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What’s Wrong with Public Schools?

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The following is an excerpt from Chapter 2 of Separating School & State: How to Liberate Americas Families (1994) by Sheldon Richman.

Its time to admit that pubic education operates like a planned economy, a bureaucratic system in which everybodys role is spelled out in advance and there are few incentives for innovation and productivity. Its no surprise that our school system doesnt improve; It more resembles the communist economy than our own market economy.

Albert Shanker, president, American Federation of Teachers

To have reasonable expectations about the public schools, we must be clear about what they are and how they operate. It is necessary to look at how they are funded and controlled and what implications those aspects of the system have for the service being provided. It must be stressed that one cannot take the schools as given, inquire how they are performing, and then sift through countless studies to come to a conclusion. The public school system must be investigated from the inside out. Only then can the performance studies be evaluated intelligently.

Public schools are government schools. That obvious statement has important implications. Government is the institution that has a monopoly on the legal use of force in a society. Most significantly, government obtains its revenues by force taxation. As government schools, the public schools are financed entirely out of taxation. Most school revenues come from the local taxes on real estate. Owners of real estate are assessed on the basis of the value of their land and buildings. The growing federal and state financing of public education comes from income taxes. Public educations dependence on taxation is emphasized here because it is the key characteristic of the system. It explains much else about the public schools. And it will enable us to contrast public schooling with its alternative, free market education (which includes many possibilities, including home schooling).

What does the presence of taxation indicate about the schools? It indicates that those who run the schools have an access to revenue that no one outside government has. The proprietor of a shoe store cannot send you a bill, whether or not you buy shoes there, and demand payment under penalty of law. He cannot raise prices and compel payment from you whether you are happy about the price increase or not. All he can do is try to attract you to the store and hope that you like the shoes and will freely agree to exchange money for them.

Those who operate the public schools are not nearly as helpless as the shoe-store proprietor. The compulsory funding of schools creates a distinctive attitude in school administrators and teachers that is not found in owners of shoe stores and other private enterprises. The people who come into the shoe store are potential customers, free to walk out without buying. In contrast, the citizens of a school district are taxpayers, who have no choice but to pay their tax bills. Sure, they can move to another jurisdiction. But they face the same compulsion there.

Unsurprisingly, the school authorities treat the taxpayers differently from the way that a shoe-store owner treats his customers. An elected school board official, of course, has his eye on the next election and for that reason must at least appear to be doing things that the voter-taxpayers approve of. Some political theorists presume that the pressure for reelection is similar to the pressures that businessmen face in the marketplace. The similarities, however, do not go far below the surface. Electing a school board official has little in common with picking a shoe store. When shopping for shoes, the customer makes a straightforward decision for himself. He pickets the store and buys.

Selecting a school board is very different. No one citizen can decide who serves on the board. If a citizen approves of a particular candidate, he must persuade over 50 percent of his fellow citizens to vote for the same person. His one vote means very little. The margin of victory in most elections is far larger than one vote. The chances of any one person casting the deciding vote are smaller than the risk of being killed in an auto accident on the way to the polls. Besides that, the average voter has no strong incentive to exert the effort to acquire the knowledge needed to cast an informed vote. That incentive is lacking because people other than himself would get the bulk of any benefits for his effort whether or not they exert any effort at all. That is known as the free-rider problem. It plagues all aspects of democracy.

Another problem with administering schools democratically is that the costs of casting a vote are perceived as small by voters. A given voter will pay only a small portion of the expense that his vote might bring about. If he thinks about the monetary cost of his vote at all, he is likely to think only of his small share, not the overall cost. In the marketplace, by contrast, people tend to face the full money costs of their choices. Thus, in the democratic arena there are distortions with respect to individual action that are not found in the marketplace.

Democratic organization of schools presents other problems not found in market organization. What if a citizen shares some but not all of the positions taken by a school board candidate? The electoral system treats his vote for the candidates as unconditional. He has no way to make clear that his endorsement is conditional or partial. He is stuck with a package deal that may look good only in comparison to the other candidates. Again, that problem is solvable in the marketplace. A person can choose to buy only what he likes from a given store and to go elsewhere for other items. In a private education market, parents, if need be, could even send their children to one school to study French and to another to study math. The market is the most flexible arrangement for satisfying consumers that can be imagined. It is precisely that flexibility that is missing in bureaucracy, whether controlled democratically or not.

