ABSTRACT
One issue, highlighted by the economist Adam Smith, is that a teacher paid solely by the state ‘would soon learn to neglect his business’. Smith supposed that if teachers were to be guaranteed an income by the state, they would have no incentive to provide a proper service. The only way in which parents can ensure that they will is
by paying them according to their performance in educating their children. In such a system, good teachers will be well paid and bad teachers will be poorly paid. If we further assume that the best schools will be those with the best teachers, the higher pay that good teachers attract will mean that the best schools have the best paid teachers. Although the education provided by these schools will be the best, it will also be the most expensive.
