As a teacher in a public high school, I am daily confronted with the lamentable realities of state-monopoly education. Student apathy, methodological stagnation, bureaucratic inefficiency, textbook-publishing cartels, obsessive preoccupation with grades, coercive relationships, and rigid, sanitized curricula are just a few of the more obvious problems, attended by the cold-shower disillusionment and gradual burnout among teachers to which they almost invariably lead.

While outcomes such as these are certainly tragic, the process that produces them is not exactly the stuff of Greek theater. There is no climactic battle, no cathartic denouement, no salvific moral lesson to be taken home when the curtain falls, and seldom are there any readily identifiable heroes or villains. It is not a single, epic calamity but a thousand trivial defeats a day, each too mundane and too quickly obscured by its successor to be considered noteworthy. Like a bad movie, public education somehow manages to be both tragic and boring. It is only its cumulative result that would have impressed Sophocles.

Oddly enough, although there is overwhelming public support for compulsory, tax-funded schooling, enthusiasm for what actually goes on in public schools is noticeably lacking. Not only are they generally acknowledged to be falling short in their efforts to produce an enlightened citizenry, but it is even conceded that they have failed in what is ostensibly their most exalted mission: the provision of equal opportunity for all via a standardized system of mass instruction in which all students receive the same basic set of knowledge and skills. Nor has this indictment originated solely from among the ranks of those opposed to egalitarianism on principle. To the contrary, it is largely the refrain of embittered progressives for whom “free” universal education has long been the desideratum of social justice, and who cannot understand how the behemoth they so vigorously midwifed into existence and then wet-nursed for a century could have so thoroughly betrayed their loftiest and most cherished ideal.

Yet ironically, it is the unassailable faith in the achievability of precisely this ideal of universal equality that immunizes public education against every reasonable argument advanced in opposition to it. Notwithstanding its manifest shortcomings, none of which has found a remedy despite decades of legislative reform, hardly anyone is prepared to see this system replaced by anything resembling a real market in education due to the deeply held conviction that that those of lesser material means either would not be able to afford market-based schooling or, in the very best case, would receive only substandard services inadequate to the task of ensuring equality of economic opportunity later in life. It is a further irony, though hardly surprising, that neither the economic knowledge nor the analytic discernment necessary for an examination of these claims has ever been or will ever be taught in a public school. No emperor willingly trains his own subjects to recognize nakedness when they see it.

Given this state of affairs, it devolves on individuals, both within and outside of the school system, to educate others about education. In what follows I will attempt to address what I see as the three primary objections raised against the idea of market-based education:

1. that educational services on the market would be at a premium, with prices high enough to exclude at least the lowest-income strata of society;
2. that even if the less affluent could afford some market-based education, it would be of a substantially inferior quality to that received by wealthier consumers of educational services; and
3. that the lack of a universal curriculum and standardized criteria of achievement would render the market incapable of providing the equality of opportunity that public education, however unsatisfactorily, at least aims in principle to ensure.

We will examine each of these arguments in turn. As will be shown, the first two rest on a misunderstanding of markets, while the third stems from a grossly distorted concept of education from which, if they took the time to examine it closely, probably even most progressives would recoil in horror.

Argument 1: Affordability

In order to understand why educational services on a free market would as a rule be priced well within the reach of the vast majority of income earners, we must first ask why the market produces anything at all for such persons. Since it is obvious that the wealthiest few have far more purchasing power per capita than those in the middle- and lower-income strata, why does the market not produce only for the former group and leave the latter two homeless and starving? Why is sugar, once a luxury of the rich, today a household item so widely and cheaply available that the US government feels called on to impose tariffs on imports and buy up domestic surpluses to keep the price artificially high? Why is the same kilobyte of computer memory that cost around $45 twenty years ago today priced at a fraction of a cent?

The simple answer is this: competition. When a good first appears on the market, the supply of it is strictly limited. To the extent that consumers value it highly, they will bid against each other for the minimal stock available, causing the price to rise until all but the wealthiest consumers drop out of the market. As long as there is no expansion of supply, and assuming the consumers do not change their valuations, the good will remain a luxury of the rich.

