Show-Me Institute Podcast
Why Markets Matter in Education with Mike McShane
In this episode, James V. Shuls speaks with Michael Q. McShane, Director of National Research at EdChoice and Senior Fellow of Education Policy at the Show-Me Institute, about his latest paper, 'Why Markets Matter in Education.' They explore the growing role of market forces in education, the benefits of choice and competition for schools and students, the impact of educational marketplaces on innovation and quality, the challenges of government intervention in schooling, and the long-term advantages of allowing parents to shape their children's educational journeys.
Read the essay here: https://bit.ly/3YG77Cy
Produced by Show-Me Opportunity
- Duration:
- 30m
- Broadcast on:
- 06 Aug 2024
- Audio Format:
- mp3
I am James Scholz, director of Research and Senior Fellow at the ShowMe Institute. Part of the role of the ShowMe Institute is to try to educate the public about the importance of free markets. And so that's why I'm so excited about this new series we have called Why Markets Matter. We recently released a paper by Economist Russell Solbel, Why Markets Matter for Human Progress and Prosperity. Check out that podcast. We had a great discussion. Check out the paper. We have another paper, the second in this series on Why Markets Matter and Education. And I'm excited to have my good friend, Mike McShane, joining me, Mike, is the director of national research at choice, formerly the Milton Friedman Foundation and former director of education policy at the ShowMe Institute. So he's been a long friend, currently a senior fellow at the ShowMe Institute. Mike, welcome to the podcast. Hey, thanks so much for having me. So Mike, this paper touches on the importance of markets in education. And I think you touched on the beginning of the paper. Education's not typically a place to think of when you think of markets that you aren't typically synonymous. So tell me a little bit about your thought process going into this paper. Yeah, I think what we've learned over the course of the last couple of years as we look at so many of the changes that have taken place in education and that think of the pandemic and all of the stuff that's happened, both, both are sort of good and bad, bad during the pandemic. And I think some of the positive changes that have happened after the pandemic. It's that parents in particular don't, they're very practical people. They don't love thinking about their children as abstractions. They don't like thinking about schools as abstractions. They don't like people who are sort of making schools into their ideological hobby horses and others. So in some ways talking about markets in education is challenging because it's almost immediately sort of abstracting them and making it sort of part of this like system that, oh, wait, all these moving parts are, you know, it's not that long before Adam Smith's invisible hand comes up and you're like, what are we talking about here? So part of it is recognizing that, you know, markets are just a way of understanding human behavior and thinking about the needs of families, the needs of students, increasingly kind of the needs of teachers, many of whom are dissatisfied with the schools that they're in right now, think about the types of institutions that they want to work in, think about the problems that exist in families life, the problems that exist in communities and the institutions that we want to have to solve those problems. So it's a way of thinking about how all of these different groups associate themselves with one another and the sort of rules under which they operate and the supports that are created, but kind of breaking some of the paradigms that we think about when we think about things like public education, we have like, residentially assigned schools and school boards that cover them and, you know, all the regulations that come down from the state. This is a way of, I think, sort of thinking differently about what, what is happening now and what could be happening in the future. You know, Doug Harris, who's an economist at Tulane, had a paper out a while ago that basically said markets can't exist or don't work in education. And you don't directly take that on in this piece, I mean, you don't cite Doug and refute his argument line for line and that sort of thing. But you do provide a counter-argument that markets do exist and can't exist more in education. One of the things I like that you say early on is right now there's a market and it's the housing market in education. Tell me more about that. What do you mean by it's the housing market? Yeah, so people pick where to live based on their perceived quality of the schools in which their children would attend living in that residential area, right? So look, I grew up in Kansas City right on Stateline Road, right? And you could see basically identical houses on the Missouri side who would be zoned for the Kansas City, Missouri public schools or for center or for any of those districts along there. And basically the exact same house just on the other side in Kansas that would be zoned for Shawnee Mission or Blue Valley, dramatically more expensive, right? And if you talk to anyone and this is what you don't have to talk to researchers, just talk to like people with school age kids and they'll tell you, you know, a lot of people like, you know, especially for me who grew up on the Missouri side, I think of friends