Betsy DeVos, Our Public Schools, and the Misleading Metaphor of the Market

Fox News pundit John Stossel recently wrote a column that – wait for it! – praised Donald Trump’s nomination of Betsy DeVos for Secretary of Education and mocked those who oppose her.

Like many before him, Stossel defends DeVos’ hostility to public schools by invoking the metaphor of free-market competition, which he sees as a bracing corrective to ineffective, wasteful, and teacher-union-dominated public schools.

Stossel writes:

My consumer reporting taught me that things only work well when they are subject to market competition. Services improve when people are free to shop around and when competitive pressure inspires suppliers to invent better ways of doing things.

DeVos understands that. That’s why she wants to allow parents to choose the schools their kids attend. Schools that do a better job will attract more students. Better schools will grow, while some inferior ones will close.

Inferior schools, like any failing business, should close. It’s a disservice to students to keep them open.

Metaphors can promote clarity when they provide perspective on one concept by drawing parallels to others. But they’re not always helpful. As Amos Tversky observed in Michael Lewis’ newest best-seller, “Because metaphors are vivid and memorable, and because they are not readily subjected to critical analysis, they can have considerable impact on human judgment even when they are inappropriate, useless, or misleading.” When the topic is the future of our public schools, the metaphor of the market is useless, misleading, and downright harmful.

Invisible Hands Don’t Care About Quality.

The metaphors of the market and Adam Smith’s invisible hand of competition explain how we’re better off when business winners and losers are determined by the cumulative impact of individual consumer choices rather than by government dictate.

But this is a very agnostic approach to market value. Since Stossel writes, “I wouldn’t want to be trapped in a bad restaurant while government debated how to improve it,” let’s take restaurants as an example.

So long as they avoid poisoning patrons, the value of restaurants inheres solely in the extent to which they win favor among those who are willing and able to spend money on their menu items. If they do, they succeed. If they don’t, they fail. As a social matter, we don’t care who the winners and losers are.  

A Rare Point of Consensus: The Quality of Our Schools Matters.

Schools are different. Schools are not an individual consumption choice but a public good. They provide knowledge and skills, which all our children need and which we future social security recipients need them to have.

It is not an exaggeration to say that the future of the republic depends on a well-educated citizenry.   So, while popularity is just about all the assurance of quality we care about for a restaurant, not so for schools.

We have a huge stake in the quality of our schools. That quality entails much more than scores on standardized tests, though test scores are indisputably important.

We also want our schools to prepare our students to thrive in the world they’ll live in. This means they need critical thinking skills, respect for scientific truth, and those other attributes that were the gift of the Enlightenment. But more, it also means our students need to spend enough time around others who are different from them to develop the kinds of social acuity and interpersonal skills that will allow them to function comfortably in diverse workplaces and new environments.

No, Parents Don’t Always Know Best.

In a phrase that must test off the charts with focus groups, opponents of public schools invariably say that parents know what’s best for their kids. But we shouldn’t simply defer to parents as the arbiters of school quality. Parents aren’t educational experts and they frequently base their selection of schools for their kids on factors that have nothing to do with academic rigor.

There are several reasons. First, the quality of schools can be hard to measure. In economic terms, K-12 education is more an “experience good” than a “search good.”  The kind of experience that a child will have at a particular school is difficult to observe in advance and to compare to other schools.

Second, parents frequently disregard information on academic quality when it is available. The best, though limited, comparative information we have on how well schools educate their students is standardized test scores. A 2013 report from the Friedman Foundation for Educational Choice found that schools’ standardized test scores are one of the least important pieces of information that parents consider when choosing a school. Apparently they care about other things.

Finally, another attribute of good schools – a diverse student body – is in fact not valued by a number of parents. These parents prefer to have their kids go to school with other kids who look like them.

So, we don’t have much reason to think that the schools parents favor are ones where their kids will get the kind of top-notch education those of us who will eventually depend on them want them to have.

There’s a deeper point here as well. We also have a stake in the future of the schools that the market doesn’t reward. More precisely, we care about the students left behind in those schools. If a voucher school improves the quality of the education received by 30 students but its existence decreases the quality and increases the cost of the public school education received by 60 students, then it’s a bad bargain for us.

The History of the Bell Telephone System Is Relevant Here. No, Really.

To understand how dangerous that bad bargain is, we need to look more closely at the metaphor of the market, this time through the lens of regulatory economics.

For decades, our nations’ telephone service was provided by the Bell system and other regulated monopolies. The cost of serving telephone customers varied. The per-customer cost of providing service to the residents of an apartment complex was much less than serving scattered homes in remote mountainous areas. The telephone company charged everyone a similar rate based on the overall average cost of service, because it could.

As technology evolved, competition in the provision of local telephone service became possible. New entrants like MCI and Sprint sought to skim off the Bell system customers that were cheapest to serve.

The local monopolist newly subject to competition complained loudly, contending that it had a regulatory obligation to serve everyone, no matter how expensive. The incumbent company relied on the profits it earned from serving the customers MCI and Sprint were targeting in order to subsidize the cost of serving the widely dispersed customers that the new entrants ignored.

The local Bell telephone companies argued that their regulatory status as the providers of last resort – they had to stand ready to serve everyone – unfairly skewed the competitive marketplace in the new entrants’ favor. They were right. They ended up receiving some public subsidies and ultimately they were relieved of their provider-of-last-resort obligation.

Public Schools: Our Educational Providers of Last Resort.

Like the old-line Bell telephone companies, our public schools are the educational providers of last resort. They stand ready to educate whichever students walk through their doors, whether they are homeless, have severe disabilities, or just got kicked out of the charter school down the street. Unlike the telephone companies, our public schools embrace their provider-of-last resort responsibility.

