The answer to a market where the participants compete to make things worse by following bad incentives is to ask what is creating those bad incentives and to stop doing that, not to impose a monopoly.
That thought is my response to, and my almost entire agreement with, an ASI blog posting by Anton Howes, which is critical of Education Minister Michael Gove’s plan to replace competing examination boards with a state monopoly examination board. Gove says these are now racing each other to the bottom, racing each other, that is to say, in lowering standards.
But, says Howes:
The proposals to limit exam board competition to monopolies for every subject (or duopolies between O-levels and CSEs) would therefore exacerbate the problem by limiting healthy academic discrimination even further. With only one exam board to be lobbied for each subject, we would face a system where every self-interested education minister could easily ‘dumb down’ the system even further, no matter how much an overhaul could raise standards in the immediate short term.
Howes is spot on in identifying one of the biggest reasons why state action is so frequently resorted to, even by politicians generally inclined to favour free market solutions. To start with, state action sometimes seems to improve matters, definitely so to many eyes. Only later does the arrangement revert to brazen, monopolised incompetence. Markets, on the other hand, often start out as a bit of a shambles, and only yield their benefits to politicians who are prepared to be patient. In the long run, markets are incomparably superior, and some politicians do know this. But politics mostly happens in the short run.
Howes also notes that “free marketeer” Lizz Truss MP supports Gove in this move towards state monopoly.
Alas, Howes himself gets a bit confused in his final paragraph:
… the real solution to grade inflation may lie in more accurate and discriminating government league tables, …
Excuse me! Now who is putting his faith in a government monopoly? But before even the next full stop arrives, Howes corrects himself.
… or even their replacement with a competing system of tables by universities, employers, and other private groups.
Quite so. But lose that “even”.