WHERE BELIEF IN MARKETS STOPS AND FAITH IN THE STATE BEGINS

Markets Versus Monopolies in Education: The Historical Evidence (Andrew Coulson, 9 June 12, 1996, Education Policy Analysis Archives)

The debate over educational funding and administration is an old one. Writing to his friend Tacitus almost two thousand years ago, the Roman lawyer Pliny the Younger described his plan to establish a secondary school in his home town, but added that he had decided to pay only one third of the total cost.

I would promise the whole amount were I not afraid that someday my gift might be abused for someone's selfish purposes, as I see happen in many places where teachers' salaries are paid from public funds. There is only one remedy to meet this evil: if the appointment of teachers is left entirely to the parents, and they are conscientious about making a wise choice through their obligation to contribute to the cost. (Pliny, 1969, p. 277-283)

Over the last decade, proposals for introducing a degree of parental choice and inter-school competition into education have abounded, particularly in the United States, the United Kingdom, Australia, and New Zealand. In some cases, such plans are already in place. With few exceptions, though, current choice programs pose barriers to the entry of new schools and to the exit of unpopular ones, exclude religious and/or profit-making institutions, restrict admissions and staffing policies, and otherwise control the supply and demand for education. Though private schooling exists in most industrialized countries, there is only limited competition at the primary and secondary levels. The comparatively heavy burden of tuition, when compared to the "free" status of tax-supported schools, greatly limits the clientele for private education. This in turn keeps the density of private institutions to a much lower level than if government did not provide schools. As a result, there is no nation currently offering a truly free and competitive market in education.

The Case Against

As market-inspired reform has gained in popularity, it has been subjected to a great deal of criticism. Attacks have been directed at the possible ill-effects of parental- choice, of for-profit schools, and of market systems as a whole. The most often heard argument against a market is that parents cannot be expected to make sound educational choices for their children, and must instead leave the key decisions to experts. A significant number of parents, it is assumed, would either fail to inform themselves about competing schools, or would base their choices on the "wrong" criteria. This contention has been directed at the population as a whole (Carnegie Foundation, 1992; Wells & Crain, 1992), and also at specific groups such as the poor or the poorly-educated (Payne, 1993; Levin, 1991; Kozol, 1992). A related criticism is that racial and economic isolation might be increased if families selected their schools based on race, ethnicity, or social status (Cookson, 1994; Kozol, 1992).

On the supply side, skeptics argue that for-profit schools with bold promises, flashy advertising, and special programs would lure customers away from academically superior institutions (Krashinsky, 1986). Murnane (1983), and others have noted the possibility of fraud in voucher systems, in which corrupt principals could offer kick-backs to parents who chose their institutions. Profit-making schools are also expected by some critics to reject difficult-to-educate children, e.g. those with disabilities or serious discipline problems. According to Shanker and Rosenberg (1992), these children would be more expensive to teach and hence would either be expelled more readily or refused admission entirely.

All these objections have in common the idea that education is fundamentally different from other human exchanges, and that as a result, the natural checks and balances of the market would fail to operate as they normally do. There is a second line of argument that takes the opposite position, namely, that an educational market would fail precisely because it would operate in the same way as other markets (Krashinsky, 1986). Education, so the argument goes, benefits not only the students and their families, but their fellow citizens as well. These indirect benefits are said to include social harmony, political stability, and a thriving economy. According to Levin (1991), public school systems are capable of producing the aforementioned benefits, while a competitive market of private schools could either not produce them at all, or do so only at prohibitive regulatory expense.

The remaining criticisms are based on the results of "limited choice" or "public school choice" programs, which place many restrictions on schools and families, and generally do not allow the participation of private or parochial schools. Smith and Meier (1995), for example, argue that since programs allowing parents to choose from among different public schools have failed to substantially increase student learning, the same should be expected of an unregulated market. The experience with heavily regulated parental choice in the Netherlands (Brown, 1992; Elmore, 1990) is also cited in arguments against the effectiveness of competition. In the United States, comparisons between existing public and private schools have led Cookson (1994) to conclude that a market would not improve education. The same author also reasons that since private schools have rarely been included in choice programs, there is insufficient evidence to support free market educational reform.

