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The State's Education Monopoly Increases Prices and Destroys Choice - Ron Paul

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Published : October 18th, 2013
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Editor's Note: This selection is taken from Chapter 5 of Ron Paul's new book The School Revolution: A New Answer for Our Broken Education System.


The free-market principle of open entry is challenged by governmental restrictions on access to consumer markets. There are many official justifications for these restrictions, but the main one is this: “Customers do not know what is good for them.” They do not know what products to buy, what prices to pay, or what arrangements to negotiate with respect to return and replacement. Customers are in fact woefully ignorant of what they really need, so the state enters the marketplace to restrict what customers are legally allowed to purchase. The idea here is that state officials know what customers really need as distinguished from what customers are willing to pay for.


One of the justifications for this is that advertising deludes customers. This means that customers are considered not able to sort out fact from fiction when they read or see an advertisement. It is interesting that the same advertising agencies hired by businesses to sell products are also hired by politicians to produce advertisements in election years. In other words, advertising is accepted as a legitimate way to motivate people to take action during election years, but is placed under suspicion when it comes to advertising products and services. People in their capacity as voters are supposedly perfectly capable of making accurate decisions based on advertising. On the other hand, those same people in their capacity as customers supposedly are incapable of making accurate decisions based on advertising. This is utterly illogical, but it is basic to understanding all modern governments in the West ...


Whenever the state intervenes in a market to restrict entry by sellers, it results in higher prices. Customers are not able to buy the kinds of goods and services they want, at a price they are willing to pay. So the producers who would otherwise have entered the market are forced to enter other markets. These markets are less profitable than the restricted markets. Customers in the regulated markets are worse off, and so are marginal suppliers who leave those markets.


We can see this principle at work in the market for education. The supply of education is limited by government restrictions on academic certification. Teachers must go through a specified regimen at the college level in order to be eligible to teach in the nation’s tax-funded school systems. This reduces the supply of teachers who can legally be hired by local school districts. 


Furthermore, restrictions on school construction by private entrepreneurs limit the amount of competition tax-funded schools face.


So, parents are compelled to send their children to school, but the state restricts the number of schools available to parents. This creates a near monopoly of education, kindergarten through twelfth grade, for the state. The state uses tax funding to build schools, and it uses the regulatory system to restrict the creation of rival schools. This is the classic mark of a monopoly.


The free-market solution is open entry and competition. Competition may be in the form of quality. Some parents want very-high-quality education for their children, and are willing to pay a great deal of money to purchase it. They would not have to pay as much money if there were open entry into the local market for schools. Other parents cannot afford the best education for their children, because they do not have enough money. So, they want price-competitive education. This is also made available by entrepreneurs in the field of private education. These entrepreneurs can decide which programs are affordable for which parents, and which programs will meet the demands of specific parents. As more schools come onstream, the range of choice for parents increases. This is the standard definition of what constitutes economic growth. Economic growth takes place when customers can buy more goods and services than they were able to buy prior to the increase in economic growth ...

Bureaucrats in the field of education, which is almost exclusively nonprofit education, have a bias against price-competitive academic programs. They assume that these programs are of low quality. They think it is a good idea to close the market to sellers of any kinds of curriculum not certified by educational bureaucrats. They have greater control over the content and structure of education when they can restrict entry into the marketplace. In the name of helping children, these promoters of self-interested restrictions on entry conceal the fact that they are able to exercise greater power over education and then charge more for the privilege of doing so.



$23.00 $18.95


This is why libertarians believe that there should be open entry into the field of education. They do not trust state bureaucrats to act on behalf of parents, especially parents who have a particular view of the best methodology and content for the education of their children. The bureaucrats operate in their own self-interest, which is to expand their power and income.


