 Hi I'm James. And I'm Anthony. And this is Words and Numbers. How you doing this weekend? Well, I'm well James and we're coming up on the start of a new school year so it's probably appropriate that we talk about something like school choice. School choice you say. Crazy. I hear that school choice is so problematic that no rational person anywhere would ever consider engaging in the practice. I hear this mostly from the teachers unions. Yeah and it's interesting given the tremendous number of people in this country that send their kids not just to private schools but who choose to home school also. Yeah, no that's right. In point of fact we already have school choice. We just have it on a very limited scale and the limitation more or less, right, it breaks right along income lines, right, because people who are pretty well healed can afford to send their children to private school and here you've got either some sort of non-secular or even Catholic school. They can choose to home school their children. They've got a number of options that are open to them by virtue of their wealth. Whereas people who are working class, even lower middle class, and certainly the poor, have no options whatsoever, right, they're sending their children to the government school in the district in which they reside. Yeah and it's interesting when you say that because really when we debate school choice we're really not debating whether we should have school choice. What we're debating is whether poor people should have school choice. So for years it's been the case that if you're upper middle class or a rich person you can choose kind of with impunity what public school district you're going to be in just by choosing to live here versus there. So those people have school choice. And now there are reports of in some areas more affluent communities within a school district parents banding together and petitioning to form a new school district within the larger school district. So again you have school choice. Right, the real surprise here isn't that people angle to get the best education for the children that they can, of course they do. They really always have. The real question here, as I see it, is how far down the income scale is this privilege of school choice going to go, right, because the rich have utterly, they've always had this, right, as is the case with most privileges that we could speak of. People who are very well off enjoy a number of privileges the rest of us don't get. But when we start thinking about things like public school and how far a privilege should extend into that realm, now we've got a relatively thorny issue, right, because our knee-jerk response is to say invariably everybody should have that privilege to the extent that it's possible to grant it. And yet there are powerful interests lined up against that sort of thing happening. Yeah, and I think the argument might even be stronger than that. I guess there are a lot of people, myself included, who might argue even if private school were more expensive and even if it provided a lower quality education, it seems right that the parents should be the ultimate arbiters, ultimate arbiters of where the children go to school to ask to say that the child must go to a state-sponsored school takes this decision making out of the hands of the parents and puts it into the hands of the bureaucrats. So even if private schools were more expensive and provided worse outcomes, I'm still not convinced there's a compelling argument for public school there. Turns out, if you look at the numbers, it's actually the reverse. The private schools tend to perform as well or better and for a significantly lesser cost. Well, they kind of have to with market forces being arrayed against them and all. If they don't perform well, they simply go out of business. And there's an interesting dynamic, the difference between the incentives of the public school versus the private school. In the private school, if they don't deliver quality or they deliver the quality at too high of a price, what happens is parents go away. And so there's pressure constantly on the private school system to reduce cost, improve quality. But think about the dynamic in the public school system. In the public school system, you're actually rewarded for doing a worse job because when the students aren't hitting whatever targets they have, it's easy to turn to politicians and say, well, the problem is we're simply not spending enough money. Right. It's always a resource problem. It's never a performance problem. But I fear that I'm going to have to throw a bunch of cold water on you right now because you seem to be getting a little ahead of yourself when you say these crazy things like I don't think it should matter. Because we all know that we live in a deeply constrained world, right? The world is constrained and we have to operate within those constraints. Otherwise, we're no better than those people who declare how things should be and then just expect that it will happen. And look, the world doesn't work that way. We have to work with the constraints that are before us. And I think that means here that the best we can hope to do is maybe offer an idea or two, which will make the world less constrained, right? It's not that we're claiming that we have a perfect answer of any kind here. Surely we don't. But we probably could come up with a better answer here. And that's always my first goal, right? What's better? What's worse? And how can we move towards the one and turn our backs to the other? So what would be better here and how might we get to what's better? Yeah, that's interesting because when you talk about school choice, of course, people's thoughts immediately go to public money going to private schools and some people lose their minds about this. But the conversation doesn't have to go there. You can talk about school choice strictly within the confines of a public school system. That is, you can have school choice if you let the tax dollars follow the student and let the student choose from amongst public schools that are in his area rather than saying if you live in this particular house you must go to this particular public school. If you do that, and still we're within the confines of a public school system, if you do that, you create the same competitive incentives amongst the different public schools that exist amongst the private schools. That is, they've got to perform better and at lower cost in order to attract the tax dollars. Right, and I think