Tuesday 20 February 2018

Charter shut-down

Students marched in Auckland against the closure of their schools. 

Partnership schools, New Zealand's take on Charter Schools, started under National - as a concession to the ACT Party. National didn't much support them while in government, but has taken up the cause since Labour's proposed changes to the system.

Roger Partridge, our Chair, was at the rally. I enjoyed his report.
Against this backdrop, it is not obvious why the new education minister is so determined to put an end to New Zealand's charter schools model and, to quote his January cabinet paper, "close these charter schools in their current form".

And to do so without having even visited one of them.

Could the answer lie in misplaced loyalties? Teachers at charter schools are not required to be registered and the schools are bulk funded. These arrangements permit the schools to hire teachers on different contracts to those in regular state schools, to pay teachers more (or less), and to hire specialist teachers from outside the regulated profession.

Each of these freedoms is a threat to the teachers' unions' collective bargaining powers. As a consequence, the teachers' unions have been vocal opponents of the charter schools policy. No one can blame them for that. That is their job.

But our state education system does not exist for the benefit of teachers – or their unions – any more than the legal system exists for the benefit of the Law Society, or the health system for doctors.
Labour has proposed making cartel behaviour criminal. I'm an antitrust skeptic. But if we're going to have antitrust enforcement, under criminal penalty, we should not leave out Ministers and bureaucracies that cartelise industries.

  • Whoever decided that pharmacies should only be owned by pharmacists has helped to cartelise that industry. Any Ministry and Minister continuing that regime should face criminal charges.
  • Building materials supply regulations that make it difficult to import perfectly adequate materials from places like Tokyo, Seattle or Vancouver are a form of cartel restriction. The Ministries and Councils that encourage those rules should face criminal charges if they do not change the rules to allow greater competition.
  • Occupational licensing restrictions, while not nearly as bad as in the US, foster cartels. More charges, likely against MBIE. 
  • And if the Minister, the Ministry of Education, and the unions change the rules to block competition from charters, I'm sure there are a few spare sets of handcuffs lying around. 
  • The Productivity Commission concluded that government regulations around the tertiary sector have cartelised higher education. Unless they fix the system, we could imagine cartel charges against the Minister for Tertiary Education, CUAP, TEC, and the Vice-Chancellors.
  • How many regulatory regimes provide a simple vehicle for objecting to competitors' rights to do business? How many of them could be deemed to facilitate anticompetitive behaviour? 
  • If the government brings in a GST-at-the-border regime that is more costly to enforce than the GST revenue it brings in, and that deters imports because of the hassle involved for consumers, the most plausible explanation is cartelisation behaviour. The Retailers Association and the Booksellers Association, together with the Minister implementing it, should face antitrust investigation under threat of criminal penalty should it happen. 
Efficiencies can be a defense in corporate antitrust cases - if a merger or anticompetitive-looking regime actually benefits consumers, then it's fine. But the firms involved have to show it. 

And so if any of those regulatory regimes actually pass cost-benefit assessment and benefit consumers on net, that's a perfectly valid defense. But the Ministries, for once, would have to put up a rigorous cost-benefit assessment of their regimes. Is there any chance at all that any cost-benefit assessment could find that it makes sense to ban people from using drywall that's perfectly good enough for use in Vancouver homes? That there's any defensible reason for only allowing pharmacists to own pharmacies? 

It sounds like satire because we all know full well that the State will never prosecute itself for its own cartel behaviour. But are there really that many cartel arrangements that can stand up without government support? 


  1. Charter schools are supposed to be far better than state schools. They were going to kick the butt of the sclerotic system. ACT was certain of this.

    They didn't.

    They aren't working in the US either, although pupil selection sometimes allows the perception. Some US ones are good, many have been closed they are that bad. But some state schools are good too.

    Put together with being more expensive per pupil, and the case for them disappears. Simple economics -- except when the dogma of private always being better than state intercedes.

    National defend them because they are part of their alliance with senior Maori.

    If charter schools were worth defending they 1) would argue with facts, not marches, and 2) parents would be sending their kids to these awesome schools instead of them remaining a tiny minority taste.

    You'd usually give numbers Eric, not emotions.

    1. I have an OIA in for the as yet unreleased commissioned assessment of the schools. Would strongly prefer better assessment of schools, both public and private.

      You're wrong on the funding of partnership schools: see Briar Lipson's column in the Herald of 27 June 2017.

      Best read on the US evidence is that charters haven't done much for middle class kids but have been great in poorer urban areas.