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Diane Ravitch writes in tomorrow’s WSJ about her conversion away from national testing standards and charter schools:

What we need is not a marketplace, but a coherent curriculum that prepares all students. And our government should commit to providing a good school in every neighborhood in the nation, just as we strive to provide a good fire company in every community.

You would do well to notice that not once in the article is a single justification for why the government ought to be involved in schooling at all – just a huge massive assumption that we need a public system. I’ll be posting lots in the coming weeks on public schooling, so I won’t address that point here. What I wanted to point out was her use of the fire provision as an analogy.

Fire protection was provided by government because of a classic free-rider problem. You and I are neighbors. If I get my own private fire protection, it probably does not make sense for you to get it. Why? Because if my fire company sees my neighbor’s house on fire, they are very likely to put it out because that fire also poses a threat to their client (me). So long as some people purchase fire protection, then it makes sense for others to free-ride – and if enough people behave this way, then not enough fire protection would be provided privately.

Of course, what this example illustrates is not some fundamental problem with markets, but rather it illustrates a huge transactions cost problem. In fact, almost every economic “problem” is a transactions cost problem. If there were a way to negotiate with non-paying customers on the spot, perhaps the free riding problem would be eliminated. More important, if there were a cost-effective way to prevent non-payers from enjoying my fire protection, the problem would be eliminated. But these transactions costs problems are just technological problems in disguise. At the time we thought up these market failure theories, the best way to quell fires was to have a fire truck come by after having sucked up some water from the river, and then dump a lot of water on your house.

Technology has made this problem far less severe. First of all, there are far more fire retardant and fire resistant building and barrier materials today. Second, there are things called smoke alarms and sprinkler systems which tend to work pretty well. Put those two things together, and it is not at all clear that an individual even needs the protection of a fire suppression company at all. As technology improves, what was once a “public good” subject to all manner of market failures becomes an excludable private good, little different than my canoe, or my steak dinner. So, we do not need to strive to have a great fire company in every community. So long as the benefits of fire protection can be internalized, there is no justification for government taxes and “free” provision of fire services to everyone.

Gosh, you have a huge audience and golden opportunity to make your best case for public schooling, and the best you come up with is, “schools are like fire companies.” Indeed they are.

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