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Privatizing Education

Michael Perelman teaches economics at California State University at Chico and is the author of fifteen books, including Manufacturing Discontent: The Trap of Individualism in Corporate Society (Pluto Press, 2005) and Railroading Economics: The Creation of the Free Market Mythology (Monthly Review Press, 2006). This essay is from his forthcoming Fouling the Nest: How Right-Wing Extremism and Business Incompetence Destroy American Prosperity.

Education is an essential part of modern economic progress, yet in recent decades, the right wing has consistently been unfriendly to public education. For example, the Walton family’s donation of $20 billion to help conservative causes was weighted toward the privatization of public education. The right wing expresses a number of objections to public education. Some religious conservatives protest that public education collides with their most cherished theological beliefs. The most public examples are sex education and the gap between the scientific explanation of evolution and a fundamentalist religious belief about God’s creation of the world.

The financial community looked forward to the establishment of educational maintenance organizations, so named to suggest that profit oriented schools would prosper in an education market, much like the health maintenance organizations (HMOs) that have taken over much of the medical care in the United States. Given the abominable reputation of the HMOs, the publicists for privatized education, with their eyes on skeptical public opinion, strategically renamed the educational maintenance organizations as educational management organizations.

Public education made an equally inviting target for politicians, who enthusiastically scored points with their constituents by expressing deep concern for the children left behind. The same business and political leaders who cynically decry the sorry state of public education are largely responsible for the problem that they now call upon private education to solve. They callously starved public education of needed support. Some continue to do so with glee.

Because schools that serve blacks tend to be substantially inferior to schools that serve affluent whites, many blacks have understandably lost faith in the public school system. The appeal to some blacks of the privatization of education is understandable. Although segregation is unconstitutional in the United States, it remains embarrassingly common in schools. This separation is more economic than racial, but black populations tend to be concentrated in poor areas. Public schools largely depend upon local property taxation. Because schools that serve the poor are generally located in areas with low property values, poor children rarely get the same educational opportunities as children from more affluent families.1

For example, in 1989, Chicago spent some $5,500 for each student in its secondary schools, compared to some $8,500 to $9,000 for each high school student in the highest spending suburbs to the north. In New York during 1986–87, funding per student was $11,300 in the upper-middle-class Long Island suburbs of Manhasset, Jericho, and Great Neck; $6,400 in the largely working-class suburb of Mount Vernon; and $5,600 in the high-minority New York City public schools. Three years later, the figures were $15,000, $9,000, and $7,300 respectively. Although the proportionate change was equal, the absolute changes favored the already rich districts.2

Even if poor, urban schools within a particular school district were to receive nearly equal funding, they still must spend their resources differently. Schools that service poor students have more need for special education, counseling, security, and so on. To make matters worse, because teaching in poor schools is frequently more challenging than teaching in more affluent settings, many more experienced teachers prefer to teach in suburban schools, leaving impoverished schools with a greater proportion of less qualified instructors. For example, teachers in schools with a large share of minority students are less likely to have a master’s degree. Higher salaries could attract more qualified teachers to those schools, but such funding is nowhere on the horizon.3

Suburban schools are generally newer, while inner city and, to a lesser extent, rural schools are often in a state of disrepair. As a result, the poorer school districts face higher costs of operating their physical plant than the more affluent suburban schools. For example, a General Accounting Office report to Congress noted that “one third of the nation’s 80,000 public schools are in such poor repair that the fourteen million children who attend them are being housed in unsuitable or unsafe conditions.”4 Jonathan Kozol described a rather extreme instance: the Martin Luther King Junior High School in East St. Louis, Illinois, where sewage repeatedly backed up into the school, including the food preparation area.5

In California, a state often equated with perpetual prosperity, many students have appallingly limited educational opportunities. The American Civil Liberties Union filed a suit, Williams et al. v. State of California (1999), which charged:

Many students lack textbooks of any kind. Other students must rely on illegible or incomplete photocopies provided by teachers when and if teachers have time and the individual resources to make the copies….Sometimes three or four students to a book with no opportunity to take the book home and study for homework….Sometimes as few as 13 percent of the teachers have full non-emergency teaching credentials….Some California public schools…simply do not provide enough basic supplies, such as pencils, crayons, paper, and scissors.

