Standards, the free market, and education reform

Bill Porter

Yesterday, Kathleen discussed the relationship between standards and choice, ultimately arguing that these two movements ought to operate as complements, rather than antagonists.

Many critics on the Right reject the intrusion of standards-based reforms from the very basic tenets of economic theory.  A truly free-market approach, they argue, would obviate the need for standards because competition and universal choice would identify excellent and poor schools (and educators) more efficiently and effectively than centrally imposed standards ever could.

This position resonates with free-market purists and conservative education reformers alike (and as an unabashed free marketeer, to me as well). Yet, fidelity to economic principles without a realistic discussion of the world within which they operate is problematic for a number of reasons.

First, even the most ardent Chicago economists would agree—whether regarding education policy, drinking water, or anything in between—that the ideal free market with no distortions is both unattainable and undesirable.  We could reduce rent-seeking behavior and deadweight losses across almost every industry by eliminating things like the FDA, federal antitrust laws, statewide insurance commissions—even state speed limits or (gasp) lawyers.   Eliminating clinical trials would allow large pharmaceutical drug companies to move innovative new compounds quickly to market with minimal cost, and the resulting successes (cured cancer patients) and failures (horrific side effects for the patients who managed to survive substandard drugs) would almost assuredly be closer to the true definition of “efficient” than our current processes.

Similarly, the Constitution secures to inventors exclusive rights to their inventions, thereby limiting the competition they face as they seek to recoup and profit on their (sometimes sizeable) investments because of the danger of living in a world where these entrepreneurs don’t bring their innovation to market.

In each case, we have decided that the benefits of a slightly less than “free” market outweigh the costs imposed.   As an intellectual debate, one could argue in either or both cases that balance has been reached in error, though I suspect there are very few who would argue for abolition of the FDA or of intellectual property rights.  These intrusions exist as a concession to the world and our best effort (to date) to approximate the operations of a truly free market.

Second, as is the case with any market, modern society demands the question of whether a truly “optimal” allocation is the goal.  In the case of education, it seems clear that it’s not.  Why? In my view, it is because we can’t stomach the “costs” of losses in the world of education in the same way that we stomach the costs to Big Pharma in our previous example.  Rightly or wrongly, watching Pfizer spend an extra $1 billion bringing a cancer drug to market is easier than watching a generation of inner-city students left behind because of failing schools. What’s more, questions still exist as to whether universal choice absent some minimal regulations for quality will drive quality, particularly among schools serving predominantly poor and minority students. Moreover, the losses sustained by the kids in poor schools grow and expand throughout their lives, with consequences reaching far beyond education, and these consequences are borne by the community and the country, not a set of shareholders.

Finally, the free market depends on a number of things, including the free flow of capital and labor and perfect information.  Neither condition exists in today’s educational ecosystem, viewed at the local or national level.  Parents offered some choice are still limited geographically by families, jobs etc. (of course, at some level these limitations are “choices”, but that ignores many of the realities of both modern life and human nature).   Capital will almost always flow more freely than labor, of course, but realizing that “flow” in the world of educational options is far closer to labor than capital is imperative.

Ultimately, it seems that education reform (and the parallel paths of choice and standards) must be viewed through the following lens.  First, there exists little reason to think that the education “market” should be analyzed differently from any other market—so on this front I agree with free-market critics of standards-driven reform.  As a believer myself in the efficient allocative power of the market, the next two questions that arise are as follows:

(a) Can we allow for the operation of a truly free market sans restrictions? (I considered myself a master manipulator of my seventh grade baseball-card market in the mid-1980s, which operated quite efficiently with no intrusion and, as far as I can remember, perfect information.)

(b) If there exist imperfect information, large barriers to entry, and other intrusive externalities, what minimal intrusions will we stomach in the pursuit of a market whose operations nearly approximate the efficiency of a truly free market?

Against this backdrop, the idea of standards as somehow orthogonal in approach to free-market education reform makes little sense. In fact, given the limitations in mobility and information, the utter abhorrence of the losses associated with failure in education, standards should be viewed as necessity in a market incapable of operating efficiently – and perhaps more importantly, one that we do not wish operated with perfect efficiency.

In the end, the goal is not the creation of a free market but, rather, the improvement of schools by imposing free-market principles. But that means increasing choice while working within the realities of the constraints that exist in today’s system.

Bill Porter is an attorney and freelance writer in San Francisco. He can be found on Twitter at @wfporter1972.

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