Politics and Policies of Private Enterprise

Politics of Private Enterprise

1. Would Steve Jobs Be A Hero If He Had Built An Education Company Every Bit As Good As Apple?
Whittle, Chris. Would Steve Jobs Be A Hero If He Had Built An Education Company Every Bit As Good As Apple? American Enterprise Institute Working Paper.

In this paper, Chris Whittle, an education entrepreneur and founder of Edison Schools and Avenues: The World School, responds to arguments against for-profit education organizations, and examines the potential origins of these objections. Whittle believes many objections are based on the flawed ideas that for-profit organizations have profit as their sole objective, and that there is only one best way to provide educational services. He goes on to ask why for-profit ventures are controversial in American education, when they are the norm in other industries and other countries. Whittle concludes that the true reasons for resistance to for-profit education organizations are 1) the poor reputation of free enterprise in general, 2) misplaced desires to preserve childhood innocence, and 3) the interest of many educational stakeholders in maintaining the status quo.  To read more....


Politics of Private Enterprise

2. The Politics of For-Profit Education

Kelly, Andrew. (2011). “More than Meets the Eye: The Politics of For-Profit Education.” American Enterprise Institute Special Report.

While Democrats and Republicans can find common ground on many aspects of education policy, such as teacher incentives and charter schools, a political divide remains over the issue of for-profit education providers. Kelly delves into the shifting political status of for-profit education, and finds that many Democrats are comfortable supporting for-profit education organizations with the exception of K-12 school management. Public opinion polls reflect a similar hesitancy towards for-profit K-12 school management, but most voters are comfortable with companies providing peripheral services and post-secondary education. This suggests that government efforts to regulate or restrict for-profit schools will be more successful at the K-12 level, unless for-profit schools and universities manage to integrate themselves into the emerging consensus on education reform.  To read more.....


Politics of Private Enterprise

3. Government Involvement in Education
Bailey, John. (2011). “Odd Man Out: How Government Supports Private Sector Innovation, Except in Education.” American Enterprise Institute Special Report. 

Federal involvement in the private sector is widespread: grants, loans and tax credits are among the tools frequently used to stimulate private-sector activity. However, according to Bailey, in education the federal government has erected policy and funding barriers aimed at for-profit organizations that discourage innovation, growth and investment. These barriers are based on the fear that funds will go to shareholders above students. Bailey presents positive and negative examples of public-private partnership programs, and points out that the private sector is already heavily involved in various aspects of education. He concludes that policymakers must consider new tools to stimulate the market for education and encourage a stronger, more competitive industry.  To read more....


Politics of Private Enterprise

4. Outsourcing to Fund America’s Classrooms
Smith, Barbara Weaver and Smith, Lawrence. (2012). Let Them Learn: Outsourcing to Fund America’s Classrooms. Smith Weaver Smith.

This paper examines how American public schools are using outsourcing (aka privatization) to become more educationally effective and cost efficient. Most outsourcing is focused on non-teaching related responsibilities, such as food service, transportation, and security. The paper is structured to address the common fears around outsourcing, such as loss of control and diminished accountability. Despite divided opinions on this issue, the authors’ research suggests that outsourcing can accomplish its goals if school districts exercise due diligence in contract management, on which they provide guidelines.  To read more.......


Politics of Private Enterprise

5.  The Role of For-Profits in Education, Beyond Good and Evil
Horn, Michael. (2011). “Beyond Good and Evil: Understanding the Role of For-Profits in Education through the Theories of Disruptive Innovation.” American Enterprise Institute Special Report.