Even if a voter finds a school board candidate he likes, there is, of course, no guarantee that once elected the candidate will do what he promised during the election. What then? Can the people who voted for him sue for misrepresentation? Of course not. They are stuck with their candidate. Sure, they can try to vote him out in the next election. But by then the damage may have been done. And those who are upset with the board member will need to persuade many other people to vote the member out, as well. That cumbersome requirement has no analogue in the market.

The nonmarket organization of education has a serious but unappreciated implication for the financing of schools: people do not know what they pay. As Myron Lieberman writes, None of us knows the costs of public education, from our own pockets or the governments. These costs are extremely diffuse and intermingled with others beyond identification. Even with the help of a supercomputer, it is impossible to ascertain what any individual is paying for education.

Generally, it is easy to tell what we pay for the various goods and services we buy. But when every level of government, taxing us in a variety of ways, puts money into the schools, how can anyone know precisely what he has been forced to contribute?

That lack of knowledge has further consequences. Most people will not undergo the arduous effort to find out how much they pay. Many people will shrug and think, Whats the point? I wont be able to do anything about it anyway? That understandable ignorance and weakening of responsibility suit the authorities just fine. They would prefer not to have the taxpayers looking over their shoulders, closely watching their decisions. It gives them substantial rein to spend money and to experiment with any fad in education theory that catches their fancy. The systems inherent lack of accountability insulates the administrators from those who foot the bill and suffer the educational results. It also enables them to form close alliances with education professionals, who are seen as the experts who understand the science of education and child development, although there are excellent reasons for believing that those are bogus disciplines.

That mystification of financing creates fertile ground for bureaucratic irresponsibility. As noted in the Appendix, the financing of public schools has skyrocketed in recent years. It is unlikely that the taxpayers have even been aware of that fact. The system has been arranged to keep taxpayers in the dark. No, they are not prohibited from acquiring the information. But such acquisition is made so difficult that most people, busy as they are raising their families and making a living, will not have the time to navigate the backwaters of the bureaucracy. The division of labor, normally a blessing, is perverted so as to discourage people from exercising self-responsibility.

A related problem is that tax financing precludes market prices for educational services. Market prices do not only let buyers know what they are paying. They are the fruit of a complex communications process that encapsulates information about the relative scarcity of resources and conveys it to all participants in the marketplace. That information is crucial to intelligent planning by buyers and producers of services. It is at the very heart of market competition, which Nobel-laureate F.A. Hayek properly called a discovery procedure.

We live in a world of uncertainty, an open-ended world in which perfect knowledge is denied to us. Discovery of new things and methods is always possible. But discovery is fueled by incentives. As economist Israel M. Kirzner points out, in the marketplace, the lure of profit creates incentives for entrepreneurs to find unsatisfied needs and to devise ways of satisfying them. Those incentives do not exist in government schools.

In the market, entrepreneurs are accountable to consumers; they face the constant threat of financial loss. The alleged accountability of officeholders to voters is a mirage. It bears not real resemblance to the accountability of the marketplace. If the shoe-store operator misrepresents his product, there is recourse in the civil courts. Offended customers can take their business elsewhere without notice. They do not have to persuade over 50 percent of the other consumers to join in the boycott. That power held by the individual consumer in the marketplacesometimes called consumer sovereigntyis lacking in the democratic administration of services such as education.

The inherent insulation of school boards (and other democratic bodies) from real accountability aggravates a phenomenon known as the Iron Law of Oligarchy. The law says that in almost any group endeavor, a small elite will emerge as the most active in determining the activities of the group. Even in a neighborhood bridge club, two or three people will show the most interest in running the group finding a place to play, determining the game night, and so forth. The Iron Law asserts itself because people tend to have busy lives, and few will find the activity of such importance that they wish to invest an extraordinary amount of time. Of course, in a bridge club the Iron Law is benign. But that is not true with things such as school boards. Even if people might like to spend lots of times studying every aspect of the school system, attending board meetings, and the like, most simply cannot do it. Besides, as mentioned above, the return on the effort will seem too small. Those who can invest such time usually have a special interest in doing somembers of the teachers union, for example. In the end, school policy will be inordinately influenced by a small group of activists, not by the mass of taxpayers or parents.

This is an excerpt from Chapter 2 of Sheldon Richman’s Separating School & State: How to Liberate Americas Families.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.