Cutting corners to achieve maximum profit; manipulating data to hide product defects; outsourcing work; spending millions to lure in new customers and investors instead reinvesting to improve product performance; focusing more on creating the appearance of success rather than actually working to achieve it – all while lobbying the government to maintain the status quo rather than innovating to compete. While this might sound like business as usual for many of America’s biggest corporations, it is actually a prediction for the future of education in America if the large scale privatization of public schools that is already underway is allowed to continue. It is also the current standard operating procedure for many of South Korea’s largest private school companies known as hagwons.
The inevitable result of putting billions of dollars of taxpayer money up for grabs in America will be that huge companies will corporatize education. These education corporations will view students as dollar signs, treat education as a product to be marketed and consumed, value test scores like quarterly financial reports, and respond to parents as they would customers who are always right. The marrying of education with business practices and Wall Street ethics will lead to an educational system where profits come first and the bottom line trumps what is actually in the students’ best interest. This will result in the creation of a tiered education system, much like our university system, except the rich will now have their education subsidized at taxpayer expense while the poor attend schools in rented out office buildings that are the equivalent of the University of Phoenix, only at a primary school level.
For proof of this, one need look no further than South Korea which is often lauded by education leaders and even President Obama as a model for educational excellence. However, while its students are among the best in the world in math and science, they lag far behind in ESL (English as a second language) education despite spending an estimated 15 billion dollars a year on private, after-school ESL academies. The most of any country in the world. Even with the massive private educational industry that has developed over the past few decades to meet Koreans’ insatiable demand for English education, Korea recently ranked 19th out of 20 countries making a major effort to learn English, according to the British Council, a leading ESL organization. While many factors contribute to Korea’s poor showing, the business practices of large corporate ESL academies motivated by profit maximization are a significant factor.
For several years I worked in the curriculum research and development department for one of Korea’s largest ESL franchises, which has more than 20,000 students. I have seen the inferior education and the perverse incentives created when profit and education are mixed, and I firmly believe that the negative effects of large scale privatization that has already taken place in Korea will lead to similar results in the US if a profit motive is allowed to be introduced into our education system. I also believe that the advocates of privatizing education are promoting the policy on the basis of several faulty assumptions and without consideration for what the large scale privatization of education would look like.
Corporatization is Inevitable
Advocates for privatization in America have designed their policies based on faulty assumptions that ignore certain economic principles and common business practices that will cause many for-profit schools to, at the end of the day, fail students. Private schools, in and of themselves are not the problem. In their current form they often provide great education and do so with innovative and alternative methods of education that are not found in public schools. There is no doubt that the advocates of privatization and school vouchers have this vision in mind when supporting measures that would give parents the right to remove their child’s share of public funding from public schools and redirect it towards private schools. And this is their first faulty assumption: private schools will remain small and innovative.
If there is one thing that Korea shows us, it is that once a profit motive is allowed to enter the equation, schools, run by businessmen and potentially with investors and stockholders to consider, will seek ways to maximize profits. One of the quickest ways for them to do that is by increasing their size. The more students they have, the cheaper they will be able to educate them for as a per student cost. This is known in economics as the economy of scale, which essentially says that, as a per unit cost, it is cheaper to make 100 cupcakes than it is to make one cupcake because of things like bulk purchasing and spreading out sunk costs (being able to use the same baking tray more than once). To put it more simply, it will cost a school roughly the same to have 10 students in a class with one teacher as it will to have 12 students, but obviously having 12 paying students will result in more profits. And it goes without saying that the more classrooms a school can add just one or two more students to, the larger the profit increase for the school. As private schools increase their size in an effort to grab as much taxpayer money as they can, many small private schools will disappear and a few large corporations will emerge to take their place.
It is this principle of economics that has created several large ESL franchises in Korea, each with more than 20,000 students and multiple campuses throughout the country. In fact, many of Korea’s largest private school franchises started out as mom and pop operations that grew to a few campuses before being bought out by businessmen who grew them into large, publicly traded corporations. While ignoring the questions surrounding what is actually motivating would-be school owners to enter the education market in the first place, the idea of a large number of small private schools being created in the US by making a multi-billion dollar market for businessmen to get their hands on is very unrealistic.
Still, some might challenge this contention that corporatization is inevitable on the grounds that a voucher program sets a limit on the amount of money parents are given for education before having to go out of pocket. They will claim that the tuition at most private schools will, therefore, not exceed the voucher amount (and no school will charge less than the voucher amount since that’s not actually saving the parents any money). Therefore, they will argue, since most schools will be charging the same price, large schools won’t form because they will not be able to pass the cost savings on to parents, and won’t be able to drive smaller schools out of business by charging less for tuition. However, what a larger school will be able to offer – because of their lower cost of educating students – are things like free transportation, sports programs, after-school activates, and online services along with the ability to advertise that smaller schools just won’t be able to afford. These things – some of which are wholly unrelated to education – will attract parents to the larger schools and help facilitate the creation of corporatized education.
In fact, this is already playing out in America’s education system in several ways. A report by Reuters said there are now regular investment group meetings that are eyeing the potential profit to be made if America continues along its path of privatizing schools. “You start to see entire ecosystems of investment opportunity lining up,” said Rob Lytle, an education consultant and partner at The Parthenon Group, a Boston consulting firm. “It could get really, really big.” Along with this group is ALEC, one of the largest lobbying groups in America and a corporate front group which is currently going from state to state pushing bills that would put more taxpayer money up for grabs. Furthermore, signs of the coming corporatization can already be seen in states like Ohio where two companies run 9% of the taxpayer funded charter schools and get 38% of the government funding. Call me anti-capitalist, but this gives me the creeps and the idea that Wall St investors, DC lobbyist and corporations are getting involved with children’s education sends shivers down my spine.
SideBar: In Part II I explain why privatization will not level the playing field and will kill innovation. In Part III I’ll talk about how overvaluing test scores will and already is creating corruption and cheating scandals on par to the ones we commonly associate with big business. I’ll also explain how even well-intentioned parents will become a huge part of the problem.