This raises the issue of government regulation of schools. First, the government requires compulsory attendance. Second, in order to keep control over the content of the curriculum, governments establish rules and regulations governing those schools. Parents are not allowed to send their children to schools that do not meet these qualifications. The qualifications are set very high, so that not many schools can be established to compete against the public school system. This increases the power of the public school system, and the power of the bureaucrats who run the system. 


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Can't disagree with that. Our financial system is heavily weighted so that bankers and the rich can prosper and so that the rest of the planet pays and reaps little if anything.
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"advertising deludes customers" - that is what happens in an election campaign and it is the perfect reason why political advertising should have a small cap (say $50,000 per candidate). That way decent candidates could compete on a level playing field but it would not suit the same manipulators who claim that consumers do not know what is good for them. What a joke!

Your comment on schools reeks of somebody not involved in the sector and hence having little understanding of the sector:

Firstly, the reason there are shortages of teachers in some disciplines is that teachers are paid rates bordering on laborers. The result is that the best and brightest do not go into teaching but migrate to where the money is: the financial markets. This leaves the few die hards and a lot of mediocre dead wood teachers who are not capable of delivering content other than of the most basic sort. So you get what you get.

Secondly, schools for those able to pay (the rich) are well staffed with the best teachers taken from the public sector. No second rate education here. This leaves the public sector with what is left. Facilities in private schools are also the best money can buy. Paints a sad picture of how people and their families are worked over by the haves doesn't it!

If you really believe that kids are taught only what the state believes useful then perhaps ask why climate change is gaining a foothold. This is the most toxic of all curriculum to the state as big business does not want to be held accountable for its destruction of the planet. So you'd think that the state would prohibit schools from teaching or debating the topic. My understanding is that they don't.

If the author of this article had his way then schools could teach anything they wanted. Some would throw out Math, science and computing and replace with the Arts and feel good crap. Great education. Good for nothing other than starvation in a modern world too. Good call!!

So anything which restores some 'balance' and fairness can only be applauded, even if state controlled. And as far as relaxing education standards on teachers I ask would you let Johnny the Blacksmith operate on you? If we take the open market rhetoric on board then maybe we do in the interests of driving down prices for medical services. But then, just like education, the rich would end up with the real doctors and the poor would end up with Billy.

Nice article but my take is that it is more crap than reality.
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Governments are only interested in controlling what people learn, not allowing non-conventional education. When they can't control the curriculum they are in danger of having a population that will think outside of the box they want everyone to stay in. It all boils down to control, if they spoon feed kids the crap being taught these days they have a very good understanding of how the kids will think, what they will believe, and how they will respond to certain stimuli in any given scenario later in life. If kids were allowed to further their education according to the natural talents and abilities they were born with it would result in a population of free thinkers and this would scare the shit out of politicians. They would have no idea of how to control the masses. It's like Obama and his beloved teleprompter, with it he has all the confidence in the world because he doesn't have to think on his feet. Without it he's crapping his drawers fearing a catastrophic verbal blunder will spew from his gaping yap. No teleprompter no control. No control over education = no programmed masses.

There is no better schooling than home schooling for no one can better understand a child's abilities than its parents. They also have the love that's so desperately needed which allow them to raise the kids as socially responsible citizens. Don't believe me, take a walk through any mall, move over to where the "students” are. Listen to the way they talk, the lack of respect they have and try not to be blown away by the anti-social behavior they exhibit. All of this thanks to the education system the politicians force upon the masses. They, by rule of law, must spend all day crammed into rooms where anti-social behavior can no longer be modified by the teachers as this would be labeled abuse. I say this not to insult teachers, in fact they suffer as much from the regimented system as the students. When a teacher sees some especially talented kids their hands are tied in their ability to move these gifted kids into a system that would help them excel. Yes there are a ‘few’ programs for gifted kids but again these are regulated by the same morons that control the general education system.

The fact that every child must go to school has nothing to do with politicians wanting everyone to have the same chance to get ahead, it’s to control from childhood how people will think, what they will think, and how they will respond. It’s no different than only putting those programs you decide on your PC. You control the programs and you control what the PC is able to do.


