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Joel Klein, Monopolist

August 13, 2006

[Cross posted at Organizations and Markets]

Joel Klein does not have a well-developed sense of irony. As Clinton Administration antitrust czar, he became a household name with his relentless pursuit of Microsoft, a $40 billion company with 70,000 employees in 100 countries. Today Klein heads the New York City public school system, a conglomeration of 1,450 schools with 136,000 employees, 1.1 million students, and a $15 billion operating budget. Oh, did I mention that it's a monopoly? Not a private company with a large market share, but an actual monopoly, an organization protected from competition by an exclusive government franchise.

Klein was Distinguished Executive Speaker at tonight's Academy of Management Convocation, which I attended. The speech was disappointing -- not because of Klein's political philosophy, which I don't share -- but because it was a shallow, fluffy talk about "leadership," "accountability," "change agents," and the like. (I did enjoy his voice, however, a smoother version of Jimmy Durante's.)

His main point was that school reform requires both decentralization and tighter performance measures. This might be a reasonable strategy for a private firm, where objective (financial) performance measures are available, but it's far from obvious how it applies to a government activity that lacks such measures. (Klein is obviously not familiar with Mises's Bureaucracy.) In any case, one might have expected a purported antitrust specialist to say something about competition and entry barriers. Does a school system's monopoly franchise have anything to do with its massive inefficiencies? But there was not a peep. Indeed, Klein never even mentioned the word "monopoly" (except in a joke about a $30 million gift from Bill and Melinda Gates -- one of Klein's associates cracked "If you hadn't have sued him, maybe he'd have given you more").

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