Mark Zuckerberg’s Worst Investment


May 21, 2014 10:30AM

What if fixing education has nothing to do with money? Consider the recent story of philanthropist and Facebook founder, Mark Zuckerberg, who, after making a gift of $100 million in 2010 to turn Newark, New Jersey into “a symbol of educational excellence for the whole nation,” has seen his generosity senselessly squandered at the hands of Gov. Chris Christie and then Newark Mayor Corey Booker. As reported, more than 20 percent of the total sum was spent on consulting firms, many of whom made in excess of $1,000 per day. Aside from Zuckerberg, no one got schooled as a result of his donation. And even though his philanthropic gesture missed the mark for educational excellence, it is indeed a symbol for something. That something being incentives, as the work of a British physician helps us understand. In the mid-1970’s, Dr. Max Gammon conducted a study of his country’s National Health Service (NHS). Between 1948 to 2000, he observed a direct correlation between hospital employees (his measure of input) and available hospital beds (output). As the former increased, the latter decreased. Dr. Gammon concluded that, in any heavily bureaucratic system, useful work tends to be displaced by useless work. This empirical observation has since been coined Gammon’s Law. This phenomenon not specific to the NHS, but in fact is alive and well in any heavily bureaucratic system. Since no system is more bureaucratic than ours in education, one can easily see Gammon’s Law wreaking havoc within it, even at the state level. Take, for example, Beacon’s 2013 study showing that an increase in spending over a ten year period led to an increase in administration and management, and a decrease in the percent of that money spent on classroom instruction. More money won’t fix our problems in education. What we have is an incentive problem, plain and simple. No one spends other people’s money as wisely or efficiently as they spend their own. Milton Friedman once quipped that “When parents are free to choose, bureaucrats cannot dictate.” If you care about practical, winnable policy solutions to the actual problem in education, support those that reintroduce forces of free enterprise into education, like competition and freedom of choice. Rather than handing your money over to people like Christie and Booker, support the Beacon Center’s initiative to place the power of choice back where it belongs: in the hands of parents. -Sam Cosby

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