Poor Economic Education Sustains the System Responsible for It

One of the biggest reasons it is difficult to make the case for market-based, transformational school system change is because success requires receptiveness to – a willingness to consider – explanations of decentralized planning through markets.  It is not obvious that such ‘planning’ orchestrated by the price system better focuses key information and creates strong, appropriate incentives.  But even the college-bound fraction widely fears the academic prerequisites of economic literacy, which has created critical blind spots even among holders of advanced degrees.  The economic literacy of everyone else is below their reading-writing literacy and math abilities.  To those that enjoyed their economics classes, including especially those with an ECON degree, part of the aim of this blog is to persuade you to consider a Henry Hazlitt-like career, where you hone and practice the communication skills needed to bring basic economic insights to the educated lay public.  Please, at least allocate some leisure time to the economic education effort, especially as it impacts school system reform discussions.

“The Third Way: A Mixed Market Approach to Schooling” – an Education Week article full of instructive economics nonsense – prompted me to write this blog.  “Advocates of market-disrupting charters” [chartered public schools – CPS] is nonsense.  The stronger state charter laws generally introduce some school choice – though mostly “school chance” because long waitlists are very common – to school systems where there was none.  They may slightly disrupt some public school districts’ comfy monopolies of public funds.  But, because laws allowing CPS regulate school start-up, and control the tuition prices charged, no market is created, much less disrupted.  Profit-seeking potential is another key feature of genuine markets; something few charter laws allow.  Schooling with or without CPS presence has no price change, mostly no profits allowed, and regulated entry.

The article alleges that, “private-sector funders cheered because it [charter law] meant injecting competition into a broken monopoly.”  The current system is a “broken monopoly”, and many well-intentioned private sector funders did cheer the spread of charter laws, in part because they expected the spread of chartering to make school systems more competitive.  But revealing their own weak grasp of economic fundamentals, they should have realized that with the huge, widespread shortages sustained by government control of what school enrollees would pay, and what charter operators would be paid, would short circuit the competitive process.  It is not that complicated.  A school that is full and has a long waitlist is not a competitive threat.  It is incapable of recruiting away students enrolled or assigned elsewhere.

And, according to the Edweek article, we’d have a market – a “mixed market” – if the government determined not only what the choices would be, but which of your family’s school preferences, if any, would actually enroll your child?  “We created a one-stop enrollment system that every school—charter and district alike—was required to participate in, giving all families access to the same options.”  I hope that kind of ‘controlled’, ‘subject-to-veto-shopping’ does not define the school systems of the future, much less spread to other sectors of the economy.

A lot of people – the vast majority, with the best of intentions – are working overtime to kill the Golden Goose of ‘good capitalism’, that the under-educated and mis-educated can easily mistake for ‘bad capitalism’, either fascism or crony capitalism.  Our terrible school system fostered the ignorance that motivates those terrifying good intentions, and it is making it easier for the assault on the Golden Goose to succeed.  Our low-performing school system also causes a lot of non-economics scholars to misinform a mostly unsuspecting public.

Out to Lunch on Engagement

One of the unique things about the schooling industry is that the desired output of the industry is jointly produced by the educators and their schoolchildren clients.  Economists call it co-production.  Instruction or project-based learning can only produce intellectual development with the genuine engagement of the children in the process.

My description of the Roots of Problem describe the reasons for persistent poor performance; that is, they describe reasons for low engagement.  Now we see form Ross Brenneman’s article that the average degree of engagement drops as students grow older.  I almost said, ‘as students progress’, but that would contradict ‘declining engagement’.  That drop in engagement to about 1/3 in the last years of high school helps explain the terrifying result that the degree of age-appropriate subject proficiency is progressively lower for older children.

More terrifying than that are the low prospects for meaningful gains in achievement.  Little is being done to eliminate the Roots of the Problem.  The article cited these hopes for achieving increased engagement:

  • a.) more parental involvement;
  • b.) increased student mentorship by successful students; and
  • c.) improved problem-solving skills.  Those are just wishes.

