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06/14/2017

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Two prime points from two different authors might add some insight. How so? Combining points made by Milton Friedman’s 1955 essay “The Role of Government in Education” and Harold Demsetz book “From Economic Man to Economic System“.

Friedman makes the point that bestowing funds on the institution [public schools] is an error and the funds should be bestowed upon the student-education-consumer. In this way the funds begin with the consumer (student). The student can then shop for his/her best education opportunity and if the current supplier doesn’t deliver, change education suppliers.

As it stands now the funds are bestowed on the institution. The institution known as public schools is based on a collectivist model. As with all collectivist models (collective farming being the best known example) ever higher inputs are rewarded with ever lower outputs. In real dollars, US taxpayers are paying 300% more than in 1960 with stagnate or dropping output i.e. test scores/graduation rates/quality of education. Why? The standard answer is the collectivist models (always a failure) suffer from shirk.

Collectivist models do in fact suffer from shirk but shirk in no way explains the entire phenomena of paying 300% more than in 1960 with stagnate or dropping output. Enter Harold Demsetz. Demsetz goes beyond shirk regarding collectivist models and exposes “power purveyors” of collectivist models. That is, the managers and administrators of collectivist models act as a spongy conduit claiming much of the increased funds that result in ever lower output of a collectivist model. Stated alternatively, a second phenomena occurs beyond shirk in a collectivist model.

One ends the exercise with funds bestowed upon a collectivist model institution with ever increasing numbers of managers and administrators that increasing enhance their total compensation with the student-education-consumer being the last person in line receiving funding. Funding the education experience only occurs after funding the power purveyor.

Great points, Bill. The only drawback with the funds following the consumer is the overwhelming tendency for statist politicians and bureaucrats to attach conditions with money granted. Thus, you have de facto governmental control of private and religious educational institutions. It seems the entire premise that public dollars should fund the educational experience is fraught with difficulty.

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