(Reprinted from HKCER Letters, Vol. 15, July 1992) 


Building West Berlin in American Education

Y.C. Richard Wong


The idea of introducing a voucher scheme to revitalize the failing public schools system has been advocated by conservative economists in many countries for several decades. The concept is very simple: Families receive from the government cash equivalent subsidies in the form of a voucher that can be used to pay for their children's tuition fees. Parents decide which school to send their children to, and this generates competition among schools to maintain the quality of education. Such a scheme creates an efficient market for education, while social goals can be achieved by linking the value of these vouchers to family circumstances.

The idea was ridiculed for decades until the failure of the public schools reached crisis proportions and various reform attempts failed to make any significant progress. Vouchers have gained increasing respectability lately even among liberal economists. A recent study by John E. Chubb and Terry M. Moe, published in 1990 by the liberal Brookings Institution, entitled Politics, Markets, and America's Schools has provided convincing evidence that vouchers work to improve education, particularly to the benefit of underprivileged families.

Nevertheless, political opposition, especially from the education establishment, kept the idea off the political agenda in many countries, including Thatcherite Britain. In the U.S., the Bush education strategy based on a variant of the voucher proposal has already been met with stiff political opposition, and Congress has effectively killed President Bush's proposals for now. The current U.S. strategy for education reform proposed by Secretary of Education Lamar Alexander's New American Schools seeks to create 535 radically different public schools, one in each Congressional district and two in each state, whose success would then spur other schools to change.

Private Initiatives

The protracted economic slowdown of U.S. productivity has prompted private business to take the initiative to revitalize American education. The most ambitious undertaking is the Edison Project, the brainchild of Christopher Whittle, Chairman of Whittle Communications. The project is a partnership of Whittle Communications; Time Warner, Inc.; Phillips Electronics N.V.; and Associated Newspapers Holdings Ltd. The Edison Project plans to design completely new schools, run them at lower cost than public schools, charge a moderate tuition, and make substantial profits. The project's ultimate goal is to serve as a model for major structural change in American public education. Their first triumph has been the successful recruitment of Benno C. Schmidt Jr. who resigned as President of Yale University in order to lead an effort to design and build the first national schools system in the United States.

In announcing his resignation from Yale, Mr. Schmidt said, "The time has come for Americans to think in a fresh way about the nature, purposes, and scope of schools. We must heed the lessons that have changed the world in recent years -- that excessive concentrations of power or resources, public or private, do not work; that competition, experimentation, and choice are essential to progress and freedom; that bureaucracies in the absence of competition are stultifying. We need to focus the best minds, the most creative technologies, adequate financial capital, and an uncompromising drive for excellence on the education of this nation's children."

The Edison Project expects to build and open 200 schools combining day-care and elementary education with 150,000 students by the fall of 1996, and a total of 1,000 day-care-through-high-school campuses nationwide by 2010 serving 2 million students. The schools would open 11 months a year, running at least eight hours a day, and charging about US$5,500 a year in tuition, the average cost per child in a public school. They would, theoretically, operate more efficiently through the use of fewer teachers and bureaucrats, more volunteers, more technology, and a systemwide sharing of curriculum, ideas, and teacher training courses. About 20 percent of the students in the Whittle schools system - although not 20 percent at every school - would be on scholarship. That would translate into some inner-city schools being subsidized by full-tuition schools in wealthy places.

Paradigm Shift in Education

Over the next three years, Mr. Schmidt will lead an eclectic design team, including business people, educational theorists and journalists, in reimagining elementary and secondary education. Financed by US$60 million from the partners, they will consider no idea out-of-bounds, Mr. Schmidt said. "For example, perhaps an education system ought to engage children at six months, or six months before they were born," he said.

Mr. Schmidt and Mr. Whittle talk grandly of the historical importance of their project, placing their potential revolution in education in the context of recent upheavals in world history. "You have to have a West Berlin for East Berlin to fall, and what we are really doing here is building West Berlin," Mr. Whittle said. This does not mean, they said, that they expect the nation's public schools to wither on the vine; rather, they envision the Whittle Schools as a catalyst for change. Mr. Schmidt repeatedly referred to effecting a paradigm shift in American education.

