The Public Policy

Competition in American Education

Necessary but not always sufficient.

By 10.30.13

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In this Age of Information and cognitive or “knowledge workers,” America is suffering from a debilitating education deficit. Education is directly related to the formation of human and intellectual capital which, increasingly, is the coin of the realm in the global economy.

Ron Bailey of Reason magazine called my attention to a remarkable OECD report by Kirk Hamilton of the World Bank and Gang Liu of Statistics Norway on the subject of human capital and intangible wealth. “Estimating the value of human capital using the lifetime income approach for a sample of thirteen (mostly high-income) countries yields a mean share of human capital in total wealth of 62% -- four times the value of produced capital and 15 times the value of natural capital.”

“Human capital” is inextricably linked to education. Brains (or skills), not brawn, will carry the day in the 21st century.

Niall Ferguson, in his new book, The Great Degeneration: How Institutions Decay and Economies Die, offers a searing critique of Western nations, the United States not excepted. He highlights the current state of American elementary and secondary education, not higher education, and sees it as a crucial obstacle to a thriving country. Argues Ferguson, “The problem is that public monopoly providers of education suffer from the same problems that afflict monopoly providers of anything: quality declines because of lack of competition and the creeping power of vested ‘producer’ interests.”

“A mix of public and private institutions with meaningful competition favours excellence,” claims the native Scot. “That is why American universities (which operate within an increasingly global competitive system) are the best in the world — twenty-two out of the world’s top thirty…while American high schools (in a localized monopoly system) are generally rather bad.” Thus, Asian teenagers do much better than British and American peers in standardized tests, which Ferguson attributes to the fact that “private schools educate more than a quarter of pupils in Macao, Hong Kong, Korea, Taiwan and Japan.” Average math scores there are generally 10 percent higher than the two western countries.

“The gap between them and us is as large as the gap between us and Turkey,” notes Dr. Ferguson. “It is no coincidence that the share of Turkish students in private schools is below 4 percent.”

A recent article by Amanda Ripley in the Wall Street Journal described the hyper-competitive, albeit successful, market for non-traditional educational opportunities in Korea, a country which, 60 years ago, was mostly illiterate but today boasts a number 2 ranking, worldwide, for reading by 15-year olds, second only to Shanghai. The country now has a 93% high-school graduation rate, compared with 77% in the U.S.

The main subject of Ripley’s story is “The $4 million Teacher,” Kim Ki-Hoon who earns millions and “is known as a rock-star teacher — a combination of words not typically heard in the rest of the world.” This enterprising fellow teaches in Korea’s private after-school tutoring academies called hagwons.

“Mr. Kim works about 60 hours a week teaching English, although he spends only three of those hours giving lectures,” reports Ripley. “His classes are recorded on video, and the Internet has turned them into commodities, available for purchase online at the rate of $4 an hour.”

“The harder I work, the more I make,” says Mr. Kim. “I like that.” He is the product of a relentless, competitive process, within the hagwons themselves, “as close to a pure meritocracy as it can be,” reports Ms. Ripley. Kim and his peers are free agents, do not require certification, receive no benefits or even a guaranteed salary. Pay is based on performance. If this intense competition is troubling, “[t]he only solution is to improve public education,” says Mr. Kim.

Ripley recognizes that, “in an information-driven global economy, a few truths are becoming universal: Children need to know how to think critically in math, reading and science; they must be driven; and they must learn how to adapt, since they will be doing it all their lives. These demands require that schools change, too — or the free market may do it for them.”

The Economist published a report by Edward McBride entitled, “Cheer up” (March 16-22nd, 2013) with a cover headline, “The America that Works.” The section on education presented an upbeat story of innovations in technical education, community colleges, the Race to the Top program (RTT), No Child Left Behind, and other state innovations, including 17 different state voucher programs for use in private schools, tax breaks to donors to scholarship funds, and 38 new pay structures for teachers and principals.

McBride understands that “Most academic research suggests that the education reforms of recent years have produced only small, if any, improvements in students’ test scores.” He concedes that “So far the effects of introducing charter schools, vouchers and tougher standards for schools, teachers and students have been underwhelming.… It does not help that teachers’ unions dislike charter schools, and vouchers” and are suspicious of any reforms, including the Administration’s, if pay is to be tied to assessments.

Choice and competition are important, even normative in a free society. But the social context has to be factored in, for instance, given the rise of births out of wedlock, single-parent households (most without fathers), high levels of incarceration of young males, and the large numbers of able-bodied men dropping out of the work force. The social fabric of America is “Coming Apart” as chronicled by Charles Murray in his book by that name as well as by W. Bradford Wilcox of the University of Virginia, and clinical psychologist Patrick Fagan.

To take just one example cited by Wilcox, “kids who are raised in single-[parent] families are two to three times more likely to drop out of high school, for instance.” These are daunting barriers for schools to overcome no matter how competitive the educational marketplace.

Choice and competition are certainly necessary conditions for improving America’s ailing educational system, but they may not always be sufficient in an “uncivil society.”

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About the Author

G. Tracy Mehan III served at the U.S. Environmental Protection Agency in the administrations of both Presidents Bush. He is a consultant in Arlington, Virginia, and an adjunct professor at George Mason University School of Law.