Extra-governmental powers in public schooling: The unions and the courts

While economists traditionally argue for ‘a government role’ for education, the precise institutional implications are not usually specified. From our article it is apparent that governments have been delegating policy-making to independent agencies and the courts. This tendency raises the question of what kind of democracy is envisaged by those who continue to urge that education should remain firmly in the ‘public sector?’ Economists who argue from efficiency grounds must, in future, accommodate the fact that the law allows greater encouragement to labor monopoly in the public than in the private sector. The implicit increases in costs to citizens is additional to the large extra expenses of the public bureaucracy (a subject we have not addressed here). All these issues, meanwhile, have a direct bearing on the ‘orthodox’ reasoning based on ‘externalities.’ Without public intervention, citizens will buy education privately at a given cost (as they did before intervention). After intervention they purchase it at another cost via taxes of most kinds (and everybody pays taxes). Externalities are only important when they are ‘Pareto relevant,’ that is, when some individuals purchase ‘insufficient’ quantities at the margin. But the purchases are related to price. In those circumstances where the price in the public sector rises appreciably (because of labor monopoly and bureaucracy), it is possible that less education will be purchased than in entirely private provision. The logic of externalities would then call for the contraction of ‘public provision,’ a term that should be understood to encompass all those extra-government powers now bestowed on the judicial and regulatory bodies that have been examined above. Copyright Martinus Nijhoff Publishers 1981