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I don't think you have ever worked in education Spokes.

Your statement "there is no better schooling than home schooling" misses the point. The reason why there is no respect is firstly the media 'education' of kids and secondly PARENTS who delegate the teaching of manners, control and common courtesy to the education system. Teachers do their best but in the absence of proper control hierarchies their hands are for th e most part tied.

For the same reason as above home schooling would not work. Whilst dedicated parents (where do you find these?) have half a chance most would not put themselves out for such a chore. And then do you really expect parents to teach technical subjects like math and science when they themselves have not and never have had any ability or understanding of these curriculum areas.

Your argument on curriculum is also flawed. We live in an era where many parents keep demanding that curriculum is watered down so that their children do better in these areas. The fact that the harder subjects are required for certain careers does not seem to register with many parents who later blame the system for the fact that their children have not cut it and are locked out of some (lucrative) careers.

So don't shoot the messenger mate. Most thrid world countries would give their right arm for the opportunities we all have. The sad reality is that society is pushing a lowest common denominator agenda whilst wanting their little darlings to behave as they wish. That my dear friend is the reality.
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The number one reason educational is for control is they do NOT teach anything about the history of the planets monetary systems.
Can't owe DEBT to a bunch of criminals if the populations knew they were getting screwed.
You can train a dog you can train a human. How the human turns out is just a matter on who's doing the teaching.
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“So don't shoot the messenger mate. Most thrid world countries would give their right arm for the opportunities we all have. The sad reality is that society is pushing a lowest common denominator agenda whilst wanting their little darlings to behave as they wish.”

Of course most of the third world wishes they had the education system we do. Does this validate the system? Not at all. Most of the third world would also like to have access to our garbage, the amount of stuff we throw away as useless is considered treasure by many in poorer countries. Does this make our garbage seem less useless to us? Your comment is comical at best.

You are right ranbotrader, I have never worked as an educator, however my wife has spent the last 25 years fighting through the educational system as a teacher. I have a sister, two nieces, a nephew, and a couple of friends who are teachers and that’s not inclusive of my wife’s friends the majority of which are, you guessed it, teachers. I also have a circle of friends that are part of a home schooling group. I believe I have enough exposure to both sides and have gleaned considerable information, more than enough to form a valid opinion and critique the educational systems employed by western societies. My original comments stand on pretty solid ground and your comment on parents wanting the curriculum watered down is one based on a minority sampling. Yes, I’ve heard all of that as well, there are always a few parents that concern themselves more with their children coming home with high grades than actually learning anything of value. Unfortunately you’ll find many of these kids are the ones leading the mall rat processions and this is not to fault the kids, the blame for their lot lays upon their parents lack of interest in raising their kids.

“The reason why there is no respect is firstly the media 'education' of kids and secondly PARENTS who delegate the teaching of manners, control and common courtesy to the education system.”

I believe you made my point for me. If parents spent adequate amounts of time interacting with their children instead of farming them out to the local mind warping school, and then allowing them to watch 6 hours of laugh tracked stupidity on TV, today’s young people would most certainly have more of what was called character and respect for others. They would have the ability to understand basic social concepts such as not swearing at the top of their lungs in a bus, and so on. Yes I know, it’s better that some kids spend less time with their parents but please, let’s focus on the majority here. Teachers hands are tied, they have no option to discipline students, this was all taken away by the same liberal morons that wanted us to believe their LSD induced musings that you could reason with a four year old as if they were 10th graders if you just tried really really hard to talk to them.

