Saturday, June 20, 2015

Privatization Primer

Every once in a while I try to take the many complicated and twisty threads, back up, and tie them into a bigger picture. Think of this as the kind of post you can share with people who don't read blogs about education every single day (no kidding-- there are such people, and they're too busy doing the work to spend time reading about doing the work).

There are many threads to the reformy movement in education, but perhaps the most predominant one is the push for privatization. Many folks look at education and they just see a gigantic pile of money that has previously gone untouched. To them, education is a multi-billion dollar industry that nobody is making real profit from.

Many of the aspects and features of what I'm about to lay out appeal to other sorts of folks for other sorts of reasons, but here is how they fit into the agenda of privatizers.

Step One: Create Failure

Use metrics for measuring school success that will guarantee failure (that's where Common Core testing fits in). For instance, base the measure of school and teacher success on bad standardized tests that don't actually measure academic achievement as well as they measure poverty. These tests will also narrow the definition of success so that fewer students will fit through the eye of the needle (a brilliant musician who tests poorly in math and English will be counted as a failure). Norm these tests around a curve, so that somebody will always be on the failing end.

The testing will create the appearance of failure, but policy can also create actual failure by stripping resources from schools. Every voucher and charter system drains money away from public schools; in some states (e.g. Pennsylvania) there are even caps on raising taxes so that local districts couldn't replace the shortfall even if they wanted to.

Concentrate these efforts on non-white, non-wealthy districts, which are both the most vulnerable and the least "protected" because their community has little political clout.

Use stack ranking so that whatever your metric, somebody is always in the bottom X% of the spread (5% has been a popular number).

If it seems as if your state has instituted policies that will force schools to fail, this is why. If there are no failing schools, there's no crisis, and if there's no crisis, there's no trigger for step two.

Step Two: Consolidate Power

Once there's a crisis from the proliferation of failing schools, it's time to step in. 

You may hear the terms "turnaround" or "rescue" or even "takeover," but the basic process is the same-- the end of local control. Currently rising in popularity is the Achievement School District model, based on the Recovery School District of New Orleans and most fully attempted in Tennessee.

The basic principle is simple. These schools are failing, therefor the state must take them over. The state will put somebody, or a board of somebodys, in charge of the district, and the new boss will answer only to someone in the state capitol. The local school board is out. The new school boss will be given the power to do whatever is necessary.

Step Three: Cash In

"Whatever is necessary" will never turn out to mean "invest in public schools." Because, remember, they are failing.

Charter schools will be set up to compete with the public school (further stripping it of resources). Or charter schools will be brought in to replace the public schools, or to take them over. The system may be called a school choice system, but it will be the schools that get to choose, so that they can select those students who are profitable. The students who are too expensive to work with (aka not good revenue generators) or who can't be made to generate "successful" numbers will be left in the public schools.

Note: It makes no difference whether the charters bill themselves as for-profit or non-profit. They are always profitable. Non-profits know many tricks for still turning a profit (eg, hiring themselves to run the school, or leasing the building back form themselves). A non-profit charter is just a for-profit charter with a money-laundering department.

These schools may operate under their own set of rules which do away with teacher job protections or school code requirements for seniority considerations. The majority of special rules are designed to allow school operators to control costs so that their school-flavored business can remain profitable.

Epilogue: The Long Term

You may wonder how this is sustainable. It isn't, and it isn't meant to be. Charters routinely drop out of the business, move on, dissolve and reform under new names, getting out of Dodge before they have to offer proof of success. This churn and burn is a feature, not a bug, and it is supposed to foster excellence. To date, there is no evidence that it does so.

But in the long term, we get a two-tier system. One is composed of private, profit-generating school-like businesses that will serve some of the students. The other is a vestigal public system, under-funded and under-served, but still serving as "proof" that public schools are failure factories and so we must have a state-run system.

Discussion: But Is This a Bad Thing

"I realize," you say, "that turning schools into profit-generating businesses is automatically repulsive to some folks, but if they get the job done, isn't this a win?"

Here's the short form for why I think the privatization of education is a bad thing.

