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	<title>Comments on: Perfect markets versus reality</title>
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	<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/</link>
	<description>"crass, boorish and more a bruiser than blogger" - Alex Wilcock</description>
	<pubDate>Fri, 21 Nov 2008 09:40:19 +0000</pubDate>
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		<title>By: James</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-48</link>
		<dc:creator>James</dc:creator>
		<pubDate>Thu, 03 Nov 2005 00:24:16 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-48</guid>
		<description>It certainly has, thanks!</description>
		<content:encoded><![CDATA[<p>It certainly has, thanks!</p>
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		<title>By: Bishop Hill</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-47</link>
		<dc:creator>Bishop Hill</dc:creator>
		<pubDate>Wed, 02 Nov 2005 21:27:04 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-47</guid>
		<description>Is education a public good? A little. From an economic point of view the evidence suggests that education is a means of filtering out clever people from not so clever people. It probably doesn't lead to overall increases in wealth. The main beneficiaries of education are the people who receive it rather than society as a whole. See Alison Wolf's "Does Education Matter?" if you are interested. So I would argue that state funding is not desirable here.

I haven't at any point questioned the flow of information in an education market, although I think you are overstating the case. Let us accept that the flow of information is worse than in some other markets. I still don't understand why a school getting worse means that it will get bigger, even with a poor flow of information. If it has 500 pupils at the start of the school year, the loss of a good headteacher might lead to a fall in standards by the end of the year. The school might trade on its reputation for the following year and expand its intake. Let's say 550. The following year prospective parents have two factors which will disincline them to send their children. The school is bigger which they tend not to like. And after two years, some word of the decline in standards will have leaked. As you point out in your previous post, it may take months. It's too much to expect it to be kept secret for years.

Like you, I sense this thread needs to draw to a close. It's been fun!</description>
		<content:encoded><![CDATA[<p>Is education a public good? A little. From an economic point of view the evidence suggests that education is a means of filtering out clever people from not so clever people. It probably doesn&#8217;t lead to overall increases in wealth. The main beneficiaries of education are the people who receive it rather than society as a whole. See Alison Wolf&#8217;s &#8220;Does Education Matter?&#8221; if you are interested. So I would argue that state funding is not desirable here.</p>
<p>I haven&#8217;t at any point questioned the flow of information in an education market, although I think you are overstating the case. Let us accept that the flow of information is worse than in some other markets. I still don&#8217;t understand why a school getting worse means that it will get bigger, even with a poor flow of information. If it has 500 pupils at the start of the school year, the loss of a good headteacher might lead to a fall in standards by the end of the year. The school might trade on its reputation for the following year and expand its intake. Let&#8217;s say 550. The following year prospective parents have two factors which will disincline them to send their children. The school is bigger which they tend not to like. And after two years, some word of the decline in standards will have leaked. As you point out in your previous post, it may take months. It&#8217;s too much to expect it to be kept secret for years.</p>
<p>Like you, I sense this thread needs to draw to a close. It&#8217;s been fun!</p>
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		<title>By: James</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-46</link>
		<dc:creator>James</dc:creator>
		<pubDate>Wed, 02 Nov 2005 00:32:02 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-46</guid>
		<description>I take your point about starting position.  But so far, all you have emphasised in your blog are the potential benefits of marketisation of education, and none of the potential problems, not least of all the risk that it would lead to many (particularly rural) areas replacing a state monopoly with effectively a private one.  Fundamentally though, I think we agree that offering a wider choice than at present is desirable and that the current Lib Dem position is too rigid.  It's the emphasis I've been taking issue with.

And you haven't IMHO thus far put forward a strong case that cricket is a public good that requires government interference.</description>
		<content:encoded><![CDATA[<p>I take your point about starting position.  But so far, all you have emphasised in your blog are the potential benefits of marketisation of education, and none of the potential problems, not least of all the risk that it would lead to many (particularly rural) areas replacing a state monopoly with effectively a private one.  Fundamentally though, I think we agree that offering a wider choice than at present is desirable and that the current Lib Dem position is too rigid.  It&#8217;s the emphasis I&#8217;ve been taking issue with.</p>
<p>And you haven&#8217;t IMHO thus far put forward a strong case that cricket is a public good that requires government interference.</p>
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		<title>By: Jonathan Calder</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-45</link>
		<dc:creator>Jonathan Calder</dc:creator>
		<pubDate>Tue, 01 Nov 2005 23:50:11 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-45</guid>
		<description>Is your case that if someone is "drawbridge down" on one issue then he must be so on every issue to avoid being inconsistent? Surely it depends upon the starting position?

If education is a state monopoly and cricket broadcasting is a private monopoly, what is wrong with questioning the existence of the monopoly in both cases?</description>
		<content:encoded><![CDATA[<p>Is your case that if someone is &#8220;drawbridge down&#8221; on one issue then he must be so on every issue to avoid being inconsistent? Surely it depends upon the starting position?</p>
<p>If education is a state monopoly and cricket broadcasting is a private monopoly, what is wrong with questioning the existence of the monopoly in both cases?</p>
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		<title>By: James</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-44</link>
		<dc:creator>James</dc:creator>
		<pubDate>Tue, 01 Nov 2005 23:38:09 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-44</guid>
		<description>Jonathan,

My post began with a direct quote from you:

&lt;blockquote&gt;Mark’s case seems to be that governing bodies and parents are both criminally stupid and need local education authorities to save them from themselves.&lt;/blockquote&gt;

... I hardly own the monopoly of arguing against caricature if that is what I'm guilty of.

