Challenge to DC Public Schools: Compete or Die!

As students continue to flee Washington, DC's regular public schools for charter schools, the system is having to shut down underused school buildings. Washington Post columnist Marc Fisher offers this telling anecdote that explains much of the failure of DC's public schools:

Three years into Washington's experiment with charter schools, after they had sucked away 15 percent of the students from regular public schools, I asked then-Superintendent Paul Vance what he had changed to compete with the charters.

His one-word answer: "Nothing."

My wife (whose mother was a public school teacher and a professor of education) looked over at me during breakfast and said something like: "See that's what I'm afraid of--charter schools and vouchers will drain the public schools of the best students and money, leaving the remaining students in worse and worse public schools." (Ah, the sheer joy of discussing public policy over blueberries and cream in the morning.)

In any case, her assumption seems to be that the public schools will simply let themselves die. The idea and the hope is that by injecting competition (vouchers, charter schools, and so forth) into education that that will force public schools to improve. But it may be that some public school bureaucracies are so ossified and some teachers' unions so reactionary that they would rather die than change. My wife is right to worry that the kids who remain in the public schools will get hurt by the death throes of their dying systems. But the solution is not to maintain failing public schools on life support.

In an excellent recent article, Reason Foundation education policy director Lisa Snell showed how public school systems can dramatically improve by assigning funds to each student and then force schools to compete for students who can choose which schools they want to attend. The DC public school system, which already spends over $16,000 per pupil (one of the highest levels in the nation) could save itself by embracing such competition. Or, if it will not, for the sake of the students, it should just hurry up and die, clearing the way for a new generation of competitive educators to take over.

Comments

[Thomas Paine's Goiter]

At this point, I'm pretty sure that the only way to undermine 70 years of urban teacher's unions is to kill their method of delivery.

I say it's a good thing that they'll die before changing.

[Ron Hardin]

The way competition works is that incompetent management structures disappear, though the need to pay them and no money to do it with.

They don't reform.

Other people take over, in this case by way of charter schools.

Not to mention the union. Expect screaming and yelling as they go down.

[smalls]

In all the time I've been following the school choice debate (only about 5 years), I've yet to hear a rational argument for preventing school choice. If any of you dems out there have a good answer, please let me know. I'm not being facetious here. I really can?t understand the argument.

[D.A. Ridgely]

... charter schools and vouchers will drain the public schools of the best students and money, leaving the remaining students in worse and worse public schools.

Probably true, especially in DC. I remember (and you may, too) some years ago a valedictorian from a DC public schools couldn't gain admission to George Washington University (then significantly less selective than today) because his SAT scores were abysmally low (if I recall correctly, somewhere in the 600s combined!) There is scant reason to believe the quality of education in the DC public school system has improved since then.

The sad truth is that, for the majority of its students, that school system (like the DC government itself) is already broken beyond repair for reasons having absolutely nothing to do with financial resources. However tragic the fate of most of its students, consigning those who can flee to even marginally better charter schools to remain would be the moral equivalent of condemning those who could be rescued from a burning building to die because, since all could not be saved, it would be wrong to save only those few.

[Captain Holly]

Let the Publik Skools die. First off, public schooling has outlived its usefulness; second, it's the only way real education reform will occur.

When I discuss the issue with friends and family, I make a point of using the term "socialized education" instead of Public Schools. It makes a big difference in how they perceive it.

[MP]

smalls,

The devil is in the details. The problem is that Public Schools (in some states) are burdened with onerous mandates, particularly in the realm of special education. These mandates are very expensive and offer local administrators very limited flexibility. Setting up a choice program that doesn't address the mandates will likely end up skewing the Public School population with students who are either very expensive or who are "problem students" (usually due to unmotivated parents). This population would drive up costs, but since funding is likely to be tighter, Public Schools would collapse under their own regulatory burden.

Note that I present this argument as one who fully supports Friedmanesque vouchers. The biggest issue burdening Public Schools is their own bureaucracy and over-regulation. I sympathize with teachers who feel their schools would fail faster if left with a harder population, but I blame the state monopoly in the first place.

[Harassed father of 3 little ki]

You have blueberries and cream for breakfast while discussing public policy with your wife?

Dude, you are soooo lucky!!

[jp]

"Not to mention the union. Expect screaming and yelling as they go down."

Good thing the teachers union doesn't have access to nukes. (It doesn't, right?)

[Pro Libertate]

jp,

They do, but only for peaceful uses.

[pigwiggle]

"The devil is in the details. The problem is that Public Schools (in some states) are burdened with onerous mandates"

Expect similar regulation for charter schools pushed by teacher unions. Seems like a predictable response.

[mitch]

smalls,

I'm no advocate of public schooling myself, but the lefties I know support public schooling because of issues of equity; they say they don't want a society in which the middle classes get good educations and the poor get poor educations, or no education at all. Some of them are very into local democracy and giving "power to the people," and they envisage the public schools as more amenable to "community control" than private schools.

