Build New, Don’t Reform Old

When I wrote my two part critique of the Gates Foundation strategy, one of our frequent comment-writers, GGW, asked: “What would you do if asked by Gates how to better donate his (and Warren Buffett’s) billions?”

Here is a brief answer to that question: Philanthropists with billions of dollars to devote to education reform should build new institutions and stop trying to fix old ones.

In general, existing institutions don’t want to be fixed.  There are reasons why current public schools operate as they do and the people who benefit from that will resist any effort to change it.  Those who benefit from status quo arrangements also tend to be better positioned than reformers to repel attempts by outsiders to make significant changes.  The history of education reform is littered with failed efforts by philanthropists.

Instead, private donors have had much better success addressing problems by building new institutions.  And competition from newly built institutions can have a greater positive impact on existing institutions than trying to reform them directly.

Let’s consider one of the greatest accomplishments in American education philanthropy.  In the late 19th century, America’s leading universities (Harvard, Yale, Princeton) were badly in need of reform.  They were still operated primarily as religious seminaries and not as modern, scientific institutions.  Rather than trying to reform them directly, major philanthropists built new universities modeled after German scientific institutions.  John D. Rockefeller and Marshall Field helped found the University of Chicago.  Leland Stanford built Stanford University.  A group of private donors built Johns Hopkins.  Cornelius Vanderbilt founded Vanderbilt.  All of these universities imitated German universities with their emphasis on the scientific method and research and were enormously successful at it.  Eventually Harvard, Yale, and Princeton recognized the competitive threat from these German-modeled upstarts and made their own transition from a seminary-focus to a scientific focus.

The reform of the U.S. higher education system did not come from a government mandate or “incentives.”  It did not happen by philanthropists giving money directly to the leading universities of the time to convince them to change their ways.  It happened by philanthropists building new institutions to compete with the old ones.

The same could be done for K-12 education.  Matt Ladner has written a series of posts on “The Way of the Future.”  He, along with Terry Moe, Clay Christensen, Paul Peterson, and others, envision large numbers of  hybrid virtual schools offering higher quality customized education at dramatically lower costs.  Students would attend school buildings, but the bulk of their instruction would be delivered by interactive software.  The school would need significantly fewer staff, who would concentrate mostly on assisting students with the technology and managing behavior.

Obviously, this kind of school would not be good for everybody.  But it could appeal to large numbers of students and be offered at such a low cost that it could be affordable even to low-income families without needing public subsidy or adoption by the public school system.

Gates or someone else with billions to devote to education could build a national chain of these virtual hybrid schools to compete with existing public and private schools.  It’s true that Gates is already investing in the development and refinement of the virtual hybrid school model, but a complete commitment to building new rather than reforming old would give him the potential to do what Rockefeller, Stanford, and others did to higher education.  Virtual hybrid schools could be the disruptive technology, as Christensen calls it, to produce real reform in education.

Another benefit of the “building new” strategy for philanthropists is that it avoids the Emperor’s New Clothes problem, where philanthropists are encouraged to pursue flawed strategies to reform existing institutions because everyone is afraid to criticize the wealthy donor from whose largess they benefit.  With the “build new” strategy there is ultimately a market test of the wisdom of the strategy.  If the new institutions are not better, people won’t choose them.  If the University of Chicago had been a flawed model, it wouldn’t have attracted enrollment and would have failed to apply competitive pressure to Harvard, Yale, and Princeton.  Similarly, if the virtual hybrid school is a bad model, then it won’t attract students and compete with existing public and private schools.

Edison Schools is an example of a “build new” strategy that failed the market test.  They failed to develop technologies or other efficiencies to bring down the costs of operating private schools.  And their revised strategy of operating public schools under contract with public school districts was flawed by an underestimation of the political resistance they would face and their inability to control costs or quality within the public system.

But we also have successful examples of the “build new” strategy adopted by philanthropists.  In addition to the string of scientific universities built in the latter half of the 19th century, we also have the example of Andrew Carnegie and public libraries.  Carnegie helped promote literacy and cultural knowledge by supporting the construction of hundreds of new libraries around the country.  He didn’t try to reform existing book-sellers, he just built new.  Another example (outside of education) can be seen in John D. Rockefeller’s role in the development of a national park system.  Rockefeller privately acquired large chunks of what are now the Acadia, Grand Teton, Great Smoky Mountains and Yellowstone national parks.  Rockefeller didn’t try to reform the operations of the existing Interior Department.  Instead, he effectively privately built nature reserves and then donated them to the U.S. to become national parks.

