Tag: competition

Can Competition ‘Make America Great Again’?

Many worry about international trade and the increased competition to which it leads, while overlooking trade’s incredible benefits. In a refreshing Wall Street Journal article, the founder and CEO of FedEx, Fred Smith, reflects on how trade and deregulation have improved American living standards over the course of his lifetime. He recalls how many luxuries enjoyed by few during his youth plummeted in price and became accessible to more people than ever before. 

“Foreign travel was exotic, expensive and rare among the population as a whole” during the 1960s, Smith reminds us. Industry deregulation and international Open Skies agreements changed that. “Long-distance telephone calls were expensive, international calls prohibitively so,” and cell phones did not even exist yet. “From furniture to TVs and appliances, and especially automobiles, American brands dominated consumer spending” across the United States, and were often out of reach to the less affluent. Then trade worked its magic: 

[Trade] has rewarded Western consumers with low-cost products that have substantially improved standards of living. [Today] Americans and Europeans don’t need to be affluent to afford cell phones, digital TVs, furniture and appliances.

The moral of Smith’s story is clear: competition, which trade and deregulation facilitate, has an extraordinary tendency to enhance efficiency and bring down prices.

Competition Is Healthy for Public Schools

As more North Carolina families are using school vouchers, enrolling their children in charter schools, or homeschooling, some traditional district schools are experiencing slower growth in enrollment than anticipated. The News & Observer reports:

Preliminary numbers for this school year show that charter, private and home schools added more students over the past two years than the Wake school system did. Though the school system has added 3,880 students over the past two years, the growth has been 1,000 students fewer than projected for each of those years.

This growth at alternatives to traditional public schools has accelerated in the past few years since the General Assembly lifted a cap on the number of charter schools and provided vouchers under the Opportunity Scholarship program for families to attend private schools.

Opponents of school choice policies often claim that they harm traditional district schools. Earlier this year, the News & Observer ran an op-ed comparing choice policies to a “Trojan horse” and quoting a union official claiming that “public schools will be less able to provide a quality education than they have in the past” because they’re “going to be losing funds” and “going to be losing a great many of the students who are upper middle-class… [who] receive the most home support.” 

Setting aside the benefits to the students who receive vouchers or scholarships (and the fact that North Carolina’s vouchers are limited to low-income students and students with special needs), proponents of school choice argue that the students who remain in their assigned district schools benefit from the increased competition. Monopolies don’t have to be responsive to a captive audience, but when parents have other alternatives, district schools must improve if they want to retain their students. But don’t take their word for it. Here’s what a North Carolina public school administrator had to say about the impact of increased competition:

New Wake County school board Chairman Tom Benton said the district needs to be innovative to remain competitive in recruiting and keeping families in North Carolina’s largest school system. At a time when people like choice, he said Wake must provide options to families.

“In the past, public schools could assign students to wherever they wanted to because parents couldn’t make a choice to leave the public schools,” Benton said. “Now we’re trying to make every school a choice of high quality so that parents don’t want to leave

Wake County is not unique in this regard. As I’ve noted previously, there have been 23 empirical studies investigating the impact of school choice laws on the students at district schools. As shown in the chart below, 22 of those studies found that the performance of students at district schools improved after a school choice law was enacted. One study found no statistically significant difference and none found any harm.

Education under the New Swedish Order

Just over a week ago, Swedes threw out the relatively pro-market coalition that had goverened the country for the past 8 years, handing power (though not an outright majority) to a new left-of-center coalition. Swedish students’ falling scores on international tests were a key cause of public dissatisfaction, and they have been widely blamed on a nationwide voucher-like school choice program introduced during the early 1990s. But as I point out in an op-ed in yesterday’s Svenska Dagbladet, the facts simply don’t support that narrative. Here’s the English draft of the op-ed:

Sweden’s collapsing performance on international tests was clearly a factor in the recent election, and redressing that slide will be a priority for the new government. A good first step in charting the way forward is to understand what has gone wrong and what has gone right in the past. Unfortunately, the most popular narrative about Swedish education trends is badly mistaken.

Many have blamed Sweden’s falling international test scores on the proliferation of free schools, merely because the decline is thought to have followed their large-scale expansion. This would be a common logical fallacy even if the timing were correct—but it isn’t.

