Dollar Bill Ya’ll: Speculative Bubble(s) in Education?

At the recent AERA conference in San Francisco, I was having a conversation with a local San Franciscan. He we mentioning that he was disappointed that he had not been able to take financial advantage of the last two “bubbles.” He was asking aloud what other thought was going to be the next “bubble.” I volunteered education.

Generation X stories from the past two bubbles:


Enron. When I first moved to Houston I had two friends that worked for Enron. Moving from Michigan, I had never heard of Enron but was quite surprised by their buzz in Texas when I arrived. Ken Lay was the talk of the town, they were building a new gleaming building in downtown Houston, and the Astros baseball stadium bore their name. I asked my friends what it was exactly that Enron did to make money, they explained it to me, and I went away wondering how they made money doing what they described. They weren’t.

Dot-com bubble background concept

Dot Com. When finishing college in the mid-1990s, I had numerous friends who left for the Bay Area to start and work for .coms. We know of course those that emerged from the carnage such as Yahoo. But several friends who sought out .com fortunes lost everything before they could “go public.”


Housing Bust. More recently, I had friends who bought homes in Southern California that could be graciously called fixer-uppers for hundreds and hundreds of thousands of dollars hoping to flip them to the next person with only modest improvements. When the market went belly-up, so did their liquidity and finances.


Wall Street and Tejano Music. Let’s be honest with ourselves. First, Wall Street were the culprits in all of the above bubbles. Additionally, Wall Street has a bubble every few months. Bobby Pullido, a Tejano singer, once told me that he thought “Wall Street is a Pyramid scheme” while we argued politics and economics late into the night. I am prone to do this, it is hereditary I think.

With each bubble, the public’s gut feeling was that it was probably a bubble despite their “irrational exuberance,” and they just wanted to get out before it burst so that they wouldn’t be holding the bag when the music stopped.

Wikipedia describes an economic bubble as a:

Speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon… is “trade in high volumes at prices that are considerably at variance with intrinsic values.” It could also be described as a trade in products or assets with inflated values.

While many explanations have been suggested, it has been recently shown that bubbles appear even without uncertainty, speculation, or bounded rationality. It has also been suggested that bubbles might ultimately be caused by processes of price coordination or emerging social norms.

Is education ripe to be the next American bubble(s)? The last census found that United States spent $1,093,000,000,000 on all levels of education. However, many have been arguing that education is a “monopoly.” You see education has been considered primarily a public good, and so has been mostly provisioned by the public. The Census shows that of total K-12 spending of  $661 billion, private K-12 accounts for 8% of total spending ($50 billion). In higher education, the US spent $442 billion, of that 37% of total spending is private ($161 billion).

So after all that economist speak… The question I am left with today is will the rush to spend billions on a variety of inefficacious reforms without potentially receiving future returns and the public be left holding the bag? Of course an entire book can be written about an impending or perhaps already expanding bubbles in education, however, this a blog post so I will consider a few potential education bubbles in the time it will take to drink your coffee.

Online Learning

One of my favorite blog posts of all time on MOOC and online education is Larry Cuban’s post MOOCs and Hype Again. (I had the pleasure of meeting Larry Cuban’s for the first time at AERA San Francisco). He stated:

I have a confession to make. I dropped out of a Massive Open Online Course (MOOC) on Artificial Intelligence at Stanford university in the Fall of 2011. There were over 160,000 other students in the class from all over the world. I listened to the two professors on my laptop give mini-lectures, watched fast hands scrawl quickly and cleverly over whiteboards to graphically display the concepts they were teaching. I found the information fascinating. I took a few quizzes. Then I fell behind and realized that I couldn’t keep up, given the other things I was doing so I dropped out. End of story about my first encounter with a MOOC. Turns out, however, that about 138,000 others dropped out also since only 14 percent completed the course and received a certificate.

MOOCs have soared in popularity as the “disruptive innovation” that will revolutionize higher education. Called the “Most Important Educational Technology in 200 Years” by the head of a new consortium of Harvard and MIT offering MOOCs, forecasts of fundamental changes in higher education are as common as iPads in a Starbucks. Stanford University President John Hennessey says “there’s a tsunami coming.”

MIT’s first course had a similar completion rate. See the infographic below:


Larry Cuban called MOOCs in the midst of a hype cycle. He states that MOOCs are at the very beginning of the Hype Cycle. Essentially, once the various realities of online courses hit the public, they might not seems as sexy as what they already have and the bubble will burst. Thats not to say that places like the University of Phoenix don’t have an important role as a producer of online MBAs etc.

In a recent meeting with a Vice President of Finance at a private university, we discussed the economics of online courses. Private universities are enamored with online delivery because it dramatically reduces cost relative to revenue— regardless of completion.

