ABC News published an article about how lack of choice lower the quality of U.S. education. The article argued that the quality of public schools in the U.S. is getting worse and worse because of zoning system. The zoning system works like the previous "rayonisasi" in Indonesia. Only students living in a certain district can go to the public school in that area. But basically, this creates a monopoly for the schools (because they are not competing for students with the other public schools). At the same time, it limits consumers' choice. Ask ecnomists what are the results. Right; either: 1) consumers are overcharged, 2) no incentives for producers to improve quality, or 3) both.
The zoning system of public schools has created the following condition:
- Parents and students are stuck with the public school in their neighborhood, no matter how bad the school is.
- Schools in relatively poor areas will have lower income because those areas will have lower tax revenue, hence they can not maintain their quality. Conversely, the quality of schools in the richer areas will be guaranteed because they can have higher tax revenue.
- No incentives for poor quality schools to improve because they will have students, no matter what. And they are subsidized based on the number of students.
In line with the story, the Economist published a similar article. It reported a case of an lternative policy, which is to give for poor families vouchers to send their kids to school of their choice. Under the voucher system, instead of chanelling the government subsidy to schools, the subsidy is sent directly to the students.
The results? According to the Economist, "Vouchers not only offer better education more cheaply to the children who receive them; they also force rotten public schools to improve, by pinching their students if they don't, as at least four studies in Florida have shown."
So, who says that competition is evil?