School & District Management Opinion

Government, Markets, and the Mixed Model of American Education Reform

By Terry M. Moe & Paul T. Hill — April 18, 2011 6 min read
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Stereotypes are alive and well in American education reform, and nowhere is this more evident than when school choice is being discussed. All too often, choice is characterized by its detractors as a “free market” solution that would “privatize” education. And all too often, this depiction is reinforced by its more libertarian supporters, who do indeed see choice in these terms and are stridently opposed to a government-run education system. The framing suggests an unbridgeable chasm. On the one side, markets. On the other side, government.

As is often true of stereotypes, this kind of either-or framing is not helpful. A more productive way to think about school choice—and about American education reform in general—is not in terms of markets vs. government, but rather in terms of markets and government.

Consider the American economy. Stereotypes aside, it is not even close to being a free market. Yes, it makes much use of markets. And this is a very good thing, because markets are uniquely powerful drivers of efficiency and innovation. Yet they can also generate undesirable social outcomes—due to monopoly, price-fixing, inequities, and the like—and precisely for that reason the government takes regulatory action to constrain the way markets operate and to harness their power to social advantage. Experts may disagree about what regulations are appropriate, and the Great Recession has revealed weaknesses that are still being addressed. But the model is one that works, not just in the United States but in every developed nation in the world. It is a mixed model of government and markets that lies somewhere in between a free-market economy and a government-run economy. It is a model in which governments try to use markets to social advantage.

About This Series

A working group on the “Futures of School Reform,” organized by the Harvard Graduate School of Education and led by Robert B. Schwartz and Jal D. Mehta of Harvard and Frederick M. Hess of the American Enterprise Institute, includes more than two dozen researchers, policymakers, and practitioners from around the country. The group is seeking to engage a wider audience in an “urgent” conversation—one that it hopes can advance the national dialogue on improving public education for all children. The working group has received convening support from the William and Flora Hewlett Foundation and the Spencer Foundation.

Education Week is running a seven-part series of Commentary essays expressing visions of members of the “Futures” group. The series, which concludes in the May 25 issue, is accompanied by a blog, The Futures of School Reform, written by the group. Readers are invited to participate by posting comments on the blog, or writing letters to the editor.

The same model can readily be applied to public education, although so far it hasn’t been. Beginning in the early 1900s, reformers designed and built an education system that was purely governmental. They made no attempt to take social advantage of what markets might have to offer—through, for example, more choice for families, competition among schools, and stronger incentives to perform and innovate. Instead, education was produced by government-run districts, which acted as local monopolies and were controlled via top-down hierarchies of elected officials and administrators. Roughly the same governmental structure has prevailed ever since.

Needless to say, this system has become familiar and normal to all Americans. What few recognize, however, is that it is also an extreme approach to public education. Just as the free market anchors one extreme and fails to capitalize on the value of government, so the all-government approach occupies the other extreme and fails to capitalize on the value of markets. In education, as in the economy, there are great benefits to be reaped by not staying at the extreme—and by moving to a mixed model that actively seeks out what both government and markets have to offer.

With the nation camped out at the all-government end of the continuum, such a move involves the introduction of much more choice and competition. But these reforms should not be viewed as radical. Indeed, they should be seen as just the opposite: as a moderating move toward the center. While it doubtless seems odd to say so, it is the current system—the familiar, normal one—that is actually radical.

How, then, to move toward the center? There isn’t one best way. Different mixes may well prove effective for different states and communities, depending on their distinctive values, concerns, and local conditions. But here are some basic ideas that we think make sense.

See Also

The authors of this commentary and other members of the Futures of School Reform Group will expand upon and discuss their visions for the future of schools in an Education Week blog. Visit the The Futures of School Reform blog.

The current system of district-run schools can simply be left in place, but required to compete for children and money in a much larger marketplace of educational options. The job of state governments—analogous to the job of the federal government in overseeing the economy—is to nurture and regulate that marketplace through rules designed to promote quality, innovation, and diverse alternatives.

A core rule is that money should follow the child (with more resources attached to the disadvantaged) and flow to the school of the family’s choosing. From the school’s standpoint, therefore, nothing is guaranteed: It only receives funding to the extent that it attracts a clientele.

Policy rules should encourage the proliferation of new educational options, chief among them (for now) charter schools—with no ceilings on their numbers or enrollments, funding equal to that of district schools, access to buildings and seed grants, the right of for-profit firms to manage them, and no requirement that they be unionized. Charters should be free to operate as they see fit, but state rules should hold them to the same academic standards and testing requirements as the regular public schools, and require fair admissions, annual financial audits, and that chronic low performers be shut down.

States should expand choice along other dimensions, too. Notably, they should take advantage of this nation’s large, dynamic private sector by providing vouchers and tax-credit-based scholarships to disadvantaged children. As with charters, any private schools receiving vouchers or scholarships should be held accountable via the same standards and tests, audited annually, required to follow equitable admissions procedures—and disqualified for poor performance.

In education, as in the economy, there are great benefits to be reaped by not staying at the extreme."

States should also open the marketplace to online learning and the new forms of schooling that offer it: virtual charters, blended (hybrid) schools, state-led virtual schools, and more—which may enroll “whole” students taking full curricula or just “parts” of students taking a few courses. The world is in the midst of a revolution in information technology that stands to generate the greatest explosion of innovation and choice options American education has ever seen. The states should actively encourage this explosion, but also manage and guide it. They can do that by adopting new-age regulations that allow schooling and funding to flow across geographic (and state) borders—and, with the assistance of the national government, by creating a “common educational market” for the country that eliminates state-specific “barriers to trade” in education. They also need to hold these new virtual schools accountable via standards and testing, require annual audits, and close down any chronic low performers.

The district-run schools will find that, unlike in the past, they have strong incentives to change and innovate to meet the competition—and the states should give them the freedom to do that. Over time, the districts’ hold on America’s children—now at about 85 percent of all kids attending school—will almost surely be greatly reduced, due to all the new alternatives. But there is nothing sacred about 85 percent. Or 70 percent or 40 percent. American families will determine how children and money get distributed across the various types of schools, depending on what they want and what the schools have to offer. The states’ job is to ensure that the supply of schools can flexibly respond to the underlying demand of families.

This is one vision of a mixed model of public education. There can be many others as well, for there are many strategies that governments might follow in seeking to use choice and competition to social advantage. The more general point is simply that the education system that Americans now live with is an extreme approach to public education. It is totally governmental, and forgoes virtually all the benefits that choice and competition have to offer. That is a big mistake, and a big loss for society.

A version of this article appeared in the April 20, 2011 edition of Education Week as Government, Markets, and the Mixed Model of American Education Reform


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