Why We Need School Choice, in One Chart

In 1973, when Ford was rolling out such losers as the Pinto and the Mustang II, would the cars have been any better if the Ford designers had, say, a budget twice as large?  Or would the same people have continued to roll out the same bad cars, just more expensively, until competition from Japan and Europe forced American car makers to get their act together?

If you have not been to a Sears store lately, and you have lots of company.  If you do not shop at Sears, think about why.  Now, imagine that Sears were to double the number of employees in their local store.  Would that change your mind and suddenly send you into the store to shop?  No?

There are times when everything about an organization is broken -- its management, its culture, its strategy.  These organizations may have perfectly good people in them -- I have no doubt that the folks at Ford in the 1970's were capable people, as are the employees at my local Sears store.   I call all these factors "organizational DNA".  This is from years ago about a corporate example, but the same is true of any organization:

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA.  And DNA is very hard to change.  Walmart may be freaking brilliant at what they do, but demand that they change tomorrow to an upscale retailer marketing fashion products to teenage girls, and I don't think they would ever get there.  ...

Corporate DNA acts as a value multiplier.  The best corporate DNA has a multiplier greater than one, meaning that it increases the value of the people and physical assets in the corporation.  When I was at a company called Emerson Electric (an industrial conglomerate, not the consumer electronics guys) they were famous in the business world for having a corporate DNA that added value to certain types of industrial companies through cost reduction and intelligent investment.  Emerson's management, though, was always aware of the limits of their DNA, and paid careful attention to where their DNA would have a multiplier effect and where it would not.  Every company that has ever grown rapidly has had a DNA that provided a multiplier greater than one... for a while.

But things change.  Sometimes that change is slow, like a creeping climate change, or sometimes it is rapid, like the dinosaur-killing comet.  DNA that was robust no longer matches what the market needs, or some other entity with better DNA comes along and out-competes you.  When this happens, when a corporation becomes senescent, when its DNA is out of date, then its multiplier slips below one.  The corporation is killing the value of its assets.  Smart people are made stupid by a bad organization and systems and culture.  In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay.

I would argue that public schools in many parts of the country are in this situation.  Any organization can become senescent with value-killing DNA, but this process happens much more rapidly when there is no competition, as has been the case for public schools which have enjoyed a virtual monopoly enforced by the government (you can go to a competing school but you still have to pay for the government school you are not using).

If I am right, then the last thing you would expect to help is simply pouring more money into the same management, the same culture, the same organizational DNA.  But that is exactly what we have done.  That has been our lead strategy for 35 years, and still remains the preferred strategy of the Left.  Via Mark Perry:

Despite this history, President Obama's strategy was to throw even more money at the schools, and again it did not work:

One of the Obama administration’s signature efforts in education, which pumped billions of federal dollars into overhauling the nation’s worst schools, failed to produce meaningful results, according to a federal analysis.

Test scores, graduation rates and college enrollment were no different in schools that received money through the School Improvement Grants program — the largest federal investment ever targeted to failing schools — than in schools that did not.

The Education Department published the findings on the website of its research division on Wednesday, hours before President Obama’s political appointees walked out the door.

“We’re talking about millions of kids who are assigned to these failing schools, and we just spent several billion dollars promising them things were going to get better,” said Andy Smarick, a resident fellow at the American Enterprise Institute who has long been skeptical that the Obama administration’s strategy would work. “Think of what all that money could have been spent on instead.”

One will hear that criticism of public schools in unfair because they have all these great teachers in them.  Examples will be cited.   I say:  "Exactly!"  That is why change is needed.  Public schools are hiring good people and putting them in an organization and system where they deliver poor results.  Let's liberate this talent.

By the way, one of the misconceptions about school choice is that it necessarily means the end of public schools.  I find this an unlikely outcome, at least in most areas.  Competition from Japan meant that Ford lost some of its customers to Toyota, but it also meant that Ford became a lot better.





  1. Thomas "Fat" Cat:

    The Education Industry has been a money laundering machine for the Democrat Party of the United States for all of my 60 years on this planet, and until it is uprooted and replaced with a market-based infrastructure this will continue unabated.

  2. Richard Harrington:

    Even if the "expenditures" listed above include pensions, would that be an honest accounting of the actual pension costs? Probably not.

  3. Rob McMillin:

    There really is no need for a Department of Education, and in fact it is just a way to reward loyal foot soldiers with cushy do-nothing jobs.

