School Choice: Charters, Vouchers, and Markets

The modern school-choice movement traces its intellectual origins to a 1955 essay by the economist Milton Friedman titled 'The Role of Government in Education,' later expanded in Capitalism and Freedom (1962). Friedman argued that while there was a public interest in an educated citizenry (justifying public financing of education), there was no equivalent interest in the public production of schooling. Governments, he proposed, should fund education through vouchers redeemable at any approved school — public, private, religious — thereby introducing market competition among schools, expanding parental choice, and breaking what he saw as the monopoly of public-sector bureaucracies over education.

Friedman's proposal lay largely dormant for decades. In 1990 John Chubb and Terry Mö's Politics, Markets, and America's Schools revived the argument with a sociological extension: traditional public schools, they argued, were embedded in political structures (elected boards, collective-bargaining agreements, centralized administration) that prevented them from adopting the autonomous, mission-driven organization that characterized effective schools. Chubb and Mö proposed near-universal choice as a way to decouple schools from political constraints and reorganize them around their educational missions.

The first U.S. charter school opened in Minnesota in 1992, based on a 1991 state law. Ray Budde and Albert Shanker (president of the American Federation of Teachers) had separately promoted the concept in the late 1980s: schools publicly funded on per-pupil formulas but operated under contract (a 'charter') by nonprofits, teachers, or communities, with relaxed regulation in exchange for accountability for results. By 2020 there were roughly 7,500 charter schools enrolling about 3.4 million students across 44 states. Urban charter sectors became particularly large: by the late 2010s charters enrolled more than a third of students in cities such as Washington DC, New Orleans (where the entire district reorganized as charters after Hurricane Katrina), and Detroit.

Private-school vouchers followed a parallel but more contentious track. Milwaukee's Parental Choice Program, launched in 1990, became the first publicly funded voucher program in the United States; Cleveland followed in 1995. The U.S. Supreme Court's Zelman v. Simmons-Harris (2002) upheld the Cleveland program against an Establishment Clause challenge, opening the legal path for broader voucher adoption. By the 2020s, roughly 30 states had some form of private-school choice (vouchers, tax-credit scholarships, or education savings accounts — ESAs — which give families a per-pupil amount to spend flexibly). Several states adopted near-universal ESA programs in the 2020s, marking a significant expansion of the voucher model Friedman had proposed seventy years earlier.