Education is important, so AndrewL believes the government should run it. Thank god AndrewL doesn’t believe that groceries are important!

First, I’m not sure how you conclude that schooling is just one of those things that government does better than the private sector. On the basis of one firm’s experience in America? AN pointed out earlier that the Catholic system has a lower cost per student than the public system. Incidentally, I’m also not sure how you arrived at the observation that private schools have one-third of the market and 55% of the government funding. Do you mean government funding from all levels?
Moreover, if you are concerned about efficiency, costs have to be considered alongside benefits. Even if private schools cost more per student (and it is likely that many do and would under a more liberalised system), many parents may be willing to pay higher costs for even greater benefits.
The case for privatisation or deregulation is also not just about short-term costs and benefits, but about dynamic efficiency - reducing the scope for government failure in the longer term. Examples include the failures that might arise with centralised decisions regarding the formation, location and closure of schools, curriculum development, teaching approaches and emphasis, etc. While it would have been possible to argue against privatisation of many firms or deregulation of many industries, such as the CBA/banking, Telstra/telecoms, SECV/power, Qantas/airlines, etc on the basis of a static view of economies of scale and higher private sector costs of capital (indeed, John Quiggin has done so), how do you account for the dynamic inefficiencies of government ownership, such as massive over-building of power stations in the 70s and 80s, various State Bank fiascos, mollycoddled airline and bank staff and so on?

My second main point is that you write optimistically about the filtering through of economists’ ideas into education policy within the current system, using trade policy as an analogy. But economists are not educationists (or exporters or importers) - their role is not to advocate any particular type of educational style, just as it was and is not to advocate business investment in any particular type of industry (in the early 90s, it was the “Shutdown” brigade that pushed for tariff retention and for Australia to develop industries such as food and minerals processing, not economists). Just as economists’ key contribution to the protection debate was to argue for its removal, the key contribution of economists to education policy would be similar to what AN has been proposing - to wind back centralised control and allow decentralised decision-making to flourish. So what role are you proposing, exactly, for economists in education?

Perhaps one day, policymakers will have some believable causal estimates of the impact of school type on some set of ‘good’ civic indicators.

“Good” civic indicators? Yep - debating what are the objectives of a political system would be useful - not only teaching the current system, but stimulating debate on what changes are desirable - and possibly increasing engagement in referenda.

It would be interesting to see how that principle would work in large parts of regional Australia, with many of the pokey 1 or 2 classroom schools. Do you want parents sending their 6 year olds 1.5 hrs on a bus every day because it’s “more efficient”?

The most likely initial arrangement is something like what ‘public’ universities already have, legislation creating them as self-governing entities, but without government representatives. The physical assets could be put into some trust-like arrangement, which would have government representatives. If the school was completely wound-up, the assets would return to the state. However, with the trust’s agreement the assets could be used in mergers or other deals with other schools. We want to ensure more efficient use of the capital invested in the school system, rather than schools being kept open just for political reasons.