  4. kidmugsy:

    "In the case of GM, hordes of brilliant engineers teamed with highly-skilled production workers and modern robotic manufacturing plants are turning out cars no one wants, at prices no one wants to pay." That's unlikely to prove profitable. It'll just need to be nationalised, eh?

  5. wilfranc:

    John Gall's pithy book Systemantics describes why complex systems have high failure rates. It is also humourous and enjoyable to read. An excerpt:

    A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.
    This statement is known as Gall's law

    A system represents someone's solution to a problem. The system doesn't solve the problem.

  6. Mercury:

    "Despite this history, President Obama's strategy was to throw even more money at the schools, and again it did not work:"

    Of course it worked, do you think they lost the money?

    More educrats were hired and various, existing departments and programs got more money.

    Public education is about jobs for adults, not education for kids. It’s not Sears, it’s Goldman Sachs.

    Achieve peace in the Middle East and then maybe you will have the chops necessary to tackle American public education.

  7. GoneWithTheWind:

    Not disagreeing with what you wrote but there is something you said to which the facts around it would be very instructive in understanding our problems. Ford made the Pinto because the EPA mandated the average MPG of all of the cars they sold. But the customers wanted the Lincolns and Mercurys and pickup trucks powerful enough to pull a trailer. So Ford had to sell a bunch of cheap small engine cars; thus the Pinto. Had the bureaucrats at the EPA not forced Americans to buy those pieces of crap Ford would not have made them. Since then the EPA has increased the cost of water, electricity and heating fuels. This is what bureaucrats do.

  8. Mars Jackson:

    After working in a school system, I realized that part of the problem with public schools are bad teachers. School choice would also create demand for great teachers who can demand higher pay. Local schools are very, very political things, and a lot of money goes into the politics of school systems. Creating competition will force government schools to spend the money where its needed in order to keep up with the competition rather than into unnecessary expenditures which takes up much of a school district's costs.

  9. herdgadfly:

    I think that the ED mess traces to its elevation to Department status under Jimmah Carter. It has been government intervention encouraged by government unions ever since. And the Republicans were just as guilty as the Dems in encouraging more and more government laws and edicts.. Who could deny better education for our kids when "money is not the object or the issue", since "everyone else helps in paying for it."

    As much as I believe in school choice, however, I oppose the "Charter" concept where we pretend are not involved with the government - when in fact the often-failing charter schools are under government control with Corporatists at the helms of these entities. Indeed, these are the Amtraks of government education.

  10. billyjoerob:

    Schools aren't about learning. There has never been a demonstrated connection between schools and test scores, so a choice between schools just increases complexity without generating better outcomes. Schools are mostly for babysitting and socialization, that's why better students are really the only way to create better schools. If you want a school system that is as needlessly complex as the healthcare, higher ed finance, and mortgage systems we have, by all means vote for more school choice. Otherwise the mediocre schools we have are the best we can do and the best we can ever do, short of genetic engineering for smarter students.

  11. David in Michigan:

    I am curious about the "Expenditures" money shown in your chart. Does it reflect 1980 dollar value vs 2017 dollar value or has it been adjusted? In other words, are you comparing apples to apples? I think it is adjusted values because of the increase in the number of employees but I'd like to know for certain.

    I agree that school performance is horrible. But I have reservations that private run schools (schools of choice?) are good for the country. One 'Possible' outcome of private schools is ever increasing compartmentalization. For example, schools attended primarily by ________ (insert racial group), schools only for ___________ (insert religious group), schools emphasizing __________ (insert engineering, arts, etc).

    As an old timey guy who still believes in the melting pot concept, compartmentalization would be surely be a divisive result for the country....... which is already pretty divided.

    I have no solution...........................

  12. gr8econ:

    As noted in the figure, the dollars are inflation adjusted to 2015.

  13. Joe:

    As others have said - Money for "The Children" " for the education of the children has really been about transfering money to the teachers and the bureaucracy - ie the "education industrial complex".

    The average cost of education per pupil today is approx $11,000 - $13,000 per year.
    Compare with the average Catholic School ( the horror of a religious education) where the average cost is in the range of $4,000-$6,000.
    The average achievement level is much higher in the catholic schools.
    Catholic schools do have a number of advantages in holding costs down, Teachers pay is lower (though there are few nuns anymore that work for subsistance), The buildings are older and typically paid for by the diosese
    They also have the number one factor is the quality of the gene pool of the students is generally much higher.

  14. David in Michigan:

    Big bold letters.... how did I miss that? Thanks.