I wonder if you even looked into the difficulties parents that choose to home school face. Then there’s the stigma that home schooled kids are dumb, less educated than the product of the worker mills the rest of the kids go through. The reality is that home schooled kids consistently score higher in virtually every subject than the kids that were processed through government mills. These kids are also allowed to shine in areas they are naturally gifted. Parents spend considerably more time interacting with and witnessing what each child is capable of. A parents natural instinct is to give children what they want and if what they desire will elevate them in a profession a parents pride will ensure the child has every opportunity to pursue this passion. Yet home schoolers are sneered at, frowned upon as some sort of anarchists, and ridiculed by most politicians as contrarians. They are looked down upon as wanting their children to be ‘backwards’ just because they won’t bend to the will of politicians.

You spend time on this site, do you own PM’s? If so are you not also going against the will of politicians? You are then cast into the same category as home schoolers. They don’t trust the most valuable thing they have, their children to a bunch of bought and paid for politicians who are hell bent on putting their kids in debt in the form of educational loans and then making them debt slaves for life. If you own PM’s then you don’t trust politicians with your financial security. Owners of PM’s and home schoolers have a lot in common, they don’t trust government with valuables and they don’t want to be debt slaves.

That is the true reality.
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You are clearly US based whilst I am Australian based so there may be some differences between our systems. But not much I dare say.

We have gone from an era where results were PUBLISHED in the papers, a sort of honour roll, to now where it is not permitted. The little darlings are so sensitive and their over protective parents make sure that results are kept strictly within family and that continued pressure is brought to bear so that the curriculum is watered down to the lowest common denominator. We see this in subjects like math and chemistry and our universities complain that what we pass on to them is not educated to a sufficiently high standard so that they can do their job. Consequently universities are now needing to give bridger courses so that they can then off a tertiary education.

Home schooling is a fad. Whilst some parents do the best job they can and may be successful for primary age children the idea fails badly when you start talking about technical subjects in secondary schooling............unless mum or dad is a highly educated person in their own right. Average people are not capable of negotiating technical subjects which they themselves failed at whilst at school. Sorry but this is the reality and your wish for home schooling to be the norm will never work.

We will have some broad agreement in our systems of government. Government is corrupt in all first world countries and is controlled by wealthy people who pull strings behind the scenes. This may be unpalatable to some folk but given that 'money' elects representation one has to eventually realise what the game is. Sadly most people on the planet don't get it and have no interest as long as they get their bowl full of rice and can afford to live. We are so easily manipulated.

I guess we are not going to agree on what happens at the grass roots of education. Whilst I might concede that there is some meddling I cannot agree that it is a conspiracy theory. People do have a great input, although this is often shaped by media propaganda.....and yes this is groomed control. Nevertheless teachers DO discuss issues and argue the merits of most curriculum so mind control might not be what the masters of the universe intend. But I most whole heartedly agree that the financial system is not discussed in the context of how people are enslaved (ursury). But then most teachers would have no idea and I have to admit that I personally have only had my eyes opened in the past 2 years but now understand the Ponzi scheme which we are all subjected to.

There are drones in all parts of our society. Teachers are not immune. But don't blame teachers who for the most part are doing the best job they can and do not propagate propaganda for their employers but rather work around bad curriculum.

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"Home schooling is a fad"

It appears that you have no concept of what home schooling is or how long it’s been taking place let alone the quality of instruction these children get. In historical terms state run schools are the fad. Parents have been home schooling kids since the first child was born. In the context of modern schooling, this has been taking place as long as there have been state run schools. Fad, I think not.

