Is it wrong for a private company to earn a profit when it does business with a public (government) school? Some people think so. They like to complain that private, for-profit management companies sometimes are hired to manage charter schools. They even object to public schools contracting in the marketplace with private companies to provide food service to busing to custodial work. I once heard a state legislator in Michigan say, “I don’t believe it’s appropriate for somebody to make a profit off of public education.”
Maybe what’s needed in the public schools is more profit, not less. Think about it: Where is the crisis in public education these days? Is it in the availability of desks, food or computers? Or is it in other areas provided by the for-profit private sector?
The fact is that in dozens of countries across the globe, the education crisis is in the classroom—the part delivered by government, regulated by government and supervised by government bureaucracies. That’s the part that could benefit from the same choice, accountability and dynamism that make the free, profit-driven parts of any economy work so much better.
If we follow the anti-profit premise to its logical conclusion, we would pass laws requiring public schools to hire only government construction companies to build new buildings (fortunately, the government usually doesn’t run construction companies).
Desks, chalk and pencils would have to be purchased from government-owned desk, chalk and pencil factories (fortunately, the government usually doesn’t run those either, except in places like Cuba and North Korea). At lunch time, students would have to eat food that was grown on state-run collective farms and sold in government grocery stores. No, thanks!
Or alternatively, we could pass laws that tell public schools it’s alright to buy these things from private companies, but only those that lose money instead of earn it in the form we call “profit.” But it’s hard to imagine that schools could find suppliers who would provide a good or a service at a loss. Not even the self-serving, power-hungry teacher unions do that. Time and again, teacher unions oppose competitive contracting for school services but at their own union headquarters, they often contract for services, even with non-union companies.
Socialists, communists and other state-worshipers on the Left turn their noses up at the very thought of “profit.” Maybe that’s because they don’t know how to create it. They have endless schemes to discourage or even seize it, but no helpful suggestions for how to generate it in the first place.
Profits are necessary to maintain a good education system
Here’s a simple, layman’s way of viewing profit: Imagine you have a hundred dollars’ worth of raw material. You shake it up, add your ingenuity and labor, and end up with a final product that people in the marketplace will pay $150 for. You’ve added value to society and earned a profit because of it. Now imagine that you take that same hundred dollars’ worth of stuff, shake it up, and produce a final product worth only $50. You’ve certainly made no profit, and have actually subtracted from total value in society. How can that possibly be virtuous?
And furthermore, which do you think is easier to accomplish year-after-year—a profit or a loss? I assure you that it takes no special skill or talent to consistently generate a loss. It is often tough just to break even. Even those leftist state-worshipers know how to lose money; in fact, that’s what happens every time they take charge.
A good number of government officials don’t like profit, and that’s nothing new. They’ve been bad-mouthing and taxing it since the sun first came up in the east. They should be grateful that some people know how to make a profit because if they didn’t, those officials couldn’t tax it.
Choice, competition and accountability in education would be served any time a school administrator opts to use scarce resources wisely and shop in a competitive marketplace for goods and services needed. The fact that they can buy those things from companies that are profitable should not be a hang-up.
Ask yourself this: When you want a good meal, do the words “government restaurant” ever come to mind?