Giving Kids the Business

Like HMOs? Get ready for EMOs. An interview with Alex Molnar, author of <i>Giving Kids the Business: The Commercialization of America’s Schools</i>.

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If you like HMOs, you’re probably an investor—and you’ll probably love Wall Street’s latest privatizing craze: EMOs, or education management organizations. Stockbrokers say education is a juicy $650 billion market, second only to health care, and like health care 20 years ago, just waiting for an explosion of private investment to cure what ails it. Privatizers say they can provide better education cheaper; opponents say profit has no place in the classroom, and that the only bottom line that counts is the quality of children’s education. The jury’s still out on whether corporate school quality is surpassing that of its public cousins.

More than a dozen for-profit corporations, including the Edison Project and Advantage Schools, have taken over charter schools in cities like Detroit, Baltimore, and Wichita; some, like Nobel Education Dynamics and the Tesseract Group (formerly Education Alternatives Inc.) are traded publicly on the NASDAQ exchange. Corporate Watch editor Julie Light spoke with author Alex Molnar, director of the Center for the Analysis of Commercialism in Education and author of Giving Kids the Business: The Commercialization of America’s Schools, about the trend of for-profit schooling.

CW: How different is the Clinton Administration on commercialism in the classroom, from its openly free-market predecessors in the Reagan and Bush administrations?

AM: Unfortunately, the Clinton administration in that regard is indistinguishable from the Reagan and Bush administrations. It continues the emphasis on contracting out. In the case of EAI, now TesseracT, one of the firms attempting to run schools for profit, Hillary Rodham Clinton made a pilgrimage to Baltimore where that corporation at one time was running nine schools and sat for a photo opportunity. So, there’s a lot of bi-partisan, high level political support behind the idea of running schools for profit.

Most recently, the Edison Project, run by Chris Whittle—the entrepreneur who gave us Channel One, the twelve minute current events program with two minutes of commercials beamed in American high schools—is operating about 25 schools. About half of those are under state charter school law. So, you can see how the deregulatory trajectory of American public policy is encouraging the development of these for-profit commercializing activities in the schools.

That’s quite a bit different from whether they’re actually improving the quality of education that children are receiving. In point of fact, there’s very little evidence to suggest that these corporations are going to do anything of much value for America’s schoolchildren.

CW: You say that one of the issues with these private, for-profit companies coming in and contracting with school districts to run the schools is that they are based on the myth that money doesn’t matter. And that the inequities, particularly the inequities between urban, inner city schools and suburban schools, don’t matter. Talk about why money does matter.

AM: The ability of local taxpayers to raise and spend money for education determines to a large extent the quality of the educational opportunities that children receive. Rather than address this self-evident truth, it’s become very popular to say that the problem is that poor districts aren’t spending money efficiently. The difficulty with that for the people who advance the argument—although it’s very obviously appealing politically and it certainly plays well to corporate executives—is that if you look at the amount of administrative overhead in the public sector, you see that the public schools are, in fact, much leaner and much more efficient than the private sector.

Here in Milwaukee for example, the public schools central administration accounts for approximately five cents on every educational dollar. That’s tiny if you compare it to manufacturing, communications, and transportation, and so on in the private sector. If you look at the health care sector, which in the United States has an enormous private insurance industry, it is the most wasteful, inefficient sector of our economy. It’s enormously profitable. The public benefit and the profitability are two very different things.

In fact, there’s evidence that the public school bureaucracies have been cut to such an extent that those organizations are now being made inefficient by the relentless round of cuts in the staff that they’ve been made to endure over the last decade.

CW: Let’s talk a little a bit about the Edison project. The vision of Edison was originally to set up a chain of private schools. It’s now going into inner-city public schools and running some of them. What has its track record been?

AM: When you look at the result of the Edison project, and there are now some test results to look at, what strikes a person who’s familiar with the performance of American public schools is that they are in no way extraordinary. They’ve got some schools that are performing well, some that are performing less well. The Edison schools are ordinary. They are in no sense of the word a kind of role model for the reform of public education.

What public education really needs is some close attention, some wise investment. We’ve got about $112 billion just in unmet infrastructure needs in the public education sector. We’ve got tremendous inequalities that need to be addressed with money. And we need to put in place what we know about student achievement having to do with smaller classes, developmentally appropriate curriculum, and so on. That’s real education reform.

CW: The Edison project has yet to turn a profit. Do you think they’ll ever be able to pay their investors dividends?

AM: Wall Street is filled with people with more money than brains these days. So, you have a lot of venture capital looking for a place to go. It’s an overheated market and everybody’s looking for the next Microsoft. And there’s a lot of money, many people believe, to be made in the education sector. [But] if there were money to be made in it somebody would have done it long before now. The provision of education is a bit like the provision of police and fire departments; there’s really not money to be made at it.

Education is a public good. We all suffer or we all benefit if education is well provided. We all suffer or we all benefit if children are treated fairly and taught well. A market, by definition, can’t address issues of equity. Nor, do I think a market can provide public education and make a profit as long as equity concerns are a factor in the equation.

