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DanielLC comments on How should negative externalities be handled? (Warning: politics) - Less Wrong Discussion
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Why do you say education has positive externalities?
From what I understand, education is used largely as costly signalling. As such, subsidizing doesn't change how much people spend or recieve. It just changes the cost. For example, the government pays for high school education, thus high school dropouts are people who aren't even willing to go to school for free. As a result, you need a high school diploma for things where the education is completely useless. If they charged for high school, not going wouldn't mean as much, and it wouldn't be necessary to go.