Gor Mkrtchian – March 3, 2020
The thought of abolishing government schools is reflexively appalling to many, but it shouldn’t be. The enormous problems with state provision of schools can fill numerous books, such as Murray Rothbard’s Education: Free and Compulsory and E.G. West’s Education and the State. Here, I’ll focus on a small subset of the possible criticisms, briefly addressing the questions of poverty, the balance of power between a country’s institutions, and the economic calculation problem.
The Poverty Concern
By far the most pressing fear that fuels support for government schools is that without them the poor wouldn’t be able to afford schooling. But even if it’s true that some wouldn’t be able to afford schooling without government financial assistance, the idea that this necessitates the government creating and running its own schools is a glaring non sequitur.
If the poor can’t afford schooling without government assistance, the state can provide the poor with money that may be exclusively spent on private schools, homeschooling, or other forms of education provided by civil society. The way the state deals with government schools is akin [to] it stopping the provision of food stamps and instead running most grocery stores.
Government financial assistance for private schooling is still conceding far too much, but the focus of this article is criticizing government-run schools.
The Balance of Power between Society and the State
Government schools can be challenged on sociological grounds. The state is not the only institution in society. There are others: the nuclear family, the extended family, the church, fraternal organizations, charities, private schools and universities, sports clubs, symphony orchestras, and many others.
The state is an institution that currently holds a monopoly on the military, the police, and the courts. By and large it controls the country’s transportation networks and utilities. Through taxation and regulation, it has a hand in nearly everything else. And more than any other organization it controls the country’s formal schooling for pre-K–12 students: about 90 percent.
Is it healthy or safe for a single one of a country’s institutions to wield so much function and authority at the expense of all of the rest? Or is this a source of soft totalitarianism today and worse tomorrow?
Anyone who is concerned when, say, a software company holds above a certain threshold of the market share should shout from the rooftops that the state receive a thousandfold dose of its own antitrust medicine.
A more evenly spread balance of power between a nation’s organizations is a check against totalitarianism. But as the growing state continues to absorb the resources and roles of competing institutions, a continuously atrophying civil society becomes increasingly powerless to halt future usurpations until all of human life revolves around the state.
This monopolization of every sphere of life is particularly alarming when it comes to schooling children from the ages of four to seventeen, exposing them to a particular view of history, economics, literature, culture, morality, and civics. Is it not a conflict of interest for the state to teach children about the historical record and proper role of the state?
The Economic Calculation Problem
In addition to concerns about the distribution of power, government provision of schooling will misallocate resources because of the economic calculation problem.
Resources are scarce but wants are unlimited. Resources spent on education can’t be spent on healthcare. Resources spent on music boxes can’t be spent on tractors. With all of these competing goals creating a tug-of-war on our limited resources, how can we decide how to deploy resources to best satisfy consumers’ wants?
The answer is profit and loss calculation in terms of money. Money is a common denominator that all goods are bought and sold against, so it’s the unit of account when making economic decisions. I can tell how many bananas a ton of steel can be exchanged for because money prices exist for both of these goods.
Now, profit is determined by two things: revenue and cost. The importance of revenue is that this is how much money people actually pay for a good or service, demonstrating through their actions their preference for that good or service over everything else they could have purchased with that quantity of money.
The importance of cost is that this is how much money one must give up, in order to convince someone else to give up a particular good or service. The more dearly needed a good or service is to achieving goal X, the more money one must give up to divert its use to goal Y.
To put everything together, when monetary revenue exceeds costs and an entrepreneur makes a profit, this means that the way the entrepreneur used his inputs was preferred by consumers to the alternate uses that these inputs could have served. Contrariwise, when costs exceed revenue and an entrepreneur suffers a loss, this means that consumers wish that those inputs had been used differently, toward some other goal.
Economic Calculation and Schools
Now we can apply the idea of economic calculation to private versus government schools.
Producers of private schooling engage in profit and loss calculation in terms of money. If they want to stay in business, they have to make sure that their revenue (what people are willing to pay or donate) exceeds the costs of running the school. If they succeed, the ensuing profits they earn mean that society prefers the schooling they provided to the other possible uses of the resources that went into creating it: the bricks, plaster, asphalt, paper, computers, the labor of the teachers and administrators, etc.
If a private school suffers losses, that means that consumers would have preferred that the resources that went into that school had been spent otherwise. This could mean that the school should be run differently, offering different classes, operating on a different schedule, hiring different teachers, etc. Or, it could mean that this particular school shouldn’t exist at all.
The problem with tax-funded government schools, or tax-funded anything, is that economic calculation can’t take place. The involuntary nature of the funding means that the connection between consumers’ preferences and the use of resources is lost.
The questions of how many government schools to build, where to build them, whom to hire, how big the parking lots should be, how long each class should be, etc. are not determined by customers voluntarily choosing which school to patronize. If you don’t pay taxes, you go to jail.
Instead, these economic decisions are made bureaucratically and politically. But, whereas for private businesses revenue communicates information about consumer preferences, revenue provided by involuntary taxation says nothing about consumer preferences.
As a result, bureaucrats and politicians have no market prices on the revenue side of the equation, and no idea whether or not the lumber, plaster, paper, and labor they’re using to run a particular school a particular way is more urgently desired by society in another application: on healthcare, housing, comic books, or different forms of schooling.
Without voluntary exchange, there are no market prices, and so the employment of the means of production has no link to consumers’ preferences. Economic calculation becomes literally impossible. Scarce resources are being spent on X, when society more urgently wants Y.
In sum, the existence of poverty does not justify government schools. State monopolization of schooling is a mark of soft totalitarianism. And economic decisions regarding government schools must be conducted without market prices because they aren’t funded voluntarily. The attitude toward the government school as an indispensable institution is not the product of careful deliberation. It more closely resembles an article of religious faith, one which government schools may not have had a small hand in instilling.
Originally published at Mises.org.
Image source: Pixabay
