There are people who consider privatization -- getting private companies to take over providing public services -- to be a panacea. They look at the poor performance of our public schools, for example, and say that privatization would solve this problem. The "discipline of the market" would make "inefficient" public schools disappear because people would cease to patronize them. Children could go instead to the excellent and cost-efficient private schools that would spring up in response to public demand. This is a dazzling vision. The trouble is, there's no evidence that privatizing education would make it a reality.
In "Does Privatization Serve the Public Interest?" (Harvard Business Review, November-December, 1991), John B. Goodman and Gary W. Loveman look at the pros and cons of privatization. They don't talk specifically about education, so they don't look at some of the important questions about private school choice, the currently popular plan for privatizing education -- for instance, whether we want to spend taxpayers' money sending children to religious and other private schools. But a lot of what they say is relevant to claims that privatization will allow us to educate students better -- and for less money.
Goodman and Loveman conclude that privatization is no magic bullet. It can suffer from the same problems as the public-sector institutions it replaces - poor service, high price, even bureaucratic paralysis and corruption. In fact, they say, the big question is the same whether a service is provided by a public or private agency: Is there a mechanism that makes the company accountable, that forces it to provide what the public wants and needs?
They describe a number of situations where privatization achieved exactly what supporters say it will. In Chicago, for example, when the public towing operation was unable to keep up with the number of abandoned cars on the city streets, the city government contracted out the service to a private company. The company not only got rid of the cars; it also paid the city $25 for every car it removed -- thus adding $1.2 million to the city treasury. And in Phoenix, Arizona, competition from the private sector got public garbage collectors to figure out how to do their job better and more cheaply. They were so successful, in fact, that they won back the contracts they'd lost to private outfits. In these cases, defining goals and determining whether they were being met was relatively easy. But establishing accountability can be just as tricky in the private sector as it is in the public sector.
Goodman and Loveman discuss a study that cites programs set up under the Job Partnership Training Act (JPTA) as an example of privatization working badly. If you just look at the numbers, JPTA seemed like a huge success: "Two-thirds of the adult trainees found jobs and over 60 percent of youth trainees had positive experiences." But the numbers were apparently very misleading. The government had taken no part in establishing or monitoring standards, so the private companies carrying out the work were free to set admission standards -- they could pick applicants who would be easy to place and reject the rest. They could also decide how long a person had to work at a job for the placement to be considered successful.
Of course, in a situation like this, the government could decide what constitutes good performance and make sure the private contractor measured up - for instance by linking compensation to performance. If it doesn't, a private company may have no more incentive to figure out the best way to do a job than a government agency. Perhaps it will have less: Doing the job well will not increase profits and may cut them.
The applicability to education is obvious. The point of privatizing education would be to improve its quality. People who support privatization assure us this would happen. But monitoring educational improvement is not like figuring out whether a private company has actually towed away cars. And no one who talks about giving kids taxpayers' money to go to religious and other private schools mentions admissions and performance standards set and monitored by the government.
The supporters of privatization assume that private schools will be removed from public scrutiny -- as they always have been -- and that they will accept whom they want and set their own standards for success. If success means getting into college, why, anybody who wants to - and has the money -- can do that now. So that's no test of educational improvement. Neither is parental satisfaction. As Gallup polls have told us, year after year, parents may be critical of schools in general, but they are usually satisfied with schools their own children attend. And as we already know from experiments with choice in Minnesota, a better academic program is seldom at the top of the list when parents choose a school.
If taxpayers simply want to let parents send their kids to religious and other private schools at public expense, privatizing education is the perfect vehicle. If they are worried about the performance of our students and want to improve the quality of public education, there is nothing about privatizing education, per se, that will achieve this. Unless, that is, the government sets standards for these schools and mechanisms to hold them accountable. There is no sign that the government would consider doing this or that religious and other private schools would stand for it. On the other hand, there's no reason why the government shouldn't do it for public schools.