Free Market Winners and Losers

One of the foundational arguments of modern ed reform is that free market forces would make education work better, that having to compete would make public and private schools work harder, smarter, better and create a rising tide of educational awesomeness that would lift all boats.

This is unlikely for a variety of reasons, but the biggest problem with the free market when it comes to public education is that by its very competitive nature, it picks winners and losers. And that's actually a couple of problems.

First, it picks winners and losers among the providers. A study by the Network for Public Education has found a staggering amount of federal money spent on charters that fail, or even pre-fail by collapsing before they even open. For free market fans, that's a feature, not a bug. In their conception of the education market, schools come and go as those that sink to the bottom are pushed out of business, to be replaced by potentially superior new competitors.  Some are sincere in this deep belief in the markets, and some are simply opportunists; when a reformster complains about the "closed system" or "education monopoly," what they mean is not a system that denies students choice, but a system that denies entrepreneurs the a chance to get in there and hustle for a piece of that mountain of sweet, sweet tax dollars.

The problem with the model of churning and burning our way to excellence is not just that the constant churn, the repeated tossing of students out to the curb with a hearty "Good luck finding your next school" is disruptive and destabilizing for students. That's bad, but then there's the whole "fail" thing. Because when a widget business fails, that just means it can't sell enough widgets to cover costs, or its widgets are low quality, or another widget business has better marketing materials.

But there are no widgets in schools. The way a school fails is by failing to serve students well. Reformsters know this--it's at the heart of their argument that students must be rescued from failing schools. And yet after "rescuing" these students, the next free market solution is to send the students to other schools, some of which we fully expect to fail some of those students. You can't have a failing school without stealing student educations. This is like arguing that this building over here has faulty fire extinguishers, so we've got to get the students out of the burning building-- but then we're going to put them in these other buildings, some of which have no fire extinguishers at all, and we're going to sort out which are which by setting fire to all of them. This is not an improvement.

Worse, reformsters often argue to prolong the failure. In Pennsylvania, we continue to support cyber-schooling even though we have ample data that cybers are failing all but a small group of students.

It's unquestionably bad practice and immoral to look at a school that is failing and do nothing to fix it. But how much worse is it to set up a system that deliberately posits that some of these schools must fail. The market is good at picking winners and losers, and that's fine for widget companies, but in schools it can only mean that some students will be literally set up to fail. When the market picks winners and losers among education providers, it is also setting up students to be losers as well.

But then, that's part of te issue anyway. Because the free market doesn't just pick winners and losers among businesses; it picks winners and losers among customers as well.

Customers do not get all the possible choices. They get the choices that businesses believe they can--or that they choose to--offer.

I live in an area that has taken many steps toward becoming another US retail desert. Sears, JC Penneys, Bon Ton, K-Mart have all pulled out of the area-- for general shopping, we've got Wal-Mart and Dollar General. There might be a new retailer moving into the old K-Mart, but most of our major employers have downsized or moved out, and our population is not Montana thin, but not particularly dense, either (abut 50K in the county). In other words, if you're looking to launch a retail business, particularly one with more upscale offerings, you are probably not looking at us.

Nobody operates a business out of a noble desire to make sure that people get to have a particular range of choices-- and charter schools are businesses. And the charter and voucher world is peppered with schools that are happy to be free of government regulation precisely because that means they don't have to offer choices to certain customers. "We don't have to make expensive adaptations for  students with that  particular special need? Super! We don't have to accept Those People if we don't want to? Awesome!"

The free market always chooses winners and losers from among the customer base. That has always been the point of some government intervention. If the free market were in charge of mail delivery, some parts of the country would never get any mail at all, and LGBTQ customers would have far fewer choices than everyone else. In some parts of the country, the free market didn't want to offer black folks any choices at all. In all cases, the government was instrumental in forcing the free market to rethink its ideas about who should be a loser.

But, free marketeers will argue, those gaps in the market will attract clever entrepreneurs who will find clever ways to make a buck serving underserved populations. Nope. Some populations are just too poor. The free market doesn't necessarily have anything against poor people--they just don't have very much money. That's why the free market reformsters do like the idea of having the customers pay the bill with taxpayer money; otherwise school choice would be really unprofitable.

The loosely/un-regulated education market likes picking losers. The big insight from the widespread use of vouchers in private religious schools that openly discriminate is not just tax dollars paying for discrimination, but the clear sign that the free market education will pick winners and losers, and customers will get the choices that vendors want to offer them. If you're an LGBTQ student, there are few-to-none choices available for you. Schools choose.

The free market, because it picks winners and losers, will never be an engine of equity. Free market reformsters like to talk about how poor folks should have the same kinds of choices that are available to rich folks, but a free market system will never, ever, ever make that happen. In a free market, rich folks will always have more choices than everyone else, and maybe that's not a bad thing (we can argus that another day), but the bottom line is that no free market choice system is going to leapfrog poor folks past rich folks, because rich folks can always pull out the checkbook and say, "I'll have some of that, too, with a little extra on the side." The free market does not say, "Yes, we could sell you that, but it would be inequitable, so we won't." And free market educational choice system will have inequity hard-wired into its core.

Because that's what a free market does. It sorts. Rich folks, you get these choices over here. Poor folks, you get these choices over here. And by basing the "buying power" of families on the money spent at their community school, reformsters keep that rich-poor inequity intact. In a free market education choice system, poor folks will get their choice of whatever edu-business operators feel like offering them.