This statement "Whilst some parents do the best job they can and may be successful for primary age children the idea fails badly when you start talking about technical subjects in secondary schooling............unless mum or dad is a highly educated person in their own right. Average people are not capable of negotiating technical subjects which they themselves failed at whilst at school." is all I need to know that you invested no time discovering what’s included in home schooling or even bothered to looked into what it involves. Every home schooled child MUST meet the educational standards set by state, they are required to pass all of the same exams. Every subject taught in a state school MUST be taught in a home school environment. Parents have access to all of the resources teachers use. Now following your train of thought "unless mum or dad is a highly educated person in their own right" a large proportion of home schooled kids would not have the ability to pass the required exam's. Facts simply blow this assumption away. A parent does not have to be skilled or educated to teach a technical subject just as many teachers themselves are not trained in most of the subjects they teach. When a student moves on to college then having staff with advanced training, degrees, in things such as chemistry is important but at any level below college the material available is sufficient for parents to school their kids. If you have any doubts about what I just said talk to some teachers, many will tell you of times they were required to teach subjects such as the various sciences when they themselves had little understanding of what they were teaching. This is in fact common as the state will fund the educational system with only enough to keep the students educated to a certain level, enough to be put to work flipping burgers or pounding nails, but still dumbed down enough so that they can be manipulated, brought into debt slavery.

I could spend a lot or time outlining what amounts to total crap that our kids are taught in schools and we would more than likely disagree on which are important but I believe we can agree that nowhere near enough time is spent on all things economic. But here’s an important item to contemplate, home schooled kids tend to be less likely to get into serious debt than their state educated counterparts. I believe it’s because while teaching the minimum required by the state home schooled kids benefit from their parents real world experiences which is added, mixed, into the required curriculum. Parents have this leeway, teachers do not, they are heavily restricted in the material they use and any deviation results in punishment. Think back, which teachers did you find the most interesting and learn the most from? Were they the ones who read from the course books or were they the ones who added some real world experience that made things fun? Yet whenever you read about a teacher being punished it’s the ones who dare to teach their students more than what the books contain. This is state control, we can't have free thinkers out there making logical decisions can we?

The state needs to stay the hell out of schools. Until they are no longer allowed to meddle with educational systems our kids will continue to come out of state schools walking talking clones of what politicians envision as the perfect citizen. They want predictable and easily manipulated masses that they can control. The concept of the people controlling the politicians is one of the most frightening things any politician has night mares about. Until the masses are able to think for themselves and understand the politicians work for us we will continue down this road being robbed and manipulated.

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I spent 25 years in senior education Spokes.

You make the statement "many teachers themselves are not trained in most of the subjects they teach" and I can but say that MOST TEACHERS ARE HIGHLY SKILLED IN WHAT THEY TEACH. The issue is that because the masters of the universe believe that teachers should be poorly paid they fail to realise that instead of teaching our best and brightest go into careers which pay well. So what you are left with is some teachers who can only ever teach at a junior level. And the average age of teachers in my country continues to rise with those who teach the difficult subject all bordering retirement. This is the real issue.....not incapable teachers as you assert.

We'll have to agree to disagree. Good luck with home schooling in calculus and the like. You'll need it.
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Well maybe you ought to come down from your lofty heights in senior education, spend a few days with real teachers and see what they have to put up with.

I'll take the word of family before I even give a seconds worth of concern for what some hack like you says. My wife, who had been teaching language arts and social studies for years was ask, just like every other teacher, to take on teaching students subjects like biology in which she has no formal university education. Was she successful, yes. Was she as successful as someone who graduated university with a degree in biology, maybe not. Did this stop the school board from laying this responsibility on her shoulders, no. Were the materials she needed available to her, just like home schooling parents, so that she could conduct the classes and have a high probability of success, yes.

As for teaching calculus in a home school environment, you just shot yourself in the foot again. Every parent that home schools must facilitate their children learning calculus (in what we call high school levels) and a number of other complex subjects. You would have all believe that they are not capable of doing so yet their children pass the state required exams, generally with higher marks than the kids who had to put up with state runs schools.

So before you go flapping you gums and claiming 25 years in senior education make sure you get your facts straight when shooting at someone who disagrees with you.

You sir/madam are the one in need of a real education.

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Well maybe you ought to come down from your lofty heights in senior education, spend a few days with real teachers and see what they have to put up with. I'll take the word of family before I even give a seconds worth of concern for what some hack like  Read more
Spokes - 10/24/2013 at 12:47 PM GMT
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