Public education systems have met with varying degrees of success in academic
programs in different parts of the country. Likewise, private schooling systems are not always
successful in spite of the higher fee structures they command. When we look at the stipulation
from the frame of reference of individual students, differing situations, different aspects of
tutelage and the grade level, etc. all may have different impacts.
Positive Externalities in Public Education
The government has traditionally justified its involvement in the public education sector
because of the positive externalities (Poterba, 1996). Such externalities would be said to have
been formed when positive side effects occur from an act of production or service; and, there is
no market for such goodness so the producer is not compensated for it. These externalities are
discussed as under.
Positive Externality: Engagement in Civil Affairs and Democratic Processes
Governmental intervention in education has been defended based principally on the
externalities arising from a common system of education. Governmental programs are the most
commonly served across our nation. The notion is that, with a common system of education,
there would be a greater participation from younger generations in civic affairs. At the same
time, democratic processes will be strengthened. A “common culture” is created and in this
culture, immigrants can easily be absorbed.
Friedman (1960) wrote, “A stable and democratic society is impossible without a
minimum degree of literacy and knowledge on the part of most citizens and without widespread
acceptance of some common set of values . Education can contribute to both. In consequence,
the gain from the education of a child accrues not only to the child but also to other members of
While it has long been established that an educated populace is critical for a well oiled
democracy, of late the worth of private stewardship is being questioned. The social benefit of
governmental schools immediately thwarts any competition. Horace Mann, who has been hailed
as the father of the free and universal pubic education system in the United States has said that
such a system is, “indispensable to the continuance of a republican government” (1846).
Positive Externality: Economic Growth
It has been claimed by proponents of state education that investment in educational
program will help boost the productivity of the citizens. These productive citizens will help
boost it in their co-workers, thus fueling economic growth. Hanushek (2002) has said, “if a
highly skilled workforce permits entirely different kinds of technologies to be introduced , or to
be introduced earlier in a development cycle , expanded education of an individual may indeed
affect other workers in the economy . Or , if improved abilities of the best students lead to more
rapid invention and development of new technologies , spillovers of educational investments
may result.” Large human capital externalities ping firms to invest huge sums in employment,
thereby raising wages.
Positive Externality: Lower Crime Rates
Engagement in a universal educational program sets common standards for society to
operate within. It identifies what is beyond limits and unacceptable. Another way a public
education program helps lower crime rates is by taking young people off the streets. Truancy
regulations and laws allow for the government to pursue cases where children are not attending
schools. Such a response would be harder to muster if we were increasingly reliant on private
schools due to reasons such as data sharing, privacy concerns etc.
Negative externalities associated with a public education system are as follows.
Opportunity Cost of Individual Time
The cost of volunteering goes up from an economic perspective as social involvement,
political activity and civic engagement increase. By civic engagement is meant participation in
civic organizations. At the same time, civic engagement may not be all good, neither can that be
said with confidence over social involvement of the subject.
Falling Educational Standards
It can be claimed that with governmental intervention, the quality of education has been
falling. Due to a wide focus, necessary invigilation on districts has been lacking. As a result we
have education on paper, but the human impact of it is unknown in many areas of the country.
Just a couple of years ago, it was revealed that mass scale cheating had been sanctioned at a very
senior levels in districts as far and wide as Philadelphia, Atlanta, Los Angeles, areas in NJ etc.
Meanwhile the superintendents involved were basking under the limelight, being awarded for
excellent performance in their districts. Overseers later found that policy pressure under the “No
Child Left Behind” Act and threats of curtailed funding were spurs for boosting test scores, one
way or another.
Impact on Social Structure
Depending upon the state and county regulations, it could be very hard to try and
influence what school district one goes to. Instead of meritocracy, decisions are based strictly on
the zip coding of an area. Moving as a tool to change the school that children go to has left some
districts more disadvantaged than others. While losing tax dollars, local cultures of violence,
dysfunctional-ism etc. are reinforced and the situation becomes progressively worse.
I’m strictly against governmental intervention in education. Government is neither
predisposed to be able to offer education as an externality (after all it uses our own tax dollars)
nor is it uniquely qualified. The high ticket cost attached to private education is merely symbolic
of the exclusivity of the times. Just as smartphones once considered inaccessible to the masses
have made inroads into all strata of American society today, so also will education. Private
education can easily supplant and replace the public system, while matching it in scale and better
ing it in efficiency.
Infra-marginality is another issue here. Infra-marginality exists when externalities are
present in total but absent from the margins. If all external benefits from an enterprise are infra-
marginal, there remains no reason or justification for any form of governmental subsidy: as in
the case of education. In such cases, externalities associated with any extra production or activity
are not Pareto-relevant (Buchanan and Stubblebine, 1962). It has been shown that the most
important positive externality out of education occurs from consequent basic literacy (which if
obtained on one’s own or via one’s family or friends, there will be no real benefit from
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