What a Free Market Approach to Education Would Look Like

Every time I engage in a discussion with someone about the state of the U.S. education system, I always hear about the same things: the failure of the system, our low rankings compared to our industrialized peers, and how poorly we treat our teachers. Yet when I suggest we could look for a free market alternative, I always get the same reply:

"But who will edcucate our children?"

Frankly, I don't think most people can conceptualize a free market alternative to our education system. They can probably imagine an older, white man with a monocle twirling his moustache on top of a pile of money while students at the bottom toil away at school, assuming they can afford it. While this is far from the case, I plan to show how the free market can help improve our education system by looking at our neighbors across the Pacific: South Korea.

It's not news that South Korea is an academic powerhouse. According to OECD rankings, their students ranked first in math and reading and third in science. Compare this to the rankings of the U.S.: 14th in reading, 25th in math, and 17th in the sciences. Ninety-three percent of all Korean students graduate, as opposed to the United States' 75%.

But what is amazing isn't the achievement itself, but how it was achieved.

The Wall Street Journal released an article highlighting an integral part of South Korean education system. In South Korea, there is a shadow education system that compliments a student's primary education. This shadow system operates as a private, after-school tutoring service. And it operates very much like how a free market system would allow a company to operate: compete to provide the highest quality of goods and services to the most amount of people at the lowest possible price. This philosophy would tremendously benefit the students, parents, and teachers.

Often, I hear the arguments that parents should be more involved with a child's education and I agree. But it's difficult given the mentality that we simply drop our kids off to school without any real incentive to track their progress. Or what's worst, parents don't have the resources to track their child's educational progress. What these incentives for tutors do is provide that accessibility and motivation. As they compete for students, they have to market their prices accordingly to attract more parents.

Kim Ki-hoon makes $4 million a year by operating a Hagwon (a South Korean for-profit private education system) and tutoring students. He posts online lectures to his customers and provides guidance to students who are struggling (a similar approach is used in the U.S. in higher education with some preliminary positive results so far).

Recruiting better teachers and tutors is an important part of the business model, since better teachers leads to better test scores, which means more revenue. A surprising fact is that the tutor does not have the burden of abiding by occupational licensing and certification laws. The results speak for themselves. With teaching being a demanding profession, it would make sense to compensate teachers according.

A very similar approach was attempted by former Chancellor for the Washington, D.C., Public Schools Michelle Rhee, where she proposed to give teachers the opportunity to make more than $100,000 in exchange for their tenure. Sadly, the teachers union won. In Hagwons, there is no tenure, there is only proper compensation for proper performance, much like everything else in the world.

I believe teachers should be paid as much as lawyers and doctors, but they have to be held to the same standards. Imagine paying a surgeon half a million dollars for only successfully completing a heart surgery 10% of the time, and then not being able to fire him. That would be ludicrous. 

In the 21st century, the information worker is more important than ever. A proper education is needed. South Korea has shown to be preparing their students adequately for the competitive global economy, while the U.S. is lagging behind. Yes, I am aware there are different demographic, cultural, and social factors at play. But given the Koreans' track record, a free market approach to education reform that models closely to South Korea's is at least worth considering.

To not do so would be a stupid move and would hurt the ones who are the most vulnerable.