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November 19, 2008

Cars and Schools: Same Situation, Different Timing

The Big 3 car companies and traditional public schools are suffering from the same problem: they are burdened with productivity-destroying union contracts while they struggle to compete against non-unionized alternatives.  The Big 3 struggle, of course, is in a much more advanced stage.  Since they were unsuccessful in stopping free trade and the establishment of foreign competitors on US soil, consumers have had choices for decades.  As a result, their market share has decreased year after year.  The union-dominated traditional public schools have been more successful in preventing competition.  The charter school movement, though, is changing that dynamic.  The basic results should be the same: unless the unions allow for much more flexible labor agreements or force the government to prevent charter school growth, they will lose market share each year until they face extinction.  Think "charter schools" instead of "foreign auto makers" in this excellent article and see if any of the dynamics sound familiar. 


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The analogy is dead on. An equally apt comparison (if less timely) is the US steel industry in the 80s. The US steel industry was declared all but dead until a few small start-up steelmakers with more efficient methods, no pension overhang, and lower labor costs started winning market share back from foreign competitors. It can be done. In the case of public education, it only requires that the state legislatures lift the absurd caps on charter schools. And maybe the legislatures will do so with more urgency now that they will be forced to trim budget dollars without trimming essential services. Let's hope!

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