Build New, Don’t Reform Old

By 08/02/2011

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When I wrote my two part critique of the Gates Foundation strategy, one of our frequent comment-writers, GGW, asked: “What would you do if asked by Gates how to better donate his (and Warren Buffett’s) billions?”

Here is a brief answer to that question: Philanthropists with billions of dollars to devote to education reform should build new institutions and stop trying to fix old ones.

In general, existing institutions don’t want to be fixed.  There are reasons why current public schools operate as they do and the people who benefit from that will resist any effort to change it.  Those who benefit from status quo arrangements also tend to be better positioned than reformers to repel attempts by outsiders to make significant changes.  The history of education reform is littered with failed efforts by philanthropists.

Instead, private donors have had much better success addressing problems by building new institutions.  And competition from newly built institutions can have a greater positive impact on existing institutions than trying to reform them directly.

Let’s consider one of the greatest accomplishments in American education philanthropy.  In the late 19th century, America’s leading universities (Harvard, Yale, Princeton) were badly in need of reform.  They were still operated primarily as religious seminaries and not as modern, scientific institutions.  Rather than trying to reform them directly, major philanthropists built new universities modeled after German scientific institutions.  John D. Rockefeller and Marshall Field helped found the University of Chicago.  Leland Stanford built Stanford University.  A group of private donors built Johns Hopkins.  Cornelius Vanderbilt founded Vanderbilt.  All of these universities imitated German universities with their emphasis on the scientific method and research and were enormously successful at it.  Eventually Harvard, Yale, and Princeton recognized the competitive threat from these German-modeled upstarts and made their own transition from a seminary-focus to a scientific focus.

The reform of the U.S. higher education system did not come from a government mandate or “incentives.”  It did not happen by philanthropists giving money directly to the leading universities of the time to convince them to change their ways.  It happened by philanthropists building new institutions to compete with the old ones.

The same could be done for K-12 education.  Matt Ladner has written a series of posts on “The Way of the Future.”  He, along with Terry Moe, Clay Christensen, Paul Peterson, and others, envision large numbers of  hybrid virtual schools offering higher quality customized education at dramatically lower costs.  Students would attend school buildings, but the bulk of their instruction would be delivered by interactive software.  The school would need significantly fewer staff, who would concentrate mostly on assisting students with the technology and managing behavior.

Obviously, this kind of school would not be good for everybody.  But it could appeal to large numbers of students and be offered at such a low cost that it could be affordable even to low-income families without needing public subsidy or adoption by the public school system.

Gates or someone else with billions to devote to education could build a national chain of these virtual hybrid schools to compete with existing public and private schools.  It’s true that Gates is already investing in the development and refinement of the virtual hybrid school model, but a complete commitment to building new rather than reforming old would give him the potential to do what Rockefeller, Stanford, and others did to higher education.  Virtual hybrid schools could be the disruptive technology, as Christensen calls it, to produce real reform in education.

Another benefit of the “building new” strategy for philanthropists is that it avoids the Emperor’s New Clothes problem, where philanthropists are encouraged to pursue flawed strategies to reform existing institutions because everyone is afraid to criticize the wealthy donor from whose largess they benefit.  With the “build new” strategy there is ultimately a market test of the wisdom of the strategy.  If the new institutions are not better, people won’t choose them.  If the University of Chicago had been a flawed model, it wouldn’t have attracted enrollment and would have failed to apply competitive pressure to Harvard, Yale, and Princeton.  Similarly, if the virtual hybrid school is a bad model, then it won’t attract students and compete with existing public and private schools.

Edison Schools is an example of a “build new” strategy that failed the market test.  They failed to develop technologies or other efficiencies to bring down the costs of operating private schools.  And their revised strategy of operating public schools under contract with public school districts was flawed by an underestimation of the political resistance they would face and their inability to control costs or quality within the public system.

But we also have successful examples of the “build new” strategy adopted by philanthropists.  In addition to the string of scientific universities built in the latter half of the 19th century, we also have the example of Andrew Carnegie and public libraries.  Carnegie helped promote literacy and cultural knowledge by supporting the construction of hundreds of new libraries around the country.  He didn’t try to reform existing book-sellers, he just built new.  Another example (outside of education) can be seen in John D. Rockefeller’s role in the development of a national park system.  Rockefeller privately acquired large chunks of what are now the Acadia, Grand Teton, Great Smoky Mountains and Yellowstone national parks.  Rockefeller didn’t try to reform the operations of the existing Interior Department.  Instead, he effectively privately built nature reserves and then donated them to the U.S. to become national parks.

Of course, this “build new” strategy has limited potential for smaller-scale philanthropy.  But for the very wealthy, like Gates, the path to making a significant and lasting difference is to build new rather than reform old.  The lasting benefits of what Rockefeller did in higher education and national parks and Carnegie did with libraries are still noticeable today.  If Gates and others with billions to devote to education continue to focus on reforming the old rather than building new, I fear their efforts will soon be forgotten after the Emperor’s New Clothes adulation fades when they stop having large sums to give.

-Jay P. Greene

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