3. Education | Libertarian Public Policy with Jeffrey Miron


Today we’re going to talk about government
policies toward education. That is of course one huge area of government intervention in
many, many different ways. Governments own and operate public schools at K-through-12
level, state college and university systems. They offer tuition subsidies, some federal,
some state, various grants, loan policies. There’s research funding from the government
that helps support universities and colleges. There are laws like compulsory education which
require every child up to a certain age to be in school for a certain number of days
per year, required curriculums, teacher certification programs, high-stakes testing, and much, much,
much more. So there’s a huge range of intervention. Government is extremely involved in trying
to regulate, define, subsidize education. Libertarians oppose much or all of this intervention.
There are plausible arguments, at least, for some modest degree of government involvement
in education, although there’s cost even of that. It’s a hard question as to whether
there should be even this limited involvement. But certainly, libertarians will argue against
the vast majority of what occurs or for substantially, enormously reduced degree of intervention.
I’m going to address these issues in the following way. I’m first going to talk about
the question of why should government subsidize education at all. Why are we involved in any
way in trying to promote education? And then I’m going to talk about the potential cost
of those subsidies. That is looking at the general question of why are we distorting
the market at all. Why don’t we treat education just like every other good and let supply
and demand determine how much is produced of that good? And for talking about that,
in concluding that, it’s not so clear that we should be subsidizing at all. Take the
different question of given we’re subsidizing, if we are subsidizing, how should we subsidize
and argue against the current approach? Go from that to talking about vouchers or tax
credits as a way to encourage education to subsidize if government is going to be involved
in some way, rather than operating public schools.
And finally, accept that maybe we’re going to have public schools for a long time. But
are there ways that we could reduce the negative effects of public schools? Could we make public
schools better? Are there some changes in the way those operate? And talk about potentially
good ideas for making them better, and some bad ways that people are trying to make them
better. The first big question is why do we treat
education differently than all the other things that people buy and sell? We let people make
their own decisions about very important life decisions: how many children do they have,
most of the decisions about how to raise your children, about savings, about whom to marry,
about what occupation to go into, about everything. Why isn’t education just another thing that
people should be able to decide do they want it, is it useful, how much should they get,
how much should they get for their children? There are three standard arguments as to why
education should be treated differently than markets for supply and demand, for toaster
ovens, or for all sorts of other standard goods and services. And they’re under the
labels of externalities, myopia, and credit constraints. And I’ll talk about each of
these a little bit. The externality argument says that my education
has a beneficial effect on you. That means that when I decide whether to get some education,
I’m likely to only look at the private benefit and cost to me and not recognize that if I
get more educated, I’m helping everybody else that I might work with or interact with
or things like that. A lot of people have made that argument, including many libertarians
like Milton Friedman. And it seems plausible at some level. If everyone reads and writes
the same language, potentially, they can communicate, they can do business together, and things
like that. If everyone knows the same rules of arithmetic or calculus, one can certainly
imagine that there are ways in which that’s beneficial. So the notion that there are some
positive spillovers, from some kinds of education, at least, I don’t think should be dismissed
out of hand. And certainly, if we’re talking about K-through-3 or K-through-6 education,
everyone getting at least the basics of the three R’s or something like that may make
some sense. That doesn’t by itself mean we need government to make it happen, but
it’s not a completely silly argument. The second argument for subsidizing education
is that some parents will not make good decisions on behalf of their children. Children, of
course, are not in a position to decide whether or how much education to get. Some parents
should be sending their kids to school but won’t, will instead let them sit at home
or have them work in the fields if it’s an agricultural society or have them apprentice
in the family business or something like that. That’s not necessarily the right decision
for those kids. It’s selfish or short-sighted or myopic decision by the parents. Therefore,
we need to subsidize to encourage such parents to send their kids to school by making it
cheaper. That might incentivize them to go ahead and let the kids go to school, instead
of using them to bring the crops or whatever. The third argument says there are lots of
people who know that education is useful, is beneficial for their children. They would
like their kids to have education, but they can’t afford it. Education of course costs
money. As we’ll discuss, it doesn’t need to be as expensive as it is. But certainly,
it costs something. So people with very limited means may want to send their kids to school
but have difficulty in doing so because they can’t access the money, they can’t easily
borrow because they’re not likely to have enough income to pay back the borrowing that
would entail and so on and so forth. All of these arguments have some element of
truth. I wouldn’t want to say that they’re evilly motivated. They’re reasonably motivated.
