What the Press Missed About Vanguard Founder’s Fortune: New at Reason

John Bogle, the founder of The Vanguard Group who died earlier this month at age 89, got rich by giving his mutual fund customers a better deal.

The obituaries seem to have missed that point, dwelling instead on the theory that if only Bogle had chosen to rip off his customers, he could have been even richer. That claim is highly speculative, and based on a fundamental misperception: a view of capitalism as a racket rather than as a system in which the incentives of entrepreneurs and customers sometimes align with results that are spectacularly rewarding for both.

The tone was set with a New York Times obituary. “Vanguard managed its indexed mutual funds at cost, charging investors fees that were far lower than those of virtually all of its rivals,” the Times wrote. “Vanguard’s consistent growth produced riches for Mr. Bogle, but not to the extent that another ownership structure might have done. For example, Edward C. Johnson III, the chairman of Fidelity Investments, has a net worth of $7.4 billion, according to Forbes. Mr. Bogle’s net worth was generally estimated at $80 million last year.”

“Instead of making billions, helping millions,” was the Times inside headline. An accompanying Times article described Bogle as someone “who didn’t care about his own bottom line.”

That’s nonsense. Had Bogle pursued the conventional, high-fee approach to mutual fund management, it’s quite possible he would have ended up not as a billionaire but in obscurity, just another mediocre retired executive from some forgettable fund firm.

That would be like claimi that the world’s richest man, Jeff Bezos, could be even richer if he only charged everyone $15 for shipping and handling instead of offering free shipping to Prime customers. It’d be like writing a story about Charles Schwab saying he could have been even richer if he only had charged full price retail commissions for stock trades rather than opening a discount online brokerage. It’d be like writing a story about McDonald’s genius Ray Kroc saying he could have been even richer if he had sold Big Macs for $10 rather than at lower prices, writes Ira Stoll.

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Does School Choice Help Students Learn? All Signs Point To Yes

National School Choice Week, an annual happening that organizes tens of thousands of events celebrating all varieties of educational choice for K-12 students and parents, kicked off yesterday. To find out more information about school-choice policies and events in your state, go here.

As a media sponsor of School Choice Week, Reason publishes articles, videos, and podcasts related to school choice during this week. For coverage from past years, go here.

If you’re in the Washington, D.C. area, please attend our Wednesday, January 23 event featuring former Reason Director of Education Policy Lisa Snell talking with Johns Hopkins’ Ashley Rogers Berner, author of Pluralism and American Public Education: No One Way to School. The event is free but RSVPs are required (more information here).

The organizers of School Choice Week promote all forms of educational reform that give students and parents more options. So that means they don’t support, say, voucher plans over charter schools, homeschooling, tuition tax credits, or private scholarship funds. Bring it all on, they argue.

Which leads to a basic question: Does increasing choice yield better results from an educational perspective? Here’s some evidence about choice programs that get students into private schools from A Win-Win Solution: The Empirical Evidence on School Choice, by Greg Forster (Fourth Edition, 2016):

  • Eighteen empirical studies have examined academic outcomes for school choice participants using random assignment, the gold standard of social science. Of those, 14 find choice improves student outcomes: six find all students benefit and eight find some benefit and some are not visibly affected. Two studies find no visible effect, and two studies find Louisiana’s voucher program—where most of the eligible private schools were scared away from the program by an expectation of hostile future action from regulators—had a negative effect.
  • Thirty-three empirical studies (including all methods) have examined school choice’s effect on students’ academic outcomes in public schools. Of those, 31 find choice improved public schools. One finds no visible effect. One finds a negative effect.
  • Twenty-eight empirical studies have examined school choice’s fiscal impact on taxpayers and public schools. Of these, 25 find school choice programs save money. Three find the programs they study are revenue neutral. No empirical study has found a negative fiscal impact.
  • Ten empirical studies have examined school choice and racial segregation in schools. Of those, nine find school choice moves students from more segregated schools into less segregated schools, and one finds no net effect on segregation. No empirical study has found that choice increases racial segregation.
  • Eleven empirical studies have examined school choice’s effect on civic values and practices, such as respect for the rights of others and civic knowledge. Of those, eight find school choice improves civic values and practices. Three find no visible effect from school choice. No empirical study has found that school choice has a negative effect on civic values and practices.

