Misleading “Market”

(Guest post by Greg Forster)

Over the past two weeks we’ve basically gone back to basics and done a ground up survey of why competition is preferable to technocracy (“scientifically” determine the “best” reforms and then strongarm schools into doing them).

Jay’s last post in particular, outlining why it’s better to build whole new institutions than try to gradually develop programmatic reforms within existing ones, made me want to step in with this point:

I think we who emphasize competition between different school models need to quit relying so heavily on the word “market” to describe the mechanism we’re trying to create. I’m not saying we should never use the word, I just think we’ve invested too heavily in it. Let’s focus on competition between different school models. If we can get people that far, which I think is very doable – consider how business-savvy the cool kids are; they know that competition is good and healthy – then we can let people think and discover what kind of mechanism creates that kind of competition. The realization that this mechanism is really a “market” can come later, or even never. Call it a bannana split if you want!

It’s bad enough that the word “market” is misleading to the many people who have limited conceptions of what a “market” is. For many if not most people “market” conjures up images of widget factories and green-eyeshade negotiations in which dollars and cents matter most. And you simply cannot deal with that by telling people that isn’t what a market “really” is. In a society like ours with no general social agreement on what counts as knowledge and meaning, it simply isn’t possible any longer to correct people’s misuse of words by telling them that the word “really” means something else. Not to them it doesn’t! And who are you to tell them their meaning is “wrong” while yours is “right”?

But more importantly, I think shallow thinking about what counts as a “market” has infected too many people in the school choice movement itself. On Jay’s post I left a comment with a snippit from this 1988 article by Milton Friedman:

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.

Well, here’s a passage from that article that I think the school choice movement would do well to ponder. Discussing the privatization of government-owned monopolies, with particular concern for the opening up of China’s economy, Milton writes:

One way to overcome the opposition to privatization, widely used in Britain is, as described by Robert Pool,

To identify potential opponents and cut them in on the deal, general by means of stock ownership. The specific applications of the principle are (1) employee stock ownership, and (2) popular capitalism…

A pitfall to be avoid in adopting such expedients is to sweeten the deal by converting a government monopoly into a private monopoly – which may be an improvement but falls far short of the desirable outcome. The U.S. Postal Service illustrates that pitfall as well as the fallacy that mimicking the form of private enterprise can achieve the substance. It was established as a supposedly independent government corporation that would not be subject to direct political influence and that would operate on market principles. That has hardly been the outcome, and understandably so. It remained a monopoly and did not develop a strong private interest in efficiency.

Isn’t that what we’re doing in the school choice movement now? Not a single existing school choice program – not one – is designed in a way that is attractive and supportive for educational entrepreneurs who want to create new school models? Re-read Jay’s post about creating new institutions that reinvent the school from the ground up. If you were one of the cool kids and wanted to start a school like that, would any of the existing school choice programs be attractive to you? Or are we just transitioning from a government monopoly system to a public/private oligopoly in which a small group of powerful school systems (government, Catholic, and a few others) divide the spoils and keep entrepreneurs outside in the cold?

Something to think about, anyway.

14 Responses to Misleading “Market”

  1. Back to basics:
    1. The government of a locality is the largest dealer in interpersonal violence in that locality (definition, after Weber),
    2. A law is a threat by a government to kidnap (arrest), assault (subdue), and forcibly infect with HIV (imprison) someone under some specified circumstances.
    3. Individual A has a right to do X in a locality Z if the government of Z has promised not to interfere with A when A attempts to do X and has, further, promised to interfere with any individual B if B attempts to interfere with A when A attempts to do X.
    4. Individual A has title to a resource X in locality Z if the government of Z recognizes a right of A to use or dispose of X which includes a right to transfer control of X (to sell X) to any individual B on terms mutually agreeable to A and B.
    5. A government is market-oriented to the degree that individual titleholders rather than political authorities determine the flow of resources. Federalism (local control of policy) and markets (the system of title and contract law) institutionalize humility on the part of government actors.
    5.1 If a policy dispute turns on a question of taste, numerous local policy regimes or a competitive market in goods and services will allow for the expression of varied tastes while the contest for control of a State-monopoly provider must inevitably create unhappy losers (who may comprise a majority; consider the outcome of a nationwide vote for the one size of shoes we all must wear).
    5.2 If a policy dispute turns on a matter of fact, where “What works?” is an empirical question, federalism and markets will provide more information than will a State-monopoly producer of goods and services. A State-monopoly enterprise is like an experimentt with one treatment and no controls, a retarded experimental design.
    “The market” names style of human interaction that occurs with the lowest level of organized (State) violence. Advocates for “the public school system” defend organized violence in the form of compulsory attendance statutes, compulsory taxation, and the NEA/AFT/AFSCME cartel’s exclusive position in receipt of the taxpayers’ K-12 education subsidy.

