Directions 2000: Opening the Education Marketplace

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Testifying recently before a subcommittee of the new House Economic and Educational Opportunities Committee, former U.S. Secretaries of Education Lamar Alexander and William J. Bennett charged that the Clinton Education Department "operates from the deeply erroneous belief that American parents, teachers, communities, and states are too stupid to raise their own children, run their own schools, and make their own decisions."

Last November, voters rejected this Washington world view and sent out a call for limits to government, declaring that most problems are best solved by those who are closest to them. Republican candidates--for Congress, as well as at state and local levels--ran on broad themes concerning how government should work, all of which have corollaries in the area of education. They emphasized diminished government and greater personal freedom, economic efficiency, public accountability, and stronger families. In education, several movements correspond to these themes, movements that will make schools more accountable and that can be broadly characterized as "market based" reforms. By instituting such reforms, the U.S. education industry--a nearly $300 billion enterprise in elementary and secondary education alone (approximately the annual sales of the Big Three automakers)--will behave more like a free market than a public monopoly. Schools will become more responsive to the "consumers" of education--students and their parents--than its producers, which include teachers' unions, school boards, and various administrator groups at all levels.

Reforms that will help make this happen include: the creation of autonomous charter public schools; parental choice of schools (including, in some plans, religious and other private schools); greater freedom in contracting out for services from private providers; and establishing external standards and measures of assessment (to insure public accountability for tax dollars spent and to help generate information for parents to make informed choices about where to enroll their children). Market inefficiencies will always exist in a system where education is compulsory and politicians--rather than consumers--pull the purse strings. Nonetheless, these reforms go a long way toward replacing regulations with incentives and injecting accountability back into American education systems through the discipline of the marketplace.

What would a deregulated, market-based education system look like? Herewith a few examples--looking back from 2000--of what would be possible under a liberated "system," all of which would be difficult, if not impossible, to achieve given the way schooling is organized today.

  • Networks of independent schools develop nationwide--many of which are charter schools or schools financed by vouchers--that are linked electronically. Teachers are able to communicate with one another by e-mail, sharing ideas about curriculum development, posing questions to one another about how to deal with specific classroom problems, and accessing information from databases around the world that helps them do their jobs better. The network also allows for students from around the country--and around the world, using the Internet--to collaborate on projects.
  • A manufacturer of car radios contracts with a national education provider (dozens of which have emerged to meet the growing demand of the new market) to open its own elementary school. The school, funded in part through a citywide voucher system and in part by the company, is provided as a benefit to its workers. Parents who work for the company are allowed an hour each day to help out in the classroom. A sen-ior engineer for the company works out an arrangement with his supervisor by which he spends every Wednesday afternoon teaching physics. Many of the kids enrolled in the school take advantage of apprenticeship programs that are offered by the company. Parents and their children are happy--particularly in situations where both parents work--because their schedules coincide and they are able to spend less time running from place to place and more time at home together.
  • A new independent school, partially funded by state-sponsored vouchers, is getting off the ground. In order to attract top-notch teachers to its rough, inner-city location, it puts high priority on paying competitive salaries. Because money is tight (as tuition costs are kept low to be affordable for the low-income population the school serves) the principal concludes that they won't be able to afford the expensive computer network they have been contemplating. Instead of borrowing the money (which the school could do as an incorporated entity), she strikes a deal with the public library that allows her students exclusive use of the library's computers during the library's slow time each afternoon, and the school splits the cost with the library of keeping the computing center open until 10 P.M. on Sunday nights.
  • The Stanley Kaplan and Princeton Review companies, known for their test-preparation courses, are welcomed into schools as sub-contractors to help students prepare for the Scholastic Assessment Test. As more and more schools contract for this service, new companies enter the market, driving prices down. Eventually, companies begin differentiating the services they provide and Kaplan becomes a broker of college counseling, helping students and parents complete their financial-aid forms, arranging group tours of colleges, and setting up interviews for high school seniors.
  • Michelle is a 27-year-old English teacher with a bachelor's degree from a liberal-arts college. In just three years, she had become a legend for the way she makes classical literature relevant to her students' lives. When the public school where she taught 11th grade was faced with a reduction in force, Michelle was among the first let go, given her brief tenure with the district. In no time, she found a job with a local charter school and negotiated a contract with her new principal (a former businessman who knows how to run an organization and motivate people) that allows her to teach year round at a salary that is 50 percent more than what she had been making. Moreover, because of her demonstrated success, every third year Michelle is entitled to take six months away from the classroom for independent study and to develop curriculum.