However, it is precisely this condition that provides producers with the incentive to increase production of the product. The high price yields supernormal profits that draw venture capitalists and entrepreneurs into that line of production, thereby increasing the supply, lowering the price, and most importantly, bringing exponentially greater numbers of consumers into the market. This process continues until that portion of profits that exceeds the general rate prevailing in other industries disappears, bringing the expansion to a halt. But by that time, the good has long since ceased to be a toy for the rich. To paraphrase Mises, yesterday’s luxury has become today’s necessity.

Of course, while this process works in essentially the same way for all goods, some goods — diamonds, for example — tend to remain luxury items indefinitely due to the high cost of producing them. It is, after all, the consumers who, in the aggregate, must ultimately pay for any lasting expansion of industry. If the capital expenditures necessary for the production of a good exceed the willingness or ability of the consumers to offset them, no sustained increase in the supply of that good will be possible.

So how would this dynamic work on a market for education? Assuming that educational services as such would be given high priority on the value scales of most consumers, would the cost of producing them keep them priced beyond the means of the typical wage-earner? Here we must be particularly careful not to engage in what psychologists call static thinking. We must ask ourselves, not how much it would cost for private entrepreneurs to produce curricula and instruction as these are presently constituted, but rather to what extent and in what ways schooling in its current form squanders resources, and how it might be streamlined and otherwise improved in the crucible of free competition.

One point is clear: the greater and more numerous the inefficiencies of the current system, the more radical its transformation by the market would be. And just how inefficient is the present system? Well, who runs it? On what principles does it operate? Does it allow students the freedom, for example, to take courses in what they are most interested in and eschew subjects they do not wish to study? Or does it rather saddle them with a bloated, one-size-fits-all curriculum prodigiously crammed full of skills and information they neither need nor want, thereby creating artificial demand for teachers and administrative staff, stimulating construction of needlessly large (or simply needless) facilities, boosting energy consumption and capital maintenance costs, and so forth? To get an idea of the sorts of “practical competencies” students in today’s public and state-regulated high schools are expected to (pretend to) master and retain for use in later life,[1] here is a randomly-selected excerpt from the scintillating epistle “Texas Essential Knowledge and Skills for Mathematics,” issued by the Texas Education Agency:

§111.35. Precalculus (One-Half to One Credit).

3. Knowledge and skills.
   1. The student defines functions, describes characteristics of functions, and translates among verbal, numerical, graphical, and symbolic representations of functions, including polynomial, rational, power (including radical), exponential, logarithmic, trigonometric, and piecewise-defined functions. The student is expected to:
      1. describe parent functions symbolically and graphically, including f(x) = x^n, f(x) = (1/n)^x, f(x) = log_a (x), f(x) = 1/x, f(x) = e^x, f(x) = |x|, f(x) = ax, f(x) = sin x, f(x) = arcsin x, etc.;
      2. determine the domain and range of functions using graphs, tables, and symbols;
      3. describe symmetry of graphs of even and odd functions;
      4. recognize and use connections among significant values of a function (zeros, maximum values, minimum values, etc.), points on the graph of a function, and the symbolic representation of a function; and
      5. investigate the concepts of continuity, end behavior, asymptotes, and limits and connect these characteristics to functions represented graphically and numerically.

Got all that?

Of course, administrative costs and restrictions on entry and labor-market flexibility also impact cost-efficiency. How do public schools hold up in these areas? Are their operational rules and procedures clear, concise, and easy to follow? Or does it take, say, 670 pages and whole cadres of lawyers, consultants, and administrative support staff just to implement a single program? Regarding entry, how easy is it to qualify as a member of the academy? Is anyone who demonstrates a potential aptitude for meeting the educational demands of students given the opportunity to try to do so? Or is club membership restricted by legal quotas and licensure requirements necessitating lengthy and expensive formal training?

