The Role of Profit in Education



By 09/18/2013

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Are profits and education antithetical? Do for-profit corporations add value to our education system? Or do they profit at the expense of the greater good?

Earlier this week, Salon ran an excerpt from Diane Ravitch’s new book in which she takes aim at the different but sometimes overlapping groups of education reformers she calls “corporate reformers,” who favor a greater role for for-profit enterprises in education.

Ravitch, who served as the Assistant Secretary of Education under President George H.W. Bush, famously about education reform. Unfortunately, along the way she seems to have forgotten why anyone would support the reforms she once championed.

Indeed, Ravitch demonstrates such an unwillingness to seriously engage with those whom she is criticizing that it is often hard to take her seriously. She has a point when she rebukes those who imply that teachers do not have the best interests of their students at heart, but then she engages in some counter-factual generalizing of her own:

The reformers define the purpose of education as preparation for global competitiveness, higher education, or the workforce. They view students as “human capital” or “assets.” One seldom sees any reference in their literature or public declarations to the importance of developing full persons to assume the responsibilities of citizenship.

Reading that assessment, one wonders if Ravitch has read the reformers’ literature or public declarations at all. She should start with Patrick Wolf’s “Civics Exam” literature review of 21 studies, which found that the “statistical record suggests that private schooling and school choice often enhance the realization of the civic values that are central to a well-functioning democracy.” Afterward, perhaps she would be willing to let her her friend Robert Pondiscio take her on a tour of Democracy Prep and learn about its CitizenshipFirst program. Lest she think these are anomalies, she could then attend an event at the American Enterprise Institute, read about the latest research on the importance of cultural field trips in Education Next, or speak to academics and policy analysts like Anthony Bryk, Andrew J. Coulson, Jay P. Greene, Rick Hess, Paul Peterson, Mike Petrilli… you get the point.

Ravitch also falsely claims that there is “no new evidence to support” school choice despite a large and growing body of high-quality research that says otherwise. But Ravitch’s inattention to the evidence is in some ways unsurprising because her opposition to school choice is mostly philosophical. School choice is “bad for our society” in her view because it supposedly “undermines the sense of collective responsibility for collective needs.” She is baffled that reformers appear to “substitute private choices for the public’s responsibility to provide good schools for all children.”

[Reformers] do not complain when for-profit corporations run charter schools or when educational services are outsourced to for-profit businesses. Indeed, they welcome entrepreneurs into the reform community as investors and partners.

Cue the Dramatic Chipmunk! Ravitch writes as though it were self-evident that profiting from providing educational services is immoral. She makes clear that she does not understand the purpose of profit when she scoffs about voucher programs and charter schools that “divert… taxes to pay profits to investors” and “turn a profit off their children, in order to reward their shareholders.”

Perhaps Ravitch does not realize that hundreds billions in taxes are already flowing to for-profit corporations through the public school system. For-profit corporations are involved in almost every aspect of public education, including building the schools and playgrounds, publishing the textbooks, cooking the lunches, and manufacturing the desks, whiteboards, computers, software, pens, pencils, and paper. Moreover, in the broader sense of “financial gain,” everyone from the teachers and principals to bus drivers and janitors are “profiting off children” in the public school system.

Ravitch also claims that reformers “assert that the best way to save education is to hand it over to private management and let the market sort out the winners and the losers. […] They lack any understanding of the crucial role of public schools in a democracy.” To the contrary, it is Ravitch who lacks any understanding of the crucial role of private education in a free and pluralistic society.

