Feeding the Beast

Public education financing is a classic Faustian bargain. In return for allowing government's taxation authority to spread the cost of educating our children across the entire population we have largely given up the right to purchase the education of our choosing. The consequence of that deal is an unimaginably large and unresponsive gomonpoly that not only ignores its customers but has the temerity to make it illegal not to consume its services (unless you're wealthy enough to pay for both it and its replacement).

Without this deal with the devil, you could pay for your child's education and be relieved of the tax burden that spreads the cost while enabling the monster's existence. I'm not convinced most people would sign up for such a system but imagine for a moment that they did. This would restore the ability to choose your service provider but our society would be left with the one intractable problem that started the whole push for public education to begin with, what to do with the kids without the resources (parental resources) to pay their own way?

As a society we've made a clear choice that it's unacceptable to leave kids behind. Even if you accept the immorality of such a proposition you certainly wouldn't want your communities to be overrun by a subculture with zero education and no means to provide for themselves as adults. Vouchers attempt to address this by leaving the financing system in place while creating a group of people who approximate those wealthy folks that can purchase what they want because they can afford it. Vouchers, as appealing as they are, don't address the problem. They put a band-aid on it. Public education's financing scheme is the root of the tree and as long as parental control is coupled to public financing, parental control will be insignificant.

It seems an insoluble problem, to maintain public financing for equity and cost sharing, while at the same time breaking the public (government) control over the system. But is it? Governments have a legitimate interest in ensuring that all citizens have access to suitable education but they have no more legitimate interest in running the system than they have with running the local Beauty Salon that they license. The problem to be solved is how to maintain our societal interests in equity and cost sharing (a financing issue) while returning control to the consumers.

What makes capitalism work is the tension between profit and value. Companies that maximize profit, at the expense of value, don't survive. Companies that maximize value at the expense of profit, don't survive. Survival goes to those organizations that navigate their offerings to a sweet spot; enough profit to satisfy stockholders (with increasing equity or dividends or both), and enough value to satisfy customers (with high quality products that meet their needs). Public education financing today is not concerned with survival. Profitless, it grows by coercion of a few elites. Valueless, it only satisfies the elites, not the consumers.

Here's a way to solve it. Think of an ideal future point. Every consumer (parent with children in the system) has enough school cash to buy the service that meets their value proposition. Every producer must struggle to find that sweet spot (they are allowed to thrive or die). Government uses their power of taxation and regulation to ensure that the cost is spread and minimal standards are met (products are safe and perform as advertised).

In this future state all schools are private entities. They can be non-profit or profit making. Profits have no constraints. They can be used in any combination to increase equity stakes (by growing), or be distributed to share holders (as dividends). The taxing authority converts school tax revenue to school cash. School cash can only be spent on a school. Everyone who pays taxes gets school cash. There would be a range of value propositions for consumers as well as the tax paying non-consumer and there would be a range of value propositions from producers. Let a free market sort out the sweet spots and let the shareholders manage their companies.

Parents, as consumers, spend their school cash at the schools where they place their kids. Everybody else is an investor, spending their school cash to purchase a stake in a school. The 'investors' have no restrictions on which school they invest in. For a school to survive it would have to attract enough parental consumers and stake holder investors to be attractive for every round of investing. A viable school would have to satisfy both the parental expectations on education, and the investment expectations of their shareholders. Neither the parents nor the investors have enough school cash (alone) to make a school viable. Investors would have an interest in the educational value because without that value there wouldn't be enough parental consumers to make the investment work. Parents would have an interest in the investment value because without that value there wouldn't be enough investors to meet the additional revenue requirements.

Would this work?

How could you get there from here?