But what Smith knew in 1776 seems to have been largely forgotten by those who would reform America's failing public education system in 1998. Smith and other economists have stressed that incentives matter in determining how scarce resources are allocated.
Parents often have little or no alternative if their local public school is performing poorly.
The result is that every year hundreds of thousands of American children must rely solely on the equivalent of the butcher's benevolence for their education. Yes, because benevolence, as Smith tells us, is not the best method for making the most efficient use of scarce resources and raising people's standards of living. We must ask ourselves what incentives currently exist in the public school system to produce a quality education for all students. An honest answer to these questions reveals that public schools simply have no incentive, beyond the benevolence of their teachers, to educate children since the consequences to them are the same whether or not they succeed in their mission. His interest is, in this case, set as directly opposite to his duty as it is possible to set it.