Another issue is a concern over church and state issues, when it comes to vouchers paying for education at a religious school.

Also, many on the left, as you no doubt know, have a phobia about privatization and a fetish for unionization, and that obviously plays into it. Public workers are noble servants of the people, while private employees are greedy chasers after filthy lucre, and all that. For those into party politics, rather than, or in addition to, philosophical and technocratic education issues, it is obviously important that the teacher's unions, which do so much to support the Democratic Party, not lose any of their members, income, and power.

Maybe joe or other Democrats will chime in, adding to what I am suggesting or correcting me.

[Chuck]

MP--

"special needs" students generally come with extra funding, via some sort of weighting formula. They may count as 1.4 FTE students or some such number. At any rate, the schools are given extra funding to compensate for them. We can debate whether the extra funding is really enough to cover the extra cost, but it's not as if they just have to absorb all of it.

Problem students are just that, a problem. The solution is to get rid of mandatory schooling after about 6th grade. 14 year old Johnny not behaving today? Send him home. Call a taxi if you have to. Parents not there to supervise? Too bad. At least the other 90% of the kids will be able to learn without constant distractions.

[Ira Weatheral]

Chuck, it's probably closer to 98% of the kids will be able to learn without distractions.

But sixth graders are 11, not 14.

[D.A. Ridgely]

But sixth graders are 11, not 14.

Not in some public schools.

[Gimme Back My Dog]

they don't want a society in which the middle classes get good educations and the poor get poor educations, or no education at all.

this would be different from the current system, how?

[Warren]

Reminds me of how desegregation is responsible for the inner-city black ghettos because all the good role-models left the neighborhood.

[Ironchef]

"charter schools and vouchers will drain the public schools of the best students"

(Ron your wife is not the first I've heard this from), but
This is the most disgusting defence of publik skools ever. The equivalent of "you must be condemned to suck as we are".

Once again, let me invest my time and money into my kids education, please.

[D.A. Ridgely]

this would be different from the current system, how?

Obvious: many in the middle class are not getting good educations in the current system.

[MP]

This is the most disgusting defence of publik skools ever. The equivalent of "you must be condemned to suck as we are".

The problem with this analysis is that there are plenty (if not a clear majority) of public schools that don't suck. The concern of educators is that choice will force the good schools to spiral into suckyness.

Chuck,

I fully agree that mandatory attendence is a big problem and I support revoking it. In fact, I support revoking it altogether.

As for special ed. funding, it varies so much that it is difficult to say with any authority that the state adequately supports the local district as a result of their mandates. Every educator I've spoken with in special ed. says that this is far from the case and that localities end up assuming much of the burden.

[Les]

Does anyone have any ideas as to why European schools perform better than U.S. schools, even though they are public and the teachers are unionized? It's a mystery to me.

[bubba]

11 or 14?

If public schools were able to hold back kids for up to 3 years when they wouldn't/couldn't learn, we wouldn't have nearly the same problem.

At least charter schools solved DC's overcrowding problem.

[mitch]

Gimme Back My Dog,

The lefties I know who talk about education would agree with you, that we already have an unequal education system, and they push for school funding equalization across states, regions, or even nationally. (They blame a lack of funding, at least in part, for the crummy schools in the inner cities.) They see choice as making things even more unequal.

[downstater]

one issue with vouchers is the burden placed on the new school to which the transferring student will be attending.

the property tax revenue (by which public schools receive most of their funding) from the transferring student does not follow that student to their new school. likewise, since the child's family is not a resident of the area, they are less likely to pay sales taxes within the new district.

if the new district currently spends x amount per pupil but must incur new students using vouchers which don't cover that current amount, overall spending per pupil in the new district declines.

furthermore, some students coming from failing districts likely will be behind those already in the new district and will require more resources to catch them up. (also, while they are still behind, the new district's test scores drop and consequently so may their funding).

in short, the new district inherits new students which could require an above average investment while receiving less than average revenue from these students while dropping the total amount available per pupil overall.

[mk]

Johnny not behaving today? Send him home.

I coach a kid's soccer team and I can vouch to the power of having this as an option. If some kid is being disruptive, I tell them to get off the field and come back when they are ready to be on the team again. So far, it is the only tool I have needed.
The thought of not having that as an option is one of the many reasons why I have never entertained the idea of being a school teacher.

[Jennifer]

"See that's what I'm afraid of--charter schools and vouchers will drain the public schools of the best students and money, leaving the remaining students in worse and worse public schools."

It's the school's job to give the kids a good education; it's not the kids' job to make the schools look good. And all this talk about "draining schools of money" is a red herring. It takes money to fund sports fields and huge administrative staffs and self-esteem seminars and other useless garbage; it doesn't take that much money to teach kids how to read, write and do basic math.

