The assumption here is that education has a significant component which is "wasteful signalling". If this is true, and that's a pretty big if, what you say follows. If the assumption is not true, reducing funding would result in a poorly educated populace which could spell economic disaster.

My point is: (1) this is not an issue we can decide without looking at the data and (2) making a claim one way or another without carefully looking at the data is not justified.