Markets work, even for those in poverty

Patrick Gibbons

Contrary to popular opinion, Nevada public education has not been devastated by budget cuts. K-12 schools still received more money this biennium than the last, while higher education has as much money today as in the booming 2005-07 biennium.

Instead of focusing on how much we spend, we should focus on spending resources more effectively by adopting market-oriented reforms. Of course, progressives are still concerned that markets don't work to help those in need.

Elliott Parker and Maureen Kilkenny, two economics professors at the University of Nevada, Reno, recently stated that "markets can do nothing for people with nothing." To these two, poverty excludes people from participating and succeeding in the free market. This is why, they argue, we need taxation to pay for government services like public education.

The poorest nations in Africa and Asia are the perfect places to test their theory. If the Parker-Kilkenny thesis is true, we should observe markets failing the world's poorest people. Fortunately for the poor, the UNR profs are dead wrong — free markets do a great job helping the poor better themselves.

Dr. James Tooley is the author of The Beautiful Tree: A Personal Journey Into How the World's Poorest People are Educating Themselves. A professor at the University of Newcastle in England, Dr. Tooley visited some of the world's poorest countries and made a discovery that stunned him: The world's poorest people are setting up their own private schools, some charging tuitions as low as $1 a week. Not only are the world's poorest parents sending their kids to private schools, but, Dr. Tooley discovered, these private schools regularly outperform the better-funded, "free" public schools.

Tooley discovered the same phenomenon among the poor of the world's largest democracy, India. Even within that long-standing democracy — with its enduring focus on social justice — government public schools fail to provide quality education to the poor. Yet, private schools for the poor succeed.

In Nevada, as in the Third World, government schools are failing. Only 42 percent of the state's low-income fourth-grade students can read at grade level, according to the National Assessment of Educational Progress. The story is similar all across the U.S. Lacking the real-world incentives that naturally arise in private-sector markets, central bureaucracies ration public-school resources from above and micromanage schools and teachers. Because parents have no say in where and how and by whom their child will be educated, the school systems remain unaccountable.

Public schools — wherever they exist — underperform when insulated from the concerns of parents. Yet public education can improve if we stop defending the status quo and embrace market-oriented reforms that empower parents.

Vouchers, tax credits, charter schools, virtual schools, open enrollment and empowerment schools (school decentralization) can all have a major impact on the quality of education.

We merely need the political will to change.

Patrick R. Gibbons is an education policy analyst at the Nevada Policy Research Institute. For more visit