[Ron Bailey]

Les: A very good question--I speculate that European, Japanese and Korean schools are much more rigorous and authoritarian than present-day American public schools. I also suspect that they track their students along ability lines (something that has been all but abolished here because of concerns about racial and ethnic disparities in classroom outcomes). Which means that public schools per se don't necessarily have to suck. Restoring academic rigor from the top down doesn't seem likely in the US, therefore fostering competition is the best policy. I'd bet that a generation after competitive school systems were established, US students would out perform foreign students. Let's try it and see.

[Swillfredo Pareto]

And all this talk about "draining schools of money" is a red herring.

It's worse than that, it's an outright lie. I have never seen a model of vouchers where the value of the voucher was even close to the average per-pupil expenditure. Mathematically you are left with more per-pupil in a school choice system than in the monopoly system. Unfortunately you are also left with the students of shitty parents.

in short, the new district inherits new students which could require an above average investment while receiving less than average revenue from these students while dropping the total amount available per pupil overall.

At least in Florida that is not close to how it works. School boards have assessment power, schools are funded at the district level, not based the neighborhood that they draw from. It is highly unlikely that parents would send their children outside of their district. Transportation challenges and other logistics usually have school choice contained within one school district so the issue is not whether tax revenue follows the student. As I said above, it is not a net loss in dollars for the remaining public schools.

[jp]

"Does anyone have any ideas as to why European schools perform better than U.S. schools, even though they are public and the teachers are unionized? It's a mystery to me."

Don't quote me on this, but I think it's because kids aren't bound to attend schools in a particular locality. The money is attached to the kid, and that money can be spent in any school the kid can get into.

"the property tax revenue (by which public schools receive most of their funding) from the transferring student does not follow that student to their new school. likewise, since the child's family is not a resident of the area, they are less likely to pay sales taxes within the new district."

I think the whole idea is that the property tax would follow the student. This would involve remittances between municipalities. I think you would also need to allow schools to turn applicants away, much the way Catholic schools do now. The kids that no school wants would end up at the crappiest school, which I think is part of the point: if you're kid is a problem, and you want him to be accepted somewhere other than the local dumping-ground, then you'd best teach him/her to behave.

[stubby]

Jennifer: you're so right (of course, you're a teacher, so you should be...) - the money public schools spend on sports - NOT physical education, but team sports and, in my neck of the woods (Texas) football in particular - is a pet peeve of mine. Kinky Friedman's idea of withdrawing all public education money from the team sports and allowing the big athletic companies like Nike and and Adidas to fund them is a great one that has no hope whatsoever of implementation.

I've never understood why the GOP doesn't make more of a fuss about vouchers and Democrat opposition to them, because this is a matter of interest to a lot of African Americans and other minorities stuck in atrocious urban schools. The WSJ a couple years back chronicled a delicious exchange between Sen. Mary Landrieu (D-Louisiana) and DC school parents appearing at a public forum about vouchers - many DC residents were there to support the program, Mary of course opposed, and she had the nerve to spout some pious BS about the importance of "our" public schools and if I recall correctly, one of the mothers asked "So what school do your kids attend, Senator?" Uh.....some really really really expensive suburban day school was the answer. It was pretty disgusting.

To repeat myself for the 1000th time, I am so grateful that my daughter will go to a private school - and not just because it's academically light years ahead of Houston Independent School District schools.

[lannychiu]

Les,

At least for Korean and Taiwanese schools (where a number of my cousins grew up), there is an explicit separation of students at a very early age. Prior to middle school/high school and college students are given a rigorous battery of examinations (much more difficult than the SAT's) and based on the results of these exams placed in an academic or technical (where you learn things like being a mechanic) high school.

Also, schools are much stricter, they study more and the curriculum is much more technical. There is much less emphasis on creative writing and such, and much greater emphasis placed on quantifiable skills.

[downstater]

It's the school's job to give the kids a good education; it's not the kids' job to make the schools look good.

i agree to a certain extent. i'd rephrase it a bit and say that it's the school's job to offer a good education. whether or not a kid gets one depends on the kid. this fact is the best reason why determining funds from standardized test scores is rediculous, imo.

the amount seemingly spent of athletic facilities does seem staggering. i agree. but most communities would probably rather cut math than football. to be fair, a large portion of those athletic budgets may be derived from booster activity.

if only there were motivated math boosters.

Swillfredo,
School boards have assessment power, schools are funded at the district level, not based the neighborhood that they draw from. It is highly unlikely that parents would send their children outside of their district.

you're right, but many districts only have one high school.

jp,
I think the whole idea is that the property tax would follow the student....I think you would also need to allow schools to turn applicants away

and if they're renters? what property tax would they take with them? also, wouldn't this create an equal protection issue?

just to be clear, i haven't personally come down on any one side of the voucher issue, so these aren't necessarily my arguments, but ones that i do think present a problem for vouchers.

[Dave W.]

If I were a school company, I would buy all the schools in a district instead of spreading my schools across the state or the nation. That way students in my district would have to go to one of my schools. Then I would cut costs aggressively and make tons o profit.

