TECHNOS

November 20, 2008

TECHNOS QUARTERLY Spring 1993 Vol. 2 No. 1

Schools, Houses, and Ice Cream: The Choices We Make

By Morton J. Marcus

Are American schools as bad as we've been led to believe? And if they are, will a program of choice subsidized by vouchers solve the problem? Economist Morton Marcus argues that it may be a misallocation of resources within our education system that needs correcting—not the system itself.

We all have choices. But in order to choose, we must have options, some of which may be too expensive for us to afford. An ice cream shop, for example, may offer 100 different flavors, but it will be successful only if the cost of those options is minimal and the demand for them warrants the asking price. So, too, a community may offer a wide diversity in its mix of housing, education, and other services, if the effective market demand is present.

But, what if consumers at a given ice cream shop do not support 100 different flavors? Perhaps there are too few consumers, or their income is too low for them to spend a lot on ice cream, or they may not have much of a taste for ice cream. We would think it silly for the government to step in. But this is just what we do with education today because we do not consider it the moral equivalent of ice cream. We believe that citizens should have certain basic services
…even if they cannot afford it,
…even if there are not enough of them to make it “efficient,”
…and even if they would not choose to have those services.

In the past, this was the accepted belief of our nation about education and the system that provides it to our children. But that consensus has been undermined as we have been led to believe that our public schools are not doing the job they were created to do. One of the solutions currently being espoused is that of “choice,” a program to treat education like other services in the private marketplace but with the benefit of a government subsidy, or voucher.

Existing Choice in Education

What choice is there now in American education? A standard practice among the wealthy for generations has been to send their children away to schools offering distinguished programs. Less wealthy persons have exercised choice by moving to a school district or parish that offered programs consistent with their desires as parents.

This is the essential relationship between education, transportation, and the community. If education is not in the home, it involves transportation. And here is the central choice parents make, within the limitations of income: They choose a place to live. That decision, for more than 100 years, has linked education and residence as a package.

How far do you want your child to travel to attend school, and how frequently do you want that trip made? If you do not mind being separated from the child and can afford it, you can send her hundreds or even thousands of miles away, and she can come home infrequently. If you are of more modest means, you will have your child walk to the nearest school, daily.

Racial integration of the schools by busing was mainly an attempt to bring about desirable change without addressing other factors we did not have the courage to approach. We would not face discrimination in the housing market or in the workplace, so we put the burden on our schools and our children. Is it still appropriate to ask the schools to do the job?

In the latter case, the community becomes important. If your child is to walk to school, then you must choose a residence that offers what you want (and can afford) in combination with a school that offers what you want (and can afford). Choosing a home and choosing a school is a combined decision for most people with children. The attributes of a home include those on the site (bedrooms, baths, view) and those in the community (neighbors, shopping, schools). Just as a home comes with certain operating costs (garden, heating, maintenance), it also has certain transportation costs (to work, to shopping, to schools).

The quality of the schools in an area depends on what people want from education, their ability to pay for what they want, and the costs of providing education. If the schools are supported by parents alone, then the programs are determined by their preferences and their resources. But if the community (in the form of the state or the church) contributes as well, then the ideas, desires, and funds of a wider group come into play. Hence, the community (geographic or religious) has a bearing on education as long as parents accept the community's financial support for their children's schooling.* Even if all schools were private, the community probably would not allow schooling to take place without some form of regulation.

(*The words “education” and “schooling” are used interchangeably here, although the difference is recognized.)

Government and Our Schools

Governments provide education services for historical reasons. Diverse private schools were not feasible in areas with small enrollments where only one school could be justified. When much of America was rural and transportation costs were relatively high, schools were organized to minimize travel. Thus we have a geographic basis to our school corporations. As neighbors got together to form school corporations, they wanted to ensure that all beneficiaries—all citizens—would participate in funding education. For that reason, school corporations were recognized by legislatures and given governmental powers to levy taxes. In addition, it was believed that accountability would be greatest if the managers of the schools were subject to popular recall by their neighbors through the ballot box.

The current drive for choice in schooling is a mutation of the healthy skepticism about government that is part of the American psyche. But the campaign to separate public funding from government provision of educational services has a virulence that makes improvements in existing public programs difficult, if not impossible. Few people want to fix something they are told is irretrievably broken.

But education is not what we call a “pure public good”—that is, a service from which consumers cannot be excluded. If you cannot exclude would-be consumers, you cannot get people to pay for the service. We can easily keep would-be students out of class, so education can be provided by the private sector quite readily. And we could have government subsidies of a purely private education system. This is the solution offered by some advocates of the voucher system.

On the other hand, the schooling of an individual is not a purely private matter but is one that affects others in the community. Universal literacy and basic common sets of knowledge create a more efficient society. The educated person imposes fewer costs on society and contributes to the well-being of the community via non-market mechanisms.

