National Public Education

Sam Walton, Charter Schools, and State Legislatures

In a recent Wall Street Journal article, Luisa Kroll writes about the success of Carrie Walton Penner, a grand-daughter of Sam Walton, at setting up successful charter schools throughout the country, such as the YES Prep North Central School in northern Houston, where the student body is 96% Hispanic and the school is ranked the fourth best in Texas.  The Walton family has contributed over $350 million to 1,600 charter schools throughout the country, mostly in poor urban areas.  All this is seen by the WSJ as “the future of education.”

There is no doubt that this school, and many like it, are doing better than the schools they replaced and so can, in some sense, be said to be improving American “education.” The question I want to raise, though, is whether they are improving American “public education,” and, if not, why exactly are we supporting them?

To answer these questions we have to go back and look at what we get out of public education in the first place.  There are two main reasons why we set up the pubic schools. The first is that they provide a public benefit to our society.  By making sure that everyone is educated up to a minimum level we lower the crime rate, increase productivity, produce good citizens, and help unify the country.  We all know that.

The second reason, though, is that we cannot afford a decent private-school education for everyone.  Private schools are paid for by parents, but parents of school-age children make up less than a third of the tax-paying population, so relying only on them to fund our schools would mean that the schools would be only about a third as good, overall. And no amount of private donations, even from the Waltons, could make up the difference.  The overall public school budget is in the hundreds of billions of dollars, much, much more than any donors can give.  The only way to fund such an expensive enterprise is to charge the non-parents as well as the parents.  This means having a public program.

So if charter schools and other privatization schemes are truly “the future of education,” it’s a pretty grim future: schools that are three-times worse, more crime, less productivity, and a generally less civilized society.

But, say the charter advocates, the general public will help fund these schools, too, since they will want to support the successful schools that charters provide.  As long as these private-like schools are producing good students, they say, the general public will open up their wallets.  We all benefit, the argument goes, from good schools, public or private, so we all will support the programs that produce these.

But this is not how support for education actually works.  We don’t support private programs simply because they produce good students.  There are plenty of good private schools out there, but that does not mean that I, or any other member of the public, regularly send them $100.  Yes, I benefit from them to some degree, but their own people, their own community, benefit much more than I do.  This means that I don’t get back a benefit at all comparable to my donation, since so much of it goes to these other people. So I have little incentive to support them.  It is not enough that a school produces good students; if they want public donations they also have to have a connection to that public. If they don’t, it will never make sense for the public to support them.

We support the public schools because they return to us a benefit exactly comparable to our support; we all share equally in the cost and the benefits of a public program.  They are “our” schools in many ways.  We set them up, we completely control the election of the officials who run them, and we all, by law, share equally in the benefits from them. There is an instrinsic logic to supporting them.

None of this is true about any private program.  There the logic of support only applies to those who are part of their own private community; for the rest of the public, support is a losing proposition.

So the argument that what the public wants is simply “good schools” is false.  What they want is the benefit from good schools, distributed fairly to those who support them. Charter schools can never provide this.  They are run by private programs, separate, as much as possible, from the dreaded public bureaucracy.  But that means that they are separate from us, too, the public supporters.  We don’t elect their leaders; we have no say over their operations.  They can never benefit us in the same way that traditional public programs can.

It’s interesting that the charter school concept is fully backed by the business world, but no corporate board would ever agree to give away part of its operation to an independent entity, perhaps writing a “charter” for this transfer of control, and so give up any chance to benefit from that part of their operation.

Would the Walton family themselves ever agree to let some other company run, say, their produce section, in the Walton’s buildings, using the Walton’s staff, but getting all the profit for themselves?  It wouldn’t be a question, then, of whether that entity could succeed, would it?  Of course they would succeed, given the good deal they had.  That’s not the point.  The point is that any Walmart executive who agreed to such a scheme would be fired, since he was wasting the Walton’s money, giving it away to someone else and getting little in return.