Me good businessguy!

[Taylor]

"Compete or die" -- logical fallacy... false dilemma.

[lannychiu]

I also find the whole discussion of necessarily saving our current public schools to be rather ridiculous. What vouchers should do is to force our schools to use the money efficiently.

I grew up in an upper-middle class suburb of Boston with a really good public school system that my brother and I both attended. In order to increase the diversity of our high school about 10% of our students would be bused in from inner-city Boston.

Growing up I always assumed that we must spend much more per student, and that our greater resources were what enabled us to have better teachers, facilities, etc... After studying it, I was amazed to learn that per-pupil expenditures were greater in the inner-city schools that were sending there students to the suburbs!

Boston had a whole lot more administration and overhead, and the money assigned to the schools wasn't actually being spent on the students. That is what vouchers can help change, a more efficient use of the resources that already are being spent, instead of constant complaints about increasing them.

[lannychiu]

Dave,

But if you did that, why wouldn't I just open up a school in your district, provide a better education (which I could do by taking some of the profit margin and spending it on better education) and steal all your clients.

Your strategy would only work if you could exclude the entry of other players, which is implictly what the public schools are doing right now.

[Jennifer]

of course, you're a teacher

EX-teacher. Bush will French-kiss Bin Laden on live TV before I try teaching again.

[Dave W.]

why wouldn't I just open up a school in your district, provide a better education (which I could do by taking some of the profit margin and spending it on better education) and steal all your clients.

Because starting up a new school has significant barriers to entry. Also, anybody who goes to your school and comes back to one of mine gets a 50% discount (til u shutter, that is).

Me better businessguy.

[jp]

"jp,
"'I think the whole idea is that the property tax would follow the student....I think you would also need to allow schools to turn applicants away'

"and if they're renters? what property tax would they take with them? also, wouldn't this create an equal protection issue?"

Renters, like property owners, would get vouchers for whatever amount the locality has decided to spend per student. School districts already make that decision. Under vouchers, instead of paying the money solely to the public schools within the district, the district would pay the money on a prorated basis to whatever schools the residents' kids attend.

As for equal protection, I don't see an issue here. I'm not aware that the US Constitution has ever been held to require that equal amounts get spent on all students. IIRC, one or two state constitutions have been construed that way, but that's a problem just for those states.

[lannychiu]

Dave,

What barriers to entry?

Maybe I am stupid, but it seems to me you need some physical location, (perhaps even a converted office building would do), some teachers (whom I could probably hire from you since I imagine as part of your cost cutting you would reduce their salaries) and some basic supplies which are available for general purchase.

Barriers to entry are things like patents, limited physical supply, government prohibition. Basic costs to start a business are not a significant barrier to entry (if that were so ever single industry could be considered a potential monopoly).

Further if you were to underprice we to put me out of business (dumping is the technical term I believe), I assume you would do this in order to raise prices after I exited the market and capture monopoly profits.

But as you are again charging monopoly prices, how does that stop another entrepeneur from entering the market, forcing you to again compete (with price or quality), incurring losses to put them out of businesses, ad infinitum.

I believe they call this a competitive market process.

[Dave W.]

should say: --because I bought up the existing schools in the district and starting up a new school from scratch entails overcoming significant barriers to entry--

that was supposed to be implicit in my previous post, but maybe not on review.

[Dave W.]

Looks like we cross-posted Lannychiu.

Anyway, your primary advantage would be reputational, and it will be hard to build your reputation when I target my discounts to your students.

[Dave W.]

--your primary barrier to entry--

[keith]

Lanny,

I didn't know that about Boston. I am always startled by the annual Phila Inquirer Report Card on Schools. I attended Lower Merion school district, in the middle-left immediately adjacent to Philadelphia on the following map:

http://inquirer.philly.com/specials/2006/report_card/schools_pa/

According to the Inquirer, LMSD spends $21,477 per student per year; Philadelphia only $10,907. The amount of money LM has to spend (with barely a tax riot peep, though maybe the commentator from Ardmore will contradict that) is eye-opening. Philly district has plenty of structural problems: thousands of central administrators for only 10-11,000 line teachers and other central admin wastefulness, such as a single-supplier textbook contract that didn't score the kind of bulk discounts I think the should have negotiated. But I cannot support this disparity. If schools do reform to a per-student funding method, I would like to see the property-tax funding model done away with. Property tax funding of schools leads to some perverse incentives, and also presents a large risk of a negative feedback loop destroying an urban district for a generation or more in the event of urban decay (I think many large districts are on the long tail of this).

I understand North Carolina has moved to state general fund financing of public education. Do any of the commentators here have experience with NC public schools? How do you find it to work? I imagine there is some loss of local autonomy, but if it can reduce disparities like what I see in my home district compared to the neighbor, I'd support it.

I think any move to per-pupil funding should disconnect school funds from property taxes.

