1This article is dedicated to E. G. West, to whom, allowing for the usual time lag between ideas and policy, our grandchildren will owe a large debt. Most of my historical discussion is based on E. G. West, Education and the Industrial Revolution, P.T. Batesford & Co., London 1975.

2"The expence of the institutions for education and religious instruction, is likewise, no doubt, beneficial to the whole society, and may, therefore, without injustice, be defrayed by the general contribution of the whole society. This expence, however, might perhaps with equal propriety, and even with some advantage, be defrayed altogether by those who receive the immediate benefit of such education and instruction, or by the voluntary contribution of those who think they have occasion for either the one or the other." (Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1789 edition, E. Cannan ed., 1904 U of Chicago Press, Chicago: 1976, Bk V, Ch 1, Conclusion, p. ii 340).

3I have chosen to refer to "government" rather than "public" schools and schooling, because I find the latter terminology misleading. A privately run school may be "public" in the sense that differentiates a public hotel or restaurant from a private club-it may choose to accept all customers willing to pay its price. In this sense, most government run schools are private, since they accept only students who meet certain criteria, most commonly geographical. To describe government schools as "public" on the grounds that they are run by the public is to identify the public with the state, which I think a mistake. Avoiding the term "public school" also avoids confusion between the British and American usages; a British "public school" is what Americans call a "private school." I use "government" rather than "state" in the context of schooling in order to avoid confusion with "state" in the sense of a political subdivision of a federal system, such as the state of Illinois.

4One can, however, argue that such virtues are in the long run interest of the individual who possesses them, since they make him a more valued partner in freely chosen associations. See Frank, Robert H., Passions Within Reason: The Strategic Role of the Emotions, Norton: NY 1988. If this is right, then private schools may do a better job of inculcating virtue than government schools, precisely because it is in their interest to teach what parents want their children to learn.

5Lott, John R. Jr., "An Explanation for Public Provision of Schooling: The Importance of Indoctrination," Journal of Law and Economics 33: 199 (1990).

6 William Buckley's response to this argument was that he would rather be ruled by the first thousand names picked out of the New York phone book than by the faculty of Harvard.

7For an interesting and original discussion of such issues from an economic perspective, see Frank, Robert H., Choosing the Right Pond: Human Behavior and the Quest for Status, N.Y: Oxford, Oxford University Press 1985.

8West (1975) p. 36.

9Quoted by West from C.R. Fay, Adam Smith and the Scotland of his Day, 1956, p. 51.

10 Smith (1976) Bk V, Ch 1, pt III art II, ii 301.

11For cites to the relevant literature, see Sam Peltzman, "The Political Economy of the Decline of American Public Education," Journal of Law and Economics, Vol 36, , (1993)

12West (1975); Education and the State: A Study in Political Economy, Institute of Economic Affairs, London 1965; "The Political Economy of American Public School Legislation," 10 Journal of Law and Economics, 101 (1967); "Private Versus Public Education: A Classical Economic Dispute," 72 Journal of Political Economy 465 (1964).

13Some variants include the option of voucher supported public schools. In others, the amount is different for different sorts of pupils, or is payed out on the basis of performance measures rather than years in school. For the purposes of this essay I shall ignore such fine points, and consider a simple version of the voucher proposal.

14Even if schools were not permitted to charge more than the voucher, parents still could and would supplement their children's education in other ways.

15This conclusion ignores income effects due to redistribution. Families with many children and low income will be net gainers by a voucher; families with few children and high income will be net losers. The former will tend to buy more schooling for their children than without a voucher, the latter less.

16If the only relevant dimension of schooling is number of hours, this is not true; a parent can provide the extra hundred dollars as privately provided after school tutoring. But if the relevant dimension is quality rather than quantity of schooling, simply supplementing what the government provides is not a satisfactory option.