Milton Friedman, who achieved most of his fame in the 1980s with the television series Free to Choose, first proposed vouchers for education in the 1950s. Fundamentally, the idea was for the government to give parents a voucher equal to the amount the government spends per child in government schools to pay for their children’s tuition in private schools. Therefore, vouchers are as much tax-funded as education provided by the government, but Friedman believed that they would expand freedom of choice and improve schools and educational outcomes.
Government Intervention
Leaving homeschooling aside, governments often impose mandatory curricula and schooling up to certain requirements, forcing parents to send their children to schools and preventing free choice of curricula. Implementing vouchers promotes further government intervention by adding a new type of funding and a new intermediary, which means further intrusion of government arbitrage in private education. And with the strongest hand to negotiate, government bureaucracies are once again entrusted with the administration of vouchers.
Although not all schools might be required to accept vouchers, all taxpayers are required to pay for them. And as in government-provided education, financing cost is externalized especially on parents who do not use vouchers for the benefit of those who do, in addition to the differences between voucher users and non-users in terms of the amount of taxes they pay.
While government regulation extends further into the private sector through vouchers, additional requirements are placed on schools and parents interested in vouchers. The fewer conditions that are sufficient to receive vouchers, both for parents and schools, the more demand for vouchers will be incentivized, with a corresponding and growing need for schools to accept them. Additionally, the legitimization of government intervention in the education market is reinforced, as voucher users and schools would see in this intervention their own interests at stake to continue to count on government funding.
Market Distortions
As voucher use increases, incentives are created for schools to seek greater profit by increasing their prices or including new services that might not have been profitable if they had been made available to a more independent clientele, without the expected government funding through vouchers. But even if schools fail to gain government complicity in raising their prices to ensure that they continue to receive the corresponding amount through vouchers, they can always resort to other practices, such as requiring new activities and adding additional payments, or lowering operating costs as well.
The parents that use vouchers are exempted from having to balance, in whole or in part, educational expenses with other household expenses, encouraging less care for education and less economic calculation in the financing of children’s activities and the family as a whole. And since schools can pressure the government to increase voucher funding, or expect users to pay the difference in price increases, the new prices can easily exceed what they might otherwise have gone up if non-users were not having to share schools with users. Yet, the incentive to use vouchers in the same schools—beyond the price increase or quality decrease—will still exist to avoid even more expense or inconvenience related to any other educational decision, such as switching schools, thus delaying and distorting the market coordination process to punish or reward schools for their service.
Moreover, by relying on the voucher for access to a given school, voucher users are less likely to punish the school for its service than non-users, since paying an additional amount at another school or sending children to a government school has its opportunity costs as well. Likewise, with an increasing share of revenues through vouchers, the free market coordination process driven by an independent clientele—which promotes better education—is further hampered, as incentives and chances to punish any quality deterioration diminish. And the more parents use vouchers instead of sending their children to government schools, the more private schools will accept students they would not otherwise accept. Hence, with an increasing number of voucher users, the incentives to produce better education for non-users are distorted and diminish in favor of the users.
Ultimately, the more relevant the voucher-funded student population becomes, the less responsive the education market will be to customers who pay based on their perceived risk through their income, and more to government-funded customers, who will tend to care less about the quality of education, since, at the very least, they are not paying twice for their children’s education. In the end, pleasing government bureaucracies and voucher users will be comparatively more important than pleasing non-users, further distorting free market practices in the education market and, eventually, bringing it closer to one financed entirely through taxation.
Free Market and Education
Typically, government intervention in the education market is based on the supposed goal of achieving some meaningful equality among people. However, this actually goes against the natural individuality and inequality among people, i.e., against the existence of innate and different qualities of all kinds, from which, in fact, the very division of labor of the free market arises. Thus, government regulation in the education market prevents the natural development of the true educational spirit of a free market economy, which is none other than educational freedom to meet the demands—both changing and permanent—of the free market. In contrast, through compulsory schooling and standards, education is not only less free, but of poorer quality than it would be in a free system.
Similarly, beyond lower quality, the government-regulated education system raises the costs of education and leads to a systematic waste of resources in the education market, which in a free system would necessarily be better utilized. Besides, educational freedom would promote a greater emergence of geniuses and innovators, who are usually those that break the rules established by the government-regulated system, and whose contributions could help raise the quality of life of many, many more people than the current system allows. As Ludwig von Mises once expressed:
It is often asserted that the poor man’s failure in the competition of the market is caused by his lack of education. Equality of opportunity, it is said, could be provided only by making education at every level accessible to all. There prevails today the tendency to reduce all differences among various peoples to their education and to deny the existence of inborn inequalities in intellect, will power, and character. It is not generally realized that education can never be more than indoctrination with theories and ideas already developed. Education, whatever benefits it may confer, is transmission of traditional doctrines and valuations... It produces imitation and routine, not improvement and progress. Innovators and creative geniuses cannot be reared in schools. They are precisely the men who defy what the school has taught them.
What Must Be Done
Mises’ great pupil, Murray Rothbard, stressed that Friedmanites even hail vouchers as a good in itself. But then, as Rothbard pointed out, why not have vouchers for housing, food, clothing, and more? And he went further:
The result, then, of vouchers or tax credits will be, in the name of expanding parental choice, to destroy the current private school system and to bring it under total governmental control. Parents who want to send their kids to really private schools, schools which may be Politically Incorrect in many ways, will then have to pay tuition to a third set of genuinely private schools, after paying taxes to support two sets of schools, the public and the Officially Approved Private.
In sum, it is a mistake to fight for vouchers as a more free-market-friendly option instead of directing all efforts to increasingly, and ultimately completely, getting the government out of the education market. But are we left with no transitional demands on education? Rothbard answered:
Sure we do. In addition to abolishing compulsory schooling… we can battle against every school bond issue, every expansion of public-school budgets, and in favor of all attempts to cut and restrict them, and within those budgets to slash away at federal and state budgets, and to try to decentralize and localize as much as possible. Is that enough to do?
However, the more the government takes on the responsibilities of families, the smaller the benefits for children and the greater the benefits for government officials and their allies outside the government, who are eager to maintain their privileges or hinder competition. Consequently, in order to defend the institution of the family as the fundamental source of education and responsible contracting for educational services, the supreme authority of parents and their full freedom to provide for the welfare and education of their children must be upheld. And yet, only when the majority of parents oppose all government intervention in the education market, will children’s education be protected in the best possible way. In the meantime, politics will continue to pit one against the other through the ultimate force of government over what should be the exclusive domain of parents and the free market: the education of children.
