Bryan Caplan  

EconLog Book Club: For a New Liberty, Chapter 7

On Monetarism... Can you say "rent-seeking?"...
In this chapter, Rothbard makes the case for the abolition of public schooling.  While he somewhat surprisingly views Friedman's voucher system as "a great improvement over the present system in permitting a wider range of parental choice and enabling the abolition of the public school system," Rothbard will settle for nothing less than the separation of school and state. 

What's wrong with vouchers, you ask?
In the first place, the immorality of coerced subsidy for schooling would still continue in force. Secondly, it is inevitable that the power to subsidize brings with it the power to regulate and control... The power of the State over private schools, through its power to certify or not to certify for vouchers, will be even greater than it is now.
Shouldn't education be free for all?  No way:
"Free" schools, whether current public schools or future vouchered schools, are of course not really free; someone, that is, the taxpayers, must pay for the educational services involved. But with service severed from payment, there tends to be an oversupply of children into the schools (apart from the compulsory attendance laws which have the same effect), and a lack of interest by the child in the educational service for which his family does not have to pay. As a result, a large number of children unsuitable for or uninterested in school who would be better off either at home or working, are dragooned into going to school and into staying there far longer than they should.
Mainstream economists will be puzzled by this chapter, because it ignores all the arguments about educational externalities, credit market imperfections, etc.  Rothbard instead focuses on public education's historical connection to brainwashing and persecution of minorities, pointing out, for example, that:
[F]or Luther, the State schools were to be an indispensable part of the "war with the devil," i.e., with Catholics, Jews, infidels, and competing Protestant sects.
This chapter also tries to win over the civil libertarian by analogizing state-controlled education to state-controlled media:
[W]hat then would we think of a proposal for the government, federal or state, to use the taxpayers money to set up a nationwide chain of public magazines or newspapers, and then to compel all people, or all children, to read them? Further, what would we think of the government outlawing all other newspapers and magazines, or at the very least outlawing all newspapers or magazines that do not come up to certain "standards" of what a government commission thinks children ought to read? Such a proposal would surely be regarded with horror throughout the country, yet this is precisely the sort of regime that government has established in the schools.
When Rothbard gets to higher-education, he gleefully points out that it forces the poor to subsidize the rich, and argues that government artificially supports the inefficient dominance of non-profits:
By exempting trustee-run organizations from income taxes and by levying heavy taxes on profit-making institutions, the federal and state governments cripple and repress what could be the most efficient and solvent form of private education...

Trustee governance is, in general, a poor way to run any institution. In the first place, in contrast to profit-making firms, partnerships, or corporations, the trustee-run firm is not fully owned by anyone. The trustees cannot make profits from successful operation of the organiza tion, so there is no incentive to be efficient, or to serve the firm's customers properly. As long as the college or other organization does not suffer excessive deficits it can peg along at a low level of performance. Since the trustees cannot make profits by bettering their service to customers, they tend to be lax in their operations.
Critical Comments
This chapter is packed full of good material, but ignoring the standard economic arguments for subsidies is a major sin of omission.  Rothbard repeatedly cites E.G. West, but doesn't mention West's striking result that 19th-century England achieved high literacy with minimal state subsidies for education.  For a modern audience, isn't that more relevant that the ravings of Martin Luther?

Since this chapter ignores the standard economic arguments, it also misses the opportunity to reverse them.  While it contains many astute observations about useless education, these barbs are atheoretical.  Rothbard never mentions the signaling model of education, which argues that education actually has negative externalities.  Government subsidizing inefficiency - isn't that the kind of argument Mr. Libertarian loved?

Rothbard's attack on educational non-profits is music to my ears.  Tyler Cowen has an old paper that tries to give a functionalist explanation for why most universities are non-profit.   But I think Rothbard's barking up the right tree here.  To complete the argument, though, you need to appeal to donor irrationality: despite the obvious inefficiencies of the non-profit sector, alumni just keep giving them more money to waste.

P.S. Check out this impressive intellectual shrine to E.G. West.

Comments and Sharing

Twitter: Bryan Caplan @bryan_caplan

COMMENTS (8 to date)
dearieme writes:

Many thanks for the West references. Also for "the separation of school and state", a marvellous phrase.

Randy writes:

I was thinking this morning about how difficult it must be for school teachers to teach the stupid. I often instruct new hires at my workplace, and it is always evident within the first hour or two of instruction which are worth the effort and which are not. For me, the choice is simple. If they're not worth the effort they don't get the job. But a school teacher has to somehow find a way to teach even those who aren't worth the effort. I suspect they do it mostly by slowing down the process and by mediocratizing the standards. In short, the problem is, again, the mystical belief in equality. A market system of education would find a place for everyone. It would ignore equality. It would be efficient.

Zac writes:

I don't know that a market system of education would lead us to the Magical Kingdom of Efficiencia.. Like health care, I think a lot of education is driven by "showing that you care". If you are a parent you will send your kids to school whether they like it or not. If you are high-status, you will likely insist that they go to college as well. Many students are motivated to continue their education precisely to please their parents or other loved ones.

Of course, taking that into consideration, the worst thing the government can do is what it does (a familiar story): subsidize the inefficiency. If they were interested in raising efficiency they would consider taxing higher education. Instead, the government panders to the irrationality of the people.

I agree this chapter could be strengthened by a lengthy discussion of the signaling model of education, but as it is, a very strong and convincing chapter.

RL writes:

Bryan, did the signaling model of education exist when Rothbard wrote his book?

Jeremy, Alabama writes:

Whenever I see Rothbard use the word "government", I translate it to "Federal government". This is probably not what he intended, but it certainly reads better.

Taken this way, I think one can build a compelling argument that federal involvement in education is both expensive and dangerous.

Scrapping the Dept of Ed is an important, practical step towards bringing education back under control of parents, instead of distant bureaucrats, whether or not we end up with a true, "libertarian-approved" system.

andy writes:

"analogizing state-controlled education to state-controlled media"

not a valid analogy...government run education is MUCH MUCH more harmfull.

Any argument from efficiency pales in front of the harm done to generations by countless 20th cent governments brainwashing kids.

"Efficiency in error is vice, not virtue"

andy writes:

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Jason writes:

I like many parts of this chapter, but I don't think you'll ever get rid of compulsory education. You must have compulsory education in any socialist or quasi-socialist society. Since everyone is responsible in some way shape or form for each other, then society is going to make you take basic care of yourself.

Riddle me this: What are two of the most heavily regulated industries in the US?

Education & health care.

What eats up ever and ever more of our incomes?


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