Sounds great, right? Sometimes government tells us things aren’t so great; it tells us it must intervene on behalf of the consumer, using euphemisms like “regulation” and “consumer protection” to make demands of providers. Without the government’s intrusion, providers will naturally seek to serve consumers in order to be patrons of their business, but when politicians tell them what to do the natural arrangement of the marketplace is no more. Providers can no longer use the fullness of their capacities in service of the consumer, they must now divert a part of those capacities in order to meet the arbitrary demands of statesmen. Providers now must serve two masters, the consumers, whom they would be serving anyway in order to receive payment, and the politicians, who pay them in nothing but demands. The end result is necessarily a loss for the consumer, who is now not as well off as he could have been.
Sometimes, government intrudes into the marketplace in an unprecedented way. Throughout history, government has completely taken over areas of service that would otherwise be private and turned them into a certain kind of public institution called a monopoly. A monopoly in this sense is an institution controlled by the government that is the sole provider, protected from competition, in a certain area of service.
The American K-12 public school system is a monopoly, since it is the primary forum by which children obtain an education.
Public schools are paid for by taxes and children attend them for free, not because school managers make them free but because government demands they be free. The price system is the mechanism by which providers keep each other in service to the consumer; providers lower prices in order to draw the attention of consumers to themselves and away from other providers. But when there are no prices, what empowers the consumer to choose what he thinks is best for himself, and thus employ providers that efficiently and easily supply it for him, is eradicated. When people no longer buy things on account of how much good it does them, but instead are simply handed something, they are made poorer, not richer. The public school monopoly is completely insulated from the needs of the consumers, them being the children and their parents. It has no reason to cater to anyone’s wants; it simply does what it does and whether or not people are satisfied is not even part of the equation. Whether they like it or not, they have to live with it. In this way, the monopoly will always, necessarily, be inferior to private enterprise.
It can be said that children should not be subjected to the “ups and downs” of the marketplace, and that schools should be protected from the turbulence that comes with free enterprise. However, this is an over-simplification and under-explanation of the issue. Children are served because of the turbulence associated with the free market. “Turbulence” simply means that some schools will do better than others at admitting students and taking in revenue, while other schools will struggle to stay financially afloat and sometimes even fail.
This phenomenon is an expression of the consumer exercising his power to determine which providers are giving him superior service and which are not. The idea that politicians and central planners will run schools “not so they themselves can profit but for the students” can only end in disaster when put into practice as public policy. (And it has.)
In a free market, the provider can only profit if he in turn is providing a legitimate service to a consumer. If the consumer does not believe the service is to his benefit, he chooses not to purchase it and moves on with his life. There is no force involved. On the other hand, when there is a government monopoly compelling people to use un-priced services, and the consumer believes the services are not to his benefit, he has no power over the monopoly; the monopoly has no competition. He has no choice and is forced to make use of bad service that he does not want, a phenomenon that cannot ever take place in a free market.