state higher-education budgets are not targeted efficiently. By way of comparison, consider the food stamp program, which in 2004 paid out $27 billion directly to 24 million low-income Americans. Imagine if there were, in its place, a food subsidy program by which the government paid that $27 billion directly to supermarkets. Under such a program needy families would benefit little, because most of the savings would be passed on to customers who didn’t need help. That would be an inefficient use of public money.
I think that is a valid analogy. It also applies to public education: if your goal is to improve the education for the poor, then stop subsidizing everyone else and instead give targeted education vouchers that phase out at higher incomes.
Or consider health care. If the goal is to help people who cannot “afford” health care, then national health care is horrendously inefficient compared with a voucher system that targets the poor.