When we have children, we buy all manner of goods and services for them on the market. Everything from food, clothing, and toys to pediatric care and tutoring services are bought and sold in some kind of market process. When policy wonks and academics talk about how these goods and services should be provided, the general assumption is that the market is the appropriate vehicle. Debate tends to focus on what shape the market should take, including how much regulation or whether the government should subsidize the least well off. There are many reasons we value markets and choice in most endeavors. Markets allow people to shop for the kinds of goods and services that fit their needs as well as the ability to choose differently if their preferences change, or the producer fails to live up to its promises. Markets also allow for more dynamic entrepreneurship than do goods and services provided by the public sector, and the market’s decentralized trial and error process often results in overall improvements of goods and services over time.
When it comes to education, though, the assumption is generally the reverse: that governments rather than markets are the appropriate providers of schooling. The benefits of markets we recognize in other areas either do not apply to schooling or are trumped by more weighty moral considerations. The value of choice may be trumped by the value of preserving community, for instance. In this essay, I am going to argue both that reasons most often given for education belonging in the public domain aren’t persuasive when compared to the reasons for private provision.
So why do champions of public education argue that governments, rather than the market, should be the primary provider of education? The most well known reason is the idea that since everyone’s education yields external benefits and costs for others, not only should we all help in paying for what we all benefit from, but that not doing so risks individuals making educational decisions without considering how those decisions benefit anyone but themselves.
This public goods rationale should not be overstated, however. The vast majority of an education’s benefits accrues to the individual being educated, and not to the general public. Sure, having a literate or civically minded citizenry benefits everyone, but my own literacy and ability to think about social issues benefits me most of all. At best, then, this rationale justifies some sort of public expenditure on education, not full state provision.
Another argument appeals to notions of equality. As long as we believe in the ideal of equality of opportunity, leaving education to markets means that the well-off can buy quite good education and the less well-off cannot. As long as education is a positional good, whose value is partly relative to how it compares with what others have, a fully private education system might mean that where one ends up in life will be largely based on what kind of education one’s family can afford, where we’d all prefer a system where advantages and disadvantages are based on merit, effort, or something like that.
I have some sympathy with this case. But if education is a positional good, it is unclear why a private system is less fair than a public one; unless the public system is very centralized and standardized, some schools will always be better than others. Where a family can afford to live will then heavily influence what public school its children can go to, and we then have roughly the same problem, with added complications for the housing market. (Note that in a private system, a poor family can save up for a better school rather than buying expensive housing for a better school.) Also, as sympathetic as I am to “equality of opportunity” arguments, they can be tricky in education. As long as it is acknowledged that different students may respond best to different educational forms, it becomes difficult to measure exactly what educational equality is. Given public school systems’ tendency to centralize and standardize over time (often in the name of educational equality), I would suggest that either a universal voucher or tax credit system might provide some measure of equality in the ability to purchase education while allowing each to pursue educational forms that best match their preferences. This is potentially a more equitable result. (Also, as long as markets in education do what markets elsewhere do, it is likely that quality will improve, and costs will decrease, over time thanks to entrepreneurship. That’s not quite equality, but it will allow everyone to purchase better and more affordable education over time.)
There is a further argument that public schools are “public spaces” that are vital to American democracy: private schools can exclude whom they’d like; dissatisfied “customers” can choose another school and avoid trying to change it by democratic participation; public schools accept all comers (who are zoned for that school) and provide a kind of community that goes beyond a group of consumers choosing in and out at will. This is bad for democracy and cosmopolitan pluralism.
Deborah Meier, for instance, writes of voting, democratic governance of schools, as preferable to “voting with one’s feet” in the market: “Voting ’with one’s feet’ is a market-based form of voting. But there is another better way. Actually voting.” It is best, in other words, to deal with problems in schools democratically rather than just be able to leave if you are not satisfied.
I think this is wrong on several related counts. First, the argument rests on a category mistake: arguing for democratic governance within schools is no argument against allowing exit rights from schools or market competition among schools; these are different categories of processes. Why assume that allowing exit rights and market competition in education will preclude people from voicing concerns democratically? If anything, my paying for tuition might make it more likely that I will voice concern when my needs are not being met (for a service I paid for)… and I will only “shop around” if my concerns are still left unaddressed. If a good thing about democracy is that everyone can have voice, the bad thing about democracy is that it can create rivalry between voices and ends up privileging the voice that garners majority support, subjecting all other voices to its dictate. For those who fail to get their preferences into the majority consensus, being able to exit and find a “better” school might be important.
Those who see public schools as a community space often have a definition of community different than mine, one where choice and exit rights play little or no part. William Ayers complains (when discussing the virtue of small public schools), that “the term community has come to mean commonality,” and that the core of community is “not that everyone is alike, but that everyone is different. And being in the community means having to deal with that person you dislike or disagree with” (A Simple Justice: The Challenge of Small Schools, p. 105).
