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School & District Management Opinion

Make Public Education a Market Economy—Not a Socialist One

By Gary Wolfram — January 05, 2018 4 min read
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Public education in America needs reform—and badly. There is an abundance of data showing the underperformance of our nation’s public schools. For example, the results of a major cross-national test, the 2015 Program for International Student Assessment, placed American students 30th in math and 19th in science out of all 35 members of the Organization for Economic Cooperation and Development, an organization of the largest advanced economies. And the most recent National Assessment of Educational Progress administered by the U.S. Department of Education found that a mere 40 percent of 4th graders, 33 percent of 8th graders, and 25 percent of 12th graders were “proficient” or “advanced” in math.

That’s not to say that all public schools are bad—quite the contrary. However, ineffective education tends to center in large, urban areas. When was the last time you heard someone say they wished they could move to Detroit to send their kids to that city’s public schools? It’s a pointed question—but the answer would be just the same if you said Chicago, Atlanta, Los Angeles, or Philadelphia. This is not a single state or a single school’s problem—it is a systematic problem for the entire country.

BRIC ARCHIVE

Consider this sad reality: Our nation produces technology so advanced that I could use the phone in my pocket—which is already three generations old—to take a video of you and email it to someone in London, but at the same time we can’t seem to teach a 4th grader to read in Detroit. Does this make sense? Why have we allowed this state of affairs to arise?

Ultimately, the reason for this huge disparity is not that we don’t spend enough money on our urban schools: The Detroit public school district, for example, spends roughly $15,000 per pupil per year. It is that we produce cellphones through the market process, and we produce public education through a system that is basically one of central planning. The government tells you what school you can attend, who is to be hired in the schools, and what is to be taught in the school.

We must make the transition from central planning to a market economy for the sake of our children."

Nobel laureate Milton Friedman once compared our nation’s education system to “an island of socialism in a free-market sea.” Similarly, nearly 30 years ago, the then-president of the American Federation for Teachers Albert Shanker wrote, “It’s time to admit that public education operates like a planned economy, a bureaucratic system in which everybody’s role is spelled out in advance, and there are few incentives for innovation and productivity. It’s no surprise that our school system doesn’t improve: It more resembles the communist economy than our own market economy.”

We must make the transition from central planning to a market economy for the sake of our children, and especially for the children of low-income families. The current system does not incentivize teachers and administrators to teach children to read or do math, but rather to lobby for more state and federal revenue. This is not to say that we do not have wonderful public school teachers and administrators. But as Adam Smith once wrote, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” He never said you wouldn’t find a benevolent baker, but systematic improvement will require using market incentives rather than relying on that uncertain benevolence.

How we make the transition is open to debate, but to me, it seems as though the best, most efficient path to success is through charter schools. I was on the board of education in Michigan and supported the development of charter schools in the state. I worked with the current U.S. Secretary of Education, Betsy DeVos, and her husband Dick in attempting to expand school choice both while I was on the state board of education and afterwards. Charter schools introduce market forces so that the revenue follows the child, and students can attend the school of their choice no matter where they live. This way, if schools fail to provide what students need and parents want, the school loses students and revenue. And gradually, as parents increasingly choose charter schools, the idea of competition in the production of education will gain a foothold in the public square and allow the political transition to purely private schools.

What’s more, introducing charter schools will allow us to reclaim the true purpose of education in a democratic society. Private schooling is consistent with a belief that government should provide education. It is the government production of education that is not only inefficient, but a threat to true democracy. As Friedrich A. Hayek, another Nobel laureate, pointed out, democracy only makes sense if you can form an opinion independent of your government. Government education for all certainly hampers a citizen’s ability to think originally and freely.

In light of all this, we should wish Betsy DeVos the best in her efforts to improve the education of the poorest among us by expanding the ability of parents to trust their own judgment and choose the schools that serves their child best.

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