Wednesday, June 24, 2015

Supply, Demand, Charters & AEI

Back in April, the American Enterprise Institute released a paper by Michael McShane. Balancing the Equation: Supply and Demand in Tomorrow's School Choice Marketplaces offers a more nuanced view of a charter-choice landscape than the free market acolytes at AEI have presented in the past, but it still reads like an exercise in unicorn farming.

McShane understands some of the problems pretty well. After opening with a picture of how a charter-choice world would be so lovely, McShane moves on to what he sees as the big issues.

But school choice is not guaranteed to succeed. The extent to which it will depends on how well it is able to create a functioning marketplace where the demands of parents are matched to the supply of schools. If barriers exist for schools to enter the marketplace, or if financial or regulatory hurdles make participation not worth their while, fewer options will be available for students to choose from. If parents cannot access information on schools to help them differentiate schools' offerings and performance, the central drivers of quality and diversity will be hamstrung.

So McShane moves on to consider what needs to be done on each side of the supply-demand pipeline.
unicorn farm.png

McShane believes that the big issue here is information. Charters need to do a better job of getting more information, better information, the right information out into the market. He brings up Maslow's hierarchy, suggesting that parents will follow the standard pyramid when considering a school-- safety first, academics next, other stuff later. Consequently, he sees only limited use for school report cards, and suggests some other avenues. In particular, he sees parent-to-parent communication as effective in establishing a world in which parents choose a school based on rich, deep information about which school would best meet their child's needs.

But McShane is either being disingenuous or he has just lived too long in a thinky tank.
Markets do not run on information. Markets run on marketing. The free market does not foster superior quality; it fosters superior marketing.

McDonald's, Coca-Cola, Standard Oil, Bank of America-- none of these corporations have dominated their marketplace by spreading information about their products and services. There is no market sector in which customers are moved primarily by information. Succeeding in the marketplace often involves carefully controlling and withholding the information that customers receive. In fact (and this should trouble the boys at AEI), often the real information that is available is available only because government regulation and intervention require it (think nutritional info at fast food places).
No charter school will ever say, "Let's get a complete, thorough informational package out there so that families can make the best decision from with the umpteen schools in this market." What the charter will always say, like any good business, is, "How can we best present ourselves to convince the greatest number of families to choose us?"

There is no incentive for any entity operating in a free market to make sure that customers have access to complete, deep, thorough information. It won't help them get customers, and, much to the chagrin of economists through the ages, that sort of data-driven analytical rational analyses is not how customers make decisions anyway.

McShane does make some other more familiar recommendations, such as suggesting that "parents need help advocating programs that help their children... Organizations that want to help parents select schools should also think about how they can help connect parents with the political process." Presumably he is thinking more of Eva Moscowitz bussing her parents and students to Albany to lobby for her charters, and thinking less of the families and students of Newark taking to the streets in a vain attempt to get anybody in power to pay attention to them.

In fact, some of McShane's work here is really marketing advice-- which buttons to push in your school report card, which way to approach parents to influence their choosing behavior.
He also talks about "matching students and schools" which is an interesting way of putting it, a shade to the side of actual school choice. In fact, he cites the OneApp system of New Orleans, a system that effective screens out families that lack the resources or background to navigate the system, allowing schools to be selective without looking selective. So, talk of information aside, it would seem that McShane is talking about driving demand by more effective targeted marketing.


McShane frames this as the problem of turning a monopoly into a free market, so he's wrong right out of the gate-- public education is not now, nor has it ever been, a monopoly. And even if we agree that public schools are a taxpayer-operated monopoly, no monopoly break-up has ever involved making the old monopoly operator provide all the financing of the new "competition." When Microsoft was being threatened with a spanking for being a monopoly, nobody ever suggested that a fitting punishment would be for Microsoft to pay the bills for Apple, Corel, and every other software maker in the marketplace. But somehow the "breakup" of the taxpayer-funded "monopoly" of public schools involves having the taxpayers pay the bills for every school that wants to "compete" with public education.

Remember when charters used to make the argument that they could do more with less? Those days are gone. Most of McShane's argument for the supply side is that charters should get more money.
They should get more money to build things and train people in better ways. For McShane the training is important because private schools keep organizing themselves in the same old way. He does not deduce that there's something about that old way that people who are actually teaching in schools continue to find effective; no, instead he concludes that we need more people to be trained Some Other Way so that charters can be Really Different.

McShane also takes on regulation, arguing that one-size-fits-all regulation combined with mission creep leads to regulations that suppress all manner of individuality and variety. I wish I had more space to talk about this part of his argument because it is an awesome argument against Common Core and the Big Standardized Testing boom.

He is concerned that the tendency is to over-regulate charters. I'd argue that such over-regulation is absolutely inevitable and guaranteed. The progression has been, and will always be, just like this:

1) Charters open in a free market environment

2) Charters marketing plan = whatever we can get away with to hook customers in a crowded, competitive marketplace

3) Some charters will go way too far (aka lying, cheating, fraud, theft)

4) Regulations will be created to rein them in

Education is an important service delivered to society's most vulnerable citizens. If you put something like that on a money-stuffed open market, you will either get high levels of regulation or high levels of misbehavior.

You will probably also, after a time, have emerging big players who will make sure their friends in government regulate a market that is harder to enter to protect their stake. The free market, from oil to railroads to telephones to cable to software, creates an intense pressure to destroy itself.