In the end, then, the problem is not just Carrie Walton Penner and  other donors; it is the people in charge of our public schools, the state legislatures.  They have taken the tax-dollars of their constituents and given these away to an entity that does not directly benefit those constituents.  That entity is providing a benefit to its own private program, so that even if it does provide some benefit to the general public, it does not do so to the degree that a truly public program would.  The states have turned away from trying to make the current program work; they are looking elsewhere for improvements.  But there is no “elsewhere” that will work for the schools.  The only solution is a fully public program, run by the elected representatives of the parents and non-parents and benefiting just them.

If private schools are such a good idea, let the Waltons and other donors fund real private schools. That would be fine, and would improve the overall level of education in the country.  That these corporate donors don’t do this shows that they have something else in mind other than simply improving education.  What that might be is hard to assess, but might well have something to do with access to the 50 million children who attend public schools and may someday shop at Walmart.

Peter Dodington

December 9, 2014



Janet Yellen on Public Education, Part II

Much as I like Janet Yellen’s comments on how our “subnational” public education program contributes to inequality in this country (see my previous blog), I have to point out some of the problems in her interpretation of the situation.  Her job, of course, is not to know everything about the details of educational reform, but, still, a few “words to the wise” might be appropriate.

It is not, also, that Ms Yellen is wrong about these matters, but rather that, at times, she is putting the emphasis on the wrong part of the problem.  If we truly want to improve the public schools, and so, as she says, help solve the problem of inequality, there are certain ways of approaching this issue that will produce results, and certain ways that probably will not.  I would like to discuss the differences between these two approaches.

Ms Yellen says, twice, that the variations in funding from state to state is an essential part of the problem.  She notes that both pre-school programs and K-12 funding vary widely from state to state, and that “this unevenness limits public education’s equalizing effect.”  But surely it is the level of funding that matters, not the variation.  It would be quite possible to have a high degree of variation between the various states or districts and still have excellent programs.  The private schools certainly vary a good deal between themselves yet still manage to produce an adequate level of funding for their schools.  It is not the variation, itself, that is the problem.

The system we use in this country, a decentralized state-run program, is supposed to vary from one state to the other.  That is supposedly why we like it.  Each state has the ability to raise its own funds and spend them as it sees fit.  Of course this may mean that some states end up with low levels of support for the poor, as Yellen notes, but we can hardly say that the variation itself caused the low support.

One often hears that “a student’s Zip Code ought not to determine their level of education,” or other similar critiques of a wide variation in levels of schooling.  True enough, but this is not where we should attack the problem.  Simply making all the states, or zip codes, similar will not necessarily make their schools better.  It’s the level of support that needs our attention, not the variation per se.

A second problem is her emphasis on the federal and the local programs, but not the proverbial elephant in the living room, the state programs.  This is an error that just about everybody makes when talking about public education.  Everyone wants to praise their own local schools, true enough, but we soon realize that these do not solve very well the larger problems concerning things like equality and productivity.  We don’t elect our local school board and superintenent to improve the economy and the level of equality.  But then the conversation invariably turns to the problems of having some national program come in and “run my school from Washington.”  We forget that it is the states that we have appointed to be the solution to problems like equality, and that they, not the local schools nor the Federal government, ought to be the ones we should be addressing on these matters.

Yellen notes, quite correctly, that the U.S. provides more resources to the rich than the poor in education, unlike the rest of the world, and that one of the causes of this is our local system of school funding through property taxes.  When almost half your funding comes from a tax that is directly related to the wealth of the citizens, obviously the wealthier communities are going to have more funding and better schools than the poorer communities.

But going after this part of the problem, I feel, is not the best strategy.  Local property taxes are in place because that is what the local communities want, and they are in charge of this part of the program.  It’s a local program, so should be run by the locals.  A better point of entry to this problem would be the other half of the funding for the schools: the funding from the states.

