"The utilitarian argument for a minimal public sector is that markets lead to better outcomes. For example .. public education is inefficient. It uses wasteful methods, because there is no competitive pressure to do otherwise. It eliminates the wisdom and discipline that come from consumer choice. Finally, the taxes collected to fund public education cause economic friction, reducing the level of overall output.
Friedrich Hayek would say that government officials are missing the local knowledge of consumers and educators. Local knowledge, mediated by the mechanism of the market, outperforms central planning .. ". More ARNOLD KLING - "What's Wrong With Paternalism?".
Posted by Greg Ransom at April 16, 2004 01:05 AM | TrackBackNot obvious that Hayek actually believed this, though, is it Greg? He wrote quite a lot about education, without ever once (AFAIAW) mentioning privatisation as a solution. And in fact, in his writings on the Ecole Polytechnique, he pushes a specifically paternalist line, because he is prepared to gainsay the "local knowledge of educators and consumers" to suggest that the X ought not to have removed practically all arts subjects from the curriculum.
Like Adam Smith, my read of Hayek is that he was always prepared to carve the education system out of the rest of the economy, because the kind of liberal society that his system is absed on presupposes a community of already educated liberal individuals.
Like I say, if Hayek thought this, why didn't he say it?
Posted by: dsquared at April 18, 2004 03:25 PM