5 Reasons Why Education Can Never be a “Business”


The current dysfunction with so many charter schools and testing efforts is tied to investors who are trying to make education into a profitable business venture.

In a very well documented story published just a few weeks ago in the Huffington Post, “Why Hedge Funds Love Charter Schools”, Hofstra University professor Alan Singer shows the many benefits that are lining up for investors in companies that develop private charter schools, especially for depressed neighborhoods inhabited by the poor.

And so to investors who have not dealt with the mysteries of the real education process, this looks like a tremendous new market that just has yet to be tapped.

There  is the same urge to raid public education much in the same way that corporate raiders like Mitt Romney/Bain Capital, T. Boone Pickens and others did to solvent corporations in the 1980s-90s.

What Investors are Missing

But, really, can hedge funds game education-related institutions like corporate raiders did to corporations in those years turning huge profits for the raiders? They have tried over the last decade; but, it hasn’t worked so far. That’s why charter schools are failing at such alarming rates. That’s why testing schemes are failing and losing the confidence of educators and the public at such a fast and large rate.

As I pointed out in an earlier post, This is What Happens When Bankers Run Public Schools, charters are going belly up with regularity, in one case just 30 days away from the end of their school year.

What investors don’t realize about education is that effective education has many more human mysteries than most regular business ventures. It involves a critical mass of trust and effort being formed between the host community, school administrators, teachers and the students. It is a unique and delicate circle that cannot be achieved by a company that is seeking short-term gains by taking over public institutions and hiring nominally committed teachers hired on the cheap.

A sign of the extreme hubris of investors who have never spent one night planning a lesson is that they believe that they can just import the usual corporate methods into education and turn it from a public good into a market of competing private entities.

I Have Witnessed How Hard It Is

I have seen the public, non-profit part of education up close, and I have seen the for-profit part of education up close, too.

In my teaching career I have spent 16 years as a public school teacher. Four summers out of those were spent grading essays for the for-profit Educational Testing Service for the AP U.S. History exam. Another 2 years have been spent as an online teacher for a for-profit online service that contracted to public schools and charters.  Currently, I am an ESL teacher for a community college in Oklahoma City.

So I have seen many aspects of the education process. And what I have seen is an attempt to turn education into a commodity that is sold using cost-saving measures and debt leverage.

In the case of the ETS, they make a profit by huge volume and having developed a reputation for delivering a reliable service to a narrow slice of the whole education effort. Even then, they come precariously close to failing in certain years.

In the case of the online service that I worked for, they worked hard and made a lot of good moves. However, eventually they had to write off a huge uncollected lump of fees that were not paid by bankrupt charters that had been loosely regulated, if at all. Their parent corporation took the write-off, and then sold them to another similar company. Time will tell if that venture will work.

Five Big Reasons

From a business standpoint, corporations simply cannot replace public schools without depending on the same or even higher levels of tax dollars, the same methods being used in public schools, and a reduction/elimination of accountability.  Corporate market efforts just won’t deliver ethical, reliable, consistent, quality education for less as they promise. Why not?  Let’s look at five big, systemic reasons:

1. Education cannot be stored in a warehouse until the market works in the favor of the vendor.

Children grow every minute of every day and they must have continuity of delivery right now. There is no holding and then releasing of money and inventory when the time is right. In education, the right time for delivery is now.

2. Education is not a product, it is a process that uses products. 

Yet, it doesn’t even have to have those products to work. Books can be borrowed and shared. Many schools in the poorest parts of the US and other countries just use information imparted by the teacher. As long as the human capital of the teacher is there, that is the key.

3. Education cannot be controlled to quality standards in the ways that a manufactured product or simple service can be.

Engineers can determine if an auto part meets engineering standards. Education cannot be measured successfully in the same way. That’s why we are seeing fundamental failures in testing schemes at present.

4. Machines will never be able to do what teachers do, not completely.

Effective teaching involves the teacher’s discernment and their relationship with the student. It is more likely to program a machine to take the place of an engineer than a teacher.

5. Not just anyone can teach, and so labor becomes a bigger issue than market-driven efforts can conquer.

A consistent, trained, monitored teacher corps whose prime loyalties are to the public, have proven to be critical to effective education in the U.S. and other countries over the long haul.

Teach for America is jokingly called “Teach for a Year” for good reasons. No matter how bright the person who goes through that program, it still takes years of experience to develop that critical ability to discern what each unique student needs and then deliver it effectively.  And so, those clearly smart young people see and understand that, and quickly leave for other professions or go into charter school administration.

Public Schools Are Public for a Reason

To hear hedge fund managers and investors talk, one would believe that the only reason why we don’t have a thriving education market made up of private corporations right now is either because people in the past were just stupid or the Communists among us have secretly sabotaged those efforts.

Neither is true.

What leaders over the years found was that public education is a public good like effective policing and fire protection. In U.S. history all three have been tried as private efforts and they didn’t work. Why? When profit motives drive private efforts in those three public goods, they become inconsistent, corrupt, and ineffective. Private efforts allow society itself to suffer.

That suffering is both unnecessary and unacceptable.

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