That said, your overall stance on marketisation of education is distinctly "drawbridge down" while your stance on marketisation of cricket coverage is distinctly "drawbridge up".  That would appear to me to be a major discrepency, particularly given the relative importance of education compared to cricket.</description>
		<content:encoded><![CDATA[<p>Jonathan,</p>
<p>My post began with a direct quote from you:</p>
<blockquote><p>Mark’s case seems to be that governing bodies and parents are both criminally stupid and need local education authorities to save them from themselves.</p></blockquote>
<p>&#8230; I hardly own the monopoly of arguing against caricature if that is what I&#8217;m guilty of.</p>
<p>That said, your overall stance on marketisation of education is distinctly &#8220;drawbridge down&#8221; while your stance on marketisation of cricket coverage is distinctly &#8220;drawbridge up&#8221;.  That would appear to me to be a major discrepency, particularly given the relative importance of education compared to cricket.</p>
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		<title>By: James</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-43</link>
		<dc:creator>James</dc:creator>
		<pubDate>Tue, 01 Nov 2005 23:32:07 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-43</guid>
		<description>Bishop,

You accept the point about extreme cases, but do you accept my point about education being a public good?

The point I was making in contrasting restaurants with schools (originally your comparison, mind) was that the market in restaurants is much more dynamic than the market in education.  Positive feedback is much easier to deal with for a restaurant than a school, because it arrives more rapidly and payment is more closely linked to feedback.  If people don't like a meal/service, they simply won't come again and restaurants will see demand trailing off relatively rapidly.  If a school is giving poor education, it won't be obvious for months, even years and the person receiving the service (the child) is not even the same person as the one authorising the payment (the parent).

But we're going round in circles here.  It is clear that you will not accept that information flows in the education market is anything less than perfect, and that I disagree.  Can't we just leave it at that?</description>
		<content:encoded><![CDATA[<p>Bishop,</p>
<p>You accept the point about extreme cases, but do you accept my point about education being a public good?</p>
<p>The point I was making in contrasting restaurants with schools (originally your comparison, mind) was that the market in restaurants is much more dynamic than the market in education.  Positive feedback is much easier to deal with for a restaurant than a school, because it arrives more rapidly and payment is more closely linked to feedback.  If people don&#8217;t like a meal/service, they simply won&#8217;t come again and restaurants will see demand trailing off relatively rapidly.  If a school is giving poor education, it won&#8217;t be obvious for months, even years and the person receiving the service (the child) is not even the same person as the one authorising the payment (the parent).</p>
<p>But we&#8217;re going round in circles here.  It is clear that you will not accept that information flows in the education market is anything less than perfect, and that I disagree.  Can&#8217;t we just leave it at that?</p>
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		<title>By: Jonathan Calder</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-42</link>
		<dc:creator>Jonathan Calder</dc:creator>
		<pubDate>Tue, 01 Nov 2005 23:19:11 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-42</guid>
		<description>"I do find it a little hard to take being told that any scepticism about marketising education is dreadfully reactionary while simultaneously being told that the market has no place in dictating broadcasting rights to major sporting events."

Eh? Nowhere have I said either of those things. Wouldn't it be more useful to engage with what I actually say rather than offer a caricature of it?

I am more interested in exploring my opinions than in narrow conformity, but it seems to me that I am being consistent in calling for a variety of providers in both broadcasting and education.</description>
		<content:encoded><![CDATA[<p>&#8220;I do find it a little hard to take being told that any scepticism about marketising education is dreadfully reactionary while simultaneously being told that the market has no place in dictating broadcasting rights to major sporting events.&#8221;</p>
<p>Eh? Nowhere have I said either of those things. Wouldn&#8217;t it be more useful to engage with what I actually say rather than offer a caricature of it?</p>
<p>I am more interested in exploring my opinions than in narrow conformity, but it seems to me that I am being consistent in calling for a variety of providers in both broadcasting and education.</p>
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		<title>By: Bishop Hill</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-41</link>
		<dc:creator>Bishop Hill</dc:creator>
		<pubDate>Tue, 01 Nov 2005 22:40:02 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-41</guid>
		<description>"Fine. can I have my money back please?"

Only if I can have my taxes back! 

Obviously the state has a right to step in in cases of child abuse. Otherwise I would say that from a liberal perspective one should trust people to seek and obtain the education that suits them.

