Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

School Vouchers, Efficient and Equitable?

Written by johnleemk on 11:45:11 am Mar 15, 2007.

I have already come to the conclusion that our traditional paradigm and way of thinking about education is inefficient and simply antiquated. By relying on the government to control and effectively monopolise education, we have eradicated most incentives for schools and teachers to improve and innovate.

How, then, do we create this incentive? It seems clear — create competition between schools. The soviet-esque bureaucratic systems that govern public education were thoroughly discredited after the collapse of the Soviet Union, in favour of a more capitalist philosophy.

Is it possible to introduce competition without getting rid of or completely reforming the public education system? Certainly. One possibility might be to create "bounties" for schools based on their examination results. All schools would be allocated similar levels of funding, but those which perform particularly well on standardised tests would be granted additional money.

This scheme has its loopholes, though. For one, it could result in "teaching to the test". Indeed, in countries where examination results are routinely released on a school-by-school basis (e.g. almost any East Asian country), there is intense competition to top the tables, but not much competition to actually help students understand the subject matter. In addition, this scheme would not be applicable for countries such as the United States, where their standardised examinations aren't as extensive as those developed in, say, the Commonwealth.

One maxim most economists adhere to is that the individual knows best. Each person knows his needs and wants better than anyone else. This is a key reason for the market system's immense success — it is uniquely suited to responding to the needs and wants of individuals, unlike centralised planned economies, where only what bureaucrats think individuals need and want is taken into consideration.

Thus, it might be better to simply cut out the government monopoly, and privatise education altogether. At first glance, this appears to be a ridiculous idea. After all, wouldn't this cut off access to education for many students from low-income families?

The solution, then, is obvious: school vouchers. School vouchers would basically make the government pay for the costs of education, while leaving the choice of which school to attend completely in the hands of parents. At the same time, by leaving the decisions of how and what to teach to private schools, instead of permitting bureaucrats insulated from competition to decide this, the market system would reward the schools and teaching systems that parents preferred.

Some immediate objections are obvious. For one, how do we know that by privatising education, we won't end up merely transferring monopoly power from an inefficient but well-meaning government to a somewhat efficient but greedy monopolistic firm? Fortunately, this is where the government control of the pursestrings comes in. The government can simply decree that the value of vouchers will decrease for, say, firms with a market concentration of above 50%. Also, since parents can exercise consumer sovereignty, if they are unhappy with the school their children are in, they can transfer them without too much hassle.

The biggest objection I have heard to the proposal of school vouchers is that they harm our public schools. This is at first glance a potent objection, because many of us (myself included, despite my near-total hatred of the Malaysian public education system) harbour a deep-seated emotional attachment to the public school system.

But what benefits do public schools provide? Only one — equity. They make some modicum of education freely available to all. But they are hopelessly inefficient institutions, and it seems hardly equitable for the rich to be able to pay for a proper education, while the rest of us languish in schools with unmotivated teachers and dilapidated infrastructure.

School vouchers may result in the eradication of the public school system, but they are far more just and fair to all. They mean that anyone can still obtain an education — equity — but not just a substandard one. People will be able to obtain a decent education for once, thanks to the competition engendered by the market. The rich can still buy an education that is head and shoulders above the rest, but the gap will not be as big as it presently is.

After overcoming the deepseated emotional objection to school vouchers, it has been difficult for me to see any reasonable objection to the proposal. School vouchers reward those schools which cater to the interests of parents and students, and everyone benefits as a result. It is criminal for our education systems to remain mired in the bureaucracy and red tape befitting a communist functionary, when they could be unfettered and set free to explore the world of opportunities that await our students, if only we dared to let them.

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Infernal Ramblings is a Malaysian website focusing on current events and sociopolitical issues. Its articles run the gamut from economics to society to education.

Infernal Ramblings is run by John Lee. For more, see the About section. If you have any questions or comments, do drop him a line.

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