The Case in Favor

Virtually all of the criticisms discussed above have been disputed by proponents of parental choice. Members of the minority groups assumed to be incompetent or uninterested in their children's education are foremost in defending their ability and prerogative to choose. State representative Polly Williams (1994), herself an African-American single parent, championed a private school choice plan in Milwaukee Wisconsin on the grounds that public schooling had failed the urban community and that competitive private provision offered a superior education. Similar arguments have been made by Native- American educator Ben Chavis (1994). Empirical studies have shown that poor parents with limited formal education, from Massachusetts (Fossey, 1994) to the mountain villages of Nepal (Pande, 1977), can and do choose schools on rational grounds (see also U.S. Dept. of Education, 1995; Martinez et al, 1994).

Arguments that racial segregation would increase under a free market have been challenged from two different perspectives. The late James Coleman (1990) observed that racial segregation within the American public school system was greater than that among private schools. So, while the percentage of African-American students in the public sector is greater than the percentage in the private sector, public schools are more likely to be all-white or all-black than their private counterparts. Opposing the very essence of the segregation claim are educators such as Derrick Bell (1987), who believe that the freedom to create separate schools for African Americans would be a boon rather than a hardship.

The assertion that private schools might defraud parents is commonly countered with the argument that such problems exist everywhere, including public schools. The cases of East St. Louis (Schmidt, 1995) and Washington D.C. are notorious examples. Rinehart and Lee (1991) note that a competitive market would at least exert pressure on a school to deal honestly and fairly with parents in order to maintain a healthy reputation, while the public monopoly offers educators no such incentive. Along the same lines, John Coons (1991) has observed that public schooling has not engendered the external benefits of social harmony and effective democracy assumed by its defenders. The American experience of Protestant bias in the education of immigrants at the turn of the century, as well as government-enforced racial segregation, are presented as evidence of this claim. Coons also contends that by removing the coercive element from school selection and allowing parents to choose for themselves, the goal of effective democracy would be strengthened.

To resolve the issue of difficult-to-educate children, Myron Lieberman (1991), investigated the current practices among private institutions. He found that rather than focusing on easy-to-educate students, the single largest group of for-profit schools actually serves the disabled. Studies have also suggested that urban private schools are able to maintain a higher level of discipline than their public counterparts with few if any admissions requirements, and only infrequent student expulsions (Blum, 1985).

For the supporter of free markets, objections based on public school choice programs are seen as misguided. To function effectively markets require significant competition, the lure of profit-making, and a minimum of restrictions on buyers and sellers. Few if any of these criteria hold among existing choice programs (OECD, 1994), and as a result it is argued that they cannot be expected to show any significant benefits (Lieberman, 1989).

The above rebuttals aside, the economic case for an educational market rests on two main presumptions: that monopoly control of education leads to coercion, indifference to the needs of families, and stagnation in the form and content of instruction, while competition and the profit motive would lead to greater quality and efficiency. The first case has been made at both national and school levels. While inflation-adjusted per-pupil spending in U.S. public schools tripled between 1959/60 and the present (U. S. Department of Education, 1993), test scores either held constant or declined (Sowell, 1993; Boaz, 1991). Comparisons between public school administrations and those of the private Catholic sector have shown the public bureaucracy to employ as many as thirty times the number of administrators per-pupil (Boaz, 1991). On a school by school basis, Eric Hanushek (1986; 1989) studied correlations between spending and student achievement only to find that the relationship was not statistically significant. Similar results have been reported by Childs & Shakeshaft (1986). Because of the absence of any truly competitive market in education, little direct contemporary evidence is available to demonstrate its effects on efficiency or achievement. In those cases where a limited degree of competition does exist, however, Hoffer et al. (1990), Borland and Howsen (1993), and others have found small but significant positive effects. Outside the field of education, the superiority of markets to monopolies is widely accepted, and Winston (1993) has demonstrated that reductions in regulation are generally associated with lower prices and better services for consumers, and even yield higher revenues for producers.

The Present Work

As can be gleaned from the arguments cited above, the debate over a market in education has drawn almost entirely from the limited body of contemporary evidence. With the exception of E.G. West's (1994) analysis of 19th century England, the historical evidence regarding market vs. monopoly provision in education has been largely ignored. Education, however, is not a recent invention. Two and a half thousand years of schooling, from the informal to the regimented, from complete parental freedom to totalitarian domination, have preceded current practice. The study of educational history thus offers a wealth of insights into the effects of monetary incentives and centralized administration on the actions of parents and educators.

