The Political Economy of Educational Vouchers

Dr. Lee is a professor of economics at the University of Georgia, where he holds the Ramsey Chair of Private Enterprise.

Public financing of education means political control.

The crisis in public education is real. As judged by any reasonable measure, the quality of public education is declining as the cost of public education is increasing. The desire for reform in public education is genuine. Parents want a good education for their children, and taxpayers want an honest return for their dollars. Unfortunately, a realistic appraisal of why meaningful reform in public education is so badly needed also points to why meaningful reform is so unlikely to occur.

The underlying problem with public education is, quite simply, that it is public. As long as education is provided publicly, it will be controlled by, and for the benefit of, public education professionals. The reason for this is straightforward.

As opposed to market decisions where each consumer exerts direct and decisive control over the services he chooses to purchase, no one individual has decisive control over the political decisions which determine the publicly provided services all consumers are required to “purchase.” Seeing no advantage in becoming informed and active in pursuit of objectives over which he has no direct control, the typical citizen-consumer quite rationally devotes little effort to influence public education policy. In contrast, suppliers of public education have significant political influence over public education policy by virtue of the fact that they are organized through professional associations, have a concentrated interest in decisions affecting public education, and are widely perceived as education experts. The political dominance of supplier interests over consumer interests gives public education professionals the opportunity to control the policy of the public schools. The special interests that comprise the public school lobby have taken full advantage of this opportunity to promote their private purposes while neglecting the public’s desire for the efficient provision of quality education.

The implication here appears to be clear. Achieving genuine educational reform would seem to require a policy which shifted control of education from suppliers of education to consumers of education. It is this view of the crisis in public education that has motivated the call for educational vouchers.[1] The idea behind educational vouchers is straightforward. Instead of government financing education by actually supplying educational services, publicly funded vouchers would be given to the parents of school-age children to spend at the school of their choice (as long as the choice is approved by government). As envisioned by its proponents, this voucher system would transfer control to the consumers of education. Educators would be forced to compete for the consumers’ educational vouchers and therefore cater to the consumers’ educational demands. Only those schools providing quality education, as determined by the consumer, at low cost would survive. It is also predicted that the variety of educational approaches would increase to reflect the range of educational preferences among the public. Also, with diversity replacing uniformity in education, market choice would replace political combat as the means of expressing educational preferences.[2]

Educational Vouchers and Political Realism

This case for educational vouchers would be sound if it were indeed true that the root of the problem lay in the control of public school policy by professional educators. But this is not the case. Educator control of public education policy is a symptom of a more fundamental problem: the public funding of education. The flaw with the voucher system is that it attacks the symptom of the problem without addressing the source of the problem. Under the voucher system public education remains public education, and nothing fundamental has changed.

Proponents of educational vouchers have assumed a benign political setting for their proposal—one which if it indeed existed would largely eliminate the need for vouchers in the first place. Once vouchers were issued by government, consumers would supposedly be in complete control, as the public school lobby would somehow have been politically neutered. The only political influence that would be in evidence is the restriction that vouchers be used to purchase education only from approved schools. And presumably this influence would be exercised in a politically impartial way. The political arena would suddenly become a setting in which the education consumer is in control; the public school lobby is dormant; and quality education is provided efficiently because it is in the public interest to do so. Obviously in such a political setting educational vouchers would perform as advertised.

The prognosis for vouchers is completely different, however, when a realistic view of politics is accepted. As long as education is funded publicly, decisions on educational policy will be made politically. As long as decisions on educational policy are made politically, the interests of consumers will remain diffused and unorganized, and dominated by the focused and organized interests of the public school professionals. Given this fact of political life there are only two possibilities for educational vouchers. The first possibility is that educational vouchers will be benign because they never will be considered seriously. The second possibility is that educational vouchers will become politically acceptable—in which case they will be no better, and probably worse, than the educational approach they replace.

Consider a voucher proposal which, if enacted, would indeed be in the best interest of the public as consumers of education. In other words, the voucher proposal would accomplish exactly what proponents of educational vouchers envision: the transfer of control over education to consumers from suppliers. One does not have to be clairvoyant to predict how the public school lobby would respond to such a proposal. They would oppose it for the obvious reason that their power and privileges would be undermined by a voucher system which worked the way it is supposed to work. This opposition is sure to be effective for the same reason that lies behind the case being made for vouchers—the ability of education professionals to control education policy when that policy is determined through the political process. What the voucher proponents have not yet recognized is that they are confronted with a Catch-22. They want an effective voucher system for the very reason that it is impossible to have one.

Unfortunately, this is not the end of the story. If it were, the idea of educational vouchers would be a rather harmless one. The problem is that there is a real danger that educational vouchers will become politically acceptable.

How will vouchers become politically acceptable if they pose such a threat to the professional educators who control the political agenda on educational policy? It has to be recognized that the public school lobby faces a second threat. That threat is public education’s inferiority to the private education alternative, but this is a threat that the public school lobby can neutralize with the creative use of educational vouchers.