Ice cream, by contrast, is a private good. The kind of ice cream you eat has such little influence on my life that we can both treat your choice of flavors as an event that is of interest to you alone. There are no externalities in the consumption of ice cream. But there are externalities to schooling, particularly at the primary and secondary levels. If education were a private good similar to ice cream cones, though, no one would object to privatization. Poorer children have fewer cones of lesser quality ice cream, while wealthier children enjoy deluxe treats to the limits determined by their parents. The same would work for schooling. But the education of all children is a matter of legitimate and considerable concern to our society.

The Parents' Role

If a voucher system were to be put into place, parents would be free to choose the school—public or private—their child attends. The success of such a system is based on the flattering assumption that parents are informed consumers who will seek the “best” education for their children. But are they? How much of their time or money do parents spend to acquire information about the education of their children? From the discouraging news about collapsing parent-teacher organizations, from the dismal attendance at open houses, and from reports of parental indifference to homework assignments, we can only assume that limited numbers of parents are investing their own resources in education.

Education does not appear to have the significant economies of scale that would lead to the formation of education monopolies from which society must be protected. Hence, public provision and regulation of education services must be founded in some other principle of public interest.

If parents really wanted the “best” education for their kids, they would be willing to make significant sacrifices. In truth, they want only the attainable—given all of their other wants and the constraints of their resources.

How many parents or grandparents will give up their fine homes, their new cars, their cable TVs, or their pension rights in order to educate their children or grandchildren?

What will assure us that there will not be a deterioration in the quality of education? Given the choice, parents may well opt for schools which provide less homework that challenges their children's knowledge, which offer extended hours of child care but little instruction, and which demand unquestioned acceptance of parental and social authority. Well-behaved but ignorant children may be the preference of some parents.

The education of the poorest child is as important, or perhaps more important, than that of the wealthiest, for when the endowment of environment (home and neighborhood life) is deficient, the additions of education may be of greatest value to the person and to society.

If parents do not place a high value on education, they may underinvest (from society's point of view) in the education of their children. Because society is concerned that parents will not devote sufficient resources to their children's education, it has instituted mandatory attendance laws and provided substantial subsidies for education in America. We presume government will continue to license and regulate schools in such ways. But a free market ideologue would argue that such regulation is unnecessary. Parents as consumers, this argument says, will quickly assess whether a school meets their educational expectations. Those schools that do not win consumer approval will quickly disappear.

This drive to reduce the government's role in the provision of education and the regulation of its content requires a determined effort to discount society's stake in education. That's why we hear more today of the private benefits of education—in the form of income earned—than we hear of the public concerns about an educated populace. There is an effort to advance the idea that schooling is for vocational training rather than for developing children with the values of civilization and the capacity for expanding human capabilities.

Government is engaged in financing education because we believe that parents—particularly, but not exclusively, poor parents—left to their own resources would not consume (or produce) as much education as we think would be to the benefit of their children and our society.

Misallocation of Resources

The modern American public education system is over-used by society to address non-education problems. In addition, distrust of local administration has given us a proliferation of strangling regulations and stultifying standardization. This trend has denied schools their flexibility and their capacity to meet local and changing circumstances.

America, in its drive to improve itself, turned to the schools as the instrumentality of that improvement. Racial inequities were to be solved by integrating the schools. Dietary deficiencies were to be corrected by school nutrition programs. Juvenile delinquency was to be ended by school-based programs. Flab was to be fought and culture nursed by the same system that was charged with teaching chemistry and language. In some future time it will be written: “And Americans so loved their schools that they sacrificed them to rid the world of sin and evil.”

The time has come for improvement, but not necessarily the dismemberment of the public schools sought by the pirates of privatization. Rather, we should seek to reduce the impediments to the successful operation of the system that is in place. Much of the problem may be the result of a very ordinary reluctance to change and too much pride to admit deficiencies.

The current system of schooling is not, however, irretrievably lost and in need of wholesale replacement. The first order of business is to determine what our schools are to do. Next, they should be liberated to do that job; and finally, teachers and administrators should be rewarded appropriately for their performance. This probably will require extricating our schools from those lines of business in which they do not have a comparative advantage.

Let's start with a basic fact: If education is not in the home, it involves transportation. In this country, most housing developers could advertise: “Buy this remote rural home. It may be way out in the country, but the taxpayers of this county and state guarantee the transportation of your child to school.” Why do we do that? Why can the wealthiest citizens move to suburban estates and have their children bused to school at the expense of retirees on fixed incomes?

Parents have choice in residential location and should bear the full costs of their choice. They should not pass that cost along to others through the school corporation's power to tax citizens. This means ending “free” (tax-subsidized) school transportation services. Some parents will find the transportation charge is a burden. For those who are poor or have special transportation problems, we can provide vouchers similar to food stamps. (If you want to privatize school transportation, do so! What educator has a comparative advantage as a school-bus schedule maker?)