The next section looks at the educational experiences of four historical periods and places: classical Greece, Germany at the Reformation, England during the eighteenth and nineteenth centuries, and France after the Revolution. This selection is a more or less representative sample from a larger survey of the subject currently in progress. The most valuable lessons these histories have to teach us concern the relationship between school governance and school quality. In particular, they highlight the differences between markets and centralized bureaucratic school systems on three important measures of school performance: how well they respond to and satisfy the demands of parents and students (e.g. through innovation and diversity in curriculum), the degree to which they benefit their students directly (e.g. higher literacy, job/life skills), and their indirect benefits to the rest of society (e.g. thriving economy, social harmony). [...]

Having described the history of schooling in these four different contexts, it is useful to see what commonalities present themselves. In particular, it is fruitful to look back at the three measures of quality listed in the introduction, namely: responsiveness and innovation, direct benefits, and indirect benefits.

There is no question that competitive educational markets have been more responsive to the needs and demands of parents than centrally controlled, subsidized systems. This has held true whether the monolithic systems have been run and paid for by governments, as was most commonly the case, or by religious societies. In Athens, changing public demand resulted in changes to the elementary curriculum, and even led to the creation of secondary education. Spartan schooling, both due to implicit features of its organization and to the explicit wishes of its rulers, kept all innovation and progress at bay for hundreds of years. In pre- reformation Germany, it was the small private school that was first to offer instruction in the vernacular, both to adults and children. The state-run schools fostered by Luther and Melanchthon often ignored the wishes of the public, insisting on a classical course of studies useless to the common man. The same was true of England's endowed grammar schools. English Dame schools, by contrast, taught only what parents were willing to pay for, even attracting families away from the subsidized schools run by religious societies. For centuries, the most sophisticated and modern instruction in England was to be had at private secondary schools, which introduced the sciences, practical engineering and surveying techniques, naval skills, and living foreign languages. Before they were squeezed out of existence by tax-subsidized public schooling, there was simply nothing that could compare to them. In France, monitorial schools led the way in pedagogical innovation and in meeting public demands--so much so that other schools were forced to adopt their methods in order to avoid losing pupils.

In looking at the direct benefits bestowed on students by different approaches to educational organization, the clearest distinction to be found is between the practical and the pointless. Privately financed and operated schools have tended to offer programs of practical benefit to their clients, while centralized systems have taught only those subjects chosen by their founders or administrators--in most cases subjects of little value to the average member of the public. While private schools have consistently taught literacy in the vernacular of their clients for thousands of years, this has only rarely been the case in state or charity-run schools. When it was finally taught by the religious societies in England, they often deliberately omitted teaching writing. Similarly, practical training in mathematics and science has been ignored by bureaucratic school systems until quite recently, while their history dates back to the 5th century B.C. in private schools.

Perhaps the most glaring contradiction between the beliefs of modern public school advocates and the historical evidence is in the area of indirect or social benefits (also called positive externalities). Defenders of public schooling argue that only it can preserve social harmony and a sound economy, while a competitive educational market would lead to social strife and presumably economic deterioration. Nothing could be further from the truth. Government-run schools have in fact been far more coercive, and far more likely to lead to social discord than their private counterparts. Tying themselves to a single religion or ideology, public schools have often alienated all those who did not share the chosen views. When French monitorial schools encouraged the intermingling of children of different social classes, and respecting intellectual merit no matter what its source, they were actually criticized for it by the ruling powers of public schooling. When English law forbade non-conformists to teach, they taught nonetheless, privately and illegally, and generally admitted students irrespective of their religion. Because private schools allowed families the option of pursuing the particular kind of education they value, conflicts were avoided.

Whenever the state chooses one world view over all others, it places its own people into conflict with one another. This has been happening for centuries, and it continues to happen today.

It's a strange thing, ask someone if their workplace would function more efficiently and their job be more satisfying if government bureaucrats took control of the company and, with the rare exception of the remaining unreconstructed New Deal/Great Society types, you're certain to get a "don't be ridiculous" for an answer. Yet these same folks are devoted to the notion that their kids' schools should be run by the State. Posted by Orrin Judd at August 27, 2003 6:11 PM