Fred’s last post prompted several commenters to mention subsidies for private schools. It’s worth taking a closer look at this issue in isolation.
As Harry Clarke reminded us some time ago in a related discussion, subsidising private education is efficient if it reduces the burden on the public sector (though I’ll argue that’s more true in the short term than in the long term).
For this to work, the subsidies need to result in lower fees for families who are price sensitive when it comes to choosing between state and private schools. These will be preponderantly middle-to-low income families.
Whether subsidies to private schools or for private education promote equity as well as efficiency depends on your point of view. In any case, we need to distinguish between the subsidies that change people’s behaviour and those that don’t.
In the case of families who would have opted for private schools anyway, we are just talking about a straightforward redistribution from taxpayers in general to those families. As far as rich families are concerned, only the RWDBs would find this an appealing idea. But there are unquestionably many middle to low income families who make big sacrifices to send their children to private schools while still contributing to public education through their taxes*. There is probably wide support for giving relief to such people, financed by progressive taxation.
On the other hand, families who switch from the public to the private system as a result of subsidies do not necessarily benefit very much some of them may only marginally prefer the private system after the subsidy is paid. So in this case the equity issue is rather how the public money saved the efficiency dividend will be spent. If it’s just handed back in tax cuts, there’s no particular equity implication. But if public schools keep the money and enjoy smaller class sizes, and if most public school students come from low-income households, this is a progressive move and ought to suit Fred’s agenda.
Of course not all public school students are from poor families. Free school for families with above average incomes is middle class welfare. So if equity is the aim, perhaps we should go further and impose means-tested fees in public schools, obliging the middle classes to pay their way or switch to private schools.
But middle class attrition from the public system imposes its own cost, a long term cost this time, in terms of equity. An important resource in schools as important as the teachers, equipment and buildings is the endowment of learning skills and attitudes that children bring with them from home. This endowment helps the children who have it, but also other children from less educationally advantaged backgrounds. The latter benefit from the good example and cooperative environment created by the former. When the well-endowed students depart for private schools, the average endowment falls, and public schools become less conducive to learning, driving more well-endowed students away, and depriving their lesser-endowed peers of the positive externality.
If this process of adverse selection continues, we will end up with a distinct two-tier system. Even if the public system is well resourced and has a low student-teacher ration, it will cater largely for the socially disadvantaged. I can’t prove that this would be a bad thing, but it doesn’t attract me. I like the idea of a strong public system which serves as a social leveller as well as a cultural melting pot, and promotes some kind of unified and unifying national ethos. I also think that, whatever benefits the classical liberals and libertarians foresee from introducing competition to school education, a lot of people – and not just the Teachers’ Federation – would rather keep commercialism out of the whole thing. No doubt that makes me a nanny-statist, a conservative, a meddling utopian social engineer, or most likely all three, but as Carlton’s Lone Grudging Socialist concedes, I’m not alone in my failure of vision.
In any case, if we are going to subsidise private school education, vouchers or tax rebates make a lot of sense, since they can be means-tested and directed to families who need them and/or would otherwise use the public system. (Like Fred, I strongly disagree with the idea of universal vouchers.) Subsidising the schools themselves only makes sense if students from poorer families congregate overwhelmingly in particular schools.
*Like the people across the road. Neither husband nor wife completed Year 12. They have a household income a little below average, but send their three children to Catholic schools (they are not Catholics) at a considerable cost. Nothing I’ve seen suggests their children learn more than mine do in the local public school, but they are nonetheless certain that private schooling will give their kids the edge in life they missed out on themselves.