The U.S. Supreme Court has ruled that cities can have school voucher programs that give money directly to parents, who could then choose between competing schools, public or private. The idea was to create competition among schools. Like businesses, schools were expected to improve their services (i.e., how effectively they teach) in order to win students from their "competitors".
Do you believe economic principles like competition apply in both private and public organizations? Why or why not?
I do believe that competition tends to improve the quality of a service that is being provided, regardless of whether that service is being provided by the government or by the private sector. That does not mean, however, that I necessarily believe that all government functions could be improved through competition with the private sector.
I believe that competition improves the quality of services provided simply because that makes logical sense. We know that companies in the private sector do not do their best to innovate and provide quality if they have a monopoly. The principle must surely apply to the public sector as well because there is no reason that it should not. This is a principle that is rooted in human nature, which is the same among people in the private and the public sectors.
However, it is not necessarily a good idea to promote competition in the public sector. In the private sector, a company that cannot compete simply folds and no one other than its owners are likely to be harmed in any major way. By contrast, let us think about what might happen in the case of school vouchers. If vouchers are introduced, the best students with the most motivated parents are likely to take advantage of them. The worst students with the least motivated parents are still stuck in the public school which is now worse than it had been before. In other words, it is not just the principal and the teachers that are hurt. The remaining students are hurt as well.
It is for this reason that I am not sure if school vouchers are a good idea. Competition is generally a good thing, but in the case of schools, competition is likely to help some students while hurting others.