They go to reasonable interest. Whether they are large or small is of course a very different
question. Whether they apply to a broad range of education, all kinds of education, and
so on and so forth is much harder. They give us some basis for thinking that there might
be some reason to intervene, to subsidize, to encourage people to get more education
than they would if it were entirely up to them, entirely in a free market. Yet there
are going to be costs of subsidizing education. Perhaps most importantly, if government is
going to subsidize education, it has to decide what is education. It has to define it. If
it were going to, say, give people vouchers to go out and purchase education, you’ve
got to say what those vouchers can be used to purchase? Can those vouchers be used to
purchase something that looks like a standard elementary school now? Or can it purchase
an education in a ski instruction school or a French immersion school or a science immersion
school? Can it purchase having kids be trained just to bring the crops in from the field?
What does it go for? That means that government has this huge power over the education marketplace
because once it’s doing the paying, it’s inevitably going to have to be doing the defining.
Otherwise, the policy just doesn’t make any sense. That has the grave danger that
it promotes huge standardization. Government officials will get together, there’ll be
committees, there will be studies, and they will say the right kind of education is whatever
it is – maybe something that looks like today. And they will not accept that for many
kids, the standard education isn’t especially effective, or at least not by itself. Maybe
lots of kids should have half of what they currently get now. But half should be something
that’s more fun or more interesting, more sports or more science or more language or
a whole range of things we haven’t even thought of and that bureaucrats won’t ever
think of, but individual parents might think of and do things that are beneficial to those
kids. You might say that’s going to be more important when you get to be 13 or 15 or 20
than if you’re 7 – where pretty much every kid maybe should be mainly learning the three
R’s, but still it’s going to apply in some measure everywhere.
So if the government is subsidizing education, that’s going to mean standardization. And
there’s potential huge loss for matching people with different interests, skills, and
needs to different kinds of education. Closely related, government being in this
business is going to discourage innovation. If there’s a marketplace full of people
using their money, or possibly, as we’ll discuss, using vouchers to purchase education,
then there’s an incentive for people who think they have something new to offer, maybe
a school for K-through-6-year-olds that starts teaching computer science skills along with
reading and writing on day one instead of only when you get to junior high school or
high school. There could be a strong incentive to innovate and offer that. And maybe it will
be popular and very useful for a lot of people. But if the government is defining what the
subsidy can go for, your incentives to do that are likely to be quite limited.
In the worst case, of course, if government is defining an education, it has the power
to engage in thought control. It’s not an accident that virtually all totalitarian regimes
have tried to control their education systems as one of their primary goals. Extreme cases
are communist China or Soviet Union indoctrinating everyone to accept the wisdom of the government,
the validity of the government, and so on. We don’t see that in any serious way in
places like the United States, Western Europe, modern economies now. But the potential is
there. Slopes can be slippery. Even the fact that government is subsidizing education sends
a small bit of thought control that says you need the government to have education. But
that’s not true. You can have education easily without the government. So by getting
in that business, the government is already taking a stand that tries to push people to
think about education a certain way. Government involvement, government providing
a subsidy also forces it to take a stand on a bunch of messy issues. Should colleges,
high schools, whatever have speech codes? Should they practice affirmative action? Should
they have single-sex education? And so on. Those have been very controversial issues
for decades now. If the government is subsidizing education, it’s in at a minimum and awkward
position because on the one hand, you might think single-sex education could be a good
thing. Maybe it’s better for some women to only be with women in college. And maybe
it’s better for some men. Maybe affirmative action in hiring is actually a useful thing
for creating a good school. And we would want some schools to be able to do it. And yet
those types of actions are sufficiently controversial, and they run into constitutional issues that
if the government is providing the subsidy, it’s at a minimum, awkward, and complicated
to decide where you draw these lines and what is allowed and what is not. So that’s another
cost of having the government be involved. And of course government subsidizing education
has a direct cost where you spend tens of billions of dollars on education. So that’s
part of the cost, plus the distortions caused by the taxation necessary to fund it. So all
the subsidy comes with a bunch of negatives that need to be considered and compared to
the possible benefits from spillovers from one person’s education to everyone else’s,
from helping kids who were born with parents, who don’t want to send them to school, or
helping people who can’t afford to send their kids to school.
