Wednesday, July 11, 2007

Public Education Reform in the Presence of Monopolies

Via Ezra Klein and Mark Thoma, I am directed to a very good post by Kevin Carey at The Quick and the Ed on the relevance of teacher's unions to fixing the problems in public schools. I'll first take issue with a theme that emerges in the commentary, expressed by Mark as:

Public schools in higher ranked socio-economic areas do very well, even with unions present, so I don't think unions are the major issue.

The statement is worded so loosely that I can't really falsify it. However, the issue is not whether a union is present but whether the union's presence is a binding constraint on improvements to the educational system. In higher socio-economic areas, there are far fewer underlying challenges to the educational system and thus fewer opportunities for the union's pursuit of its own interests to interfere with addressing those challenges. The appropriate counterfactual to consider is whether the public schools--whether in higher or lower ranked socio-economic areas--would do even better in the absence of unions. The answer can certainly be "yes" if the unions were using their monopoly power to constrain the behavior of other stakeholders in the system.

But the monopoly that's relevant is not primarily the teacher's union, it is the monopoly of the school board over the educational choices of the families in the area (which itself may facilitate the unionization of the labor force). Of the several elements that characterize the public schools in my town:

I do not object to the generally progressive manner in which educational funds are raised within the district. We have a local property tax. In this community, the value of the house is a pretty close analogue of permanent income. (I don't necessarily advocate property tax funding more generally given the disparities across districts, but that's a different matter.)

I do not object to the use of some of those monies to run our highly regarded public schools that my children could attend without additional payments from K-12.

However, I strongly object to the constraint that all of these monies go into just these three schools (covering K-5, 6-8, 9-12). I have no choice of provider if my views of the best educational program for my children are at odds with those of the school board, acting on behalf (hopefully) of the other members of my community. I don't begrudge them their views, but I simply may not share them. I don't see why I should have to forfeit all of the tax monies that would be spent on my children's behalf to put them in private schools.

The money that is allocated to my children's education--not the tax money I pay--should follow the children rather than being constrained to be spent only at the government-run schools. That's the key monopoly problem, whether in high-ranked socio-economic areas like mine where additional expenditures are a desirable luxury good or in more disadvantaged areas where the consigning of low-income students to poorly performing schools is catastrophic. If the money followed the children, then multiple providers would compete, and members of the community could be better served by that diversity.

I may post more on implementation of such a system at a later date.


Fritz said...

I don't think it is a monopoly power of local school boards, the unions are national in scope. The unions control the offerings available to local boards. If the local board had the option to outsource to private educational providers, I mean 5 or 6 large firms not available today, the union would become irrelevant. Like the accounting curriculum at Dartmouth is determined by large national accounting firms and not the whim of a single professor, these firms too would determine teacher colleges academic standards rather than today's unions. Mr. Carey is an apologist for the union monopoly influence over our delivery system of education. If the entire student body were switched between a wealthy Virginia school and DC, the outcomes would be the same. I'm quite confident both schools have the same lousy teaching methods.

JG said...

A NYC public school teacher makes some observations about the school system she taught in.

Perhaps there's a problem on both ends with the whole dual monopoly (school board/union) structure?

JG said...

Regarding getting the money "to follow the children rather than being constrained to be spent only at the government-run schools", to break up the monopoly problem:

Sweden has a universal full-voucher school system that's proved both popular and effective. It's remarkable to me that this functioning real-world example doesn't get more atttention, at least from reformers.

Of course, like private accounts in Social Security, it's another example of Swedish social policy being too right-wing radical for US Democrats. They might be beginning to suspect that those dang Swedes are fronting for Cato.

Tom said...

Ah, yes, what we need is a system whereby every tree-hugger in Vermont can send their child to a truly efficient 10-person school that may or may not meet any of the standards (some reasonable, some ridiculous) established by the state. This, of course, would leave only the special education students in the public system, allowing critics to complain about how expensive it is and how poorly the children perform. Any idiot can make money educating only the best students at the average price.

There are publicly funded companies who have outsourced school management. As soon as they're faced with the same requirements as public school boards, they fail miserably. (Edison is the poster child). The problem is with the requirements, not the monopoly.

I personally set the bar very high for drastic change because there's no evidence that the proposed systems can take on the task we ask our public schools to perform: educate EVERYONE (No child left behind, including the kid who bangs her head against the wall while everyone else is trying to learn science) from every stratum of society using only people with 5 or more years of college while paying them less than half of what the average person in that education bracket normally makes. Oh, and handling in-school medical and social work facilities, childhood obesity, dental and eyecare, after-school programs, and education of identified students from ages 2-25 (I'm dead serious, we are paying for a special ed student who's 24 years old).

To sum up, if you dudes had an inkling of what public schools are asked to do, I defy you to make a system that would do it all better and deliver a profit margin and high executive salaries to some company. Dream on.

Anonymous said...

Someone wrote: "The problem is with the requirements, not the monopoly." I couldn't agree more. Two of my friends teach high school math and they do it because they care deeply about learning. They're not doing it for the money that's for sure; if only one student has that "light bulb" go off after being introduced to the quadratic equation, it makes the whole thing worthwhile to these guys. God bless 'em I couldn't put up with half the crap they do. Parents thinking that they are their personal au pairs, butlers, and baby sitters all rolled into one. Unfunded federal mandates. Students who blow off major exams and then ask to retake it after football practice at 7 PM. Hustling to get translators somewhere somehow because there are three other languages spoken in addition to English in the classroom. I hear all of the stories. High school teachers burn out after 4 or 5 years because we as a society pile up one requirement after another on them and then ask stupid questions like "is our children learning?"