And how flexible is the labor market? Can an underperforming or incompetent employee be readily replaced? Or does even a mere suspension require a hearing before a three-member commission?[2]

We do not have space here to speculate on all the optimizing innovations creative entrepreneurs might come up with, and to do so would be presumptuous in any case. As John Hasnas has pointed out, if we could forecast the future market accurately, our very ability to do this would be the greatest possible justification for central planning.[3] Suffice it to say that today’s public and government-regulated private schools dissipate resources with a profligacy that would have made Ludwig II blush. We can hardly claim, then, that these institutions — whose costs are externalized onto the whole society — are paragons of affordability. Yet education is not a capital-intensive industry, and market competition would surely eliminate most of this waste in short order, allowing educational entrepreneurs to reduce their costs, lower their prices, and take advantage of economies of scale. As for those few who might still be unable to pay, lower prices would mean that private scholarships, grants, and student loans would be available in greater abundance than they are today, and the latter would no longer require ten years of indentured servitude to pay off.

Just as with sugar, automobiles, civil aviation, and cell phones,[4] so too in education high initial profits would draw competition, increase supply, reduce cost, and multiply innovation. There is no reason for market-driven educational services tailored specifically to the desires of those who consume them to be prohibitively expensive.[5]

Argument 2: Quality

A second argument against leaving education to the market is that to do so would result in grave disparities in quality of service. The rich, it is said, would get steak, while the poor got rump roast. Of course, there is a kernel of truth in this. The more you are prepared to offer for something, the more quality you are in a position to demand. The market is indeed a place where the principle embodied in the cliché “You get what you pay for” prevails.

But what exactly do you pay for? The answer to this question is not necessarily obvious. To illustrate, I offer a personal example.

Many years ago, I worked at a tavern-style restaurant that was part of a nationwide chain. With its eclectic menu, modest prices, and dollar-a-mug draft beers, it was a place where families could go on a budget, and weekend drinkers could go on a binge. Not exactly Alain Ducasse, but we did offer a steak (T-bone, as I recall) for around $10. What is interesting about this is that right next door was a more upscale steakhouse that also served T-bone; only this one went for something like $22. Nothing unusual about that, but here’s the catch: both restaurants were owned by the same company and both served exactly the same T-bone steak.

At first blush, this seems absurd. Why would any company compete with itself? And why, for that matter, would anyone in his right mind pay $22 for a steak he could get for less than half that just by walking across the parking lot? Situations like this have led to calls for governments to step in and “protect” consumers from their own “irrationality.” But there is nothing irrational going on here. The two restaurants were not in competition, because they served different clientele, and patrons had definite reasons for the choices they made about which restaurant to patronize. Ours wanted to cut the frills, sit at the bar, and save money; theirs were willing to pay more than double the price for the plush seats, subdued ambience, and tuxedoed waiters. The essential thing, however, is that both were eating the same steak.

The relationship between price and quality is therefore not as straightforward as we might imagine. It is certainly true that you get what you pay for, but it is equally true that you pay for what you get. To be sure, on the education market, those with the wherewithal could attend schools equipped with indoor swimming pools, tennis courts, amphitheaters, and state-of-the-art IT. But this does not mean that everyone else could not make do with less extravagance and still get the same basic service.

Of course, all this in no way suggests that quality of educational services would be identical. Such a conclusion would be absurd. What we have demonstrated is simply the fallacious reasoning behind the common assumption that where price is low, product must be unsatisfactory. What does not satisfy is not profitable. Products and services that do not meet the needs of consumers — rich and poor — will soon have, not a low price, but no price.

Argument 3: Opportunity

We now turn to a final argument for public education that goes beyond economics, though even here there is a parallel. Deeply rooted in the belief that justice means equality and equality means identical circumstances, this view holds that educational standards and curricula must be essentially uniform for everyone if all students are to be given the same opportunity to succeed in life. Here, the anticipated failure of the market lies, not in its high prices or disparate quality, but in its presumably excessive flexibility and diversity. In essence, this argument is really nothing more than a special case of the more general socialist contempt for the division of labor. But what is the “division of labor” in education? What is its meaning, and why should we fear its emergence?