So what’s the bottom line on that? I’m not going to take a strong bottom line on
that, except to say the level of subsidy that U.S. and other places currently provide seems
grossly excessive. It’s way beyond making sure that every 8-year-old gets a chance to
learn to read and write. We have government subsidizing college, universities, business
schools, dental schools, law schools, and so on. All of these issues might argue for
some government subsidy. The beneficial spillovers, the myopia, they don’t apply with anything
like the same kind of force to a 26-year-old who wants to get an MBA as they might do a
5-year-old who might happen to be born into a family where the parents aren’t doing
the thing that’s in the child’s best interest. So at a minimum, I think thoughtful consideration
suggests way less subsidy than we currently have.
It’s of course inevitable that for the foreseeable future, we’re going to continue to subsidize,
probably substantially, but certainly to some degree. Then there’s the question of if
government is going to try to promote more education than would occur otherwise. How
should to do so? There are many current approaches now, especially government-owned and operated
schools. That’s very widespread at the K-through-12 level. And it’s also widespread at the college
level. About three quarters of enrollments in the U.S. are in public-owned and operated
schools. You could also consider things like grants, scholarships, vouchers, and tax credit
that we’ll get to. The key point I want to make is that the subsidy
argument, the idea that people are not getting as much education as would be socially desirable
on the own, even if it’s right, in no way, shape, or form the government needs to be
owning and operating the schools. There’s no market failure. None of these arguments
says that no one knows how to create a school, that there are monopoly problems, or any sort
of externality or inefficiency in building a school and advertising a school and enrolling
students into school and hiring teachers and all of that. So if you want to subsidize education,
you don’t need to have any government-owned or operated schools. It could all be accomplished
by giving purchasing power to the people who are not getting as much education as you think
they should be getting for themselves or purchasing for their children.
How can you do that? How can you transfer this purchasing power so that people have
more ability to purchase education in the marketplace? There are two main ways: vouchers
and tax credits. I’m going to talk about vouchers because it’s simpler. I don’t
have a strong feeling about the two approaches, although I mildly favor vouchers because it
helps us avoid making the tax code more complicated. But reasonable people certainly do disagree
and can disagree on the exact method. I’m going to talk about vouchers for simplicity.
First, what exactly the vouchers mean? Take an example of K-through-12 or K-through-8
education. It would mean that every parent of a school-aged child gets a piece of paper
that is official and has registration and stamp and something on it that says legitimate
that they can use to go to a private school to purchase education. And it has some amount,
some face value. Call it $5000 a year. So any parent can use that for each of their
children to buy whatever kind of schooling the definition of the voucher allows. Now
a crucial issue is we’re going to get the benefits of this approach much more if the
voucher is defined very, very broadly. And that’s one thing that we’ll have to talk
about. But that means that there is now competition because anybody can start a private school
and accept these vouchers. It means there’s scope for innovation because someone who wants
to start new types of schooling or education can hope to attract these voucher dollars
from parents who have them. Using vouchers makes it somewhat easier, not
completely simply by easier, to avoid the issues about whether to have single-sex schools,
speech codes, and things like whether to tolerate those because the definition of who can accept
the voucher can be very broad. Any school that satisfies very broad criteria can accept
them, although the issue still can come up. One thing that vouchers may or may not do,
and it’s important to recognize, is dramatically raise the amount of education relative to
the cost by making the education better. It might be, and probably is the case in a lot
of situations, that current public schools are doing an okay job, but they’re just
doing it much too expensively. What the vouchers do is allow us to first not necessarily pay
the teacher union wage premium, and secondly to allow for other kinds of innovation and
cost saving that make education less expensive. Whether allowing the vouchers will lead to
dramatic improvements in test scores or kids getting better educated, the evidence isn’t
quite so compelling that you will see dramatic effects. The evidence is suggestive of some
mild effects, and those are good. But the best hope is probably vouchers would give
us similar results at many fewer dollars, not that it will give us dramatically better
results for fewer dollars. Now one possible risk of the voucher approach
is that government does now have to say what constitutes a school, what type of entity
can receive these vouchers from parents and then get reimbursed for them by the federal
government. And some libertarians worry that if you do that, that puts the government into
position of defining all schools and possibly gives it the scope to then impose very heavy
regulation on all schools. I think that’s not the right way to think about it and is
not a major risk, but it’s worth discussing. First of all, all of these voucher schools
have an incentive to lobby now against those regulations and that standardization, all
these rules that limit the types of schools – whereas the public schools don’t have
that incentive. If you think you have something that’s valuable, if you can convince your
legislator or some legislatures, you can make a case that says we should define the rules
of what constitutes a school more broadly. So private efforts, the lobbying by schools
or associations of schools have some ability to perhaps push back against excessively tight
regulation of what constitutes a school. Secondly, whether or not that first thing
is true, as long as we have compulsory education, the government is already in the position
of defining all schools. The compulsory education law is the most fundamentally bad for limiting
scope, innovation, and variety of different kinds of schools because if the law says every
child has to be in school, you have to define what constitutes a school. A huge example
of this has been home schooling. Initially, when some people wanted to engage in home
schooling, they had big fights on their hand with the local regulator saying, “Well,
no, staying at home and watching Sesame Street, or even if you’re staying at home getting
lectures on nuclear physics from your parents, that’s not being in school.” Government
already had the power to say exactly what constitutes a school. Even setting aside home
schooling, if you want to send your child to something that’s not the public school
and it doesn’t satisfy certain state-mandated curricula and so on, the state can say you’re
not complying with compulsory education laws; therefore, it already has the power to limit
what constitutes a school. So I don’t think that vouchers make that issue worse, but it
is something that many libertarians are concerned about.
