“The Department of Education is being torn apart in real time,” the New York Times declared this week. The Trump administration has kicked off the boldest federal education shake-up in 45 years, carving up its core functions across Labor, State, Interior, and HHS. To understand why this was inevitable, we must go back to the Austrian economist, Friedrich Hayek.
It’s all about central planning—the very purpose of the Department of Education.
Hayek’s famous essay “The Use of Knowledge in Society” asks the big question: How do we organize an economy in the smartest, most effective way? Rather than assuming—as some planners do—that “all the knowledge” needed for rational economic decisions “should be concentrated in the hands of a single authority,” Hayek argues the opposite.
Knowledge is scattered. A store manager knows how many customers bought eggs today; a farmer knows a drought is coming; a mechanic knows there’s an extra part in the back. This small, local, constantly changing knowledge cannot be gathered into one master file and handed to a central planner. The real economic problem is how to make use of this “dispersed bits of incomplete and frequently contradictory knowledge” that no single person—or institution—can ever fully know.
When discussing “economic planning,” Hayek argues that there are two basic models: central planning, in which a single authority decides what gets produced, in what quantity, by whom, and at what price; and decentralized planning, in which millions of individuals make their own decisions based on the knowledge they uniquely possess.
Hayek stresses that the real question is not whether society plans—because everyone plans—but who does the planning. He contends that decentralized planning is far more efficient because people closest to the action hold the most relevant information.
While scientific knowledge includes data, formulas, and broad theories, everyday practical knowledge—like a shop owner knowing a shipment is delayed, a truck driver knowing a shortcut, or a contractor knowing a uniquely skilled local worker—cannot be captured in spreadsheets or centralized systems. Because no central planner can ever gather or process all these scattered, hyper-local pieces of information, Hayek argues that decentralized decision-making, coordinated through prices, is the only reliable way to make use of society’s full knowledge.
Hayek’s insight makes the case for closing the Department of Education. Like the economy itself, the Department of Education suffers from the same structural flaw Hayek identified, which is that no central authority can access the real time, local knowledge that drives outcomes. Central planning fails, he argued, not because planners are ill-intentioned, but because they are structurally incapable of knowing what they need to know.
In education, the knowledge that matters differs from the “scientific” knowledge that can be gathered in Washington. It is the intimate, local, time-and-place knowledge held by parents, teachers, principals, and school boards. When the federal government tries to centrally plan schooling from thousands of miles away, it is attempting the very thing Hayek warned was impossible: replacing millions of decentralized decisions with a single bureaucratic plan.
Before the creation of the Department of Education in 1979, America’s school system, run almost entirely by states and local communities, was widely considered the best in the world. Half a century later, after nearly $300 billion a year in federal spending and layers of federal mandates, the United States ranks 28th in math and 36th in literacy.
And Hayek would not be surprised. The Department of Education was born from politics: a last-minute election-year deal Jimmy Carter made with the teachers’ unions, which had long wanted a federal department they could influence. From the start, it has functioned less as an engine of student achievement and more as what Hayek would call a “centralized authority with the illusion of knowledge”—commanding schools through grants, conditions, regulations, and ideological initiatives that have little connection to the needs of actual students.
Hayek’s solution is simple: push decisions back to where the real knowledge is. Washington does not know what a second-grade teacher in Lubbock knows. It does not know what a principal in rural East Texas knows. It cannot possibly design a one-size-fits-all plan for 50 million students living in 13,000 diverse school districts. Local communities and parents can.
Closing the Department of Education will not abandon students or cut off funds. The money can still go directly to states, without filtering through a $268 billion bureaucracy. Hayek would see it for what it is: a central planner that can never possess the knowledge required to justify its power. Real reform begins by trusting the people closest to students.
