Separation of School and State

Privatization and Educational Choice, by Myron Lieberman, New York: St. Martin's Press, 372 pages, $35.00/$12.95 paper

The Berlin Wall is down, East Bloc politicos avoid the dread C-word, Hungarian reformers even talk behind closed doors of a free market in currency. And in the United States? We can barely muster a fundamental questioning of a vast socialized enterprise that will directly affect nearly every person in the population and is the subject of widespread popular complaint and hand wringing in the highest circles. The schools.

Per student, governments have more than doubled expenditures on public education in the last 30 years. Not that this has improved the product or even maintained quality. Instead, test scores continue to decline, campus crime is a nagging problem, the dropout rate inches up, and teachers increasingly go out on strike.

With a record like that, and the public policy experience of the '80s, you'd think the word privatization would be on a lot of lips. Instead, the captains of industry, dismayed by the declining smarts of the labor force, are into business-and-school "partnerships." Citizen activists, intent on more parental say, are trying to take over school boards. And in a few but increasing number of cases, reformers are achieving a modicum of school choice within the system.

Myron Lieberman, in Privatization and Educational Choice, has the temerity to suggest why none of these hot tickets will achieve its promised improvements on any scale that matters. They all fail to challenge the basic structure of the educational system: who makes decisions; how they are made; who benefits and who loses, and in what proportion. "My view," he writes in the opening pages of his book, "is that…the only ways to improve American education are to (1) foster private schools that compete with public schools and among themselves and/or (2) foster for-profit competition among service providers within the public school system."

Lieberman has two powerful things going for his analysis. First, he knows the system inside and out, having been a consultant to education agencies at all levels of government, negotiated school district contracts with teachers' unions in six states, and written several previous books on the subject of education, along the way actually changing his mind because of the evidence. And second, Lieberman deploys the insights of the public choice school of economics.

He can thus be quite specific about the multitude of ways in which the system frustrates efficient, consumer-oriented delivery of education services. (How about state laws mandating that at least 55 percent of the school budget be spent on teachers' salaries? How about union contracts that prohibit teachers from meeting with parents after school hours?)

And he can put his finger on why this is the outcome of the system. At the local level, decisions are ultimately governed by a politically elected or appointed school board that ideally is made up of public-spirited citizens but in reality is made up of people who seek the support they need to obtain or remain in office—in the classic public choice situation of concentrated benefits (to teachers and support personnel) and diffuse costs (borne by taxpayers and parents). And although local decision making is also much determined by state laws, and nationally more than half of public school revenues come from state governments, the public choice dynamics are the same: Elected officials tend to act in the interest of the vocal, concentrated minority, often to the detriment of the diffuse majority.

Unfortunately, Lieberman's attempted pro and con analysis of contracting out and vouchers is flawed. Among the various ways to "privatize" that he lists, he sees these as the main alternatives for achieving a market-oriented, consumer-driven mode of decision making.

Not taking public choice insights to heart when it comes to solutions, Lieberman starts off on the wrong foot with an overbroad definition of privatization that even includes tax exemptions for nonprofit schools. And, like most privatization advocates, he emphasizes contracting out and vouchers. But these are not privatization either. If a government, instead of using its own employees, purchases education services from independent contractors, this does not move education into the private sector. If a government hands out vouchers that parents can use to purchase education at the school of their choice, this does not move education into the private sector.

Public choice analysis is not only a powerful tool for explaining the failures of government activities. It is also a powerful tool of prediction. It tells us that if purchasing decisions will be made by politically driven bodies (contracting out) or spending decisions will be made in the political arena (vouchers), we are not going to achieve the virtues of the marketplace: cost consciousness, innovation, diversity, customer satisfaction, efficiency.

The scandals, overt and subtle, that plague the government's contracting out of weapons production should temper Lieberman's sanguine assessment of for-profit contractors' incentives to operate efficiently. And years of experience with federal grants and loans to college students should give us a good picture of how the political dynamic would operate to continually increase the amount of the voucher benefit and, in tandem, suppliers' "costs," with government becoming ever more involved in the details of what the provider and the "customer" may and may not do.

True, under Lieberman's "privatizations," the alliance of concentrated beneficiaries would shift and education would likely improve some. But the bottom line is that the system would still be politically driven and rife with the problems that entails.

Currently popular education reforms are probably as useful as Mikhail Gorbachev's early attempt to get the Soviet economy moving—restricting the supply of vodka and exhorting bureaucrats to be more efficient. The changes analyzed by Lieberman are better, about on a par with Gorbachev's late-'80s moves to imitate the market without actually getting down to private-property basics. We await, and desperately need, a popular, persuasive proposal for a truly radical restructuring of our socialized education system. What it would mean in practice to get government out of the business of providing, of funding, of regulating, and, yes, of mandating education—what the education industry would look like, what social arrangements people might develop to assist with the education of the poor, what historical precedents could be drawn on—this is an area ripe for exploration by intellectual entrepreneurs.

Critics will say privatization isn't politically feasible. Even contracting out and vouchers face an uphill battle against the beneficiaries of the status quo. But as Lieberman notes, in one of the gems to be found in this not very well written book, people's attitudes toward government versus private activity can change. "Religious history provides an illustration of the possibility," he observes. "In some countries religion was formerly a state affair.…Today, however, religion has been left to individual decision and support in many of these countries. Although important differences still exist on the matter, the American people as a whole clearly support the privatization of religion; this support is frequently expressed as support for 'separation of church and state.' In terms of our categories of privatization, the separation of church and state is an example of load shedding—that is, government withdrawal of support as well as provision of service."

The idea of religious freedom as an instance of "load shedding" (can't proponents of true privatization come up with a better name than that?) may strike one as humorous. But it is also insightful and could come in handy in attempting to convince the American public that nothing short of separation of school and state will really improve our children's educational prospects.

Marty Zupan is vice president of professional programs at the Institute for Humane Studies.