Remember Hillary Clinton’s declaration that privatization never works? She may want to look at a new study in the Journal of Public Economics, which analyzed the effect of a school voucher system in Milwaukee. Not only did privatization improve the education of childred redirected from the public school system, it also forced the public schools to improve to remain competitive:
As a voucher program in Milwaukee has expanded, taking money and pupils out of public schools, the schools have responded by ramping up their own performance, a forthcoming study in the Journal of Public Economics argues.
The paper offers one of the most positive conclusions yet drawn in the heated debate over the effects of the 17-year-old Milwaukee program, which in 2007 sent more than 17,000 low-income Milwaukee students to private schools via publicly funded scholarships. It is the nation’s largest publicly funded voucher experiment, having grown from seven participating private schools in 1990 to 121 in 2007.
At issue is whether the program has appreciably helped the students who are given places in private schools, as well whether it has hurt the students who stay in public schools.
How did they make those adjustments? One of the voucher program’s critics says that people should be skeptical, because the school districts changed superintendents and curriculum in order to achieve their gains. Well, it looked like it worked! Perhaps that’s what the public schools needed, and it appears that the competition from the private schools forced the school districts to figure out the reasons for poor performance.
The voucher program did not start off as successfully as it has been recently. Two changes created most of the success, according to the study’s author, economist Rajashri Chakrabarti. The second replaced the money for public schools that was lost when a student used the vouchers. The first and primary improvement came when Milwaukee allowed parents to choose parochial schools, greatly expanding the number of choices and creating a more competitive environment.
It appears that privatization works in two directions when dealing with government bureaucracies. First, private enterprise and competition give consumers a wider choice and force suppliers to become more responsive. Second, when public bureaucracies see their funding threatened, they reorganize to meet the threat and become more efficient themselves. The marketplace forces reforms that would not take place without the clarifying effect of competition.
Someone might want to tip Hillary to the news that privatization works.