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Please, this idea that business is universally better at producing value than any other form of social organization has to die. I'm pro business. I founded my

Please, this idea that business is universally better at producing value than any other form of social organization has to die. I'm pro business. I founded my first money-making venture when I was 4 years old (selling "art" to strangers on the street-- the business was quickly closed by the regulators-- Mom). But business is best when the value created by an investment can be (mostly) captured by a single entity, and also generally when the ROI is short term. Why shouldn't businesses provide i.e. (K-12) education? Because, unless every single student goes to work for the company, then the value they create is lost to them. So you cannot align the interests of the business with providing quality education. NOTING that the diffuse value created by government is often many orders of magnitude greater than the value which can be captured by a single organization. Another example: value of the internet vs value of Google. Google is an insanely valuable organization, but a) it wouldn't exist without the internet, and b) the other FANGS also derive their value from the internet. So clearly the internet's value is many times greater than that of any internet-based company.

acdha 5y ago
> Why shouldn't businesses provide i.e. (K-12) education? Because, unless every single student goes to work for the company, then the value they create is lost to them. So you cannot align the interests of the business with providing quality education. The charter school industry is the textbook example of this: what usually happens is that some school will have a good couple of years, and we’ll get some Slate piece about how they’ve discovered the secret of cost-effective education. Unfortunately, over time regression to the mean usually sets in and results start to look statistically similar to public school students of similar socioeconomic status while the few which maintain a performance edge inevitably turn out to have found a way to cherry-pick higher SES students and exclude the most expensive students because that’s what they’re incentivized to do.
- sokoloff 5y ago
  I think they often skip the first step of even bothering to outperform after correcting for socioeconomic differences. If you can cherry-pick students, education can be both more effective and cheaper for those whom you decide to serve.
  - acdha 5y ago
    Often, yes, but sometimes it does happen because they got the most enthusiastic staff (not yet worn down) and attracted the most prepared poor kids with the most motivated parents (the ones who’ll take a chance on a new school pledging higher academic standards). The one I really wish the United States was better at accounting for is assistance for students with special needs. That hammers public school budgets and also means that those kids are discouraged from trying a new school because that’ll reset their support plan even if the new school offers services.
    - dantheman 5y ago
      It's very simple, just attach the money to the child and then let the parents determine what school they go to.
      - acdha 5y ago
        That helps a lot but there are some challenges: e.g. you have therapists at a big school with lots of students and they’re all reasonably fully booked but a small charter needs 15% of a person in three different specialties.
        sokoloff 5y ago
        Or worse, the charter school interview and disciplinary practices ensure that these kids are not admitted or are expelled and the small charter school then takes the full payment but needs 0% of a specialist.
        dantheman 5y ago
        The schools, can share a specialist on different days of the week, or if there is an economy of scale then parents will choose it. Sure there may be schools that handle kids with disciplinary issues, like they do today in the public school system.
netcan 5y ago
This is not the idea that I expressed.
- mellavora 5y ago
  First, apologies, yes, I was clearly over-generalizing from what you wrote. And to be very clear, I am addressing a deep pet peeve of mine, which is related to the topic but not necessarily a direct descendant. Your post uses Apple as an example of how a company prioritizes cost/pricing decisions, and suggests that this, if applied to Galesburg, might allow them to fix their budget. Which is not exactly what I was responding to.
kaashif 5y ago
> Why shouldn't businesses provide i.e. (K-12) education? Because, unless every single student goes to work for the company, then the value they create is lost to them. So you cannot align the interests of the business with providing quality education. But this ignores the fact that private schools do exist and are successful in many countries. The incentives are aligned in some cases - if the education is bad, the parents will take their kids to a different school, or never go to the bad school in the first place. If it's good, they'll be willing to pay higher fees. I'm not sure what is meant by "unless every single student goes to work for the company, then the value they create is lost to them" - (some of) the value they create is captured by the school by charging fees. Isn't that the whole point of private education? This is the idea of markets in general: when a voluntary transaction takes place, both sides believe they benefit. If fees are $10,000, the parent will only pay this if they value the education at more than $10,000, although they may not think about it in these terms. Some parents will make gigantic sacrifices in the millions of dollars (in lost earning potential if nothing else) for their kids. You are right that private schools don't always have an incentive to provide good education. The schools have that incentive if and only if the parents care about the child's education and have the ability to choose schools. In many cases they don't care, and the children are the innocent victims in that case. In many cases parents care, but cannot afford to move and the school effectively has a local monopoly on poor people forced to go there. No market system can really work with a monopoly. Agreed that universal private education wouldn't be the best, but I think it's because the buyer of the service and the beneficiary are different, and there is an element of monopoly. I don't think it's because the schools lack a mechanism to capture value, they can just charge fees.
- TulliusCicero 5y ago
  You're ignoring the possibility that the value of the private school is in network effects via filtering out poorer people. That would be beneficial to the students who attend, but neutral or even negative for society as a whole.
- IG_Semmelweiss 5y ago
  >>>>>>You are right that private schools don't always have an incentive to provide good education. The schools have that incentive if and only if the parents care about the child's education and have the ability to choose schools. In many cases they don't care, and the children are the innocent victims in that case. You are missing out on a key feature of the free market. I know someone that is very well off but is very specific when buying grocieries. This person will resort to going to a supermarket 10min farther away. Supermarket chains know this and offer prices for such people. Now, this person may reflect 5% of the population. However, note the positive externality: Thanks to this person, we dont have to worry about prices, yet we benefit from the penny pincher's efforts. This is why a free market works in education. Parents may not care, but schools will cater to all parents including those that do and everyone benefits. Of course, for this to work, there cannot be public (or private) monopolies

