Profit and Loss, Public or Private: Tweedle Dumb and Tweedle Dee

There has been a spate of “scathing” reports and comments lately about for-profit schools, which bring out the kissing-cousin questions of whether schools are “businesses,” whether it’s good to “privatize” them, and whether we need more “regulation.”

And all the words in quotation marks in that sentence are meant to draw attention to the fact that the field is littered with misunderstandings, misstatements, and just plain gobbledygook.

But first, a word from Whitney Tilson, who summarized things rather succinctly in an August 8 email blast:

All of the fraud, sleaze, etc. that’s recently been uncovered in the for-profit ed sector warrants its own email. This is probably one of the few areas Ravitch and I would generally agree on, though I suspect I’m much more open to for-profit providers – but there needs to be VERY strong regulation, oversight, audits, etc. Otherwise it’s an invitation for disaster.”

You know that something is amiss if  Tilson says he agrees with Diane Ravitch. But he has a shotgun list of bad news about private- and quasi-private-sector education. He calls attention to a recent New York Times story which noted that:

  • a federal judge upheld the Department of Education’s right to regulate unscrupulous for-profit schools that leave students with big debts and valueless credentials,”
  • “a Senate committee released a blistering report showing that many of these schools pocket huge profits, even though most students leave without degrees,” and
  • a study from the National Bureau of Economic Research found that people who started in programs awarding an associate degree—a big slice of the student population—reaped significant economic rewards with degrees from public and nonprofit institutions. Those with degrees or certificates from for-profits did not.”

Tilson cites a follow-up editorial by the Times which called for, according to the headline, “Closer Scrutiny of For-Profit Schools.” He quoted from a Pennsylvania story reporting that “a charter-school mogul was charged today in a multimillion-dollar fraud case by the U.S. Attorney’s Office.”


And speaking of Ravitch, she was very busy during this period writing blogs like: “How schools are like and not like business,” “Profiteers circling the schools, looking for $$,” “Chris Christie’s plan to privatize NJ’s Low-Peforming Schools,” and “What you need to know about for-profit online schools.”

More Whew!

But that last post by Ravitch is the most interesting. It is a plaudit for what she called “a stunning article” in The Nation from last fall, titled “How Online Learning Companies Bought America’s Schools.” The piece by Lee Fang is stunning in many ways—it’s long (almost 5,500 words) and it’s detailed, as examples—but not in its depiction of, as Ravitch states, “how certain politicians and investors and entrepreneurs are working together to privatize public education and to generate huge profits for certain companies.”

But wait. That characterization is actually quite remarkable for it could just as easily apply to the current education system—with its swirl of private labor unions delivering wheelbarrows of cash to “certain politicians” and with its profiteering text-book companies (and a host of other entrepreneurial sorts) milking public education for their personal and investor profit—as to the one Fang describes.

And this is the problem with the current debate about private and public, nonprofit and for-profit: There is no agreement on the terms, much less the reality that they supposedly describe. The ideological soup is thick.

Mr. Fang’s Nation story is a perfect case study. On the one hand, he has done a remarkable reporting job, creating what might be called a who’s who of the school-reform movement; on the other, it is a gushing guilt-by-association lecture littered with buzzwords to warm up the anti-reform (anti-business, anti-profit) chorus. Here’s a quick, not comprehensive, list of excerpts from the story (names are not necessary):

  • She also advised paycheck protection, a union-busting scheme;
  • Combining financial firepower of their corporate clients with the seeming legitimacy of privatization-minded school-reform think tanks and foundations;
  • Policies designed to boost the bottom lines of education-technology companies are cast as mere attempts to improve education through technological enhancements;
  • Gold rush of investors clamoring to get a piece of the K-12 education market
  • Most education-reform advocates cloak their goals in the rhetoric of “putting children first”;
  • Worked for almost fifteen years at converting the K-12 education system into a cash cow for Wall Street;
  • The rush to privatize education will turn also turn tens of thousands of students into guinea pigs; and
  • The frenzy to privatize America’s K-12 education system.

You get the idea—or should. (Class, please underline the words and phrases that are inflammatory but not expository.) And I don’t want to counter this kind of empty partisan rhetoric with similar broad-brush characterizations about the status-quo crowd. Indeed, there are hopeful signs that some educators in the current (failing?) system have gotten the message and are retooling. I am finishing up a report about six high schools in Ohio (due out in the fall) that have managed to do wonderful things in high-poverty urban centers—five of those schools are traditional public schools. It can be done.

But the current talk surrounding governance issues could certainly stand some critical thinking.

Take for instance, the plight of the Highland Park school district in Michigan, which I wrote about the other day, which was turning management of its 1,000 student system over to a for-profit charter-management organization. I suggested that the district had nothing to lose; the thing was practically bankrupt and over 90 percent of the kids couldn’t pass a rudimentary college-readiness exam.

Is this part a “rush to privatize education”? You bet it is. And this is why we need to ask of these new establishmentarians (like Ms. Ravitch and Mr. Fang) two questions: “Compared to what?” and “So what?” Not all American public schools are as bad as those in Highland Park, but there are plenty enough of them that we should be asking ourselves, “What do we have to lose by not trying something new?” Vouchers. Charters. Longer school days and years. Common Core. End LIFO and lifetime tenure. Kill school boards. Online learning. Why not?

My guess is that lefties who read Fang’s piece will be cheering as it seems to buck up their beliefs about the nastiness of the private sector. But I could also imagine a righty reading it and (removing all the hyperbole) applaud everything these Wall Street financiers are doing.

In fact, during this same period, I noted a piece in Forbes with the headline, “Let’s Make Education Big Business, With Profit, Loss and High Pay for Top Performers.” Exactly. Here’s how writer Carrie Lukas sees it:

When you see that Americans spend more than $1.1 trillion on education—that’s 7.8 percent of GDP—it’s tempting to call education “big business.” Except that it’s not really: 80 percent of that spending is controlled by government and spent on public schools and universities. That means that it’s divorced from the usual factors that make our competitive free market system work.

Interesting observation. Given those facts, with others suggesting that our public-education system is failing too many children, why wouldn’t one consider doing something different? We should at least ask the right questions. Does the free market work? Why not run schools like a business? What’s wrong with profit? More importantly, what’s wrong with the current system? Why is it not working?

Class dismissed.

-Peter Meyer

This blog entry originally appeared on the Fordham Institute’s Board’s Eye View blog.

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