Local control, as in such things like local property taxes, can be a problem, but it also has to be part of the solution.   As Andreas Schleicher of the OECD has noted, all the best education systems in the world allow for a good deal of local control.  Countries like Finland clearly improved their education program by increasing the level of local control and decreasing the control by the centralized bureaucracy.  As Schleicher notes, the best programs combine strong local programs with efficient centralized oversight.

The problem in our country, then, is that even if we may have too much local control, the center of our problem is that we have too little, and, in fact, hardly any, “centralized oversight."  We leave this to the states, and they clearly are not doing it well.  Where we should start to work on our public education problems, then, are the states, not the local districts.

So instead of talking about how bad local property taxes are for issues like equality, we should be talking about how bad the state taxation programs are in this regard.  What are we getting from these?  Do they help in any way to solve the problems of inequality?  And could they?  Could an effective system of state taxation, no matter how well done, actually have much effect on the overall inequality in this country?  Would it help for Nebraska to solve its own educational inequality problems?  Is that ever going to work as a way to lessen inequality overall?  These are the questions we need to ask if we ever want to lessen inequality by improving the public schools.

Peter Dodington

Nov. 4, 2014



Janet Yellen on the Problems of “Subnational” Education

Janet Yellen, Chairman of the Federal Reserve, has come out, bless her heart, for something close to a national way to fund our public schools.  This is not quite the same as saying that she wants national public education, but it surely is gratifying to see her at least nod in that direction.  Her argument is that our current local and state system for funding public education is a contributing factor to the rise in inequality in the U.S.

In her speech on October 17th on inequality, Yellen notes that inequality is rapidly increasing, as everyone knows, and that one solution to this problem would be adequate and fair funding of public programs.  She devotes a sizable portion of her speech to the problems of low-income families with children, and specifically mentioned how the public school system could help them (All citations are from

For families with children in the lower half of the wealth distribution, she reports, median wealth fell from $13,000 in 2007 to $8,000 in 2013, adjusted for inflation; a drop of 40%.  These are incredible numbers for one of the wealthiest countries in the world.  Clearly there is a concentration of our inequality problem amoung low-income families with children.  And just as clearly, it is rapidly getting worse.

One thing we can do to slow the growth of this problem, she says, is to fairly fund public programs.  As Ms Yellen says, “For families below the top, public funding plays an important role in providing resouces to children that influence future levels of income and wealth.”  As I have been arguing all these years, it is the long-term public benefit, such as the future success and wealth of all the children, that is the reason we set up programs like public education in the first place.

Yellen then devotes several paragraphs to the problems of our public education system. She starts off by saying that “[t]he United States is one of the few advanced economies in which public education spending is often lower for students in lower-income households than for students in higher-income households,” quoting a 2013 OECD report.  In most countries government school spending on low-income children is higher than it is for wealthy children, since they need more resources.

She then goes on to note that the “major reason” for this in the U.S. is the way we fund our public education programs.  The problem is, she says, that the United States is “one of the few advanced nations that funds primary and secondary public education mainly through subnational taxation.”  By relying on property taxes and other forms of “subnational” taxation, which must mean local and state taxes, we enhance (her word) rather than lessen the problem of inequality.  It stands to reason that if our school funding is linked to the property and wealth of families, then the better schools are always going to be available to the wealthier communities, and the wealthy families in them, and the worse schools for the low-income families.  In other words, having local and state taxation rather than a national system is one of the major causes of unequal public funding of our schools.

That word “subnational” is as close as Yellen (or anyone else these days) will come to an open criticism of our state-run school system, but I’ll take it.  At least she, a high public official, sees that there is a problem in the overall way we have set up our public school funding, and that the core of the problem is in our “subnational,” state-run, decentralized system.  She can’t quite name this problem directly, since this would bring down on her a storm of criticism, but she clearly realizes the nature of the problem.  It gives me hope that we might actually be able to at least start working on this issue some day.

