Free schools: the market as a discovery mechanism

 

Some things don’t need discovering:

• This is a school which has been set up and run by representatives of the community with limited knowledge and experience. Leadership and management, including governance, are inadequate and have been unable to improve the school.
• The school has not been adequately monitored or supported. Pupils’ achievement is inadequate because the staff’s expectations are too low and pupils do not make enough progress.
• Teaching is inadequate. Many teachers are inexperienced and have not received the training and support they need.
• etc.

So sayeth Ofsted about the Al-Madinah school. Unfortunately, because Gove was keen to have Free Schools up and running as soon as possible he’s let some rather unsavoury characters run full steam ahead.

Some of a libertarian bent have greeted this failure with fanfare. The market winnows out losers. No central planner can succeed. This is all part of the process of discovery.

Between me and you, I think this might be bullshit.

I’m all for discovery and failure. The Use of Knowledge in Society makes a lot of good points theoretically. Disney, Haskel and Heden make a solid empirical case for the importance of failure. But plur-leease. They don’t give you carte blanche to celebrate failure.

At Al-Madinah and Pimlico, obviously stupid ideas have failed and everyone involved is the worse for it. Having incompetent teachers is bad for pupils. Hiring a 27-year-old to be headteachers is a bad idea. These are not the market discovering something useful. This is idiots rediscovering things people of normal intelligence already knew.

Actually, blaming idiots is unfair. [1] Ideology blinded these people in utterly predictable ways. These are not evidence of the strengths of the Free School programme’s tolerance of experimentation. Nobody has done a double blind randomised trial to prove parachutes are effective. You’re a clever bunch, I’ll let you join the dots yourself.

Celebrating bad ideas failing is a bad idea. Celebrating good idea failing is great, we can chalk them off and move on. But generally, I wouldn’t recommend celebrating a bad idea succeeding either. Look at finance.

Investing in hedge funds, dot-coms and bank stocks has made a lot of fund managers very well off, but for the investors? Not so much. There’s an old joke about someone going to a marina and being shown all the hedge fund managers’ yachts and asking “where are the clients yachts?” Haha. How droll.

Anyway. If you were paying attention, the Nobel prize in economics was awarded a few days ago. It went to the guys who made the best empirical case that “you personally won’t beat the market, so don’t try any funny stuff.” It’s a pity it ended up being called the “efficient market hypothesis” because there’s a lot in the idea for the left. Those masters of the universe who justify their paycheques through their unique foresight and vision? Bullshitters.

Rather than all the financial jiggery-pokery, a diversified portfolio of stocks, fixed income and cash (regularly rebalanced) is a much better investment than almost anything else. [2] But the terrible idea that super-duper financial wizardry can make people loads of money persists. Bad ideas have legs. Don’t celebrate that.

So what do we see with free schools? Lots doing well and a few fucking up in entirely predictable ways. The market discovers, but there is some stuff we already know. Don’t segregate children, don’t hire people born in the 1980s to run schools, don’t trust hedge fund managers. A little oversight goes a long way. The market will discover your terrible idea is terrible over and over again, but we don’t need to. We’ve written some good ideas down.

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[1] Some of my best friends are idiots.

[2] Okay. Dan is probably right, I defer to his superior knowledge. There are some ways to beat the market. If you’ve the diligence, calmness and discipline and can follow some simple rules then you can succeed. But most won’t and therefore don’t and in that sense Matt is more correct and I can continue with the same beliefs I always had.