The social merits of private education (1 of several)
Introducing a series about how education is valued, why we must value great schools, state or private, and why many commentators miss the point.
Previous posts have focussed on the fiscal consequences of Labour’s policy to tax parents. I’ve argued here, here and here that their talk of tax-breaks is nonsense; here that it won’t raise much money if schools pay the tax instead of parents; here that Labour are wrong to take for granted the labour, value creation, and payroll taxes of high-earning parents if they switch to the state sector; and here that Rachel Reeves the plagiarist must share her fag-packet calculations. Most recently here I took a detailed aim at the IFS analysis where they misrepresent the past and make unjustified claims about the future in order to support Labour’s claims. More to come on that.
There’s no chance Labour’s assault on independent schools raise £1.7bn. There’s a significant chance (depending how many families withdraw, and how many as a consequence reduce their labour supply) the net tax impact is negative. If it doesn’t raise money then it can’t possibly help state schools. This is a sufficient reason to say no to VAT on school fees.
However, there’s more to the debate than that. Some supporters of the tax don’t necessarily believe it will raise revenue. Some don’t even care if it raises revenue - shrinking the independent sector is the whole point.
Those of us who believe in private education need to stick up for it. We need the language and conviction to remind everyone that educating children well is terrific not only for them but for everyone. Young adults who get off to a good start will deliver value to their future customers, employers and employees; they’ll vote and volunteer; and they’ll pay taxes that help support whatever future society votes for.
We just need good places in good schools. Attacking good schools is an odd way to start.
Introducing the economics of education
You’ve probably read, from time-to-time, utterances like:
“Education is a right, not a privilege”
“Education is a public good” but (somehow) “Private education is a luxury”
“Everyone should have the same start in life”
Those comments are simple. The economics of education are complicated. Instead we need to use the questions such as:
What are the costs and benefits of education?
How and where do those costs and benefits arise?
To what extent do private actors obtain the benefits and pay the costs?
How does society organise itself to obtain the greatest benefit at the least cost?
This post is a short one, think of it as a trailer. In the series, I’m doing to dive into the following, trying to answer the economic questions and presenting a few (I believe) original ideas on the way.
I think it will take five posts, but I’m not entirely sure as I’m trying to keep everything down to a 5-10-minute read. I’d welcome comments on the following - what have I missed?
The basics of education economics. If you have economics A-level, you can probably skip this entirely. I’ll explain what a Public Good is, and why education isn’t one. I’ll look at Merit Goods and explain why education is one, owing to “positive externalities”. I’ll conclude with the entirely mainstream starting-point that we should generally subsidise, not tax, Merit Goods.
Externalities in education. I’m going to review some of the externalities in education. These externalities are hard to measure (if we could measure them, we could more easily incorporate them into the market); nonetheless most people agree the social benefit of education is substantial, positive and wide-ranging, with the “productive capital” element particularly compelling in a progressively-taxed economy that expects to maintain public services and a welfare state.
The authoritarian activist perspective. I’m going to highlight some of the voices calling (often with the backing of taxpayers’ money) for taxation, control or closure of independent schools. I will argue that it’s their position, not mine, that is extreme and radical, doctrinaire and ideological, because they ignore even the mainstream economics.
A deeper review of social benefit in education. I’m going to question the mainstream thinking and look at how the social benefit is distributed. There are two glaring omissions from mainstream literature, which is that we never questioned whether (1) the social benefits are divisible from the private benefits or (2) the social benefits are otherwise developed for non-financial reasons. This points to families’ ability and willingness to deliver social benefit to a much greater extent than is typically understood, or in some cases their inability to withhold social benefit. The market is therefore substantially capable of delivering society’s needs; it fails only in narrow circumstances, rather than in general, therefore we need to re-think the nature of government involvement.
What we should do about it. I’m not going to spoil this one; suffice it to say I agree with Labour that (1) there is a glaring unfairness in the tax treatment of Britain’s schools and (2) we should as Labour claim they intend, tear down the artificial barriers between our best- and worst-performing schools so that more families can expect, and demand, great education for their children.