Doug Ducey (Former Arizona Governor) on Passing Universal School Choice and Universal Licensing Recognition

>> Speaker 1: It's that time of the year. Your vacation is coming up. You can already hear the beach waves, feel the warm breeze, relax and think about work. You really, really want it all to work out while youre away. Monday.com gives you and the team that peace of mind.

When all work is on one platform and everyones in sync, things just flow wherever you are. Tap the banner to go to monday.com.

>> John Carley: Welcome to the new Books Network.

>> Jon Hartley: This is the capitalism and freedom in the 21st century podcast where we talk about economics, markets and public policy.

I'm Jon Hartley, your host. Today I'm joined by Doug Ducey, who served as 23rd governor of Arizona from 2014 to 2022. While in office, Governor Ducey was truly instrumental as a policy entrepreneur with huge policy achievements, including spearheading and signing into law the first universal licensing recognition law in America and the first universal school choice law in America.

He also passed a flat income tax rate of 2.5%, balanced the budget, reverting deficits to surpluses, and reduced the size of the government workforce. Before becoming governor, he was CEO of ColdStone Creamery from 1995 to 2007 and helped grow the company into the massive international ice cream company we know it is today.

Now, after leaving the governor's office, Governor Ducey now leads the CEO citizens for free enterprise. Welcome Governor Ducey.

>> Doug Ducey: Thanks for having me, John. Good to be with you, happy new year.

>> Jon Hartley: Happy new year to you as well. So tell us a little bit more about your background.

You were born in Toledo, Ohio, then moved to Arizona for college, where you began your career and became a highly successful business person and eventually became the CEO of Cold Stone Creamery. Were you always interested in politics? It seems like increasingly fewer highly successful business people today are wanting to run for office, maybe for obvious reasons, given sort of how polarized things are right now, and maybe that sort of benefits the more career politician mold.

I'm curious, like, what in your early days might have enabled you to become both such a successful business person and such a successful governor?

>> Doug Ducey: Well, thank you. Thanks for having me, I'm looking forward to the conversation. I wasn't so interested in politics as a young man or even as a businessman.

I think I've always had interest in being a good citizen. So who I was voting for, especially for president, was important to me. But I was more focused on my career and building my business and raising a family. As you mentioned, I grew up in Toledo, Ohio. My dad was a cop, my mom was a waitress, and basically a stay at home mom.

She'd work part time to help with my brother and sister and I. And I came to Arizona in 1982. I was in a different position. I had never been here. I didn't know anyone. My folks had split up. My mom moved out west, and I was in a position where I had to pay for my own schooling.

So I came out here, I studied business and paid my way through college working for the local Anheuser Busch franchisee. Started my career with Procter and gamble. Eventually built ColdStone creamery, sold that in 2007. And I'd never been to Washington DC until I was 44 years old. And that's when I got some interest in public policy after I'd sold the business.

The role of governor is something I wanted to pursue. I really thought Arizona was a great state, and I didn't like the way we were being portrayed around the country. And I thought as governor, you could be the chief spokesperson.

>> Jon Hartley: Well, that's amazing, and Arizona has attracted so many people to the state over the decades.

And I think most people who live in Arizona today are a big fraction. We're not born in Arizona. It's just an amazing story. In terms of Arizona's growth, which you've been an integral part of. I'm just curious, in terms of your philosophy to both economics or policy in general and governing, what has your core philosophy been?

And were there particular economics facet or economists that were influential to you along the way? I understand that Texas was sort of a model or a template for your policy agenda in Arizona, but you certainly went beyond Texas in many ways. Often hear you use the word policy entrepreneur.

I'm curious, what does that mean to you?

>> Doug Ducey: So, I developed my philosophy over time. I certainly didn't or wasn't born with a philosophy, although I think growing up in the Midwest, middle America, son of a police officer, it was conservative by nature. I did have good economics professors in school, and I also think going to Procter and gamble was a great education on what drives profit for what was one of their smaller divisions, which I took out of a leadership role at one point.