Over the past few years, charter schools have probably become the most popular and politically viable form of choice in K-12 education. Charters are publicly funded and regulated by state boards of education, receive less funding per pupil than traditional public schools, and have greater autonomy in creating their curricula. Between 2000 and 2015, reports the National Center for Education Statistics, the number of K-12 students attending charters rose from 1 percent to 6 percent, or from 400,000 kids to 2.8 million kids (seven states still don’t allow charters). In virtually all cases, charters are run by nonprofits and it’s typical for charters to enroll at-risk students from disadvantaged economic, racial, and ethnic groups.

A few years ago, comedian and talk-show host John Oliver devoted a highly watched segment of his HBO show Last Week Tonight to painting charters as particular hothouses of corruption and failure. There have indeed been some real funding- and education-related scandals involving charters, but that’s also the case, on a much-bigger scale, in traditional public school systems (here’s just one example). The biggest difference is that when charters are revealed as corrupt or ineffective, they actually shut down while traditional school districts merely replace bad actors with new ones. Public K-12 education is a $670 billion industry and the forces of the status quo—including teachers unions, educational bureaucrats, a wide variety of builders, technology companies, and curriculum companies—are always trying to blunt disruptors. But how do charters stack up when evaluated against comparable conventional public schools?

University of Arkansas education researcher Jay Greene summarizes the data on “randomized control trials” (RCTs), which compare students who enrolled in charters and other who wanted to but were not able to due to limited slots. Because most charters use lotteries to enroll students, it’s possible to match the effect of attending a charter versus a traditional school. As Greene puts it:

More here.

Speaking as a parent, I can say that few things are more anxiety-inducing and emotionally fraught than sending your kid off to school. When my older son went off to kindergarten for just a few hours a day (the district we were in hadn’t yet established “full-day kindergarten,” actually meaning six hours), it felt much more consequential than having him attend daycare for 40 hours a week. Education is supposed to help shape so many aspects of students’ lives and can, at its best, improve the options and outcomes for kids who are starting off in tough situations. And yet, even in an age of increasing mass personalization and focus on customer service and individual needs in most parts of our lives, we’re supposed to believe that increasing options and choice in education is somehow suspect. Parents aren’t equipped to make smart choices, either in picking a school in the first place or evaluating its effectiveness in the second, goes this line of thinking. Without questioning how hard it is create and sustain a good school, that sort of argument is deeply insulting to parents (and students) and fails to explain why total expenditures for K-12 education has increased by 2.5 times in real dollars since 1970 while educational outcomes for graduating seniors have remained flat. The establishment has been a lot of time and money to increase its performance but has failed to.

When parents have choice, they tend to use it. For instance, in the Los Angeles Unified School District (LAUSD), the nation’s second-largest, fully half of all students are either in charter schools, magnet schools, or schools that have some form of competitive entrance; the biggest problem for parents is a lack of available slots at charters and other alternatives to traditional assignment based on where you live. Teachers at LAUSD are currently striking, in part because the district has lost a staggering 245,000 students over the past 15 years, leading to various political and financial pressures. That decline is partly due to demographics but according to recent research by Reason Foundation, the nonprofit that publishes this website, the powers that be at LAUSD “attribute…an unduly high percentage of its decline in enrollment to charter schools, which outperform the district at most every measure.” The education establishment, in Los Angeles and elsewhere, view charters and school choice more broadly as an existential threat precisely because the new alternatives are good at what they do.

Bonus video:What We Saw at the Save Our Schools Rally.” This 2011 video was shot during an anti-school-choice rally where actor Matt Damon spoke and then went off on Reason‘s host, Michelle Fields, and videographer, Jim Epstein. Take a look:

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Washington Forced Segregation on the Nation: New at Reason

In 1940, the federal government required a Detroit builder to construct a six-foot-high, half-mile-long, north-south concrete wall. The express purpose was to separate an all-white housing development he was constructing from an African-American neighborhood to its east. The builder would be approved for a Federal Housing Administration (FHA) loan guarantee he needed only if he complied with the government’s demand.

Today, most African Americans in every metropolitan area remain residentially concentrated or entirely separate. That fact underlies or exacerbates many of the nation’s most serious social and economic problems, from relatively low intergenerational mobility to the disproportionate prevalence of hostile encounters between police and disadvantaged black youths in neighborhoods without access to good jobs. The Detroit wall offers a striking illustration of an underappreciated truth about this shameful situation: Racial segregation in America was, to a large degree, engineered by policy makers in Washington, writes Richard Rothstein.

