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Spending More Money Won't Fix Our Schools

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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The other day, I argued that maybe we should rethink our current policy of endlessly dumping more money into college education. It's completely true that there is a big wage premium for having a college degree -- but it does not therefore follow that we will make everyone better off by trying to shove every American through post-secondary (aka tertiary) education. We may simply be setting up college as a substitute for a high school diploma: a signal to employers that you can read and write, and are able to turn in scheduled assignments within a reasonable time frame. And in the process, excluding people who aren't college-educated from access to decent jobs.

Predictably, this was not met with shouts of joy and universal admiration in all quarters. I was accused of just wanting to stick it to President Barack Obama, and also of wishing to deny the dream of college education that should be the birthright of every single American. I was also accused of being unfamiliar with the known fact that America woefully underinvests in education compared to other advanced nations.

It is true that I am unfamiliar with America's woeful underinvestment in education, in the same way that I am unfamiliar with the tooth fairy, because both are legends with no basis in fact. American spending on education is in line with that of our peers in the developed world -- a little higher than some, a little lower than others, but not really remarkable either way:

That black bar represents total spending, and as you can see, we spend more on education than most of our peers, not less. To be sure, that is partly driven by our very high spending on tertiary education, aka college. But we spend more than most of our peers at most levels, not just on college.

Of course, we're richer than many of our peers, so maybe we should spend more. If you look at spending as a percentage of gross domestic product, we're no longer the highest, we're just average:

We spend more than many of our peers on college and late secondary education, less than a few on primary and early secondary school. Perhaps we should reallocate those resources, diverting more into earlier education. But this is not a problem of inadequate overall investment -- and Japan and Switzerland, which spend less than we do, are hardly Third World hellholes.

What about public investment? Is the problem that we don't put enough public funds into education? I find these sorts of arguments rather unconvincing -- the idea seems to be that we should spend more government money on education not because there's a gap we've identified, but simply for the purpose of spending more government money on education. But at any rate, we spend quite a lot of public funds on education at all levels:

And when you look at primary, secondary and post-secondary training, we're on par:

You can argue that there's an inequality problem in our schools. In fact, I think there is obviously an inequality problem in our schools, but that the big problem is not at the college level, but rather in the primary and secondary schools that are overwhelmingly government-funded. And those disparities are also not primarily about the dollar amounts going into schools -- Detroit spends well above the U.S. average per pupil, and yet one study found that half the population of the city was "functionally illiterate."

Should we fix the issues with those schools? Absolutely -- and doing so might mean spending more money. But that doesn't mean that we need to increase the overall level of educational funding. It means that we need to identify ways to improve those underperforming schools, then find out how much more it would cost to implement those programs. It is just as likely that improvements will come from changing methods and reallocating resources as that they will require us to pour more money into failing institutions.

And, of course, middle-class parents will say that all that spending on tertiary education is breaking them. And perhaps we should spend less on college. But that's not a problem you attack with more subsidies, because paying for college out of tax dollars doesn't make the cost go away; it just means you have to send a check to the IRS instead of the bursar's office. In general, providing government subsidies does not lower the price of goods; if anything, it increases them, by insulating consumers from the cost of their educational decisions.

I'm certainly not arguing that the U.S. educational system is perfect. It has many problems. But they are specific problems which will require specific solutions -- and "spend more" or "hand out mass subsidies" are anything but specific.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Brooke Sample at bsample1@bloomberg.net