Peter Dodington

October 29, 2014



Two Economists on Public Education

Economists often see clearly the core reasons why we have to do certain things, but unfortunately few people read what they have to say.  Also, the economists themselves tend to shy away from controversial topics, like who should be in charge of public education, so do not press their ideas to the logical conclusions.  The ideas, though, are there for all to see.  Let me just briefly review some of the major ideas of some economists on public education.

Gary Becker

In his seminal work  Human Capital, Becker noted back in 1964 that for any organization, public or private, “the incentive to expand and improve . . . depends on the rate of return expected”  (p. 85 of the 3rd Edition, U of Chicago Press, 1993).   For public education, that rate of return, for the general taxpayer, not just the parents, has to be the public benefit they get from it; the increases in productivity, unity, civility, health, etc. of our society.  As Becker says, we are not going to be able to improve such a program until we find a way to give the people in charge, that is, for public education, ultimately, the public, an incentive to improve the program, and that this can only come from a demonstration that they are getting some “return” from their taxes, some public benefit.

Becker does discuss public education directly in this book, but, as is the case with many, he is pretty pessimistic about what can be done about it.  At the end of the book, he explains why he took up this topic of human capital in the first place, and says that “probably the most important application . . . is to show how education affects economic growth”  (p. 250).   But, he says, to do this we would have to know much more about what he calls the “external effects” of education, which, as he explains elsewhere, are the long-term effects beyond those just to the children and parents, or, as I would say, the public benefits from it.   However, a thorough analysis of these external public benefits, he says, is “work that, I fear, will be rather slow in coming” (p.250).

In other words, he knows what matters for the improvement of public education; it is the incentive that the people have to improve it, as in any organization.  Supplying that incentive in  public education would do such important things as improve our economic growth.  But currently we have no way to do that, since we have no good way to measure these external or public benefits we get from it.  We don’t know, for example, whether a certain amount of good education will always produce a certain amount of, say, economic growth, or crime reduction.  We can see the direct benefits to the families involved, but not the long-term benefits to society in general.  And furthermore, as he says, we do not seem to realize that this is a problem, and so are not working on it.

This is where he leaves it, but I, of course, would take his argument one step further, and ask why it is that we cannot measure these external effects.  The only answer I can come up with is that the states are incapable of tracking these benefits, since they generally occur outside of their own state, and so we need a national system of public education.

I want to point out, too, that Becker’s comments on the need for all organizations to provide a “return” is a crucial point in the discussion of public education.  We, the public, own this organization; we pay for its existence.  If we want to improve it, we have to have some way to see how we benefit from it.  If we cannot see that, of course it will just poke along at the status quo, at best.

Milton Friedman

I get such a kick out of quoting Mr Friedman on these public education issues, since he is so much “the enemy:”  one of the founders of the view that we should have far less government involvement in public education, and certainly not any “federal interference,” as he would call it.  He was one of the leading proponents of “choice” in education, back in the ‘60’s, which led to vouchers, charter schools, home schooling, and the whole privatization, anti-government, libertarian movement in public education.

But, he was a very smart man, and fully realized that there are rational reasons why education has to have a governmental component, and that these reasons center around the public benefits from it.  In his famous libertarian work, Capitalism and Freedom, he lays out these ideas quite clearly at the start of his chapter on education, but then, as I pointed out in an earlier blog, ignores these in his later comments on the need for “choice” and privatization.  He says:

[G]overnment intervention into education can be rationalized on . . . the existence of substantial “neighborhood effects”. . . .

The gain from the education of a child accrues not only to the child or his parents but also to the other members of the society.  The education of my child contributes to your welfare by promoting a stable and democratic society.  It is not feasible to identify the particular individuals (or families) benefitted and so to charge for the services rendered. There is therefore a significant “neighborhood effect” (U. of Chicago Pr, 1962/2002, p. 86).