and family members who said, oh, well, like once we had kids, we moved to Kansas. Obviously, like we're going to move to Kansas because we want our kids in Shawnee Mission or in Blue Valley or others. And it's like, well, you know, that's kind of like a private school, right? If you can only, you know, you have to buy a house and whatever the kind of additional cost of that house is the privilege of attending that school, it's not that different than just like cutting a check to a private school to go there. So I think it's this bigger issue when we talk about school choice, right? And all these policies that are getting passed and every year, you know, in the springtime when the Missouri legislature meets and they talk about, are we going to expand school choice or are we going to have school choice or there's going to be a new school choice program? It's sort of presented as if there will be like school choice or no school choice or there will be like, oh, we're going to have a marketer. We're not going to have a market. It's like, no, no, no. People are going to have choice, right? People of means are going to have school choice. The fundamental question that we're asking with school choice policy is who is going to have choice and what are they going to be able to choose? Because right now in Missouri and Kansas and other places, you know, some people have choices and they were able to choose some things with those choices. And so the question is, well, how broad of a group of Missourians do we want to be able to choose where their kids go to school and how broad of a set of schools or other educational environments do we want to have for them? So do you think it's fair, though, the criticism that says pure markets don't exist in education? We can't have a pure market in education, therefore free markets just don't work in education. Yeah, no. I mean, like, look, I don't think we would want to have a pure market in education in the sense that, you know, from our very founding days, you can go back and read Benjamin Rush or Thomas Jefferson. The idea that the government is going to pick up the tab for young people's education has very deep roots in the American democracy, in the American Republican in understanding the skills and knowledge and talents that are necessary for our society, for our democracy, for our economy in order to take place. So as long as the government is paying for some or all of someone's whatever they're getting, you're never going to have like a pure market, right, that's going to function the same way that markets for a car or a home or, you know, a cell phone where you're spending 100% of your money. You're entirely in control of the situation. So, so no, I don't think we would ever have a pure thing. That said, just because you don't have like the purest form of something does not mean that having some of the characteristics of markets or moving more in the direction of individual choice, freedom, liberty won't mean positive results. So I think it's sort of that's the thing is people sort of set up a straw man argument where it's like, well, if we're not creating like a pure market, then the whole thing falls apart. It's like, no, there's all sorts of ways from sort of complete command and control on one side centralize bureaucratize control to complete freedom and everyone spending their own money on the other side. There's a lot of gray area in between where we could think of multiple different ways to organize our education system. Yeah, I like the how the sort of academic argument against school choice and against markets and education tries to bring in these like really pure, theoristic sort of pieces like perfect information. Oh, markets won't work in education because people don't have perfect information. Look, I don't have perfect information about the type of toothpaste I buy. You know, I have no idea what the ingredients are. I know, you know, basically there are a couple of big types of toothpaste I could get. They got different flavors and I trust that people have sort of vetted these things and I make decisions based on what I think works for me, what I like best. I have preferences, but I don't have perfect information. And so I feel like sometimes these critics of school choice try to put these theoretical constraints on what a perfect market should be and say that we can't have that in education. So therefore markets don't work. Well, look, I agree with you. And to build on that, it is also the bar that they are held to, which is like when using your toothpaste example or if we were even think of homes or cars or the big like important purchases, like we don't make a perfect choice, right? Like whatever my budget was for my last car, right? There was probably some better quote unquote better car out there than what I, you know, I had constraints of like, I looked at like a couple of dealerships and I had a general idea of sort of what I wanted. Could I have maximized in some other area? Probably. Well, does that mean that like the market failed because I didn't get the perfect result or like, you know, maybe there's some better toothpaste out there that you're actually overpaying for your toothpaste or something. Well, like that's not the bar that we hold things to, right? But it seems like so much in education, it's this idea of like, if anyone makes a quote unquote bad choice or if there aren't enough schools in one area or whatever, if the market doesn't