Continuing Conversation... James Tooley on Private Schools for the Poor and The Beautiful Tree

EconTalk Extra
by Amy Willis
James Tooley on Private School... Joshua Greene on Moral Tribes,...

This week, EconTalk host Russ Roberts welcomed author James Tooley to talk about what he discovered in researching the educational options of the world's poorest children. What he found is surprising to many, but as Roberts notes, some find Tooley's work dangerous. Let us know what you think about their conversation, using the prompts in this week's Extra.

beautiful tree.jpg

Check Your Knowledge:

1. What does Roberts mean when he mentions "feedback loops," and how does Tooley suggest these operate in the realm of private schools in the world's poorest areas?

2. What does Tooley mean when he suggests he has learned more about economics from poor parents than from reading Friedman or Hayek? Do you think that's hyperbole or simply a true statement?

Going Deeper:

3. What are the means by which these private schools arise in these poverty-stricken ares, according to Tooley? Why do you think other spheres of the economy do not see a similar pattern of emergence?

Extra Credit:

4. Roberts notes that critics of Tooley's work may claim that public schools, such as those in Finland, are the ideal. How does Tooley react to this claim? What would you suggest as means to achieve the ends Tooley desires? Explain.

5. What does Roberts regard as the two primary lessons he learned from reading Tooley's The Beautiful Tree? How would economist William Easterly suggest that Roberts' second lesson be addressed in the education realm?

Comments and Sharing

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COMMENTS (9 to date)
SaveyourSelf writes:

1. Complex systems exhibit many characteristic features, one of which is feedback loops, “where change in a variable results in either an amplification (positive feedback) or a dampening (negative feedback) of that change.” (Source)

Tooley traces one such feedback-loop where failure to meet parent expectations leads to unemployment which in turn leads to careful focus on the part of other teachers to meet parent expectations.

It is remarkable to note that these loops still operate through price mechanisms even in places where money is VERY scarce.

SaveyourSelf writes:

3. What are the means by which these private schools arise in these poverty-stricken ares, according to Tooley?
Excellent question. I propose the answer is that these slums were abandoned by the government apparatus. The slums were thus, “Free”, to develop in the manner that made the most sense.

Why do you think other spheres of the economy do not see a similar pattern of emergence?
Government interference. Targeted application of violence to reduce or eliminate competition. That and just plain ignorance. Complex systems are, well, complicated, hard to understand, difficult to model, impossible to predict, challenging to grasp, etc.

Why do you think other spheres of the economy do not see a similar pattern of emergence?
(Saveyourself): "Government interference. Targeted application of violence to reduce or eliminate competition."

Perhaps. I suggest that the education industry exhibits few features of likely candidates for State (i.e., government, generally) operation: inputs (individual students' interests and abilities) and outputs (their future career paths) vary enormously, start-up costs are low, and compliance costs rise with the social distance between the student-teacher interaction and decision-makers (it's hard to hold teachers to account in a large school district). Given the opportunity cost to parents of wretched schooling, small-scale operations can compete against ponderous, high-cost "free" State suppliers of education services unless political authorities actively suppress competitors (e.g. Cuba, North Korea).

The cost issues associated with State-operated schools do not deter politicians from imposing compulsory attendance statutes and tax subsidization of schools because schools serve politicians and system insiders, not students, parents, or taxpayers. Politicians buy teacher union support and State-worshipful indoctrination with the expense of tax dollars and student time.

I recommend __The Beautiful Tree__, Coulson's __Market Education__, and the Brookings study __Vouchers and the Provision of Public Services__.

(Q): "What does Tooley mean when he suggests he has learned more about economics from poor parents than from reading Friedman or Hayek?"

There's a big difference between words and experience. If I say "emotions are a chemical trip", you might agree somewhat. Experience heroin, LSD, human sexual desire and the suffering of loss and you will understand in a very different way. Too many economists understand their own subject superficially. "Demand" is a word or a line in a graph. "Incentive" and "education" are undefined. So they send their own children to State-monopoly schools and don't bother to ask themselves why their children (or any other children) should do what strangers require. Compulsory, unpaid labor is slavery (definition).

Today, in the USA, children work, unpaid, as window-dressing in a massive make-work program for dues-paying members of the NEA/AFT/AFSCME cartel. It does not take 12 years to teach a normal child to read and compute. Most vocational training occurs more effectively on the job than in a classroom. State (government, generally) provision of History, Civics, and Economics instruction is a threat to democracy, just as State operation of newspapers and broadcast news media would be (and is, in Cuba and North Korea).

On-the-job training qualifies as "education. The State cannot subsidize education without a definition of "education". Tooley and Roberts allude to this point toward the end of the interview. The State cannot compel attendance at school without a definition of "school". Becker (__Human Capital__) defines "school" as an institution whose principal product is education. By that definition, many of the NEA/AFT/AFSCME cartel's so-called "schools" are not schools. Compulsory attendance laws, child laborlaws, and minimum wage laws put on-the-job training off limits for many children.

Amy Willis writes:

@Malcolm, thanks for the reading recs. I might add EG West's "Education and the State" (the British story...and incidentally, West is the namesake of Tooley's university institute). I also like Ravitch's "Left Back."


Thank you for the exercise in attention. Your first question, about feedback loops, is fundamental to the issue of the relative performance of competitive markets versus State-monopoly enterprise generally. There is so much to be said about that issue that I did not even start. As Tooley observes, operators of small independent schools can make small incremental adjustments to curricula, methods of instruction, funding mechanisms, admission criteria, and other factors. Employees of a State-monopoly enterprise (teachers, principals, etc.) are bound by the terms of their contract. Evolution in markets can advance smoothly, while major changes to State-monopoly enterprise may require large-scale political campaigns to overcome internal resistance from system insiders.

I have been composing an overview of the evolution of Friedman's thinking on vouchers, framed as a review of the Cato collection __Liberty and Learning: Milton Friedman's Voucher Idea At Fifty__. West changed Friedman's cost/benefit calculation with historical data.

I have put off reading __Education and the State__. It's on my to-do list. I'm very much a fan of West's work. See West's article "Education Vouchers in Principle and Practice: A Survey" in the World Bank Research Observer (Feb. 1997). There's an abstract analysis of the case for a State role in the education industry.

One more recommendation: Myron Lieberman, __Privatization and Educational Choice__.


I second the recommendation of Ravitch, __Left Back__, even though she has outed herself as a defender of the NEA/AFT/AFSCME cartel and Jay Greene questions her analytical impartiality. __Left Back__ exposes the arrogance of policy planners, who presumptuously prescribe curricula and methods of instruction for thousands of children about whom the planners know nothing.

Amy Willis writes:

@Malcolm, Lieberman is also great...And I would love to see your Cato review. I hesitated in suggesting Ravitch for that very reason, but indeed "Left Back" stands as a good book...despite her current trajectory. BTW- Russ interviewed her on "The Death and Life..." in 2010. ICYMI, here's the link:

About feedback loops: ...
In __One Who Survived__ Alexander Barmine recounts a conference he attended (as an official of the Commissariat of Trade) with Stalin and a manager of an automobile factory who sought from Stalin permission to modify the design of headlights on cars intended for export. Command economies operate on fear, and this must either paralyze the system, sending trivial decisions to the summit of power, choking the political process, or it turns mid-level and low-level decision makers into criminals.

The argument about feedback loops in socialist legal environments (i.e., command economies) and market-oriented legal environments (free market economies) needs a name by which we refer to some standard analysis, as we can with "agency problem", "public goods", "monopoly rent" and (thanks, Bryan. Jan. 5), "bailey and motte".

The relation to the education industry should be obvious.

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