acdha 5y ago

sokoloff 5y ago
I think they often skip the first step of even bothering to outperform after correcting for socioeconomic differences. If you can cherry-pick students, education can be both more effective and cheaper for those whom you decide to serve.
- acdha 5y ago
  Often, yes, but sometimes it does happen because they got the most enthusiastic staff (not yet worn down) and attracted the most prepared poor kids with the most motivated parents (the ones who’ll take a chance on a new school pledging higher academic standards). The one I really wish the United States was better at accounting for is assistance for students with special needs. That hammers public school budgets and also means that those kids are discouraged from trying a new school because that’ll reset their support plan even if the new school offers services.
  - dantheman 5y ago
    It's very simple, just attach the money to the child and then let the parents determine what school they go to.
    - acdha 5y ago
      That helps a lot but there are some challenges: e.g. you have therapists at a big school with lots of students and they’re all reasonably fully booked but a small charter needs 15% of a person in three different specialties.
      - sokoloff 5y ago
        Or worse, the charter school interview and disciplinary practices ensure that these kids are not admitted or are expelled and the small charter school then takes the full payment but needs 0% of a specialist.
        dantheman 5y ago
        The schools, can share a specialist on different days of the week, or if there is an economy of scale then parents will choose it. Sure there may be schools that handle kids with disciplinary issues, like they do today in the public school system.

netcan 5y ago

This is not the idea that I expressed.

mellavora 5y ago
First, apologies, yes, I was clearly over-generalizing from what you wrote. And to be very clear, I am addressing a deep pet peeve of mine, which is related to the topic but not necessarily a direct descendant. Your post uses Apple as an example of how a company prioritizes cost/pricing decisions, and suggests that this, if applied to Galesburg, might allow them to fix their budget. Which is not exactly what I was responding to.

kaashif 5y ago

> Why shouldn't businesses provide i.e. (K-12) education? Because, unless every single student goes to work for the company, then the value they create is lost to them. So you cannot align the interests of the business with providing quality education. But this ignores the fact that private schools do exist and are successful in many countries. The incentives are aligned in some cases - if the education is bad, the parents will take their kids to a different school, or never go to the bad school in the first place. If it's good, they'll be willing to pay higher fees. I'm not sure what is meant by "unless every single student goes to work for the company, then the value they create is lost to them" - (some of) the value they create is captured by the school by charging fees. Isn't that the whole point of private education? This is the idea of markets in general: when a voluntary transaction takes place, both sides believe they benefit. If fees are $10,000, the parent will only pay this if they value the education at more than $10,000, although they may not think about it in these terms. Some parents will make gigantic sacrifices in the millions of dollars (in lost earning potential if nothing else) for their kids. You are right that private schools don't always have an incentive to provide good education. The schools have that incentive if and only if the parents care about the child's education and have the ability to choose schools. In many cases they don't care, and the children are the innocent victims in that case. In many cases parents care, but cannot afford to move and the school effectively has a local monopoly on poor people forced to go there. No market system can really work with a monopoly. Agreed that universal private education wouldn't be the best, but I think it's because the buyer of the service and the beneficiary are different, and there is an element of monopoly. I don't think it's because the schools lack a mechanism to capture value, they can just charge fees.

TulliusCicero 5y ago
You're ignoring the possibility that the value of the private school is in network effects via filtering out poorer people. That would be beneficial to the students who attend, but neutral or even negative for society as a whole.
IG_Semmelweiss 5y ago
>>>>>>You are right that private schools don't always have an incentive to provide good education. The schools have that incentive if and only if the parents care about the child's education and have the ability to choose schools. In many cases they don't care, and the children are the innocent victims in that case. You are missing out on a key feature of the free market. I know someone that is very well off but is very specific when buying grocieries. This person will resort to going to a supermarket 10min farther away. Supermarket chains know this and offer prices for such people. Now, this person may reflect 5% of the population. However, note the positive externality: Thanks to this person, we dont have to worry about prices, yet we benefit from the penny pincher's efforts. This is why a free market works in education. Parents may not care, but schools will cater to all parents including those that do and everyone benefits. Of course, for this to work, there cannot be public (or private) monopolies