For-Profit Schools: Profit’s not a Four-Letter Word

by | Feb 22, 2002

“It’s not ethically sound to make a profit off educating students in a school that serves the public, which a charter school is, using funds from public coffers.” That’s not a sentence from Mao’s Little Red Book. It’s from Philip Parr, Chief of Staff of the Pittsburgh Public Schools, as quoted in a front page […]

“It’s not ethically sound to make a profit off educating students in a school that serves the public, which a charter school is, using funds from public coffers.” That’s not a sentence from Mao’s Little Red Book. It’s from Philip Parr, Chief of Staff of the Pittsburgh Public Schools, as quoted in a front page article in the Pittsburgh Tribune-Review, “Edison Inc. set to run charter schools in city; district official: business arrangement immoral.”

Profits inherently “immoral”? That’s the kind of talk I used to hear from my Trotskite friends in Pittsburgh’s South Side in the 1970s, back before the Soviet Union collapsed, before the Berlin Wall came down, before most of the GNP in China was produced by the private sector, before communism ended up in the ash-bin of history.

To say that profits are simply “not ethically sound” — in any field, education or lumberyards — is a stance that puts ideology above experience, above the evidence, and in the case of schools, a posture that places dogma above student achievement.

Let’s take two hypothetical cases. In one, there’s a yearly cost of $10,000 per student, SATs are 600 and profits are zero. In the second case, yearly costs are $8,000 per student, SATs are 700 and profits per student are $1,000. Who wouldn’t say, looking at it in terms of overall benefits to society, that the second picture is superior — better for students and parents, better for taxpayers?

In saying point blank that the improved performance in the second scenario shouldn’t be permitted because of the existence of profits, i.e., that it’s intrinsically a dirty business to make a capitalist buck “off educating students,” one wonders how Mr. Parr can sleep at night after dealing with all those money-grubbing profit-seekers who supply the Pittsburgh Public Schools with pencils, books, blackboards, electricity, floor wax, mops and buses. Would it be better, would the operation be more unblemished and moral, if McGraw-Hill and General Motors were eradicated and the School Board only bought its books and buses from state-owned monopolies?

One could ask, too, if Mr. Parr thinks, as do so many so-called “public servants,” that it’s somehow more moral that he gets his paycheck through taxation, no “profits” involved, rather than earning it in a competitive private sector company — somehow more ethically sound, in other words, to get paid with money from mandatory paycheck deductions, a quite involuntary exchange, as opposed to earning a paycheck in the free and competitive market of voluntary exchanges.

One wonders, too, why it’s not “immoral” to educate all those students when all most of them are going to do is join the free enterprise system, a sector whose bottom line, by definition, is profits. If profits are evil, isn’t it “not ethically sound” for Mr. Parr and the School Board to persistently seek to improve scores in math and science, considering that there’s a good probability that more than a few of their best students will end up at America’s profit-seeking defense companies, firms that make a business out of producing things like bombers and missiles for the defense of the world’s most successful “profit” system?

As Balint Vazsonyi reminds us about the history of anti-capitalist politics, “Communists apply this to class, Nazis applied it mostly to the Jews.” Either way, it’s the politics of division, the politics of pulling down — an outlook that’s not only anti-rich and anti-profit but also anti-individual, anti-freedom and anti-progress.

Marx, for instance, argued that all profit was “surplus value,” i.e., unpaid labor appropriated by capitalists through the institution of private property. To a good communist, in short, all profits are ill-gotten gains, stolen from workers. Hence, a “workers’ paradise” arrives through the elimination of profits, private property and greedy capitalists.

As the record shows, what Marxism delivered was an overdose of class hatred, totalitarianism and economic disaster — a “paradise” only for a small assemblage of central planners, party hacks and unelected bureaucrats.

From day one, of course, it was nonsense to preach that a nation’s economic output could best be expanded through the slaughter of its most successful people and the elimination of profits. The result? Over 100 million people sacrificed, mainly by their own statist governments, on the altar of socialism and communist ideology. And some lessons learned. In China, the lesson of the failure of collectivism. Today, it’s a China of stock markets, a million non-state businesses, privatization, competition and higher incomes

Ralph R. Reiland is the B. Kenneth Simon professor of free enterprise at Robert Morris University in Pittsburgh.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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