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November 2015

Adam Smith on Public Policy: Education

Adam Smith thought that everyone should receive an education, and that funding should be set up to comport with justice and to incentivize a high quality product.

Adam Smith was a political and moral philosopher who had a vision for public policy. This third series about Smith and libertarianism explores his arguments on such topics as education, taxation, trade, infrastructure, occupational licensing, price controls, and banking. Many of Smith’s insights are still relevant today. Smith had a great deal to say about education. I will explore his perspective on general primary education here, including how it should be funded and who should be required to go. My next post will look at Smith’s criticisms of Oxford and other European universities and the perverse incentives he saw in higher education.

Education was important to Smith. He spent his whole life teaching, either as a professor of moral philosophy, as a private tutor, or as an influential public intellectual. Scotland, which less than fifty years earlier was one of the poorest backwaters of Europe, had one of the highest literacy rates in Europe in Smith’s day. The dramatic transformation of Scotland’s education system came about through the influence of John Knox and the formation of the Scottish Presbyterian Church.

Knox led the Scottish Reformation and founded the Church of Scotland. He spent time with John Calvin in Geneva and became a firebrand preacher of reformed theology to Scotland’s aristocracy, including its Catholic monarch, Queen Mary. There were many sharp clashes between Catholics and the new reformers—ultimately ending with the meteoric rise of the Presbyterian Church as the official Church of Scotland (the Kirk). Presbyterian theology emphasized the importance of every Christian reading and studying the Bible for himself or herself. But to do that, the Scots needed to learn how to read.

The Kirk worked tirelessly towards that end—establishing a small parish school in every town and village in the Scottish lowlands. These schools were modest affairs, usually with a single schoolmaster and supported almost entirely by fees from students. Occasionally, the village provided a small school building. Smith notes that despite their modest means, the Scottish parish schools succeeded in bringing the literacy rate of the Scottish people from one of the lowest in Europe to one of the highest in less than fifty years: “In Scotland the establishment of such parish schools has taught almost the whole common people to read, and a very great proportion of them to write and account.”

Given that context, what did Smith think about primary education? His first concern was how to fund it: “The institutions for the education of the youth may, in the same manner, furnish a revenue sufficient for defraying their own expence. The fee or honorary which the scholar pays to the master naturally constitutes a revenue of this kind.” In the 1700s students didn’t pay the “school” for their education. Instead, they paid their teacher directly—much as people do for private tutors or music lessons today. Smith applauds this arrangement as both just and useful.

Even realizing that poorer people “have little time to spare for education,” he still thought a basic education was important for them:

But though the common people cannot, in any civilized society, be so well instructed as people of some rank and fortune, the most essential parts of education, however, to read, write, and account, can be acquired at so early a period of life, that the greater part even of those who are to be bred to the lowest occupations, have time to acquire them before they can be employed in those occupations. For a very small expence the publick can facilitate, can encourage, and can even impose upon almost the whole body of the people, the necessity of acquiring those most essential parts of education.

Although collegiate work may not be useful for many people, everyone can benefit from a basic education in reading, writing, and accounting. So how did Smith think this basic level of education could be conveyed?

The publick can facilitate this acquisition by establishing in every parish or district a little school, where children may be taught for a reward so moderate, that even a common labourer may afford it; the master being partly, but not wholly paid by the publick; because if he was wholly, or even principally paid by it, he would soon learn to neglect his business.

Even common laborers, who were generally quite poor in his time, should contribute a fee towards their children’s education.

But he acknowledges that fees from the students may not be sufficient compensation for the school teacher. In that case, he argues, the gap is best filled by “some local or provincial revenue, from the rent of some landed estate, or from the interest of some sum of money allotted and put under the management of trustees for this particular purpose, sometimes by the sovereign himself, and sometimes by some private donor.” He highlights many potential sources of funding but explicitly excludes funding from the “general [tax] revenue of the society.” With regard to public works, Smith made several arguments about why general funds should not be used to fund local projects.  There will be less accountability and there will be distortions where some parties benefit greatly while others don’t—yet everyone has to contribute. Requiring user fees or taxes from those who use the publicly provided good, however, gives a better sense of whether the project is actually worthwhile. Funding schoolteachers was no exception.

Smith notes that historically education was not supported by public tax revenue. In ancient Greece and Rome philosophers and rhetoricians would take on students of their own volition. These teachers had to attract students with no support from the state except being assigned

a particular place to teach in….There was nothing equivalent to the privileges of graduation, and to have attended any of those schools was not necessary, in order to be permitted to practice any particular trade or profession. If the opinion of their own utility could not draw scholars to them, the law neither forced any body to go to them, nor rewarded any body for having gone to them.

People would pursue education freely if they believed it would benefit them. But education was not a barrier to any occupation. Nor was it promoted by government. It was an entirely private affair.

Although Smith speaks well of this private voluntary education, he thought that everyone should be required to have a basic education: “The publick can impose upon almost the whole body of the people the necessity of acquiring those most essential parts of education, by obliging every man to undergo an examination or probation in them” before he can begin any trade. Smith also made a similar claim that people of “middling rank and fortune” or higher be required to study science and philosophy. This would be enforced by a probation before anyone could enter a “liberal profession” or an “honourable office.” But he is also clear that the state “would have no occasion to give itself any trouble about providing them with proper teachers. They would soon find better teachers for themselves than any whom the state could provide for them.”

Smith also seems to suggest that it is just to fund education through general revenue:

The expence of the institutions for education and religious instruction, is likewise, no doubt, beneficial to the whole society, and may, therefore, without injustice, be defrayed by the general contribution of the whole society. This expence, however, might perhaps with equal propriety, and even with some advantage, be defrayed altogether by those who receive the immediate benefit of such education and instruction, or by the voluntary contribution of those who think they have occasion for either the one or the other.

Since education benefits the whole society, it is not unjust to pay for it with general revenue. Between that claim about funding and the requirements that people attain a certain level of education, some might be thinking “Cue the department of education!” But that conclusion misses his point that the state should not provide teachers. It also misses the important qualifications Smith makes about funding. It is just as proper, according to Smith, for these education expenses to be defrayed by those who directly benefit (i. e. students and their families) or by philanthropists who want to help educate students. Smith even says that there may be “some advantage” in such an arrangement.

Smith argued repeatedly that many projects that benefit “the whole society” should not necessarily be funded by general revenue. Infrastructure projects are “most immediately and directly beneficial to those who travel or carry goods from one place to another, and to those who consume such goods.” But by funding them through tolls and duties, those who benefit “thereby discharge the general revenue of the society from a very considerable burden.” Smith wanted to relieve the general tax burden, not increase it. Smith thought local funding and fees from those who benefit most directly would defray the “considerable burden” of public spending on roads. Would it not also relieve the billions of dollars of federal spending on education today?

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