Nothing was said to explain why the system would suddenly produce different outcomes.  Teachers should, . . . .  Schools should, . . . .  Why aren’t they already?

There was no mention of massive out-of-field teaching, or weak, tangible educator incentives; sometimes perverse incentives, like those that pertain to innovation.  What about expansion of parental choice to achieve or increase student engagement by matching children with schools that teach with instructional approaches that excite them, and that match how the target clientele learns?  There was no mention of additional choice in the Education Week article; the self-avowed mouthpiece of the education establishment.

Traditional Public Schools Epitomize the Way Democracy DOES Work

Winston Churchill said: “Democracy is the worst form of government, except for all the others.”  So, choose school system management through elections IF you believe a political process will produce better results than markets, which are not much more than the exercise of freedom to keep finding better deals.  I strongly prefer school system management by the price system that orchestrates market activity.

But many people believe that the political process will produce superior results, though every country I’ve studied believes their school system is much in need of improvement.  Some of those people make statements such as:  “Traditional public schools epitomize the way democracy should work.”  As tennis great John McEnroe was known to say after a surprise line call, “You cannot be serious.”  Teacher unions often dominate low-voter-turnout school board elections, and, in effect, elect the officials they will face in contract negotiations.  There’s more.  But, it is accurate to say that traditional public schools epitomize the way democracy DOES ‘work’.  About 180 years is enough time to fine-tune it into as good as it can get, which is, and stubbornly remains, reform-resistant, ‘Nation-at-Risk’ low performance.  It’s the net result of collective decision making driven, mostly, by the best of intentions.  The apologists for the current system use the words ‘should’ and ‘hope’ a lot.  What is actually politically correct is mostly not good.  For example, please note the practiced spin of Ruswalsh’s comments (see here).  As is common, he repeatedly asserts the hope (“school board members should, . . . “ – but mostly they don’t), but not the reality of what happens when we imagine that useful directional information (what should be done, how, where, and for whom) and accountability to the public can result from nearly invisible, low turnout elections.

Frenzy Without a Cause

What have we achieved with all the work towards the common core?  In another article in the Summer 2016 edition of Education Next, we see that the state applauded for having the most rigorous application of the common core standards, Rhode Island, is #39 in academic outcomes.  It is already well-established that standards don’t yield the demanded outcomes. Can we please focus our energies on something that will matter at least in proportion to political effort; for example, a strong charter law, plus price de-control, or large universal education savings accounts.

Let’s look at some telling correlations that will hopefully further compel reallocation of political effort.  In this article, we see that the top (“at the top of the cellar stairs” – former Asst Secretary of Education, Chester Finn) six states are: 1) Minnesota (12, 39); 2) North Dakota (9, 8); 3) Massachusetts (6, 28); 4) Montana (44, 12); 5) Vermont (34, 14); and 6) New Hampshire (23, 17). The first number in the parenthesis next to each state is the state’s per capita GDP rank. Remember all of the blather from the education establishment that schooling outcome is just a matter of wealth/poverty? NOT!! And the minimal correlation between wealth and performance rank is biased by the higher cost of living in the NE states.  The second number in the parenthesis next to each state extends the Rhode Island story.  So, for example, Minnesota is ranked #39 in standards rigor.  Increased standards rigor does not seem to boost academic outcomes, at least not all by itself, which is widely acknowledged except by state politicians that make a big deal about raising standards.  Message to them: skip that step, or declare victory and move on.

When I went to educationnext.org to find the article links above, I discovered yet another entirely predictable story about obsessing over the wrong things: “Detroit is the school district with the smallest achievement gap but its poor overall performance is notable” [awful!!].  How about first creating a system that maximizes every student’s rate of improvement, which will maximize their earning potential and functionality as a citizen, and then see what can be done to fine-tune the system to make the rate of progress of the least advantaged a bit faster than the progress of the most advantaged?