Mr. Whittle believes his private schools will indeed change public schools - through the same kind of consumer pressure that underpins the Bush Administration's education strategy. This is the idea of a choice or voucher system, that allows dissatisfied parents to leave public schools and take their tax money with them. Choice is meant to make the world of education more like the marketplace, with competition forcing schools to improve or lose students.

At the heart of the Edison Project is an idea that it is hopeless to expect change from within the existing school system, so parents must be given the weapon of choice to force changes in public schools. Among the seven members of the Edison Project's core design team is John E. Chubb whose study has become the blueprint for believers in parental choice. Indeed, Mr. Schmidt cites Chubb and Moe and their free-market theory of education frequently. Their thinking that the failure of educational reform lies with the existing system - and not with teachers or students - vibrates at the heart of the Whittle Schools?philosophy. Another member of the team is Chester E. Finn Jr., a Vanderbilt University professor, the prime architect of the Bush education strategy.

The other members are Lee Eisenberg, former editor in chief of Esquire magazine, which Mr. Whittle used to own; Dominique Browning, a former assistant managing editor of Newsweek; Nancy Hechinger, who heads Hands on Media, a company that produces reference materials for use on computers; Daniel Biederman, president of the Grand Central and 34th Street Partnerships, organizations that assist property owners and tenants in Manhattan; and Sylvia Peters, principal of the Alexandre Dumas Elementary School in Chicago, who is the only school administrator.

High Tolerance for Risk

Mr. Schmidt and Mr. Whittle stated that sweeping change is antithetical to the existing system. But, they said, no one outside the public schools ventures any grand-scale alternative because the start-up costs are staggering. "The reason this has not been done before is that this thing is a matter of D-Day dimensions," Mr. Schmidt said. "Only someone with a high tolerance for risk would even be willing to contemplate it." Mr. Whittle, whose risk taking is central to his reputation as an unorthodox businessman, estimated that he will need to raise $2.3 billion to open his first 200 schools.

"There is a lot of risk here," said Christopher Whittle. The proclaimed objectives are to invent appreciably better schools, using dazzling technology and longer hours, but to charge no more in tuition than public schools spend on pupils - all while making a sweet enough profit to attract big-time investors. If the enterprise comes to pass, it will constitute an education business of unprecedented size. Mr. Whittle envisions the schools producing revenues of nearly $700 million in their first year of operation. If 1,000 schools open, the revenues could swell to more than $10 billion.

A cornerstone of the whole plan, and surely its most treacherous obstacle, is that the schools charge tuition no higher than the average cost per student spent in public schools, which is estimated at around US$5,500. Even at that tuition, Mr. Whittle said he would actually have to operate the schools at a cost per student closer to $3,500, since he needed to incorporate the cost of the buildings, underwrite scholarships for about 20 percent of the students and wring out a profit margin of around 15 percent.

Mr. Whittle says he does not know whether the economics will ever make any sense. He is betting that he will be able to reap considerable savings by eliminating the lumbering and expensive bureaucracies familiar in public school systems. To make a profit, he will have to keep actual costs far lower than US$5,500, and he is betting he can do so by relying on more volunteers, fewer bureaucrats, the latest technology, more efficient use of classroom space, and students who perform a wide array of services, ranging from tutoring others to cleaning bathrooms. While he intends to pay teachers better, he expects there will be fewer full-salaried teachers. He says students will do much of their learning on their own with an interactive computer system and with the help of student coaches and volunteers. Mr. Whittle contends that he will succeed precisely because he is able to start from scratch, while reformers must struggle with existing schools that often fight change.

And what if the Edison Project fails?

"If it fails, it will have been a noble effort," said Mr. Schmidt. "And I will no longer have tenure."

One is reminded that not so long ago in Hong Kong, every single secondary school principal opted not to join the Direct Subsidy to Schools scheme. Quite a contrast.


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