No existing U.S. program approximates a free market in education

In a new City Journal essay, prominent school voucher advocate Sol Stern declares that competition and choice "may not be a panacea," and recommends that choice supporters shift emphasis to standardizing the curriculum. He's not alone.

Conservatives have long championed central planning in addition to parental choice, but in recent years centralization has been ascendant. Department of Education alumni William Bennett, Chester Finn, and Diane Ravitch, all appointed under Republican administrations, now place greater emphasis on national standards than on choice. Last month, Mr. Finn faulted Ohio's charter school system for placing "too much trust in market forces."

Their faltering support stems from disappointment with the impact of existing U.S. charter school and voucher programs, and what they think it says about market reform in general. Stern, for instance, laments that while Milwaukee's voucher program has benefitted the low income students who gained access to private schools, it has not dramatically improved the city's public schools.

But criticisms such as those of Finn and Stern don't reveal any failure of market education, because existing U.S. "school choice" programs do not constitute, or even closely approximate, free markets. That anyone imagines otherwise shows how poorly markets are understood, even among conservative education reformers.

Do charter schools really rely too heavily on "market forces"? Consider some key elements of free markets: prices determined by supply and demand, private ownership of businesses, low or no barriers to the creation of new businesses, few or no barriers to workers entering the profession, minimal regulation, the ability of owners and investors to profit from their efforts, and payment by consumers rather than a third party. With charter schools, these features are either grossly hobbled or absent. Yes, charter schools produce some attenuated competition and parental choice, but to imagine that those two diluted ingredients are sufficient by themselves (or even excessive!) suggests a badly mistaken notion of what a market is.

Milwaukee's voucher program has indeed helped many children, but it also falls far short of a market. First, it is capped at 22,500 students. That's too little to justify large-scale R&D investment by education entrepreneurs. If the market for computers were limited to 22,500 customers, Microsoft, Apple, and Dell would cease to exist. Private schools must also accept the voucher as full payment, but such price controls are almost universally derided by economists as counterproductive. If it were not for the fact that electronics manufacturers could once charge $1,000 for a DVD player, it would never have become possible for the units to sell for $30 today.

The initially high prices of innovative new products and services are what encourage the R&D that eventually brings down their cost.

Even if Milwaukee's voucher program were big enough and free enough to create a vigorous marketplace, the public schools still might not improve dramatically. The most significant advances in market economies generally occur when better products or methods replace old ones. The loom did not improve hand-weaving, it supplanted it. Even in the highly regulated and not especially market-like school choice programs of Chile and the Netherlands, private schools already enroll most students.

Though markets have been marginalized by "free" public schooling, they still thrive in niches such as tutoring, where programs like Kumon and Sylvan Learning show their effectiveness and responsiveness to consumer demands.

In many slums and villages across the developing world, where state-run school systems are particularly dysfunctional, majorities of poor parents are currently paying for their children to attend ultra-low-cost private schools - though free government schools are available. These education markets, as researchers such as Orient Global Education Fund president James Tooley and Oxford professor Geeta Gandhi Kingdon have shown, outperform state-run schools at a fraction of the cost, and they teach what families want. The vast international research literature on school governance and funding systems strongly favors competition, minimal regulation, private ownership of schools, parental choice, and some level of direct payment of tuition by parents.

It is possible to give all families access to a free education marketplace - by dramatically expanding and liberalizing existing choice programs, or adopting new ones, like Cato's public education tax credit proposal. But you can't expect current programs to produce free-market results in the absence of free markets.

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Detroit schools

Expensive and terrible. It’s time to offer vouchers

A new report shows that less than 1 in 3 ninth-graders in the Detroit city schools will graduate from a Detroit school in 4 years, a federally funded study by Michigan State University found. The official state figure is a graduation rate of 66.8%.

Poor underfunded Detroit city schoo … Wait. Detroit spends $11,112 per student. The statewide average in Michigan is $9,340. Inefficient and expensive.

Board President Carla Scott does not believe the results of the Michigan State study. “It doesn’t seem credible to me,” Scott said. “You can make data for anything you want it to say, but (they) should have factored in the reasons why they left. “If you look at children moving out of the city, of course you’re going to see a decrease. There are all kinds of reasons why children leave the city, that doesn’t mean they’re dropouts.”

That’s a good point. But it underscores how terrible — and expensive — Detroit schools are. Kids are moving out to graduate. They give up on Detroit schools. If that indeed is the explanation. The answer? The Detroit News reported:

Gov. Jennifer Granholm has proposed increasing the dropout age to 18 and creating smaller high schools to boost graduation rates. “Governor Granholm recognizes that we must provide a quality education for every child and provide them with the tools they need to be successful in the 21st century,” Liz Boyd, Granholm’s press secretary, said in a statement. “She has called on education leaders and lawmakers from both parties to join her in solving the dropout problem.”

More money. How trite. Hmm, if this were health care, Barack Obama and Hillary Clinton would be decrying those “greedy” teachers and bureaucrats and would be calling to slash spending and use more technology.

The simpler solution is to give them vouchers for $5,000 a year each and let them attend parochial schools.

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Australia: Better teacher selection needed

Elements in the NSW Teachers Federation have strongly resisted the mild proposals put forward by the NSW Director-General of Education, Michael Coutts-Trotter, to improve the processes of selecting teachers for our public schools. Principals of NSW secondary public schools have for years been seeking a more effective system of staffing their schools, and see the latest proposals as a small step in the right direction. A balance between local selection by school-based panels and statewide staffing processes would bring NSW into the 21st century, as well as ensuring students were being taught by teachers who really wanted to be in their school.

The NSW Secondary Principals' Council, the professional association that represents the vast majority of principals in the government sector, has developed a position paper that calls for just that: a balance. The SPC would like to have 50 per cent of staff chosen through local selection, with the remainder determined by state needs. Principals are rightly held more accountable than they used to be for the educational outcomes of students in their schools, but have very little say over the selection of their teachers. Greater authority to do this would lead to a better match of teachers for every school, and teachers would be able to make more informed decisions about where they might like to teach.

Schools in all parts of NSW would benefit from the adoption of the principals' position paper, as it calls for improved incentives to attract and retain teachers in rural and remote areas. Salary increases and termination bonuses after five years' service might well attract more teachers to these schools. Students in isolated areas deserve experienced teachers just as much as students in coastal and metropolitan schools do, and genuine incentives would make this possible.

The current transfer system works against the interests of many teachers who don't attract enough points to be able to move to a school that they would like to be in and to which they could make a great contribution. Some of our really great young teachers resign after a few years and either travel or work in the private sector once they realise that the present selection process is an impediment to them. More Generation Y teachers are teaching in our schools and they have a much more flexible approach to work. They don't want to be locked into a system that sees them as points on a scale rather than as a teacher who wants to work in a variety of locations. A young teacher told me a couple of weeks ago that this would be one issue he wouldn't take industrial action on. He wants the option of seeing what is available in a school before applying. He is not alone in thinking like this.

Parents want the best for their children. Knowing that the teachers of their children want to be in their school, have been selected through proper, fair processes to be there, and will be professionally developing themselves to enhance their future prospects should give parents much more confidence in their local public school.

Let's hope that NSW schools can move into the 21st century, and that the proposal by our school leaders for an improved staffing process will influence both the department and the Teachers Federation.

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