Then there is this on online colleges: NY Times: Online Colleges Are a Sham

How about K-12? NEPC weighed in:

Over just the past decade, online learning at the K-12 level has grown from a novelty to a movement. Often using the authority and mechanism of state charters, and in league with home schoolers and other allies, private companies and some state entities are now providing full-time online schooling to a rapidly increasing number of students in the U.S. Yet little or no research is available on the outcomes of such full-time virtual schooling. The rapid growth of virtual schooling raises several immediate, critical questions for legislators regarding matters such as cost, funding, and quality.

Does the online education bubble burst when the realities of online education surface for the public?

Common Core Standards

At AERA, over lunch Christopher Miracle from the California Schools Boards Association related that the Common Core standards will cost $3 billion over the next two years in California. The May estimates of the current California surplus were $5 million— for the entire budget. Rupert Murdoch signs up for $13,000,000 on the table for test development. But that is just the beginning, Gotham Schools relayed that Rupert Murdoch stated:

We see a $500 billion sector in the U.S. alone that is waiting desperately to be transformed by big breakthroughs that extend the reach of great teaching.

Regardless of whether you think Common Core is the next best thing after sliced bread, or not…

Does the Common Core bubble burst when the realities of the expense of Common Core surfaces for the public?


Charters, Vouchers, etc. Impossible to do justice to the big eyeballs that neoliberals and proponents of choice have in mind for reducing share of public education $ in the US.  To examine the efficacy of choice, go to the box on the left hand column of this page and Cloaking Inequity search for these terms: Chile and Vouchers, Charters and CREDO, Neoliberals.

Does the choice bubble burst when the intentions of neoliberals and the reality of charters/vouchers limited impact on achievement surfaces for the public?

Side note: Have you noticed that Dr. Patrick Wolf, a lone wolf who consistently distributes research that says vouchers have small, but limited effects on achievement is the holder of the “21st Century Chair in School Choice” at the U of Arkansas. So what would happen if he released papers with models showing that school choice was inefficacious? Would they make him the holder of the “21st Century Chair in Non-School Choice”? The irony. I doubt either will happen.

Wyclef John:

Singin’ dollar dollar bill ya’ll (dollar, dollar bill ya’ll) Singin’ dollar dollarbill ya’ll (dollar, dollar bill ya’ll)

Please Facebook Like, Tweet, etc below to share this discussion with others.

Want to know about Cloaking Inequity’s freshly pressed conversations about educational policy? Click the “Follow blog by email” button in the upper left hand corner of this page.


  • Pingback: NCAA Bans K12 Inc. Online Charters » Resist the Privatization of America

  • Pingback: NCAA Bans K12 Inc. Online Charters: No Rose Bowl, No Final Four | Cloaking Inequity

  • Pingback: Happy Birthday!: A Conversation About Education With César E. Chávez | Cloaking Inequity

  • “Who Is Profiting From Charters? The Big Bucks Behind Charter School Secrecy, Financial Scandal and Corruption”


  • Monty J. Thornburg, PhD

    Clockwork Orange and the Milgram Experiments:

    I would suggest that everyone with this of the attitude of Leonard Ravenhill above, be required, as in “Clockwork Orange” to watch the “California” part of the Enron documentary. (This is a joke but serious.) “Burn baby Burn” was one comment of an Enron floor trader heard today on the Enron video as he watched $billions flow to Enron from CA tax and rate payers to his company. The manipulated electric “commodity” prices in the new unregulated energy market with George Bush’s support of Ken Lay made Enron possible.

    The post by Honsom Luna / Leonard Ravenhill above, goes to the heart of the Milgram Experiments: We have a capacity to damage others as long as it seems “justified” by “ideology” or by an “expert” or political leader: Ronald Reagan, George Bush – Sr. and Jr., Bill Clinton, Barak Obama, Wm. Bennett, Arne Duncan, and the list goes on and on have all endorsed the “meme” that we need to “break the monopoly” of public education.

    There’s a reason that electricity is regulated. See CA and Enron video, “the smartest guys in the room” … Electricity is a natural monopoly! K-12 education is a “so called” “monopoly” for a different reason, politics and greed.

    K-12 education is produced by the states as provided for in the U.S. Constitution, Article 10, and all states have mandatory attendance laws and therefore all students must be educated to ages 16 to18 depending on the state. In that sense it’s a monopoly, codified in state laws. Other state interests: law enforcement and prisons for example are also government produced. They exist in the public interest, too! Why aren’t law enforcement and prisons called monopolies, too? Because there’s no political and economic interest to do so!