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dibert dogbert said...

Public Education Reform is on the agenda only because of the huge cash flows that business see as a cash cow. Out of that vast cash flow very large executive compensation packages can be obtained. A lot of very smart people have been working for years on how to tap that market and get the rewards. So far no one has come up with the right ideas. When someone does it will happen because the financial rewards will be so great.

Extreme Wisdom said...


You do your job so well that even top-notch economists cna get snowed by your rhetoric.

The only "privatization" of education that has taken place is that of the "education industry."
They have effectively walled off $500 billion/yr into a politically protected, barely-legalized money laundering scheme saddled with intentionally complex legislation and mandated over-bureaucratization.

When criticised, the rule is always to retreat into some nonsense that no one but the proetected experts "knows anything" about how "hard it is to manage today's education industry.

It's a load of crap disproven by scads of private schools, small schools, and home schoolers, all of whom do tons more with tons less.

To be sure, I hail from Illinois, magnet state for every oily superintendent who wants to prove his mettle by hiking taxes on rich, dumb suburbanites, while s/he hops from district to district, pumping up his last 4 years of work life with artificial bumps to juice up his/her bloated, underserved pension.

It is your industry that "privatized" education, making it a jobs program for the not particularly motivated instead of a funding mechanism to connect neurons in our children's heads.

To truly make education "public" again, we should equalize funding for every child, attach that funding only to the child, and nothing else.

Each School should be cut loose from the absurd "district" (nothing but a "franchising mechanism" to insure centralized control) and be converted to a 501(c)3 Charter run by the parents who choose it.

I don't know all the particulars of NH, or all the other states, but I know enough from various headlines to know that schools in IL are hopelessly corrupt.

fund children, and not districts or bureaucracies.

Who is Big Ed?

Micah Faulkner said...

Dear Everybody:

I am an educator. My school corporation is certainly not the most effective nor the least corrupt. We face problems like all metropolitan school systems.

Some of what has been said here is in I might be missing the point. Nevertheless, I think the gist of the original statement is something like: "get rid of public education (except for the stuff for 'retards') and move to privatized education!"

First, you should allow that every major industrialized nation that matters has public education that works. Do we agree? Of course. Second, we should look at our own standing: ours doesn't. Why not? Because we have a few things working against us: the most obvious 1) burned out teachers. This is a real problem and should be addressed. 2) Massive corruption in the system (footnote 1). This needs to be addressed. 3) State manipulation of federal grants for profit (footnote 2) as in cases like NCLB and Title 1. Fourth, we have the problem of local taxes going to local schools. I will look at this in my next paragraph.

Imagine a rich suburban neighborhood. They spend, say, fifty percent of their property taxes on their schools. If their average home is valued at a million dollars, each of them is submitting fifty-thousand dollars a year to their school system.

Now, imagine a school system that has an average property value of one-hundred thousand dollars. If they are paying fifty percent to their schools, they are only paying five-thousand dollars per year. This is a difference of a power of ten.

But let's look at the truly poor.

What about those people on government housing? They aren't paying ANY property taxes. So their children receive...let's count it up...ZERO dollars for their schools. This is a real problem. Fifty percent of zero is zero. They get no actual money from their community this way.

Obviously, I am dealing in exaggerated numbers: no one really pays fifty percent of their local taxes to anything. However, I think the example holds true to the nature of things nation-wide. Hence, Title 1 and NCLB...both of which are noble attempts to correct the discrimination built into a system that uses local taxes to determine how the children of a community will be provided for.

Obviously, NCLB and Title 1 have not worked as they promised. And certainly, we teachers have not fixed the nation's set of children the way that we have been asked to. However, I ask you, do you really believe in privatized education with the (faux) numbers you see above? Really?

Should we discard education for everybody? That is what you seem to suggest. Maybe it would be better for us to return to a state where only the wealthy, white males get education while women, minorities, and the disabled do not...for the better of our economy. Maybe it would be better for our sense of well-being to ignore the fact that poor people cannot pay to have their smart kids educated...because it would mean that we won't have to allow them into our workplaces, churches, and social circles.

On the other hand, I think that most of America believes in public education...and that it should be equivalent (if not better than) the public education offered around the world. This is the goal, and what we should be working towards.


Footnote 1) In metropolitan school systems, corruption is rampant. People in 'the know' are more than aware of this. For example, Chicago regularly 'misplaces' millions of dollars of Title 1 funds -- which always seem to pay for some suburban school's football uniforms for some reason -- yet they are allowed to apply for Title 1 funds the next year. Another example I witnessed firsthand in the Gary School Corporation. In northwest Indiana there has been massive industrial loss -- the steel mills have been shutting down for outside-the-border alternatives. In turn, Gary has become an economic wasteland. Afterward, the schools became dumps...performance was atrocious. A new superintendent came into town...and he offered a solution to the schools' problems and a bandage to the economy's: The system would only buy supplies 'in-house'. This meant that the money from the system would stay in the system. Great idea.

Unfortunately, the only office supply depot in the city of Gary was owned by his brother...who charged some 24 dollars per ream of paper...a 600% retail upcharge. The IRS noticed nothing because both sets of books were in line with each other. It was all legal.