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After Living Abroad, Kids Struggle With American Overparenting: New at Reason

When Jean Phillipson’s family returned to Fairfax, Virginia, after living in Bolivia, the main thing her 10-year-old son complained about was the bus ride home from school. “He wasn’t allowed to have a pencil out,” says the mom of three, “because it was considered unsafe.”

Welcome back, kid, to the land of the outlandishly cautious, writes Lenore Skenazy.

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Brickbat: Not Heeding the Warning

Handicapped parkingSecurity at Jefferson Elementary School in Warren, Ohio, escorted the school resource officer from campus after he ticketed the principal for parking in a handicapped zone. A spokesman for the officer’s union says the officer had warned the principal repeatedly that parking in the spot was illegal.

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The Media Wildly Mischaracterized That Video of Covington Catholic Students Confronting a Native American Veteran

LMPartial video footage of students from a Catholic high school allegedly harassing a Native American veteran after the anti-abortion March for Life rally in Washington, D.C., on Saturday quickly went viral, provoking widespread condemnation of the kids on social media. Various media figures and Twitter users called for them to be doxed, shamed, or otherwise punished, and school administrators said they would consider expulsion.

But the rest of the video—nearly two hours of additional footage showing what happened before and after the encounter—adds important context that strongly contradicts the media’s narrative.

Far from engaging in racially motivated harassment, the group of mostly white, MAGA-hat-wearing male teenagers remained relatively calm and restrained despite being subjected to incessant racist, homophobic, and bigoted verbal abuse by members of the bizarre religious sect Black Hebrew Israelites, who were lurking nearby. The BHI has existed since the late 19th century, and is best describes as a black nationalist cult movement; its members believe they are descendants of the ancient Israelites, and often express condemnation of white people, Christians, and gays. DC-area Black Hebrews are known to spout particularly vile bigotry.

Phillips put himself between the teens and the black nationalists, chanting and drumming as he marched straight into the middle of the group of young people. What followed was several minutes of confusion: The teens couldn’t quite decide whether Phillips was on their side or not, but tentatively joined in his chanting. It’s not at all clear this was intended as an act of mockery rather than solidarity.

One student did not get out of Phillips way as he marched, and gave the man a hard stare and a smile that many have described as creepy. This moment received the most media coverage: The teen has been called the product of a “hate factory” and likened to a school shooter, segregation-era racist, and member of the Klu Klux Klan. I have no idea what he was thinking, but portraying this as an example of obvious, racially-motivated hate is a stretch. Maybe he simply had no idea why this man was drumming in his face, and couldn’t quite figure out the best response? It bears repeating that Phillips approached him, not the other way around.

And that’s all there is to it. Phillips walked away after several minutes, the Black Hebrew Israelites continued to insult the crowd, and nothing else happened.

You can judge for yourself. Here is video footage of the full incident, from the perspective of the black nationalists. Phillips enters the picture around the 1:12 mark, but if you skip to that part, you miss an hour of the Black Hebrew Israelites hurling obscenities at the students. They call them crackers, faggots, and pedophiles. At the 1:20 mark (which comes after the Phillips incident) they call one of the few black students the n-word and tell him that his friends are going to murder him and steal his organs. At the 1:25 mark, they complain that “you give faggots right,” which prompted booing from the students. Throughout the video they threaten the kids with violence, and attempt to goad them into attacking first. The students resisted these taunts admirably: They laughed at the hecklers, and they perform a few of their school’s sports cheers.

It was at this moment that Phillips, who had attended a nearby peace protest led by indigenous peoples, decided to intervene. He would later tell The Detroit Free Press that the teenagers “were in the process of attacking these four black individuals” and he decided to attempt to de-escalate the situation. He seems profoundly mistaken: The video footage taken by the black nationalists shows no evidence the white teenagers had any intention of attacking. Nevertheless, Phillips characterized the kids as “beasts” and the hate-group members as “their prey”:

“There was that moment when I realized I’ve put myself between beast and prey,” Phillips said. “These young men were beastly and these old black individuals was their prey, and I stood in between them and so they needed their pounds of flesh and they were looking at me for that.”

Again, all the evidence suggests that Phillips got it backward.

He also claimed that he heard chants of “build the wall.” While I cannot rule out the possibility that some of the kids indeed chanted this—those who were wearing MAGA hats are presumably Trump supporters—I did not hear a single utterance of the phrase in the nearly two hours of video footage I watched. Admittedly, the kids do a lot of chanting and it’s not always possible to tell what they are saying. Their stated explanation is that they engaged in a series of school sports chants: That’s what one student told a local news reporter. His account largely tracks with the video.