Of course, this “build new” strategy has limited potential for smaller-scale philanthropy.  But for the very wealthy, like Gates, the path to making a significant and lasting difference is to build new rather than reform old.  The lasting benefits of what Rockefeller did in higher education and national parks and Carnegie did with libraries are still noticeable today.  If Gates and others with billions to devote to education continue to focus on reforming the old rather than building new, I fear their efforts will soon be forgotten after the Emperor’s New Clothes adulation fades when they stop having large sums to give.

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22 Responses to Build New, Don’t Reform Old

  1. Greg Forster says:

    Outstanding post, and a key point that we need to be hitting every time we talk about “competition” in education.

    In Education Unbound, Rick Hess dug up this great Milton Friedman quote:

    In some ways, referring to “the market” puts the discussion on the wrong basis. The market is not a cow to be milked; neither is it a sure-fire cure for all ills.

    It’s from this article. I’ll be posting more soon on it!

  2. matthewladner says:

    Great post- if you build cars from the Jetsons, you won’t need to worry about updating your Flintstones Stone-Wheel-mobile. That will work itself out.

  3. The reform of the U.S. higher education system did not come from a government mandate or “incentives.” ????

    What about land grants? The creation of A&Ms? The creation of state universities? The Wisconsin Idea? The G.I. Bill?

  4. The reform I was describing was the shift to the German scientific model for universities. That came from private philanthropists building new, not the government.

    Of course, the government can and does change educational institutions also, including higher ed. Sometimes those changes are good and sometimes they are bad. The government changes don’t have to meet a market test like the private ones do.

  5. Greg Forster says:

    Plus land grants, state universities, the G.I. Bill, etc. are not really examples of education reform. The purpose was not to change the way we educate, but to extend education in its existing form to new people and places. If all you want to do is make something bigger, government subsidies can accomplish that. What they can’t accomplish is productive, entrepreneurial innovation. And that’s what schools today need.

  6. Some changes induced by private philantropist may also lead to disastrous effects… And how must philantropy meet the “market test”? I tought the idea of “philantropy” consisted in aiding a noble cause when initial market conditions can’t be met, yes, but furthermore when they just never will bet met. Otherwise, it’s not philantropy… It’s just plain business!

    • Greg Forster says:

      You’re thinking of “philanthropy” exclusively as charity work. But it isn’t, as the example of philanthropists founding universities shows. U. Chicago, Stanford, Johns Hopkins and Vanderbilt had to pass a market test: would students of sufficient quality be willing to pay tuition (and, even more important, sacrifice the opportunity to go to other schools) to attend these institutions? The schools had to perform well enough to prove that they could attract students away from Harvard, Yale, Princeton, etc. If they hadn’t performed, the market would have punished them and they’d have folded. Because they did perform, the market punished Harvard/Yale/Princeton/etc. until they were willing to change.

      • A proper role of philanthropy is to start or subsidize an operation who return on investment would not attract a for-profit investor — that is, to start a non-profit organization. Founding a university is an example of that kind of philanthropy.

  7. allen says:

    I wonder how much funding would be required to provide private scholarships, on par with the late, lamented D.C. Opportunity Scholarship program, to every kid going to, say, the Washington D.C. district schools?

  8. Greg Forster says:

    First of all, the DC voucher program was rescued and is now once again admitting new students.

    To your question, in 2009-10 DC had 60,485 K-12 students in district schools (excludes charter schools, Pre-K, and ungraded students). The DC program provides vouchers of up to $7,500. My Calculatotron advises me that this adds up to $453,637,500.

