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ERIC Number: ED525105
Record Type: Non-Journal
Publication Date: 2011-Oct
Pages: 15
Abstractor: ERIC
Reference Count: 0
Odd Man Out: How Government Supports Private-Sector Innovation, Except in Education. Private Enterprise in American Education. Special Report 3
Bailey, John
American Enterprise Institute for Public Policy Research
For decades, for-profit educational provision has been merely tolerated, often grudgingly. In the world of charter schooling, for-profit providers are lambasted and sometimes prohibited. In higher education, for-profit institutions have grown rapidly, enrolling millions of nontraditional students and earning enmity, suspicion, and now investigative and regulatory actions from the federal government. When it comes to student lending, teacher quality, and school turnarounds, there is a profound preference for nonprofit or public alternatives. All of this is so familiar as to be unremarkable. The problem is that K-12 and higher education are desperately in need of the innovative thinking and nimble adaptation that for-profits can provide in a landscape characterized by healthy markets and well-designed incentives. As critics have noted, for-profits do indeed have incentives to cut corners, aggressively pursue customers, and seek profits. But these traits are the flip side of valuable characteristics: the inclination to grow rapidly, readily tap capital and talent, maximize cost effectiveness, and accommodate customer needs. Alongside nonprofit and public providers, for-profits have a crucial role to play in meeting America's twenty-first century educational challenges cost-effectively and at scale. In this paper, the author demonstrates how for-profit educational providers are singularly excluded from federal governmental efforts to engage private-sector actors. The authors notes that policymakers and government officials are comfortable with for-profits routinely playing a substantial role in addressing pressing social problems in areas like health care or green energy, but not in education. "When it comes to other crucial challenges our country faces--creating a more reliable health care system, finding efficient sources of clean energy, or improving space exploration--policymakers do not ask whether they should engage for-profit companies, but how they should," he writes, continuing, "It's time for education policymakers to follow suit." Given that the federal government is seeking to play a more catalytic role in promoting school improvement, it would seem a useful time to revisit this double standard. To be clear, the point is not to advocate for federal subsidies or a manipulation of the marketplace, but instead to encourage policymakers to regard for-profits in education as they do in other sensitive domestic policy areas. As the author writes, "[A]n entrepreneurial education landscape is not one in which the government or foundations simply pick winners and losers. Rather, it is one in which these entities help remove barriers to entry for quality providers and think deeply about the impact their policy or philanthropic decisions will have on the broader educational marketplace and potential investors or entrepreneurs in the field." (Contains 32 notes.) [For related reports, see "Beyond Good and Evil: Understanding the Role of For-Profits in Education through the Theories of Disruptive Innovation. Private Enterprise in American Education. Special Report 1" (ED521781); and "More than Meets the Eye: The Politics of For-Profits in Education. Private Enterprise in American Education. Special Report 2" (ED521780).]
American Enterprise Institute for Public Policy Research. 1150 Seventeenth Street NW, Washington, DC 20036. Tel: 202-862-5800; Fax: 202-862-7177; Web site:
Publication Type: Reports - Descriptive
Education Level: Elementary Secondary Education; Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: American Enterprise Institute for Public Policy Research