Buy the farm

I get the rosy picture of free market fans like the AEI crew-- a world where there is a robust field of varied, high-quality independent schools, and parents sort through them by consulting clear, rational, fact-filled materials to make sensible decisions and select the school that will best serve their children. I myself like to imagine a picture in which I live in a beautiful mansion surrounded by a huge lawn that never has to be mowed, am regularly invited to travel the world to play tailgate trombone, and have a full head of hair. Also, I would like to own a unicorn farm. I think my dream is more closely connected to reality.

Originally posted at View from the Cheap Seats


  1. I love your version of the "keep calm" thing. Can I just say how much I hate the original? The whole stiff upper lip thing is what's gotten us into (or at least kept us in) so many embarrassing quagmires.

  2. The market for traditional schools is the real estate market. Every listing for a home in my town includes information on which elementary, middle, and high school catchment area for the house. Is it different in your town?

    In NYC, when the catchment area for PS 321 was changed, one homeowner complained that the value of his home dropped by $100,000 by change in imaginary lines on the city. The market for schools is traditionally only a market that the wealthy participate in, something like the market for Ferraris and McLarins. Charter schools have the potential to even the playing field and allow for more teacher autonomy in the classroom.

    1. Well, that's nice in theory, TE, but as you perfectly well know, that's not how it's worked in reality. Charters have increased segregation and decreased teacher autonomy. But you keep right on plodding along your single track and don't look for any evidence that would derail that train of yours.

    2. Dienne,

      It is not theory. I know you are happy with the progressive private school that your children attend. Do you think your local school board would be able to tolerate conversion of one of the local traditional public schools into a progressive school, another into a Montessori school, and a third into a French immersion school just because the faculty of the school wanted to do the conversion? Do you think the residents of 500 Maple street would enthusiastically send their students to the French immersion school while the folks on the 600 block of Maple are assigned to the Montessori school and the folks on the 500 block of Oak have to attend the progressive school?

      If parents do not have autonomy in choosing a school, they are going to insist on having control over the school their students are assigned to attend. That control will result in the school looking like what the majority of people in the district want it to look like, and the school board will attempt to make the schools as uniform as possible.

      As for segregation, I think that depends greatly on the specific location we are talking about. In NYC, for example, charter schools tend to be much closer to the average for a district than the schools run by NY Public. With 40 African American students out of a student body of 3,295, Stuyvesant is surely one of the most segregated schools in the country considering that it is in a school district that is 32% African American.

    3. All your silly arguments have already been destroyed before, TE. As I've pointed out numerous times, there are public (non-charter) progressive, Montessori, military, etc. schools. There can be choice within the public system. There is heaps and tons of documented evidence (which I know you're aware of because Diane has been documenting it for years) that charters increase segregation across the board. Your theories (and, yes, they are theories, but not the way science uses the word) are nice and all, but they do not match reality.

      BTW, if you're looking for uniformity, I'd suggest KIPP, Success Academy, Yes Prep, Rocketship, Aspire,... need I go on?

    4. Dienne,

      First, you might note that there are more Montessori charter schools in California than there are Rocketship schools in the entire United States, so it appears that a Montessori education is more representative of charter schools than Rocketship. Kipp schools make up less than 3% of charter schools, and enroll less than 3% of charter students. Why this focus on a tiny segment of charter schools?

      I agree there can be choice in a public system, there just often is not any choice. My district has no magnet schools or programs. How many does your district have?

      In any case, the usual arguments against charter schools (cherry picking, damaging neighborhoods, etc) apply equally to magnet schools as they do to charter schools. My point was about traditional, neighborhood preserving, non-cherry picking zoned schools. You can always refute my explanation for uniformity in traditional public schools by pointing to a district where one traditional zoned elementary school is a Montessori school, another is a progressive school, and a third is a Waldorf school. There are over 13,500 public school districts. Surely you could come up with one to refute my explanation for uniformity.

    5. You know perfectly well I don't support magnet or selective enrollment public schools. Public schools should be open to, well, the public. I'm talking about traditional, open to everyone, public schools.

      As far as one district, before "reform" set in, Chicago was very diverse school-wise. But the rephormsters have forced out nearly all the unique CPS schools and replaced them with actual military or military-style schools. But I do know of one district, which you also know of because I've talked about it many times in response to your comments. The district that I graduated from added a progressive school within their main elementary school a number of years ago. From everything I've heard, it's doing quite well.

    6. Dienne,

      No public schools is open to everyone. If you try to send your student to a school that is outside your catchment area or even worse, outside your district, you will be guilty of theft of services and you might be jailed.

      The admission policy for the progressive school within the main elementary is the traditional all and only geographically based admission policy? Perhaps it is a magnet program that you do not support. Could provide the school district number so that we can check on these important facts?

    7. Oh for cripes sake, TE, don't be obtuse. Open to everyone who pays taxes for it - better?

    8. Dienne,

      That is certainly clearer, though I wonder where you would have people who do not pay taxes to support the local school send their students. In addition, there are some states that fund their schools entirely through the state budget. Are families in those states entitled to send their students to any school in the state because they pay for every school in the state?

  3. Dienne,

    I forgot to ask again about the options available in the school district in which you currently reside. Are there a rich variety of public schools, Montessori, Waldorf, perhaps some language immersion programs?