Belmont Club

Withering Competition

Leo Linbeck III

According to the Washington Post (h/t Instapundit), Washington DC’s public school district is planning to close 15 under-enrolled traditional schools:

“If we don’t become very serious about marketing and competing” with charter schools, [DC Councilman David] Catania said, “traditional public schools, as we know them, will become a thing of the past.”

Charter schools have grown quickly in the District during the past 15 years and now enroll more than 40 percent of the city’s public school students, leaving the traditional school system with half-empty buildings in many neighborhoods — and something of an existential crisis.

This is not the first time that a big-city public education system has gone through such a transformation. After Hurricane Katrina, New Orleans all but shut down its traditional district schools:

NOPS was the New Orleans area’s largest school district before Hurricane Katrina devastated the city in August 2005, damaging or destroying more than 100 of the district’s 128 school buildings. NOPS served approximately 65,000 students pre-Katrina. For decades prior to Hurricane Katrina’s landfall, the New Orleans public school system was widely recognized as the lowest performing school district in Louisiana. According to researchers Carl L. Bankston and Stephen J. Caldas, only 12 of the 103 public schools then in operation within the city limits of New Orleans showed reasonably good performance at the beginning of the 21st century.[6]

In Katrina’s immediate aftermath, an overwhelmed Orleans Parish School Board asserted that the school system would remain closed indefinitely. The Louisiana Legislature took advantage of this abdication of local leadership and acted swiftly. As a result of legislation passed by the state in November 2005, 102 of the city’s worst-performing public schools were transferred to the Recovery School District (RSD…

For the 2009-2010 school year, the Orleans Parish School Board directly administers 4 schools and oversees the 12 it has chartered. The RSD operates 33 schools and has chartered 37.[1] Additionally, two schools were chartered directly by the Louisiana Board of Elementary and Secondary Education (BESE).[3]

More than 100 schools down to 4? That’s quite a loss of market share. Never let a crisis go to waste, right?

But the subtext here is more important than the top-line. The stories from Washington DC and New Orleans are not about the failure of public education; they’re about the importance of competition in creating a sustainable society.

The great political scientist E. E. Schattschneider, in his seminal book The Semi-Sovereign People, emphasized the importance of conflict (the word he uses for the competitive struggle over a political issue).

The role of people in the political system is determined largely by the conflict system, for it is conflict that involves the people in politics and the nature of conflict determines the nature of public involvement.

The “conflict system.” In other words, the structure of political competition matters.

An underappreciated story of the Progressive Movement and its progeny (The Fair Deal, The New Deal, The Great Society, The New New Deal, and so on) is its emphasis on collaboration over competition. FDR put it this way:

Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.

This has it exactly backwards. It is cooperation that is useful to a certain point, and then we must rely on competition.

Cooperation arises from trust. Robert Axelrod, in his 1984 book The Evolution of Cooperation, used game theory to describe the way in which cooperative behavior arises from competitive game structures:

For cooperation to emerge, the interaction must extend over an indefinite (or at least an unknown) number of moves…

For cooperation to prove stable, the future must have a sufficiently large shadow. This means that the importance of the next encounter between the same two individuals must be great enough to make defection an unprofitable strategy…

In order for cooperation to get started in the first place, one more condition is required. The problem is that in a world of unconditional defection, a single individual who offers cooperation cannot prosper unless some others are around who will reciprocate. On the other hand, cooperation can emerge from small clusters of discriminating individuals as long as these individuals have even a small proportion of their interactions with each other.

“Indefinite number of moves,” “shadow of the future,” “small cluster of discriminating individuals” – these are characteristics that break down as the size of a human grouping grows. With your neighbors, you’re likely to interact with them repeatedly in the future, the future interactions are likely to be important, and there aren’t that many of them. But as the scale grows, these conditions erode, and with them the possibility of cooperation.

That’s when competition kicks in. The fact is that human beings compete in groups; there is a significant advantage to be gained by having multiple skill sets and personalities united in a common effort. (Engineers and salespeople are famously different, but rely heavily upon one another for their livelihood.) There is cooperation within these groups, but competition between them.

The genius of the market system is that it allows for an efficient form of stable competition to emerge from a single variable: price. Consumers don’t need to know what it costs to produce a widget, and producers don’t need to know how much a consumer values a widget relative to other goods and services. A staggering amount of information is encapsulated in one number, and it allows for the scale of activity to grow way beyond what would otherwise be possible.

Still, competition has gotten a bad name. I recently had a discussion with a very sophisticated, politically active, and thoughtful friend who was pushing the idea that the state’s role in education was in promoting “best practices.” Experts, working for or with government officials, should scan the horizon, find out what works, and then propagate it across the entire state. This would create progress, and avoid the “wasteful competition” inherent in market systems.

But “best practices” is really a code word for centralization. Who decides what’s best? Inevitably, it’s central planners. How do those practices get propagated? Inevitably, it’s through edicts from the center. “Best practices” is, in reality, a profoundly anti-competitive concept.

As is “intergovernmental cooperation.” This sounds so nice and peaceful, governments working together for the common good. In reality, it replaces competition with a cartel, enforced from the center. And from the resulting concentration of power flows a steady stream of corruption.

Governor Rick Perry has recently garnered headlines for his trip to California in search of businesses he can lure to Texas. The reaction from California’s political elite was predictable in its content, if not in its form:

Earlier this week, Perry launched a week-long radio ad buy in California — dubbed “Texas Wide Open for Business” — to market the Lone Star State’s business-friendly, low-tax environment. In the ad, Perry invites listeners to “come check out Texas.” The 30-second spot has been running on six radio stations throughout California.

On Tuesday, California Gov. Jerry Brown downplayed Perry’s radio promotion, calling it “barely a fart.”

“It’s not a serious story, guys,” the Democratic governor said, as reported by The Sacramento Bee.

But Perry seems to be taking it very seriously. He is amping up his effort to attract employers to Texas by hosting a reception for business leaders who have reached out to his office since the ad was released.

It’s easy for Jerry Brown to laugh this off; after all, his party has dominated the state for decades, and some cowboy-boot-wearing, oops-uttering, coyote-shooting red state rube is not a real threat to his political power.

But regardless of your state of residence, party affiliation, or choice of profession, it is a good thing for state governments to compete for being the best place to live, work, and play. The worst thing that could happen would be for Brown and Perry and their fellow governors to get together and cut a deal over something like tax rates. We’ve seen how that sort of “cooperation” turns out in education and health care: more money paying for more mediocrity.

No monopoly in the history of mankind has reformed itself from within. It has always taken an external threat – a competitor – to drive internal change.

Competition, far from being a bad thing, is the only way to assure our long-term survival. And while we’ve drifted away from competition toward cartelization over the past century (a drift at the federal level that Michael Greve documents so well in his latest book The Upside Down Constitution), it still remains that Americans like to compete. It’s in our DNA.

But we also know that there’s a difference between being a player and a referee. One is there to compete, and the other to make sure that the competition is within the rules. We agree, up front, on the way we will compete, and then let the chips fall where they may. If that means businesses move from California to Texas, or students move from traditional districts to charters, or smartphone users switch from Apple to Samsung, so be it.

There’s a word for what happens when a referee tries to change the outcome of the game rather than letting competition take its course: fixing. Recently it a massive match-fixing scandal was exposed at the highest levels of professional soccer. And then there’s Lance Armstrong and the allegations that he made contributions and payoffs to officials to hide positive test results.

We need more competition, not less. We need competitive governance, competitive organizations, competitive elections.

So the system needs fixing; that’s for sure. But I do not think that word means what they think it means.