Crony Capitalism in the Classroom

Edison Schools, that purported alternative to government-run education, has just been bailed out by the government. Josh Marshall has the details:

…in the last year Edison has bumbled along from failure to failure and the stock has spent most of the year trading a bit over a buck a share.

Things looked awfully bad until last week when Florida's state employee pension fund announced it was buying up all of Edison's stock and taking the company private --- for a cool $174 million. That's got to be the shrewdest investment the fund has made since it bought millions of shares of Enron just as the company entered its death spiral --- including 1.3 million shares just two weeks before the company declared bankruptcy….

The three member board of trustees of the fund is chaired by Florida Governor Jeb Bush, a big supporter of privatized schools and a big supporter of Edison.

So, you start a company to privatize education and take on the teachers unions. Your company fails miserably both in terms of the market and academic success. Then after you've hollowed the company out to cover your other bad debts friendly pols come along to bail you out with a couple hundred million from the teachers' (and other public employees') pension fund. I love symmetry.

Comments

[Kevin Carson]

Confusing genuine privatisation with contracting out--isn't that a recipe for crony capitalism?

[Warren]

yes, yes it is

[Anonymous]

Yipes! That's my pension fund that's throwing good money after bad! Maybe it's not about private education, but about showing that publicly managed retirement systems should be supplemented by the workers managing some of the investment themselves. The proposal that Social Security participants be able to direct the investment of(a small portion of)retirement funds has been implemented here in Florida. It's too late for me, but new government workers in Florida might want to take a harder look at the investment vehicles.

[a student]

Home schooling for me, thank you.

[StMack]

The question I still don't have an answer to is to what extent is Edison's failure a result of the system in which it operates. Is it Edison that was a failure or would anyone attempting to do the same thing fail. How much of Edison's failure, both educationally and financially, was a result of the constraints and regulation that they had to work within to run a public school? How much was their own incompetence, and how much is just a business model that was doomed to fail from the start?

[Stmack]

The one thing I have yet to see is a decent analysis of why Edison failed. Marshal does a good job at pointing out some financial shenanigans tht are part of the public record but here is no ananysis of why the schools themselves failed, nor even any discussionof how the whole operstion was set up to function. If Edison was indeed set up to take over the operation of a publlic school, and run it as apublic school, the fact that it did not (could not) succeed might be more of an indictment of the public school system than the company.

[Stmack]

Sorry about all the typos above. It's either my public school education or the obvious result of trying to type too early in the a.m.

[Jon H]

Stmack: Edison has run a number of schools, in a number of school systems, in a number of states. And not done very well at it, in either financial or educational terms.

[Jon H]

From a 2002 article from the Philadelphia Inquirer:

"With 82,000 students and 150 schools in 23 states, Edison Schools Inc. has achieved many goals, except the one that was supposed to revolutionize education: profit."

"The biggest money-loser was the Chester Upland School District just southwest of Philadelphia, where Edison lost $6 million.

The losses in Chester are a good example of why Edison's profits are so unpredictable. About 1,700 of the district's 7,200 students unexpectedly enrolled last year in new charter schools. Chester was paying Edison $5,200 to $6,800 per pupil, so the defections cost the company at least $8.9 million in lost revenue."

" In the last year, six districts canceled contracts because of high costs or lack of improvement in student test scores."

[dhex]

you know, tarring and feathering a few florida pension managers might convince the rest of them to avoid obvious money pits in the future.

somebody must be geting a reacharound on this one - well, obviously not the pension holders, but somebody.

[fyodor]

Freedom starts from the bottom up, not from the top down. Contracting out is not genuine privitization.

[joe]

You mean conservatives used the language of markets and small government to help out wealthy businessmen? And libertarians went along with it, only to be betrayed in the end?

Wow, this is really groundbreaking territory here.

[Wilson Lynne]

EMAIL: [e-mail]
IP: 62.213.67.122
URL: http://www.PENIS-ENLARGEMENT-MEDICATION.NET

DATE: 12/10/2003 06:19:12
Any certainty is a delusion.

[Quintal Anne]

EMAIL: [e-mail]
IP: 62.213.67.122
URL: http://average-penis-size.nonstopsex.org
DATE: 12/20/2003 10:16:04
Never underestimate the power of human stupidity.

[Niblock Jasper]

EMAIL: [e-mail]
IP: 68.173.7.113
URL: http://porn.sexmuch.com
DATE: 01/09/2004 04:15:54
I have been a stranger in a strange land.