I don't understand the relevance of the Cable book to the sizing of schools, which was what we were talking about. High transaction costs and high cost of bad choices would not lead to giant schools would they?</description>
		<content:encoded><![CDATA[<p>&#8220;Fine. can I have my money back please?&#8221;</p>
<p>Only if I can have my taxes back! </p>
<p>Obviously the state has a right to step in in cases of child abuse. Otherwise I would say that from a liberal perspective one should trust people to seek and obtain the education that suits them.</p>
<p>I don&#8217;t understand the relevance of the Cable book to the sizing of schools, which was what we were talking about. High transaction costs and high cost of bad choices would not lead to giant schools would they?</p>
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		<title>By: James</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-40</link>
		<dc:creator>James</dc:creator>
		<pubDate>Tue, 01 Nov 2005 15:35:50 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-40</guid>
		<description>&lt;i&gt;IMHO political involvement in the education system is the problem, not the solution. I the idea that my someone else should be able to dictate my children’s education to me rather frightening. This is a meaning of “liberty” that has previously escaped me.&lt;/i&gt;

Fine. can I have my money back please?  Email me for my bank details.  After all, providing you with the cash is dictating your children's education, whichever way you look at it, and that is presumably an intolerable burden for you.

The only reason education is state funded is because it is a public good, not because it is "nice". As soon as a parent chooses to educate their child in such a way that it ceases to be so, then the state has a right to withdraw that funding. Arguably, in extreme cases (where parents are members of an extreme religious movement for example), it should have the right to take over the care of that child if the "education" the parents want is tantamount to child abuse.  Or would you support that?

Having thought it over some lunch, you're right that I rather overegged the pudding on my restaurants argument.  A stronger argument would have been to look at those criteria I quoted from Vince Cable's book that you took exception to, in particular "low costs of bad choices" and "low transaction costs".  In both cases restaurants meet the criteria and schools don't.  We're talking apples and oranges here.  People don't pick schools the way they might choose a sandwich, and there is both much less pressure for restaurants to grow large and much more pressure on them to remain small.</description>
		<content:encoded><![CDATA[<p><i>IMHO political involvement in the education system is the problem, not the solution. I the idea that my someone else should be able to dictate my children’s education to me rather frightening. This is a meaning of “liberty” that has previously escaped me.</i></p>
<p>Fine. can I have my money back please?  Email me for my bank details.  After all, providing you with the cash is dictating your children&#8217;s education, whichever way you look at it, and that is presumably an intolerable burden for you.</p>
<p>The only reason education is state funded is because it is a public good, not because it is &#8220;nice&#8221;. As soon as a parent chooses to educate their child in such a way that it ceases to be so, then the state has a right to withdraw that funding. Arguably, in extreme cases (where parents are members of an extreme religious movement for example), it should have the right to take over the care of that child if the &#8220;education&#8221; the parents want is tantamount to child abuse.  Or would you support that?</p>
<p>Having thought it over some lunch, you&#8217;re right that I rather overegged the pudding on my restaurants argument.  A stronger argument would have been to look at those criteria I quoted from Vince Cable&#8217;s book that you took exception to, in particular &#8220;low costs of bad choices&#8221; and &#8220;low transaction costs&#8221;.  In both cases restaurants meet the criteria and schools don&#8217;t.  We&#8217;re talking apples and oranges here.  People don&#8217;t pick schools the way they might choose a sandwich, and there is both much less pressure for restaurants to grow large and much more pressure on them to remain small.</p>
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		<title>By: Bishop Hill</title>
		<link>http://www.theliberati.net/quaequamblog/2005/10/29/perfect-markets-versus-reality/#comment-39</link>
		<dc:creator>Bishop Hill</dc:creator>
		<pubDate>Tue, 01 Nov 2005 14:49:13 +0000</pubDate>
		<guid isPermaLink="false">http://www.theliberati.net/quaequamblog/?p=30#comment-39</guid>
		<description>The bit about restaurants isn't flawed at all. We were talking about gigantism in relation to the physical size of establishments, not to the size of corporate bodies. If a school is part of a chain, why should that matter to parents? Chains tend to be very good at providing value for money. This is good for the poor. 

I'm amazed that you think restaurants provide bog standard meals for the poor. Where I live (in rural Scotland) even our tiny town has a choice of Indian, two Chinese, two chip shops, two French restaurants, one fast food joint,  plus pubs and hotels. Pretty much all of these are well within reach of everyone. 

IMHO political involvement in the education system is the problem, not the solution. I the idea that my someone else should be able to dictate my children's education to me rather frightening. This is a meaning of "liberty" that has previously escaped me.</description>
		<content:encoded><![CDATA[<p>The bit about restaurants isn&#8217;t flawed at all. We were talking about gigantism in relation to the physical size of establishments, not to the size of corporate bodies. If a school is part of a chain, why should that matter to parents? Chains tend to be very good at providing value for money. This is good for the poor. </p>
<p>I&#8217;m amazed that you think restaurants provide bog standard meals for the poor. Where I live (in rural Scotland) even our tiny town has a choice of Indian, two Chinese, two chip shops, two French restaurants, one fast food joint,  plus pubs and hotels. Pretty much all of these are well within reach of everyone. </p>
<p>IMHO political involvement in the education system is the problem, not the solution. I the idea that my someone else should be able to dictate my children&#8217;s education to me rather frightening. This is a meaning of &#8220;liberty&#8221; that has previously escaped me.</p>
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