  15. Dustin Barnard:

    In a related note, the response the Betsy Devos has been crazy. My facebook feed is made up almost exclusively of educated, post college age liberals heavily weighted towards people with post graduate degrees. And they are losing their fucking minds over her. My feed is more or less constantly filled with apocalyptic rantings about how terrible she's going to be. Their opinions seem to based almost entirely on the fact that she didn't know (or at least couldn't immediately describe) the difference between 'growth' or 'proficiency' based metrics and the silly anecdote she told about some school that kept a gun to protect from bears. In general the sort of 'intellectual center' of the progressives seem to have lost their god damn minds about school choice. Keep in mind, most of these people don't have kids, and if they do have kids, they mostly live in Silicon Valley where they likely paid 500k+ extra for their house just to get into the 'good' school district.

    I honestly don't know much about Betsy Devos and whether or not she'll be a competent administrator. But I'm hopeful that just having an advocate for school choice at the top will improve things. I say that as a person who currently has a special needs son being very well served by our local public school. Our family had the benefit of 'school choice' by virtue of making enough money to buy a house in a school district we liked. Watching people absolutely freak the fuck out over poor people being able to make those same choices, under the guise of protecting them, is really fucking weird.

  16. dagamore:

    Losers like the Pinto!!!! WTF OVER!!! small light, the 351C with a C6 fit right in, you had to play with the 9" to fit in the rear, but it could be done. I loved my Pinto, it was stupid fast, and put a ton of Camaros and Vetts to shame, even when they were 20 years younger than that old Ford V8.

  17. marque2:

    There was nothing wrong with the Pinto. It got a bad rap because I believe Ralph Nader or some similar person sued claiming they had a propensity for tank explosions when rear ended, and someone successfully sued when a family member died running into a horse using the hypotheses that the roll cage/supports should have held up - people still die from much smaller deer collisions today.

    In the end safety records from the day show the Pinto was actually safer than other cars in its class and it was merely the media hysteria that made folks think it was a bad, unsafe vehicle.

  18. marque2:

    Oft failing? Dubious claim. How about a comparison to the oft failing public schools as well?

  19. marque2:

    They weren't crap, they were actually some of the safest cars in their class. It was media hype brought on by fake or from activist groups that made everyone think they were bad.

    I really feel sorry for Ford in this case, they made a good car. Of course Audi US was nearly destroyed when 60 minutes drilled holes in the transmission to prove unintended acceleration, and GM /Dateline put explosives in the tank. Par for the course for media to generate fake news. Didn't just start with Trump.

  20. markm:

    And the education establishment firmly believes that the system IS the solution, if only enough money flows to it (and thereby to them). They measure inputs and strongly resist measuring outputs.

  21. markm:

    The problem was that Ford made and documented a deliberate decision to save $5 per car by not including a part to prevent the gas tank being rammed through bolts in the rear suspension when a larger vehicle struck and overran the rear of the Pinto. At any other angle, the gas tank placement over the rear suspension was as safe or safer than most cars, but lawyers could prove that Ford knew about this one hazard and chose not to protect against it.

    I owned a Pinto wagon for several years and for the price it was a quite good car.

  22. Patrick:

    The chart here compares inputs (money and staff) with one specific output (number of students warehoused). There's been a fairly broad consensus in this country during the time period compared that schools' primary focus should be on education, not warehousing. Of course, it's hard to objectively measure educational performance over the past 35 years... NCLB testing data will help with later dates, but not so helpful going back to 1980.

    I see two major gains (and associated major expenditures) over the past 35 years. First, technology... there's definitely been waste and dead ends, but students today have far more exposure to computers in school than did their counterparts in 1980. But all that tech and the support for the tech has definitely increased costs. Second, students with disabilities are much better-served today than they were in 1980. Again, this is not cheap--the administrative requirements alone add significantly to spending and demand significant investment of educator hours. Additionally, the time and resources spent on actually supporting those students with disabilities is very high. And I think there are good arguments to be made that overall educational attainment has increased beyond just those two bright spots, so the picture at public schools isn't quite as bleak as the chart implies.

    As for the disappointing results of the School Improvement Grants, that's definitely a shame. Although I hope that there were at least some valuable lessons learned about what works. The practice of the Feds throwing money at the states with only general strings attached has certainly been shown to be ineffective. Continuing enhancing school choice seems like a best bet, but the problem of charter and private schools discouraging students with special needs while their advocates criticize the public school system for spending to adequately support those students is an ongoing concern.

  23. GhostRider2001:

    Choice is a terrible thing when it comes to schools, and reducing the political power and influence of the teacher's union..... so say the liberals. Keep the establishment entrenched and well funded.