Just as we want the residents of remote mountainside abodes to have access to reliable telephone service, we want the most challenging and expensive-to-serve students to receive a quality education. Indeed, we have a particularly significant stake in these students acquiring the basic literacy and math skills to function successfully in society, since failure in the effort exacts such a substantial and tragic social cost.

Follow the Money: Out of the Classrooms and into the Pockets of Voucher Entrepreneurs.

When we give students vouchers and declare a free market in educational choice, the outcomes will be as predictable as they were when competition came to the local telephone business. New schools will spring up to serve the students who are easiest and least-costly to educate. There won’t be much of a market to cater to rootless, trauma-scarred, disabled, or unruly students. That will remain the public schools’ responsibility.

Imagine, for example, a school district with 12,000 students and an average cost to educate each student of $10,000. Under a voucher regime, the families of each of the students would receive a voucher worth $10,000 to pay the cost of whatever school they choose to attend.

But it won’t cost $10,000 to educate each student. Instead, the cost breakdown could look something like this:

Per-Student Annual Cost Number of Students
$8,000 2,500
$9,000 2,500
$10,000 4,000
$11,000 2,500
$20,000    500
Total Students 12,000

What will happen? Charter or voucher school entrepreneurs will swoop in to entice the students who are less expensive to educate to enroll in their schools, with slick brochures featuring an appropriately diverse array of smiling children, marketing swag, and maybe promises of free computers.

The difference between the $10,000 voucher amount and the actual cost to educate these less-expensive students will be the measure of the entrepreneurs’ profits. Those profits represent public funds earmarked for education that are not going to be spent on our students.

On the other hand, there are 3,000 students who cost more than $10,000 to educate, some a lot more. The voucher entrepreneurs will leave them alone, just as MCI and Sprint didn’t try to scare up telephone customers in remote mountain enclaves.

The increment above $10,000 that is needed to educate each of the students left in the public schools will not be available. Instead, it will have been have been siphoned off into the profits earned by voucher entrepreneurs.

In our example, if voucher entrepreneurs serve the 5,000 students who are less expensive to educate, they’d reap profits of $7.5 million, assuming their costs are the same as the school district’s.  The school district will come up $7.5 million short, and the quality of education those more needy students receive will be correspondingly lower.

The Destruction of Our Public Schools: A Feature, not a Bug.

As the Bell companies loudly proclaimed when they were stuck with all the expensive customers, this is not a sustainable economic model for the public schools. Public schools would be set up to fail.

And for many voucher advocates, that is exactly the point.

The most strident voucher champions — intellectual heirs of Ayn Rand and Milton Friedman – are hardcore libertarians who want to drive government out of the schooling business entirely.

Most voucher advocates are strategically discrete about their ultimate goal. Not everyone.

For example, writing in 2002, Joseph Bast of the libertarian Heartland Institute, bemoaned that “Elementary and secondary schooling in the U.S. is the country’s last remaining socialist enterprise.” To Bast, vouchers were the obvious solution: “Pilot voucher programs for the urban poor will lead the way to statewide universal voucher plans. Soon, most government schools will be converted into private schools or simply close their doors.”

Betsy DeVos’ family has generously supported the Mackinac Center for Public Policy.  The Mackinac Center touts the so-called “Overton Window,” a strategy for how, through well-funded proselytizing, radical ideas can gradually enter the mainstream. On its website, the Center illustrates the concept by laying out a taxonomy of K-12 education policies, starting at the bottom, with the “Most Government Intervention/Least Freedom” policies, and moving upward toward the ultimate goal of “No government schools.”

Your Public School Is Your Neighborhood’s Beating Heart.

We don’t care when a failing restaurant serves its last its last crème brulee and closes up shop. Indeed, economists celebrate what Joseph Schumpeter called the perennial gale of creative destruction that drives unsuccessful businesses out of the market and makes room for successful ones to expand and new ones to enter.

There would be nothing to celebrate if that perennial gale swept away under-enrolled neighborhood public schools serving our neediest students.

Our public schools are critical community resources. In addition to their educational mission, public schools are our default social service agencies for children in need. Kids in poverty come to schools for what is often their most nutritious food of the day. Some of our schools have washers and driers to handle clothing emergencies for homeless students. Our teachers – community heroes – do all they can to metaphorically wrap their arms around their charges, address their most pressing physical and mental health needs, and provide a point of access to whatever outside services may be available.

In addition, as Robert Putnam has explained, our public schools are where kids on their own have the best chance of falling under the protective wing of a caring teacher, mentor or coach. They are the predominant generators of social capital in neighborhoods that are most in need of the informal communities of trust and reciprocity that grow up around parents, students, and classrooms.

Call Out the Deceit; Hold Off the Destruction.

Voucher advocates know better than to be candid about their goal of destroying our public schools. Better to talk about parents knowing best and opening up monopoly government schools to the magic of the market. Betsy DeVos and her posse hope their appealing figures of speech will do the heavy lifting of persuasion for their ideological crusade.

But we shouldn’t be fooled. It would be a tragedy for all of us if our public schools, our most vital community resource, fell victim to the rhetorical power of a misapplied metaphor.

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One Response to Betsy DeVos, Our Public Schools, and the Misleading Metaphor of the Market

  1. The former Federal Reserve chairman Alan Greenspan, after the viewing the great harm that had been done by the financial crisis of 2007 to 2008 in part caused by his policies based on his ideological extremism, conceded that the “invisible hand of competition” cannot be trusted to protect us.

    Flaw in Free Markets: Humans By ROBERT H. FRANK SEPT. 12, 2009

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