To classical liberals like me, a community with exit rights is much preferable. First, it sometimes happens that an issue is resolvable only at extreme personal cost, as some issues of bullying prove to be. Second, a “democratic” resolution may be imposed on all within the school such that not everyone is pleased with the result, much as Catholics were displeased with the State of New York’s decision to placate them watering down the Protestantism in public schools. Third, I don’t see why communities where membership is based on arbitrary criteria like geographic location is, for that reason, more authentic than communities with membership based on deliberate choice and felt commonality. In fact, I suspect that bonds among people in communities are stronger when all parties knows that others are there by choice rather than because they are zoned for the same school community. Lastly, there are moral objections to the idea of allowing money (profit, no less!) to be made on something like educating students. But we allow money-making on a lot of other important things, and we don’t have a moral problem with it. And people already make money within the public school system itself - including textbook makers, teachers, and administrative bureaucrats deriving a salary. If we don’t find it morally objectionable for people within the public system to make money, why do we object if those in a private system do it?
Now, why a private market? First, a private market provides the incentives and the flow of knowledge (via the profit and loss system) that allow for entrepreneurship and innovation in a way that doesn’t happen as well in the public sector. It is a well-worn but true cliché to say that the automotive industry, the computer industry, and almost every other industry we can think of has radically transformed over the years thanks to entrepreneurship: quality improves, prices get lower, or both. Companies try different ideas in attempt to outdo their competitors; customers decide what they prefer. Innovations that work make a profit, and those that don’t disappear. Over the long run, new innovations become old and more affordable to everyone, and still more innovation happens. Education doesn’t generally work like this. It seems to be an area where the service doesn’t change much over time, but gets more expensive by the decade.
A serious objection here is that while innovation can be good, it also leads to missteps - entrepreneurs may create, and consumers may choose, services that turn out to be duds. In education, this problem is particularly worrisome because the mistakes may be cumulative. If I buy a bad car or house, I am out a lot of money, but it will probably not affect my future ability to benefit from houses and cars. If I buy a year of bad education, it may either set me back a year, or worse, it may fill my head with stuff that now needs to be unlearned and retaught.
But there is no good reason governments can’t get education wrong in the same way a private company could. Indeed, they do. The difference is that when governments are the primary education reformers, one reform affects all (or all public-school-attending) students, where if a private company gets it wrong, it affects only those who chose into that company’s model. And in the latter case, at very least, consumers can try to choose out and the market process sends that company a signal via financial losses. It is much harder to detect a bad public school reform - or a good one - in absence of a profit and loss system. I also think that this may be a situation where we confront a trade-off: we can either allow for entrepreneurship and accept that some experiments will fail, or take a more conservative course where we are so worried about guarding against failed experiments that we more or less maintain the status quo or reform at a snail’s pace.
Another advantage of markets is that they allow for pluralism and diversity. I want people to be imbued with a cosmopolitan ethic as much as any “public school as community” advocate. But my cosmopolitanism is one where what counts is not just being together, but having a diversity of options (that includes being with those you want to be with). Information I’ve seen indicates that private schools might do a better job at teaching cosmopolitan tolerance than public schools, and I suspect an important reason for that is that private schools allow people to be educated how they’d like without forcing competing groups to engage in a political struggle about how everyone should be educated. That kind of fight leads to more potential discord among groups than allowing individuals to choose into and out of schools based on their preferences.
The benefits of entrepreneurship and pluralism go beyond cultural difference and extend into current debates about merit pay and other education policy issues. Instead of having national (or even district level) discussions about whether merit pay for teachers is good policy, and how it could be implemented, why not allow different schools to use different hiring, retention, and incentive programs, and the market system to allow teachers to go where they think they can get the best contract, and students to go and stay where they think they can get the best education by the best teachers? (Note that when we discuss the issue of merit pay in the political realm, the assumption seems to be that there is only one best answer to how to hire, retain, and incent teachers, and all we have to do is discover it. In a market, the assumption is that, quite possibly, there is no “best” answer, and different folks might find different answers to be “best.” I find the latter assumption more plausible, of course.)
I will close with some key elements that I think any successful market in education would need: the market (1) must be open to for-profit companies that can scale and put money to R&D better than non-profits, (2) should maintain relatively low cost of entry and exit for new firms in order to best harness entrepreneurship, and (3) include a role for government in enabling and mandating that schools make information about the school and its performance available to consumers.
I started with an observation that in most areas of life, we not only use markets to great effect, but don’t generally question whether markets are the best way to allocate goods and services. There are many arguments about why education is different, but I find them unconvincing. Education is not significantly different. The market should be allowed to work.