[Dave W.]

But as you are again charging monopoly prices, how does that stop another entrepeneur from entering the market, forcing you to again compete (with price or quality), incurring losses to put them out of businesses, ad infinitum.

I don't charge monopoly prices to students who sign a contract with you. Just all the others. Til you're gone. Don't worry, Lanny. You will enjoy working for me better. I am more profitable and I pay my executives well.

[MP]

Dave,

The natural monopoly problem of schooling is only an issue in lightly populated areas.

All,

An issue that Dave touches on tangentially is that there is an economy of scale with centralized schooling in rural areas. This leads to a natural monopoly that resists competition, even in light of vouchers. This means that vouchers are more likely to be effective only in areas of high population density. This understanding has never changed my support for voucher driven funding, but it is why I also support a rural public school network in tandem with urban and rural private schooling.

[D.A. Ridgely]

Oh, it "entails" significant barriers, huh? Well, yes, if we grant you the purely necessary truth by stipulation of your (otherwise facially false as an empirical matter) premises, then your argument has the vacuous virtue of purely logical validity.

You no very good logic guy.

[Dave W.]

Mp,

You say, problem, I say opportunity.

My consolidation has nothing to do with natural monopoly. I invest in my monopoly so that I can make profit from my pricing power. that is where the big bux are!

I will probably choose a medium size district for my first consolidation. Someplace with a decent tax base, but not so rich that the parents can send kids out of my territory.

[lannychiu]

Keith,

That is interesting. The reason inner-city Boston schools have so much revenue is they consume the property taxes for all of the businesses in downtown Boston, which generates significant amounts of revenue.

Wealth disparities between schools also strike me as unfair, but even if you equalize spending across pupils that alone is not likely to equalize performance.

In college I looked at a lot of data of school performance based on various inputs (per-pupil expenditure, teacher quality, vouchers, etc...), what emerged was that per-pupil expenditure has almost no explanatory power in explaining student performance. The only thing that seemed to positively influence outcomes was the presence of higher quality teachers (generally measured as fraction of teachers having at least a masters) and vouchers.

This of course must be taken with all the usual caveats around statistics, but given the odd structure around school expenditures it is not surprising that an additional input of funds do not necessarily translate into higher performance.

[keith]

Dave W,

You're describing the problem with the Philadelphia school district. It's administration top-heavy. Holding the line on teacher headcount and contract items quietly supports a gold-plated principals' union contract (and most of the thousand-plus central administrators are in fact "principals"). Plenty of money for executives by cutting back on services to customers!

[D.A. Ridgely]

MP,

That's true, but no one to my knowledge has ever argued that vouchers or charter schools are a one-size-fits-all solution. And yes, we mostly focus on urban school systems in these discussion, secondarily on suburban systems and practically not at all on rural schools.

But the very fact that those rural areas are so sparsely populated (and, IMHO, for good and obvious reasons) make their concerns comparatively less important to address. If some square-state county chooses for reasons of economy of scale to have a public school system, I'll still object on philosophical grounds to government operated schools but I'm not going to worry about the impact on the education students receive there. As long as there are viable options elsewhere (as, for all practical purposes, there currently are not), it doesn't really matter.

[Dave W.]

You're describing the problem with the Philadelphia school district.

Stop saying *PROBLEM*. The word is opportunity. I resent the fact that you guys are painting me out to be some kind of problem causer. I am maximizing profits for my corporate entity. Ain't nothing better than that. Good lesson 4 the kiddies as well.

[Dave W.]

And I will have you know that many of my shareholders are retirees. You guys keep giving me static and grandma will be back to eating dogfood. My heart is as large as my acumen.

[Adam Fucking Smith]

Mp,

You say, problem, I say opportunity.

My consolidation has nothing to do with natural monopoly. I invest in my monopoly so that I can make profit from my pricing power. that is where the big bux are!

I will probably choose a medium size district for my first consolidation. Someplace with a decent tax base, but not so rich that the parents can send kids out of my territory.

Dave, read a fucking economics book already.

[lannychiu]

"I don't charge monopoly prices to students who sign a contract with you. Just all the others. Til you're gone. Don't worry, Lanny. You will enjoy working for me better. I am more profitable and I pay my executives well."

So this assumes you can now perfectly price discrimminate among your customers. But what stops any of the students you are charging monopoly prices to, to leave your school system and attend mine (which is not charging monopoly profits)?

As for using reputation barriers to entry, these are the most ephemeral of all business advantages, and not the basis for any long-lasting competitive advantage.

And it is not parents leaving the district you should worry about, it is how do you keep other people from entering your market. Without government collusion or some dramative economic advantages (i.e., you own all the coal mines) efforts at consolidation usually fail.

[Adam Smith]

The proposal of any new law or regulation of commerce which comes from (dealers in any particular branch of trade or manufactures) ought never to be adopted till after having been examined with the most suspicious attention. It comes from an order of men who have generally an interest to deceive and even to oppress the public.

