One of the reasons for low and stagnant literacy scores in the United States[14] is the influence of prevailing education philosophies on instructional practice. In the absence of competition, public schools have not had strong incentives to base their methodologies on sound research. Instead, they have adopted unproven and sometimes even empirically discredited methods solely because these methods have fit nicely with the notions of influential education philosophers. This pattern has been well documented, particularly in the United States over the past 75 years. Under markets, by contrast, decisions are based more on results and less on ideology.

Competition not only ensures that all schools strive to improve student outcomes, but also forces them to maintain their facilities in good repair and to offer an environment conducive to learning.

Competition not only ensures that all schools strive to improve student outcomes, but also forces them to maintain their facilities in good repair and to offer an environment conducive to learning. In the United States, the level of disrepair of public school buildings is epidemic, despite funding levels far higher than better-maintained non-government facilities. There are 17,200 U.S. public schools with defective or inadequate electrical systems, 19,500 with plumbing problems, and 22,700 with inadequate or malfunctioning heating, ventilation or air-conditioning systems. All tolled, half of our public schools have at least one (but usually more than one) major building feature in less than adequate condition.[15] And all that with an average per pupil expenditure of $10,000 a year.

The benefits of competition increase in proportion to the number and variety of competitors, and hence to the number of students participating in a given education marketplace. In rural Northern India, where many families cannot afford tuition at fee-charging schools and population density is low, private schools typically have few competitors. Their greatest competitive threat comes not from other schools, but simply from the need to demonstrate that their services are worth the forgone value of their students’ labor (or parents might not send their children to school at all). That modest competitive density leads these schools to be only moderately better than their “free” public school counterparts. The situation is utterly different in densely populated Japan, where virtually all children attend for-profit tutoring schools at some point in their educational careers, and where most families can choose from dozens if not hundreds of competing service providers. These juku, as they are known in Japan, are incredibly diverse, flexible, responsive, and dynamic, and are credited for much of that nation’s strong performance on international tests of mathematics and science.[16] The most recent evidence from Chile’s national pseudo-voucher program (see the “Policies” section below) confirms the positive effects of competitive density not just on student achievement but on school efficiency as well.[17]

With that knowledge in mind, we can now return to the very first bifurcation point we struck in the Goals section, above. Since the effectiveness of markets depends on maximizing the number of students for whom schools compete, we can conclude that market reforms targeted only at poor families, or, for that matter, at any subgroup of families, will necessarily be less successful in their aims than otherwise similar reforms that allow all families to participate in the education marketplace.