Renew Milton Friedman's Conservatism

Milton Friedman was a man of towering eminence. He had a positive impact on the world surpassed by only a handful of individuals in the 20th century. He revered the individual, private cooperation, and peace, and he distrusted centralized power of any kind. As we mourn his passing, we should renew Friedman's call for freedom and for responsible, limited government--and we should apply his conservatism to meet today’s challenges.

Senior Fellow Newt Gingrich
Senior Fellow Newt Gingrich
Two of our most pressing challenges today are a broken health-care system and crumbling public education. Each demands new, transformational solutions. Friedman would agree that government can and should play a role in overcoming these challenges. But he would warn that its role must be limited, as he often said that a government solution to a problem is usually as bad as the problem itself.

Take a look at our public-education system. Nearly a quarter-century ago, the Reagan administration warned America that our failure in education was becoming a major threat to our national security. The report A Nation at Risk noted that "[o]ur once unchallenged preeminence in commerce, industry, science, and technological innovation is being overtaken by competitors throughout the world." It went on to soberly conclude that "what was unimaginable a generation ago has begun to occur--others are matching and surpassing our educational attainments." Unfortunately, since that report was issued in 1983, public education has continued to deteriorate.

According to the 2005 National Assessment for Educational Progress, the definitive national study of student performance, nearly 40 percent of all fourth graders were below basic proficiency in reading. These numbers are virtually unchanged since the early 1990s. Math proficiency is almost as bad. 31 percent of fourth graders in 2000 scored below standards of basic proficiency.

With those dismal results, you would expect alarm bells to go off throughout the education establishment. You would expect that in four or five years, math performance for these students would be drastically improved. You’d be wrong. Eighth-grade performance was actually worse in 2005, with 32 percent of students performing at below basic proficiency.

School administrators, government officials, and teachers' unions profess to want real change. Their calls ring hollow, considering that student performance has not improved in a generation. After all, public education is a monopoly run by city, county, and state governments, with a growing federal role in oversight. Bureaucratic intransigence and vested union interests consistently block transformational solutions that will bring about real change.

The status quo is failing our students, and to truly see real change, we need to enact real change. The simplest and surest way to transform education is to give students and parents the freedom to choose where they will go to school. This means eliminating restrictive zoning laws that force kids into schools simply because they live nearby. This means introducing free-market forces into education, encouraging schools to compete for students, much like businesses compete for customers. This means that schools that do not perform will either improve or close their doors--which is as it should be. There is no middle ground.

The success of school choice, when properly administered, is indisputable--proven by hoards of academic studies and thousands of personal experiences. School choice attracts better teachers, encourages creative curriculum, and improves student achievement. Friedman was a passionate advocate for school choice, particularly through his work at the Milton and Rose D. Friedman Foundation. He argued--correctly--that by applying market principles to education, you empower students and parents at the expense of bureaucratic government control. This combination, of limited government and a vibrant market, never fails to deliver better outcomes--even in public education.

This exact approach can bring about real change in health care as well. No one is satisfied with our current system. Every year, consumers pay more for health care, with millions of Americans going without any health-care coverage at all; businesses, both large and small, are hemorrhaging under the weight of rising costs; the quality of care seldom seems to improve, especially considering the urgency of the very real threat from medical and medication errors; and the waste and inefficiency in our system is breathtaking.

This can be changed. We can transform health and health care to deliver more choices of greater quality at lower costs to every American. And government has a role to play. It can and should build an electronic infrastructure, much like government builds public school buildings. But perhaps most importantly, it must also get out of the way.

We need to put the consumer at the center of the health-care system, just as we do in every other market. And the surest way to do this is by creating a national market to purchase health insurance.

Current state and federal laws permit consumers to buy only those health-insurance plans that have been approved in their own state, meaning it is illegal for a citizen of one state to buy insurance in another. These government barriers to free trade stifle competition, producing disastrous results: The absence of robust competition artificially inflates the cost of insurance, preventing millions of citizens from purchasing affordable coverage, and thus shifting the burden of care to those who do pay for insurance and into government programs.

To reverse this, government must allow competition to flourish. More competition among insurers in a national market will encourage more creative products, better services and lower prices--just as it always does wherever competition thrives--and every American will be able to find affordable coverage. The Health Choice Act, which was introduced by Representative John Shadegg of Arizona, will go a long way toward creating a rational, working market in health care.

A vital part of this rational market is the availability of information. Information on performance, cost, and quality allows consumers to make informed decisions, but health care is perhaps the only market in which consumers have virtually no access to this information. When Americans shop for a new car, home, or thousands of other items, they quickly and easily gather information on cost and quality from an endless array of resources. But in health care, consumers are blind. Try finding out how a doctor stacks up against his colleagues. Try finding out how much a hospital charges for an elective surgery. Try finding out which surgical team has the lowest mortality rate.

Americans have a right to know this information, and the data that can best inform us is Medicare-claims history. Medicare has detailed information on nearly every doctor and hospital in the country, which can be analyzed to identify the most efficient hospitals, best doctors and most effective treatments. The federal government also has information on disciplinary action and lawsuits filed against doctors, collected for the National Practitioner Data Bank. Inexplicably and inexcusably, the federal government will not release this data, despite growing demand from many health plans, employers, consumers, and researchers. This information will save lives and save money now. Americans have a right to know this information, and taxpayers must continue to demand its release.

Good education and a healthy citizenry are--and will always be--the keys to a prosperous civilization. We must tend to both needs to ensure our survival as the greatest nation on earth. Friedman was right: The only way to do this is to allow markets to work. A fitting tribute to him--and our country--would be a new generation of leaders who see intrusive government as part of our problems and markets as part of the solutions. By applying the conservative, market-based solutions that Milton Friedman so passionately and eloquently advocated, we will undoubtedly bring about real change and build a brighter future for America.

Newt Gingrich is a senior fellow at AEI and founder of the Center for Health Transformation, where David Merritt is a project director.

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Wednesday, August 27, 2014 | 3:00 p.m. – 4:15 p.m.
Teacher quality 2.0: Toward a new era in education reform

Please join AEI for a conversation among several contributors to the new volume “Teacher Quality 2.0: Toward a New Era in Education Reform” (Harvard Education Press, 2014), edited by Frederick M. Hess and Michael Q. McShane. Panelists will discuss the intersection of teacher-quality policy and innovation, exploring roadblocks and possibilities.

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