4 ms·

If the market were able to solve the problem better, private schools could just provide better service at lower costs (compared to public school cost + state su

If the market were able to solve the problem better, private schools could just provide better service at lower costs (compared to public school cost + state subsidy) and few would still go to public schools right? State subsidies for public schools are not that large anymore (34% of budget for UC Berkeley comes from tuition+fees while 13% comes from state of California). These are actually IMO all examples of Baumol's Cost Disease as healthcare, child care, and education simply do not scale or require less workers with improved technology (at least so far). The fact that BCD hits so hard is evidence of most of the efficiency gains over the last decade(s) not being shared with the majority of people.

GarrisonPrime 7y ago
How are private schools supposed to offer better service at a lower cost, when public schools are effectively free? This is hardly a market. Even if people wish to move their children out of public schools en masse, it's not like governments are going to reduce property taxes accordingly.
- opportune 7y ago
  Well in the example I provided, state money only amounted to a 28% subsidy (assuming if the state funding were cut, the only way to raise as much money would be to raise tuition+fees). Doesn't seem effectively free to me. Keep in mind I was replying to a critique of "Education and health care are out of reach for many" which obviously implies higher education
- nostromo 7y ago
  > public schools are effectively free It's actually even worse than that because you pay for public education even if you don't use it. So in that regard, if you send your kids to private schools, you're paying for their education twice. This makes it very difficult to compete, and as a rayiner pointed out, isn't a real market. I think the best solution to this is vouchers, which is a nice blend of public dollars but competitive schools.
  - ookdatnog 7y ago
    I like to think I'm not too ideological about which sectors should be public and which should be private (this is not a moral question as far as I'm concerned). I think some sectors work better privately and others work better publicly. Essentially I think letting the free market do its thing is a good idea if I can be confident that the profit motive broadly aligns with public interest (and using regulation where it doesn't, for instance for pollution). Education is a sector where I have very little faith that the free market profit motive aligns with the public interest. The problem lies with evaluating the quality of education. Children aren't very capable of evaluating the quality of their own education (and if they are they often aren't taken seriously or they don't have any choice in the matter anyway), and parents are too far removed or often don't know the subject matter very well themselves. The only way (and even that is an inaccurate way) to evaluate schools is by doing statistical analysis on outcomes. The crucial point is: the only data you have is outdated by years, perhaps even a decade or so. Education is a strongly reputation-based sector for a reason: reputation is the only way people have to evaluate your product. I don't believe there's a way around this. In a for-profit corporation, particularly in a publicly-traded one, there's often pressure to optimize profits on the short term. So if I'm the unscrupulous CEO of a for-profit school, I can always deliver very easily by simply cutting costs even if it dramatically hurts the quality of the education, confident in the knowledge that by the time the effects start getting noticeable I'm long gone. The short term profit motive of a publicly traded corporation works perversely here: there's always the temptation to sell the reputation you built up yesterday to turn a bigger profit today; no one will be any the wiser until it's too late (and they paid a lot of money for sub-par education). Of course public or non-profit institutions are also vulnerable to bad management, but at least no one has a strong incentive to gut their expenses, as no one stands to gain.
    - tomp 7y ago
      Maybe there's a way to align incentives? E.g. schools are (partially) government-funded, but the funding is a function of the taxes that people who have attended the school pay. Still there are a few issues that would need to be fixed, off the top of my head: (1) the function should simply be a mean, to make schools focus on desired outcomes (e.g. the minimal (or 5th percentile) education) - otherwise they'd just focus on producing a few outliers, like VCs; (2) there needs to be a "default" funding available (e.g. average of all schools) to enable innovation (starting new schools); (3) there needs to be some funding available for "non-profit" education (e.g. art) but maybe there should be a limit on the number of people that can attend such schools (for free).

GarrisonPrime 7y ago

How are private schools supposed to offer better service at a lower cost, when public schools are effectively free? This is hardly a market. Even if people wish to move their children out of public schools en masse, it's not like governments are going to reduce property taxes accordingly.

opportune 7y ago
Well in the example I provided, state money only amounted to a 28% subsidy (assuming if the state funding were cut, the only way to raise as much money would be to raise tuition+fees). Doesn't seem effectively free to me. Keep in mind I was replying to a critique of "Education and health care are out of reach for many" which obviously implies higher education
nostromo 7y ago
> public schools are effectively free It's actually even worse than that because you pay for public education even if you don't use it. So in that regard, if you send your kids to private schools, you're paying for their education twice. This makes it very difficult to compete, and as a rayiner pointed out, isn't a real market. I think the best solution to this is vouchers, which is a nice blend of public dollars but competitive schools.
- ookdatnog 7y ago
  I like to think I'm not too ideological about which sectors should be public and which should be private (this is not a moral question as far as I'm concerned). I think some sectors work better privately and others work better publicly. Essentially I think letting the free market do its thing is a good idea if I can be confident that the profit motive broadly aligns with public interest (and using regulation where it doesn't, for instance for pollution). Education is a sector where I have very little faith that the free market profit motive aligns with the public interest. The problem lies with evaluating the quality of education. Children aren't very capable of evaluating the quality of their own education (and if they are they often aren't taken seriously or they don't have any choice in the matter anyway), and parents are too far removed or often don't know the subject matter very well themselves. The only way (and even that is an inaccurate way) to evaluate schools is by doing statistical analysis on outcomes. The crucial point is: the only data you have is outdated by years, perhaps even a decade or so. Education is a strongly reputation-based sector for a reason: reputation is the only way people have to evaluate your product. I don't believe there's a way around this. In a for-profit corporation, particularly in a publicly-traded one, there's often pressure to optimize profits on the short term. So if I'm the unscrupulous CEO of a for-profit school, I can always deliver very easily by simply cutting costs even if it dramatically hurts the quality of the education, confident in the knowledge that by the time the effects start getting noticeable I'm long gone. The short term profit motive of a publicly traded corporation works perversely here: there's always the temptation to sell the reputation you built up yesterday to turn a bigger profit today; no one will be any the wiser until it's too late (and they paid a lot of money for sub-par education). Of course public or non-profit institutions are also vulnerable to bad management, but at least no one has a strong incentive to gut their expenses, as no one stands to gain.
  - tomp 7y ago
    Maybe there's a way to align incentives? E.g. schools are (partially) government-funded, but the funding is a function of the taxes that people who have attended the school pay. Still there are a few issues that would need to be fixed, off the top of my head: (1) the function should simply be a mean, to make schools focus on desired outcomes (e.g. the minimal (or 5th percentile) education) - otherwise they'd just focus on producing a few outliers, like VCs; (2) there needs to be a "default" funding available (e.g. average of all schools) to enable innovation (starting new schools); (3) there needs to be some funding available for "non-profit" education (e.g. art) but maybe there should be a limit on the number of people that can attend such schools (for free).