oklahoma’s official state bird, the scissor-tailed flycatcher, created by renowned sculptor Gerald Balciar.

Every attendee received a copy of Gov. Daniels’ new book, Keeping the Republic: Saving America by Trusting Americans. And Phena Hackett led the audience in the singing of our state song, “Oklahoma!”

OCPA’s fourth annual Liberty Gala was a tremendous success. %

15

NONPROFIT ORG. U.S. POSTAGE PAID OKLA. CITY, OK PERMIT NO. 2573

Change Service Requested

Oklahoma Council of Public Affairs 1401 N. Lincoln Blvd.

Oklahoma City, OK 73104 Tel: 405.602.1667 Fax: 405.602.1238 ocpathink.org

Perspective is published monthly by the Oklahoma Council of Public Affairs, Inc. No substantial part of the activities of OCPA includes attempting to influence legislation, and OCPA does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

Q

U

O

“For the first time in my adult lifetime, I’m really proud of my country—although, admittedly, it’s downright mean and we’ve lost our ambition and imagination and our willingness to do the things that built the Golden Gate Bridge and Solyndra, which are jobs Americans won’t do because we’ve gotten as soft as those underfed obese kids whose parents act as stupidly as a typical white person or the Cambridge police, who spend most of their time air-raiding villages and killing civilians in the Midwest, causing them to become bitter and cling to guns and religion and antipathy toward people who aren’t like Republicans, who, you may have noticed, are always making plans for

T

E

U

N

Q

U

O

dirtier air, dirtier water and people without health insurance, causing us to lose our competitive edge, which is why the unemployment rate has stayed above 9 percent for 27 of the last 29 months, resulting in more rapes, more murders, more chickens coming home to roost and less revenue to the federal treasury because the rich (except Warren Buffett) won’t pay their fair share in taxes—something that’s unpatriotic and un-American unless you’re one of the 47 percent of Americans who don’t pay any federal income taxes but believe in American exceptionalism, just like the Greeks believe in Greek exceptionalism and the Somalis believe in Somalian exceptionalism. It’s a

T

E

mediocre country but someone’s gotta govern it.”

Peter Kirsanow, writing at National Review Online

“Social media sites like Facebook [are] being used to spy on injured workers. This is a growing phenomenon, which could spell real problems for personal injury or worker’s compensation claimants especially. … Make sure there is nothing you would not want your mother or the insurance company lawyer to see. Search your name to see that what comes up is acceptable. Make whatever adjustments are necessary.”

Slovis, Rutherford & Weinstein, “Knoxville’s Injury Law Firm,” providing some “very worthwhile tips” for clients and potential clients