This paper argues that the rule-making function of institutions introduces an information distortion into markets--economic, political, and cultural--that changes the rational pattern of resource allocation. As markets expand, this distortion raises the price of individual talent and skill development in production. It leads to a public-private information convergence in education that places into doubt many arguments in favour of private-sector solutions to the underdevelopment of human capital. Implications are discussed. (Contains 1 endnote.)