Anyone who knows the history of my investment career understands that I almost never make a case for active investing. However, one rare exception deals with our country’s failing educational system. Unless parents and school board members exercise real leadership and improve our students’ math and science comprehension, our country’s future, and its ability to bounce back from current and future economic challenges will continue to weaken.
For entrepreneurs and business leaders, the “too big to fail” attitude that sometimes permeates school bureaucracies is just flat-out unacceptable. By now, because of technological innovators such as Steve Jobs’ vision of the digital destruction of paper textbooks, and Sol Kahn’sKahn Academy offering of more than 3300 educational videos on everything from math, history, physics and finance, you might expect that our antiquated educational system would have accelerated change in how we prepare our 21st century students. Parents are waking up to the fact that there are multitudes of free digital learning tools that do not require new levels of funding; a fact clearly demonstrated by the 150 million Kahn Academy YouTube views.
So why are our public schools so slow to reform, while other industries are adapting to the new digital world and thriving? Part of the answer lies with the active managers guiding America’s teachers unions. The Wall Street Journal’s Alicia Mundy recently reported that America’s two largest teachers’ unions spent more than $330 million in the last five years on outside causes, political campaigns, lobbying and issue outreach. Unless parents and taxpayers weigh in and advocate for performance-based results for kids, interests other than that of the pupil may dominate in your local school.
Thanks to a group of parents in California this week, union opposition to reforming a failing school lost a State Superior Court case after a two-year round of delay tactics. The so-called “parent trigger” law called into question in this case works similar to the principle of a shareholder derivative lawsuit. In the case of shareholder suits, shareholders are allowed to bring action in the name of the corporation against parties allegedly causing harm to the corporation. Applied to California public schools, parents can now bring about local ballot action that will disrupt their failing neighborhood school’s reluctance to serve children better. The parent trigger remedy is school choice in action: turn a bad school into a newly governed public charter school.
The late free-market economist Milton Friedman recognized tragic disruptions to our education system as potential opportunities for comprehensive change. Recently, Washington Postwriter Jo-Ann Armao noted how government has reshaped its role in education in New Orleans after Katrina. By adopting free-market principles, she argues, families have more choice about where their children can best succeed, and educators have more opportunity to choose a school that best aligns with their style.
Active fund managers and hedge fund investors may never see the efficient markets world as I do. However, philanthropists who have an eye focused on improving our world should seriously consider supporting education policy change that will increase the number of high quality educational choices for parents in every state of the union. Parent trigger laws, teacher performance pay based on student outcomes, teacher tenure reform, expanding the number of high quality charter schools, and adopting virtual learning programs into the classroom go a long way to place the focus on the interests of the child and put the power of choice in the hands of parents.
To learn more about Rex Sinquefield, please visit www.rexsinquefield.org.