4 - “The Economics of Universal Education” and After: From Friedman to Rawls

Summary

Buchanan’s and Nutter’s 1959 “Economics of Universal Education” has generated intense controversy. Their analysis of education financed through a voucher system is read as offering Virginia racists a method to resist the integration mandated by the Supreme Court. Their comparison of a public school system to majority rule and a voucher system to proportional representation provides some context to the controversy. The Knightian background explains why, in the 1965 republication of their essay, they deemed segregated schools to be ineligible for state support. Buchanan returned to the context of the inequality of racial outcomes in which he adopted a Rawlsian notion of the “fair chance” to which all individuals are entitled. He formulated a social contract in which the randomness of market outcomes is accepted in exchange for being judged on competence. Buchanan argued for a government policy of quotas in hiring so that individuals might prove their competence. In line with this reasoning, Buchanan also renounced his previous support of a voucher system for education.