The Cato Journal

The Cato Journal is a leading free-market public policy journal. The Cato Journal features articles discussing politics and the economy of interest to scholars and professionals but accessible to a general audience as well.

Articles from Vol. 25, No. 2, Spring-Summer

Capital Flows, Overheating, and the Nominal Exchange Rate Regime in China
China's historic entry into the World Trade Organization (WTO) in 2001 has increased the pace of reform and opening up, and the Chinese economy has gathered further momentum with real GDP growth reaching a phenomenal 9.5 percent in 2004. That spectacular...
Coasian Contracts in the Coeur d'Alene Mining District
For the greater part of the 20th century, mainstream economists viewed negative externalities as a prima facie justification for government intervention in the market (see Bator 1958). Absent such government action, they argued, nothing would be done...
Creating a Competitive Education Industry
This special issue of the Cato Journal explores the nature of a competitive education industry (CEI) by examining the key ingredients of and minimal requirements for a true education market. Most of the articles were first presented at the Cato Institute's...
Defining the Education Market: Reconsidering Charter Schools
Several economists and education researchers have argued that current school choice programs fall far short of a true market in education. According to Frederick Hess (2004: 249), "Those who suggest that a smattering of charter schools, that a handful...
Education Reform as Economic Reform
In 1642 the Massachusetts Bay Colony enacted an ordinance pronouncing, for the first time on these shores, that public education was a fundamental mission of the state. The Law of 1642 expressed concern over lack of knowledge of English and of the...
Education Research Flounders in the Absence of Competition from For-Profit Schools
Relatively little attention is paid to research in controversies over educational policy. For instance, A Nation at Risk (NCEE 1983), the most highly publicized document on educational reform in our nation's history, did not include any references...
In Defense of Outsourcing
You probably did not sew the clothes you are wearing as you read this, nor did you grow the food you will eat today. You also didn't build your own home, manufacture your own car, perform your own dentistry, or cut your own hair. You may not clean...
Leadership, Prisoners' Dilemmas, and Politics
The prisoners' dilemma is a ubiquitous problem that can be effectively addressed by good leaders, but which is a major obstacle to achieving good leadership. A prisoners' dilemma is a situation where the behavior that is rational for the entire group...
Market-Based Education: What Can We Learn from Universities?
There is a widespread perception that American universities are the best in the world, dominating the Nobel laureate affiliations and luring foreign students from throughout the world. Yet virtually no one claims America has the best K-12 educational...
Measuring Market Education: Suggestions for Ranking School Choice Reforms
With each passing year, the number and variety of school choice proposals continue to grow. The purpose of these proposals, whether implicit or explicit, is to reintroduce market forces to the field of elementary and secondary education. Education...
Public Problems, Private Solutions: School Choice and Its Consequences
What is the best way to organize education and achieve the greatest social benefits? Specific matters as to how schools are run--such as class size, teacher certification, teacher salaries, student testing, homework levels, and the curriculum--are...
Religious Freedom and Economic Prosperity
Let there be no compulsion in religion. --The Qu'ran, Surah 2, verse 256 The basic notion that an individual's freedom to choose will advance society at large is a cornerstone of political philosophy and of the economic theory of the Western...
Specialization in a Competitive Education Industry: Areas and Impacts
Even in relatively backward societies, extensive division of labor and specialization of function is required to make effective use of resources. --Milton Friedman (1962: 12) In most of the economy, competition forces producers to specialize....
The Competitive Education Industry Concept and Why It Deserves More Scrutiny
The present U.S. education system is shaped by a political process in which constituents collectively determine how to produce education. Political campaigns, lobbying, and voting establish schooling options, how to pay for them, and determine the...
The Extent and Nature of Waste and Rent Dissipation in U.S. Public Education
It's time to admit that public education operates like a planned economy, a bureaucratic system in which everybody's role is spelled out in advance and there are few incentives for innovation and productivity. It's no surprise that our school system...