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Fellows with Friedman

Decentralizing Schools

Eric Hanushek

Eric Hanushek explains the issues with the current education system. According to him, the United States has been running a national class-size experiment for 40 years:

"Between 1960 and 2000, the pupil-teacher ratio fell by more than a third. Second, there has also been an expansion in the conventional measures of teacher quality—graduate education and experience. The percentage of teachers with a master’s degree or higher doubled during this period, with the typical teacher now having an advanced degree. Experience also reached new highs.

"The monopoly supplier—the education system—has done just what monopolists do: Create too little and charge too much. These changes add up to a dramatic increase in spending on schools. Teacher education and experience are prime determinants of teacher salaries, and the pupil-teacher ratio determines how many students the wages are spread. Thus, real spending per pupil in schools was 240 percent higher in 2000 than in 1960. After adjusting for inflation, we had truly dramatic increases in our school spending—increases that appear to exceed public perceptions by a wide margin."

But despite high spending, performance has been flat. School resources more than tripled but with no discernible effect on performance. To fix the system, introducing competition in schools is needed:

"The discussion of school choice stimulated by [Milton Friedman’s book] Capitalism and Freedom has grown and has penetrated the broad public. Most parents and citizens now believe that more choice is desirable. . . . Giving parents and policy makers better information about the shortcomings of their schools offers the possibility of breaking the schools loose [from the school establishment’s stranglehold]."

Although Hanushek does not believe that simple accountability will work without more excellent school choice, he also does not think that we will quickly arrive at much greater choice without strong accountability.

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Russ Roberts

Russ Roberts agrees that competition is powerful: “When you have alternatives, it forces people to treat you better than they otherwise would, as a customer, as a worker, in business, in education.” For that reason, he believes that competition is why suburban public schools outperform urban public schools: “Suburban public schools have to keep the parents happier because of the competition from private schools.” In an affluent suburban neighborhood, you get excellent public schools, partly because the parents are rich enough to send their kids to private schools if the public schools perform poorly. In other districts where parents are poorer, the private school alternative is not much of a threat.

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Terry Moe

Terry Moe states that how school choice programs are designed is critical. While we need the school choice that voucher programs would introduce, we also need to make certain such voucher programs are properly structured: “A voucher system would allow children and money to flow from the public to private schools, creating a more decentralized system in which teachers’ unions would have less power and control.”

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