function perfectly for everyone immediately, then that's them. Oh, we'll see. Like that's why markets don't work in education. So I think that that's, that's another area that we have to think about. And look, and look, this is where, you know, we're sort of going after choice opponents. And I think we have to give a little bit of the same medicine to some choice advocates. Some people who do advocate for markets and education, I think it should be clear in the paper that I wrote. And I think there's lots of stuff that comes out of the Show Me Institute is not setting the bar at perfection. The idea is like, if tomorrow Missouri gave every student an ESA, that does not mean that all of the problems of education in Missouri would magically be solved overnight. Like I think that school choice that having more markets in education, education savings accounts and others is a powerful tool to improve education. But I do not think it is magic. I do not think it is a panacea. I do not think it will solve all of the problems that come with children into schools or that schools have. I just think it would be better. So I think sometimes we hear some kind of utopian language from school choice supporters that we also have to like, you know, you can't necessarily blame the opponents for holding this to a high bar when some of the advocates are like, it's going to magically fix everything. Yeah. Well, you outline three ways in which you think markets are going to improve the educational system. And I'm going to take them in reverse, right? Because one of the things you say is that the markets themselves act as information-gathering engines. They help us to gather more information about what people want. You know, so going back to this, you know, I hate to keep going back to toothpaste. I don't know why I started there in the first place, but you know, helping people, helping understand what people want, like you are thinking about your car, I don't know a lot about cars. I'm not a car guy, but I only start really paying attention to cars when I'm in the market for a car. You know, when I'm going to buy a car, I have intentions to buy a car, then I start doing research. I start looking at what are the best cars, what get the best mileage, what are safe, you know, all these different types of things to figure out the type of car that I want that wouldn't happen if I didn't have a market. Like if I was assigned a car, I'd have no incentive to go and look up what type of car I might want. So one of the things you talk about is how markets create this incentive and this mechanism to get information from people and what they want and to provide the types of things that they want. Tell us more about that. Yeah. I think it's education is we, if we think of even in America, right? The first law regarding education in America was written before America was even America. I think it was what was it, 1647, I think there was maybe later ones in 1649, the old deluder Satan laws in, in Massachusetts, which basically was the first time that folks had communities of a certain size had to tax themselves to pay for school. There's actually these interesting religious origins to it, but we'll leave that for another day. So like, yeah, the fight against that old deluder state. They're trying to keep our kids ignorant and preventing them from reading the Bible and thus getting into heaven. And that's really what the, that's why the law was there. But what's that now, like 370 something years, probably 13 or 14 generations of folks living and dying back to back with one another. And that's just in America. I mean, if you go to any other place and we'll basically as long as we've had the written word, we have had people talking about what kids should learn and what they shouldn't learn and people debating and discussing think the Greeks of Rome and all these folks were having. So, so a, we haven't figured it out yet. And it's not like we haven't been trying B, we live in a big diverse country that different people want different things out of education. They want different things for their kids, they're going to be doing different things later in life and potentially need to be educated in different ways. So how do we, how do we think about improving in a system that is, you know, more decentralized or pursuing different ends and others? And like, this is where markets come in handy, right? Which is to say, if you have a lot of people making choices, they're telling us stuff. So for example, in a lot of states that have more capacious charter school laws than we see in Missouri, there's been a big growth recently in like classical schools. And if you had told me, you know, when you and I were back in graduate school in the Pleistocene or whatever, that like, you know, there's going to be this big growth in like schools with Socratic seminars and Greek studying the good, the good, the great books and like doing stuff in Greek, think of this, you know, back in like tech hair, you know, like Facebook, you know, we're thinking it's going to be STEM schools and people are going to be using computers, like, no, it's actually going to be the opposite of that. I would have said, like, you're crazy, like there's no way. And I would think most education quote unquote experts in the country would have said, oh, no, like clearly we need to be moving in this STEM direction and whatever, because that's the future. It's like, well, when people got a free