I recalled the play’s tragic finale as I read Sol Stern’s City Journal essay. He’s leaning over what he believes is the corpse of market education.… He’s taking out his vial of poison.… “Sol, don’t do it!” I yell helplessly at the screen. “Market education isn’t dead!” And then it’s over.
Assessing recent developments in American schooling, Stern concludes that “markets in education may not be a panacea — and … we should reexamine the direction of school reform.” But Stern’s conclusion does not, and indeed cannot, follow from his premises, because there isn’t a single place in the United States where education has operated as a free market for the past 150 years.
Stern’s mistake is to confuse the very unmarketlike “school choice” programs that exist today for real education markets. They’re nothing of the sort. Consider some of the essential characteristics of free markets: prices determined by supply and demand, private ownership of businesses, low or no barriers to the creation of new businesses, few or no barriers to workers’ entering the profession, unfettered consumer choice, minimal regulation, the opportunity for owners and investors to profit from their efforts, and payment by consumers rather than a third party. For true market forces to arise, these characteristics must exist on a large scale, with hundreds of thousands — or millions — of potential customers. Without such scale, the prospective return on investment is too small to raise enough capital for meaningful research and development, to generate the specialization and division of labor that afford consumers real choices, or to attract enough competitors to improve quality or lower prices significantly. Where education is concerned, these free‐market ingredients are hobbled or absent altogether everywhere in the United States, regardless of the presence or absence of tiny “school choice” programs.
Unlike Romeo, Stern will happily survive his misjudgment. Unhappily, he is far from alone in erroneously conflating “school choice” with market education, and the widespread confusion on this point can — and unless corrected, will — kill the prospects for real market‐based education reform in America. So let’s look at one example that Stern offers as an illustration of how existing choice programs fall far short of free markets.
Stern laments that while the Milwaukee voucher program has given hope and a better education to thousands of low‐income children, it has not dramatically transformed the city’s public schools. There are two reasons why this observation is not an indictment of education markets. First, as noted above, the Milwaukee voucher program has never constituted a market and will not do so without massive expansion and liberalization. Consider that for the first eight years of its existence, Milwaukee’s program was capped at about 1,500 students, and that for the next eight it was capped at 15,000. The cap only recently rose to 22,500. Now think what similar caps in the number of prospective customers would do to, say, the personal computer industry. Microsoft, Dell, and Apple would promptly vanish in a puff of regulation. Because of its tiny size alone, the Milwaukee voucher program cannot give rise to a competitive education industry.