Amazing that Teachers Tolerate Teacher Union Opposition to Transformational School Choice

Two recent Education Week articles reminded me how I got to meet Milton Friedman, and along with another great, Myron Lieberman, what led to my critically acclaimed 2001 book, The School Choice Wars.  About twenty years ago, I sent Professor Friedman a short op-ed draft that asserted that teachers, though not their unions’ leadership, should be pro-universal school choice.  He found it worthy of his time waiting for a doctor’s appointment.  He returned the draft with extensive comments on both substance and style.  Comments on the latter informed me, for the first time, that I was guilty of excessive use of the passive voice.  I have been in writing style recovery ever since.  He did agree with my basic point.

I may dust off and update the final draft of that op-ed, because teacher tolerance of their unions’ opposition to any meaningful change in our school system, except increased funding, is still a source a jaw-dropping amazement.  The first Edweek article talks about teacher warehousing and that the norm in the U.S. is district “forced placement” of teachers.  The latter means that districts, not schools, employ public school teachers, and that with some small but growing exceptions, the districts choose the school each teacher work at; whether or not the school principal or teacher agree.  Indeed, the noted downside of “force placed” is that, “we [Boston’s district leadership] do not think that it creates a strong school culture.”  I suppose the teacher unions accept “forced placement” because districts are willing to pay salaries and benefits to unassigned (warehoused) teachers; hundreds in some districts; “by far its [Boston district] largest cost.”  But what about the unassigned teachers?  Did they go into teaching for the money; hoping to get that fat paycheck for just for mostly sitting around!?!?  Maybe yes, once burned out by the conflict created by the system, but sitting around was definitely not the aim of college students working for a teaching credential.

Ending “forced placed” increased Boston’s unassigned pool.  School leaders would not accept some of the mismatches between the skills of the available in the pool, and the job openings at their schools.  The regular readers of this blog know why districts have many unassigned hires and applicants, yet cannot find a good match between the teachers available and the job opening requirements; the single salary schedule that creates excess supply for some types of teachers, and shortages of others, including at certain locations.  Difficulty placing credentialed people in ‘tough’ schools is probably a major reason why “forced placed” is still widely practiced.  New hires and teachers dumped into the unassigned pool are the ones sent to the least desirable teaching positions, which induces many to quit, or find a way back into the pay-for-no-pay unassigned pool.  Is it smart to assign the toughest jobs to the newest employees?  Is it good for educators or schoolchildren?  No!  Is it a reason for teachers to support preservation of the current system?  Absolutely not.  Quite the contrary.

The second article arises from the same basic cause; failure to recognize different market values for different teaching placements, by subject and by location.  The article noted that Oklahoma had just issued “840 emergency certifications to teachers not certified in the subject they teach.”  That’s awful for teachers; worse for students.

Oh, one other thing rarely noted, that Professor Friedman and I agree on.  Many economists, especially among those active in school and school system analysis, have forgotten that ‘Economist’ is synonymous with price theorist, or should be.  They have abandoned the much-needed analysis based on Price Theory in favor of econometrics, which is multiple variable regression analysis by someone with a PhD in economics.

Poor Economic Education Sustains the System Responsible for It

One of the biggest reasons it is difficult to make the case for market-based, transformational school system change is because success requires receptiveness to – a willingness to consider – explanations of decentralized planning through markets.  It is not obvious that such ‘planning’ orchestrated by the price system better focuses key information and creates strong, appropriate incentives.  But even the college-bound fraction widely fears the academic prerequisites of economic literacy, which has created critical blind spots even among holders of advanced degrees.  The economic literacy of everyone else is below their reading-writing literacy and math abilities.  To those that enjoyed their economics classes, including especially those with an ECON degree, part of the aim of this blog is to persuade you to consider a Henry Hazlitt-like career, where you hone and practice the communication skills needed to bring basic economic insights to the educated lay public.  Please, at least allocate some leisure time to the economic education effort, especially as it impacts school system reform discussions.