I also regularly read national review. So, I think the idea of the Chicago school or Milton Friedman Frederick Hayek type economics made sense to me. It's something I believed in. I thought it is what built the nation's economy. Adam Smith writing the wealth of nations in 1776 and the country being founded in 1776, to me always seemed like somewhat divine providence.

So, I would say over the course of time and then being a small business owner myself, Colstone Creamery grew into a large international brand. But it started as one single ice cream store in Tempe, Arizona. So, I was able to actually apply a lot of this philosophy to the building of that business.

The incentives for the franchisees, the measurements of the headquarter office. I came to believe in that, and that's really when I ran for governor. I ran as a businessman. I ran as somebody who wanted to kickstart our economy, somebody that had built the business and now wanted to shrink a government.

I believed all that could be done. I think our eight years demonstrate that it can be done. And I think that those principles and values are applicable not only in the state of Arizona, but all 50 states, and certainly at the federal level.

>> Jon Hartley: Well, it's amazing what you've done in Arizona during both your terms across eight years.

I want to get a little bit more into some of your big policy achievements, and I wanna start with occupational licensing. How did you orchestrate Arizona becoming the first state in America to pass universal licensing recognition? I think a lot of people don't really understand licensing or appreciate the economic costs it imposes on licensed workers, maybe across states who often skew toward lower incomes.

The idea that you have to recertify, you have to take more tests and so forth for a very similar license after you've moved states. Not a lot of people, I think, are necessarily aware of that. For those who don't know, since you passed universal licensing recognition, about 12 or so states have followed your lead on this, both Republican and some Democratic states as well.

I'm curious, how did you orchestrate universal licensing recognition, and how did you get interested in that?

>> Doug Ducey: So, you mentioned policy entrepreneur, and that's something that I said to my team, that I wanna be somebody who leads and innovates on policy. But that was a few years into the governor's office.

As I did my diligence on running for governor, I noticed all the good things that Texas had done over the last 20 years. I really admired governors like Mitch Daniels and Indiana and what Jeb Bush had done on education in Florida. And we very much took this like a Procter and gamble search and reapply initiative.

We took those best practices and applied them to Arizona, and it took us a couple terms to get that done. Then, moving forward, I said to my team, I wanna be the one leading on the innovations. And on the things that can be breakthrough and make Arizona the top state in the nation in which to live, work, do business, get an education across the board.

So we basically brainstormed ideas on how do you make the economy work better? And part of it was making it freer for people to pursue happiness or to pursue opportunities they wanted it. And the other thing was to get government and obstacles out of the way. So in terms of universal licensing, we stood on the shoulders of a good idea, which was to give an opening to military spouses.

I think everybody loves our folks in the military, they relocate every 18 months. Oftentimes the trailing spouse has a license or certificate that is not applicable in the state in which they reside. So we had the opportunity for military spouses to waive that. And once we saw that, that worked, Americans do love and crave fairness.

It was only fair that was open to all individuals. I was somewhat shocked as to what a breakthrough idea it was because it seems somewhat simple. And we played a little bit on my conservative reputation in saying that we were gonna trust your government in your state. If you were somebody in good standing with a certificate or a license or a credential, we were gonna recognize that as long as you were in good standing.

And I think that this is an idea of this universal recognition should be available in all 50 states. Was somewhat strange some of the opposition from my side, from the conservative side, still, folks thought that it was unfair that an Arizona moving to Illinois wouldn't enjoy the same benefit.

And I had to remind them that we were in charge of the state of Arizona, and Illinois would have to take care of themselves. But, I think, across the board, there's these ideas on how you lower taxes or reduce regulations or get obstacles out of the way. There's always an unintended consequence where every law that is passed, that they are, I imagine, passed with good intentions.

Very rarely are they repealed, I wish we had sunsets on these laws. If something was a good idea and it's working well, you can pass it again. If it's a bad idea, it can expire, if it needs tweaks or reforms, I think that you can address it. And that's basically how we looked at the portfolio of laws and regulations and ideas on what we could move forward over the next six years of the eight year of the two terms we were fortunate to have.