These educational inequalities are inexcusable. Rather than immediately addressing these inequities, for years the state wasted scarce resources in fighting the suit.

The children of the poor lack virtually every conceivable advantage over and above those already mentioned. Poor children are more likely to grow up amidst greater family tensions, have poorer nutrition, and suffer from serious health problems, including lead poisoning, which affects mental abilities.6 Their connections and their role models all fall well short of those of the well-to-do. Where children grow up with the disadvantages of poverty, go to impoverished schools, and get virtually no feedback, they are unlikely to develop the sort of skills that legal market forces will reward. Obviously, conventional roads to success are unlikely to be open to them.

A simple psychological experiment illustrates the deep inequities built into the educational system. A pair of psychologists gave teachers the results of a test that supposedly predicted which students would be “late bloomers.” The test proved remarkably accurate, except that there was no test at all. Instead, the psychologists just chose students at random. The teachers’ acceptance of these results strongly affected the way they treated their students. The students, in turn, responded positively, and this helped lead to educational success, except for the majority of students who were not predicted to succeed.7

Class background creates something analogous to the fictitious test that purported to measure children’s ability to improve in the near future. Teachers immediately recognize the stigmas of lower-class life in their students, especially if the children entrusted to their care are not white. Teachers have little reason to expect such children to succeed. After all, relatively few of such children have succeeded in the past. The children, in turn, are likely to perform according to the teachers’ low expectations, confirming what the teachers believed all along.

Even the successes, such as those resulting from the “late bloomer” experiment, may only be temporary. Herbert Kohl’s heart wrenching book, 36 Children, tells the story of how a gifted teacher recognized students’ potential and inspired them to excel. The rest of the educational system then worked to snuff out the children’s earlier successes, possibly making them worse off than if they had been consigned to failure all along.8

Critics of public education ignore the lost potential of young people destroyed by such inequities; instead they berate the educational system for bloated administrative structures that do little to promote education. They never mention that a never ending flow of mandates accounts for a good part of this administrative bureaucracy.

For example, the cynically named No Child Left Behind Act requires that schools spend inordinate amounts of money for testing. The estimated annual direct costs of testing are $400 million.9 Because of the penalties that schools face for poor test performance, school systems have little choice but to spend even more money for services that are supposed to improve test results. The money spent on these tests of dubious value could easily be spent on more productive activities.

However, from another perspective, this diversion of funds into nonproductive channels is welcome. By deflecting schools from education, the emphasis on testing undermines public education and further fuels those calling for outright privatization.

Given the disastrous conditions of public education for the poor, conservatives piously call for the privatization of education without any suggestion that once they have achieved their goal they would follow up their victory with tax increases sufficient to give the new system a chance to work. Instead, these politicians pretend that the imagined savings supposedly made possible by the supreme managerial efficiency of private business will be more than enough to finance the improvement of education—a promise similar to those once made by advocates of health maintenance organizations.

Other promoters of privatized education relish a tactical opportunity to create a divide between blacks and teachers’ unions, whose members reliably vote Democratic. In an answer to the question: “What do you look for in an issue to go after or to recommend to the Republican Party to pursue?” Grover Norquist, head of Americans for Tax Reform and one of the most influential Republican strategists in Washington, responded:

Does it divide the left? School choice reaches right into the heart of the Democratic coalition and takes people out of it. It divides the left because the teachers’ unions are on one side and all the parents of poor children are on the other and it makes Bill Clinton choose between poor parents and teachers’ unions.10

Barbara Miner cited a number of other right-wing leaders and organizations who echoed Norquist’s sentiments, including Terry Moe, a senior fellow at the conservative Hoover Institution and coauthor of the book, Politics, Markets, and America’s Schools:

[The issue comes down to] a matter of power….[The National Educational Association and American Federation of Teachers] have a lot of money for campaign contributions and for lobbying….They also have a lot of electoral clout because they have many activists out in the trenches in every political district….No other group can claim this kind of geographically uniform political activity. They are everywhere. [School vouchers are a way to diminish that power.] School choice allows children and money to leave the system, and that means there will be fewer public teacher jobs, lower union membership, and lower dues.11