“The Third Way: A Mixed Market Approach to Schooling” – an Education Week article full of instructive economics nonsense – prompted me to write this blog.  “Advocates of market-disrupting charters” [chartered public schools – CPS] is nonsense.  The stronger state charter laws generally introduce some school choice – though mostly “school chance” because long waitlists are very common – to school systems where there was none.  They may slightly disrupt some public school districts’ comfy monopolies of public funds.  But, because laws allowing CPS regulate school start-up, and control the tuition prices charged, no market is created, much less disrupted.  Profit-seeking potential is another key feature of genuine markets; something few charter laws allow.  Schooling with or without CPS presence has no price change, mostly no profits allowed, and regulated entry.

The article alleges that, “private-sector funders cheered because it [charter law] meant injecting competition into a broken monopoly.”  The current system is a “broken monopoly”, and many well-intentioned private sector funders did cheer the spread of charter laws, in part because they expected the spread of chartering to make school systems more competitive.  But revealing their own weak grasp of economic fundamentals, they should have realized that with the huge, widespread shortages sustained by government control of what school enrollees would pay, and what charter operators would be paid, would short circuit the competitive process.  It is not that complicated.  A school that is full and has a long waitlist is not a competitive threat.  It is incapable of recruiting away students enrolled or assigned elsewhere.

And, according to the Edweek article, we’d have a market – a “mixed market” – if the government determined not only what the choices would be, but which of your family’s school preferences, if any, would actually enroll your child?  “We created a one-stop enrollment system that every school—charter and district alike—was required to participate in, giving all families access to the same options.”  I hope that kind of ‘controlled’, ‘subject-to-veto-shopping’ does not define the school systems of the future, much less spread to other sectors of the economy.

A lot of people – the vast majority, with the best of intentions – are working overtime to kill the Golden Goose of ‘good capitalism’, that the under-educated and mis-educated can easily mistake for ‘bad capitalism’, either fascism or crony capitalism.  Our terrible school system fostered the ignorance that motivates those terrifying good intentions, and it is making it easier for the assault on the Golden Goose to succeed.  Our low-performing school system also causes a lot of non-economics scholars to misinform a mostly unsuspecting public.

Equity Math for a Transformed System

Suppose we provide a high minimum level of per-pupil public funding to anyone wanting to exit their assigned public school, and independent schools – charter or private – can charge whatever the market would bear. Markets would then set tuition rates; often at the per-pupil public funding (‘free’), but sometimes above. Market entry would drive tuition rates down to the level needed to finance efficient operations, including a normal rate of return on investment. Purveyors of poorly conceived instructional approaches would not be able to recruit enough schoolchildren to cover their expenses. But purveyors of some well-conceived instructional approaches would be able to charge more than the per pupil public funding; a 3rd party co-payment. Suppose the per-pupil public funding is $8,000/year, and school X’s instructional approaches cannot be offered for less than $9,000/pupil/year. To avoid the current donor dependence of such schools (which is current norm; for example, KIPP Chartered Public Schools are highly donor dependent, thus massively under-supplied), X will need to charge a $1,000/pupil/year co-payment. Ending donor dependence frees the donor money currently paid directly to schools for means-tested co-payment financing. So, the $1,000 can come from parents’ private funds or accounts created from means-tested public or philanthropic financing. School X will get enough parents and donors to pay the $1,000 if X’s instructional approach is significantly better than the alternatives.

The aim of this post is to provide a rough approximation of the likely per pupil level of philanthropic funding available for means-tested co-payment financing. So, suppose a family wants to enroll a child in school X, but their below-poverty income precludes the family from having the means to make the annual $1,000 co-payment. In 2014, approximately 20 percent of children were from officially impoverished families.

How many needy families would seek co-payment assistance? Universal school choice existed in the Edgewood District of San Antonio, Texas for about six years. The Edgewood voucher amount was large enough so that most of that area’s private schools took the voucher amount as full payment. That yielded a peak participation rate of 16 percent. 16 percent of U.S. public school enrollment (50 million) is eight million. If official poverty (20 percent) has proportional representation in the likely eight million seeking an alternative to the assigned public school, the potential demand for 3rd party-financed, means-tested co-payment is 20 percent of eight million; 1.6 million students.

