Education Worker

In his farewell speech in 1961, Dwight Eisenhower famously warned of the dangers of the new military-industrial complex.  What he perhaps did not foresee was how that complex would become a paradigm for policy making outside the field of defense.  In the excerpt below I changed a few words, such as “military” to “education” and “federal contract” to “foundation grant”, and am struck by how Eisenhower’s prescient warning rings true for education in 2012.

"This conjunction of an immense education establishment and a large education industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every state house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the education-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge commercial and education machinery with our peaceful methods and goals, so that we may prosper together.

Akin to, and largely responsible for the sweeping changes in our industrial-education posture, has been the technological revolution during recent decades.  In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

Today, the solitary teacher, toiling in her classroom, has been overshadowed by task forces of researchers in foundations and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a foundation grant becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite."

The structure of the military-industrial complex has become a meme. It has recreated itself in the schools and universities of America.  A shadowy, revolving door world of government and quasi-government agencies, think tanks, foundations, corporations, universities, political and advocacy groups, and private contractors, form the ecosystem of education policy.  Oh yes – and unions, to be fair.  We need to call this out – it is the Education-Industrial Complex.

A self-reinforcing scientific-technological elite, detached from the everyday realities of the work, performs vast social engineering experiments behind closed doors in a cloud of group-think and acronyms.  Fueled by the endemic soft corruption of revolving six figure sinecures, as members pass easily from government to foundation to university, etc., this elite presumes to manipulate the masses of citizenry for their own good.

I have seen this with my own eyes.

It will take an “alert and knowledgeable citizenry” to deal with the consequences.  But where will that citizenry come from if their education is being engineered by people whose interests are money, status, and power, rather than democracy?

Working for the US Dept of Education last year, I encountered high officials who expressed astonishment at the disconnect between Federal influence on public education and on higher ed.  Federal influence on public schools is purchased at less than ten cents on the dollar.  Looking at the influence of IDEA, NCLB, RTT, SIG and now NCLB waivers, to name a few, the Feds leverage relatively small amounts of money for big returns.

By contrast, the federal student loan programs run by ED literally bankroll the higher ed enterprise, yet the Feds have little influence on substantive policy in higher ed, including matters like cost control, and accountability for results.  This is illustrated by the way regulations designed to limit the predations of for-profit colleges were gutted, after a vigorous lobbying effort.

Of course higher ed has something to offer policy makers that public ed lacks - sinecures.  The revolving door world of education policy is as insidious as that of defense policy.  If you were a policy maker, would you rather have your next job at a university sponsored think tank, or perhaps as a professor, or in a third grade classroom?  I'm skeptical of the prospects for meaningful higher ed reform in the context of this endemic soft corruption.

So with no meaningful prospects for accountability from universities and colleges, where does accountability fall?  Squarely on the shoulders of individuals, in the form of student loans which cannot be discharged by bankruptcy.  Cost control in higher ed may only be achievable by making student loans subject to bankruptcy again, so some of the risks of the system are again borne by the institutional players who milk the system.

I found it instructive to read What the U.S. can’t learn from Finland about ed reform by Pasi Sahlberg on the WaPo Answer Sheet.  He wrote:

"In the United States, education is mostly viewed as a private effort leading to individual good....By contrast, in Finland, education is viewed primarily as a public effort serving a public purpose."

In Finland P-12 AND higher ed is free to all residents.

The caveat emptor philosophy of higher ed funding we have in this country has saddled our most educated and ambitious citizens with a trillion dollar ball and chain which is dragging down our economy.  Had the same money that was poured into trickle down corporate bailouts been injected into the bottom of the economy as an investment in the middle class, we might have seen some real economic recovery.

30 years of bitter experience has shown us that trickle down is a vast boondoggle for the well connected.  It's time to try some trickle up economics.

After years of toiling for unions that protect lazy teachers and allow them to harm innocent children, I’ve finally come to my senses and bought into the neo-liberal agenda.  Privatization, choice, competition and markets….think of this as my reverse Diane Ravitch moment.  If you can’t beat’em, join’em.    This is my ticket to the gravy train and I want to share some great ideas I’ve come up with.

We have a problem.  As taxes on the wealthy approach zero, foundations are no longer going to be necessary to shelter the wealth of the rich from taxation.  Revenues will decline as the middle class (the people who get taxed) shrinks.  How are we going to fund our schools with neither revenue, nor foundations?

The answer lies in the financial markets.  Wall Street has the talent and the capacity to develop innovative investment instruments that can save our schools.  Why did this never occur to me before?  There are so many smart people on Wall Street – I know this is true because they have more money than I do.  If we unlock the genius of Wall Street everything will be OK.

There are a couple of key innovations that make this financial miracle possible.  First of all, thanks to standardized tests, education has become a commodity.  It can be traded just like pork bellies or Brent crude.  Second, when a product becomes a commodity, the efficiency of the market allows the producer to be paid below the rate needed to sustain life, meaning that education costs cannot only be controlled, but radically cut.  The commoditization of education provides a way to quantify costs per unit output (test scores.)

I propose that investors be able to make direct investments schools – in essence, buy shares.  The value of the investment will fluctuate according to the value of the school, which will be a function of test scores and per pupil spending.  Like any good commodities business, schools that can squeeze higher test scores at lower unit costs will be more valuable.  When this occurs, the value of the security will rise.

This market could be part of the Chicago Mercantile Exchange.  Investors will be able to use put and call options so they can bet either for or against student learning.  In addition, a futures market would allow accurate predictions of test scores at individual schools through the price fluctuations of these securities.  With securities pricing information in hand, management could bring resources to bear on problems pro-actively.  The miracle of the invisible hand will improve schools even as everyone gets rich – and all with no messy revenues to raise!

One difficulty this poses for the wealthy investor is exposure to conditions in individual schools.  For example an outbreak of flu, or an inconvenient school shooting during testing could cause an investor to lose money.  Plus, statisticians have warned us of the instability of VAM when applied to the relatively small student populations of individual schools and teachers’ classrooms – what rational investor would want to be exposed to this sort of risk?

Luckily, we can use derivatives to hedge against these risks.  Individual school securities can be sliced up and bundled with other schools with similar characteristics.  These derivatives could be sliced and bundled a second time to allow creative money managers to customize investment portfolios for the risk profiles of their wealthy investors.  Investors would be able to hedge their risks and bet for and against student learning simultaneously, while continuing to make money.  These derivatives could become so divorced from the underlying value of student test scores that they increase in value indefinitely.  This will encourage the wealthy to pour their money into schools, now guaranteed money makers.

I believe that similar mechanisms can be employed on other public goods.  A prime example is infant mortality rates – a candidate for commoditization if there ever was one.  We have a statistic which can float up and down, and a measurable unit cost.  The use of derivatives in this case would create an efficient market that would allow infant mortality rates in a community like East St. Louis to settle to an economically sustainable level.

The miracle of the market is that by removing irrational considerations, like ethics, that distort the economic system and lead to inefficiencies, like doctors and hospitals, we can achieve the best possible rates of infant mortality at the lowest cost.  Self interest flows naturally to the public good, with no sacrifices. 

I am so glad to have discovered the power of unregulated markets.  I’d like to pitch this idea to Goldman Sachs, and the Gates Foundation.  I don’t think I’ll bother with the US Government, since there won’t be much of it left in a few years.