The problem with Education Savings Accounts

Austrian economist Henry Hazlett tells the story of a glassmaker who fixes a store owner's broken window while reminding us that the store owner was about to buy a new suit.  Since the merchant had to fix the glass, he no longer had the money for a new suit, and so the tailor is one job poorer without anyone knowing it.  Opportunity costs may be missed by a plumber who goes to a movie for three hours.  If he earns $40 an hour, he just lost the opportunity to make $120 plus not spend $20 for the movie.

It is difficult for people to consider things that never happen.  So the community is glad to see the vandalism corrected and happy for record-breaking box office sales but is unaware of the tailor and the irritated homeowner with the flooded kitchen.

As you progress in mastering a trade or skill, it becomes easier to notice what doesn't happen as you look for solutions to improve what does happen.  In Rich Dad, Poor Dad, Robert Kiyosaki emphasizes that his risk level in real estate purchases is near zero because he knew what he was doing.  I had only begun building businesses in 1997 and could not understand his confidence.  Now I know exactly what he meant, as I have a successful business, too.  It takes experience to uncover and analyze the unseen that may hamper my mission.  I don't see every opportunity, but I see more than in 1997, when I started my education services company, Classical Conversations (CC).

My husband and I have homeschooled our four sons since 1983.  We began CC to serve homeschooling families across the globe.  Our team supports committed homeschooling parents as they encourage other parents to practice the classical arts of education in local communities.  In 2022, CC communities had over 50,000 families studying together.  If CC families were a consolidated government school district, our student enrollment would place us in the top 25 districts in the United States, according to Wikipedia.  I love helping homeschooling families start small businesses that advance the return of classical education to my country.

When I began CC, I just wanted to encourage homeschooling parents to stay the course by helping other families improve their academic abilities.  Instead, since 2009, my team has been distracted by hiring laws that prohibit contracted work ideally suited for stay-at-home moms who tutor or teenagers who run our summer training camps, background checks on mothers watching a dozen kids for three days, double and triple insurance policies because responsibility is now frightening, tax and hiring audits from states (which we always pass), fines from counties (which have been returned with letters of apology), and COVID shutdowns that have forced every math tutor to become a medical surrogate.  Complying with federal hiring and insurance laws has been easy compared to determining tax nexus and chronically correcting quarterly receipts from 50 states' tax offices.  It's even harder to comply with zoning restrictions from almost 2,000 counties where our classical communities meet.  Even though CC communities meet for a total of only 24 to 30 days a year, parents who just want to help one another are hamstrung by daycare laws and fire codes.  I have the resources to comply because I started my business before the regulations were so numerous.

And now conservatives have offered more government help, bless their hearts.  They have decided that Educational Savings Accounts (ESA) are the equivalent of a New Deal for angry parents.  A variety of ESA schemes are being drafted by policy orgs.  One group uses food stamps as an analogy.  It claims that grocery stores have thrived with food stamps, so ESA money should only help private schools become big business.

It's true.  I stand to make a fortune, like any other crony capitalist or fascist, which are synonyms for private-public partnerships.  I could raise my tuition by the same amount that ESAs provide.  By evidence, I offer the current discussion on the forgiveness of college student loans because of Pell Grants, G.I. Bills, and Hope Scholarships.  Colleges raised tuition to match scholarships.

I won't make the partnership with state or local ESAs.  I trust that my fortune will come from private contracts and sources.  Remember the broken window?  Past business-owners who refused to become welfare agents for the state are no longer in business.

Can I prove that food stamps drove grocery stores out of business with empirical evidence?  No more than the tailor can prove he lost an order for a suit.  Am I sure of it?  As sure as Robert Kiyosaki when he passes on a losing opportunity.

Leigh Bortins is the founder and chief visionary officer of Classical Conversations, which supports classical, Christian homeschoolers in all fifty states and in thirty foreign countries.

Image: Wokandapix via Pixabay, Pixabay License.

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