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Problems With the Libertarian Free-Market View of School Reform

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I was on a panel on Friday at the libertarian Cato Institute that reminded me of some old problems with school reform debates--and brought up some new ones. The video is here. I'm going to pick on Jason Bedrick of Cato who was also on the panel, though he is far from the only one to make these mistakes:

Problem #1: Trying to discredit traditional public schools by placing test score trends and expenditure changes on one graph. These graphs have been floating around for years. They purport to show that spending has increased much faster than expenditures, but it's obvious that these comparisons make no sense. The two things are on different scales. Bedrick tried to solve this problem by putting everything in percentage terms, but this only gives the appearance of a common scale, not the reality. You simply can't talk about test scores in terms of percentage changes.

The more reasonable question is this: Have we gotten as much from this spending as we could have? This one we can actually answer and I think libertarians and I would probably agree: No, we could be doing much better than we are with current spending. But let's be clear about what we can and cannot say with these data.

Problem #2: Repeating arguments that have already been refuted. Bedrick's presentation repeated arguments about the Louisiana voucher case that I already refuted in a prior post. Neither the NBER study nor the survey by Pat Wolf and his colleagues provide compelling evidence that existing regulations are driving out potentially more effective private schools in the Louisiana voucher program, which was a big focus of the panel.

Problem #3: Saying that unregulated free markets are good in education because they have been shown to work in other non-education markets. For regular readers of this blog, you know where I'm going with this. For example, the education market suffers from perhaps the worst information problem of any market--many complex hard-to-measure outcomes most of which consumers (parents) cannot directly observe even after they've chosen a school for their child. Also, since students can realistically only attend schools near their homes, and there are economies of scale in running schools, that means there will generally be few practical options (unless you happen to live in a large city with great public transportation--very rare in the U.S.). And the transaction costs are very high to switch schools. And there are equity considerations. And . . . I could go on.

Problem #4: Using all this evidence in support of the free market argument, but then concluding that the evidence is irrelevant. For libertarians, free market economics is mainly a matter of philosophy. They believe individuals should be free to make choices almost regardless of the consequences. In that case, it's true, as Bedrick acknowledged, that the evidence is irrelevant. But in that case, you can't then proceed to argue that we should avoid regulation because it hasn't worked in other sectors, especially when those sectors have greater prospects for free market benefits (see problem #3 above). And it's not clear why we should spend a whole panel talking about evidence if, in the end, you are going to conclude that the evidence doesn't matter.

This critique of the libertarian view is not a defense of the current school system. We do indeed need a new regulatory framework--a new role for government. And the evidence in Louisiana does seem to help point the way. In our state can be found the largest positive effects I have ever seen in the fairly heavily regulated New Orleans school reforms, and the largest negative effects in the much more lightly regulated Louisiana voucher program.  This, along with other evidence I discuss on the panel, seems to provide a good case for aggressive regulation, especially if we care about typically measured outcomes like test scores, high school graduation, and college entry. That said, it is far from a clear-cut case since there are not enough rigorous studies with varied policy regimes to really test this directly. Just looking to Louisiana is not enough.

OK, libertarians, what do you say? Let the debate continue.


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