Prometheus 6

A lot of conservative enthusiasts of "market based solutions" tend to assume that private ownership/management will necessarily work better, regardless of the common-sense application of their own theory as to why this would ever be the case.  In other words, the expectation that competition both within and among private firms will ensure a strict meritocracy, has to actually have some truth to it.  

A lot of economists have made a career out of arguing that this is somehow true under conditions of monopoly (namely, by pointing out that the monopolist still has to make the enterprise profitable by ensuring that the marginal cost curve is sufficiently low).  However, there remains the assumption that the interests of the managing-agency line up with those of the individual or the community.  This is not necessarily going to be something the charter school can do any better than the public school.

Part of the problem is with the assumption of meritocracy. Education benefits from process technology; and an improvement in that technology absolutely enhances the educational outcomes.  But education also involves relationships that must endure.  I recently dropped my car insurancer, Safeco, because it used a diamond-studded golden parachute for retiring CEO as a crypto campaign contribution.  There was no consequence in the quality of my insurance.  A hot, competitive environment in the "educational systems management" sector will be quite different.  If Edison replaces Mosaica, it may feel it has to sack the staff; otherwise, how else can it improve the caliber of the school?

Educational management companies (EMCs) are usually small: Edison Schools ($425 million annual sales), National Heritage Academies & Image Schools (both $100M), Mosaica Education ($83M).  However, this is deceptive: the firms have subsidiaries, like Edison's Westport Corp., and appear to be part of huge, complex fiduciary pyramidsunder which the parent company can select districts for whose performance it can take credit, and which not. 

But there are other ways in which the agency problem can rear its ugly head. 

 

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Incidentally, I noticed the corporate media is taking its reliably fair-and-balanced position on charter schools.  Here's CNN, with an outright advertisement for charter schools, yanking on every wither it's got on behalf of dear old Fulton Academy.  Notice how the sole criticism allowed in is a single sentence, immediately rebutted by Fulton exec.  BTW, the charter school lobby claims studies are premature and unfairly skewed against charters.  But charter schools cherrypick students for aptitude; if an insurance company can do it, so can a subsidiary of N.Gulf & DiVour.

 

CNN's story, of course, includes no reference to this report and others like it.

In the link on the Westport Corp., zealous readers will notice it's about that company's Chapter 11 filing.  It filed C.11 because it had lost the charter to run the Westport Community Elementary School (Westport, MO).  The school district attempted to pull the plug on the charter--precisely the thing that a school district supposedly can do easily to ensure smoothly-oiled school administration (according to this McCarthyist jackass).  The charter school managed to fight its dismissal all the way to the SCOMO; upon losing its battle, its parent company arrived to loot it of assets, so it declared bankruptcy. 

Ironically, one of the most effective anti-privatization arguments I've found is that McCarthyist jackass mentioned above (R David Walk, Jr).  He uses every meritrious argument in the book: "Even a critic of privatization has recognized that '[c]orporate law is an exceptionally blunt instrument with which to protect involuntary constituencies'" (Under privatization, others don't exist; that's why "even" critics of privatization are, in fact, critics of privatization); he accuses his interlocutor of being against capitalism; he picks nits with all of the accountability regulations Conn recommends by arguing that they don't exist for public schools (which, however, have to conform to the will of school boards and do have to educate all comers); and so on.  Clearly, he has a lot to fear from any instrument of applying accountability.  Remember, the simple expedient of withdrawing students or charters is a very costly one IN PRACTICE for parents and school districts alike.

His editorial poisoned the well for me with lines like this one:

They have every reason to do an excellent job in educating students; if they do not, they will not make a profit and will eventually fail.

Like General Motors or Safeco Insurance, actually.  This is a scam being pulled on the school districts, which are ill-equipped to deal with professional hucksters. 

The simple fact is that there is an immense flow of money available for EMC propaganda.  99% of news stories will be bogus-news handouts--press-releases or "documentaries" that consist of nothing more than editorials written by the president/atty for the firm involved.  The news media corporation can slash staffing costs, the firm gets good press, and you, the news consumer, are properly brainwashed--for free!  The EMCs are typically created by venture capitalists of a peculiar character: rightwing thinktanks, like the Heritage Foundation, that have an interest in a mudslinging fest that will ruin the moral authority of school teachers and culminate in corporate control of EVERY MINUTE of your child's life.

I think charter schools are most useful in conjunction with a quality public school system. Realistically, every comprehensive system has gaps. The charter school set-up makes it easy to create "plugs" for those gaps. But obviously there are opportunities to  just milk the system.

The profitability argument works because a business transaction is America's central metaphor for relationships.

You think people can come to understand that some things are inherantly not business transactions?

The profitability argument works because a business transaction is America's central metaphor for relationships.

I think the USA is a standenstaadt of industrial managers. Industrial managers have evolved into a class capable of squelching opposition. They can pre-emptively accuse any critic of being a Communist ("You, like what they have in North Korea"), however absurd the accusation is. They can equate whatever arrangement serves them best as the very essential definition of a "free market economy," nay, the very essence of "freedom" itself.