Compelling evidence of the inferiority of the public schools is found in the fact that private schools, charging full price for their services, are competing successfully against the fully subsidized public schools. And the number of parents who remove their children from the public school system is likely to increase. The public schools are surely not going to get better, and are very likely to get worse. The recent call for “reform” and the political rhetoric about “excellence in education” will do nothing to improve public education. Indeed, the pre tense of reform has satisfied the political demand that something be done while leaving such educationally destructive forces as the National Education Association with more control than ever. On the other hand, the private demand that something be done will continue to find expression in parents’ rejection of public schools. This rejection will surely increase as per capita incomes increase, even if the decline in the quality of public education is somehow arrested.[3]

The Response of the Public School Lobby

The public school lobby will respond to this threat of consumer rejection, but how? It will not, indeed cannot, respond by improving the quality of education and becoming competitive with private schools. This is not to be taken as a criticism of the individuals who teach in our public schools. Many of these individuals are competent, hard working, and personally dedicated to educational excellence. The problem is one of the flawed incentive structure that plagues the provision of all publicly financed goods and services.

If suppliers are to direct their efforts efficiently and persistently to the satisfaction of consumer demands, they require accurate information on what those demands are, and compelling motivation to respond to this information. There is only one arrangement whereby this information and motivation can be provided. That arrangement is the private market where consumers, by virtue of the fact that they are spending their own money as they see fit, communicate their preferences through changes in prices and patronage in a way that conveys wealth gains to those suppliers who respond appropriately, and imposes wealth losses on those who do not. By breaking the connection between the demand for education and the ability of consumers to control their own money in expressing that demand, public education has made it impossible for the public schools to provide quality education efficiently.

But the public school lobby does not have to concern itself with providing better education at lower costs in order to beat back the threat it faces from the private school option. If the move to purely private schools begins to accelerate, the public school lobby can, and surely will, protect its privileged position against this competition by embracing educational vouchers. As strange as it will sound to advocates of educational vouchers, if the voucher approach to education ever becomes a serious political possibility, it will be as a means of reducing competition in education, not increasing it.[4]

The advantage the public school lobby will see in educational vouchers comes from the ability of vouchers to entice students back into publicly financed education. Consider the situation in which a large number of parents have taken their children out of the public schools. These parents will have the control over their children’s education that can come only from private education, but they will be paying dearly for the privilege; paying for both the private education they have chosen and the public education they have rejected. Given this burden, parents of children in private schools will be susceptible to a proposal for educational vouchers. As presented by the advocates of vouchers, which will now include public school professionals, the promise will be continued freedom of choice in education without the obligation to pay twice. Such a voucher proposal will also sound appealing to the proprietors of private schools, who will mistakenly see it as a way of expanding the demand for their product by eliminating the discriminatory financial burden being placed on their customers.

Unfortunately, the reality of educational vouchers will be far different from their promise. Vouchers or no vouchers, as long as education is financed publicly, control over education will be exerted through political power, not through consumer choice. Educational vouchers may, for a time, give the appearance that consumers are exercising genuine choice. But consumer choice can, and will, be circumscribed by restrictions on the vouchers; restrictions that will reflect the interests of the politically organized public school lobby, not the interests of the politically unorganized public. One can predict with confidence that the choices educational consumers will have under any voucher system that is politically acceptable will in no way threaten the privileged position of the public school establishment.

This conclusion is based on more than just idle theorizing. We have experience with Federally funded educational vouchers at the experimental level. The Federally funded voucher experiment that ran the longest and has been deemed most successful was conducted in Alum Rock, California. As one would predict, restrictions were placed on these vouchers which minimized the competitive pressures they imposed on public school professionals, and which attempted to promote social objectives that had little to do with education. Teachers, for example, did not have to worry about loss of income if their enrollments declined. They were given priority in teaching jobs at other schools and were paid for makeshift work until such jobs became available. On the other hand, teachers who succeeded in attracting additional students were not rewarded with higher salaries. Those schools which parents preferred were not able to expand to meet the extra demand. Those students who did not get their first choice were simply assigned to other schools. A local employee certification council required that any private school had to satisfy a host of standards on such things as teacher education requirements, pay and fringe benefits, and faculty-student ratios. This control over entry was used to make it effectively impossible for any private school to enter into competition for the vouchers. The Alum Rock vouchers did nothing to threaten the suppliers of public education by passing genuine control to the consumers of education.

If educational vouchers become politically viable it will be because they can be used to reverse the expansion in genuinely private education. The public school lobby will see educational vouchers as the means to entice those who are attending private schools back into a public education system that will be no better than the one which they have rejected.


The special interests that comprise the public school lobby have been able to subvert educational policy to their narrow advantages with the same political influence that will be used to frustrate any reform that threatens those advantages. These special interests would be emasculated by a system of educational vouchers that worked in the way envisioned by the advocates of vouchers. It is for this reason that we will never get a voucher system that is worth having. If educational vouchers are in our future it will be because the public school lobby will see them as the best vehicle for maintaining or enlarging their special interest advantages. Educational vouchers will never serve to increase the range of freedom in education, and may do much to restrict it. []

1.   For the purpose of this paper there is no advantage in distinguishing between educational vouchers and educational tax credits, and henceforth we will refer only to vouchers.

2.   Milton Friedman, the leading proponent of educational vouchers, first made the case for vouchers in “The Role of Government in Education,” in Robert Solow, ed. Education and the Public Interest, New Brunswick: Rutgers University Press, 1955.

3.   It should not go unnoticed that increased wealth represents a major threat to the public education establishment. The wealthier parents become, the greater their demand for quality education for their children, i.e,, private education for their children. The NEA’s advocacy of economic policies calling for economically stifling regulations and taxes is not completely irrational from their perspective.

4.   This point was first recognized by Gary North in his article, “Educational Vouchers: The Double Tax,” The Freeman, (May 1976): 259-75.