choice to express their own preferences, they gave us a lot of valuable information. They, they had the freedom to choose STEM schools, they had the freedom to choose performing art schools, and a lot of people chose this one type of school, which, again, is useful information for policymakers, which is like, oh, wow, these schools have massive waiting lists. Maybe the next charter school we authorize or the next thing that's happening should be a classical school. Um, so I'm going to jump, you know, I was, I'm going to jump to, to bring in one of your other points. I said I was going to go in reverse order, but now I'm just jumping around, but it's already cut you off. But one of the things you say markets are good for is creating different types of school. And this is exactly where you're going with what, the way you're answering this is it, the markets allow us to gather information, but they also allow us to allow a variety of types of schools to flourish. I mean, in a single community, I'm in what's called the wind spill school district, I think we have four high schools that are all basically following the same sort of format, but a market would say, what a different people want and allow different types of schools to flourish. So sorry to cut you off, but keep going there, tell me how the markets produce the different types of schools. Yeah, I think, and I think this is an important thing, because I know another point that I make is about competition, which we can sort of put a pin in, because in some ways I'm going to slightly undercut the point that I make later. So I guess I'll get this one out of the way first. One of the things I think is important is that people want different things. So there is no one, at least in my opinion, there is no one best way to educate kids. There is no one thing that we're all searching for, that if we're just smart enough, and we just do enough research and we just work hard enough, we're going to feel, oh, this is the way that schools should be organized. This is the way that math should be taught. This is the way that reading should be taught. I think that there's just lots of, again, the great diversity of students that we have need, probably not an infinite number of approaches, but I can see there are different environments in which different kids will thrive. Think of some kids need schools with more discipline. Some kids can thrive in schools with less discipline. Some get in Socratic seminars and discussion or some places where kids thrive and others need more direct instruction or things like these broader broad strokes things that we're looking for. That's not to say that there aren't some things. I mean, there have been these great advances we've seen recently around the science of reading and others, some of these more narrow technical things that we're trying to teach. I think we can learn and there are kind of better practices that we can share amongst everyone else, but setting that aside, these broad strokes, people want different things out of school, people need different things out of school, they're doing different things out of school. It's just hard to do that centrally. Like, as you mentioned, in Wensville, they've got four high schools, even if they, right now they're all very similar to one another, but let's say they go a quarter of the way to what you're talking about and they say, okay, well, now we recognize different kids need different things. So let's have four different high schools. Well, like think about like, how do you do that? Like how do you maybe you like survey fail it, but an easier thing to do would be to say, hey, families, you have more freedom to choose what schools you want to people outside folks who are starting schools can come into our area and start schools that they want to. And again, I don't think it happens immediately, but over time, we'll see this matching between what people want and what people are providing, different types of schools can operate there. And then the thing is that like a lot of these schools aren't necessarily competing with one another, right? Like they sort of are, but by and large, it's kind of like, look, if someone really wants to go to a performance art school, you could have a great like STEM school next door and they're like, well, yeah, that's not really what I'm looking for, right? I want to go to a performing art school. So I'm going to go to the performing arts school. So it allows for these different types of schools to exist. And again, this is in pedagogical approaches, this is in philosophical approaches and does it in a way that you just can't, you just can't do centrally, like you can't, all right, we're going to do a STEM school, we're going to do a performing arts school, we'll do whatever. Sure enough, like there'll be too many kids of one, not enough in another. It has to be done through the sort of organic, as I mentioned before, it's kind of information gathering process. Yeah, one of the other points that you mentioned, the choice and competition piece that when we have a choice system or a market and education, allow schools to compete and they're going to get better over time, I think that's the argument that we've hammered the most in the school choice space. For the long time, we've said, look at these failing schools. These kids need options, we need choice and competition to give them a way out to make these schools better over time. And I think there's a