The Private Sector Lacks What?!?

So there I was, checking e-mail this morning on my JooJoo when I came across this editorial about how the private sector lacks accountability unless the government provides it through regulation! This naturally caused me to expectorate New Coke all over over myself and my Apple III, forcing me to toss my Levi’s Type 1 jeans in the wash and hop back in the shower. (You know, that Touch of Yogurt shampoo by Clairol is really… uh… something).

Twenty minutes later I was still so preoccupied about responding to the editorial that I backed over my neighbor’s Segway as I pulled the Edsel out of the garage. Oops. Sorry Dean.

Anyway, once I got into the office I popped a couple of Ben Gay Aspirin to ease my now ferocious headache, but realized as I did so that I’d left my Colgate Kitchen Entree frozen dinner at home. Argh!

You get the idea, yes?

The fact that consumers have demands, and that they can go elsewhere if you fail to meet them, makes producers accountable. We see this in every sector of the economy. Provide a product or service that people don’t want, take away one that they do want, or charge more than they are willing to pay, and they will kick you right in the bottom line.

The result is the same in education as in other fields: the least regulated, most market-like education systems consistently outperform highly regulated state-run school systems such as we have in this country—across every measure people care about.

Regulations are an attempt, crude and usually unsuccessful, to imitate the accountability inherent in competitive markets. So as long as you allow market forces to work in education, and you allow people to allocate their own money rather than taxing it and spending it through the state, regulations are not only unnecessary they are generally counterproductive. (Milton and Rose Friedman had a good chapter on this in Free to Choose.)

Note that this is true under both personal use education tax credits (for parents’ own education costs) and scholarship donation tax credits (in which taxpayers donate to non-profit organizations that subsidize education for the poor). If a scholarship organization becomes corrupt or inefficient, taxpayers can easily redirect their donations to better-run competing organizations. The accountability is built into the system’s design. No other private school choice program has this feature, and certainly public schools do not.

There is no evidence that layering government regulations on top of this market accountability system improves outcomes, and ample evidence that heavily regulated school systems perform badly. Unless those facts change, there is good reason to fight off attempts to regulate private schools under education tax credit programs.