Education and Capitalism: How Overcoming Our Fear of Markets and Economics Can Improve America’s Schools
reviewed by Jack Buckley - 2004
Title: Education and Capitalism: How Overcoming Our Fear of Markets and Economics Can Improve America’s Schools
Author(s): Herbert J. Walberg and Joseph L. Bast
Publisher: Hoover Institution Press, Stanford
ISBN: 0817939725, Pages: 362, Year: 2003
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In November of 2000, voters in California and Michigan rejected referenda that would have created statewide educational voucher systems by a margin of about 70-30 in both cases, bringing the total of failed voucher ballot initiatives to seven since 1972. The response of libertarians and other conservative voucher advocates has generally been threefold: continue to advocate other, less ambitious, forms of school choice, such as charter schools; repackage vouchers as a more limited policy initiative designed primarily to help the neediest students; and attempt to educate the public about the virtues of a fully market-based approach to schooling (Moe, 2001).
This new book, authored by Hoover Institution scholar and UIC professor Herbert Walberg and Joseph Bast, CEO of a Chicago libertarian think-tank, of which Walberg is chairman of the board, is part of this third initiative. “Because they do not understand economics or capitalism,” they write, “many people cling to a romantic notion that the current system of government finance and operation of schooling protects children and poor families from the predations of capitalists and markets.” (p. xxiii). The goal of this book, then, is to help the majority of the people who have consistently rejected vouchers overcome their fear and ignorance and embrace the market.
Their reasoning in support of vouchers is the usual one, first popularized by Chubb and Moe (1990): America’s public schools (or, as Walberg and Bast term them, “government schools”) are failing and only the creative destruction of the market can save them. Unfortunately, the twin evils of teacher unions and their captured democratically-elected school boards conspire to hide this truth from would-be consumers of private education. But there is hope: “Restoring the proper relationship between capitalism and education would rescue millions of schoolchildren from unsafe and dysfunctional schools. It would help ameliorate some of our most pressing social problems, including crime, poverty, and racism.” (p. 327). Market-phobes have nothing to lose but their chains.
Walberg and Bast do not simply reiterate the familiar arguments in favor of privatizing education, however. Education and Capitalism is unique in that it also includes lengthy discussions that purport to explain what both capitalism and economics are to the lay reader. Along the way, Walberg and Bast also rewrite the history of political science, implying that neoclassical theories and methods of microeconomics, particularly public choice theory and noncooperative game theory, have laid bare the workings of government and the electoral process—a position increasingly under attack by opponents of “rational choice” theory (Green & Shapiro, 1994).
Their argument proceeds as follows: since government schools have failed, we must seek out an alternative institution to provide schooling. Privatization of education has been proven to work in a variety of settings, boosting test scores and educational “productivity.” This should not be a surprise, since neoclassical economics has proven that government is doomed to fail and that markets are superior. Finally, they conclude with a detailed review of the various types of voucher programs that have been put forth, and they make their own suggestions as to what an ideal program would look like.
A NATION AT RISK?
From a practical level (although perhaps not to the market fundamentalists in the audience), Walberg and Bast’s argument for vouchers rests on the current failure of American public schools. Without a crisis, what would be the justification for such a radical change of institutions? Recognizing this, they open the book with a survey of the evidence that the government schools must be replaced.
As anyone who studies U.S. education knows, the crisis in American education is an area of great and often highly politicized debate. The authors provide a brief summary of the alarmist side in the body of the chapter, consigning the counterarguments (such as Gerald Bracey’s decade of reports in the Phi Delta Kappan and elsewhere) to a footnote. Much of their strongest evidence for the failure of government schools comes from the research of Walberg’s colleagues on the Hoover Institution’s Koret Task Force on K-12 Education, such as economists Eric Hanushek and Caroline Hoxby, and political scientist Paul Peterson.
Where their argument is less convincing, however, is in the inclusion of additional “evidence” from journalistic sources. For example: “Because of skill shortages, many low- and high-technology jobs, such as data processing and computer programming, are increasingly exported to other countries, most notably India and Ireland. Relying on other countries to educate our workforce may, or may not, be a successful strategy for the future. But it is plainly evidence of the need for school reform in the
ARE VOUCHERS THE FIX?
Assuming one is convinced that the nation’s public schools are failing, the next step in Walberg and Bast’s argument is to show that their favored institutional reform—vouchers—will improve the schools. The large amount of academic interest in vouchers has generated a corresponding volume of scholarship attempting to assess their benefit. Walberg and Bast pick and choose from among this literature to find the parts of studies, complete studies and meta-analyses that support their position, such as the review of research by the conservative Manhattan Institute’s Jay Greene (2001).
While there is some evidence for the correlation of voucher use with increased test scores (and other indicators, such as civic engagement), it is not at all clear that a consensus has emerged on this question. For example, in a recent meta-review Smith (2002) finds that only the Greene review supports the contention that vouchers and other forms of school choice significantly improve student achievement. He finds three additional studies with “mixed evidence,” and two that do not find an achievement link, including a landmark review from
The authors conclude this section with a description of what a school system liberated from the tyranny of government schools might look like. As part of this depiction, they point to the examples of
Why do Walberg and Bast ignore Chile? Perhaps because the gains in student test scores attributable to vouchers are small or nonexistent, and there is evidence that private, subsidized schools “cream-skim” the richest and brightest students, leaving the rest to the lowest-performing public schools (Hsieh & Urquiola, 2003; McEwan & Carnoy, 2000)? For whatever reason, the omission of such an important and well-studied case is glaring in a volume with the sole purpose of making a sound case for vouchers.
