Michael B. Horn: Beyond Good and Evil

The role of for-profit companies in public education–education financed by the government–has attracted increased scrutiny over the past few years. Though for-profit entities such as textbook companies have had contracts with public school districts for decades, recent controversy over what government officials and others perceive as low graduation rates and questionable marketing practices within the for-profit higher-education space has drawn significant negative attention. As this controversy heats up, it is prompting a wider debate about the role of for-profit companies in education–a debate too often characterized by faulty assumptions and misunderstandings on both sides.
Many in public education assume the worst about for-profit corporations, arguing that they are money-grabbing entities that will shortchange the public good if it means increased profits. Critics see no place for for-profit providers in American education. Supporters view for-profits as a force for good that can harness the profit motive to attract top talent and scale quality in public education. The government often perpetuates these divides by drawing lines in the sand of what activities companies can and cannot do based on their corporate structures. Despite these views on for-profits, however, the reality is different. Policymakers, officials, providers, and other members of the debate would do well to keep three key points in mind:
--Firs, for-profit companies are not inherently good or evil
--Second, there are far fewer inherent and predetermined differences between for-profit companies and their nonprofit counterparts than many assume.
--Third, the biggest inherent differences between for-profits and nonprofits stem from their fundamental corporate structures, which determine what they do with their profits–and thus affect their ability to attract capital and scale–as well as what opportunities look attractive.
Click here to read more of my thoughts on for-profits and the role they should--and can--play in education. You will also find a link to my paper"Understanding the Role of For-Profits in Education Through the Theories of Disruptive Innovation," published by the American Enterprise Institute. There is also a link to AEI's "Private Enterprise in American Education Series."