>> Jon Hartley: That's amazing. And you mentioned Milton Friedman as an influence, it's funny. He wrote his doctoral dissertation in the early 20th century on occupational licensing. Often critical of doctors in certain professions that use occupational licensing as a gatekeeping mechanism to keep their wages high and extract rents and so forth.

So it's amazing to hear that there was a lot of conservative opposition, certainly you think, from certain professions that are a bit more well off, maybe. But not necessarily thinking about what might be best for all Arizona in terms of price and so forth. I want to jump into the next topic here, which I think is an amazing trend that's sweeping the nation.

And I think it's probably the biggest policy shift in 2023 and in recent years, which is this topic of universal school choice. I'm curious, how do you orchestrate Arizona becoming the first state in America to pass universal school choice? I'm amazed by the story I've heard from you before, the behind the scenes story of how it happened, or during COVID it almost kind of happened.

Or there was sort of a big battle in 2017. And for those who don't know, amongst our listeners, about a dozen states have similarly followed in passing some form of universal school choice, with about eight or nine states going in 2023 and many more expected to come in 2024 in the years ahead.

I think you're a policy trendsetter across states, to say the least. I'm curious, what was the story behind going all in on universal school choice toward the end of your second term as governor?

>> Doug Ducey: First, real honor to Milton Friedman, who not only preached freedom and free enterprise.

One of the first laws that we passed in Arizona was the American Civics Act. So that every child that graduated high school had to pass the same civics exam than a newly naturalized American has to pass. If I would have had a third term, I would have passed a law that every child in Arizona would have to watch the free to choose series that is available for free on YouTube.

And Milton Friedman talked about school choice, and I think this was in the 70s or early 80s, and it really animated my run for governor in 2014. I said I wanted to get taxes as close to zero as possible, our income taxes, and I wanted universal school choice.

Arizona had been a leader on school choice. We've been a leader with charter schools, and we'd seen great success with that. We were able to pass one of the first ESA bills in the nation in 2017, my second year, it was a very limited ESA program, that's educational savings accounts.

It's basically when somebody receives their taxpayer dollars and they can apply them however they want, whether that's Catholic school, Christian school, Hebrew school, private school, homeschooling, or innovations. Hey, mirror zone, it's an anomaly of our constitution that laws can be referred back to the voters with enough signatures.

And that ERISA in 2017 was referred to the voters, and it was crushed by the voters. It was crushed 65 to 35, so they were being very clear that they didn't want ESAS. And I said to my team, I think we need to do a better job communicating and persuading on this issue.

And coming back to Milton Friedman, he also said that in a crisis, people look for the ideas that are lying around. And the crisis that we had in 2020 was COVID, and parents were able to see what their children were or were not being taught. They were able to see a lack of rigor and much indoctrination around critical race theory.

And other things that have nothing to do with reading, writing, arithmetic, character formation, or American cynics. So we took another run in essays, and this time we want much larger, it's a universal educational savings account program. And one of the stories I love to tell about this is a woman that I met through into the summer of 2020.

The George Floyd riots was someone named Janelle Wood, and she was the leader of the Black Mothers Form. And Janelle wasn't very happy with me because I put out the National Guard and called an 8 PM curfew that summer. And she said a lot of her members and young people in her organization were angry.

And we agreed to disagree on how I was gonna handle the unrest and make certain there wasn't rioting in Arizona. But we found an issue of common interest, and that was school choice. And Janelle Wood sat next to Angela Ducey, the first lady. At my last state of the state, from the podium, I said that 50 years ago, politicians stood in the schoolhouse door and wouldn't let minorities in.

And today, 50 years later, politicians stand in the schoolhouse door and won't let minorities out. These kids are trapped in failing public schools. It's time to set these families free. It was Janelle Wood who led the standing ovation, also helped organize all the African American pastors in Maricopa county to help with these votes.

