Category Archives: Economics

An old friend recently asked me my thoughts on privatizing education. Here’s a lightly edited version of what I wrote to him:

My only goal for education is that it be good. I don’t care if it is provided publicly or privately. I only care that is high quality.

Economic theory tells us that a competitive market tends to deliver a better product than a monopolistic market. Let’s see if this theory works in the real world.

The current system in the U.S. can reasonably classified as a monopoly – only the rich have the option of opting out and affording a private education if they so desire. The masses are given only one option for educating their children, no matter their wishes – a classic monopoly.

U.S. students also tend to score poorly on standardized tests compared to other developed nations. This tells us that the current, monopolistic model – the only option for most students – delivers a low-quality education.

Now let us look at countries that have the highest test scores. Their high achievement tells us that they have stumbled upon a system that works pretty well. It turns out that students in the Low Countries of Western Europe – Belgium and the Netherlands – do very well on standardized tests. Their success tells us that their students receive a high quality education. ABC News even aired a story recently about Belgium ’s educational achievements.

Not coincidentally, high-performing countries all have educational systems that are different from the one we use in the U.S. – none of them are monopolies. While the specifics vary from country to country, what they have in common is that they all have competitive elements.

Belgium has something very similar to a voucher system. Parents are not told where they will send their children to school, as they would be if they were Americans. Belgian parents make that choice for themselves. The government then pays the tuition if the parents cannot afford it. If a school provides a low quality education, parents do not send their children there, and that school is eventually closed. If the market gives parents a lousy choice like that, they learn to avoid it. In time, that lousy choice is eliminated.

Such a system is not perfect. For example, it can take several years for a bad school to be closed. It is, however, better than the American system. Here, bad schools almost never close. In fact, they are often rewarded with more money! This does not provide failing schools an incentive to improve – if they did get better, they wouldn’t get the extra money. Neither system is perfect, but the American model is clearly inferior.

Since I am not a fan of letting the ideal get in the way of the good, I favor a system that allows competition, even though I know the results will fall short of perfection. It is enough that competition would significantly improve on the status quo. I oppose monopolies to the marrow of my bones. This especially holds true for the American educational monopoly where some (the rich) can opt out, but the wishes of the poor are simply ignored.

There are many policy solutions. Vouchers have been tried, if on a small scale, in Milwaukee , Cleveland , and DC. Vouchers have their flaws, but have proven to be superior to the traditional American model. Educational tax credits are the preferred policy of many libertarians. Arizona and Florida are considering policies along those lines. No doubt there are other ideas out there I haven’t yet been exposed to.

All I want is a high quality educational system. Since the current monopoly is obviously failing, I favor a change in the direction of competition. Basic economic theory has been proven correct by real-world educational policies on multiple continents. This means that if one favors a high quality education for everyone, one must favor a competitive system. This would probably include a mix of private and public schools. Again, I don’t care if schools are public or private, only that they be good. There is more than one way to effect positive change, and I am open to any proposal that would break the current monopoly.