Profit and Profiteering in Education

Lately I was gently (and privately) chided for expressing skepticism about the role of business enterprises—the people who sell us our computers, our textbooks, our desks, our apps, our standardized tests, our paper towels, and our trays of ravioli—in schools. Can’t live without ’em. Gotta have ’em. We lionize the entrepreneurs who bring us our cool gadgets and apps, even as they amass billions, and we bend to the will of testing companies, for-profits who have spun testing enterprises off from lucrative textbook branches and gargantuan non-profits alike.

I know that schools need things and services. Buildings must be built, water and heat and light are essential, and we have to feed our students. Kids have to sit in chairs, and the technology on which we depend doesn’t fall from the sky.

Many years ago I traveled to Washington, D.C., on some personal business. My grandparents had lived there, and so I remembered it as just another city, with more stirring architecture than most. But when I shopped for hotel rooms more or less downtown, I was shocked by the prices. Someone patiently explained to me that very few people visiting that part of the city pay their own way; some business or law firm or lobbying group is covering the cost, all expensable and deductible, and therefore rates are higher than what mere people would be willing to pay. “Regular” tourists stay out of town and take the Metro in to see the sights. Oh.

Experience has taught me that there are other such spots in the world. Geneva, Switzerland, for one. The institutional furniture industry, for another. Price out some of the really cool schoolroom furniture you see in “schools of the future,” and you’ll see that these schools, or school districts, are shelling out way more for these things than you or I would.

There’s probably a term for this phenomenon, but I’ll just call it “dis-economies of scale.” Institutions buying in bulk and using other people’s money (even if that is actually tuition revenue) wind up paying more for some items because their “consumers” are twice or thrice removed from the people who actually provide the dollars. Government agencies are notorious for this, and public schools are one of the largest arms of government. Independent schools, a relatively tiny market, wind up paying these artificially inflated prices because of the limited number of vendors, all of whom are accustomed to charging what I call government prices.

What’s true for furniture is doubly true for textbooks. An experiment: See which would be a more luxe item to grace your coffee table, a nice art book from Amazon or a random French textbook; there are some cheaper textbooks, but the ones my kids toted around out-cost colorful tomes on Matisse by a pretty penny. If you happen to pay for your kids’ textbooks at an independent school or a college, do a price check. If you’re an administrator signing off on billing these things, find out what parents are paying.

I’m not against publishers*, but I am pretty excited about teacher-created textbooks and assessments not just because they save money but because they can be expressly tailored to the learning objectives for a class. I know that kids have to sit somewhere, and I’ll bet there are smaller suppliers who are making or could make neat stuff for less than six hundred bucks for a rolling chair-desk. Or maybe we could just ask our students to help us rearrange even some of the old-fashioned but movable furniture in our installed base.

Food service operators are a boon in all kinds of ways, I know, from solving HR issues to providing more nutritious meals; I think there actually are economies of scale in this realm.

I frown, however, when itchy investment money hovers directly over schools and school supplies, looking to snag big returns. I’ve written elsewhere of my opposition to for-profit schools in the public and charter realms; allowing business enterprises a profit margin on the backs of kids and taxpayers seems like bad public policy, especially when we have plenty of models of highly effective government-run schools. There has been huge growth in the for-profit standardized testing industry; every new scaling up of some testing regime—and many see the Common Core as culpable in this—seems to open the door for more profit-making. Educational technology has obviously benefited from the entrepreneurial spirit, fueled by venture capital, but scaling this into a sector dominated by online learning under a for-profit model just invites corner-cutting and lowest-common-denominator practices that are unlikely to serve each student well.

So I continue to reserve to myself the right to judge the difference between reasonable profit-making, businesses offering needed services and materiel for reasonable prices, and profiteering, extracting maximum revenue in exchange for goods and services in a model that puts investor returns over the good of students, schools, and taxpayers. 

I am not anti-business, but much more am I pro-kid.

*Someone is bound to point out that one of my own books is being offered for an absurdly high price on Amazon; rest assured that you can buy the book from its non-profit publisher at less than half the Amazon price. As a contract author in this case, there’s nothing more in it for me either way.

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