Thursday, May 31, 2007


"Try to speak French with someone who was educated in public school and then try to speak it with Berlitz graduate."
- Milton Friedman

In Daily Telegraph, Johnny Munkhammar wrote an article on how free choice and school voucher transformed the education in Sweden. As we can read, in 1991 Sweden pioneered the launch of competition in education sector, giving parents and children a sense of choice to choose (on the basis of coupons called 'vouchers') the school in which their children would be educated. Milton and Rose Friedman contributed a tremendous share to the idea that greater quality of education as well as output and performance demands a degree of competition, pursuing the objectives desired by parents and society.

In nearly every country in Western world, the idea of school vouchers has been attacked aggresively without a particular reason behind which we can see a huge amount of mistaken arguments noting that many of the so-called "engineers of public education" are very far from understanding the basic principles of economics properly.

The price effect of private school as a new entrant in the market naturally reflects the effects in the economy. If a newly established private school wants to attract students, it reasonably cannot bubble the price of its service - tuitions and fees, but it will probably be ought to fight cost increases to minimize the burden which is purely reflected in the price which a student has to pay to enter the school. Consequently, if the entrepreneurs supply a highly respective education service which attracts new-comers to choose the particular school, public schools are forced to pursue changes and restructuring to supply students with more quality and value. In fact, students or their parents are the one who pay the education, whether it be through taxes (public education) or through their own funds if they choose particular private school, college or university.

There is also the effect of quality and yield. As Benjamin Franklin once wrote: "Investment in education always pays the best interest." As we can track from international comparisons, universities such as Harvard and MIT are on top according to the criteria such as alumni performance and the research quality of the environment supplied to their students, professors and researchers. According to Academic Ranking of World Universities, Harvard and Stanford scored on top. Among top ten universities, only two originally come from Europe, namely Oxford and Cambridge. Harvard, for example, scored 100 percent on 5 out of 6 different levels.

Taking the 'trademark' of university into account, graduates from private universities usually benefit far more greatly compared to the students educated in public universities. Not to say that each public university (in terms of ownership) is bad, but the results tend to flatter private universities over public ones. In facing your career perspective, it is sometimes good to consider what you want to achieve, whether to reduce your investment or increase it temporarily. The return to your education grows after you graduate, depending on how successfully you perform your output meaning that your interest (the price at which your capital units are purchased) is paid higher relative to your lads.

In high schools (secondary schools) and elementary schools as well as in child-care kindergardens, the matter of choice is equally important. According to differently stated objectives, the mission of high school is to train pupils for university life in terms of teaching them how to combat the challenge of new economy by absorbing information and functional literacy. In some cases, the performance of public high schools is not very well both in terms of quality of education and learning environment. The answer to the question how to change this 'status quo' is not government intervention and shooting rigidity and bureaucracy through means of public ownership but simply to deregulate the school market by allowing private school to enter it. If there is completely collectivized system of schooling, pupils and their parents simply have no choice as the mechanism contains the most violent means of coercion such as performed by central-planning in Cuba and North Korea.

On the other side, the deregulation of school market as well as the introduction of school vouchers gives parents an opportunity to choose. One largely mistaken argument assumed by the defenders of public education schemes is that, if private schools flourished, the price of their service would skyrocket. This argument is in full contradiction with the elementary principles of economics, notably the behavior of general equilbirium where the price is lower if the supply is enriched. In telecommunications, we have recently seen dramatically lowering prices benefiting final consumers.

Imagine the situation in which the government told you that you should buy only one particular laptop, say Acer, because Acer is the best. I'm not pretty sure that so many of us would have laptops if only one supplier (monopolist) had full control over the market, keeping the price in line with "Cournot point" which explains the behavior of the monopolist as well as his/her cost function. Exactly the same kind of competitive behavior is happening in supplying the market with education services. The amount you pay into public schemes is lower than the amount you get back from "yield-growing" options of education service in comparison to public schools. Going for growth requires a solid formation of human capital servicing the challenge economic performance. Also, going for quality demands choice and certain degree of competition pursuing quality, education value and competitive prices. Economic growth grew significantly after monopolies were faced by competitive forces. It's about time to let 'growth miracle' pouring into education spectrum as probably everyone deserves to determine his own future through choosing the education which he/she wants.

Milton Friedman once brilliantly demonstrated the difference between public and private schools when he said:
"Try to speak French with someone who was educated in public school and then try to speak it with Berlitz graduate."

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