Between 1995 and 2011, Swedish math scores on the Trends in International Mathematics and Science Study (TIMSS) fell by a massive 56 points. But the vast majority of that decline—41 points—had already taken place by 2003. In that year, 96 percent of Swedish students were still enrolled in government schools.

Another international test, the Programme on International Student Assessment (PISA), began in the year 2000 and has the advantage of breaking out the scores for government and private schools. The last PISA test was administered in 2012, by which time government school scores had fallen by 34 points while free school scores had fallen by only 6 points.

Anders Böhlmark and Mikael Lindahl’s long-term nationwide study helps to explain these trends: increased local competition from free schools actually raises the performance of students in both sectors—on both national and international tests. But, since free schools still enroll a small fraction of students nationwide, the benefits of this competition have yet to be felt in many areas.

Of course, none of this is to suggest that there are no bad private schools. There has never been an education system in history capable of producing only good schools. The best that can be hoped for is that unsuccessful schools close while good schools expand. And that is precisely what has been happening in Sweden.                                           

Much has been made of the failure of JB Education, which attracted too few students to remain financially viable, and was forced to shut down. This was regrettable for everyone directly concerned, in the short run. In the long run, it is better than any realistic alternative. In most countries, including the United States, atrocious government-run schools are able to continue operating indefinitely because they face no meaningful competition—the poor parents they most often serve simply cannot afford any alternative. These schools are numerous enough that a term has been coined to describe them: “dropout factories.” Swedish families are lucky that they can far more easily escape such schools.

Not only does the Swedish system pressure failing schools to close, it encourages good ones to expand. International English Schools is one of the highest-performing school networks in the country, even after controlling for the parental level of education and immigrant background of its students. It is also one of the fastest growing, now operating 25 schools serving nearly 18,000 students. IES has plans to continue growing so long as demand for its services remains unmet. But if IES’s emphasis on academics and civil classroom behavior seems too traditional for some families, there are many other options to choose from. Another large and successful network is Kunskapsskolan, which allows students to proceed through the curriculum at their own pace, combining tremendous student autonomy with weekly one-on-one meetings with teachers.

But not all good private schools grow. Specifically, non-profit schools tend not to build large networks, no matter how good they are. As a result, thousands of students who might benefit from their services never get the chance to do so. The only good schools that consistently “scale-up” in response to rising demand are those operated as for-profit enterprises. This is not a coincidence. Building a network is both risky and expensive. The profit-and-loss system provides both the resources and the incentives that allow and encourage successful enterprises to grow.  

Sweden is fortunate to have harnessed that system to spur the growth of its high performing schools. Chile does the same thing, and has become not only the highest-performing nation in Latin America but also one of the fastest-improving countries in the entire world on international tests. If Sweden wishes to become a fast-improving nation educationally, the evidence strongly supports preserving the entrepreneurial freedoms and incentives that promote the growth of successful education networks.

Chile’s Proposed Education Reforms Would Kill the Goose that Lays the Golden Eggs

For the past three decades, Chile has had a nationwide voucher-like school choice program. Parents can choose among public and private schools, and the government picks up most or all of the tab. But, since the election last fall of a left-leaning government led by Michelle Bachelet, the future of the program has been in doubt. In May, President Bachelet introduced a first round of reforms aimed at dismantling aspects of the program, though these are still under debate. I’ve written about what that could mean for Chile’s educational performance and equality in today’s edition of the Santiago-based El Mercurio. Here’s the original English version:

Chile’s elementary and secondary education system has been harshly criticized in recent years for academic underperformance and for having large gaps in achievement between lower-income and higher-income students. There is significant truth to both charges. What is less widely known is that Chile has been improving substantially in both respects for at least a decade, and that president Bachelet’s proposed reforms are likely to reverse that improvement.

Though Chilean students perform in the bottom half of countries on the Programme for International Student Assessment (PISA) test, many of the nations that participate in that test are rich and fully industrialized. When compared to other Latin American countries, Chile is number one across all subjects. More importantly, Chile is one of the fastest-improving countries in the world on international tests, and so it is gradually closing the gap with rich nations.

Is School Choice Worth Celebrating? A Look at the Evidence

In honor of School Choice Week, I’ll be answering questions on Facebook tomorrow (4:00pm, Eastern) about the evidence regarding free education markets. When I began studying education policy back in the early 1990s, parent-driven education markets were generally thought of as a new, radical and speculative adventure—uncharted waters where, heaven help us, “thar be monstars.” That was a mistaken view then, and it’s positively absurd now.