  24. Bowdoin81:

    How about this for a metric: High school graduation rate in 1975: 78%
    High school graduation rate in 2013: 78%

    What has the DOE accomplished for kids and communities since its inception?

  25. marque2:

    Sadly all companies have to make decisions like that ($5 per car more like $30 today) . You need to do a cost benefit analysis to make sure the car is safe enough, but you can't afford to pay to stop every hazard. If we did, everything would be huge clunky slow and unaffordable.

    So.sadly companies are doing the exact same thing today, but are just documenting things differently, and not putting real concerns on paper or email.

  26. Walt:

    Just a little info to ponder. I retired in 2014 after 36 yrs working in school maintenance for the same school on Long Island. The school opened in 1958, had 48 original parking spaces and had a student enrollment of 725. When I left there were 690 students, 93 parking spots and overflow of a dozen on street. The additional staff difference between 1958 & 2014. Five reading teachers as opposed to one. Six dual language/English Second Language teachers as opposed to zero. Two psychologists as opposed to one per district. Sixteen paraprofessionals which were non-existent in 1958. Three full time speech teachers instead of one. (Spanish teacher included). Two unclusions classes per grade which adds 10 additional teachers. The kitchen staff though was six cooks in 1958 but only three and cleaning crew was cut from five to three. That's a fat amount of money for just one school. Multiply it by every school.

  27. MB:

    Probably worth linking to the full set of stats for anyone looking to compare inputs vs outputs - a single chart is never enough to even superficially understand something. https://nces.ed.gov/programs/digest/current_tables.asp

    From a brief perusal, I'd note the following as possible qualifiers for context to the expenditure numbers:
    - Table 222.85 Avg NAEP Math scores shows some fairly significant gains in 9 and 13 year olds from 1982
    - Table 106.10 Expenditures per GDP looks like it roughly averages 4% for elementary and secondary schools since the mid 70's. There's a noticeable bump to 4.5% in the early 70's and throughout the 2000's. Higher education meanwhile (to the surprise of no one, I'd guess) has increased from 2.2% to 3.1% since 1980.
    - Table 104.10 25+ high school completion goes from 75% (79%W, 64%B, 51%H) in 1987 to 88% (93% W, 88% B, 67% H) which looks like huge gains, especially among black and hispanic.
    - Table 105.40 # of teachers public and private shows about 43% increase in both public and private since 1980
    - Table 105.30 # of students public and private shows about 21% increase in public since 1979 (skewed to elementary), and only 6% increase in private
    - Table 605.10 OECD expenditures shows US is about 40% higher than average, which looks to be pretty steady since 2005. Interestingly, our GDP per capita is also about 40% higher than average...not sure how well that correlation plays out for the rest of the countries. It does look like we spend about 20% more than what I would naively think of as our comparables (Australia, Canada, UK).

    Even 75 charts isn't really enough to tell a complete story - but it appears that an alternative explanation to "public schools have value-killing DNA" could be that (a) despite the rhetoric, overall education levels are up since 1980; and (b) the remaining 25% of high school dropouts we tolerated in 1980 have been much more expensive to educate per pupil.

    This is not my particular forte, but that narrative largely makes sense to me - it's reasonable to assume that it's much harder (= expensive) to educate the poor, downtrodden, children of poorly educated parents, special needs, broken home, etc. than average. Further data breaking out costs per pupil w/demographic data could disprove that theory. Assuming that's correct - the argument then shifts to how much of a responsibility (or premium) do we as a society place on universal education. The data says that's been about 4% of GDP for the last generation or two, which might be a better metric than per-pupil costs.

    Other interesting finds:
    - Table 236.60 expenditures per pupil by function looks interesting to see where the additional $$ are going, but really needs some more analysis to show growth rates
    - Table 236.65, expenditure by state would be interesting...if it was in constant dollars
    - Table 236.90 expenditures for transportation shows a doubling in per student cost, but not much change in percentage of students. Not sure what to make of that...longer routes? Higher fuel costs or driver salaries? There's $12.5 billion of the difference...
    - Table 222.81 Avg NAEP Reading scores shows minuscule gains in whites since 1980 overall, though modest gains in black and hispanic subsets.
    - Interesting there's no NAEP science prior to 2009...I guess we didn't think that was important until 2009?
    - Table 233.10 looks like fights are slightly less common than 1999...and 2% of primary schools took a drug related disciplinary action in 2009? I wonder if that counts Tylenol or some such....