“We are an all-male school that loves to get hyped up,” said this student. “And as we have done for years prior, we decided to do some cheers to pass time. In the midst of our cheers, we were approached by a group of adults led by Nathan Phillips, with Phillips beating his drum. They forced their way to the center of our group. We initially thought this was a cultural display since he was beating along to our cheers and so we clapped to the beat.” According to this student, the smiling student was grinning because he was enjoying the music, but eventually became confused, along with everyone else. (Indeed, multiple people can be heard to shout, “what is going on?”)

It would be impossible to definitively state that none of the young men did anything wrong, offensive, or problematic, at some point, and maybe the smiling student was attempting to intimidate Phillips. But there’s shockingly little evidence of wrongdoing, unless donning a Trump hat and standing in a group of other people doing the same is now an act of harassment or violence. Phillips’ account, meanwhile, is at best flawed, and arguably deliberately misleading.

Unless other information emerges, the school’s best move would be to have a conversation with the boys about the incident, perhaps discuss some strategies for remaining on perfect behavior at highly charged political rallies—where everybody is recording everything on a cell phone—and let that be the end of it.

The boys are undoubtedly owed an apology from the numerous people who joined this social media pile-on. This is shaping up to be one of the biggest major media misfires in quite some time.

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Justin Amash: The Libertarian Party Shouldn’t Nominate a ‘Squishy’ Republican in 2020

||| Nick GillespieAsk a Libertarian which candidate he or she would most like to see run for president in 2020, and the name that will come up more often than not is Rep. Justin Amash (R–Mich.). Amash, who prefers the term “libertarian” over “libertarian-leaning Republican,” and is fond of tweeting stuff like “Both parties mislead, misdirect, employ double standards, and lie,” had an interesting response at LibertyCon Friday night when asked by Reason Editor in Chief Katherine Mangu-Ward to describe his ideal third party candidate.

“He wears Air Jordans,” Amash began. (He was wearing Air Jordans.)

Then, without mentioning 2016 vice presidential nominee and likely 2020 candidate Bill Weld by name, Amash warned against the party choosing an insufficiently libertarian Republican.

“Well, I think an ideal third party candidate, especially a Libertarian Party candidate—that’s what I’ll talk about—I think the ideal candidate has to be very libertarian, because if you’re running in the Libertarian Party, you better be a libertarian,” he said. “But it has to be a person who is persuasive to other people, can bring Republicans and Democrats on board, or bring a large part of the electorate on board, because you can’t just appeal to diehard libertarians and win the election.”

Amash, who declined Mangu-Ward’s offer to announce his candidacy on stage, spoke like someone who has nevertheless thought the question through.

“I think that too often the party has made concessions to have more sort of squishy Republican candidates run as the Libertarian Party candidate, and then destroy the Libertarian Party base,” he said. “So you have to have the base align with the candidate, but that candidate has to be appealing to people beyond the base.”

When informed of Amash’s “squishy” comments Saturday night on the same LibertyCon stage, Bill Weld shot his hand up and said “That’s me!” I then asked the former Massachusetts governor if he would encourage Amash to run. “Absolutely,” he said. “Justin is a hero.”

But even if Amash throws his hat in the ring, that doesn’t mean Weld will stand down. “It helps the Libertarian Party to have three or four strong candidates up there,” he said, hinting that we’ll soon hear the name of another prominent candidate. (Overstock’s Patrick Byrne, maybe?) “I am very interested in 2020,” Weld declared, stopping just short of making an official announcement. “I am going to be involved in 2020.”

One reason Amash has stayed in the GOP despite describing himself as “the only libertarian in Congress” is that Michigan is one of just a handful of states that have the straight-ticket ballot option, by which citizens can choose a political party’s entire slate of candidates by filling in just one blank. “Straight-ticket voting makes it prohibitive to run outside of the major parties,” Amash told me last August.

The 6th Circuit U.S. Court of Appeals struck down Michigan’s straight-ticket system last September, but voters reinstated it two months later, 67 percent to 33 percent. The electoral track record of elected officials who switch to the Libertarian Party once in office is not good, even in states without straight-ticket voting.

Another factor potentially complicating Amash’s political future is redistricting. Michigan is expected to lose a congressional seat after the 2020 Census, and there has been ongoing litigation and reported settlement negotiations stemming from GOP-led gerrymandering in 2011 (of which Amash has been a lonely Republican critic). Even if the new map-drawing process is maximally independent and fair, it’s not hard to imagine a pox-on-both-houses type suffering a disproportionate impact from the rule changes.