As we've seen, they can even use this defense on methods that would actually minimize the size of the state, reduce the intrusion of the government on our lives, reduce taxes, or open up the market to real competition. There is a name for an economic system in which a particular cadre of professionals is allowed to make decisions about the regulatory environment under which they operate, who among them is fired or promoted, the allocation of capital among various enterprises, the types of choices consumers will be allowed to make, and the disposal of public goods. That name is "command economy," and it's actually quite distinct from a free market economy.

In the last four years or so, I've become aware of the fact that this cohort has total control over the debate and how it will be treated by the press. I've observed how any public person participating in political debate over matters such as the boundaries of corporate control over the public space, has either fled in terror if she reached an awkward spot, or else been savagely punished. A google news search for "Edison Schools" is creepy, because one is buried beneath a ton of indoctrination on behalf of the EMCs. Even from the perspective of a relatively conservative proponent of free markets--or, I daresay, especially from that perspective--this is alarming because it means an end to any hope of decent corporate governance. Even if corporate managers were reliably virtuous, honest, proud achievers, the abolition of accountability (through monopolies, trusts, and control of the public space) would give rise to anxiety.

You think people can come to understand that some things are inherantly not business transactions?

I think people used to understand this, but are in danger of losing the ability to even conceive of values other than those of business transactions. Education is a special case because it is so dependent on relationships. The relationship of student and teacher is vulnerable to betrayal at both ends. It is adversarial but also based on mutual tenderness. Teachers often understand their students better than the students parents do.

I think charter schools are most useful in conjunction with a quality public school system. Realistically, every comprehensive system has gaps. The charter school set-up makes it easy to create "plugs" for those gaps.

The problem I have is that the charter school pushers (the EMCs) want to create a gap, and then pretend to fill it. Other firms, such as Sylvan Learning Centers or University of Phoenix, already emerged though market mechanisms to fill gaps in the educational systems. The idea of creating a gap and pretending to fill it is not a novel one; but it is definitely one that has dominated the economic process more and more.

Industrial managers have evolved into a class capable of squelching opposition.

That's a little strong, I think. Management-think is seen as a successful planning and execution method so people apply it all over hell and back. I remember when I discovered structured analysis, and discussed it with a IT auditor that was kind of looking out for me while I was trying to be all corporate. I told her I realized the technique could be used to plan and document my department's operational procedures as well as for planning software systems. She said, "Hey you could live your life by it, if you wanted to."

The one thing that has held constant since the first Dutchman landed on the main continent is the purpose of all this activity: to make money. The colony was a combined military/commercial venture and that fact leaves its fingerprints everywhere in our law and culture. That all the squelchers look like industrial managers is an emergent quality arising from the fact that folk set about squelching opposition (which intent, frankly, is culturally independant) with the tools and weapons at hand.

There is a name for an economic system in which a particular cadre of professionals is allowed to make decisions about the regulatory environment under which they operate, who among them is fired or promoted, the allocation of capital among various enterprises, the types of choices consumers will be allowed to make, and the disposal of public goods. That name is "command economy," and it's actually quite distinct from a free market economy.

I've never seen a free market economy.

Education is a special case because it is so dependent on relationships.

Agreed. It's the best place to press the case that business transactions are not the correct model for everything.

I've never seen a free market economy.

I'm pretty certain there has never been one in history, and I looked pretty hard. The reason is that humans do not like the uncertainty involved.

JRM: Industrial managers have evolved into a class capable of squelching opposition.

PT: That's a little strong, I think. Management-think is seen as a successful planning and execution method so people apply it all over hell and back.

True, and I must say I too make reccurring efforts to be corporate. I do so now, because I want to be effective. I think what bothers me, though, is the difficulty people have in seeing the need for a mixture.

My initial statement was one of those examples of when it would be nice to say, "The preceeding sentence was about 60-75% true." I wrote it in a moment of resentment of the cohort of industrial managers we happen to have: an incredibly insular, self-satisfied, un-foresightful, and deeply entrenched cadre of managers.

It seems to me that there are degrees to which a free market obtains, and degrees to which we may speak of a meritocracy. I think the concepts of free markets and meritocracy are somewhat related, but the relationship is a real problem everywhere. Our country has been moving away from both conditions for many years, but doing so under the guise of embracing both things. This concept was explained quite well in John K. Galbraith's Economics and the Public Purpose (which I just reviewed for Amazon). Except that Galbraith wrote in 1974, long before the planning system became as bloated and rigid as it is now. Galbraith, whose forbearance and philosophical outlook were more robust than mine are, did not see the managerial elites of this country as a malignant hand on the throat of the national well-being; I do, and perhaps that does not redound to my credit.

The reason is that humans do not like the uncertainty involved.

Humans would do well to recognize that accurate calculations of probability is the best it gets. Certainty exists only after the fact.

I think what bothers me, though, is the difficulty people have in seeing the need for a mixture.

You've got to secure your existance before you can think about all the other cool stuff of life. They'll see the need only when they see the benefit. Most people can get enough of their need in predictable fashion from the current system to finesse the rest. Most consider that enough.

Galbraith, whose forbearance and philosophical outlook were more robust than mine are, did not see the managerial elites of this country as a malignant hand on the throat of the national well-being; I do, and perhaps that does not redound to my credit.

Galbraith was writing from principle. He wasn't writing about this particular elite. This particular elite IS a malignant hand etc.

The goals are the problem more than the technique.