Tuesday, February 04, 2014

Do “The Rules Matter”?

The proposal from Senators Lamar Alexander and Tim Scott — offered during “National School Choice Week” — for turning nearly half of the federal K-12 spending into school vouchers was notable for its explicit embrace of assumptions that the GOP had often been hesitant to discuss.  When offering their plans at the American Enterprise Institute, the lawmakers talked of education “monopolies” harming the prospects for students, the (questionable) relative advantages of private education, and the benefits of competition and — remarkably — “vouchers” in providing enhanced educational opportunity.

Of course, vouchers are not a new idea in Republican ranks.  But the explicit use of the term is unusual, having been all but banished from the GOP vocabulary on the advice of master message manufacturer Frank Luntz, who had advised Republicans to use terms like “opportunity scholarship” instead, since “vouchers” polled so poorly with his focus groups.  So kudos to the Senators for calling their proposal what it actually is. 

But perhaps more important than the truthfulness in advertising is the uncovering of the market-oriented assumptions that are advanced in this proposal, as well as in several other recent discussions of “incentivist” policies to expand choice.  In these discussions, policy-shapers exhibit amazing confidence that they can formulate the details of policies such as school choice in ways that lead to desired outcomes.

In the voucher proposal, policymakers assume that handing poor children $2,100 will induce private schools to open up more opportunities for them.  Similarly, when the US Department of Education issued new guidelines last week allowing charter schools to use weighted student lotteries in admissions, it is with the anticipation that many charter schools will then give preferences to disadvantaged students.  Likewise, a recent argument among school choice proponents revolved around the appropriateness of measuring voucher schools by test scores (as they are quite happy to do with public schools), since some are concerned that this might cause innovative independent schools to narrow their curriculum. 

Arguments over such policy specifics highlight the perceived importance of program details: the “rules” matter, as policy wonks and researchers like to suggest.  This assumption reflects a faith that choice policies can be fine-tuned to produce desired outcomes. 

This perspective is nicely spelled out by advocates and analysts.  For instance, choice scholar Terry Moe has argued that stronger incentives can be used to promote policy outcomes such as achievement and efficiency, since the right incentive structures can be leveraged to encourage organizations or individuals to pursue that outcome.   While advancing from a somewhat different perspective, Richard Kahlenberg sees similar possibilities for equity and integration through highly regulated choice mechanisms.  For these approaches, it’s simply a matter of crafting the right policies, incentives, and regulations (for some, as few as possible) to both encourage self-interested pursuit of these socially desired goals, and limit the excesses of choice and competition.

Thus, it’s not surprising to see school choice advocates debating arcane policy specifics, such as admissions policies, testing requirements, or other regulatory requirements, since they believe that the devil is in the details, and those details matter immensely.

But do the rules really matter?  Maybe not so much.

Placing limits on the pursuit of self-interest does not negate the force of competitive incentives.  Market-oriented reformers are correct about the power of human creativity, but forget that their policies also incentivize organizations and individuals to find creative ways around the regulations in which policymakers place so much faith. 

Certainly, the creative but destructive impulses of Wall Street are a good reminder of the inherent limitations of government regulation to rein in the excessive pursuit of self-interest that has caused so much harm to so many.  The same is true in the emerging education markets created by school choice and deregulation, where individuals, schools, charter chains, school managers, and many others find ways around the rules meant to promote equity in order to give themselves individual advantages. 

For instance, we know that charter schools in New York have been systematically ridding themselves of lower-performing, more costly or difficult-to-educate students who might diminish a school’s market position, despite regulations meant to ensure equitable access for all students to these “public” schools.  Scandals in Milwaukee’s voucher program show the limitations of education policy specifics in policing profit-seeking behaviors, and law enforcement has had to step in when school management gets too self-interested.  Our work in New Zealand’s more developed school market shows many of the self-managing “public” or state schools drawing their own boundaries in ways that exclude minority and disadvantaged student.  And these examples only focus on who is being served, and do not include the multiple examples of fraud and nepotism we have seen when self-interest is leveraged in the burgeoning charter school market. 

Choice and competition can indeed be powerful forces for incentivizing creativity — sometimes towards socially desirable ends, and sometimes, not so much.  But the faith that policymakers place in the invisible hand of the market for education, even when guided by their carefully thought-out regulations, may not be enough to protect children from the blunt impact of market forces.  As the tiger of competition is unleashed in education, it’s not at all clear that holding its tail is a sufficient assurance of safety.

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