Corporations (and partnerships) were created as legal fictions to allow their owners and managers to evade legal and financial responsibility for their actions. Fifty years ago, Milton Friedman suggested that their sole social responsibility was to increase profits. At a stroke, his proposal enabled the very worst of animal spirits by promoting a brutally simple view of management — if you drank his Kool-Aid, there was no longer any need to consider anything other than profits.
Two hundred years earlier, Adam Smith — he of the invisible hand — had foreseen the problem: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.“ Although capitalism has morphed many times since those words were written, you have only to look at the likes of Amazon, Facebook and Purdue Pharma to see that he wasn’t far from the truth.
The growth of schools-as-a-business exposes Friedman’s catastrophic error in a particularly acute form. Seeking to deliver the best education for its students at the least cost means that a school faces conflicting objectives. Friedman and his followers would have it ignore the education and welfare of its students in favor of cost-saving and money-making schemes: If it’s not making and selling kiddie porn, then it is failing in its “sole social responsibility.”
Every dollar that goes to profit, interest or transfer payments to the head office is a dollar not spent on the students’ education.
Trapped by the marketing imperative, a school-as-a-business will need to create an image of success — the simplest and most cynical way is to be selective: to only enroll kids they like the look of and ruthlessly expel those who don’t excel. That way, they should improve their own overall results and, by burdening the competition with their rejects, worsen others. We may have gotten rid of de jure apartheid in this country, but this sort of behavior helps to perpetuate de facto apartheid even longer.
For so long as Raleigh continues to gift our tax dollars to these businesses while our public school teachers are paid — even in part — out of lottery money, the future of our state is predictable. In the global competition for innovation and investment, we will continue to lose. It says a lot about how the world sees us that one of the largest recent investments was when Shuanghui took over Smithfield: Apparently environmental regulations surrounding pig-farming are less stringent in North Carolina than in China.
We can try to buck this trend by investing in our city schools in ways that the state budgeting process cannot touch: volunteering time and donating money or resources. The rancid rhetoric we have heard for so long is wrong. These efforts are not wasted, but are the best investment we can make — for our kids, obviously, but also for ourselves. Eventually, we will be looking to them and their peers for support in our old age.
— Geoff Kemmish