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Egad! What if Education Was Left to the Free Market?

By Stephen Hicks

March 17, 2017

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Nothing can come into our minds as knowledge and nothing can become a skill except that we choose to make it so. So the real cost of education is the effort each individual has to put into it.

Higher education can be a path to a successful life. Yet many successful people did not graduate from college and many unsuccessful people have impressive degrees.

So who should go to college? And who should pay for it?

Let’s start by imagining an average student who wants to go to college but has no money and compare that student’s options in socialized and free-market education systems.

In a socialized system, the government pays for it. The student eventually graduates, goes to work, and starts to pay taxes.

In a free-market system, the student does some combination of working, receiving gifts or scholarships, and borrowing money from friends, family, and banks. The student eventually graduates, goes to work, and starts to pay back the loans.

So what’s the difference?

In both systems, the student pays the education’s cost — in the socialized system via taxes for the rest of his or her working life, and in the free-market system through loan payments via money earned from work.

But there are at least five differences, all of which are morally charged:

* Venture capitalism: Economically, education is about developing human capital. Who is more likely to judge better which potential students will be a good investment — the socialized system’s government officials, or the free-market’s family members, private loan officers, and the students themselves? We should also ask, under each system, how many more or fewer people will attend college and how many more or fewer will succeed there?

Here we need to make some delicate calculations about the types of student who go to college. One type is this: Those who will not go to college if they have to work and save upfront for it or ask for money from their families or get bank loans themselves — but who would have done better in life had they gone to college. Another type is this: Those who will go to college because it’s government-paid and “free” but then waste their time and everybody’s money — and who would have done better had they gone directly into the workforce. In each system, are we likely to get more of the former type of student or the latter?

* Overhead and accountability: Will a government’s or a private bank’s administration likely be more efficient? Which system is more likely develop bloated bureaucracies that skim off a large proportion of the monies to cover overhead costs? And which will be more likely to monitor the long-term effectiveness of the education-monies invested and be responsive to the data?

Will colleges and universities deliver better education if their funding depends upon satisfying students who are their paying customers — or if their funding comes from governments and so depends upon satisfying criteria established by government officials?

* Education delivery: Will colleges and universities deliver better education if their funding depends upon satisfying students who are their paying customers — or if their funding comes from governments and so depends upon satisfying criteria established by government officials?

Answering those questions requires a lot of hard economic and social-science work. All of that work is morally charged because if we are supposed to be social engineers of education — as most of our public officials see themselves — and we are creating public policies that affect hundreds of millions of people and spend billions of their dollars, then our fiduciary responsibility requires that we do that hard work.

Yet the sad truth is that much education-funding policy is decided by those who don’t have a clue about how to answer the above questions. And that means they are deciding by other methods, methods take us directly into moral philosophy.

* Moral responsibility for education. By the time you are an adult: Are you are responsible for making your way through life, including your post-childhood education? Or: Are we are all collectively responsible for each others’ important life needs and goals?

Many discussions regarding education funding are tied directly to questions about what “society” needs. Do we need more college-educated humanists or more electronic technicians — or more art historians and economists — or more nursing assistants or travel agents or videographers?

If we think that is a society-as-a-whole decision, then we will expect our governmental representatives to craft policies to encourage young people to go into certain professions and to discourage them from pursuing others. We will also expect them to divert society’s resources to the government-preferred educational paths and away from the unapproved-of paths.

Or is it my judgment call whether I become a physicist, a deep-sea explosives expert, or open a convenience store? If we think that is an individual decision, then we will encourage individuals to pursue their own chosen paths, depending upon their dreams and their judgment of the employment market. We will also expect them to find a way to pay for it.

Which brings us to the fifth ethically-charged element:

* Moral methods of payment. The private methods of funding education — working, gifts, scholarships, bank loans — are all voluntary. By contrast, government funding uses compulsion.

Suppose that Jerome is studying philosophy at a university in New England. (Good choice, Jerome!) And suppose that Juanita earns $100,000 per year from her landscaping business in California. If Jerome’s $25,000 per year education is paid for by the government and Juanita is taxed at 25%, then we are in principle and in fact forcing Juanita to pay for Jerome’s education.

Making the compulsion element explicit sometimes brings out a wistful sadness in people — Well, I wish we didn’t have to use government compulsion to fund higher education, but it’s the only realistic way. In this case, the thinking is, the end does justify the means.

But is compulsion really the only way — or even the best way?

Maybe we think that private financial institutions won’t loan poor students the money. But why not? If education really is a good investment, then the data will show this — and young people who are serious about higher education should be able to convince loan officers of their potential and mettle.

Or maybe we think that a wealthy society won’t generate enough philanthropic dollars to fund scholarships and non-profit institutions committed to higher education. There are only tens of thousands of them, after all.

Or maybe we think that a wealthy society won’t generate enough philanthropic dollars to fund scholarships and non-profit institutions committed to higher education. There are only tens of thousands of them, after all.

Or maybe we think that an entrepreneurial society can’t find ways to lower the costs of quality education, expand the number of students on athletic scholarships (A sound mind in a sound body is one noble educational goal), develop more combined work-study options, internships, apprenticeships, and more.

