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Are Public Schools Supermarkets?

The absurdity of applying the business model to public schools knows no boundaries. In an essay published in The Wall Street Journal on May 5 titled "If Supermarkets Were Like Public Schools," Donald J. Boudreaux, professor of economics at George Mason University and senior fellow at the Mercatus Center, tries to show why the present monopolistic system of public education in the U.S. is indefensible. He attempts to make his case by supposing that groceries were supplied in the same way as K-12 education.

At first, I thought the piece was intended to be a satire. But then I realized that Boudreaux was dead serious. What he writes shouldn't come as a surprise, however, because the Mercatus Center was founded and funded by the Koch Family Foundations. According to SourceWatch, the Koch family has additionally contributed more than $30 million to George Mason University.

But more to the point, Boudreaux's model is not new. In 2003, St. Louis Public Schools hired Alvarez & Marsal, a marquee-name New York bankruptcy firm which preferred to be called turnaround experts, for a one-time fee of $5 million to address abysmal test scores and plummeting enrollment. It was successful in getting William Roberti, former Brooks Brothers chief executive, named superintendent even though he lacked any educational experience. I wonder if this set a precedent for the appontment of Cathie Black as former chancellor of New York City schools?

During his 13 months at the helm, Roberti shuttered 21 schools, chopped $79 million off the school budget, privatized many school services and fired more than 1,000 employees (although none were teachers). The real impetus for these changes, however, came from the Broad Foundation, whose proclaimed goal is to reform public schools along business lines.

Roberti took these steps in the belief that a school district operates much like a retail business. In fact, he viewed each school as a retail store and teachers as retail clerks. He asserted that the key is "supply chain management." As he explained: "Many people talk as if there's some magic to education. But the job of getting supplies from a warehouse to a building is the same in schools as it is in business as it is in the federal government." What this has to do with educating students, I still don't understand. Three months after Roberti left, student enrollment continued to decline, teacher morale was at a nadir, parents were angry about school closures, and voters were outraged about high salaries paid to top administrators. (For a detailed account of the fiasco, see "This is reform?" by Peter Downs.)

Regardless of the evidence, supporters of an educational free market are not deterred. They insist that not enough school districts have adopted the strategy to draw any final conclusions. They look to Milton Friedman as their hero. In 1955 when he issued his then radical proposal to disentangle government funding of education from operation of schools, Friedman was motivated more by ideology than by disaffection with the status quo because public schools during the era in question enjoyed widespread taxpayer approval. Since then, however, that support has slowly eroded as a result of a sophisticated disinformation campaign.

So maybe it's time to clarify why the laws of economics and the principles of education don't mix.

First, in an open marketplace, consumers possess ease of entry and exit. They immediately signal their satisfaction or dissatisfaction by their buying behavior. But in the case of schools, the ability to do so is expensive and disruptive. Certainly, parents can sell their homes or rent an apartment in an area to meet residency requirements or to make the logistics of attending schools easier. But the price paid financially, socially and psychologically is steep.

Second, even when parents are willing to pay the price, there's no assurance that they'll be able to enroll their children in coveted neighborhood schools because supply and demand are too often out of synch. In an open marketplace in business, this disconnect is routinely remedied by opening new branches. But it is very expensive to convert existing buildings to schools because education is extremely labor intensive. As a result, there are no economies of scale. The process is costly no matter how often it is repeated.

Third, product differentiation in education is at best minimal. Even when parents are guaranteed the right to choose, similarities between schools tend to overwhelm their differences within the same community. This doesn't mean parents can't find schools to meet the unique needs and interests of their children, but it is not nearly as simple as free marketeers assert.

Finally, the supermarket paradigm that Boudreaux offers is predicated on efficiency. But education by its very nature is not efficient. There will always be uncertainty and ambiguity in schools that aim for educational quality. That's why the business model of reform for public education won't work. The best it can do is to turn out students who perform a trifle better on standardized tests.

Nevertheless, I fully expect to see even deeper inroads into public schools made by Corporate America. The estimated $700 billion spent annually on K-12 education is too tempting to pass up. Joanne Barkan said it best in a essay published in the Winter 2011 issue of Dissent: "Got Dough? How Billionaires Rule Our Schools."

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The opinions expressed in Walt Gardner's Reality Check are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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