Voucher ‘Experiments’ Don’t Test Competition

Published August 1, 2002

Revolution at the Margins
by Frederick Hess
(The Brookings Institution, 2002
268 pages, $18.95 Paperback, ISBN 0-8157-0209-4)

Revolution at the Margins is about the effects of vouchers on public schools, especially in the three school districts with the most prominent voucher plans in the 1990s: Milwaukee, Cleveland, and Edgewood, Texas. The effects are fairly described, but when Hess tries to explain their policy implications, his discussion is seriously flawed in several ways. Although the flaws outweigh the praiseworthy features, let me begin on a positive note.

Public Schools Cannot, Will Not Compete

Hess explains very clearly why public education cannot compete effectively in a competitive education industry.

As he points out, the changes in the school districts he studied are only “at the margins” and not necessarily due to competition. For example, he notes, the increase in the number of voucher students is not because voucher-redeeming schools are educating better, but because overcrowded public schools are happy to have private schools absorb the overflow while the public schools do not have to change at all.

Public schools do not respond like carmakers by adopting improvements, says Hess; they respond in the only way they can, by strangling competition politically. It’s as if U.S. carmakers did not compete with foreign carmakers by developing and adopting improvements in the U.S. cars, but by tariffs and other political hurdles that foreign carmakers could not profitably overcome. It is the political influence of the teacher unions, not the better service or reduced costs of public education, that protects public education as we have known it.

Hess also does an excellent job of showing that despite the claims of school choice proponents, there was no significant change in public education during the 1990s. In fact, significant competition may not emerge in most school districts even if the obstacles to competition are somehow eliminated.

Most suburban parents are satisfied with their schools. The pro-voucher scribes who predict the imminent end of public education play into the hands of the public school forces, who rally public and teacher support against this feared but totally unrealistic outcome.1

An Imperfect Market

As Hess recognizes, Milton Friedman’s 1962 Capitalism and Freedom set forth the free market rationale for vouchers. based on the outcomes of market competition in other industries.

Unfortunately, Hess does not explain that market competition requires ease of entry for producers, including for-profit firms; regulation only to the extent of regulation in other industries; no control over prices by producers or consumers; a scale large enough to justify research and development by entrepreneurs; and confidence the vouchers will not be short-term. None of the voucher plans studied by Hess comes even close to meeting those conditions.

This gives rise to the question: What can be learned from today’s voucher programs—means-tested vouchers that exclude for-profit schools, severely restrict eligibility, are under constant threat of termination, are small scale in economic terms, and are subject to anti-competitive regulations of one kind or another—that is informative on what would happen in a competitive industry?

Hess does not answer or even phrase this question clearly. He says repeatedly that the effects of vouchers will depend on such things as “the structure of the market,” but he does not spell out the key structural changes, such as ease of entry, required by a market system of education.

Several proponents of market competition have explicitly argued that the outcomes of voucher plans in these three districts are not informative about voucher outcomes in a free market system of education.2

Muddying the Waters

In his closing paragraph, Hess writes:

“… education competition cannot be divorced from discussions about testing, teacher certification, school governance, educational administration, or the other frustrating conversations that many school choice proponents have long wished to avoid. In the end, the fate of education markets, for good or ill, is intertwined with broader issues of education politics and policy.”3

I disagree. Education competition can be divorced from discussion of those other issues. The proponents of market competition believe changes in the subjects mentioned by Hess could facilitate competition, but the relationships between market competition and those subjects are not a critical factor. Moreover, the proponents of competition in education don’t wish to avoid discussions of those subjects. In my experience at least, it is difficult to stop them from doing so.

Consider also research and development, a topic Hess completely ignores. In a free market, we would expect substantial producer expenditures for R&D, leading to improvements that would increase market share and profits. But no for-profit company is going to invest in R&D in hostile environments, where there are severe restrictions on producers and consumers and great uncertainty about the continuation of vouchers.

Of course, virtually any expansion of school choice has some potential to generate competition of some sort, but it is not “market competition” in any meaningful sense of the term. The impact of restriction-laden, underfunded, nonprofit schools in dilapidated buildings restricted to pupils from low-income families in a small catchment area has little or no bearing on market competition under vouchers without such crippling restrictions.

Copping Out

In the last chapter Hess writes:

“The present study has not equipped me to judge whether policymakers should embrace competition or whether market forces will make urban schools better. Such determinations ought to await the development of a fuller body of research and analysis.”

Those comments are not credible. Hess has studied school choice for years, spent considerable time on site visits to school choice school districts, lists 341 references that encompass most of the books on the subject, plus scores of others cited in the footnotes, has discussed or corresponded with 44 leading supporters and opponents of school choice, participates in several conferences and forums on the subject, and still feels the need for more research and analysis before he is “equipped to judge whether policymakers should embrace competition?”

Give me a break.


1. In Public Education: An Autopsy (1993), I asserted what had died was the rationale for public education, but I also made it clear (or so I thought) that its institutional manifestation would be with us for “several years to come.” Its ability to prevent, not ward off, competition is discussed in my forthcoming book, The Educational Morass.

2. Andrew Coulson, Market Education, pages 281, 324; Myron Lieberman, Public Education: An Autopsy, pages 11-13; John Merrifield, The School Choice Wars, repeatedly, especially pages 21-31. Inasmuch as two of these references are included in Hess’ list of references, one can only wonder how he came to his demonstrably false conclusion. My guess is he thought that everyone who advocates “competition” understood what it entails.

3. Hess, Revolution at the Margins, page 242.