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July 20, 2009



"better education for me makes you worse off. One survey (pdf) has found that over a third of people do indeed regard schooling as a positional good."

That a proportion of people regard schooling as a positional good does not make it so, it's an example of the zero sum game fallacy.

Charitable status for private schools has long been viewed as a quid pro quo for those who have to pay for the state system and get no benefit from it. This cosy little arangement was spoilt by the Charities Act 2006 which was specifically designed to remove charitable status from private schools unless the school engaged in charitable activities outside their normal course of business. It is unsuprising that many view this as an attack on private schools because it was a feature of the legislation, not an unfortunate bug.

So the answer to "should private schools have charitable status?" is mu. The problem can only be resolved by either making the cost of private schooling tax detuctable up to the cost of a state education or bringing in a voucher system.

Tim Worstall

Yes, me, but then I'm with Adam Smith on this. To a certain level of education, education is indeed a public good. A population that is essentially literate and numerate is indeed one. I don't think it extends to university level though, think it stops before that, somewhere.

Of course, all we now need to do is get the publicly funded system to turn out 14 and 15 year olds who are functionally literate and numerate.....

john b

"Charitable status for private schools has long been viewed as a quid pro quo for those who have to pay for the state system and get no benefit from it."

So why doesn't my private army have charity status?


Given that private schools had charitable status for years, and only now is that being questioned (on highly politicised grounds in my opinion) would it not be fairer to say that any school that is currently a charity could opt out of charitable status, and transfer all its staff/assets to a private organisation? Perhaps subject to a clause that if the school ever stopped being a school all the assets have to be given to some specified charities? And then they pay tax on profits, and capital gains etc just like any other business?

This way the past is the past, and if we are now agreed that private schools should not have any tax benefits in the future, we should not punish decisions made many years ago in different times and under a different law?


"To see what I mean, bear in mind that the case for charitable status is not that private schools save the tax-payer money. If this were the argument for treating public schools as charities, we’d also regard private health insurance... as charities. But we don’t."

But we should.


"So why doesn't my private army have charity status?"

Because Chris has been saying "public good" when he means "merit good".

Education is not a public good, it's a merit good. Defence is a public good.

Leigh Caldwell

Perhaps, though, both sides are in fact being entirely politically consistent.

If public schools are not regarded primarily as providers of education, but as a competitor and antagonist of the state school system, then the positions are defensible. And I would argue that both sides in this debate do, indeed, define public schools mainly in opposition to state schools and not as neutral providers of a service in the market.

Believers in education as a public good - especially if they think it has a network effect among pupils - would thus consider public schools to be damaging the provision of this public good, and deserve taxing. Those who disagree, would see public schools as flagships, leading the way to a more efficient education sector, and thus worthy of subsidy.

(by the way, Hugo, I don't think "merit good" is right either. Perhaps "social good" or "good with positive externalities"? It might be a merit good as well, but that's a different argument)


"better education for me makes you worse off"

No when you go to your doctor (or your lawer, or your car mechanical). You are much better when you are surrounded by well educated people.
Maybe the point for you then is to have also your chance to get an education an take it. For your good and for the good of the rest of us.


"So why doesn't my private army have charity status?"

It's all down to that pesky Henry the VII.


Education is indeed a Merit Good, which would be both under produced and under consumed if left to the free market. That's why it's compulsory. It also creates positive externalities - and the public benefit exceeds the private benefit - also why it's compulsory. Capitalism has a hunger for literate and numerate workers, but also for more than that; it needs both socialised workers and effective leaders.

The covert school curriculum, of obedience, punctuality and the ability to perform repetitive work tasks, is universal and common to both state and private schools (except perhaps Neill's Summerhill). What private schools produce in addition to this is a large number of leaders. It's the inability of the State sector to produce leaders in the quantities that they should that grates, I think. Until they do, we must rely on the private sector.


Children's clothes are a private good. But they are still VAT exempt. Taxation exemptions might just reflect a moral consideration of what ought to be provided more cheaply and easily. I don't think Tories would have a problem with that sort of position, although as a libertarian I would prefer that taxes were uniformly low and neutral.


Perhaps "social good" or "good with positive externalities"?

I don't know what a "social good" is. A good with positive externalities is a merit good.

Whatever it is, education is not a public good. It is neither non-rivalrous nor non-excludable.


Instead, the case of charities in public schools is that education can be a public good. Its benefits extend to society as a whole.

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