School choice does not hand control of education to “private management,” but to the parents who select among providers. Choice makes schools more responsive to parents. This dynamic is illustrated repeatedly in James Tooley’s The Beautiful Tree, which examines the role of private schools in the world’s poorest areas. For example, a public school principal in Ghana explained why poverty-stricken parents pay private school tuition instead of sending their kids to the public school at no charge:

It’s supervision. Proprietors are very tough. If teachers don’t show up and teach, the parents react. Private schools need to make a profit, with the profit they pay their teachers, and so they need as many students as they can get. So they are tough with their teachers and supervise them carefully. I can’t do that with my teachers. I can’t sack them. I can’t even remove them from [the payroll] if they are late or don’t turn up. Only the District Office can. And it’s very rare for a teacher to be sacked. (Page 71)

Fortunately, American public schools do not struggle with the rampant teacher absenteeism common throughout public schools in the developing world, though they often share the inability to fire teachers who are low-performing or even dangerous. By contrast, as Tooley explains, private schools must “ensure that the quality of education provided was at least high enough to satisfy parents, linking the desire to make a profit with the desire to maintain or raise standards in education.”

Profits provide information. Profits send a message that a firm is creating value for its customers. Just as importantly, losses send a message that a firm must change its practices to provide more value to customers or else close down. As Herbert Walberg and Joseph Bast explain in Education and Capitalism: How Overcoming Our Fear of Markets and Economics Can Improve America’s Schools:

In a capitalist economy, profits are the reward earned by firms that maximize the quality of services and goods, minimize overhead and bureaucracy, motivate their workers to achieve high and consistent levels of productivity, and avoid unnecessary expenditures. Successful firms sell better, cheaper, or better and cheaper products and services than do other firms. Customers notice, and business gradually shifts from inefficient to efficient firms. […]

Low-performing government schools don’t gradually lose customers and face the threat of closure, the way an inefficiently run business does. As a result, there is little urgency for reform. Their assets do not move from the control of those who have misused them into the hands of others who could do a better job. (Pages 98-9)

Greater responsiveness to parents also means a greater ability to choose the education that best meets the individual needs of their children. Diverse children require diverse schooling options, from classical and traditional education to Montessori and Waldorf. We should not expect that any one school will be able to meet the needs of every child who happens to live in a certain geographic area.

Moreover, allowing parents with differing values to choose different forms of education relieves the social tension inherent in public education. Ravitch is certainly correct that the best schools foster a sense of community. Those communal bonds are strongest when the school is freely chosen. By contrast, government-run schools turn the curriculum, what books are read, and what values are taught into political decisions, which can pit factions against each other and create winners and losers.

Like any business, a for-profit school only makes money if it provides value to its customers. The profit-motive induces private schools to be more responsive to parents and generates a more diverse array of educational options that better meet the needs of children while reducing social strife. Private education serves the greater good. We can enhance its impact by empowering families with limited financial resources to choose the schools that are right for their kids.

-Jason Bedrick




Comment on this article
  • terrymac says:

    I am delighted that this article mentions James Tooley’s groundbreaking research into the role of government-free profit-making entities in the education of 50-80% of the students in the poorest provinces of the world. These schools deserve far more attention.

    The most important factor is not simply that these schools are operated for profit; it is that parents choose which schools to fund by the same direct and immediate process that they use to determine which grocery stores to fund. The prospect of economic death – losing paying customers – concentrates the mind of entrepreneurs wonderfully.

    This is vastly more efficient than the cumbersome route of political kabuki theater, which is so different from profit-and-loss accounting that it should never again be referred to as “accountability.”

  • Reinvent_ED says:

    Superbly written, Jason.

    Al

  • Joe Beckmann says:

    It’s extraordinary that you ignore the core reason for public education in the first place: to teach how to work with others across barriers of class, culture, and skill levels. This was the core principle on which tax-supported education began at the birth of this country. As that diversity increased, first with the Irish in the 1840′s, the American “system” created grades, created elementary-secondary-postsecondary, and later even created vocational options. They weren’t “market driven,” but, rather, survivalist. And choice is valuable, but hardly the same when comparing cars or colleges, schools or police, health or illness, aging or suicide.

    You posit a “consumer-focused” education system, much like that described by Hacker and Dreifus or in Selingo’s College UnBound. The result of that particular kind of “market” is luxury studio apartments and courses that make people look good, regardless of what they actually need or learn. When the student becomes primarily a “consumer,” the product shifts from Milton and Einstein to Kentucky Fried dough.

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