In April 1983, the National Commission on Excellence in Education issued its now infamous report, A Nation at Risk. The Commission found that American students were experiencing, among other things, a decline in literacy levels, a diminishing level of science and mathematics skills, and a limited knowledge in the social sciences when compared to American students of earlier generations or even to students in other countries. The Commission concluded that serious problems existed in the American system of education.
Since the publication of A Nation at Risk, Americans have done much soul-searching in an attempt to address the problems outlined in the report. Most of the solutions proposed by educators, politicians, and the media involve increased government funding in an effort to expand training programs, lengthen the academic year, reduce violence, and identify and assist those students who are slipping through the cracks. Other proposals have also come to the forefront, including Milton Friedman’s educational voucher program, which would ostensibly create competition among public schools by offering taxpayer choice in school selection.
However, these and other proposals flowing from Washington, D.C., state capitals, and local school districts have missed the mark. School reformers are attempting to shore up an existing educational system which is, by its very nature, destined to fail. Misguided policy solutions for American education attempt to salvage a system that is unsalvageable–a system that is intellectually, socially, and economically backward. Reformers refuse to admit or to understand that the American system of compulsory public education has foundered precisely because it is public–that is, government-controlled. The only solution to the serious education problems in America is to proclaim the separation of school and state, and allow education to be bought and sold through the free and unhampered market process.
Compulsory Public Education: The Economic Dilemma
Public schools–like all public agencies–are inherently unable to evaluate their own performance accurately in terms of the satisfactions derived by their constituents, i.e., students and their parents. The absence of proper evaluation lies in the inability of the educational bureaucracy (or any government agency) to calculate profits or losses in terms of numerical assignments to monetary units. In other words, public bureaucracies cannot perform economic calculation.1
Economic calculation is the process of comparing and contrasting opportunity costs (prices) among a variety of choices facing an individual actor or group of actors regarding the means to achieve a desired end. For a private firm operating within the parameters of a market economy, economic calculation consists in comparing and contrasting the outputs (expenses) and inputs (revenues) in order to arrive at the most efficient use of scarce resources in the satisfaction of the consumers’ most urgent wants.
In the market sector, outputs and inputs (expenses and revenues) are linked through the determination of profit or loss. A profit indicates that the private firm succeeded in providing a commodity or service that consumers valued more than the costs expended in bringing it about. A loss indicates that the private firm failed to provide a commodity or service for which consumers were willing to pay more than the costs expended in its creation. Profits are an implicit declaration by consumers that the scarce resources used for the creation of a given commodity were prudently applied. Losses are an implicit declaration by consumers that scarce resources were squandered and should have been employed in a manner more conducive to their satisfactions. Regardless the profit or loss outcome, however, all private firms, operating within the confines of an unhampered market economy, are offered the ability to positively or negatively evaluate their own performance for the immediate accounting period precisely because they have the use of economic calculation.
Government bureaucracies have no such ability. The essence of bureaucracy is that it cannot evaluate performance in terms of consumer satisfaction because of the absence of economically calculable profits or losses. This is why bureaucracies are encumbered with regulated structural procedures. By their very nature, government educational agencies cannot link outputs (expenditures) to inputs (tax revenues). There is no relationship between the taxpayer who is coerced into financing all educational expenditures, and the student who is the consumer of what such expenditures have created.
Because the educational bureaucracy exists within a sea of capitalist economic calculation, bureaucrats can calculate and budget expenses. But, because government agencies do not operate on a profit-and-loss basis, these administrators have no way of relating expenses to tax revenues to determine if the expenses were prudently applied. They do not know whether the resources taken from taxpayers were employed according to the most urgent demands of consumers. Government agencies are deprived of profit-and-loss accountancy methods, precisely what is necessary to economically evaluate past performance and make changes based upon the information provided.
From an economic point of view, then, the government education system in America is like a ship lost at sea with neither a compass nor a lighthouse to guide it. Absence of evaluative information in the form of profits or losses makes rational navigation impossible.
The Political Dilemma
Because education administrators cannot evaluate their agency’s performance in terms of consumer satisfaction, they resort to noneconomic criteria. These noneconomic measurements may be labeled political calculation. As with any government agency, the American education system is motivated by political considerations, and its performance must be evaluated in terms of these political considerations. Evaluative criteria in the field of education thus become the subjective social, ideological, and political goals of individuals within the establishment itself. The success or failure of the organization is based entirely upon the degree to which these social, ideological, or political goals have been achieved.
