National Public Education

The Fallacy of “Choice” in Public Education


One of the arguments one often hears for the privatization of public education is that we ought to have a “choice” as to what kinds of schools we attend.  In a world where, it is said, there is so much choice already, such as on the internet, why should we have to put up with this “one size fits all” government-run school system?  “Choice” is an American right, they say; it is what makes us “exceptional.”  We should naturally have the right, then, to choose from several different kinds of education for our children, such as charter schools, voucher plans, home schooling, religious schools, etc.

But this view doesn’t make sense.  It ignores the distinction between public and private programs.  “Choice” is a valid concept for a private, market-based transaction, such as when you are buying a new pair of shoes, but does not have a similar validity in a public program like public education.  The whole point of a public program is that we are making a collective project; we are sharing our resources so that we can produce something better than what we could do individually.  In that shared, government-run program, the concept of “choice” will never have the importance that it has in a private transaction.  How this works in public education is fairly clear.

If you get to choose something, and so have a “choice,” you also get to pay for it.  Why would anyone else pay for it?  It’s your decision; you are getting the benefit from it.  So if we really did have “choice” for individuals in public education, what would that mean?  Can you, alone, afford to build a school?  Or a gym, or labs, or hire a calculus teacher? Schools are expensive, like fire engines, power plants, and other things we collectively pay for through public programs.  If we want to treat them like simple consumer goods, like shoes, and so have complete “choice” over how we buy them, we would then also have to pay for them all by ourselves, and so would have to settle for a much lower level of quality.

If we want good schools, we need the help of other taxpayers.  But once you involve these other people you are going to have to let them in, so to speak, on the project. If it’s a cooperative effort, the choices have to be made cooperatively, not individually.  There is no way around this.  Of course we would all like to be able to afford our own private way of educating our children, and the “choice” that goes with this, but most of us can’t afford it.

The whole concept is illogical.  Who is, after all, making this choice?  Obviously, the parents of the children involved.  It’s not a “choice” for the general public, but for the parents with school-aged children.  But who is paying for these schools?  Parents only make up a quarter of our taxpayers.  By far the main supporters of the public schools are the non-parent general public.  So why don’t they get a “choice” about how to spend their money?  Why is a quarter of the population allowed to choose what they want, but the rest of us don’t?  It might make sense for the parents to have “choice” if, in fact, the parents were paying the full cost of the schools, but they aren’t.  The whole concept, then, is illogical and unstable, and the general public will eventually refuse to support it.

Furthermore, we like collective projects.  Let’s look at a middle-school playground, the source of much wisdom.  There, the lonely kid standing off by himself has the “choice” of what game to play that day.  He is free to choose.  Great.  But all the rest of the kids, the ones in the games and other collective activities, no longer have that “choice.”  They have already agreed to play by the rules of the game they are playing, and that’s fine with them.  They don’t have “choice;” they have collective, shared action.  They are doing something together with each other and that is more fun than being alone and having total “choice”.

Collective, shared activities produce better outcomes and are more enjoyable.  But once you are in them, you don’t get “choice.”  You have to abide by the collective decisions that were made when the program was set up. We did “choose” the public school system, a long time ago, and we chose the government to run it.  It didn’t just happen; people voted for it, since it was a good way to share the costs with the entire population and so produce a much better education for our children.  And, yes, that decision does limit how much free choice we now have in that system, but it is well worth it.   The collective, shared benefits far outweigh the value of any individual “choice.”

Peter Dodington

May 6, 2017



Post-Logical School Reform

I read an interesting article the other day by Paul E. Peterson entitled “Post-Regulatory School Reform” (Harvard Magazine, Sept./ Oct., 2016, pp. 37-43).   Peterson argues that federal “top-down” regulations, through such programs as No Child Left Behind, Race to the Top, and the current Every Student Succeeds Act, have failed to improve the schools and so should be abandoned in favor of local initiatives based on “choice” such as vouchers and charter schools.  He gives a lengthy history of the failures of various federal programs initiated by presidents Bush and Obama and the corresponding growth of these alternative programs.

He argues, for example, that the schools in Philadelphia received a sizable amount of federal aid in the early years of the 21st century but put this money into things like teacher’s salaries that did little to improve student performance.  And, of course, the failures of the NCLB are well known.  As he says, the stated goal of all children making “adequate progress” by 2014 was “never meant to be taken seriously.”  In the end almost all these federal initiatives were abandoned and the programs turned back over to the states.

