Another argument for nationalizing education is natural monopoly

In small communities and rural areas, the number of children may be too small to justify more than one school of reasonable size, so that competition cannot be relied on to protect the interests of parents and children. As in other cases of natural monopoly, the alternatives are unrestricted private monopoly, state-controlled private monopoly, and public operation – a choice among evils. This argument is clearly valid and significant, although its force has been greatly weakened in recent decades by improvements in transportation and increasing concentration of the population in urban communities.

But I suspect that a much more important factor was the combination of the general disrepute of cash grants to individuals (handouts) with the absence of an efficient administrative machinery to handle the distribution of vouchers and to check their use

This arrangement would meet the valid features of the natural monopoly argument, while at the same time it would permit competition to develop where it could. It would meet the just complaints of parents that if they send their children to private nonsubsidized schools they are required to pay twice for education – once in the form of general taxes and once directly his comment is here – and in this way stimulate the development and improvement of such schools. The interjection of competition would do much to promote a healthy variety of schools. It would do much, also, to introduce flexibility into school systems. Not least of its benefits would be to make the salaries of school teachers responsive to market forces. It would thereby give governmental educational authorities an independent standard against which to judge salary scales and promote a more rapid adjustment to changes in conditions of demand or supply. 2

Why is it that our educational system has not developed along these lines? A full answer would require a much more detailed knowledge of educational history than I possess, and the most I can do is to offer a conjecture. The development of such machinery is a phenomenon of modern times that has come to full flower only with the enormous extension of personal taxation and of social security programs. In its absence, the administration of schools was regarded as the only possible way to finance education. Of course, as some of the examples cited above suggest, some features of the proposed arrangements are present in existing educational systems. And there has been strong and I believe increasing pressure for arrangements of this general kind in most Western countries, which is perhaps to be explained by the modern developments in governmental administrative machinery that facilitate such arrangements.

Many detailed administrative problems would arise in changing over from the present to the proposed system and in administering the proposed system. But these seem neither insoluble nor unique. As in the denationalization of other activities, existing premises and equipment could be sold to private enterprises that wanted to enter the field, so there would be no waste of capital in the transition. The fact that governmental units, at least in some areas, were going to continue to administer schools would permit a gradual and easy transition. The localized administration of education in the United States and some other countries would similarly facilitate the transition, since it would encourage experimentation on a small scale and with alternative methods of handling both these and other problems.

For one thing, the natural monopoly argument was much stronger at an earlier date

Difficulties would doubtless arise in determining eligibility for grants from a particular governmental unit, but this is identical with the existing problem of determining which unit is obligated to provide educational facilities for a particular child. Differences in size of grants would make one area more attractive than another just as differences in the quality of education now have the same effect.