First, all the numbers show that charters are, as a group, no more "successful" than public schools. Furthermore, what success they have is often simply the result of being careful and selective about their student body. How they do this is a whole other discussion, but the short answer is 1) they mostly don't do any better than public schools and 2) public schools could also "improve" if they were allowed to get rid of problem students. In other words, we're not talking about a new way to do public school-- we're talking about a new definition of what a public school is supposed to be.

Second, the privatization machine involves the end of local control. It is the end of any democratic control and accountability in a fundamental community institution. This is doubly troubling because so far, the people who are having democracy stripped away are mostly black, brown, and poor.

Third, turning education into a business means that business concerns will take precedence over student concerns. The purpose of a public school is to educate students. The purpose of a business is to make money. That does not make a business evil, but look around the rest of the world and ask yourself if businesses make money primarily by devoting themselves to creating the most excellent products. Operators of a school-flavored business will always have interests that are in conflict with the interests of their students. That cannot be good for education.

We are looking at a movement to change schools from a public good, a service provided by communities for their members, into a profit-generating business. Maybe that's a change we want as a society, and maybe a public discussion about such a transformation would lead us to that conclusion. I hope not, but maybe it's so. But we're not having that discussion. Instead, some folks are making changes in policy and regulation to create that transformation without anybody having a chance to object. That is not okay; it's a discussion we need to have whether some folks want us to have it or not.


  1. This comment has been removed by the author.

  2. There will be a third tier in this system. It will be the excellent, expensive, non-profit private schools that already exist. Lakeside School in Seattle, where Bill Gates attended and his children attend, is one of these schools. These places don't look anything like public schools or charter schools. They certainly don't do all the testing that public schools are forced to do.

  3. In Indianapolis, the takeover/turnaround schools have been total failures and famished gigantic leeches on education resources. The new brand is "partnering." Education flavored businesses are going to partner with public schools so that everyone doesn't get scared and run away. The takeover will be gradual.

  4. "A non-profit charter is just a for-profit charter with a money-laundering department."

    Nailed it, Peter! Thanks!

  5. I wish I could bronze this column in gold and display it everywhere. Too many people don't even have a glimpse of the big picture. Thank you!

  6. Clear, concise, and to the point! I will definitely share this.

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    Pure Juvenate world, that such who are in the institution wish to get out and such as are out wish to get in.

  8. For economists, the term "public good" has a technical meaning: a good or service that is not excludable and not rival. Under this definition, schools are not "public goods". What do you mean by the term here?

    1. What do "not excludable" and "not rival" mean? How do they not apply to public schools?

    2. Non-excludable means that a person can not be prevented from using the good or service even if they do not pay for that service or good. The classic example of a non-excludable good is strategic defense. Schools are exclucable: all schools have admission requirements, even traditional zoned public schools. Students who illegally attend a traditional public school (by living outside the catchment area, for example) are guilty of theft of services, and their parents are occasionally jailed for the offense.

      Non-rivalness means that my consumption of a good or service does not reduce your consumption of that good or service. An example of a rival good is anything that is eaten: if I consume a pizza you cannot consume that same pizza. Again, stratigic defense is a classical example of a non-rival good. A more recent non-rival good, much to the industry's dismay, is recorded music.

      Public schools are what economists call a club good, they are excludable and become rival when congested. Being rival when congested means that as class size increases the students in the class are worse off.

    3. Thank you, this is interesting. I think for those of us who haven't studied economics, "public good" doesn't sound like a thing or a noun that can be plural (goods), it just sounds like "good for the public". Peter defines it as " a service provided by communities for their members" as opposed to "a profit-generating business."

      However, even in the sense used in economics, (I did some googling to try to learn more), it seems like public education would be more of a "common pool resource" (Non-excludable but not not non-rival) rather than a "club good" (non-rival but excludable.) Public schools are certainly not non-rival because there's only so much money to go around, so you do have the problem of congestion, and with charters it's even worse since they siphon off money and leave the public schools with fewer resources. As far as excludable, I would argue that even though there are geographic requirements (although at one point in my area they were saying you could go to any school or district in your area as long as there was room in the school), you ARE guaranteed that you can go to a public school.

      I would also argue that public education SHOULD be a public good: there should be set limits on class size and if you go over that limit you have to provides another class.