If there is to be reform now, Peterson says, “it will happen because more competition is being introduced into the American education system” through vouchers and charters that “catalyze” competition.  These approaches are growing steadily and enjoy strong support from a majority of Americans, particularly Blacks and Hispanics.  It is only “teachers and their unions” who are strongly opposed.  Charters currently enroll only about 6% of the school-age population, but Peterson feels they will soon reach a “tipping point” that will “force a reconstruction of the educational system more generally.” No matter what, he says, “reforming the system from within is unlikely to succeed.”  We are entering an age of “post-regulatory” school reform.

What is most interesting to me, in all of this, is how such seemingly authoritative and high-ranking figures can be so apparently clueless about the basic parameters of the topic they are addressing.  Peterson ignores the most fundamental aspects of the public programs he wants to reform, attributes that one can find explained in any elementary textbook on public policy.

Take the issue of the “regulation” of a public program.  Can you have an “un-regulated” public program?  Could you have a fire department, for example, where each resident was allowed to choose for himself the kind of fire protection he wanted?  Wouldn’t that just be a private program, then?  Isn’t the whole point of a public program that you collectively solve a social problem by agreeing on some joint, collective action, and that the only way to implement this collective action has to involve some kind of “top-down regulation”?  How else would you ever get what you agreed on to actually take place?  You can't just let everyone do what they want -- it's a joint project.  Yes, there are “regulations,” but ones that you have all, jointly, agreed to.  That’s different from the top-down regulation of a private enterprise by some outside agency.

We have public programs in various areas, such as those that concern fires, crimes, disease, and education, where the outcome for an individual has an effect on the rest of the population – the fires spread, the crimes multiply, the educated child produces a higher standard of living for everyone.  We don’t have public schools because we like government-run institutions; we have them because they fit the task we want solved.  See Milton Friedman, of all people, (in his chapter on education in Capitalism and Freedom) on the necessity for government “intervention” in education, since it benefits the entire population, not just the families involved, and so should be paid for through a government tax paid by everyone.  If you don’t like government regulation of schools, fine, you can send your child to a private school, but once you agree to public funding and support, you also have to agree to collective public policies that, by definition, have to be implemented through top-down regulations.

Peterson also inflates the federal regulatory role in our current decentralized school system.  In his comments about the Philadelphia school system, he argues that the federal government failed to improve the schools when they gave them extra money.  But it was not Washington that decided to raise those teachers’ salaries.  How could they?  We have a constitutional restriction on federal interference in public education.  Yes, there are federal regulations on how schools should deal with federal funds, but overall school policy is still a state and local concern.  Those federal regulations did not determine how the schools would be run; that was a state and local decision.

And let’s look at the topic of “competition.”  Economists have known for a long time that competition doesn’t work for public programs.  These programs do not function according to the same market forces that affect private businesses.  As any economics textbook will tell you, competition only works where the “exclusion principle” applies, that is, where “A’s consumption is made contingent on A’s paying the price, while B, who does not pay, is excluded” (Musgrave and Musgrave, Public Finance in Theory and Practice, 1973, p. 55).  This cannot happen in a public program, since, by definition, the program is used by everyone and paid for by everyone.  There is no point in making a second fire department complete with the first, since everyone would be paying for both programs and so there would be no competition.  So of course we never make two fire departments.  Why, then, should we make two public school programs?

In public education it might make sense to encourage truly private schools to compete with the public system and perhaps show how to do things more efficiently, but that is not what Peterson wants.  It’s another public program that he wants to do the competing, paid for with public funds, as charters and vouchers are.  That doesn’t make sense.  He avers that competition has helped the airline and telecommunications businesses, but these are private businesses.  We don’t have government-run airlines.  In the private realm competition does work, but not in public policy.  There is no such thing as government-supported competition for a government-run program.

Once we accept that a publicly supported program has to involve government regulations of some sort, and is not helped by publicly-funded competition, Peterson’s arguments do not make sense.

Peter Dodington

Sept. 17, 2016



Samuelson on Competition in Public Programs

As you may know, Paul Samuelson wrote the standard textbook on economics in the second half of the 20th century.  I myself used it  in the “Econ. 1” course I took at Stanford in the ‘60’s.  (The only course I ever took in economics, I have to admit.)  So he knows what he is talking about.  Back in 1954 he wrote a short paper entitled “The Pure Theory of Public Expenditure,” in which he lays out how public programs, (like public education, though he doesn’t mention this) differ from private programs in fundamental ways.  These comments help clarify some of the misconceptions that are being tossed around concerning our current public school programs, particularly concerning the value of charter schools, vouchers, and the whole notion that competition will benefit the public school system.

