I was tied up when the massive Atlanta School District cheating scandal broke last month, and so didn’t get around to blogging it. [Recap: nearly 200 teachers and principals in half of the district’s 100 schools were involved]. But, with other large-scale cheating investigations still on-going, U.S. Education Secretary Arne Duncan was asked about the problem yesterday during a video-taped “Twitter town hall” (minute 12:00). Specifically, he was asked if the high-stakes tests mandated by NCLB are to blame (minute 16:50). Though Duncan made an off-hand comment that high-stakes NCLB-required tests may have contributed to the pressure that lead to the cheating, he repeatedly blamed the cheating on a uniquely “morally bankrupt culture” in Atlanta’s public schools. That didn’t convince interviewer John Merrow, who cited several other cities where cheating investigations are underway—nor should it convince you.

The problem is not that Atlanta is the Sodom and Gomorrah of public schooling. The problem is that state schooling separates payment from consumption. The accountability mechanism of competitive markets—the only such mechanism that actually works—requires the payer to also be the consumer, because the central incentive for any service provider is to please the payer. So if the consumer isn’t paying, he or she is rendered relatively unimportant in the eyes of the provider. Atlanta parents want their children to be well educated, but a lot of work is required to meet that goal. State and federal bureaucrats just want high scores on NCLB-mandated tests—that’s much easier to achieve by cheating than by doing an excellent job teaching. So there is an incentive for school officials to cheat because they are paid by the bureaucrats, not by the parents. Not every teacher succumbs to this incentive, of course, but the incentive is very clearly putting pressure in the wrong direction.

Now consider the incentive structure of schools paid directly by parents in tuition. The incentive in that scenario is to give parents what they want, which is usually a high quality education for their children. Certainly schools could try to lie to parents about how well their children are doing, but this is much harder than lying to bureaucrats. A great many parents will notice a discrepancy if their illiterate children are awarded A’s. And parents considering a school will notice a discrepancy if the “A”-graded graduates of that school somehow cannot gain admission to, or often drop out of, the next higher level of education. Word of mouth—and now word-of-social-networking-apps—is a powerful thing. So it’s much harder for parent-funded schools to get away with cheating, even if they were predisposed to use that strategy.

This is why no system of education that relies exclusively on third-party payment will ever match the quality and progress that we have come to expect in every other field. Indeed, it argues for finding ways of ensuring universal access to education that rely, as much as possible, on direct payment of tuition by parents. Of all the currently viable education policies, the one that fits that description best is the education tax credit—particularly direct credits for families’ own education expenses. And, among third-party payment methods, scholarship tax credits also have advantages over the alternatives.

This is a reality many folks will not want to hear or accept, but reality is not optional.