The Education Market

The Wall Street Journal discusses the problems that the Harlem Day Charter School has had. Unlike many charter schools, it has lagging student test scores compared the population from which it draws.

Its charter is up for renewal this year, and the school's Chairman of the Board admits it won't be renewed due to their failures. Instead, the school has proposed that another successful charter school organization, Democracy Prep Public Schools, take over the school and have the charter renewed under their leadership.

While defenders of the status quo in education will use Harlem Day's failures as evidence against charter schools - notwithstanding the strong overall performance of charter schools - in fact their failure and resulting risk of being closed demonstrates another advantage charter schools have over regular public schools: they can be closed for failure due to the need to have their charter renewed every five years.

If public schools faced such a fate, they would be motivated to take even radical steps to avoid closure - and there are few things more radical than Harlem Day's proposal for its administration to be replaced by a new organization.

The result would be improved education for children in failing schools.

Believe It or Not

The government at all levels is being overwhelmed by its compensation practices. Staggering pension and healthcare liabilities, if unchecked, will bankrupt either the economy or government budgets. Paying above market wages and benefits raise taxes and reduce funds for other government services.

The Wall Street Journal reports that New York City pays $100 million to teachers who were laid off due to their school being closed. Moreover, 59% hadn't applied for school openings nor attended teacher job fairs.

If we pay people for not working, don't be surprised when they don't work.

Healthcare, Lombardy-style

This Wall Street Journal article discusses the impact of private sector competition on the quality of healthcare in the Lombardy region of Italy.

Italy has a national healthcare system, including long waiting lists for critical care typical of socialized medicine. In 1997, the government decentralized authority to the various Italian regions to allow them to innovate. In Lombardy, the government encouraged private sector hospitals to compete with the public ones, who previously received all of the government funding.

The result? Healthcare quality has increased, while costs have been contained, in Lombardy relative to the rest of Italy. The Wall Street Journal quotes a local surgeon: "Up to 10 years ago my patients had to wait months for heart surgery. Now, in Lombardy, it can be done almost immediately, in both state-run and private hospitals."

The last point, about state-run and private hospitals both not having wait lists, deserves particular attention, because it highlights an often-poorly understand aspect of the free market. The competition and innovation that a private enterprise introduces into the market forces the government-owned enterprise to improve its operations - otherwise patients and customers will flee the government-owned facility for the private one.

This is critical to hospitals (85% of the hospitals in the U.S. are not-for-profits but the for-profit ones provide critical innovation and competition to keep the not-for-profit ones operating efficiently); and insurance (where studies have shown that the for-profit insurers drive innovation in the market that the mutual or not-for-profit insurers then emulate to maintain their competitiveness).

And it would be true in public education if a robust voucher system was implemented, where truly competitive education markets would improve the quality of public schools as they would be forced to be competitive with charter or private schools.

Obama's healthcare reform (and for that matter his efforts on education) are a giant step in the wrong direction. Obama is unleashing the power of government, and controlling private actors, in his healthcare plan. Quality of patient care will suffer.

This Could be Good

New Jersey's new Republican governor, Chris Christie, won his primary contest last spring as the moderate candidate, with many conservative/libertarians concerned that he was weak on limited government issues.

Christie took office recently, and if his words can be matched by deeds, which will be challenging in a state with the legislature controlled by Democrats, he may end up being much more effective than he appeared on during the campaign.

Christie has ruled out tax increases to balance New Jersey's large budget deficit, which is impressive since tax increases have been the solution du jour for state Democrats to tackle deficits.

But just as impressive is Christie's attitude toward education reform. New Jersey has one of the nation's highest per capita spending per student in public schools, which has been one of the factors leading to sky high taxes, and has been resistant to promoting educational choice. Christie has appointed Bret Shundler, the former Jersey City mayor and gubernatorial candidate with a strong track record of promoting educational reform, as his state education commissioner.

But best of all is Christie's response to the question as to whether his appointment of Shundler sends a message to the powerful teacher's union, the New Jersey Education Association (NJEA). Christie replied: "I don't think the appointment of Bret Shundler sends any signal to the NJEA. The election of Chris Christie sends a message to the NJEA."

Three Cheers for Michelle Rhee

Michelle Rhee is the chancellor of the Washington, DC public schools. She was hired in 2007 to shake up one of the worst educational systems in the country despite spending more than most, about $14,000 per student annually.

Rhee created a firestorm with the DC teachers union by firing 266 teachers in September based on quality, and not on seniority.

That which is normal course for many organizations is, however, a crisis for the American Federation of Teachers. The AFT is one of the two main teachers unions in the country, and it is battling Rhee out of fear this example of sound management could spread to other school districts in the country.

Rhee has also tried to create a performance-based compensation culture for the DC schools, where teachers can opt out of tenure-based job protections in return for being able to earn significantly more money. As example, first year teachers could earn up to $78,000 a year, as compared currently to $45,000, while experienced teachers could earn up to $131,000, or double their pay. The union rejected the plan as a threat tenure.

Rhee is a courageous and determined women, fighting to make common sense reforms in education. She deserves our admiration and good wishes.

Obama's Choice

William McGurn of the Wall Street Journal reports on what ought to be a major news story. Congressional Democrats are working to end the Washington, DC school voucher program, a program which is supported by the head of the DC school system.

Two of the program's beneficiaries go to the same private school that Barack Obama's daughter attend, and they may not be able to attend the school without the voucher (unless of course the school or a donor "solves" the political problem by making up the funding provided by the voucher).

So will Obama stand up to the teachers' unions to insist the bill preserve the voucher program? Or will he demonstrate to everyone, including his own children, that quality education is less important than satisfying a key Democratic constituency?

Spending Blow Out Continues

Congressional Democrats are demonstrating just how much budget discipline Barack Obama really expects. The House passed a $410 billion spending bill, an 8.7% increase over the previous year. Future spending bills will now grow from this new, higher base. This is on top of the "stimulus" bill's spending spree.

Moreover, the bill includes additional support for key Democratic constituencies. The bill phases out school vouchers used in the atrocious Washington, DC school system. No doubt the teachers' unions are quite pleased their support for Democrats has been rewarded again.

It would be encouraging if Barack Obama threatened to veto the bill unless the voucher program is restored. Don't count on it.