Not one of them a registered Republican. And we were able to pass this. We only have a one seat majority in our house and a one seat majority in our Senate. Unfortunately, not one Democrat saw fit to vote for universal school choice, but it was led by a very diverse coalition.

Today, it's the law of the land. They anticipate that there will be over 100,000 families participating in this program by this time next year. If you search this and you look at how the mainstream media is painting it, they're all pointing to the fact that there's more spending on it than was anticipated.

How you can translate that is that it's wildly popular. More families want it than anyone could have ever anticipated. If public education is about educating the public, we are educating more people for less money in the school of their choice. Since we did this, many other states have followed suit.

Texas and Tennessee are on the 1 yd line, and I believe this is something that every parent in the nation should enjoy and be able to take advantage of. Not only do I believe it can reform k twelve education, I think it can help renew our country because it brings communities together.

They care about what their kids are learning and have high expectations for them. It's also a way to get more money into the classroom to better reward our teachers, which are critical in a good education in a classroom environment. So, so far, so good, there's no lost causes in American public policy because there are no gained causes.

Just as we're doing this, the left is working very hard. The current governor in Arizona who is a Democrat, is opposed to this program. She pledged to terminate it in her first year. She was unsuccessful. Now she's trying to eliminate it. So it's very important that we not only get the law passed, but then we bring it to life and make it successful.

>> Jon Hartley: Well, it's amazing how successful it's been and how much it has influenced other states. Again, with eight or nine states going in 2023 after Arizona went in 2022. And many more are expected to come this year, this coming year. I think it's very fair to say that you've started a school choice revolution in terms of governance and actually getting it done.

It's amazing those who have followed sort of school choice as a Milne Friedman idea. It seemed almost like an abstract academic topic with sort of limited programs across states, which Jeb Bush passed in his time in governor. But the idea of having universal school choice for all children, it's almost unbelievable just how successful this has been over the past just a couple of years and how it's continuing again.

I really think that this is probably the most significant policy change that's happening across the United States. And strangely, I think doesn't get enough attention nationwide, even though it is a state issue. I predict in coming years almost half the states in America could very well have universal school choice thanks to your pioneering efforts.

So I want to just shift a little bit to fiscal policy and just your other accomplishments here. So you pass a flat tax rate of 2.5%, you balance the budget, reverting deficits to surpluses and reduce the size of government. Unlike the federal government, states cant really borrow or print money, so you have to cut spending if you wanna cut taxes.

I'm sure that was not easy. I'm curious that along with what other policy accomplishments you're most proud of as governor. And I highly recommend that our listeners check out your website, theduceyears.com comma, which lays out all of your policy accomplishments. There's way too many to cover just in this interview, but I'm curious, what other policy accomplishments were you particularly proud of and what other ones were tough wins in your mind?

>> Doug Ducey: Well, I think you're pointing out the real highlights, of course, universal school choice. The fact that we inherited a billion dollar deficit and left billions of dollars in surplus while we were gone. We balanced that budget. We applied the same principles you apply to your own household or any small business does.

We just spent less than we brought in, so it's really not that hard. It's more having the political will to make the difficult decisions, to tighten your belt, to take some of the heat from the media and the special interests down at the Capitol. But the other things that I beat a drum on would be, of course, the civics.

I had no idea that we're gonna be where we are today in terms of divided as a country we stand in 2024. I came into office in 2014 and it seems rather than a decade ago, but it seems almost like 100 years ago. But I do think that our kids need to know more about our history and informed and patriotic and heroic history, and that can include all the good and the bad and the ugly, because I believe as a nation we've always been in search of a more perfect union.

Look at what's going on our elite college campuses with these kids seeming to know nothing of the true history of the United States or even the nation of Israel and how it was formed and the ongoing conflict that's been happening there for decades and centuries before that. That's all an indictment on K-12 and higher education.

