June 3, 2018
Many of my friends who defend public education are also the political type who are very worried about monopolies. They often point to the damage that companies with large market shares—think Amazon, Wal-Mart, and Google—can do. These friends point out how these companies’ large market presence allows them to squeeze out competitors, exploit employees, and hold customers captive.
Those points, of course, are debatable, but what really troubles me is that while these friends decry monopolies in commerce, they defend a huge monopoly: public schools. All the same criticisms should apply—but never seem to.
Recently, 60 Minutes ran an interesting piece on Google and why (according to interviewees) they are a monopoly. The segment’s host stipulated that in 2017, 90% of all internet searches came through Google.
Whatever the case, Google has an impressive market share in many areas, from operating systems (Android on 67% of phones) to web browsers (Chrome is the preferred browser on 60% of desktops).
Other companies have recently been decried in the press as monopolies. Amazon’s seeking of a “second headquarters” and its recent purchase of Whole Foods Market has renewed cries that it is a monopoly. Amazon’s total share of retail sales in the U.S. in 2017 is 6%, which sounds small, but if we narrow the range to online retail, Amazon handled a whopping 53% of all sales! Other companies, like Wal-Mart (“the world’s largest company”) and Facebook (which dominates the social media space), are frequently called monopolies.
The market presence of these companies is surely impressive. Is it enough to call them monopolies? I’d argue that it isn’t because all of these companies are in industries where competitors do exist and others are free to enter the market. It may not be easy to go toe-to-toe with Google, Wal-Mart, or Amazon, but competitors—like Mozilla Firefox and Target —do exist.
What isn’t in dispute is that all the companies listed above have dominant market positions. And this, my friends argue, gives them unfair leverage and power to do things like squeeze suppliers, exploit workers, and hold consumers hostage.
My contention is that if monopolies (at least as described above) are bad, then public schools are possibly the worst kind of monopolies.
The Worst Kind of Monopoly
Purely for the sake of argument, let’s stipulate that Amazon is a monopoly because of its ownership of 51% of online retail sales. Public schools serve around 90% of U.S. children’s K-12 education. In 2014, New Orleans was the city with the most private schools, and even then, public schools (including charters) accounted for 75% of the market share. That eclipses Amazon’s online market share!
And it gets worse. Even if we argue about whether Amazon engages in sneaky sales tactics to get consumers to buy more than they otherwise would, Amazon must cater to consumer demand to stay dominant. Not so for public schools.
Treating Companies like Public Schools
Imagine a different scenario:
Since Amazon dominates online retail, imagine that the government makes them an offer. If Amazon agrees to supply citizens all with “free” stuff to satisfy our wants and needs, then in return, Amazon will gain its revenue exclusively through tax money. Another term of the agreement is that Amazon will not ask us what we want or allow us to individually request items but will give us all a predetermined package of goods that the political process (politicians and bureaucrats in conjunction with Amazon) say we should have.
You want to opt out of this great deal? Not to worry, say Amazon and the government. You can choose to shop at other retailers. Just fill out a set of forms explaining why (to our satisfaction) and recognize that your tax money still goes to Amazon. You’ll just have to pay those other retailers out of pocket.
I doubt any of my anti-monopoly-public-school-supporting friends would accept this arrangement. They would immediately recognize the problem. Amazon would no longer have great incentive to offer us products that satisfy our (as opposed to its’) wants. The government would be forcing people to support a company they may not want to support, and while there is an illusion of choice, those who can’t afford to “pay twice” (a tax to Amazon and money to other retailers) would be left out. And if anyone wanted a job in retail, they would have one real option: Amazon.
Why the Double Standard?
I submit that this situation is exactly what our public school systems do. Maybe public schools have such a high market share because they are just so good, but I think it is more plausible that the deck is artificially stacked in their favor. Public schools are guaranteed tax funding, whereas private competitors must convince consumers to pay tuition over and above the tax.
This arguably allows public school systems to behave like the worst sorts of monopolies. My friends would point out that Wal-Mart’s and Amazon’s powerful market presence allows them to bully employees. Yet these friends also believe that many states persistently pay teachers poorly, and since public schools educate around 90% of students, there is very little price shopping teachers can do but ask the state for a raise. And as to whether public schools are giving families what they want, the data ranges from lukewarm to pessimistic (as I’d expect would happen in our imagined tax-supported Amazon example where Amazon wouldn’t really need customers to be satisfied to maintain its dominance.)
Of course, it bears mentioning that public schooling is not a monopoly but a confederation of monopolies. Public school systems are largely run at the district level and vary to some extent by district. State governments, however, control curricular standards, textbook selections, and many of the assessments (standardized tests) that all students must take. That caveat, though, doesn’t amount to much because, in any given district, that district’s public school system has dominant control of K-12 education. And while teachers seeking employment can shop around across many districts, state legislatures have a large amount of control over what public school teachers in that state get paid and other working conditions in public schools.
Before concluding, I must say that it is particularly interesting that Google comes under fire for its monopoly status in a way that applies well to public schools. Google’s (and Facebook’s) dominance, people say, is particularly troubling because they exercise significant control of how we consume information. Public school systems do, too. States choose what will and won’t be taught and tested in its schools and also select the textbooks that will be used to teach what is and isn’t true. Again, I think there may be a double standard here.
I suspect my well-meaning friends do not see public schools as a monopoly in the same way as Amazon or Google because, well, we are used to public schools being the service provider.
We’ve been told stories about the noble ideal of the public school. And while we see just as many examples of public school officials behaving poorly as corporate executives, we somehow have more faith in public actors than in private ones as a force for change.
I simply ask that we take seriously the idea of a double standard here. If commercial monopolies are bad because their power gives them the ability to do bad things, it seems strange to treat government monopolies any differently. And if breaking up commercial monopolies is allegedly good for consumers, who benefit from competition between providers, I’d suggest this probably also holds true when talking about public school systems.