What would be the average co-payment funding available to potential low income leavers of assigned public schools? The most recent firm number for K-12 philanthropy is $1.5 billion in 2002. Anecdotal evidence suggests that the total amount has risen significantly since then, so I’ll assume that $1.5 billion is annual charity funding for means-tested co-payment. Even if every one of the 1.6 million eligible for means-tested co-payment funding applied for it (every preferred private school levies a non-trivial co-payment), $1.5 billion yields nearly $1,000 per low income pupil for co-payment; that is, to top off the public per-pupil funding. The per pupil amount funded by charity for low income households will be higher to the extent that low income families choose private schools with little or no co-payment required, OR to the extent that giving for means-tested co-payment (scholarships) funding rises with increased interest in private schools, and increased diversity in the menu of private school offerings.

Chile’s somewhat useful experience with what Chile calls ‘shared financing’ of private school tuition is that competition causes the average private (family or charity) share of private school tuition to be quite small. So, the bottom line from the very rough estimates above is that the poor will not be disadvantaged by school system reform that opens the system to much-increased free enterprise delivery of schooling orchestrated by price change and price (tuition) variability within the menu of taxpayer supported (subsidized) schooling options. Actually, quite the contrary. Low income families will have more options, but with donor financing of co-payment levies, without significant loss of accessibility due to out-of-pocket cost.

A Lesson in Propaganda: Reporting of Nation’s Report Card Results

Despite important, but rarely noted criticisms like test-takers’ classroom-3weak incentives to give maximum effort, the periodic National Assessment of Educational Progress (NAEP) is widely referred to as the Nation’s Report Card. The recently reported 2015 results are an interesting lesson in boosterism, obfuscation, and handwringing. Handwringing resulted from the decline in score overall, and the still terribly low proficiency levels. Those are not NAEP numbers an outgoing administration will want to cite as a legacy of frenzied effort and unprecedented federal spending on K-12 education.

Only Massachusetts (MA) has more than 50% (51%) of its 8th-graders proficient in math. I’ll focus on the math scores because, overall, those 8th grade NAEP scores are better than the reading scores. The national average 8th grade reading score is 264/500 (52.8%); 274/500 (54.8%) for MA. The national average 8th grade math score is 281/500 (56.2%); 297/500 (59.4%) for MA. Notice the small difference between the USA and MA scores, and the low level of both. The same thing is true internationally: #1 scores are at a low absolute level, and aren’t much above the average. Internationally, and within the USA, the best are still pretty bad.

When I assign grades to my students, between 50% and 60% is a ‘D’ or an ‘F’. Perhaps wishing not to fail everyone, Education Week’s 2016 Quality Counts gives Massachusetts a ‘B’ for an average score of 59.4% and proficiency at 51%. By the way, if you’re wondering why I’m discussing 8th grade results rather than the scores of the school system’s (NAEP scores include private schools) final product – which I would prefer to do – the answer is that the even more terrifying NAEP scores for children older than 8th grade are not broken down by state. For older children, only national numbers are available, giving states room to deny that things are that bad in their states.

Since Education Week’s 2016 Quality Counts reports all of the numbers that are the basis for their assessments (you can decide what a 297/500 score or 51% proficiency means), I will not accuse Education Week of boosterism. To check for that, I decided to look at some Massachusetts sources. Sure enough, the Boston Globe chose feel-good boosterism over the appropriate journalistic integrity. In an article entitled “Massachusetts Again Tops National Test Student Achievement,” the Globe made no mention of actual scores or proficiency rates. The article only reported the differences between the 2015 NAEP scores for Boston and Massachusetts and past scores, scores in neighboring states, and the national average. I’m sure the Boston Globe and other sources obfuscated reality with the best of intentions, and we know that the path to you-know-where is paved with good intentions.