Understand, anybody who tells you the pre-Katrina Orleans Parish School Board had made a good case for democracy is a liar. The truth ain't in 'em. Our schools were mostly awful. The system's finances were even worse, and the board members were hostile to the very idea that they had anything to do with the way things were. Ellenese Brooks-Simms, the president of the board who later pleaded guilty to bribery charges, liked to blame the poverty of its students for the school system's woeful performance.Corrections would simply note that bad, dysfunctional schools with concordant low taxes likely raise overall utility--at the very least, their presence along with the presence of school districts that aren't dysfunctional is likely a net benefit. Why? Some people have preferences for low-tax, low-quality schools. Others have a preference for high-tax, high-quality schools. Assuming that low quality is a function of low taxes and not simple inefficiency, more options are better.
In order to see this in a "guns and butter" like diagram, imagine there are two types of people, as described above. The first type, preferring disposable income, in depicted in blue. The second type, preferring education, is depicted in red. Then both types are unambiguously better if they are allowed to live (or move to) cities that they prefer. This is depicted graphically on the left (click to enlarge). On the right, we see that individuals forced to have the same measure of income and schooling make both worse off.
As we can see, allowing Tiebout sorting can enhance utility. Not everyone has the same preferences, and a distribution of public services rather than a single quality/standard is likely to make everyone better off.
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