Viewpoint: The education competition myth

By Seth Rosenblatt
February 1st, 2012

Most of the fundamental conditions of capitalism don't exist in the world of public education, the author asserts..

I received lots of feedback from my eSchool News article last year, “Viewpoint: Why education is not like business,” which postulated there was a fundamental fallacy in viewing the world of public education through the lens of normal business paradigms.

An overwhelming number of the comments I received were positive and supportive (and gave additional examples of such fallacy), but a few folks thought I was just perpetuating the problem of government being resistant to change, serving its own interests rather than those of the public, and apologizing for a lack of innovation.  As I mentioned in that article, I’m a strong believer in capitalism and have devoted most of my professional life to profit-driven pursuits.

The distinction I drew was that most of the fundamental conditions of capitalism don’t exist (and we wouldn’t want them to exist) in the world of public education.  In short, it’s what defines a “public good”–just like our military or highways, which have to operate to a large degree outside of laissez faire economics.

Many readers and fellow school board members have asked me to elaborate on a specific area referenced in the previous article–the notion of competition among schools.  It continues to be a great debate within the education community as to whether competition is a good thing or a bad thing.  On the one hand, many in the field say that competition just works, regardless of the arena–the pressure to perform better is a rising tide that will lift all boats, and of course this argument is central to many in the charter school movement.

On the other hand, many educational leaders suggest that educators aren’t affected by these sorts of pressures, and that competition actually harms students.  Unfortunately, this debate misses the larger point.  In a sense, both sides are mostly wrong, and if anything, the very premise of the debate is flawed.

It’s not whether competition works or whether it doesn’t work; the question is whether it can exist at all.  Just like capitalism is predicated on the free flow of information, capital, and labor, competition has prerequisites.  In this article, I have parsed them into individual conditions required for a healthy and effective competitive environment, including: (a) Customer Switching Ability, (b) Provider Capacity, (c) Existence of Clear Success Metrics, (d) Incentives to Win, (e) Minimal Downside of Having Losers, and (f) Having a Level Playing Field.

Customer Switching Ability–The first predicate condition for competition is the ability for customers to change providers with minimal friction.  Said another way, competition is based on the premise that “customers vote with their feet,” meaning they can easily pick (and change) the services and products that they feel best serve their needs.  Implicit in this premise is the requirement that customers are able to seamlessly change their provider without incurring extra cost, hassle, or some other side effect from making such a switch.

If customers cannot vote with their feet, then competition will have no effect.  Let’s use an example of where such friction can exist.  If you try two restaurants, and you decide that the one 10 miles away from you is superior to the one a block away from you, you will still probably make the trip and go to the farther one.  The reason you can do this with minimal friction is that you don’t eat there every day, making the cost for the extra travel trivial.  On the other hand, if you were somehow required to only eat at one restaurant each and every day, it would suddenly be a burden to drive back and forth to the farther restaurant.  If physical distance is a factor in consuming any product or service, friction is created proportionately to both that distance and the frequency in which that distance must be traveled to consume the product.

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