And if there was a silver lining in Covid, it was universal school choice. If there's a silver lining in October 7, may it be a reform of our higher education and the way that we form our children in the knowledge of the United States and western civilization. So we could go on and out about other things.

But I think you're hitting the highlights. The other thing that I would want to say to people, we had a secure border in Arizona, and we had a secure border in 2020 because we had a partner in the federal government. Border security is not immigration. Border security is public safety and national defense.

During the pandemic, it's also public health. So the way you secure the border is you make sure that the border has enough resources. Walls work, surveillance works, enforcement of the law works. Along with conversation with Mexico, Mexico's Arizona's number one trading partner times four. My first visit internationally as governor was to Mexico City.

My first visit internationally upon re-election was New Mexico City, and my last official visit as governor was to Mexico City. I had a wonderful relationship with the nation of Mexico while being asked to tough or tougher on the border than any other governor in the United States. These are separate and mutually exclusive issues.

So you can have a great trade policy, you can have border security and stability in those communities. And then Washington, DC, the halls of Congress is where immigration reform happens. And that can be done as well. They shouldn't try to be done comprehensively, that's not going to work, that's a non starter.

That's a game both parties play for political advantage. Step one is to secure the board, get that done, and then go. And let's have the debate around immigration. I'm leading an organization right now called Citizens Board Free Enterprise. We promote and advocate for free enterprise. I talk with small business owners every day.

Everybody needs to hire workers, and in the past, we solved this through proper immigration programs. Most of these folks are republican or right leaning. There's no appetite for immigration reform with a wide open and unprotected border. Secure that border, and then we can talk about improving immigration. Whether you want to call it merit based or needs based in need of reform, I've got a lot of ideas and passion around it, but step one is to secure the border.

>> Jon Hartley: That's fantastic. One last question here. Can you tell us a little bit more about Citizens for Free Enterprise, which you're the CEO of and what its goals are and what it's doing?

>> Doug Ducey: So Citizens for Free Enterprise is headquartered here in Arizona. It's an all 50 state organization.

We're getting started here and in Georgia right now, we'll expand out over time. We're gonna educate and advocate around free enterprise. I think it should scare everyone that if you held up a sign that said capitalism and socialism in most college classrooms today, it'd be a 50 50 proposition.

That changes a little bit when you frame it as free enterprise or free market capitalism versus big government socialism. But we wanna make sure that we protect it, there's a lot of freedoms in the United States. We enjoy freedom of religion, freedom of speech, freedom of assembly, but it's economic freedom that underlies it all.

It has built the strongest military machine in the history of the world and has also allowed us to get away with all these stupid spending decisions. It's because our economy is dynamic and we're prosperous as a people. We're also gonna organize people around free enterprise. We're gonna hold candidates accountable for free enterprise policies.

These should not be partisan issues, these are all things that Citizens for Free Enterprise are going to do. You can check us out at citizens for free enterprise.com. And there will be more to follow beyond this, but please sign up for our emails, we wanna keep you informed.

And this is a way Thomas Sowell we can break from Milton Friedman, but Thomas Sowell said, you don't need to know much about brain surgery or botany if you run for office. But you should know something about economics because nearly every decision you make will affect the economy.

And we wanna make sure that people elected office are making good economic and economic policy decisions.

>> Jon Hartley: I couldn't agree with you more, governor. I really wanna thank you so much for joining us today. It's been a real joy and honor for us to hear about your career and your thoughtful, very thoughtful approach to policy and revolutions that you've started in school choice.

Universal school choice, and universal licensing, recognition across the country and being a model governor for many governors across the nation. Thank you so much for joining us today.

>> Doug Ducey: Thank you, John, Happy New Year. Happy New Year.

>> John Carley: Today our guest was Governor Doug Ducey, who served as 23rd governor of Arizona from 2014 to 2022, was previously CEO of Cold Stone Creamery, and is now the CEO of Citizens for Free Enterprise.

This is the capitalism and freedom in the 21st century podcast where we talk about economics, markets and public policy. I'm John Carley, your host. Thanks so much for joining us.