Near the end of this article (in The Review of Economics and Statistics, Vol. 36, No. 4 (November, 1954), he sums up his main point:

But there is still this fundamental technical difference going to the heart of the whole problem of social economy: . . (namely that) the “external economies” and “jointness of demand” intrinsic to the very concept of collective goods and governmental activities makes it impossible for the grand ensemble of optimizing equations to have that special pattern of zeroes which makes laissez-faire competition even theoretically possible . . .

We need to unpack this a bit.  He is talking about how we fund public programs, which, as he says, produce “collective goods” and are run by the government.  These public programs produce “external” benefits to those outside, or external, to that program.  All public programs benefit not only the people who are paying for them, but everybody else in the community.  You still get the benefit of the streetlights whether you paid your taxes or not.

And there is a shared, or “jointness of demand” for these benefits, too.  Since everyone shares in the benefits, everyone also shares in the desire to have the program.  So there is a shared demand.  A policeman is not working for one person, but for the shared collective needs of the entire community.

Keeping that in mind, let’s look at what the situation is with private goods.  With private goods, the market sets the proper price for the good.  If you just leave the market alone the competition involved will find the best price for the good; best for both the consumer and the producer of the good.  If you don’t like the quality of a private good, you go to a different producer and this solves the problem.  The competition in the private market forces the producers to find the right level of both quality and price.  As he says, all the factors, in the private goods market, that might hinder this process cancel each other out, giving equations with a nice pattern of zeroes, and the whole private, market-run system works for the betterment of all if we just leave it alone.  (Or, as he says, at least this is theoretically possible.)

But this beneficial way that competition brings about the best goods for the best price doesn’t work with public goods.  As he says elsewhere in this article, “No decentralized pricing system can serve to determine optimally these levels of collective consumption.”  By “decentralized” I gather he means leaving the market alone and not trying to impose controls  from above.  This doesn’t work in a public program or what he calls “collective consumption”.  If you try this with a public program, you do not get the proper price for the good, nor the proper quality of the product.  So when we complain about the quality of, say, the schools, but will not able to fix this, he implies, by simply letting the market act freely on the situation.  Market solutions, such as allowing more free competition, will not work in the public sector.

This is because both the “externalities” and the “jointness of demand” interfere with that market process.  The fact that there are externalities means that a whole group of people are involved in the process other than just the buyer and the seller of the good, and this throws the market’s calculations off.  We can’t then just take these external benefitters out of the process because, as Samuelson says, they are “intrinsic to the very concept of collective goods,” their needs are why you have a public rather than a private program in the first place.  The whole point of a public police force rather than a private one is that it will affect the entire community, including the criminals themselves, and their parents, and all the other factors involved, and that this will probably lead to a more just and ultimately more successful outcome.

And the shared demand causes trouble because there is no way to pin down how much that demand is.  We all want a police department, but for varying reasons and with varying intensity.  When we share this need, then, there is not way to accurately determine this collective demand and so no way for the market to work out the proper parameters of the transaction.

This, as Samuelson says, is at the “heart of the whole problem of social economy” by which I gather he means the problem of how to create public programs that produce the right product for the right amount of money.  The reasons for having open and competitive markets simply don’t work for public programs.

This means, then, that all the arguments for increasing the “competition” for the public schools, such as through publicly funded vouchers for more private schools, or by introducing charter schools, won’t ever work.  Competition is not a way to get better public schools.  Samuelson knew this two generations ago but we seem to have forgotten it.

The only solution he suggests is to just look at how other countries run their successful public programs and copy the best ones.  So much for "American Exceptionalism."

Peter Dodington

June 10, 2015


Contra Friedman

Milton Friedman is justly honored as one of the leading economists of the 20th century.  He won the Noble Prize in Economics in 1976 and has been called by Robert J. Samuelson, the author of what must be the most widely used textbook on the subject, “the most influential living economist since World War II.”  On matters of education reform, though, he is remarkably short-sighted and confused.

In his 1962 book Capitalism and Freedom, Friedman devotes a chapter on “The Role of Government in Education.”  He starts out by noting that government “intervention” is needed in education, instead of the free-market exchange of goods and services, because of what are called “neighborhood effects.”  These are “circumstances under which the action of one individual imposes significant costs…or gains to other individuals for which it is not feasible to make [appropriate compensation]—circumstances that make voluntary exchange impossible”  (pp.85-86 in the 2002 U. of Chicago Press edition).  As he says, “the gain from the education of the child accrues not only to the child or to his parents but also to other members of society” (p. 86).  Since everyone is society benefits from education, it is reasonable to share the cost for that education among all through government taxes.  He goes on to say that the details of this government involvement “must be decided by the judgment of the community expressed through its accepted political channels” (p. 89).  Well and good.