Horn argues that the role of for-profit companies in education differs substantially from the arguments put forth by critics and supporters alike. First, for-profit companies are usually responding to market incentives, and if we want to change their behavior, we should change the incentive structure. Second, the functional differences between for-profit and non-profit education organizations are far fewer than is conventionally believed, and are usually influenced by legal rules of corporate structures. Unlike non-profits, for-profit companies have a natural pathway to attract capital and grow by rewarding investors, whereas, non-profits can continue to provide services when there is not a viable market. In that way, both types of organization have an important role to play in education, which the government should recognize by supporting results regardless of corporate structure. Horns ties this argument to the theory of disruptive innovation, which holds that a new entrant to a market can find success by offering consumers a more affordable or convenient product that differs from conventional definitions of quality.   To read more.......


Policies in Private Enterprise

1. Evaluation Practices in For-Profit Education Firms
Riggan, Matthew. (2012). “Between Efficiency and Effectiveness: Evaluation in For-Profit Education Organizations.” American Enterprise Institute Special Report.

Riggan explores evaluation practices at for-profit education organizations, including the question of how to encourage transparency and accountability without hindering innovation or investment acquisition. There is little incentive for most for-profit firms to hire third party evaluators to do rigorous impact studies, due to the cost of these studies and the potential negative impact of unfavorable results. Evaluation practices differ between for-profit firms providing peripheral or supplementary services and school management firms because school management firms are often subject to greater scrutiny. In general, for-profit firms’ evaluations focus on customer satisfaction, and academic performance in relation to organizational efficiency. While these focus areas are important, Riggan notes that the infrequency of rigorous, external evaluations could make informed decisions difficult for consumers.  To read more.....


Policies in Private Enterprise

3. For-Profit Education Organizations Bring Innovation and Quality at Scale
Vander Ark, Tom. (2009). Private Capital and Public Education: Toward Quality at Scale. American Enterprise Institute Working Paper.

Vander Ark compares public, non-profit, and for-profit models of education service delivery, and concludes that the underrepresentation of for-profit organizations is inhibiting our global competitiveness in the 21st century. Vander Ark argues that the structure and culture of public and non-profit education institutions is not conducive to large-scale improvements and innovation, whereas for-profit organizations have access to flexible capital, incentive to consistently improve and grow, and ability to utilize multiple business strategies. He points to application development, online learning, open content, supplemental education services, and school operations as the frontiers of private investment in education.  To read more......


Policies in Private Enterprise

4. Achieving For-Profit Quality in Early Care and Education
Grindal, Todd. (2012) Unequal Access: Hidden Barriers to Achieving Both Quality and Profit in Early Care and Education. American Enterprise Institute Report.

In the early childhood education (ECE) sector, while public and non-profit options may provide higher-quality education overall, private options are often better able to facilitate parents’ workforce participation. The abundance of largely unregulated home-based child care businesses could account for this difference. Grindal examines the history of ECE in the United States, and provides case studies of public and private ECE models. Grindal argues that growth of high-quality private ECE providers has been inhibited by parents’ inability to effectively assess and compare program quality. The report recommends policymakers address this by creating quality ratings systems for publically subsidized ECE providers, and instituting equitable oversight of ECE programs regardless of size, or home vs. center-based venue.  To read more......


Policies in Private Enterprise

5. Insiders Compare For-Profit and Non-Profit Higher Education
Wildavsky, Ben. (2011). Cross to the Dark Side? An Interview Based Comparison of Traditional and For-Profit Higher Education. American Enterprise Institute Report.

Wildavsky interviews administrators, board members, and instructors with experience in traditional higher education institutions who are now associated with for-profit institutions. He draws out salient administrative and education differences between these educational options, and concludes that the for-profit sector could offer some lessons to its non-profit and public peers. Many interviewees report that for-profit institutions have superior administrative flexibility, are more open to experimentation and more responsive to market demands. The faculty at for-profit institutions differs substantially from traditional academia because instructors are hired and evaluated based on teaching ability and student outcomes rather than research accomplishments. While interviewees credit for-profit institutions with serving students who are underrepresented in traditional universities, they caution that good organizational governance must protect against socially irresponsible practices such as fraudulent recruitment. To read more......


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