June 29, 2008 2:54PM

This Little Philly Did NOT Go to Market

The Washington Post claims that Philadelphia’s contracting out of 45 public schools to private management firms represented a test of whether “the free market could educate children more efficiently than the government.” It represented no such thing, and to claim otherwise the Post must not understand the city’s contracting arrangements or the nature of free markets.

Families cannot choose from among the privately managed schools. Students are assigned to these schools based on where they live, just as is the case with traditional state‐​run schools. Markets require consumer choice, and no consumer choice exists in this contracting arrangement. A free market also requires significant autonomy for providers. Under the contract signed by Edison Schools, the largest contractor, its teachers and principals remain employees of the school district. Edison is also bound to honor the terms of the collective barganing agreement reached between the local teachers’ union and the district. Hence, Edison may only make “recommendations” as to who will work in its schools, and has little input on the salaries they will be paid or the length of the school day or year, or other relevant factors. Finally, markets require a price system driven by supply and demand, but the private management firms may not charge tuition, and in any event they are not chosen so there is no basis for demand‐​driven pricing.

Philadelphia did not create a “free market” in education. What it did was to subcontract aspects of its monopoly to providers of its own choosing — an arrangement not too far afield from the one that gave the Defense Department $640 toilet seats. As I noted five years ago, there was never any reason to expect this subcontracting to yield dramatic gains.

As if to drive home the lack of research that went into this story, the Post’s reporter asserts that DC public schools suffer “a lack of funding.” Three months ago, I calculated the total per pupil spending in the District this year as $24,600, roughly $10,000 more than total per pupil spending in area private schools. That calculation was published in… the Washington Post (with further details on this blog).