Some parents will continue to choose remote locations because they are willing (and able) to bear that cost. Others will choose residential locations that allow their children to walk to school. Parents will demand sidewalks and crossing guards for the safety of their children. And none of this will happen instantly. But perhaps it will lead to smaller schools that will serve more compact areas.

Smaller schools with a community focus have been out of fashion for a generation or more. We have had waves of school consolidations because we believed that there were significant education options and economies at larger schools. That may have been true with the technology of the 1950s and earlier; it may no longer be valid. We have done little to change our methods of teaching since the introduction of the textbook. We have failed to employ with vigor the options that computers, videotapes, videodiscs, and live, interactive television offer educators and students.

Transport Education, Not Kids

The effectiveness of schooling could be increased by reallocating the tax money now spent on transporting students and using it to bring the modern world to education. We could use those funds to make our classrooms and teachers more productive by giving them superior complementary educational resources. We could help break down the school walls by freeing education from the tyranny of place and allowing students to learn at home or elsewhere if that works for them.

I believe that I learned certain subjects better from the textbooks I carried home each evening and back to school the next day than I did from in-class presentations by the teachers. Other topics, for me, however, required the explanation and encouragement of the teacher. Today, through television, we could have students learning at home if we made more materials available to them for that purpose. Homework the whole family could watch might be more interesting than some of the current game shows in reruns.

In addition, we can have classes made up of students in different locations, all being instructed by a teacher of superior quality through interactive TV. Schools that are too small for specialized courses can offer diversity (i.e., choice) through electronic media. We do not use these options widely today because they are costly and because many teachers and students have not developed the skills to teach or learn in this manner. Education can be transported without transporting children.

But let's not stop with transportation. Look about the school and ask, “Why is this program supported by the education budget?”** Sports, marching band, drama club. Are we again asking the schools to do jobs that are the rightful responsibility of other organizations? These are each worthwhile activities, but why are they supported with tax funds? Does music instruction require a marching band complete with uniforms and an extensive schedule of competitions? It is inappropriate to make such efforts part of the public's responsibility.

(**Note I did not ask, “Why is this program in the school?” That is a different legitimate question.)

There is no question that young people should engage in physical activities and learn the skills of play and cooperation that sports involve. But couldn't these efforts be financed through voluntary organizations, rather than through the compulsory use of tax funds? If parents and neighbors believe in the value of rooting for old Hopped-Up High at the Friday night football game, couldn't they prevail upon the local Rotary Club or Chamber of Commerce to provide monetary support for the team?

Schools are very much like other organizations in society. We have seen that some of our giant corporations have lost their ability to adapt to changes in their environment. Some of our schools' inflexibility has been imposed by added state and federal regulations. These often result from the distrust we have of our governments and our demand for their accountability. Some of the problems in schools are due to hostile labor-management relations where unions and administrations have become petrified partners in a destructive dance.

Funds now used for such purposes, including the capital funds for the stadium and the Olympic-size swimming pool, could be released to enhance educational productivity. It seems time to withdraw the schools from their role as multipurpose social-service organizations and return them to their role as teaching institutions. Before we attempt to remake the education system of the nation, we might try letting the one we have do its job.

Vouchers, competition, and privatization will not resolve our problems if we still do not have agreement on what we wish an education system to produce. Adults are more capable of describing the desired features of a home or an ice cream cone than of the education children should receive. We tend to view education as a means of enriching our own angelic offspring while civilizing the neighbors' little devils. We also want our children to learn their place in the history and culture of our diverse world while simultaneously being prepared for gainful employment by age 17.

Presumably, government regulation of schools will continue, even if we go to full privatization. But will we know what outputs to monitor, or will we just measure inputs, as we have in the past? All of the contemporary furor over choice and control is hindering us from rediscovering education's appropriate mission and renewing the will to support that mission. Until we do those things, offering even 100 options won't solve the problems in American education.

Illustration by Dave Coverly.

Morton J. Marcus is an economist and director of the Indiana Business Research Center at the Indiana University School of Business, where he teaches both graduate and undergraduate courses. He is also AIT's 1996 Distinguished Fellow. For the past 23 years, he has studied the changing economy and population of Indiana and the United States. Marcus writes a weekly column on economic issues for 27 Hoosier newspapers from his home in Indianapolis, where he and his wife maintain a household of unemployed dogs and cats. His book on financing public education in the 21st century, Tightrope to Tomorrow: Pensions, Productivity, and Public Education, was published by TECHNOS Press in 1997.

Click here for ordering information on TECHNOS Press's Tightrope to Tomorrow book by Morton Marcus.