[Adam Smith]

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

[MP]

Dave,

There's a difference between seeing a trust around every corner and believing that natural monopolies are harmful. Artificial monopolies don't have staying power, so your devil's advocate case doesn't have any sway.

D.A.,

The Friedman universal voucher is, at its root level, meant to cover all students everywhere. As I said before, the devil is in the details and thus there are circumstances where universal vouchers aren't as effective. I agree with you that a discussion of rural systems of secondary concern, since the "bad" public schools are typically in urban and/or poor areas.

[momacress]

Just for the record, Asian and Western European students only outperform U.S. students if you don't take class into account. Middle and upper-middle class American students do better than Japanese students, across the board. If you look at the stats, there is actually no way to compare students from poor American schools (schools where a high percentage of the student population is on free or reduced lunch) with their equivalents in Japan, because there are no such severely class-segregated schools in Japan. We're sort of in a unique position there. Comparing internationally is an apples/oranges proposition because of our locally-funded public schooling system.

I currently work on a research project investigating science education in high-poverty schools, and we bang our heads on a wall every time another "American studets are failing at math and science!" article comes around. What it should say is, "African-American and poor students are failing at math and science! Everyone else, you're fine." That headline would reframe the debate, wouldn't it?

[CharlesWT]

My wish is that we skip vouchers and the government get out of the education business altogether except, perhaps, for providing low income families with the educational equivalent of food stamps.

[Dave W.]

So this assumes you can now perfectly price discrimminate among your customers. But what stops any of the students you are charging monopoly prices to, to leave your school system and attend mine (which is not charging monopoly profits)?

They sign with you then they get the 50% discount from me. They show they signed with you, then they get the discount from me. If families pay by the month, then the kid will be back at AFS Inc. (short for Adam Fucking Smith) brand schools the next month. If they pay you by the quarter then I have them back with me in a quarter. If you require them to prepay for an entire year, then I will point out that my schools only require advance payments of one quarter at a time. I think my payment terms will be preferred.

When you come to work for me Lanny you will need to gfigure this kind of thing out without being told. Why do you think the executives make 1000X what the teachers make at my company. Cause their supposed to be smart!

[Dave W.]

--they're--

[MP]

for providing low income families with the educational equivalent of food stamps.

That is simply another way of saying "means tested voucher".

[Dave W.]

b4 you ask Lanny: if they don't pay u money, then they get no discount from this viscount. My discount is 4 serious shoppers only, not lookie-loos.

[D.A. Ridgely]

But for his poor command of English and broadsword like wit, I'd suspect Dave W. studied economics with John Kenneth Galbraith.

[lannychiu]

Dave,

Again I might be stupid, but why wouldn't all of your students sign with me? This would mean all of your students are paying the discounted rate, and you are now charging under monopoly prices for everyone(the "Dumping" price). While this price may be low enough to put me out of business, and simultaneously incur losses to you.

If you try and raise prices after I fold to reap the benefit of the monopoly, someone else will enter as long as you are charging your exorbitant markup.

Price discrimmination can work, but only under a more subtle play (airlines heavily discounting fares for a Saturday stayover, etc...)

[Captain Holly]

What it should say is, "African-American and poor students are failing at math and science! Everyone else, you're fine." That headline would reframe the debate, wouldn't it?

...and automatically get the author branded as knuckle-dragging, mouth-breathing inbred Klan racist.

Just as the MainStreamMedia refuse to acknowledge that minorities living in gun-control utopias suffer the highest rates of gun crime, they won't admit that minority children in big-city public schools are suffering the most from the bloated Socialized Education System.

It's ideologically easier for them to create a panic among middle-class soccer moms that their kids won't get into Harvard than to report on the issue truthfully.

[Dave W.]

D.A. Ridgely:

My SAT verbal score was at least as high as yours, but really I must object to any suggestion that I am like Galbraith.

I am highly suspicious of government. Galbraith, I assume (haven't read him) was not.

I like competitive markets. galbraith, I assume, was not.

Now that I am done teasing LannyChiu with my fake school company, I will put the point in plain terms for the non-exec's here:

Vouchers are fine, but will require much dedicated effort to avoid problems of consolidation. It is possible to have a competitive market funded by vouchers, but, as with any other business sector, steps must be taken to avoid companies from obtaining pricing power and sucking all the juice out of the system. I don't want a repeat of what has happened with US style healthcare where twice as many dollars go in, yet the people live shorter. There are steps that can be taken to prevent market consolidation in education, but a competive market in education is neither a state of nature nor selfexecuting.

Going back over the others responses on this thread, you can probably see why I am concerned.

[lannychiu]

Dave,

Off the top of my head (and I quick google search) I can find

Aetna
Blue Cross
Assurant
Cigna
United Health Care
Kaiser Permanents
Medica
Oxford
...
...