  • The Phillips family lives in a working-class neighborhood in Phoenix and has two school-age children, both in high school. Katie is in the 10th grade and finds school boring. She's also been caught skipping school and has been arrested for smoking marijuana. Her younger brother, Pat, is in the 9th grade and is a budding artist who has won awards in several state and regional shows for his pottery. Their local public high school provided a one-size-fits-all education and neither of the Phillips kids were being well served. Under a school-choice plan, Pat now attends a magnet school which places special emphasis on the arts, including sponsorship of its own visiting artists' program. Katie's parents, who had been struggling for years to get her "engaged" in school, found a private alternative school that provides the disciplined, structured environment that her old high school did not.

These sorts of innovations--replication of a quality method or system, joint ventures with strategic partners, subcontracting for activities outside of the enterprise's core interests and capacities, compensation based on merit, and service differentiation--are common in the private sector. They are, however, foreign to most public schools today.

Detractors will cringe at the idea of thinking of education as the relationship between "producers" and "consumers." Indeed, to describe the relationship between a teacher and a student only in such terms would reflect too material and rather reductionist a worldview. Few thoughtful people would argue that equipping children with the character, knowledge, and skills to live productive and purposeful lives can be summed up as the buying and selling of "education services." However, as a way to describe the relationship between an organization and a group of people such an organization serves, the analogy to the marketplace is a useful one.

Many members of the education politburo--union heads, administrator-group executives, education-school professors, and other establishmentarians--smugly dismiss the "crassness" of corporations, charging that they are more concerned with profits than with children. It is folly, however, to suggest that their own motives are not mixed. In New York City in the late 1950's, the union organizer Albert Shanker (now the president of the American Federation of Teachers) proclaimed that "when schoolchildren start paying union dues, that's when I'll start representing the interests of schoolchildren." It would be wrong to accuse Mr. Shanker of deliberately slighting schoolchildren to defend the interests of his constituency: He's doing his job. It would also be wrong to forget that union heads have producers' interests in mind, and those do not always coincide with the interests of parents, schoolchildren, or taxpayers.

These groups spend millions of dollars each year to preserve their monopolistic position and thwart market-based reforms--through litigation, anti-reform media campaigns, staffing the phone banks of status-quo politicians, and other means. The recent court decision in Michigan that temporarily blocked, and ultimately diluted, that state's charter-school program was a result of legislation sponsored by the Michigan affiliate of the National Education Association with the help of the American Civil Liberties Union. The $20 million opposition campaign waged by the California Teachers Association to defeat Proposition 174, which would have allowed California parents a choice among schools, is another example of the awesome influence the unions have over public policy.

The point of the matter (dare I say the bottom line?) is that the current means of providing for education through government-owned and -operated schools is deeply flawed and is serving American schoolchildren poorly. New Republican legislators at all levels--and New Democrats if they are to be found--should join forces to change the ground rules of how we provide for education in America. They should adopt a fresh definition of "public" education, one having more to do with who is served than who provides the service, and pass legislation that allows and encourages new entrants into the education market. Then let diversity, competition, and choice return schools to the public that they are supposed to serve.

Vol. 14, Issue 27, Pages 34, 36

Published in Print: March 29, 1995, as Directions 2000: A Forum
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