Or perhaps we secretly don’t think much about our college-aged kids — we don’t really believe that they have what it takes to find a way to make college work.

But actually look at them: millions of young people have the energy and resourcefulness to open their own businesses — to start rock bands and take them on the road — to join the military and learn to use weapons that can kill people — and to find a way to scrounge up enough funds to travel through Asia or South America for a few years.

Which brings directly to the cost issue. If the free market reigned, some people worry, then only the children of the rich would get educated, perpetuating a class system. They worry that education will become even more expensive.

Fortunately, they are wrong.

Schooling has become more expensive, but consider the cost of the following awesome education resources:

For almost all of us, the cost of information has declined dramatically. So if one doesn’t know much about history, biology, or the French one took, that’s a choice.

Of course one must have internet access to get all that free stuff, so we should ask how much the internet costs and what it is worth.

A fun question asks: Would you give up the internet for the rest of your life for one million dollars? No more email, no social media, no streaming video, no online banking, no unending series of cat photos, and so on. Most people say Of course not! Or perhaps you are unsure and think it is a close call to make. In either case, the internet is worth a huge amount to you.

Now ask: How much do you pay for internet access? Suppose you pay $1,000 per year — several hundred dollars directly for service in your home and a few hundred indirectly for Wi-Fi at coffee shops and other public spaces. If you live 80 years, then your internet access costs you $80,000.

The difference between what you pay and what it’s worth to you is enormous: over $900,000 for most of us.

And that makes sense if we start to tally the costs of education without the internet: how much for a print set of the Encyclopedia Britannica, how much for a full library of classic books, how much for a trip to Europe to visit the Louvre, how much for tutoring in mathematics and foreign languages, and so much more.

All of the technology-driven cost reductions are impressive and wonderful — and helpful in focusing our attention on where the real costs of education are.

Often drilled into us is an identification of education with schooling. But while education can occur in a school, education is always something we do for ourselves, whether in school or not. Nothing can come into our minds as knowledge and nothing can become a skill except that we choose to make it so.

So the real cost of education is the effort each individual has to put into it. That effort comes naturally to kids, as they are born curious, exploratory, and experimental. And as they develop, children are excited by the new powers and abilities their young bodies and minds acquire, and that excitement reinforces their natural commitment to education.

What, then, is the value-added of schooling?

At its best, the apparatus of schools — teachers, administrators, and infrastructure — are enablers. As a teacher, for example, you can be a knowledge resource, a source of motivation, and a guide. But while you can lead a child to wonders, you can’t make her think. She has to do that herself. You can give a dynamic lecture, but the student has to listen actively and process it. You can fill your house with books, but your child has to open them. You can give your son a guitar, but he has to pick it up and play with it. You can build a jungle gym, but the kids have to choose to use it.

At their worst, however, schools can be disablers, and this may be their greatest cost.

Consider how, in much of traditional schooling, education is presented to the young. They are told: you must go to school. No choice. And you must work on things that others have decided. The teacher is the boss — do what she says.

Further: everyone in the class will do that same thing. They will do it at the same time, and they will do it in the same way. The correct answers are already known, and they are found at the back of the book. Finally, everyone will be examined at the same time and in the same way. Do not fail, for that is bad and a source of shame.

Is it any surprise that so many children who start kindergarten full of excitement a few years later actively dislike school? Is anything more de-motivating than the sense that one is merely following and repeating? Is anything more dehumanizing than being ordered around and made to do things in conformist fashion?

So: to the financial costs of schooling we must add its social and psychological costs. Perhaps the highest costs of traditional education are all of the obstacles we put in the way of children. In order to learn, children often have to get past the enforced tedium and shake themselves out of what they experience as a zombie-like state of being.

Contrast one popular but often maligned learning system — the video game. Why can young people (and adults) spend hours absorbed in video games? Partly it is the variety of worlds we get to explore. Partly it is that we can choose which game to play and which goals to pursue. Partly it is the sense of growth and development — memorizing characters and their abilities, directions, problem-solving, exploration, experiment, failure, dealing with frustration, and improved eye-brain, eye-hand, and ear-hand coordination. Partly it is that we are in control and can repeat a section as many times as we need to in order to succeed. And when we do succeed, we get the rewarding sense of mastery.

We live in an era where the free market can, and is, dramatically reducing the cost of tailored education, which is the best there is. And the free market does not rob Peter’s income to pay for Paul’s education.

Let us therefore celebrate innovators such as Sugata Mitra and his experiments in child-driven education. In several poor villages Mitra installed a computer with internet access in a wall — and walked away. Children eventually discovered it and started playing with it, despite having no computer knowledge or foreign language skills. The results from the unsupervised “Hole in the Wall” are impressive.

We live in an era where the free market can, and is, dramatically reducing the cost of tailored education, which is the best there is. And the free market does not rob Peter’s income to pay for Paul’s education.

We can all agree with Ann Landers’s pithy line: “If you think education is expensive, try ignorance.” But let’s also consider more actively the unsettling possibility that mis-education is even more expensive — and that many mainstream schooling methods undermine education.

 

 

 

This essay was previously published as two essays in Every Joe under the titles Free College Tuition Is a Moral Issue and Is Education Really Too Expensive?

 

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