If conservative counties are going to use the bond market to fund mechanism design studies for vouchers, then public school systems need to work on mechanism design to keep public schools on top. The most important contribution mechanism design could help public schools is to move divisive social issues from school boards to voter initiated referendums.
Private voucher schools don’t have to waste top management resources on divisive social debates. They pick one side or the other and parents who believe in that side bring their children to that school. So the divisive social issues lead to a separating equilibrium. Parents of one group go to one set of schools and those of another to a different set.
In the long run, this is a competitive advantage for private voucher schools. Unless public schools can remove divisive social issues from school boards, the voucher schools will eventually win because they split the divisive social issues into separate private systems.
Voter initiated referendums are the way for public schools to compete with private voucher schools on divisive social issues. It allows the voters to decide them. If the vote is close, then a mechanism allowing the minority to have some schools in their form could be made a compromise solution. If voters want that, they can approve it. Or the minority could go into voucher programs once voucher schools figure out a mechanism design that works.
Public schools have to compete on mechanism design with private voucher schools. The private voucher schools will not stay bad forever because of poor mechanism design and a failure to understand the market microstructure of private schools and vouchers. So public schools have to get busy to win the mechanism design wars.
Mechanism design wars are about better education outcomes instead of just a food fight. They also lead to a separating equilibrium for those who want a specific choice on divisive social issues. One way or another, those who really want a particular choice for their children will get it. So mechanism design allows that but making sure the education outcome is as good.
Currently, private vouchers are not working. But public schools can’t assume that will continue forever. This is particularly true if public school boards spend their time on divisive social issues and not on education outcomes.