The Amash and Weld comments at LibertyCon had the Libertarian Party attendees at the conference buzzing with speculation. In a campaign where the main declared candidates so far are serial arrestee Adam Kokesh, abrasive controversialist Arvin Vohra, and “whale-fucking” enthusiast John McAfee, there may soon be more traditionally impressive resumes in the mix.

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As Marijuana Legalization Expands, the NFL Clings to Prohibition. For Now.

Half the players taking to the gridiron on Sunday with a shot to play in this year’s Super Bowl spent the current season in places where marijuana is legal—and, legal or not, weed use is widespread in the National Football League for both recreational and medicinal reasons.

But as the social stigma and legal prohibition of marijuana use is fading across America, the NFL remains stubbornly committed to keeping the substance outlawed.

For now.

Last month, NBC Sports’ Mike Florio reported that team owners are increasingly interested in legalizaing weed, though it remains unlikely that the league will adjust its current policy before 2021 when the owners and the players’ union are scheduled to renegotiate the collective bargaining agreement.

“The NFL realizes that there’s no longer any good reason to keep the best football players from playing football over marijuana,” Florio wrote. “But the NFL isn’t yet willing to make dramatic and wholesale changes to the marijuana testing policy because the NFL hopes to dangle the changes within the context of collective bargaining, securing a concession from the union in exchange for softening a policy that badly needs to be softened.”

By then, America’s most popular sport will have fallen even farther behind the country as a whole. When the Denver Broncos and the Seattle Seahawks played in the Super Bowl in February 2014, they were the only two teams in the league hailing from states where weed was legal—a super bowl, indeed. Just five years later, there are 10 states where recreational marijuana is legal, and those states are home to eight NFL franchises (25 percent of the league), including the Los Angeles Rams and New England Patriots, who will play in Sunday’s conference title games.

While the NFL has never allowed players to use marijuana for any reason, there is a well-documented history of teams handing out pharmaceutical pain-killers by the handful. “The medicine being pumped into these guys is just killing people,” former player Nate Jackson told Rolling Stone in 2016, as part of an excellent piece on the league’s nonsensical marijuana rules and how they’ve led to an over-reliance on opioids.

No wonder so many players have opted to violate the league’s marijuana ban. Last year, recently retired tight end Martellus Bennett estimated that nearly 90 percent of NFL players use marijuana at least occasionally as a treatment for football-related ailments.

“There are times of the year where your body just hurts so bad,” Bennett said on a Bleacher Report podcast. “You don’t want to be popping pills all the time. There are anti-inflammatory drugs you take so long that they start to eat at your liver, kidneys and things like that. A human made that. God made weed.”

As Florio notes, most players—perhaps as many as 95 percent, he estimates—know how to beat the league’s drug testing these days, so there is little reason for the players’ union to make major concessions in order to get the league to legalize. Some owners, like the Dallas Cowboys’ Jerry Jones, have been pushing for the league to drop its prohibition on marijuana for a while. The rest will eventually come around to reality.

In the meantime, the NFL will continue looking like a reflection American society as a whole: a place where marijuana use for a wide variety of reasons is increasingly common and accepted, even if still technically against the law—and where enforcement of prohibition is increasingly viewed as either a joke or a vestige of flawed, outdated ways of thinking.

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Deplatforming Is a Dangerous Game: New at Reason

Silicon Valley’s efforts to pull the plug on dissenting opinions began with Twitter, Facebook, and YouTube, who have proven to be innovators in devising excuses to suspend ideologically disfavored accounts. Until now, the deleted or suspended accounts have mostly been unpaid users of social media—libertarian law professor Glenn Reynolds, actor James Woods, radio talk show host Jesse Kelly, Infowars provocateur Alex Jones. But paying customers may be the next targets for social media “deplatforming.”

At a company-wide meeting in November, Amazon executives tried to fend off a revolt by employees upset about the company’s decision to sell its facial recognition technology to U.S. police agencies and Immigration and Customs Enforcement (ICE). Some Amazon workers also objected to Palantir, an analytics firm that relies on government contracts, being allowed to purchase Amazon cloud services.

This effort to deplatform paying customers has spread throughout the tech industry: Some 100 Microsoft employees signed an open letter complaining that, by providing email and calendar services, their company was “complicit” in ICE’s border enforcement policies. Salesforce and Google employees have staged similar protests, writes Declan McCullagh.

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