It has to do with the way that everything else in society is compartmentalized and specialized. People become trained to specialize in one area, then use their money to purchase things they can't produce on their own. The only difference with schools, is that the government has decided that it is so important that they will pay for it (by taxing YOU for it).
So, the question is, are you more curious about why institutions that just specialize in education exist? If so, you might as well pose the question "why don't you grow your own food and build your own homes?"
Or, is your question more along the lines of why people have settled for mediocre government run schools? I suspect the answer to that is because they are abundant, convenient, and cheap.





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