The only reason that the health care industry can make a profit is that it has nothing whatsoever to do with equity. We’ve got 40 million Americans who on any given day don’t have health insurance. Now that’s a social catastrophe. The same thing would happen in education. If you cut the schools loose from any kind of concern for equity, you could carve out schools that you could run for a profit. However, it would be at enormous social cost.

CW: Let’s talk about some of those social costs. Many parents in particular are attracted to privatized public schools, vouchers, charter schools, and the different private/public solutions. There is the sense that, ‘I want the opportunity as a low-income parent to get my kid out, the way affluent parents might have that opportunity.’ Do these different experiments—many of them corporate experiments—represent a real alternative, since you say they don’t address issues of equity?

AM: Well, they might represent an alternative for a handful of poor people in some circumstances. But they can never be a broadly based or widespread alternative for all parents. What we’ve created is a kind of lifeboat mentality, in which we’ve said, a quality education is a scarce commodity. Not everybody can get it. The best thing you can do is not operate collectively to change the tax structure, not operate as a community in order to improve the public schools, not divert resources that are necessary for the children. The best thing you can do as a parent is behave completely as an individual and try to beat out everybody else on your block. So if there is only one seat in a high-quality school available, your child will get it.

Now, that’s very alluring to poor parents who say the way it works in this country is that the affluent parents, like you, Professor Molnar, for example, can send your children to any school that you want, but we can’t. The problem, of course, is that I, Professor Molnar, if I had chosen to send my children to private school (which I did not), could have supplemented the tuition. Let’s say that I got a tax-supported voucher that was good for $4,000, but the tuition at the school that I wanted to send my child to was $7,500. My family could afford to do that. A poor family that got a voucher couldn’t afford to do that. So wherein do they have a choice?

CW: A moment ago you mentioned that it’s unclear whether anyone can make a profit at running the public schools. Do you think these companies are a flash in the pan? Will the market deal with them if they are unable to pay dividends to their investors in a few years and they’ll just vanish?

AM: Not necessarily. They could represent a kind of creeping failure. Chris Whittle was successful early in his career. He was at one time a co-owner of Esquire magazine and successfully turned it around. But since he launched Whittle Communications in the mid-1980s, Channel One has been his biggest and most successful enterprise. The Edison Project, and a number of site-based advertising vehicles he’s come up with, have all been losers. His investors included Phillips Electronics, Associated Newspaper Holdings, Time Warner, all of whom lost their shirts with Mr. Whittle. It is certainly possible again with the Edison Project. Right now, he’s able to pay the salaries of his staff and flacks around the country, primarily because he’s existing on venture capital. At some point those venture capitalists are going to want to see a profit.

It is possible that if this country continues its headlong rush away from any kind of idea of equity, Mr. Whittle might well be able to set up shop in some suburban communities and perhaps turn a profit. Although the paradox is that in those communities where the schools get a large enough grant, or the parents make enough money to subsidize a grant, people are generally very, very pleased with their public schools. They don’t actually want to send their children anywhere else.

CW: How do you go into poor communities, communities of color where people are saying, ‘It’s fine to talk about reforming the whole educational system, but I want to get my kid an education now?’

AM: The anguish of seeing one’s children that are in schools that could be better, but aren’t better, that’s a real issue that is hard to respond to. The problem is that 30 years ago people would have demanded a tax structure that isn’t so unjust. They would have demanded an allocation of resources that wasn’t so unjust. The would have demanded an investment in social institutions, such as the public schools, which benefit us all, instead of the parsing out of $12.50 to every taxpayer in a tax cut.

What’s lacking in conversations with people who are desperate to see that their children are well educated is hope that these sorts of policies can be changed. And that their participation could actually make that possible. The very folks that have the energy to seek out the schools, to observe teachers in the classrooms, to demand a higher-quality education for their children, those are the very people who should be in the forefront of promoting educational change for everybody. Those are the folks that we need to talk to, and that can be spoken to, if anybody cares to take the time to do it.

CW: Your book, Giving Kids The Business, has been called prophetic, looking at the trends in education and the right-wing think tanks and market gurus who have been influencing educational policy. Do you have any thoughts on where education is headed as we enter the new millennium?

AM: It will be impossible, in my view, to reverse the trend towards commercialism in schools, without understanding that there are cultural values that are driving this trend. We have a society that is dominated by the value of consumption culturally. We have a society that is dominated by metaphors of market, or buying and selling, economically and politically. The schools are institutions that are built on very different ideas. They are built on the ideas of democratic politics, the common welfare, human connectedness, and sharing a struggle to try and find truth and meaning in existence. These are all very different things than a culture in which commodities represent the ne plus ultra of social well being. To a certain extent the work of reversing the trend of commercialism in schools has to be part of a more general idea of thinking about whether or not our culture, as dominated by things as it is, is really healthy not only for children, but for adults as well.

This interview first appeared in Corporate Watch, as part of its feature “The Education Industry.”

Alex Molnar is author of Giving Kids the Business: The Commercialization of America’s Schools, published by Westview Press. He is also director of the Center for the Analysis of Commercialism in Education at the University of Wisconsin in Milwaukee, where he teaches.


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