The last main point is say we’re stuck with public schools. Can we do something to make
them better than they are? And what is it that’s wrong with public schools? Well,
it depends a lot on which public schools you’re talking about. Public schools in middle-class
and upper-income suburbs in most parts of the country are pretty good. Tons of kids
go there. They’re happy. Parents want to live in those neighborhoods. They’re happy
paying high property taxes to be able to live in those neighborhoods and send their kids
to those schools. There’s lots of competition between those public school systems in many
states because they have small towns and districts that compete with each other. So in many cases,
public schools are pretty reasonable and certainly, there are no huge or obvious negatives. But
public schools in other cases are quite horrific. They’re dangerous, they’re violent, there’s
not much education going on, and so on. One approach that’s been discussed and is
implemented and used quite widely now, both from state actions and more recently from
federal policy under No Child Left Behind, is accountability in high-stakes testing.
And this is a case that I think is useful for libertarians because it illustrates that
you need to be careful of wolf in sheep’s clothing. The accountability mantle sounds
good to libertarians until you think about the details in this particular application.
Of course, libertarians like the idea that people who sell things in the marketplace
are accountable to their customers, and if they make crummy product or of too high a
price, people don’t buy it. So that suggests a kind of accountability. The high-stakes
testing approach in the public school setting said we’re going to make everybody, every
kid take these the standardized test. And we’re going to look at the scores and we’ll
compare them to other schools, compare them over time, and so on. And schools that have
really low average scores or schools whose scores go down or things like that, we’re
going to make them accountable by taking away funding, taking away teachers, forcing new
practices or curricula, whatever on them. So at one level, it sounds okay. We’re trying
to give the schools an incentive to behave better, to spend more time teaching and less
time doing recess and things like that. The problem is that the accountability high-stakes
approach clearly changes incentives, but it changes a lot of the incentives that the public
schools face. One incentive it creates is to do things like calling parents of kids
who have low test scores and telling them to stay home the day of the test because then
their test scores won’t be in the average. It creates an incentive for teachers to actually
cheat, to take the Scantron sheets in which the kids have filled in their answers to all
the questions on the standardized test in the little bubbles and go in and erase them
and put in the right answers because that gets that teacher scores to be higher and
encourages reclassification of students as not proficient in English language so that
their scores might not be counted in the averages for the school. So the accountability approach
is sort of a government version of accountability. It’s a government approach to bad government
of public schools. It has worked quite imperfectly all of these possibilities I’ve just mentioned
indeed have happened, all these adverse incentives created by the high-stakes testing. Libertarians
think the right form of accountability is accountability to parents, the fact that parents
can take their kids and send them to different schools if they don’t like what the school
is doing. They need the purchasing power to do that, and that’s why the voucher approach
has appeal. It allows you to say if you don’t like what’s going on, where you’re spending
your voucher this year, send your kid to a different school next year, and you get to
take your voucher with you. There are some things that might have some
promise in terms of improving existing public school system. They basically consist of getting
rid of regulations and rules that didn’t make much sense in the first place. They’re
adding cost without any obvious or tangible improvements in value. So barriers to entry
in teaching is an obvious one. To be a public school teacher, you need to have gotten various
kinds of accreditation in most states, taking certain amounts of education degrees, credits,
and so on. There’s very little reason to think that those particular requirements make
people better teachers. So that just makes it more expensive to become a teacher, reduces
the supply, and raises the cost. And it may even create an adverse selection of people
who want to become teachers because people who are really on the ball don’t want to
sit through these mushy-minded education courses in order to get their teaching certificates.