Not surprisingly, “conservative foundations that also support taxpayer funded vouchers for private school students and charter schools operated independently of traditional school district supervision” have begun to fund rival teacher’s organizations, such as the Alabama Conference of Educators.12

Supporters of the privatization of education insist that school vouchers that allow students to purchase education in the free market will eliminate the inequities in education. However, if the right-wing gambit to finance education through vouchers succeeds, the debate will quickly shift. The first step will be to make vouchers means tested, meaning that people earning above a certain income will no longer be eligible. In the process, education will become redefined as an entitlement, like other welfare programs. Programs for the poor inevitably become poor programs. Soon, taxpayers will protest having to subsidize the undeserving; they will demand that schools eliminate their “frills.” The outcome will be that the politicians will relieve the rich of much of the tax obligation of supporting education, while the poor will see their educational opportunities degrade even further.

Privatization will add to the profits of corporations that fund the conservative initiatives, while, as Grover Norquist and Terry Moe have noted, dividing those who suffer most under the current system from the teachers’ unions. Teachers’ unions oppose privatization of education on several grounds. They question that the state will be able to monitor and control the quality of private education. Private providers will have the advantage of being able to cherry pick by excluding difficult students or students with special needs. Because public education will have to service most of the physically and emotionally disabled students, they will have difficulty matching the results of the private providers, unless the latter prove to be absolutely incompetent. Finally, even though schoolteachers are already underpaid, private providers will be freed from union contracts and will be able to make employment conditions much less favorable. For service workers, such as custodians, the switch to private employers will be even harsher.

When teachers’ unions highlight how teachers will suffer economically with these changes, the right wing portrays teachers as just another special interest group, who put their own selfish needs ahead of those of the poor, especially black, students in their care. Teachers, of course, bear little responsibility for the inequities of the public school system, but the right wing has been very effective in painting teachers’ unions as public enemies. The rhetoric has become so heated that on February 23, 2004, Secretary of Education Rod Paige actually went so far as to call the teachers’ National Education Association a “terrorist organization.”

Lost in these debates is the sad fact that no major political party seems ready to come to the aid of public education, which has long been a mainstay of the U.S. economy. The economic effects of privatization will not be felt immediately. Over time, however, as a larger share of the workforce suffers the handicap of inferior education, the negative effect on all aspects of society will be unmistakable.


  1. Martin Carnoy, Faded Dreams: The Politics and Economics of Race in America (New York: Cambridge University Press, 1994).
  2. Jonathan Kozol, Savage Inequalities: Children in America’s Schools (New York: Crown, 1991).
  3. Gerald Bracey, “The Eighth Bracey Report on the Condition of Public Education.” Phi Delta Kappan 80, no. 2 (October 1998): 112–20.
  4. United States General Accounting Office, School Facilities: America’s Schools Report Differing Conditions, GAO/HEHS-96-103 (Washington, D.C.: USGPO, 1996).
  5. Jonathan Kozol, Savage Inequalities: Children in America’s Schools (New York: Crown, 1991).
  6. See Gaudio Weiss, Andrea Del, John W. Fantuzzo, “Multivariate Impact of Health and Caretaking Risk Factors on the School Adjustment of First Graders,” Journal of Community Psychology 29, no. 2 (March 2001): 141–61.
  7. Robert Rosenthal, “Interpersonal Expectancy Affects: A 30-Year Perspective.” Current Directions in Psychological Science 3 (2002): 176–79.
  8. Herbert Kohl, 36 Children (New York: New American Library, 1967).
  9. Tiffany Danitz, “States Pay $400 Million For Tests In 2001,”, (February 27, 2001),


  10. John Berlau, “Grover Norquist Takes on the Tyranny of Federal Taxation,” Insight (January 26, 1998).
  11. Barbara Miner, “Why the Right Hates Public Education,” The Progressive (January 2004): 22–24.
  12. Daniel Golden, “Nonunion Teacher Groups Cost NEA Membership and Clout,” Wall Street Journal (July 28, 2004).