[gizmo686]

>You have to some how get the markets to stop chasing profits

There is another solution. You could set up the markets so that the way to maximize profits is to create the best solution. For example, imagine if we had a perfect measure of student outcome. You could make the school's pay dependent on their outcome, then the market will find a way to maximize the f(outcome)/cost.

[mogrim]

Doesn't work in practice, though - you end up with schools "teaching to the tests", to the detriment of other unscored qualities.

The obvious solution: more tests, and more bureaucracy. By the time you've got enough tests you might as well have a state-run school.

[cdash]

What do we need the market for then?

[gizmo686]

To minimize cost. A better example than education would be carbon emissions. Suppose we want to reduce our carbon emission to X tons per year. If we auction off X credits permitting 1 ton of carbon each, the market will find the cheapest way to reduce our emissions to X. Simply being able to measure emissions would allow us to reduce emissions (say, by requiring all companies to reduce by Y%), however, this is almost defiantly going to be more expansive.