As I wrote in Market Education, The Unknown History, the education market of classical Athens, in the 5th century BC, was the first time and place on Earth in which education reached beyond a tiny ruling elite. There was no government participation in education. Teachers competed in the town square to attract paying customers, families called the shots, and the city ended up building a thriving economy and the highest literacy rate in the ancient world. During their heyday, the Athenians invented democracy, most forms of Western literature, and some pretty enduring art and philosophy. Simultaneously, 100 miles away, Sparta established a highly organized system of public boarding schools. It’s legacy? One decent action movie and a name for high school football teams.

Over the next 2,500 years, markets continued to outshine state-run school systems in their ability to serve the needs of families, and they also reduced the social tensions created by state schooling. Near-universal literacy and elementary enrollment among the free population were achieved in the United States by the mid-19th century—before the rise of state school systems—chiefly through private and home schools financed by a combination of parent fees and philanthropy. Even the semi-public “district” schools of the early 19th century charged most parents fees, reserving free and subsidized places for the poor.

Granted, historical evidence is subject to interpretation and charges of selectivity, and so it might not be universally persuasive. But, since 1990, scores of within-country scientific studies have compared education systems ranging from state-run monopolies such as our public schools, to state-funded and regulated private schools, to truly market-like systems in which regulation is minimal and parents choose their schools, as well as paying at least some of the cost directly themselves. I reviewed that body of research a few years ago for the Journal of School Choice and found that it shows private schools tend to outperform state-run schools. More specifically, it shows that the freest and most market-like education systems have the most consistent advantage over state schooling.

There is no credible case against this body of research. I could not find a single study that found a public school system to be more efficient than a market system in terms of student achievement per dollar spent. There weren’t even any insignificant findings for this comparison. Every single study that looked at the efficiency question found statistically significant results favoring education markets over state schooling. It’s rare to see such clear results in the social sciences, but perhaps that’s because there are few areas of life that are still under the thrall of state-run monopolies.

Education markets, when coupled with a mechanism to ensure universal access (such as education tax credits) are a better way to serve our individual needs and to advance our shared ideals. Compulsion and state provision are not only unnecessary, they are counterproductive to our most cherished educational ideals.

Another Newspaper Attempts Suicide

Last Friday, the often-respectable newspaper Education Week published a blog post that seems designed to destroy its credibility. The piece makes a claim so egregiously false that it could have been caught by a motivated 10-year-old using a second-rate search engine:

A growing number of countries are surpassing the United States in student performance and are spending less per student than the United States.  Not one has used choice and market incentives to do it.

In fact, according to the latest PISA international test results, the Netherlands, Belgium, Australia, and Canada all significantly outperform the United States in every subject tested. They also all spend less than the United States per pupil, and make use of choice and market incentives such as competition between schools, to varying degrees. The Netherlands, for example, has had a universal public and private school choice program for the last 95 years, which, according to the National Center on Education and the Economy is “one of the [Dutch] education system’s primary strengths.”

Could the author of the Education Week commentary possibly be ignorant of the Dutch and other examples that flatly contradict his claim? That seems unlikely since he is the president of the National Center for Education and the Economy.

In addition to its central falsehood, the piece also relies on an oversimplified and flawed understanding of how to draw lessons from foreign educational experiences. It fails to consider the very different cultural, demographic, and economic conditions prevailing in different countries and therefore offers no basis for apportioning responsibility for a nation’s educational outcomes between environmental factors and the design of its school system.

That is an unforced error, because there is a reliable way of learning from the educational experiences of other nations: within-country comparisons of different education systems. Many nations have two or more education systems operating side-by-side, sometimes in similar communities and sometimes in the same communities. By comparing the relative performance of these systems within countries (taking into account any differences in student/family background across sectors) it is possible to avoid the confounding variables that plague between-country comparisons.

When I surveyed this within-country scientific literature for the Journal of School Choice I found 150 separate statistical findings reported by 65 papers. The results not only favored private over government provision of schooling, they revealed that the most market-like, least regulated school systems have the biggest advantage over state school monopolies such as are the norm in the United States.

It is disappointing to see Education Week publish such obviously false and confused twaddle. If it wishes to remain a serious publication it should establish some minimal standards for the veracity and coherence of its commentary and enforce them with at least a cursory editorial review.

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