Here Friedman is pointing out how education differs from a traditional market transaction.  When you pay for your education, you expect to get a certain amount of benefit for your money.  What happens, though, is that the education also benefits numerous other people at the same time, those in the neighborhood, so to speak, by providing such things as a stable and democratic society.  When this happens, there is now a discrepancy between the amount you have paid for the education and the true amount of benefit being generated.  To make this market work fairly and efficiently, you need to make these costs and benefits equal, so need also to charge the general public, the ones who are getting the benefits of those neighborhood effects.  This can only be done through a government program, since taxes are the means we have to charge the general public for something.  As you can see, these neighborhood effects are the same as Becker’s externalities, or what I call public benefits.

So even Mr Friedman, as anti-government as one could be, admits that there are logical, “rational” reasons to run public schools through a government program, and that such a public, governmental program will actually not work unless you tax the public and make them pay for the public benefits they are getting, regardless of whether they are parents or not.  This is, of course, at the core of my argument for a national school program.  My whole point is that the states are incapable of taxing the public correctly for the schools, since they have no way to calculate these “neighborhood effects” from the schools.  For the states, the “neighborhood effects” occur outside their “neighborhood,” that is, in the other states to which their graduates have moved.  Hence our state-run system cannot ever work correctly.

All this may seem a long way around the barn to get to some fairly simple ideas, but it is important to remember that the core rationale for a national school system has been discussed in the past, and by very intelligent and successful people.  There are valid, solid reasons to change to a national system.

Peter Dodington

October 14, 2014



What Dr. Peterson Gets Right, and Wrong

I have always admired the work of Paul E. Peterson.  He is a thorough, conscientious researcher who takes seriously the core issues of funding and reform in public education. He knows a lot about the field and is not shy about letting us know what he has figured out.  All the more reason, then, to point out the parts of the school system he has not figured out.  He is so close to a solution that would actually improve the schools throughout the country that I really want him to “drill down” (his term, and a good one) just a bit more.  Much of what follows is a response to his 9/21/14 article in the Wall Street Journal: “How the Education Spendthrifts Get Away With It.”

What Peterson knows is that funding is the key to school improvement.  This, in itself, puts him two or three steps ahead of most commentators, who seem to feel that newer, better, and stronger educational programs can be produced out of thin air.  In spite of its title, his WSJ article is not about money wasted, but rather the “cloud of confusion and inconsistency” that surrounds educational funding.  He knows that money does matter, so wants to find out why we are unable to figure out how to spend it correctly on public education.
In the article he points out that most Americans want to spend more on public education, but that when they are reminded that this will raise taxes, the percentage in favor drops precipitously.  He then goes on to report on how the public also overvalues their local schools compared to other schools in general.  He attributes this to a general confusion about how the public schools are funded, and speculates that the public suffers from a kind of “buyer’s delight,” which gives them the impression that the education they have purchased is automatically better than that which others have purchased.

But if this is so, why doesn’t the public have the same problem with other public programs?  Why don’t they automatically feel that they have the best police force, or the best public hospital?  There must be some particular problem with public education that is causing this confusion.  That is what I would like to examine.  Let’s take the first problem first; why is it that we have trouble understanding that educational improvements have to be paid for by new taxes?
It cannot be that Americans in general don’t understand that better social services cost money.  Everyone knows that a new fire truck will be expensive, or that well-trained, effective policemen don’t work for peanuts.  Nor are they unwilling, in certain situations, to support their local schools effectively.  A resident from the New Jersey suburb where I grew up, where the high school usually ranks in the top 50 schools in the country, recently told me that she pays a property tax that is close to 6 figures, per year, in order to live there and send their kids to that school.  So it is not the residents of the high-end suburbs that have this funding misunderstanding, but the average, overall population.  Why is that?