We are accustomed to conceiving of education, not as an abstraction, but as a “real thing” existing in the world outside; a commodity possessed by some people whom we call “teachers” and transferred, more or less mechanically, to other people called “students.” This habit of thought is reflected in our language: it is far more common to talk about getting an education than about becoming educated. Yet the greatest thinkers in this area have repeatedly emphasized that education is, in fact, a process of becoming. This is what Maria Montessori meant when she said that if our definition of education proceeds

along the same antiquated lines of a mere transmission of knowledge, there is little to be hoped from it in the bettering of man’s future. For what is the use of transmitting knowledge if the individual’s total development lags behind?

Montessori urged an approach to pedagogy that would “help toward the complete unfolding of life,” and “rigorously … avoid the arrest of spontaneous movements and the imposition of arbitrary tasks.”

John Dewey expressed similar views. In his seminal work Democracy and Education, Dewey places the onus of responsibility for education squarely on the shoulders of the individual student:

One is mentally an individual only as he has his own purpose and problem, and does his own thinking. The phrase “think for oneself” is a pleonasm. Unless one does it for oneself, it isn’t thinking. Only by a pupil’s own observations, reflections, framing and testing of suggestions can what he already knows be amplified and rectified. Thinking is as much an individual matter as is the digestion of food. [Moreover], there are variations of point of view, of appeal of objects, and of mode of attack, from person to person. When these variations are suppressed in the alleged interests of uniformity, and an attempt is made to have a single mold of method of study and recitation, mental confusion and artificiality inevitably result. Originality is gradually destroyed, confidence in one’s own quality of mental operation is undermined, and a docile subjection to the opinion of others is inculcated, or else ideas run wild. (p. 311–12)

For both Dewey and Montessori, education starts from the inside and moves outward.[6] Its purpose is to stimulate discovery and development of the personal resources latent within the self by allowing the student to experience the myriad possibilities for bringing them to bear creatively on the external world.

This means that becoming educated is not a matter of passively acquiring what is given, but of actively discovering what one has to give. It means that education does not create opportunity; opportunity creates education.

Regimentation and uniformity must therefore be jettisoned entirely; the individual must reign supreme within the sphere of his own development. The function of the school is to provide a stable environment rich in stimuli across a broad spectrum of disciplines, while the role of the teacher becomes primarily that of the observer who watches as closely — and intervenes as sparingly — as possible.

From this it follows that no two individuals would or could possibly educate themselves in exactly the same way. The self-directed intellectual, aesthetic, and spiritual explorations of millions of people simultaneously thus result in an unfathomable diversification of interests and activities that amounts to an educational “division of labor” — one that supports and enhances the division of labor of the market economy, and is in fact its logical precursor.

It must surely be obvious that such a philosophy is in every way wholly incompatible with systems of compulsory or universalized schooling aimed at “equalizing opportunity,” and moreover, that even to use the word opportunity in connection with compulsion or regimentation is to abuse language, otherwise we might just as well reinstate slavery in the name of providing equal “employment opportunity.”

Education, if it is to be worthy of the name, demands a method opposite to that of bureaucratic management and entirely irreconcilable with it. It requires flexibility, parsimony, innovation, and above all, a means of daily subjecting the producers of educational services to the competition of their peers and the approval or disapproval of their clients.

It requires, in other words, the free market.

Conclusion

In Slovenia where I teach, the verb “to learn” literally translates “to teach oneself.” If the truth behind this linguistic convention were widely recognized, it would discredit the very premise on which all systems of public education are founded. But, as the great economist Frédéric Bastiat warned more than a century and a half ago, there is a pronounced tendency when confronted with important questions to consider only what is seen and ignore that which is not seen. And this just as true in education as it is in economics. We see students go to school day after day for 12 years, do as they’re told, get their diplomas, and finally go on to do something with their lives. Perhaps from our vantage point it does not look so bad. But what we do not see is what they might have become had they been allowed to be the architects of their own fate from the beginning.

David Greenwald received his BA in German from Hendrix College and his master’s in counseling studies from Capella University. He currently teaches high school English in Slovenia, where he conducts extracurricular projects on entry-level Austrian economics, banking and the business cycle, and the sociology of violence. He is also a lecturer at the Cato Institute’s Liberty Seminars. Send him mail. See David Greenwald’s article archives.

You can subscribe to future articles by David Greenwald via this RSS feed.

Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.