Why Schools Suck: The Economics You Were Not Taught

American schools are among the most expensive in the world, yet far from the top, performance-wise. This is designed into their nature, due to something which any decent school ought to teach, if students are to understand democracy – but that is not an oversight but a feature.

Schools are a prime example of concentrated benefits and dispersed costs.

Folks who benefit most directly from government schools – teachers, administrators, janitors, textbook publishers, and those who build new facilities – are concentrated interests. They gain very large benefits from more educational spending. Parents perceive that their children’s education is at stake. Who can object to more spending? Only a few disorganized curmudgeons and those who more properly understand the economics of the situation – who also know that their votes are unlikely to impact the costs. Concentrated interests almost always win such battles, and so education becomes more and more expensive.

The lack of quality is due to another matter which should be widely taught; that it is hidden is not a bug but a feature, from the point of view of the government. The Economic Calculation Problem refers to the lack of direct connection between inputs and outputs, the lack of detailed information and incentives needed to make good economic calculations. A private-sector school *must* attract students and tuition, or die. Fear of economic death wonderfully concentrates the minds of entrepreneurs. Even the World Bank, which objects to private-sector schools, admits that their “short routes of accountability” are quite effective. Parents, teachers, proprietors, and students are tightly linked together; they know each other and are striving for good education at an affordable price.

We tend to think of private schools as being “only for elites”, but James Tooley discovered a vast network of many thousands of affordable parent-funded non-government schools in developing countries, which he documented in The Beautiful Tree. These schools cater to poor parents and students, cost less, and teach more effectively than their local government competitors. Situated in the poorest slums, their conditions are not what Westerners are accustomed to, but that is an adaptation to extreme poverty; similar schools in America would be economically similar to, and usually a bit better than, the homes of their students. This is not without precedent; E.G. West and Andrew J. Coulson have documented the rise of mass education in the U.K. and America, before government got so deeply involved; the means responsible was parent-funded education.

America ought to separate school and state, and let that “short route to accountability” do its work. If this seems “too extreme”, or if the concentrated special interests kick too much, there’s a more modest step: completely deregulate home education. We already have about 40 years of experience with this, it has proven to be effective, and home schoolers, being more creative than regulators, have kicked out the box to include cooperative associations. Once those are deregulated, we can expect a new network of schools to arise to meet the demand for better and less costly education.

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