this is actually bordering on the incredibly interesting, right? Because it takes the system as we find it and it doesn't introduce any new variables, no new schools, no new teachers, just the ones that are already there being supported by the public in the form, generally speaking, of their property taxes. Right, and it says something like, look, these are your options and your options can stretch further and wider than they ever have before, but these are your options, so choose wisely. Now, understand we're going to have transport problems here, right, and the arguments about which students are entitled to take which buses are these things are all going to come up later. And let's just casually, as economists, assume those problems away and deal with the one thing. And that's introducing market forces into a system which has been wholly resistant to market forces of any kind for as long as anyone can remember. And it seems to me that if we did this one simple thing, the people themselves, they all seem to know which schools are better and which are worse. Right, everybody seems to know this. Yeah, it's no real mystery here. So before you know it, right, before long, we would end up in a situation where the schools that were performing well would be turning people away and the schools that were underperforming wouldn't be able to fill their seats. And that would be indicative of a certain kind of health in a market where I come from. And I'd really like to see this sort of thing, right? And notice what we haven't done here, private schools, parochial schools, religion doesn't become an issue, we're only looking at public schools. So why on earth, if this is so simple that two idiots like us can come up with this idea in the space of nine minutes and 52 seconds, why has nobody tried this? Yeah, well, so it goes all back to incentives. There's a tremendous incentive amongst the educational bureaucracy to maintain the system as it is. Currently, everyone from the administration to the teacher's unions are not required to put their product in front of consumers who can choose to decline it. Instead, they just turn to politicians and say, we need more money, tax those people and hand it to us. I've had this conversation with a number of people in the past. And what's interesting to me is the response I get often is, yeah, but you can't do education like that. Education is a different product. We can't submit it to the vagaries of the market forces. And I point people's attention to the way we handle food for the poor. We have food stamps, right? So what happens is the government taxes, and if you're poor, it gives you food stamps and what you do with these food stamps, you go to a grocery store and you spend them. There's no restriction on what sort of grocery store you can go to. The government does not produce food itself. And you don't have to go to a government run and manage grocery store to buy your groceries. You just go to the private sector. It's a fascinating combination of public and private where the government is doing the taxing and handing out of vouchers. That's what food stamps are. And we leave it to the market to produce the product. And people just choose what the best product is and spend their money appropriately. And when you start to think of it that way, vouchers are for education very much what food stamps are for food. You start to wonder what people who believe that market forces have no place in education. You start to wonder what magic they think happens between the senior year of high school and the freshman year of college where all of a sudden market forces do have something to say about the delivery of an education, right? Because market forces are very clearly at work in the higher education market. Well, they are. And it's worth noting that higher education is consistently one of the top five or ten exports of the United States. Foreigners, we're so good at higher education that foreigners come here and spend their money to get higher education from the United States. You don't hear that happening at primary and secondary schools. And the major difference is one is directed by markets in the other one. Right. And for all of the criticisms we level at higher education in America, and there are quite a few and they are legitimate. They are legitimate. The American higher educational system is still the gold standard globally. And it's precisely because market forces prevail there. And we accept that without a whole lot of argument. Why we refuse to accept that K through 12? For everybody except those who are rich enough to involve themselves in market forces. I will never quite understand. So it's worth, we call these words a number, so it's worth stating a couple of numbers because I looked them up prior to this conversation. The average cost of public education in the United States per student, primary and secondary school, is $13,000. And that ranges from a high of over $20,000 in New York State to a low of under $7,000 per student in your home state of Utah. Now that's public education, $13,000 per student. For private education, we normally associate that with the well to do schools, but those are a small minority. The average primary and secondary education in the United States is about $10,000. So you're talking roughly around 30% less on a per student basis. Yeah, that's interesting. And with numbers like that, it would seem that this is an industry that's probably ready for some sort of unfettering. And it's just a matter of how that's going to happen, not if, but how and when. So I'll throw it to you for a last word here. Well, one of the things we haven't talked about are the teachers. And in talking to high school teachers, what I find is that generally speaking, there are very creative and dedicated bunch who feel, and this is anecdotal, but of the ones I've spoken to feel constrained by the system that they'd like to do more and try more innovative things in the classroom, but they're constrained by the very same bureaucracy on their end that's constraining the parent's choice on the parent's side. So I guess we're just going to have to take a wait and see approach, but all the places, all the pieces seem to be in place for us. Right. So that's all the time we've got this week on Words and Numbers. Be sure to come back next Wednesday at about noon Eastern time for another episode. Until then, check out all the great content at fee.org and at fee online. Until next weekend, we'll catch you later. See you next week, James.