In Sweden private for profit schools and schools run by the municipalities compete with each other. All of them are funded by the tax payers and they get a certain amount of money for every student.

The system is a disaster, with a lot of for profit schools slashing costs to maximize profits regardless of what the consequences are for the students. And that's just one of the many failures of the system.

Basically, the problem is that markets don't necessarily generate the best solutions from a social perspective, markets generate the solutions that create the largest profits. You have to some how get the markets to stop chasing profits, which is easier said than done.

>> In Sweden private for profit schools and schools run by the municipalities compete with each other. All of them are funded by the tax payers and they get a certain amount of money for every student.

How the hell can a school be "private", while being funded by taxpayers?

They call these "PPP" public private partnerships. What happens is cronies of the ruling party are given money to avoid risk and get to run the business extracting all profits for themselves. The taxpayer is told hey this would cost 10x as much if we ran it.

Yep, bullshit as usual.

The privatization of rewards while the public bears the risk is a pretty well established business model these days.

Right. I wasn't actually confused about what's going on, just wanted to point out it doesn't make sense :p

Profits ~= value of product - resources consumed

There is nothing wrong with firms making profits, it is a sign of efficiency, and a sign of where resources should be allocated; with time, the least efficient firms are eliminated, and only those which create the most value at the lowest cost remain. The problem is that the product (and its value) may not reflect the objective(s) of the policymakers and the public, and the chief goal of those creating any system should be to properly align rewards with desired outcomes.

Easier said than done. I think it's probable that some problems are so difficult to translate into proper market motivations that the cost of the perverse incentives inevitably produced by your attempts will consistently exceed the potential for increased efficiency and miraculous innovation that the market promises.

You are neglecting to examine the counter-factual. The current system is abound with perverse incentives and flaws. As to the difficulty of designing a new system; we have thrown money at a poorly designed system for many years with little success, perhaps a redesign would be worth it.

>You have to some how get the markets to stop chasing profits

There is another solution. You could set up the markets so that the way to maximize profits is to create the best solution. For example, imagine if we had a perfect measure of student outcome. You could make the school's pay dependent on their outcome, then the market will find a way to maximize the f(outcome)/cost.

Doesn't work in practice, though - you end up with schools "teaching to the tests", to the detriment of other unscored qualities.

The obvious solution: more tests, and more bureaucracy. By the time you've got enough tests you might as well have a state-run school.

What do we need the market for then?

To minimize cost. A better example than education would be carbon emissions. Suppose we want to reduce our carbon emission to X tons per year. If we auction off X credits permitting 1 ton of carbon each, the market will find the cheapest way to reduce our emissions to X. Simply being able to measure emissions would allow us to reduce emissions (say, by requiring all companies to reduce by Y%), however, this is almost defiantly going to be more expansive.

If you stop chasing profits then there is no incentive to produce a quality product. The US public schools are a great example of that.

But are profits the best way to measure a "quality product" when it comes to something like education?

I would argue not, or at least that externalized costs need to be internalized somehow (regulation or taxation are the typical means).

That is to say, if we have for profit public schools, I'd want their profits to be tied to the long term effects of results of their students, not to yearly test scores.

>if we have for profit public schools, I'd want their profits to be tied to the long term effects of results of their students, not to yearly test scores.

This is a great idea! Why not do the same for government-run schoolteachers? This may help attract and retain high quality staff, as well as providing low-skilled teachers an incentive to leave.

Are you suggesting that I can't determine for myself if a particular school is providing a good long term education for my child? Or that I shouldn't be able to choose to take them to a different school?

There's no inherent incentive to produce a quality product when chasing profit either, just one that people will give you money for. Sometimes this aligns with quality, other times, it does not.

Unless schools somehow got paid for good outcomes then this is a specious argument.

Why do Americans always insist on conceiving of children as products? Why do they always insist that schools produce children? Last I checked, we disallow reproduction at schools.

Other incentives are available. Public pressure, for example.

Well, there's a rising number of for profit schools and colleges. These are different in that they still get government funding but are run by private companies (as opposed to private schools, which are funded by tuition).

http://chronicle.com/article/Annual-Portrait-of-Education/12...

People convince the government to defund public schools, they then complain public schools are failing in order to get more private schools built.