There’s lots of regulation of the way the schools operate in terms of bilingual education.
That forces additional classrooms, it forces additional procedures, and almost certainly
is counterproductive for kids whose first language is not English instead of immersing
them as quickly and as much as possible in English – which all the data would show,
and most people’s personal experience would show, gets kids to learn English really fast,
especially when they’re young. We instead have these redundant and extra classes to
try to maintain kids’ ability to keep learning in their existing language rather than just
converting to English as quickly as possible. Teachers’ unions is of course a huge thing.
If you could change the laws in states that allow teachers to unionize and therefore reduce
the union wage premium, it would save a lot of money. It wouldn’t automatically make
the quality of the schooling better, but it would get you similar quality at lower cost
by eliminating the teachers’ wage premium. Finally, but very, very importantly, if all
regulation of public schools were left purely to states, and better yet, if states left
it to local cities, towns etc. as opposed to having the federal involved, that has the
potential for huge benefit. The federal government is inevitably going to generate tons of cost,
clearly has much more potential for thought control and excessive standardization and
so on, relative to lower level of government involvement in education. So repealing No
Child Left Behind, but also every prior federal government intervention back to the ‘60s,
would certainly go in the right direction for allowing public schools to do what the
local citizens wanted to do with their public schools rather than the federal government.
To sum up, there is a plausible case for some subsidy. Assuming that subsidy were much smaller,
none of it was federal, it was controlled purely by local or maybe state levels, I don’t
think libertarians can assert with 100 percent certainty that the optimal level of subsidy
for education is zero. But it’s almost certainly much, much smaller than it currently is. There’s
a very compelling case for eliminating government schools for subsidizing education simply by
giving people who should be purchasing more, that we think might want to purchase more,
the purchasing power via vouchers or tax credits rather than doing it by owning and operating
the schools. If we’re stuck with public schools, there are some things that could
be done to improve them – basically less regulation, and in particular, elimination
of the federal role that has the most potential to do great harm relative to all the things
that are happening at the state and local level.
So education is super important, matters to everybody. That doesn’t mean the government
should be involved in it a lot. That’s a crucial thing that you’ll hear again and
again in these lectures. Just because something is good doesn’t mean the government should
subsidize it. And just because something is bad doesn’t mean the government should try
to penalize it. To a much greater degree in education and elsewhere, we should be letting
individuals make their own decisions. Thank you very much.

5 thoughts on “3. Education | Libertarian Public Policy with Jeffrey Miron”

  1. Only problem is people from outside think libertarian education system is where children are left behind and if you dont have the money you wont be able to afford your child a good education.

  2. It is sad when what we learn in school is not at least useful knowledge, such as how to ride bikes, rather than the useless things we do learn, such as how to play a band instrument.

  3. Private schools as a solution? Do none of you remember that a few years ago most of the private for-profit colleges and their umbrella companies were shut down due to false advertising, improperly reporting career placement numbers, etc. I remember because I was a dean at one of the schools that got shut down as collateral damage. Private schools do not currently require their instructors to be credentialed. Mushy-minded education courses? So you think ANYONE can walk into a classroom and teach? Besides, the type of people who WANT to teach have no issues taking coursed about teaching. You think teacher salaries are what drives up costs? You realize teachers are drastically underpaid in many regions. So the government can't define outcomes. Now, you put the burden on the universities to give entrance exams to EVERYONE because they have no idea what a particular school's diploma is worth. Essentially, you'll end up with students from poor neighborhoods who can't afford to go to the "good" school in their area (because you know someone will set up schools to do this on the cheap) not having ANY chance to go to college. Let's say I'm a fundamentalist xtian and I don't think little Suzy should learn anything aside from home ec. Is that fair for little Suzy who may have wanted to become a doctor? I'll concede that the testing approach is flawed, but the examples you listed of people breaking the rules to improve test scores are outliers at best and no way the norm.

  4. I think healthy companies really should get into private schooling set-ups – as long as these companies have the right histories and monuments to stand by. That's certainly the direction universities go in when in hotel formation places, and job fairs and degrees offered in alliance with companies. Or right leaders, and more. That would be a freaking monopoly galore and would need to be regulated in terms of how much universities/departments/blocks each company has and avoiding abuse of the system by thorough background checks.

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