What’s Our “Market Failure?”

October 19, 2012

Last Friday, Scott Warren and I were in Atlanta, where we were one of twenty startup “civic ventures” competing to join a new “Civic Accelerator” started by Points of Light and Village Capital. The twenty finalists spanned a wide range of missions and forms, from helping people take action based on news articles to crowdsourcing funding for small businesses shut out of traditional loan programs. Just over half the organizations were for-profit businesses and most (GC was an exception) had a strong tech component. Over the course of two days, Scott and I appeared before panels of judges (with mostly private sector backgrounds) to do a two-minute pitch on stage (my microphone was confiscated when I breached the two minute limit; I was unable to see the iPad timer at the foot of the stage), group interviews with three other organizations, and a one-on-one interview with Ross Baird, the executive director of Village Capital and a “civic entrepreneur” himself. 

Although I heard enough tech-y buzzwords and mixed metaphors in two days to prompt serious consideration of maximizing (or was it leveraging?) the mental health portion of GC’s benefits package, hearing a group of really thoughtful entrepreneurs and judges grapple in both conceptual and concrete terms with a variety of challenges they face generated a few fresh perspectives on our own mission that I wanted to share – and hear input on.

So here goes:

In the group interviews portion, Jay Lee, CEO of Smallknot (the crowdsourcing site to fund investments in local small business I mentioned earlier) emphatically stated that he did not want to be seen as altruistic or have Smallknot (a for-profit) branded as charitable. The inability of otherwise healthy small businesses to obtain bank loans at less-than-usurious interest rates is entirely a market failure, he argued, and must therefore be dealt with in those terms. (That said, Smallknot’s business model draws on (not-so-capitalist) civic inclinations.)  The concept of “market failure” is well known to every econ 101 student. And it led me to think about what sort of “failures” GC might be addressing when dealing with pervasive civic disengagement. I came up with three: teacher training, policy, and culture.

Teacher training might be the clearest in evidence. Work done by AEI and others provides compelling evidence that although many social studies teachers feel well equipped to teach U.S. history and facts about, say, the Constitutional Convention (on which their students are more likely to be tested; see below), they are far less prepared to teach more amorphous (but perhaps even more vital) civic skills – persuasive communication, group collaboration, critical thinking, and other so-called “21st Century Skills.” Those are precisely what our action civics course develops, and by using college volunteers that we train with a curriculum we produce, we’re able to essentially jury-rig a temporary fix to broader teacher training failures. But until stronger pedagogies like action civics become standard parts of education schools’ and professional development programs’ curricula, we’re likely to face an uphill battle.

The second failure is one of policy. A new fact sheet released by CIRCLE last week elucidates a problem that has nettled social studies teachers at least since the 2002 No Child Left Behind Act. (Cliffs Notes version: The act held states and schools accountable for only English/language arts and math standardized tests, states focused limited resources in those areas at the expense other areas, especially social studies.) A mere nine states have mandatory assessments with civics content; only two have it as a graduation requirement. Say what you will about standardized tests, but what they do and do not assess, and how they assess it, say much about policymakers’ priorities. 

Blaming policymakers, however, only takes us so far, especially in a democracy. Ultimately, their priorities reflect our own. In a society where praise of the lone entrepreneur or “job creator” is in vogue, we will naturally put less emphasis on the collective and collective action problems. Yet those sorts of problems are arguably the greatest we currently face, and our failure to treat them as such may partly explain our perennial political paralysis. As the old saw goes, if the only tool you have is a hammer (here, individual-oriented solutions), every problem looks like a nail.

Although I’m skeptical of using only one lens to view a sweeping problem like civic disengagement, this approach seems to bring a few “failures” into focus – and suggest where we should be directing our energy (and where we should form alliances). Does this analysis resonate with you? Are there other “failures” you see? Most importantly, what can be done?

-Daniel Millenson, Managing Director

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