What if competition doesn't work?

Ten years ago, many school choice and charter school advocates (including yours truly) pointed to the American automobile industry as a powerful example of the free market's ability to transform unwieldy bureaucracies. The "Big 3" Detroit automakers had grown complacent. By the early 1980s, their quality was low and costs (and prices) were high. Fuel efficiency was a joke and safety not a priority. Along with the rest of America's manufacturing economy, the auto sector looked bleak.

But competition came to the rescue, in the form of cheaper, smaller, and higher-quality imports, mainly from Japan. Faced with the first real threat to their market share in decades, Big Auto and Big Labor reacted with horror, and screamed for Uncle Sam to save their bacon. Yet these protectionist calls went mostly unheeded and carmakers were forced to face the music. "Change or die" was the clarion call, and change they did. They retooled their plants, retrained their people, borrowed management techniques from the Japanese, and began designing cars that people wanted (and could afford) to drive.

School choice advocates in the '90s saw in Detroit's transformation a model for reforming public education. Big urban districts, we said, would never improve on their own. Their leaders wouldn't—couldn't—just decide to make the painful changes that a full turnaround required. Only if they faced the stark choice between "change or die" would they buckle down and make significant progress.

We touted vouchers and charter schools as mechanisms to effect that choice. Invoking our inner-Teddy Roosevelt, we would use these school alternatives to bust Big Education's monopolies, force them to compete for students and money and, after lots of moaning and cries for politicians to relieve the pressure, surely the school systems would do what GM, Ford, and Chrysler all did: they would get better—and all kids would benefit.

It was a compelling and hopeful story. But does it have a happy ending? Ten years later, Chrysler is no longer an American company, GM is shutting plants and hemorrhaging employees, and Ford is ailing, too. Detroit is again producing cars and trucks that people don't crave. Another oil crisis has left U.S. manufacturers unprepared for a serious fuel-economy push—and too ponderous to change quickly. There's more competition than ever, yet Big Auto seems stuck in its old malaise, which now feels more like a death spiral.

The "change or die" mantra seemed right at the time. It was faithful to free-market economics. But what if "change or die" isn't the end of the story? What if some bureaucracies are so brain-dead, so dysfunctional, so entwined in special interests that they simply cannot respond smartly to competition? What if Harvard Business School professor Clay Christensen is right that only "disruptive" newcomers can make quantum leaps in quality and innovation, while longstanding organizations muddle along? What if, for some behemoths, competition doesn't work?

It's hard to find much evidence, after 15 years with charters and vouchers, that competition has transformed dysfunctional urban districts. Sure, a lot of kids are benefiting directly. Sure, there are a few promising turnaround stories, such as Milwaukee, where choice advocates can claim credit for the district's reform of its seniority hiring system, which resulted in principals getting to choose their new teachers. (For an illustration of how critical—and uncommon—this policy is, check out The New Teacher Project's recent report.) Sure, New York and Chicago and a tiny handful of other places are deploying some charters as a way of circumventing their own bureaucracies and union contracts. Sure, there have been responses around the edges in other places. We noted, for example, last month's announcement that Dayton's school system (in Fordham's hometown) is advertising to parents in an effort to respond to competition from charter schools—which now enroll upwards of 30 percent of the city's students (see here ).

But can anyone credibly claim that even one urban district has responded systematically to competition from charters or vouchers? Most such school systems are still a mess; the latest National Assessment of Educational Progress (NAEP) results show that millions upon millions of their students are still learning at dismal levels. (See Diane Ravitch's recent New York Sun article for trenchant analysis on that score—and a debunking of a Times's assessment that New York City schools are making big strides.) It may be that big urban districts are simply incapable of making the painful changes that improvement requires. They still let the best veteran teachers congregate in their more affluent schools; they still pay phys ed teachers the same as physics teachers; they still send weak administrators to make-work jobs in the central office, rather than throwing them out. In other words, they still bow to the demands of established adult interests rather than making decisions based on what is good for kids.

Perhaps vouchers and charters haven't catalyzed systemic school reform because too few urban superintendents and school board members understand how they can use competition to drive their own reform agendas. Perhaps the "theory of action" of market-driven change is too complex and too slow. For it to work, a reformer would have to convince everyone that competition was bleeding the system of kids and funding, and that if they didn't figure out how to win parents and students back, many bad things would happen. Budgets would get cut. Teachers would lose their jobs. Class sizes would rise. Retirement benefits would fall. Only after doing this could the reformer say, "I need major concessions from you so as to avoid further pain." How much less painful to join the chorus of complaint that charters and vouchers are "draining the public schools" of funds—then demand that government put the competitors out of business.

Perhaps it is easier for leaders to call for change when the consequences of failure are more immediate and palpable, such as with NCLB-style accountability, where "bad things" swiftly and more-or-less automatically happen to schools that don't improve. Perhaps there are too few places where systems face severe financial pain if kids bolt for charters or vouchers, since some states have adopted "hold harmless" provisions to protect district funding. Perhaps charters and vouchers still don't have enough market share to trigger a competitive response—though we're over 20 percent in Dayton, D.C., and Kansas City, and not far behind in a number of other districts. Maybe we haven't hit the "magic number." But what if there is no magic number? What if urban districts continue to lose students to charter schools (and in some places, vouchers) and yet never respond constructively?

Some "defenders of public education" will reply that competition has failed and that charters and vouchers should be extinguished. But nobody seriously contends that Toyotas, Hondas, and Nissans should be taken off the U.S. market just because the Big 3 are in trouble. Our country wouldn't be better off if Washington forced everyone to buy Fords. Nationwide, families have used their feet to vote for charter schools and private school choice programs. These should be allowed to operate so long as they please their customers and get good results in student learning. They cannot be held responsible for the inability of Big Education to respond to competition. Besides, our children are better off with high quality options.

But is it time for those of us who support such reforms to stop claiming that competition will lift all boats? Maybe we should defend charter schools and vouchers as an end in themselves—not as means to another end. If choice yields benefits to kids who avail themselves of it, and does no harm to those who stay in the traditional system, our argument is strong enough. If the new options work better than the old, there should be no limit to their growth. And if the big urban districts never get their acts together, we should replace them. It might sound "disruptive," but that's just another word for progress.

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