What Public Schools Could Learn From Fred Smith
Replace “schools” with “electricity sector” in the following and you’ll get a good idea as to what “Consumer Regulated Electricity” is all about.
“‘Without competition, neighborhood schools behave like monopolies, delivering low quality at high cost.’
Empirical studies have supported these claims. Research by Caroline Hoxby, an economist at Stanford, demonstrated that schools respond positively to deregulation and competition in the same way that other sectors do. Deregulation of the trucking industry in the 1970s resulted in faster and more-specialized customer service than before at the same price. Competition from foreign automakers has enhanced the quality of domestic vehicles.
“In parcel services, the introduction of competition improved productivity not only because the private firms (United Parcel Services, Federal Express, DHL Worldwide Express, etc.) had higher productivity and productivity growth,” Ms. Hoxby wrote. “The competition also induced the U.S. Postal Service to raise substantially its own productivity.”
The goal of school reformers isn’t simply to create more alternatives for parents but also to provide incentives for underperforming schools to improve or risk losing students to better schools. The most efficient way to improve K-12 education is to make schools compete for students. As Fred Smith and so many other successful entrepreneurs well-understood, more competition makes organizations strive to do better. Less competition breeds complacency.”
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