Study their behaviors. Observe their territorial boundaries. Leave their habitat as you found it. Report any signs of intelligence.

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Thursday, November 13, 2008

The Market Failure in K-12 Education

The primary market failure I see in K-12 education is that poor minors needing tuition money are not allowed to enter into long-term contracts that surrender a fraction of the alleged increase in earnings that a tuition investment would buy them. If education investments are as wise as we liberals claim, then such contracts should be able to make education for the poor self-financing. In the absence of such contracts, I don't mind the geolibertarian citizen's dividend financing tuition vouchers (or land value tax credits for tuition donations to) for poor families. There is no more need for the government to own and operate schools than to own and operate grocery stores.

1 comment:

Christopher Schmidt said...

Do you know about HECS in Australia?

Herewith a snip recycled from an email I wrote to a disgruntled voter in 2005:

"The same segment of society that couldn't afford the cost of government schools expressed as tuition can't afford the cost of government schools expressed as taxes. The cost is the same either way. The smaller pocketbooks of the poor could be addressed by discounted tuition as readily as by discounted taxes.

Why is it unreasonable to charge a poor parent an $85 school fee, but reasonable to charge a poor parent an $85 parcel tax? And what about the poor non-parent? Why should he pay an $85 parcel tax?

Increasingly expensive government schools negatively impact the poor most of all.

A better system would be an explicit system of loans for those choosing a government education (or a government financed education), paid off using a graduated system of repayments, added to participants' income taxes, the way Australian university education is (partially) paid for. (Their payments, interest-free but adjusted for inflation, are 4-8% of the debt amount, on incomes over $38,000AU.)

The system (HECS: Higher Education Contribution Scheme) is described here:
Rasmussen on HECS

The current tax schedule paid by participants is shown at
HECS surtax rates

If California adopted such a scheme, taxes could be reduced by 46% in one generation, as government-provided or financed education became self-funding or parents voluntarily left the system.

Instead of being a disconnected system of extortion (taxes) and giveaways (government schools), taxpayers would know what they were paying for--their own educations! And parents would have an incentive to keep closer tabs on wasteful spending, instead of today's incentive to campaign for higher taxes on other people.

You might be concerned that people with lower incomes might never pay off their education debt under such a system. That's true, but it would be vastly better than the present system, under which virtually everyone is indentured for life, paying off other people's school debts with taxes that never end or even decline.

Without a system like HECS, we'll all be paying off school loans for the rest of our lives, and our children's lives too. Just because our taxes aren't itemized by spending program doesn't mean government schools are free. They are expensive, and getting more expensive by the hour. A system like HECS would be a way to break the vicious cycle, and restore incentives that promote thrift rather than wastefulness."