Wouldn't it be better to try to fix the 'bad' schools? Why are they bad? If parents are able to make a choice about what school is good or bad why don't they decide to make the choice of making their bad school a good school? Introducing the amount of competition that Milton wants would create a system with 2 velocities, one where the good parents flock the good schools, and the 'bad' parents flock the bad school, and in the end this decision to which school to go will not depend on a quality choice, but on a resource constraint choice. The benevolent government that we assumed at the begining, that gave the free choice to the parents, is not being benevolent since we have people that have the choice in theory, but it is not a choice they can make.
In the end we end up with a society with the good parents kids having the opportunities to make a difference (that in the end they would not want to make, since everyone is out for their own interest) and the bad parents children are the dumb and unprotected, the criminals by necessity and not necessarily by choice, the mass, la foule, the mob that does not think and just follows.
I think is in the best interest of all to provide public education for all, where there is an attempt to make good schools out of the bad one, since i like to think that no rational individual with an instict to survive wants to be put in the category of 'bad'.
The choice to sent you kids to private school remains in the hand of the parents (with the resources), however, I see no reason why private schools have to be better than public schools. Investing (money, necessary but not sufficient) in our education system will provide society with the scarce politcal good that is and informed citizen.
Another advantage down the line will be that the new generations will be less indoctrinated in the fanatical stupidities, since I would not put up with my being told non sense about biology, he/she would not put up with it neither, and we will hopefully arrived to a place where this rational individual has the tools and the information to make those rational decisions that we as economist love to assume!
No one should be let go through the cracks! which is different from 'No child left behind'
End of rant!
P.S. I went to both private and public schools