Friedman then argues, though, that the best way for the government to be involved in that subsidy of education is to give direct payments to parents in the form of “vouchers” that can be used at any school, public or private, rather than to rely on the government to administer the program.  He spends the rest of the chapter touting the virtues of “competition” among the schools that would result, and the rights of parents to freely choose from a wide variety of educational alternatives.  Such a scheme would, he says, “reward merit” and ensure the highest possible level of education in our schools.

But what happened to the findings about “neighborhood effects”?  If these are the essential feature of educational programs, why, then, are we suddenly talking only about how to compensate parents?  The whole point of the “neighborhood effects” argument was that it is the non-parents, the “other members of society,” who are at the center of the issue; it is their fair compensation, their costs and benefits, that brings about the need for government intervention.  Instead of talking about this core problem, though,  Friedman shifts the argument to the needs of the parents.  He establishes the public, governmental, nature of education, and then ignores this for the rest of the chapter.

By looking at only the needs of parents, Friedman is essentially classifying education as a straight “market” transaction.  Parents “buy” education for their child, and gain their own private benefit from this transaction.   Of course, from this angle it does seem quite right to get the government out of the picture and let the parents decide for themselves how to fund education.  Why pay for the government bureaucracy if all that matters are the needs of the individuals involved, the parents?  Let them have the “choice” of which school to use, let the schools compete for their support, and let as diverse a mixture of schools serve them, both private and public.  Let them have vouchers, and charter schools that avoid the bureaucracy, and  home schooling.  Free choice works in other market situations; why not let it work for education?

Because, as Friedman himself has already established, that this is not the right way to look at education.  The market does not work for them, since the “neighborhood effects” interfere with that market.  Parents are in fact only one part of the picture.  Most of the support for public schools has to come from the non-parents who are getting all those neighborhood effects, such as a better economy and less crime, from the education program.  The government has to be involved, since this is the only way those non-parents can be involved in the funding.

Once we look at vouchers and other ways to avoid government “interference” from the point of view of the needs of the general public, we can readily see why they cannot succeed.  Why should a general public taxpayer want to pay to give someone a private education?  This would mean that he no longer had any control over the educational outcomes that he was paying for.  Private education is, by definition, free from government control.  But that control is the way the people paying for it, the public, are able to regulate how their money is spent, as Friedman himself notes in his comments on the community control of government.  Take it away and you take away, eventually, that support.  Then you are left with only the support of the parents, which, as any private school will tell you, is never enough to run a school.  Schools that are supported only by the tuition of parents, like a start-up nursery school, meet in church basements, not block-long buildings.  The economics of support for public education  by parents alone doesn’t work.

So even though he is an economist, Friedman has ignored the central economic issue of public school funding: how to get the general public, including but not limited to the parents, to fund improvements.  This involves such matters as the demonstration of educational public benefit to that public, and the various strengths and weaknesses of the local, state, and national government agencies involved.  Since the free market doesn’t work here, you need to examine the governmental economics, not the free-market economics, of the situation.

Yes, cutting the government out of the funding for public education would result in a “freer” and “more competitive” program, but it’s all wrong from an economic standpoint.   Ironically, it is the economists who don’t seem to realize this.

Peter Dodington

March 26, 2013


A Liberal Tea Party

Regarding Mitt Romney's latest plan to bring back vouchers as a cure for public school problems, I want to ask, "Why should I pay education taxes for a plan that funds private schools?"  When my tax dollars go to Title I or the Special Ed program, the money is still controlled by people in the government, people whom I have some control over when I vote for their bosses in elections.  But if Romney takes this money and distributes it to private schools, I will no longer have any say over it at all.

Talk about taxation without representation!  He is the King George who is taking our taxes and using them for his own ends.  Of course he, like King George, claims that this is for our own good, but that doesn't change the fact that we would no longer have any control over these tax dollars under his scheme. It is time for our own liberal tea party.

People keep forgetting that public education is not just a way to educate children.  That's what private education is.  Public education is a way to solve various public problems, such as crime, unemployment, poverty and  poor health, by using education.  Its main goal is the solution of those problems, not just the education of the kids.   That's why we all pay for it, not just the parents of the students.  It benefits us all.

If you just want to educate your children you have a private goal, not a public one.  Of course, then, vouchers and the like will appeal to you, since they use private means to meet your private needs.  For those of us who have public goals, though, who want to make a better society, not just better children, that will never do.  We need a public program where we share the costs and the benefits,  funded by our public taxes, and run by our publicly elected representatives.

Peter Dodington

June 12, 2-12