    4. Many things are "good for the public" that should not be produced by the government. Food comes to mind first because of the disastrous consequences of collectivization in the countries that tried to control food production centrally. Peter's definition of "a service provided by the communities for their members" seems to me to unjustly privilege the status quo. My town, for example, recently began curbside recycling, putting the private curbside recycling company I paid to pick up my recycling out of business. Given Peter's definition, curbside recycling changed to a public good the moment the city took over the business, and would cease to be a public good the moment that the city stopped doing the recycling and the independent small businesses restarted. It seems to me that the definition of public good should rest on the nature of the good or service itself rather than how the good or service is produced.

      Education is not really a common pool resource. A common pool resource is one where use of the resource is not excludable, but the resource is rival. A good example of this is ocean fisheries. All nations can fish in the open ocean, but if boat A catches the fish, boat B can not also catch the same fish. Fish are rival. In school, both student A and student B can equally share the whole of the lesson, something the two boats can not do with the fish.

      It is not a matter of funding that determines whether a good is or is not rival, it depends on the nature of the good. No matter how much we as a society might spend on pizza, you can I can not both eat the same slice of pizza. We can, however, listen to the same talk.

      It is beyond our power to declare a good to be rival or not rival. If we had the power to that, we can eliminate hunger by declaring food to be non-rival, so everyone can enjoy the same food at the same time. In some cases we can make goods excludable or not excludable. Sometimes we can not make that decision, as the record labels have discovered.

    5. I don't know, there are lots of places you can't fish or there are limits on what you can fish. A lot of this seems arbitrary. And at first you said public education was excludable and not non rival, which would make it what? Private business? When the private company did recycling, did it cover everyone in the city the way it does when the city does it? My city now employs a private company to do garbage and recycling, but the important thing is that everybody is recycling. By your definition I don't know what is considered a public good besides national defense. So it just seems to me these labels aren't very useful for anything. How is talk a "good" of any kind in the economic sense?

  9. As I said, we can choose to make some things excludable in some cases. You can require a permit to fish (and limit the number of permits) or prohibit fishing in certain places if you are willing to spend enough money. Technology change also creates the possibility of exclusion in some situations (You must pay a toll in order to drive into London on any street, not just limited access highways) and eliminate the possibility of exclusion in other cases (my music example).

    Being excludable and rival only when congested makes a school a club good. There are a number of examples of this kind of good. A natural one is a golf or tennis club, but cell phone and cable networks are also club goods.

    When the private firm did curbside recycling, each household had the option to subscribe to the service or not. This resulted in a little free riding: my neighbors who did not subscribe would occasionally put things in my recycling bin. This would not be a problem for me if there was enough space for my recycling, but occasionally there would not be enough room and I would suffer from congestion. Now there is no choice and all must pay for recycling (through local taxes). This lack of choice is crucial to prevent free riding that comes from a good being non-excludable, and we typically see it when a public good is involved. That is why the individual mandate is included in the affordable care act.

    There are many public goods in the world and they exist at different scales. When I am teaching the idea to my students, I often talk about relations between roommates. The roommate who says cable is worthless to him so he will not pay is found watching Game of Thrones when you return early from class, for example. The roommate who turns the air conditioning way down in the summer and heat way up in the winter is another example.

    In towns, trash collection is another example, especially in a college town. Given the choice, students would save the money and sneak their trash into a neighbor's bin. Public goods require government intervention because governments can require purchase of the good, something that is not possible for private producers. Your city may have private firms pick up your recycling and garbage, but my guess is that they do not allow you to save money by not having your garbage or recycling picked up.

  10. No indeed, in fact, the recycling is added to our water bill, and you actually pay more if you don't participate. The economics stuff seems pretty complicated, and I really don't see the point of all the labeling. I think recycling is an important thing to do so I'm glad the city does it. Before it did, we could only recycle by taking stuff to Kroger and putting it in different bins there. Working full time and raising 3 kids, it was difficult to find the time, and after I got a flat tire from a broken piece of glass, I decided I just wasn't going to do it anymore until it became easier and more convenient, so I was glad when the city started doing it.