  2. Ayn Marie Samuelson says:

    Greg,

    As a small business owner, I know from experience that government, at any level, is not inclined to support entrepreneurship – for several reasons – one of which is the difficulty in exercising control.

    On the other hand, large corporations or influential educational companies (private, non-profit or publicly owned) are easier to control through laws, regulation and persuasion. Moving education from a government monopoly to an oligopoly will have the same general effect as our current situation: a lack of authentic and sustained competition with the likely result of disengaging the public in educational decision-making. This would give the public a type of pseudo competition and tend toward a stunted variation of educational models.

    Reinventing or transforming individual schools “from the ground up” with actual input from stakeholders such as parents and taxpayers is the mantra of the book, Exposing the Public Education System. Entrepreneurship that genuinely promotes alternatives, while also requiring efficient use of taxpayer funds and strong educational results, should be fostered not strangled.

  3. Parry says:

    Greg,

    Outside of existing policies and political pressures (which are big barriers to push aside), what do you think are the biggest barriers to educational entrepreneurship, the sort of starting-from-scratch efforts you describe? I’m thinking of practical barriers such as finding an adequate space (which I know can be a big barrier for new charter schools). To what extent and how do you think that education-minded philanthropies could help education entrepreneurs overcome those barriers?

    Parry

  4. Greg Forster says:

    Great question, but wrong interlocutor. I’m a policy guy; policy is what I know well. For example, on charter schools finding space, my first instinct is to say that’s really a policy problem – charter schools don’t get the kind of funds for buildings that regular public schools do, and districts refuse to sell their school buildings to charters (which would be far more efficient).

    On school choice and entrepreneurs, I think choice should provide three things:

    1) A very large client base. Entrepreneurs offer a product not everyone wants, so the client base has to get large before it will support entrepreneurs.

    2) A large enough dollar value per family to overcome the bias toward attending “free” ( = free at the point of service) public schools.

    3) Freedom to create schools without unnecessary transaction costs and to design them in ways that challenge our idea of what a “good school” is, or even what a “school” is.

    All that is policy. To find out about the non-policy barriers you’d have to ask the entrepreneurs themselves!

  5. *(Greg): “Not a single existing school choice program – not one – is designed in a way that is attractive and supportive for educational entrepreneurs who want to create new school models?
    Dunno if that’s a statement of a question. How ’bout Minnesota’s education tax credits or Alaska’s subsidized homeschool program (through enrollment in government-operated virtual schools)? These policies allow providers of education services (e.g., tutors)too sell services directly to parents. The term “school choice” supposes a “school”. School is a means, not an end in itself.
    E.G. West
    Education Without The State
    “What is needed is choice in education. School choice has not and will not lead to more productive education because the obsolete technology called ʺschool” is inherently inelastic. As long as ‘school’ refers to the traditional structure of buildings and grounds with services delivered in boxes called classrooms to which customers must be transported by car or bus, ʺschool choiceʺ will be unable to meaningfully alter the quality or efficiency of education.”

    • Greg Forster says:

      In general, the point that we need to reinvent “school” is right on the money. Still, Minnesota’s program doesn’t provide nearly enough dollars per student to achieve that vision (as can be seen from the fact that education in Minnesota remains largely unchanged by the program). I’m not familiar with the Alaska program but if it only supports home schooling then it’s not really a “choice” program (only one choice is supported) so your description of it as a “subsidy” would be apt.

      • (Greg): “…if (the Alaska homeschooling subsidy) only supports home schooling then it’s not really a “choice” program (only one choice is supported) so your description of it as a “subsidy” would be apt.

        In __Summer Meditations__, Vaclav Havel observed that “the market” names everything people do that is not coerced. The US State-monopoly system has indoctrinated people to associate “market” with “greed”, although public-sector agents can respond to greed just as much as can people in the private sector. People misunderstand “market”, Similarly, people misunderstand “school”. That is West’s point. People often misconstrue “homeschool”. Homeschooling does not have to occur in a residence and it does not have to involve deliberate instruction. You can send your kid to a piano teacher and to the Kumon Institute in the morning and to his uncle’s auto body shop in the afternoon. Ben Franklin apprenticed to a bookbinder at 12. Legally, homeschooling is whatever occurs when parents do not enroll their children in a school accredited by State-authorized accreditation agencies.