THE INVISIBLE HAND
Instead of proceeding from the evidence of failing schools and the promise of choice directly to particular policy prescriptions, Education and Capitalism instead takes a detour. The middle third of the book attempts to answer the questions, “can capitalism be trusted?” and, “what is economics?” In many ways, this is the most entertaining section of the book, if not the most informative. It is here that we learn, for example, that capitalism is good for the environment because the
We also learn that capitalism, even though it isn’t really an “-ism,” nevertheless contains within it a virtuous moral philosophy, as evidenced in the writings of Ben Franklin and, the authors note, in the list of “ten secrets to success” published in every single issue of Investor’s Business Daily. As Walberg and Bast note: “Anyone who has spent time with businesspeople will immediately recognize that these lists describe most of them, especially those who are most successful in their business lives. These lists are a far cry from the opportunism, cutting corners, and taking advantage alleged by capitalism’s critics.” (p. 144). Despite the publication of Education and Capitalism after the collapse of the “dot com” speculative bubble and the corporate scandals of Enron and Tyco (note to Dennis Kozlowski: profligate excess is not on the Investor’s Business Daily list), the authors apparently deliver the previous sentence without irony.
Education and Capitalism also admonishes us that “the opposite of capitalism, and the situation from which capitalism helped us escape, was kleptocracy, ‘where those in power seize most assets for themselves.’” (p. 165). Liberal economist Paul Krugman, however, has recently outlined the similarities between the corporation-driven public policies of the second Bush Administration and Nobel laureate economist George Akerlof’s description of the potential for politicized public policy to turn into “a form of looting” (Krugman, 2003). Perhaps the Administration and their major corporate contributors haven’t been reading Investor’s Business Daily either.
This section of the book is also where Walberg and Bast provide a basic lesson in economics (minus the Marshallian supply and demand curves and little triangular areas representing “deadweight loss” that fill the undergraduate microeconomics textbooks). Their description places great stock in the theoretical tools of game theory and formal models of public choice, which attempt to provide “equilibria” in social systems based on an abstract model and some fundamental axioms of rational decision making. Their citations are accurate and representative of the contributions of this area of economics and political economy, but their presentation is one-sided. A non-expert reader would come away thinking that it has been scientifically proven that government is doomed to fail in the provision of schooling. Unfortunately, the reality is that some formal results from the 1970s and 80s are, in fact, not the last word on political economy (Green and Shapiro 1994).
DOING IT RIGHT?
The book concludes with a detailed description of the differences between various voucher plans and tax credits, and an exploration of some of the other practical issues involved in how a voucher plan can and should be phased-in and administered. This is, arguably, the strongest part of the book, and it should be required reading for anyone attempting to implement such a plan. Of course, given the less-than-firm foundation of the previous sections, it is not entirely clear at this point why one still would insist on vouchers as a necessary education reform.
All-in-all, Education and Capitalism is an ambitious project, a manifesto for market populism and the dismantling of a $300 billion sector of government, coupled with an apologia for capitalism and an undergraduate course in political economy from a rational choice perspective. It is worth reading by all scholars of education policy (although they are, arguably, not the intended audience), if only to better understand the belief system of those who are the most fervent advocates of voucher programs.
Perhaps the place in which these beliefs are most clearly exposed is when Walberg and Bast, echoing Chubb & Moe (1990) from a decade earlier, bemoan the fact that government schools “are accountable only to school boards and elected officials.” (p. 123). Most Americans would be a bit confused as to why, exactly, this is such a problem. The fact that education, one of the most important facets of our society, is run by elected officials probably seems appropriate to most citizens of a democracy. And maybe that’s why voucher initiatives will continue to be defeated at the polls.
Chubb, J. E., & Moe, T. M. (1990). Politics, markets, and
Gill, B. P., Timpane, P. M., Ross, K. E., & Brewer, D. J. (2001). Rhetoric versus reality: What we know and what we need to know about vouchers and charter schools.
Green, D. P., & Shapiro,
Greene, J. (2001). The hidden research consensus for school choice. In P. Peterson & D. Campbell (Eds.), Charters, Vouchers, and Public Education.
Hsieh, C. T., & Urquiola, M. (2003). When schools compete, how do they compete? An assessment of
Krugman, P. (2003, December 5). Looting the future.
Matloff, N. (2003). On the need for reform of the H1-B non-immigrant work visa in computer related occupations.
McEwan, P., & Carnoy, M. (2000). The effectiveness and efficiency of private schools in
Moe, T. M. (2001). Schools, vouchers, and the American public.
Smith, K. B. (2002). Data don't matter? How empirical research can contribute to the school choice and voucher debate. Paper presented at "The Promise and Reality of School Choice: The Milwaukee Experiment," Public Policy Forum, Milwaukee, Wisconsin.