Who are all major national providers of health insurance. Does this really seem an industry to you that is highly consolidated?

I might suggest that there are a number of other reasons why we have poor health outcomes relative to cost, but consolidation is certainly not one of them.

[Dave W.]

Who are all major national providers of health insurance. Does this really seem an industry to you that is highly consolidated?

Compared to when individual doctors ran the show? You bet it seems consolidated. here's a challenge: lets see a list of all the licensed MD's in the US in your next response. then we can compare the length of the lists and see which one is longer and by how much.

[Captain Awesome]

But what about the schools that refuse to sell to you during your "consolidation"? I'm sure some parochial schools would refuse to sell. And where is the nest egg that pays for these acquisitions? Each school you buy is going to drive up the price of the next. And then selling at a loss to transfer students is a money losing deal. That is unless you can sign them and then increase your prices afterwords without losing them again. How do you guaranty that you alleged monopoly profits will outperform your increadibly expensive afformentioned efforts? And what do you do when some dude comes up with a new business model that blows you away, I suspect R & D will be spent mostly on a monopoly preserving efforts from what you've mentioned previously. Andam Smith is increadibly insightful, but you seem to have an irrational fear of an imagined monopoly power that controls everyone. And if that's how the world works, if it's so easy to build and maintain a large monopoly... Then why haven't you done it?

[John]

"It's the school's job to give the kids a good education; it's not the kids' job to make the schools look good. And all this talk about "draining schools of money" is a red herring. It takes money to fund sports fields and huge administrative staffs and self-esteem seminars and other useless garbage; it doesn't take that much money to teach kids how to read, write and do basic math."

As much as I disagree with you about other things, Jennifer, I couldn't agree with you more about your views on education. The whole system is whacked. You should see the schools in the big suburbs here in Texas. Pallacial is an understatement. They have huge football stadiums and gyms and auditoriums. They are just embarassing. Why? How does any of that educate kids? It doesn't. It just wastes tax payers money. We built the greatest, most productive country in the history of the world on generations of people educated in spartan conditions. Now, Junior can't learn if he doesn't have in class internet access and a multi million dollar audio visual center. Gee, do you think there is some corruption going on in administrations of even the suburban schools? You should never go back to teaching, you should go for the big bucks and go into administration and contracting for public schools. Why slave away teaching when you get in on the real theft?

[lannychiu]

Dave,

Do you think the convenience store market suffers from significant problems of consolidation and monopoly pricing with the rise of national chains (7-11, etc...) and has resulted in the decline of many local grocers?

An industry with 500, versus 10,000 major players is not one that suffers from a significant problem of consolidation. In both cases every local consumer has plenty of choices. One with 3 players might be a market that requires concern.

Healthcare has lots of problems but consolidation among insurance providers is not one of them.

[D.A. Ridgely]

Dave W.,

Well, I didn't score a 1600 so for all I know your SATs were higher. However, I didn't take a shot at your intelligence (let alone your ability to score well on standardized tests) but at what you wrote and how you wrote it. Yes, Galbraith not only disliked markets, he suspected they didn't really exist. And frankly, it isn't clear to me that you have much confidence in them either, your protestations to the contrary aside.

Every time you tweaked your hypothetical to reply to critics you reinforced my suspicions that you really didn't grasp how difficult it is to perpetuate an artificial monopoly without government assistance. So, for example, (1) nothing precludes some better capitalized company from entering the market and driving down your profits (and, hence, your ability to price out less capitalized competitors) and (2) the presupposition that demand is highly price elastic is at best dubious (parents actually care about giving their kids the best education they can afford, not merely the cheapest).

Your analogy to health care is inapposite, by the way, because in large measure the oligopoly of insurance companies working through corporations to provide employee benefit health care arose in large measure precisely because of bad government tax policy. Assuming that we need more government to fix the problem more government caused in the first place is an unpromising approach.

I don't deny that there probably will be negative unintended consequences in a move from a state monopoly to an increasingly private market for primary and secondary education. But worrying excessively about such downstream concerns at this point is like worrying about the water damage caused by the fire department at the scene of the blazing inferno.

[Dave W.]

But what about the schools that refuse to sell to you during your "consolidation"? I'm sure some parochial schools would refuse to sell.

Why? I give them money and promises to keep religion in the curriculum and they give me the school. This might surprize u, but my Church (the Catholic one) needs money now.

There are ways for an acute businessman to make holdouts sorry, but I really don't think religious organizations are going to be much of a challenge to outmaneuver. It is not like AFS would ever try to block, change or tome down the religious message or rules. Our company would continue to look to the religion to provide the very substance of the religious curriculum on an ongoing basis. Religious integrity is one reason why so many religions choose to sell their management and physical plant headaches to AFS!

Oh and one last thing: when I do the consolidation, I am not going to announce my motives in advance. In fact, to the extent i plausibly can, I will deny them. You'd be surprised at what people will buy into when ur discreet.

[Dave W.]

