Ken DeRossa started a little argument. Here's my two cents' worth.
What's the alternative to a market in education services? Perhaps it's better to suppose a range of options on a multidimensional continuum and ask: "What actions can policymakers, teachers, taxpayers, parents, and/or students take to improve the performance of the US (formal) K-PhD. education system?" The answer will depend on the powers available to the person who answers.
The government of a locality is the largest dealer in interpersonal violence in that locality (definition). Every law on the books is a threat by the State (government, generally) to kidnap (arrest), assault (subdue), and forcibly inoculate with HIV (imprison) someone, under specified circumstances. People do not become more intelligent, more compassionate, better-informed, or more capable (except by their enhanced access to violence) when they enter the State's employ. The tools available to State actors are violence and threats of violence, and subsidy, extracted at gunpoint from taxpayers.
In the US today, academics design school policy. These academics excelled at school. They have spent their entire lives in school. They imagine that the academic is the highest form of life on Earth and that everyone wants to be a college professor. The curriculum they prescribe and the goals to which they invite students to aspire are foreign to many normal children. Training an artistically or mechanically inclined child for an academic career using a transcript as the incentive is like teaching a cat to swim using carrots as the reward.
Compulsory, unpaid labor is slavery; black or white, male or female, young or old. Compulsion kills motivation. US schools fail because they give to many children no reason to do what schools require. Einstein opposed compulsory attendance at school. Gandhi opposed compulsory attendance at school.
The State-monopoly US school system originated in anti-Catholic bigotry and has become an employment program for dues-paying members of the NEA/AFT/AFSCME cartel, a source of padded construction and supply contracts for politically-connected insiders, and a venue for State-worshipful indoctrination. If this is not so, why cannot any student take, at any time, an exit exam (the GED will do) and apply the taxpayers' age 6-18 K-12 education subsidy toward post-secondary tuition at any VA-approved post-secondary institution or toward a wage subsidy at any qualified (say, has filed W-2 forms on at least three adult employees for at least the previous four years) employer?
The NEA/AFT/AFSCME cartel's schools (the "public" schools) operate for the convenience of administrators, not for the benefit of students. Consider the concept of "a year of Math" or "a year of English Literature". This makes as much sense as "a pound of friendship" or "a meter of exercise". Think on it: measurement of course content in units of time reflects what some administrator imagines a "normal" child can acquire in some amount of time. This indicates systematic indifference to individual differences in ability. That indifference characterizes the cartel's one-size-fits-all methods of operation. And THAT kills motivation.
The education industry is not a natural monopoly. Beyond a very low level there are no economies of scale at the delivery end of the education business. Education only marginally qualifies as a public good as economists use the term and the "public goods" argument implies subsidy and regulation, at most, not State (government, generally) operation of an industry.
Amended (2008-12-21:1741 Zulu) by a one-word substitution ("reflects"=>"indicates") and insertion of "That indifference...operation".