    As exciting as that idea is, and I’d be all for it, it’s worth noting that a privately funded voucher program on that scale would pose very significant design challenges:

    1) Even with private funding, there would be tremendous pressures to design the program in ways that neutered the threat to public schools. It’s very likely that one reason Bill Gates refuses to back school choice is because he doesn’t want the government monopoly to retaliate against Microsoft in software purchases. If he (or anyone else) did get behind choice in this kind of way, big threats would be brought to bear. Unless the philanthropist were extremely determined to do the program right, it would be done wrong. And then it would flop, and the other side would say, “See? Vouchers don’t work.”

    2) You’d want to do a program like that in a place where the legal, regulatory, economic and cultural environment would support and sustain entrepreneurial creation of new schools. Legal and regulatory environments for private schools differ dramatically. (Unfortunately the big Friedman Foundation study of private school laws and regulations in the 50 states doesn’t include DC. Bummer!) Plus you need a labor force that would allow you to recruit teachers, administrators, etc. from more than just the existing system – draw new people into teaching and school leadership. Plus you’d need a city where families would welcome the program as empowering – but that’s such a big deal I’ll make it a third point.

    3) There would be considerable danger of popular resentment against the program. People don’t like to feel like guinnea pigs. If anyone got the impression that a philanthropist – especially a controversial one like Bill Gates – were using their community to test a policy that they didn’t like or trust, you wouldn’t be able to get enough famliies (and educational entrepreneurs to create new schools) into the program.

    That said, it would be a very exciting experiment to try if you could do it right!

    • allen says:

      Oh the real Greg Forster’s going to be pretty upset when he catches up with you.

      OK, carpet bombing an entire, reasonably large municipal school district’s enrollment with vouchers is probably a bridge too far but there are variations and permutations that might be more doable.

      For instance, matching grants to supplement an existing voucher system in some way that’s appropriate to the area. If there isn’t a strong community of voucher-accepting schools in the area then the voucher program ramps up over time encouraging the opening of schools. A large foundation or consortium of foundations could even directly encourage the opening of schools in various ways.

      1) Of course the public education lobby would exert pressure to try to protect the public education status quo but it’s pretty clear, and even more so in the last couple of months, that public education’s lobby’s not quite as powerful as it once was. As for threats against Microsoft, please, information technology’s something I do know about and organizational America has nowhere to go for the foreseeable future but where Microsoft leads it.

      2) Yup, the rub’s probably the legal/regulatory environment but with enough cubic dollars, and the political adroitness that kind of money buys, I think the hurdles could be cleared. As for cultural barriers the only one that matters is whether black parents want their kids to get good educations. That last would definitely play into how difficult political/regulatory barriers would be to overcome.

      3) You think the poor, black parents of Washington D.C. would object to being guinea pigs if it meant their kids had a shot at a good education and everything that implies? I don’t. I think they’d quack like ducks if it got their kids on the road to a better life.

      Right at the top your post you link to another blog post which appears to be celebrating the re-enactment of the D.C. Opportunity Scholarship program. The only thing I can find that looks related is S.206 which was corked up in committee with the last action being “hearings held” on February 16, 2011. Was the voucher program re-enacted via some other means?

      Lastly, the underlying point of the idea is to underscore the superfluousness of the school district when it comes to educating kids. Once that question’s in the air I think it’ll be pretty hard to avoid confronting the fact that the school district really does bring nothing of value to the job of educating kids and exacts a heavy penalty, both financially and in terms of educational efficacy.

      • Greg Forster says:

        My WordPress Fu is not strong enough! When I wrote that “Yeeeeaaaahooooooo!” post I put in a link to Jay’s post earlier that day celebrating that the program had been reauthorized under the budget bill hammered out the previous night. Unfortunately, I can’t figure out how to make large size type (WordPress doesn’t want to take the html I try to give it to do that) so I have to use the “headline” text style to get big text. And if you do that, hyperlinks don’t show up as a different color, so the link is concealed unless you mouse over it. Sorry!

    • Minnesota Kid says:

      Greg,

      Just a minor and friendly amendment, the new DC Opportunity Scholarship Program provides vouchers worth up to $8,000 for K-8 students and up to $12,000 for high school students. Plus the amounts will be inflation-adjusted going forward. So, it probably would cost north of $600,000,000 to fund a voucher saturation program in DC.

      • Greg Forster says:

        I’ll consent to the amendment proposed by the gentleman from Minnesota, since he’s forgotten more than I’ve ever known about the DC voucher program. Thanks!

