Before concluding that parental choice in education is the best improvement to the
system, we should at least consider one alternative: that simply devoting more resources
to traditional public schools will dramatically improve their performance. That question
has been conclusively answered. Indeed, now even mainstream economists accept that simply
spending more money on traditional government schools will not significantly improve
education. Edward Gramlich, the Dean of the Public Policy School at the University of
Michigan, and a former Acting Director of the Congressional Budget Office, has long been
concerned about lagging national investment in human and physical capital. He notes in his
1992 Brookings Distinguished Lecture on National Priorities:
Two types of public consumption seem especially in need of attention—education and
health care. In both cases, aggregate measures of performance are lagging badly. In both
cases, this lag is in the face of big increases devoted to the problem.
Take first education. There John Chubb and Eric Hanushek make a powerful argument that
further resources devoted to the problem without structural reform will simply make the
nation’s schools more expensive, not better. Their macro argument is that over the
last 30 years real expenditures per pupil have tripled but most measures of test
performance have dropped sharply. Their micro argument is that most careful research
studies have simply not found any relationship between resource inputs and output measures
such as achievement test scores. Presumably the missing ingredient here is some form of
performance incentive, but even this is not very clear.45
Gramlich confirms what free-market advocates have been saying for some time: simply
putting money into the current system has not worked in the past and will not in the
future.46 More recent work, including a comprehensive analysis of Michigan
schools by Dr. Allen, again finds a weak relationship between increased expenditures and
improved school performance.47
Gramlich, writing in 1992, was not yet convinced performance incentives were the
answer. Today, the case for performance incentives is clear and compelling. Indeed, more
aggressive reformers go well beyond the parental choice plan proposed herein. They argue
that the government school system has completely outlived its usefulness and should be
totally replaced. Lewis J. Perelman, in School’s Out, argues that choice is
essential, but does not go far enough:
However, the need not merely for "choice" but for commercialization of
education has been overlooked by most would-be reformers. We need commercial choice and
competition in schools first to goad technological innovation—the profit motive is
essential to reward the creation and provision of productive technologies.48
While Perelman argues for outright commercialization, Dr. Allen argues for a new
framework of public ownership of schools, in which competition on price and quality would
drive the system:
We advocate provisions by which all K through 12 education will be non-governmentally
operated. We propose to eliminate all jurisdictional barriers to school selection. No
single structure of educational governance would be imposed by the State, even as the
State preserves its commitment to equitable funding for Michigan students. Schools will be
owned by individual shareholders, who will operate each school acting through their
respective boards of directors.49
Thus, we need to change the incentives if we hope to change the outcome.
