blind to the way the political power of charter schools severely limits market forces. In fact, they often fund charter school lobbies, frequently using foundations to reap tax subsidies while doing so.
Politics aside, there is a theoretical problem of equating efficiency with equity. Markets, by their nature, produce losers as well as winners, and market theory does nothing to guarantee equity of opportunity or outcomes, since many lose their resources in the long run even under perfect market conditions. The unequal rewards that come to the best producers and the losses of those who fail may drive competition and produce more efficiency, more bushels of corn, but they do nothing to assure that all buyers have an equal or even a sufficient supply of grain. Competition in true markets produces winners and losers—the creative destruction of capitalism. Some schools would succeed and grow, and others would lose everything. In a parallel way some students would make good (high-profit) decisions, and others would lose their school or even end up in a worse one. Creative destruction is supposed to result in more effective producers and lower prices but not to guarantee uniform standards or equality of outcomes for buyers.
A perfect market is not an empirical reality; it is a Platonic ideal type, like perfect honesty or perfect racial integration or a perfect defense policy. In reality, imperfections abound. The theory of perfect markets should be tempered by the skepticism about perfect governments that is so characteristic of American political philosophy. If we had a perfect democracy, all citizens would have an equal chance to participate, be treated equally by others, and confront no barriers, and all would willingly obey the decisions reached by the majority after full and fair consideration. But these ideal conditions do not exist in real societies. Power without limits is power that will be abused. James Madison sagely notes in the Federalist Paper number 51, written during the national debate over the adoption of the Constitution: “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.”32 Since neither of these has ever been the case, Madison argues, we need to regulate and limit each of the government's branches so it preserves freedom and can meet national needs but not harm its own citizens. One of the distinctive characteristics of American political philosophy is that it balances power with real constraints. In economic thought, however, particularly in times of business dominance, there is a tendency to assume that participants in markets will behave like angels rather than use whatever opportunities they have to maximize their interests, whether these reflect market ideals or not. It would be healthy if people applied the skeptical attitudes toward governmental power in political philosophy to markets and were more concerned about what actually happens rather than what the theory suggests. There are tremendous profits to be had in limiting competition, getting and exploiting inside information, and making people believe that products are more valuable than they are.
Further, in a perfect market, the theory argues, all potential buyers and sellers have an equal chance to participate. But if one group of competitors unfairly controls the rules of the game, they threaten the whole idea. If new schools outside the system can tap public school resources, attract the better students, send those with low scores or special needs back to public schools, avoid accountability, and create the belief that they are superior to regular public schools, a negative-sum game of increasing stratification and inequality can result, with the schools left behind demoralized and defunded. The students in public schools would be not beneficiaries of increased competition but the special victims of a distorted market. Something like this may well be happening in cities such as Detroit, which closed half of its public schools as students transferred to charters in other districts, and New Orleans.33 Similar trends were apparent in other cities. Los Angeles School Board Member Tamar Galatzan in 2012 asked, concerning a wave of charters serving middle-class and white students in her part of the nation's second-largest district, “Will traditional public schools become a repository for the poor and the special education students of our city, with everyone else fleeing the traditional public school system? What does that mean for the future of California?"34
Even if, on average, the overall set of choices in a market improves, there is nothing to guarantee that the results for all groups of consumers will be more equal, or to prevent them from becoming more unequal. Indeed, in an arena— such as the real estate market—that has features of a true market, with a great many buyers and sellers and no one controlling much of the total market, some well-intentioned buyers lose everything, while some with a more shrewd sense of timing become rich, taking advantage of the losses of many others. Inequality is an essential product of market competition; in fact, it is a basic driving force. People with better information about and understanding of the system will get the best choices. This is why there have to be rules for markets to be fair: true information must be provided, competitors who cheat must be excluded, contracts must be enforced, and intimidation must be forbidden. Getting the balance right is a complex task.
Market theory is most directly applicable to the buying and selling of simple interchangeable products among thousands of independent producers and potential buyers and a simple and clear way to buy and sell the products. Under those circumstances, comparing prices is the only thing a consumer needs to do. Obviously, under modern economic conditions—with specialized and complex products, high entry costs, often limited competition, limited consumer understanding of differences, massive advertising designed to inflate the value of products, and a tremendous inequality of power between sellers and buyers— things are different.
The theory of market choice in schooling assumes that the customers (the parents) understand the different offerings and have meaningful choices. Unfortunately, this and other key parts of the theory don’t hold in school choice. Schools are not a standardized or easily understood commodity. Even experts struggle to assess the real opportunities and impacts of individual schools. The only generally available information, test scores, mostly reflect out-of-school factors and can be manipulated in many ways.35 Schooling is a highly complex commodity supplied in many forms, with high costs of entry into the market, and schools usually provide little useful comparative information to parents. How does an immigrant single mother who is not an English speaker, for example, acquire information and make good choices for the education of her children in a large city? (Twenty-one percent of U.S. children are growing up in homes where they speak a language other than English.)36 What does choice mean in that context, and what forces influence choice or failure to choose? Is it fair that those who do not understand the system and do not choose often end up in the weakest schools, or that schools of choice often find ways to exclude the most expensive and low-scoring students?
There are rarely multiple suppliers of public schools in a given geographic area. Except in school districts with broad school choice programs and free transportation supporting them (conditions usually produced by desegregation plans), the options are seriously limited. Often there is only the neighborhood public school. Charter schools often do not offer either distinctive curricula or parent recruitment and transportation, so they may serve only a segmented market. Magnet and charter schools may have admissions criteria and may or may not provide free transportation. Schools in danger of losing students typically make few efforts to inform parents of transfer policies, if such exist. Such policies often don’t provide for transportation anyway. Segregated and high-poverty neighborhoods might have a public school, a neighborhood charter school with equally low-scoring students and inexperienced teachers, and, in a few places, a voucher private school, all of which tend to be likewise segregated and impoverished. Many students with an unambiguous legal right to transfer, such as those in schools consistently failing to meet No Child Left Behind progress requirements, have few good choices, because most of their districts have few high-performing schools of any type.37
Two of the most important limits on the school market are jurisdictional boundaries and lack of transportation, both of which radically curtail choice. Metropolitan regions are the natural market area for most economic decisions in a society where more than four-fifths of the population lives in or near cities. No one hesitates to cross a municipal boundary when shopping, when buying a home, when seeking entertainment, or in many