    An educated populace is important for democracy and our society in every way, socially, politically, and economically, so I don't care what you call it, but I think education should be more of a priority, schools should have equitable funding, and charter schools should only be allowed if they do something that traditional schools have trouble doing, like be for autistic kids, be a magnet school, or pilot something truly innovative. All of which could be done under the aegis of a public school, but if it's not, you could have charters. But at the local level, no for-profit chains. There's no way you can take the same money, which is already inadequate, and generate a profit without taking away from the kids. To me it's immoral.

    I feel the same way about healthcare. Even hunter/forager groups all had equal access to the shaman. In this country we're supposed to be born equal and all have the right to life, liberty, and the pursuit of happiness. You don't have any of those things if you don't have access to healthcare.

    I've had to have two hip replacements. Since being in pain and not being able to walk is not an emergency situation, if I didn't have insurance I wouldn't be able to have the surgery. I would be in constant pain, in a wheel chair, useless and needing to be taken care of, and I would probably get diabetes and have a stroke or a heart attack. After the surgery and recuperation, I am in no pain, I can walk and exercise, and I'm useful to my family and society instead of being a burden.

    No one should have to be in constant pain and die because they don't have a job that has insurance. When I was teaching I had super insurance, but I knew a lot of working people who had no insurance. I thought, "I'm willing to have insurance a little less good in order for other people to have insurance." So I'm glad for the ACA since more people have insurance, nobody can be denied insurance because of pre-existing conditions, and no one can be kicked off their insurance because they get sick. But since the Supreme Court made it so Republican governors didn't have to expand medicaid, not everyone's covered.

    There's also the problem of cost control. Insurance companies evidently can't negotiate hospital costs. Anything else, doctors, testing, what the insurance accepts is one-half to one-fifth of the charge. But each of my surgeries cost $35,000 for two nights and three days in the hospital, not including surgeon's fee or anesthesia, and the insurance company only got it down to $29,000. The only charge I could figure out was $1000 for about 20 minutes of physical therapy. My daughter is a physical therapist, and that is NOT the going rate. Medicare says three hospitals in the same area will charge three totally different prices for the same procedure. This is ridiculous. I'm sure having insurance companies as middlemen also adds to the cost. So I'm for one-payer.

  11. We can do anything in this country; it all depends on priorities.

  12. Rebecca,

    It is not about labeling, but about observing that different goods and services have different properties. Your local government forces you to purchase recycling and trash service because giving citizens in the town to by the service or not will result in some not buying the service and attempting to free ride on others purchase.

    Healthcare is another area that suffers from this free riding. We can not simply require insurance companies to cover preexisting conditions because too many people would wait until they are diagnosed with the condition to buy the insurance covering the condition. It would be like requiring auto insurance companies to cover preexisting collisions: no one would bother with collision insurance until after they have been in a collision. What we have to do is use the unique power of the government to require the purchase of insurance by everyone, sick or healthy. This is the only way to avoid the adverse selection process of insurance market.

    As for charter schools, the good news is that the majority of charter schools are single schools, not part of any chain. Even the largest national charter school chain (I am taking KIPP as the largest chain) has less than 3% of the charter schools and less than 3% of charter students.

  13. Instead of requiring "the purchase of insurance by everyone," we should have one-payer, which is actually the same thing, but more fair and cost-effective.

    1. Rebecca,

      I think that one payer, or something equivalent, is inevitable.

  14. I have an issue with the following statement from this article: Charter schools will be set up to compete with the public school (further stripping it of resources). Or charter schools will be brought in to replace the public schools, or to take them over. The system may be called a school choice system, but it will be the schools that get to choose, so that they can select those students who are profitable. The students who are too expensive to work with (aka not good revenue generators) or who can't be made to generate "successful" numbers will be left in the public schools.

    As a charter school teacher, we operate by doing more with less. We are only allocated per student 40% less state funding than a county school. I have to fund raise to buy pe equipment because I do not have a budget. We DO NOT select the students who attend our schools. In fact most of our students are those who have been expelled from surrounding schools or are those the county have given up on. My wife works for the county and I have seen both sides of the coin. I'm not saying either side is better because both sides want what's best for the student. Just get your facts straight before posting.

    1. Depends on the charter school. But lots of the for-profit and non-profit chains are the way Peter says.