Free-market school choice

Posted: July 14, 2005

The United States education system is governed by the political process. Public elections and lobbying work to establish where schools will be built, what will be taught, and which teachers will be hired. As a result, our elementary and secondary education system contains all the inefficiency and stagnation symptomatic of government bureaucracies. Low quality, high costs, a lack of innovation, and perverse incentive structures plague our education system.

Thousands of reforms and billions of dollars worth of tinkering with the system have failed to improve the lot of students. Based on the track record of past federal reforms, the No Child Left Behind Act is unlikely to yield any encouraging results.

Incremental reforms in America's school system will do nothing - or worse than nothing - unless reformers attack the problem at the root, which is the bureaucratic and political control of schools. The solution is to open the schools up to consumer choice and competition with private schools, allowing parents to choose the schools that they think are best for their children.

Some states have enacted reforms intended to boost consumer choice and apply the power of the market to education. Unfortunately, all of the reforms to date have been limited in scope and too tightly regulated to serve as models of what a true education market would produce.

A true market system would allow educators to start new schools just like people start new businesses. Customer preferences would determine how much schools charge for their services, what services they would provide, and what curriculum would be used. Schools would be free to specialize and parents would be free to shop around for the type of school they feel is best for their children. Even the best school-choice programs today don't provide these options.

Milwaukee's choice program, the oldest, largest and most generous in the country, provides vouchers of up to $5,882 for children to attend the private school of their parents' choice. But only low-income families can participate and total participation is capped at 15 percent of public school enrollment. These restrictions dilute the benefits that would result from a truly universal education market.

School choice will attract new start-up schools only if enough parents have the purchasing power to leave the public school system. A large pool of paying customers would attract newcomers who would imitate and improve popular schooling practices and ensure against long-term shortages that otherwise produce waiting lists. Since waiting lists signal that there are many consumers without other options, waiting lists tempt existing schools to save money by letting product quality deteriorate. In a true education market, school entrepreneurs would form new schools to capture the opportunity reflected by students on waiting lists.

The whole purpose of school choice is to allow students to select schools that offer something different. Unfortunately, too many school-choice programs restrict which schools students can select. Some choice programs require private schools to administer state tests, even when those tests are inferior to those the school is already using. Some choice programs require private schools to accept all students who apply, limiting that school's ability to specialize in a particular type of curriculum or focus on students with special needs or interests. Choice programs in Maine and Vermont prohibit students from using vouchers at religious schools, barring participation by the overwhelming majority of easily affordable private schools.

A new publication by the Milton and Rose D. Friedman Foundation, which rated the nation's 13 existing school-choice programs, concluded that even the least restrictive programs are hampered by regulations and caps on which and how many students can participate. Although helpful, these limited school-choice programs are too restrictive to become the engine of reform for American education. If we want to see real change and improvement in our schools, we should seek full-fledged, universal school choice for all.

John Merrifield and David Salisbury coedited an issue of the Cato Journal about competitive education markets.

Contact John Merrifield and David Salisbury at the Cato Institute (www.cato.org), 1000 Massachusetts Ave. N.W., Washington, D.C. 20001.

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