Picking Schools is Like Picking Prisons

A criticism of the idea that choice and competition promotes quality

We are going to do a little thought experiment. Imagine that free-market enthusiasts have just taken over government and declared they will revolutionize every sector of the economy by introducing more choice and more markets. From now on, the prison system will operate like the private school system in Sweden: Every inmate gets a government voucher to pay for rent at his or her prison of choice. We add a little twist to the Swedish formula by allowing every inmate to pay extra to get a nicer prison or prison cell.

Ranking agencies will pop up, rating prisons on a variety of criteria to help prisoners pick their “dream” prison. Meanwhile, prisons themselves will compete to attract the highest paying and best behaved inmates.

What will be the outcome of this thought experiment, and why am I making this thought experiment in the first place? I am creating this thought experiment because I am highly critical of the idea that higher quality schools can be achieved through competition in a marketplace. Unfortunately, many have a hard time accepting that markets don’t always lower prices and improve quality. Hence, sometimes we need extreme examples to help demonstrate why something is a bad idea in principle.