The Power of Choice: Part I
If you genuinely want to spur educational improvement in Nevada, end stagnation-ensuring monopolies
- Thursday, April 12, 2012
Nothing imposes accountability upon producers like free and open competition for consumers.
This is true across the board — whether it's grocers or automobile manufacturers or cell-phone providers. When consumers are permitted to select among different offerings at varying degrees of quality and different price levels, least-efficient producers are bypassed as purchasers choose providers whose products offer them the greatest personal value.
Thus, to win customers, entrepreneurs in competitive markets are constantly innovating — bringing forth new products or discovering new ways to offer existing products more efficiently. Entrepreneurs who successfully innovate and organize resources efficiently catapult themselves to the forefront of the market, leaving less efficient producers behind. As a result, we frequently see innovative new companies displacing older companies that have stopped innovating as quickly — Japanese automakers overtaking American automakers, Target capturing market share once held by K-Mart, Google cutting into a market once dominated by Yahoo, and so on.
In all of these cases, consumers have benefitted. Over the long haul, open competition results in higher-quality products at lower prices. And since everyone is ultimately a consumer, an open, dynamic economy improves the lives of everyone.
And yet, in some of the most important areas of life, Nevadans are being deprived of their ability to choose among providers.
Most parents, for instance, have no consumer choice as to where their children must go for school. Yes, parents who are wealthy enough to afford private-school tuition can benefit from the innovation and evolution in product quality that competition among private-education providers yields. But parents who cannot afford access to this market have no choice but to turn their children over to a government-run education monopoly.
Monopolies protected by government rarely innovate. Facing no threat of losing customers to more innovative providers, such monopolies avoid the accountability that consumers would otherwise impose. As a result, the monopoly's product quality stagnates, or even degenerates.
This is exactly what has happened within the education monopoly. Parents, as education consumers, are forced, via their tax dollars, to purchase education services from the monopoly — even if they'd prefer to purchase from a more innovative provider.
And, in Nevada, parents pay dearly.
According to the latest data from the U.S. Department of Education, Nevada taxpayers spend an average of $10,377 per child to purchase education services from the regional monopolies we call "school districts." That's even more than taxpayers in most of our neighboring states spend on their monopoly school districts.
In fact, Nevada's monopoly school districts today force Silver State taxpayers to pay nearly triple the per-pupil amount, in inflation-adjusted dollars, that they charged 50 years ago. And this is while, throughout the competitive economy, the inflation-adjusted prices of goods have fallen.
Yet, as the costs levied on Nevadans by the state's monopoly school districts have gone up, the quality of their product has gone down. Graduation rates have fallen precipitously and test scores are among the nation's worst.
It's exactly the result one would expect from a monopoly provider that government protects from competition.
Very few families can afford to enter the private-education marketplace after they've already had to finance their local government-monopoly provider through taxes. Those who are fortunate enough to access this marketplace, however, can tell a much different story. Private-school students nationwide score, on average, two grade levels higher on standardized math and reading tests than their age-peers in government-run schools. They also graduate far more frequently and have a higher likelihood of attending college.
Yet, in most cases, private-school tuition is less expensive than the de facto prices that monopoly school districts are charging taxpayers: In 2007-08, 84 percent of private schools nationwide charged less than $10,000 for annual tuition.
The merits of competition — both educationally and economically — are clear. And policymakers across the country are learning the lesson: If you want quality in your public schools, you need to re-incorporate competition and consumer choice into your educational system.
Last year, Indiana launched the nation's largest first-year school-choice program, giving many parents real educational options. And just this week, lawmakers in Louisiana passed legislation to create a statewide school-choice program.
When Brian Sandoval campaigned for the governorship of Nevada, he promised choice to all the parents and children who've languished under the state's monopoly education structure.
His eminently reasonable proposals, however, met strident resistance from lawmakers whose campaigns are funded by the monopoly establishment.
For the sake of every Nevada child, here's hoping the governor has more success in 2013.
Geoffrey Lawrence is deputy policy director at the Nevada Policy Research Institute.