  9. Ayn Marie Samuelson says:

    Will parents,’ communities’ and taxpayers’ roles in education be downplayed – again? Does big philanthropy/business provide yet another Master to serve? Trust is a huge issue. What is the risk?

    The blog states: “private donors have had much better success addressing problems by building new institutions.” – Are these public or private institutions? The universities listed look like private institutions.

    The blog continues: “Students would attend school buildings, but the bulk of their instruction would be delivered by interactive software. The school would need significantly fewer staff, who would concentrate mostly on assisting students with the technology and managing behavior.” – It appears that teachers would be trained for the roles of tech experts and management of student behavior. How will this impact student learning and skills over the long-term? What about young children who crave personal interaction?

    The blog notes: “But it could appeal to large numbers of students and be offered at such a low cost that it could be affordable even to low-income families without needing public subsidy or adoption by the public school system.” – So, then are they to be private and without any taxpayer funds/public money? Or will big philanthropists rely on a vast majority of public money to fund their endeavor? There is never enough discussion about how taxpayers must pay for public schools and how philanthropists can choose to donate a small percentage of the total funds but still have a serious impact on education policy.

    The blog continues: “Gates or someone else with billions to devote to education could build a national chain of these virtual hybrid schools to compete with existing public and private schools.” – Whose money? Whose curriculum, tests and standards – maybe national like CCS? Would these schools become a nationwide experiment for students?

    The blog states: “if the virtual hybrid school is a bad model, then it won’t attract students and compete with existing public and private schools.” – But, what if private, tax-free money is poured into schools that require 95% public funding but little public input? Who pays and who benefits? Who stands to gain, really? Who will be held ultimately accountable for efficiency, effectiveness and results?

    The blog ends: “Of course, this “build new” strategy has limited potential for smaller-scale philanthropy. But for the very wealthy, like Gates, the path to making a significant and lasting difference is to build new rather than reform old.” – So much for individual community schools run by an elected board, parents and community members and collaboration for making students’ education the best it can be at the individual school level. We need another top-down driven initiative like a hole in our heads.

    • Ayn — You missed quoting the part where I said “Obviously, this kind of school would not be good for everybody.” and “With the “build new” strategy there is ultimately a market test of the wisdom of the strategy. If the new institutions are not better, people won’t choose them.”

      So, no one would be compelled to attend and nothing is imposed top-down.

  10. […] to the system that currently exists. Jay P. Greene makes a similar point in his blog post Build New, Don’t Reform Old–”build new institutions and stop trying to fix the old ones.” Our educational […]

  11. […] Billionaire philanthropists should build new institutions and stop trying to fix old ones, advises Jay Greene. “In general, existing institutions don’t want to be fixed.” […]

  12. Mark Berger says:

    Interesting. While the title of “starting over” is appropriate, many of the examples here fail to actually express this perspective and are more closely aligned with the “old” model. Virtual schools and increased technology are NOT going to change what we have FUNDAMENTALLY – which is what “build new” requires. They are window dressing and non-essential adaptations. This doesn’t mean they aren’t good ideas or aren’t better in some ways, they just aren’t game changers.

    I’ve written significantly on what “build new” would actually consist of here: http://www.ultimateprep.wordpress.com

    Mark

    • Ayn Marie Samuelson says:

      Mark,

      Good point. Starting over, whether you call it reinventing or transforming means just that, not simply adding technology-driven education to the antiquated system. I wonder who expects to gain from pushing technology as the proposed savior to education woes? Lets get busy at the grassroots level. But wait, I almost forgot, we need top-down support for ground-up transformation.

      • Daniel Earley says:

        Frankly, I thought it was clear that any examples pointing to disruptive technologies are merely intended as short term hypothetical examples, not ultimate prescriptions. When we refer to the wisdom of the marketplace, we speak of something as unknowable as biochemistry and the iphone were to Leonardo DaVinci, despite his genius. Both philanthropists and investors alike can back modern Leonardos in new startups to greatly accelerate the evolution of the education industry’s “state of the art.” Just as with any species, the greater the competitive pressures, the faster it will evolve. Finally unleashing and harnessing that most potent force of nature is, I believe, essentially the singular point.

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