If you look at almost any negative article about school choice, it will probably use the word “profit” in a sneering tone. The suggestion is usually that private and charter schools care about profit over education.
That seems to be the reason school-choice critic (and former US Assistant Secretary of Education) Diane Ravitch sure doesn’t like the idea of for-profit schools. And according to education advocate Steven Singer, “Public schools are designed to educate. Corporate schools are designed to profit.”
Public schools are not for-profit enterprises. They receive federal, state, and local tax dollars (and can receive private donations) rather than private tuition, and the success of a public school does not depend on their ability to maximize profits in the way we’d see in the business world.
So when economist Milton Friedman wrote an article advocating that we start “selling schooling like groceries” the anti-school-choice reaction was (and continues to be) that schools need to be protected from the profit motive.
I’ve always been puzzled by this reaction because the profit motive serves us well in so many areas, from grocery stores to car manufacture. It would be hard to imagine grocery stores or car manufacturers offering up quality products if they weren’t motivated (in part) by profit.
So here are 3 reasons school choice opponents are wrong to oppose for-profit schooling.
First, the profit motive is compatible with wanting to do good.
Arguments like those linked above often assume that you can care either about profit or about doing good by those you serve, but not both. Yet all of us buy things from for-profit companies regularly, and it seems strange to think that those companies don’t generally care both about profits and about providing quality goods and services. Quite simply, wanting to make money does not necessarily distract from the goal of wanting to provide something good in return for the money.
One case in point I often use to illustrate this is the public school teacher. Public school teachers get paid, and it is unlikely that many would do the job if they didn’t. Moreover, teachers’ unions and teachers themselves often (correctly, in my view) want teacher salaries to be higher.
Making money for what one does needn’t distract a person from the goal of providing good service.”]
But none of this means that teachers do what they do solely or primarily for the money, or that a desire to provide students with good educations isn’t a huge motivator. The bottom line is that making money for what one does needn’t distract a person from the goal of providing good service.
Second, the profit motive will likely lead to more focus on the consumer experience.
When critics phrase “educating kids” and “making money” as contradictory goals, I suspect they have in mind cases, like those we see in movies and occasionally on the news, where pursuit of profit leads greedy companies to do things contra consumers’ interests. And surely cases like that do exist.
But we shouldn’t generalize from these extreme situations. Much more often than not, the profit motive means that, to survive, companies have to focus a great deal on the consumer experience, on gaining and retaining customers who can always go elsewhere if they grow unsatisfied with the current product.
(One question I’ve asked colleagues skeptical of the profit motive is, out of the last 50 purchases they’ve made, how many they think were from companies whose primary goal was to screw consumers. They often try to avoid answering.)
In the current public system, where we pay tax money to the government, which gives it to public schools regardless of whether we choose them, schools simply have less incentive to attend to the consumer experience. Profit also provides information to producers about what to produce and how to produce it in ways that best satisfy consumers.
In a private system where profit is allowed, different schools would make different choices about how to operate. They would be able to find out if their choices are good based on whether customers are willing to pay for their product over their competitors’. Since a public system distributes funds through the political, rather than a market, process, it becomes a lot harder to find out what consumers want.
Third, the debate between for-profit schools and public schools is framed wrong.
The debate is often framed as if the difference is between (private) schools motivated by making money and (public) schools unmotivated by money. Yet, money flows vigorously through the public system. School districts receive money from local, federal, and state governments (as well as private donations) and can lobby hard to get more of it. State and local boards of education pay textbook manufacturers, curriculum and assessment designers, companies to provide services to the schools, and so on.
In this interview with Bill Moyers, Ravitch suggests that she “never thought of public education as an industry,” implying that this is the difference between public schools and for-profit charter schools. Yet, it is doubtful that she was or is unaware of the vast sums of money that flow through the public school system or the groups who do profit within it.
The key difference is not whether people are seeking to make money, but how they seek to make money. In the market, companies get money from investors and customers. This means, at the end of the day, they make money by offering products and services that people will voluntarily pay money for. (Companies that cannot generate and retain consumers will not last long.)
Public schools receive money primarily through the political process — through lobbying and politicking. Thus, decisions will favor those with political clout and consumers will be far removed from this process.
1 Note that voucher programs tend not to allow for-profit schools to receive voucher money. My point in this article is to argue that there is nothing wrong, and much good, with opening school choice programs to for-profit schools.
2 I have to tread lightly here, because public schools certainly do benefit from receiving as much tax revenue and donation money as possible, but they do not make profits the way businesses do, by minimizing operating costs and maximizing income