    We have a mixed economy and electricity while produced by the private sector needs regulation, and education, particularly K-12 education is produced using tax payers revenue in the public interest not as a monopoly. By making students into commodities, –see post above by Jeff Bryant- wealthy oligarchs on both sides of the political spectrum want to take more tax dollars from the 99% to make greater billions for themselves. They are all pulling this off politically by demonizing teachers, teacher unions, and government in general and with the “privatization” meme.

    At the end of the day almost all K-12 education will rely on public funds, that is, our tax dollars. As those of us in the “trenches” argue among ourselves about this, Wild Bill and others with $billions to invest, and using our tax money and the “meme” that public education needs “accountability” on a national scale, are laughing all the way to their banks.


  • In the case of the .com bubble some investors and tech folks lost their butts. In the housing bubble, same thing, Investors and speculators lost their butts. Oh well, capitalism has a nasty habit of doing that every so often. This is public education we are talking about, when these bubbles pop we all lose. Don’t mean to preach to the choir, but it’s scary watching this particular train wreck, because it is not just a bunch of zealous investors that will get hurt. They can afford it, but the public school system, which this country counts on, can’t.


  • Well folks, there will always be an up and down in a capitalistic society. Those who chooses to take advantage of the opportunity of the present, whatever the hype might be at the time, can make out real good. Just as those who did in the boom & the most recent housing boom. There is a quote that I admire the most and it goes: “The opportunity of a lifetime must be seized during the lifetime of the opportunity.” – Leonard Ravenhill. Nonetheless, great post.


  • Monty J. Thornburg, PhD

    “Vouchers”: The neo-liberals and “conservatives” have an agenda and both groups are looking for a teat. That’s what makes “choice” so dangerous, people on all sides of the political spectrum like it!
    The Louisiana Governor’s Voucher Plan was just shot down by the LA State Supreme Court (look it up). In the 1990s the state of Louisiana tried “vouchers” (in effect) with the state’s mental health system- giving public money to private health care companies through a parental choice system. The entire scheme nearly bankrupted the state! Someone needs to study that fiasco to better understand the dangers of vouchers from a fiscal point of view.


  • I wrote about this topic a year and a half ago labeling it an “edububble.”

    Here’s the post:

    Key graphs: “Education reform advocates — either unwittingly or intentionally (does it matter?) – gave the venture crowd a huge gift by decreeing that student scores on standardized tests would define the learning “output” that schools would be accountable for. And all of a sudden everything monetarily related to schools — operations budgets, teacher salaries, classroom costs, government funds, grant money — could be related to a test score output.

    This in effect turned student learning — and by extension, the students themselves — into a commodity that could be speculated on. Now that edu-venturists had something they could put on the other side of the balance sheet, they could now “flip” student test scores into a speculative market. And all sorts of ‘reform’ schemes and start-ups — from starting charter schools to lowering teacher salaries to closing schools — could be rationalized on the basis of test scores.”


  • Monty J. Thornburg, PhD

    I suggest everyone have a look at Todd Farley’s (2009) “Making the Grades: My Misadventures in the Standardized Testing Industry” to see how (CC) “Common Core” will put “standardized testing on steroids” … as readers will be needed more than ever.
    From my point of view as a classroom teacher, CC does move positively back toward an appropriate role for teachers with “project based learning” and mastery that for example examines “text complexity” with reading. But, some assessment will be through quantitative factors (as is NCLB) and other through qualitative factors where an “attentive human reader” will be needed. Read Todd Farley’s account and you’ll be in wonderment as to how this will get done on a nation wide scale.
    Why can’t we simply trust the teachers and improve schools from within instead of spending $Billions on “privatized schemes” that further enrich Bill, Warren, and …?


  • This is a necessary note of skepticism, and probably largely true.

    I suspect OnLine courses will become much more widespread, though, since eventually they will be able to deliver a ‘college degree’ at a fraction of the cost of doing so now.

    But we can be pretty confident that there will not be much change in educational outcomes at the K12 level, regardless of what’s done. There, performance really is mainly a function of the child’s cultural background. Kids who grow up in a culture that values learning will value learning and will learn, and kids that grow up in a culture that doesn’t, won’t.

    The best we can do is to provide exit routes out of the anti-learning cultures for the minority who want to take them.

    However, once private companies get onto the public teat, it will be very difficult to pry them off. They will become the equivalent of the arms industry, or the subsidies paid to farmers., or the foreign aid sent off to various despotisms. Anyone who questions whether we really need to spend a gazillion dollars to put computers into crappy schools with illiterate students and semi-literate teachers, will be subjected to indignant abuse, just as anyone is who questions whether we really need another gazillion-dollar aircraft carrier.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s