pushback against that for a variety of reasons. I believe it to be true. I do believe that choice and competition improves things over time. But this other piece that you're talking about, I think is under talked about, that it is, you know, we don't talk about it enough that it creates a choice and competition of ideas, right, of different types of schools, not competing on the same metrics, right. So it's not just we're trying to improve schools on test scores, but we're having a competition of or a marketplace of ideas of schools where you talked about the classical schools being next door to say a STEM school. These two things are not in competition to produce the same thing, but they are in competition to attract students and they might attract different types of students, but part of it is helping the public to see and value that type of education that they're producing. And so the thing about markets, what you're saying is, is it produces different types of schools that aim at different targets. And yet at the same time incentivizes schools to compete with one another, to improve and get better over time. So it does both of these things at the same time. And as you're saying, it doesn't create improvement or I mean, it doesn't miraculously improve everything by tomorrow, but it puts in place a system that leads to improvement over time. Yes. All right. And I think, yes, and I think to what as you were just saying this, I think, you know, the way I kind of marry the idea of competition and the sort of pluralism or the diversity of schooling options that's there is that constant, I mean, fear, frankly, that you might lose students pushes you to be the best at what you are trying to do, right? It's not necessarily saying you want to be like the person next door. You may want to be doing something different, but you need to be doing it well. Otherwise people will leave. So I think it's a powerful accountability tool. And it's a way, it's one of the only ways that we have to have accountability to different ends, right? Because under traditional accountability systems that we have in states, we have to set up like the same series of metrics that everyone has to use. And I think, look, in a world where there isn't any school choice, that's like a perfectly reasonable thing to do, right, like to say, well, if everyone stuck in this system, we need to probably make sure it's good. And so we have to find things that we can all generally agree on, so things like reading and math. Okay, I think we can all agree that schools need to do that. All right, let's test kids and let's make sure schools are doing it. And I totally get people who are particularly supportive of that kind of management system, get a little agita when it's like, well, what about these schools that are outside of that, that are trying to do something different that don't really fit neatly into these sort of systems that we created? I get that. That my sort of counter to them is to say, oh, don't worry, like, there's a lot of accountability that is in this system. And it's the accountability of saying, listen, if you're a classical school and people want to send their kids to a classical school, but you do a very poor job of it, folks are going to say, it seems like a good idea, but we got to go somewhere else. So it doesn't necessarily say, oh, hey, you have to be like whatever the school's like next door is whatever you're doing, you need to be doing it well. Otherwise, people will leave. Yeah. So I wasn't sure if I was going to mention this, but I'm going to. At a recent Teachers Union National Convention, a prominent academic made the claim that school choice was really about sort of promoting Christian nationalism, which I found incredibly hilarious because the public education system was founded on Christian nationalism, founded to build American citizens and, you know, inculcate them into the Protestant work ethic. So it's pretty hilarious that this claim comes about. But what really, you know, another thing that struck me is that choice, as you're saying, the pluralistic system actually allows very different visions to flourish. So it allows a progressive notion that says we want to tinker with things over time and create general improvements, and you may be a technocratic sort of sort of view of education, allows that to flourish in some places, and it allows a very sort of small sea conservative notion which you have in classical education that says, no, we need to look to the values of the past. We need to look to the great tradition. We need to look to the best ideas that have been thought in the world and study those things. These are very different visions of education, and choice allows for these very different visions to flourish, whereas a centralized system is a winner-take-all system that you're saying you might put in place regulations from the state. But what you're saying is all schools need to fit into this box. Choice says not everything needs to fit in this box. We can do this and it can look in a lot of different ways depending on what the people want. Yes. Look, the first thing I always say when people talk about school choice and Christian nationalism, your point that you just made there is actually an even better one, which is like the degree to which, I mean, read about the Philadelphia Bible riots or whatever because it was schools for basically Protestants and the Catholics had problems with it, like rioting broke