Public option? How about a private option?

The Democrats’ new-found love of competition should be applied to ed-reform

As national health care reform passes into Schrödingerian un-death (a quantum-pundit state of simultaneously being both perma-killed and on its way to certain victory), it is tempting to wallow in self-defeating cynicism and bemoan the eternal incompetence of the left wing. After their latest botching of the political process, it is clear that Democrats should be demoted from a “political party” to something a little more their league, like a “political intramural team” (with matches every other Thursday so long as Chad doesn’t screw up the scheduling again). For long-time supporters of health insurance mandates (myself included), it is difficult to summon the will to do anything but face-palm the remainder of 2010 away and wait for the inevitable Republican take-over of Congress. At least then we’ll have the opportunity to blame government gridlock on something real, like an irreconcilable partisan split between our executive and legislative branches.

However disappointing the health care reform debate was, there was, like a diamond stuck in a sea of pig effluent, one revelation that I found inspiring. I would like to take a moment and reflect upon it.

Liberals love competition. Their all-consuming passion in life is to spur markets to greater competition. All throughout the debate they just couldn’t stop talking about how important the public option was, how it was the heart of health care reform, how there could be no competition and improvement in health insurance markets without it. Even when the Congressional Budget Office and several health care experts (like our own Jon Gruber) told them that health insurance markets were already largely competitive and that a public option would have minimal impact, they still clamored for it. They love free-market competition that much.

Of course, some have concluded that the perseverance of liberal support for the public option in the face of expert indifference was not due to an undying love of competition, but instead was the product of ulterior motives. As this cynical line of thinking goes, liberals were using the “competition” argument as merely a convenient cover for their less defensible belief in the superiority of a state-controlled economy, and that in reality, they couldn’t care less about competition — they simply didn’t trust private markets to provide services for consumers. After all, if Democrats were true believers in competition, why would they today be killing the D.C. Opportunity Scholarship Program, a successful school choice program set up to rescue the downtrodden underclass of Washington, D.C.?

But let’s take the Democrats at face value for a moment and assume they really have had an epiphany in their economic thinking. Why shouldn’t education be the first policy arena on which to unleash their newly acquired doctrine of free market competition?

There are several parallels between our school system and our health care system. From 1960 to 2000, per-pupil spending has risen from $2,235 to $7,591 (2000 dollars), while outcomes have either stagnated or declined. By nearly every metric, other nations regularly spend less and achieve more — some, like the Slovak Republic, spend one quarter of what we do and achieve the same results. The system fails to provide secondary education to large fractions of students, and many of those that have high school diplomas would be considered under-educated if we analyzed their conditions more closely. Access to education is largely correlated with socioeconomic measures — poorer citizens cannot afford to live in better-performing school districts. The system even discriminates based upon preexisting conditions, punting mentally disabled students into more expensive plans that parents struggle to pay for.

Unlike health care, however, there is very little competition in the existing system. While European countries commonly offer vouchers and encourage an independent system of private schools, America continues to stand by its state monopoly. Those in poorly performing school districts have little hope of escape. Whatever sympathy Democrats might have for our trapped underclass is drowned out by their political subservience to powerful teachers unions, who are unwilling to countenance even the smallest degree of competition in the system they dominate.

Prior to their apparent conversion into ardent free-marketeers, the liberal solution, conspicuously in line with the interests of teachers unions, was to throw more money at the problem: longer school years, longer school days, more investment in facilities and training, higher pay, and so on. Despite this strategy having failed for the better half of a century, Democrats continued to believe that more spending would produce better results. Much as it is with health care spending, in education it seems the answer is not to blindly advance further down the flat of the spending curve, but to try and bend it, to attack the core reasons behind why our increased spending is doing so little.

I have my own prescriptions based upon the data I have seen. If you ask me, the problem our school system faces is likely one of teacher accountability. If you could get schools to fire bad teachers, that alone might be enough to bridge the entire difference between the U.S. and the leading countries of the Organization for Economic Cooperation and Development (OECD).

I believe in the potential to reform our public schools. But I am also a believer in competition. I recognize that a decentralized system of independent, self-interested decision makers is more likely to get the answer right than some monolithic authority. It is not mutually exclusive to support both longer school years and school choice, or merit pay and vouchers.

There is little downside risk to school vouchers (and even less to school choice). In the worst case scenario, the increased competition does absolutely nothing, no one except existing private school students take up the voucher offer, and all we accomplish is to return some portion of the tax monies that parents of the private schooled are currently forced to pay into the public system. But in the best case scenario, vouchers could revitalize our educational sector, introducing competitive pressures into the school system that spur better resource management and improved educational methodology.

Given the importance of education to both equality and economic growth, this is an experiment we should be willing to conduct. For liberals who criticized as hollow any health care proposal that did not include a public option, it is time to stand up and demand educational reform that includes a private option.