Politically or ideologically motivated administrators within any public bureaucracy will, in order to achieve their goals, seek to employ their authority to the maximum as long as their government-sanctioned position allows them to do so. They will seek to expand the annual budget of their agency by spending more than is annually allocated, thus appearing necessary to society.
They will seek to expand their agency’s sphere of influence, thus obtaining greater power and prestige than agencies with which they compete for congressional or municipal funding. They will attempt to use the power of their positions to force their own subjective values upon society. Unless it becomes politically necessary, they do not give a great deal of attention to those whom their agency is designed to serve, namely students and parents. They are not motivated through economic profit and loss, but rather by personal political or ideological considerations.
This process of political calculation is inevitable. When an organization loses the relationship between revenues and expenditures, when it can no longer be influenced from without, it becomes influenced from within. And, the more power it is granted to carry out its political, social, or ideological agenda, the more it will become a law unto itself. The modern political correctness and outcome-based education movements, as well as the ongoing submarginal academic performance of American students, are a direct result of politically and ideologically motivated educators attempting to socialize an entire nation of unsuspecting young minds, to remake society in their own egalitarian image through the use of compulsory government education. Government-controlled education easily becomes government-controlled indoctrination.
This is not to argue that all or even most teachers in the government school system are ideologically or politically motivated. Most of them no doubt receive a great deal of satisfaction from teaching and want to perform their jobs well.
The same cannot be said, however, about education officials at the national, state, and local levels of government. Sadly, education administrators and the teachers’ unions have both the taxpayer and the student at their mercy. They covet their insulated positions because they are able to control the curriculum and enforce government licensing standards that inevitably discourage competition and creativity. Their virtual monopoly status enables them to present their ideological biases as unquestionable truths. Any notion of a free market in education threatens to undo their immunity from accountability to consumers. Those in the education establishment do not want anything taught that would challenge or disparage their own established ideological creeds and dogmas.
The Unconditional Solution: A Free Market in Education
In order to restore academic integrity, individual achievement, intellectual freedom, and a peaceful learning environment to the American student, we must dismantle the education monopoly and establish separation of education and state. Government school administrators and teachers must begin to compete in the marketplace of ideas. The American people must begin to see education for exactly what it is: an economic commodity to be bought and sold in the marketplace according to the subjective valuations and preferences of education consumers, both students and parents alike.
Tax-based financing of education must be replaced with consumer-funded education. Education must be produced and consumed according to the demands of independent education consumers, and must be offered at a competitive price. Outcomes in the education market must be the sole result of the voluntary buying and abstention from buying by education consumers, and not in any way the result of intervention by politically or ideologically motivated politicians or public administrators.
Further, education must be noncompulsory. If children (and their parents) do not care to consume the information and knowledge provided by the education entrepreneurs competing in the marketplace, so be it. Out of self-interest, relatively few individuals would go uneducated. Moreover, noncompulsory education would suppress violence in schools. Those who did attend would have a financial incentive to make the most of it. Behavioral accountability among students would be restored.
Market-based schools would have the incentive to provide a top quality educational experience to students at a competitive price. If a school did not enforce rigorous programs and a thorough curriculum, their graduates would be ill prepared to compete in their respective fields. The school would earn a poor reputation as its graduates would be unable to command respectable incomes, thus discouraging prospective students, causing financial loss, and forcing the school to re-evaluate its performance. Conversely, those schools providing the best education to their students would earn profits, thus reflecting their proper employment of scarce resources. In either case, economic calculation in terms of profits or losses would enable schools to accurately evaluate their performance in terms of the demands of education consumers.
Competition among educational entrepreneurs would tend to weed false prophets and educational quacks from the market. The general nonsense which now pervades most government school systems would not long survive the market-driven search for truth and excellence. Students would no longer be captive to the ideological or political biases of teachers and administrators. Rather, teachers and administrators would be required to provide a valuable educational experience to their students in a peaceful learning environment or find themselves unemployed.
Americans must begin to realize that the separation of education and state is equally as important as the separation of church and state. Only then will American students begin to experience academic diversity, intellectual growth, and a crime-free learning environment. Only then will we be liberated from the bureaucratization of the mind.
1. See especially Ludwig von Mises, Bureaucracy (Spring Mills, Pa.: Libertarian Press, 1983).