        Education tax credits (the Cato preference) would make more impact if they offered a substantial incentive and were deductable from taxes owed rather than from before-tax income. Education tax credits don’t help people whose parents are too poor to pay taxes. They would make more of an impact if anyone could donate this tax credit to any designated child (up to a limit of some fraction of the State’s per-pupil K-12 subsidy). Sam Walton or Matt Damon could have erased their entire tax liability with charitable donations to K12 options.

  6. Sandra says:

    When speaking of children learning to read and write, the only entrepreneur vision I see reported is virtual learning. Some schools are tossing pencils for keyboards, tossing books for computer screens, tossing human interaction for more solititary engagement, tossing multiple measures for increased standardized assessments. Other than plunking kids in front of computer screens, what are the entrepreneurial visions that exceed child-centric learning environments away from the family home?

    • Ayn Marie Samuelson says:

      Sandra,
      Is the dialogue actually about the best interests of children? Are far too many “reformers” more concerned about theory and dialogue without the practical concern or know-how to actually implement their concepts in the best interests of student learning? Technology, rightly understood and applied, can be a terrific tool in education, but there also needs to be quality human interaction.

      On the other hand, I home schooled my son for three years because the local ed system could not/would not attempt to meet his educational needs. There are huge defects in the system, and stakeholders like administrators, teachers, parents, communities and politicians all have a part to play. Singling out one group will not solve the problem of transforming the antiquated system.

      As president of a 3,000 home residents association, I understand how citizens can initiate and drive positive changes within their community, and this can be harnessed for grassroots educational reform.Starting from the ground up with grassroots support to build quality schools can lead the way. But we absolutely need top-down support for bottom-up reform.

    • (Sandra): “Other than plunking kids in front of computer screens, what are the entrepreneurial visions that exceed child-centric learning environments away from the family home?
      It makes more sense to me to identify areas where current methods could improve and to open avenues for exploration in search of improvement.
      1. The one-size-fits-all batch process of current schooling imposes a uniform pace on students of widely divergent ability. Self-paced curricula could address this.
      2. Student motivation is critical. The uniform, standardized curriculum kills motivation. Self-selected curricula could address this. So also would parent control address this, as children, especialy very young children, often work for love and will work their hearts out for the love and approval of parents.

      • Sandra says:

        @Malcom – self-paced is not new. Once there were groupings of kids by ability, vocational and college-bound tracks, and assistants to give students extra practice and attention. How did we get to this one size fits all? Agreed, the current test centric environments are stifling motivation. So, if some approaches had value, it makes sense to apply them. My question remains – what is the vision of the so-called entrepreneurial visions that are untried or are they a rolling back to more effective approaches?

  7. Grouping by ability is not self-paced instruction. taxpayers lose whenever any child has to wait for a class to catch up.

    I’m not opposed, in principle, to standardized tests. Tests can motivate. If your State legislature offered a tuition subsidy at any VA-approved post-secondary institution or a wage at any qualified private-sector employer of, say, 2/3 of the taxpayers’ age $12,000 6-18 education subsidy to any child who passed an exit exam (the GED will do) before age 18, you would see poor minority kids testing out of the NEA/AFT/AFSCME cartel’s wretched schools by age 14. Schools as currently constituted give to many students no reason to do what schools require. Compulsory, unpaid labor is slavery.

    • Sandra says:

      Correct, self-paced is not the same as grouping; however, self-paced is not new and has been shown successful. Computer-assisted instruction has also bee utilized flor self-paced, so does it qualify as the transformational education reform best driven by entrepreneurs? Or is it part of a more realistic, cost-effective approach of examining methods that do work?

      • (Sandra): “Computer-assisted instruction has also bee utilized flor self-paced, so does it qualify as the transformational education reform best driven by entrepreneurs?

        In the Brookings study __Politics, Markets, & America’s Schools__, authors Chubb and Moe suggest that vouchers are a panacea. A shift from the current State-monopoly structure to a competitive market in education services would create an ongoing experiment in how to satisfy parents’ choices while reducing waste of resources. For various reasons, I prefer a policy I call Pefformance Contracting to vouchers, charter schools, or education tax credits.

        Across industries, across countries, competitive markets in goods and services outperform monopolized industries. In abstract the education industry, with its enormously varied inputs (individual student interests and abilities) and outputs (the possible career paths a modern economy offers) is an unlikely candidate for centralized control.

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