While traditional school districts are characterized by a relatively unchanging stock of schools, performance-based systems with effective parental choice mechanisms and rigorous school oversight are defining the changes taking place in places like New Orleans, DC, and Denver. These systems have one unique common denominator: dynamism, a central concept in modern economics that explains how new, superior ideas replace obsolete ones to keep a sector competitive.
The process happens through the entry and exit of firms and the expansion and contraction of jobs in a given market. As low-performing firms cease to operate, their human, financial, and physical capital are reallocated to new entrants or expanding incumbents offering better services or products.
Too little dynamism and underperformers continue to provide subpar services and consume valuable resources that could be used by better organizations. Too much dynamism creates economic instability and discourages entrepreneurs from launching new ventures and investors from funding them.
Dynamism, however, rarely comes up in discussions about education policy despite a growing number of urban education systems closing chronically underperforming schools and opening new, high-potential schools as a mechanism for continuous systemic improvement.
New Orleans’ system of schools has operated in this reality since Hurricane Katrina. And others like Denver and DC are implementing their own versions of dynamic, performance-based systems. To illustrate, below is a graph of charter school dynamism in DC between 2007 and 2018.