out or the degree to which the spread of public education in America was frankly a kind of evangelical, Protestant. We wanted schools teaching the same thing during the week that folks were hearing from the pulpit on Sunday. I mean, yeah, you're right. I had never really thought of it that way, and that's brilliant. My general response to it is like, well, as you introduced, I'm the director of national research for Ed Choice was previously known as the Milton and Rose Friedman Foundation. Milton Friedman, Christian nationalism, I don't think those two things are lined up pretty well, right? Like the kind of modern father of school choice was neither Christian nor a nationalist. So I don't know what we're doing here. But again, I think the broader point is true is that like in so far as we think sort of nationalism is promoting a kind of whether it's Christian nationalism or any form of nationalism is promoting this kind of unified vision of what America is and what it means to be American and the sort of values and maybe in some cases, faith that you have to have. Yeah, school choice is terrible for doing that, right? Like school choice is terrible for that. For me, I mean, because I'm not a nationalist, I think that school choice has the ability to foster patriotism, which I'm definitely a patriot. And I think patriotism is something that we should inculcate in our children. And part of the way we do that is by helping them participate in systems that reflect the values of our nation. The pluralist, the liberty, orientation, the belief in markets and like the things that made America awesome, making sure our institutions reflect that like school choice is an awesome way to instill patriotism in students. But yeah, that it is if you want to have one way in which all children are raised, which is sort of, I think the general kind of nationalist ethos is that sort of everyone will be kind of the same or will sort of believe the same things school choice is not a good way to do that. You know, Jonathan Hight in his book, The Righteous Mind kind of talks about how people of different political persuasions have different fundamental values that might take them in different directions. And so it's not that they don't care about the other things. It's just that the thing that's the highest priority for them, you know, dictates some of their decision making. When I think about school choice or education, I should say, I think that real key defining thing for me between the people who support our traditional public system of residential assignment and the people who support a more market based system comes down to equity and freedom. And this, I think, is the criticism you get most often about a choice based or a market based system is it's not equitable that some students will be left behind. It doesn't always serve all students well. How would you respond to that criticism that a choice based system is not an equitable system? So to me, it's always asking the question compared to what? Because any school system that we create will leave some students behind. You know, George W. Bush, you know, peace be upon, you know, trying to have no child left behind or later on. I was President Obama signed into the Every Student Succeeds Act. I think, you know, in a nation where we have 50 to 55 million school children, not everyone is going to find a great school. Not everyone is going to find a mix. It's just the law of large numbers, right? Some folks are going to have the perfect school for them and some of them are not going to work. So the question for me is always compared to what? So a more choice based system compared to the system that we have currently, because I think it's hard to argue or it's hard to oppose the idea that the system we currently have just in the traditional public school system is deeply inequitable. And this is the crazy thing that we have to contend with when we talk about so many of these people who oppose school choice is that half the time you're talking, I wrote this piece recently, sort of criticizing some stuff that Bernie Sanders said about it recently about, you know, attacking sort of school choice programs or whatever. And I just pulled up all the stuff that he said when he ran for president about how inequitable and racist our traditional public schools are. And that's why they need all of this more funding and everything. So half the time we hear that our schools are unequal and that, you know, their discipline policies or contributing the school to prison pipeline, all of these things are happening when people are asking for more money for them. But when you're the person who says, oh, wait a second, what if we just gave people the opportunity to choose some other institutions that don't suffer from these problems? Suddenly, they start looking good again. And it's like, oh, no, but that's the equitable system. And what you're proposing is inequitable. So I'm like, which one is it, guys? Like, I don't know. So I always think compared to what? And I think that we have a pretty inequitable system now. And so giving people more choices in it, it's not clear to me that that will make it any worse. And I think it has the opportunity to make it much better. Mike, I love your new paper, Why Markets Matter and Education. We're super excited to put this out of the ShowMe Institute to help people understand why markets matter in education. Thank you so much. Thanks for having me. [MUSIC]