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Business-Managed Democracy

“Business-managed democracies are those in which the political and cultural arrangements are managed in the interests of business”

Sharon Beder

Business-Managed Education

Disconnecting Funding from Outcomes

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Having cut school funding, governments were subject to criticism that they were harming the quality of education. Consequently they needed research to show that funding was not an important factor in achieving a quality education. They funded their own research on this and corporate-funded think tanks augmented this effort.

Think Tank Research

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Eric HanushekIn the US Eric Hanushek (pictured), an economist and fellow at the Hoover Institution in the US published various studies purporting to show that there was no relationship between levels of educational expenditure and measures of student achievement. His findings were cited in policy papers and newspaper editorials around the world. Others who demonstrated that Hanushek’s data could be interpreted to show that levels of expenditure actually did make a significance difference were largely ignored by the mainstream media and policy-makers. The Heritage Foundation declared in 1989 that “Virtually all studies of school performance, in fact, reveal that spending has little bearing on student achievement”.

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Australian think tanks such as the Centre for Policy Studies used Hanushek data to argue that student-staff ratios were not important to educational outcomes. Their findings were then promoted in the newspapers by conservative columnists such as Paddy McGuinness who argued that “pupil-teacher ratios, expenditures per pupil, the age and quality of physical facilities, the number of books in libraries – none of this has any relationship to outcomes”.

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cartoonAnother research aim was to shift the blame for declining educational quality from funding cuts to the inadequacies of particular schools and teachers. A 1990 book by John Chubb and Terry Moe, Politics, Markets and America’s Schools, published by the Brookings Institution, was one of the most widely cited on education policy in the English-speaking world during the 1990s. It argued that it was good leadership and teaching as well as high academic standards and goals and strong parental support that made effective schools, not being well-resourced or located in areas of high socio-economic background. Therefore the responsibility for effective schools lay with headmasters, teachers and parents not with governments. The way to promote good practice in schools, they claimed, was through market competition. Both authors, formerly with the Brookings Institution, are now fellows of the Hoover Institution.

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Business Campaigns

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Similarly the Business Roundtable (BRT) argued “reform cannot be premised on increased public spending”. The BRT ran a campaign that changed the way that educational progress was measured, from “traditional indicators such as per-pupil spending and student-teacher ratios” to “bottom-line gains in student achievement”.

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Corporations demanded that schools achieve better student performance without resort to the traditional remedy for educational shortfalls –increased school funding; smaller classes; more qualified, better paid teachers – which are measures likely to raise taxes. They helped shift the focus from inputs and processes to outputs.

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This view that what matters is outcomes and that these do not depend on the resources available came to dominate government policy circles in all English-speaking nations. In Australia the Quality Education Review Committee (QERC) was established by the federal government to reorient education policy away from demands for more resources to an emphasis on school performance and efficiency.

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Business-funded think tanks around the world still argue that funding is not a key element of school success. For example, Chester Finn, president of the Thomas B Fordham Foundation, and a widely cited commentator on school education issues, claims “there is no direct relationship between the amount of resources a school receives and its level of academic performance”.

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Contrary Evidence

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Yet it is obvious that smaller classes, better qualified teachers, access to up-to-date good quality text books, and the quality of resources such as science labs and computers, have an important impact on student learning. Independent studies show that minor increases in funding, when allocated appropriately, can dramatically increase student achievement.

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In 29 of the 30 states in which courts have considered whether "money matters," the courts have ruled that it does – additional money for education, if spent well, leads to higher student achievement.

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A 2003 National Center for Schools and Communities study of New York City’s 1,100 public schools found that students performed better, regardless of race or socio-economic background, in schools that were better resourced and had more experienced teachers. Also, schools “with fully functioning libraries and modern computers” had better student attendance rates, lower suspension rates, and less crime.

It is also evident to corporate executives that funding matters. Many willingly spend $20,000 to $30,000 a year on each of their own children’s private education to ensure they have an educational advantage whilst arguing that public schools need far less to achieve academic excellence.

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NEW! Contributers' Updates and Examples

If you have any examples or updates you would like to contribute please email them to me and I will add them here. Please give references for where you sourced the information.