Your analogy to health care is inapposite, by the way, because in large measure the oligopoly of insurance companies working through corporations to provide employee benefit health care arose in large measure precisely because of bad government tax policy.

Vouchers are also a government tax policy. If HnR ever obtains its dream of a voucher funded unregulated "market," this excuse can be recycled when the education market becomnes as inefficient as the healthcare one.

There is a reason why it is better to preven monopolies b4 they happen. because after they happen, that pricing power can be used to buy influence in government and in the media (eg, libertarian blog sites who wouldn't recognize consolidation from a hole in the ground). After that happens, anybody who complains about consolidation gets tagged as a krazy konspiracy theorist who likes Galbraith. Its weird how that happens.

[Dave W.]

Yes, Galbraith not only disliked markets, he suspected they didn't really exist. And frankly, it isn't clear to me that you have much confidence in them either, your protestations to the contrary aside.

I think competitive markets can exist, but that they don't tend to continue as competitive markets unless they are forced to exist by external forces (eg, antitrust laws).

In Adam Smith's time, they were lucky enough not to have telephones and railroads. Sadly, we have to deal with associated business organizational difficulties that were not prevalent in his state of nature.

[Russ 2000]

You should see the schools in the big suburbs here in Texas. Pallacial is an understatement. They have huge football stadiums and gyms and auditoriums. They are just embarassing. Why? How does any of that educate kids? It doesn't. It just wastes tax payers money.

Ahh, the result of competition amongst public schools. Each district plays "can you top this" when it comes to luxury facilities. Still can't educate the kids any better, but at least they learn where they rate in the socio-economic pecking order. It would be a shame if such classism were restricted only to private education.

[Mo]

lanny,
I'm a voucher supporter, but don't you think the reason inner cities need more per student is that the teachers need to get paid more for hazard pay. Convincing someone to teach at the upper-middle class neighborhood is easy, convincing them to go to the 'hood is not. Even if you hold students constant. I have quite a few friends that would rather take $15K less a year to work in a nice OC neighborhood than take a job in LA.

[CharlesWT]

Here in Texas, many of the smaller, outlying suburbs and rural districts went on spending and building sprees when the large, wealthier suburbs were forced to share their tax revenues with them under the Robinhood plan.

[emmajane]

Learning how to spell 'palatial'....priceless.

[bendover]

Personally I'm a big voucher supporter. How about this as a compromise with the public schools - you give me a voucher for 80% of the per pupil cost (based on the assumtion every school age child is going to attend public schools). Win/win situation, I get enough money to make a sizable dent in most any private school tuition and the 20% haircut increases the dollar amount spent on the remaining students (per pupil of course).

[lannychiu]

Mo,

What you say is very reasonable, and it may in fact cost more to educate children in the inner-city than in suburbs.

The problem is since there is no real market no one can say for certain how much any of these things cost. If we implement a voucher system and it turns out that no one is willing to provide education for say 10% more than it costs in the suburbs, we can allocate resources accordingly.

But given our lack of specific knowledge I would be hestitant to make any public policy suggestions without some hard facts.

[WinterSplash]

Vouchers are fine, but will require much dedicated effort to avoid problems of consolidation. ( Dave W)

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Dave W,

You are assuming that the free market schools of tomorrow will look like the government schools of today.....Wrong!

I will give a few examples:

- The preschool that does such a wonderful job babysitting and offering an outstanding preschool program will extend their program to include kindergarten, first and second grade.

-The summer camp will grow into an all-year round boarding school.

-The county children's theater will open a school, and so will the local ballet company that today prides itself in getting its students admitted to the most prestigious dance companies.

-The local soccer teams will organize to form schools.

The YMCA that already has an outstanding summer camp for working parents will open an all-year school in its facilities. They will have outstanding swimming and basketball teams with national leagues.

Some of these schools, Dave W, will be no bigger than the one room school houses that educated my parents, members of the "Greatest Generation".

Sorry,,,,,but your big box, institutionalized, factory-like "consolidated school will be no match for the personalized attention of these inexpensive "boutique" schools. These small schools would already have very loyal and satisfied customers and well established and developed infrastructure.

[Mr. F. Le Mur]

Other than unsubstantiated claims, at Reason and other places, I still have yet to see any information which shows that charter schools, vouchers or school choice actually produce a better product. However, there's plenty of information to the contrary.
For example:
http://nces.ed.gov/nationsreportcard/studies/charter/2005456.asp
In reading, as in mathematics, the performance of fourth-grade students with similar racial/ethnic backgrounds in charter schools and other public schools was not measurably different.

There are also instances where the performance of students with shared characteristics differed. For example, among students eligible for free or reduced-price lunch, fourth-graders in charter schools did not score as high in reading or mathematics, on average, as fourth-graders in other public schools.

I'm not sure why so many people are cheerleading for school choice...lower costs for the same (or slightly worse) performance?

[Nike ?????? 3.0shoes]

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