The answer is simple: people pay for results they can see.  The fire truck, the well-trained police officer, and that high-end school all produce results that a taxpayer can see with his or her own eyes.  The benefits are obvious, so there’s a good reason to fund the program with higher taxes.
But why, then, don’t the average taxpayers want to pay more for these benefits?  Because they cannot see these.  We have a problem with the demonstration of the public benefit from public education in this country.  This is what Peterson doesn’t know, or at least does not want to talk about.
The key concept here is that there is a difference between why parents fund the schools and why everybody else does.  Parents get an immediate benefit from the quality of their school, and a long-term benefit, too, from the success of their child.  This benefit they can readily see and understand.

The non-parent taxpayers, though, who actually account for three-quarters of the support for the schools, overall, (since parents only make up about a quarter of the population) get just a long term benefit from public education, namely the general increases in productivity, civility, good health, unity, etc. for our country.  A non-parent is not paying for good students, he or she is paying for good graduates; the good adults who eventually will know how to solve an insurance problem, run a business, or understand that you might want to sleep after 11 p.m. on a weekday.
The problem is that the non-parents have no way to see how their contributions to the schools, at either the local or state level, are contributing to this benefit.  There is no data on this kind of outcome.  No one keeps track of how the schools lower crime or raise the GDP.  Yet surely they schools do, there is no doubt about this.  The problem is that this is not demonstrated to the general non-parent public.
Without this kind of information, the general public has to treat the schools as a kind of charity.  They may like the idea of supporting something that they sense is beneficial to them, but in the absence of any hard data on actually how this happens, they are not going to open up their wallets.  It’s not that they are confused, as Peterson argues; they are the ones who have thought it through and realized that it is not, apparently, in their interest to support improvements to the schools, since they will never see any results from this.
This is why school funding only works in the high-end suburbs.  There are no non-parents there.  The entire population is usually just parents. They can see how they directly benefit so have no trouble with the costs.  Our current system, then, works for that kind of a school program, but obviously cannot work in general, since the three-quarters of the population who are non-parents has to live somewhere.  The average, overall population has to be full of non-parents.  Since they cannot see how they benefit from the schools, they will always tend to balk at higher taxes.
This is why, too, the public has such a biased focus on their local schools.  As Peterson reports, they overvalue their own school by a factor of two.  This is simply because they don’t get any information about the success of other schools.  That is, success that matters to them, such as less crime or a better economy.  At their local school they can see that at least someone is benefitting, namely the local parents whom they know and care about, but cannot see anything about who is benefitting from a distant school.  It’s not some kind of “buyer’s delight” that gives them this impression, as Peterson posits, but a simple result from the way we have structured our school system.  For those other schools they are, by definition, non-parents, and we don’t have any good way to demonstrate the public benefit to non-parents.

But, you will say, my local school cannot track that kind of public benefit; the graduates move all over the country.  A reunion from my little suburban high school brings adults from 20 or 30 different states.  Quite so; this is not a task for the local school.  Other countries do it by having a national school system that can keep track of such matters.  In our country, though, we have given that job to the states, since that is the way we interpret our constitution.
But clearly the states can’t do this much better than the local schools.  Of those graduates at my reunion less than half were still living in New Jersey.  This is a double problem for the states.  Not only do they not have a simple way to track these out-of-state graduates, but they don’t want to track them, since the benefits those graduates are providing is mostly going to out-of-state residents, not the residents of the state which paid for their education.  Tracking them would just emphasize how much their own state taxpayers were losing by funding good schools.  The better the schools, they more they lose by the out-of-state migration of the graduates.  So the states leave the whole topic alone. Hence, no tracking of graduates, no demonstration of public benefit, and no incentives for the non-parents to fund good school.

There is no solution to this problem through better individual schools, better teachers, or a national curriculum, let alone such ideas as vouchers or charters.  It is a structural problem built in to the fabric of our state-run system.  The only solution is to join the rest of the world and set up a national school system, not a state-run one.  Then all these “confusions” would get cleared up and we could start improving the schools.

Peter Dodington