{"id":328009,"date":"2010-02-16T10:14:27","date_gmt":"2010-02-16T15:14:27","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.36008"},"modified":"2010-02-16T10:36:07","modified_gmt":"2010-02-16T15:36:07","slug":"school-choice-markets-work-if-the-rules-are-right","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/328009","title":{"rendered":"School Choice Markets Work–If the Rules Are Right"},"content":{"rendered":"

There is more to a market than buying or selling.  Armchair economists and parlor libertarians often act as if all you need to make a market is to remove the government barriers to trade.  This can be true (ag subsidies, I’m looking at you!), but in many places it’s nowhere near enough.  You need the social norms that support market trade, and you need to set good rules by which trade happens.  What we did to Russia is a good example of why the “get government out of the way” theory is not sufficient.<\/p>\n

Matt Yglesias has a post on school choice that makes this point very well, I think, citing a paper<\/a> by McLeod and Urquiola:<\/p>\n

Friedman (1962) argued that a free market in which schools compete
\nbased upon their reputation would lead to an efficient supply of
\neducational services. This paper explores this issue by building a
\ntractable model in which rational individuals go to school and
\naccumulate skill valued in a perfectly competitive labor market. To
\nthis it adds one ingredient: school reputation in the spirit of
\nHolmstrom (1982). The first result is that if schools cannot
\nselect students based upon their ability, then a free market is indeed
\nefficient and encourages entry by high productivity schools. However,
\nif schools are allowed to select on ability, then competition leads to
\nstratification by parental income, increased transmission of income
\ninequality, and reduced student effort–in some cases lowering the
\naccumulation of skill<\/strong>. The model accounts for several
\n(sometimes puzzling) findings in the educational literature, and
\nimplies that national standardized testing can play a key role in
\nenhancing learning.<\/p><\/blockquote>\n

The
\nrules surrounding markets matter a lot–and the reason we don’t know
\nthis is that the rules that work have disappeared into the background,
\nfaded out of our consciousness, become part of the miasma of “the
\nmarket”.  For example, I recall a web debate years ago in which someone
\nmade the standard point that cartels are very difficult to hold
\ntogether, which means anti-trust rules about this sort of thing have
\ndubious utility.  I believe it was Eugene Volokh who pointed out that
\nthis was true . . . but only because courts refused to enforce cartel
\nagreements.  If courts did enforce them, cartels would work pretty
\nwell–which is why we still have professional sports leagues.<\/p>\n

Luckily,
\nthis is the sort of rule that most voucher programs enforce–and
\nbecause I find this paper pretty convincing, I’d say they should
\ncontinue to.

\n

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\n\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

There is more to a market than buying or selling.  Armchair economists and parlor libertarians often act as if all you need to make a market is to remove the government barriers to trade.  This can be true (ag subsidies, I’m looking at you!), but in many places it’s nowhere near enough.  You need the […]<\/p>\n","protected":false},"author":80,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-328009","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/328009","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/80"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=328009"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/328009\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=328009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=328009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=328009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}