What’s The True Cost of Amazon’s Low Prices? The FTC and Congress Have Antitrust Concerns

This story is part of a Recode series about Big Tech and antitrust. Over the next few weeks, we’ll cover what’s happening with Apple, Amazon, Facebook, Google, and Microsoft.

On the heels of yet another year of record sales, Amazon is dealing with a couple of unwelcome updates in the new year. The Senate Judiciary Committee has announced it will soon be marking up the American Innovation and Choice Online Act, an antitrust bill targeting Amazon and other Big Tech companies. This follows reports that the Federal Trade Commission is ramping up its years-long antitrust investigation into Amazon’s cloud computing arm, Amazon Web Services, or AWS.

It’s clearer now than ever that Amazon, which was allowed to grow mostly unhindered for more than two decades, is caught in the middle of an international effort to check Big Tech’s power.

The Senate bill, one of several bipartisan antitrust bills in Congress, would prohibit Amazon from giving its products preferential treatment, among other things. It’s the bill that would affect the company the most, and the one it has been fighting hardest against. Meanwhile, the renewed scrutiny from the FTC about alleged anti-competitive behavior from AWS, which represents a significant and largely invisible source of Amazon’s profits, could threaten Amazon’s long-term dominance in a number of industries.

Just because a company is successful and dominates a market (or even several markets) doesn’t mean it’s violating any antitrust laws. But Amazon’s critics say it illegally uses its power to harm competition and consumers, particularly with its Marketplace, where outside, or third-party, businesses can sell their products to Amazon customers alongside Amazon’s own wares.

Amazon has been accused of copying popular products to sell under its own labels, using non-public seller data to inform its own decisions, and forcing sellers into agreements that essentially prohibit them from offering lower prices elsewhere. Amazon denies some of these allegations and says other actions are simply meant to provide the services its customers want at the best price.

Some of these complaints have been around a while, but 2022 may be the year that Amazon faces meaningful and real consequences for them. There are still caveats. State attorneys general are rumored to be looking into some of Amazon’s business practices, but only one has filed a lawsuit so far.

The FTC is still waiting for the confirmation of a fifth Democratic commissioner who would break up the deadlock of two Republican and two Democratic commissioners. And while antitrust bills are making progress in Congress, Democratic lawmakers currently seem focused on other initiatives ahead of the midterm elections — elections that could give Republicans a majority in one or both houses of Congress.

Amazon isn’t the only Big Tech company that’s been targeted, but it might have more reason than anyone else to worry about the FTC in particular. One of two federal agencies that enforce antitrust laws, the FTC is now run by Lina Khan, who basically built her career on research surrounding her 2017 Yale Law Journal paper, “Amazon’s Antitrust Paradox.”

The paper detailed how Amazon’s rise showed the flaws in antitrust laws and led to Khan becoming known as Amazon’s antitrust antagonist. Since her appointment to the FTC last June, it hasn’t seemed like the question is whether the agency will take on Amazon, but rather when and how. Amazon, meanwhile, has asked that Khan recuse herself from any antitrust matters involving the company.

Khan “is best suited to understand the various issues and problems with Amazon,” said Alex Harman, a competition policy advocate at Public Citizen, a consumer advocacy group. “And we are very excited that she will be able to bring a significant action against them.”

Khan has a lot to choose from. It’s hard to overstate Amazon’s role in the economy, or how many roles it has. It’s a technology company. It’s a delivery service. It’s an advertising platform. It powers about a third of the internet. It’s a movie studio and a streaming service. It’s a health care provider. It’s a surveillance machine and a data harvester. It’s one of the largest employers in the world and one of the most valuable companies. Also, it sells books.

In response to questions about whether its size and market share were too big in too many sectors, Amazon told Recode it faces “intense competition” in all of its lines of business. It says its expansion is part of a long-running strategy to make “big bets over the long term to reinvent the customer experience.”

Sarah Miller, executive director of the American Economic Liberties Project, an anti-monopoly advocacy group, sees it differently: “Amazon leverages its power in one space to take over a new space, which is core to their business practice. They have the ability to combine the competitive advantages of different aspects of their business to take over new sectors of the economy.”

While the FTC, for now, seems interested in AWS (and Amazon’s attempt to buy MGM), most of the antitrust attention we’ve seen elsewhere is focused on Amazon’s retail business and how it treats the businesses that sell products through its Marketplace platform. Critics say Amazon uses its power to give its own wares an unfair advantage over third-party sellers, and effectively forces them to pay for extra services and make agreements that could inflate prices everywhere.

“That’s where there’s a lot of obvious harms, and where you have businesses who are unhappy with how they’re being treated,” Miller said.

Consumers may be paying more and missing out on new products, companies, and innovations that a more competitive retail space would have produced. And that may be a violation of the antitrust laws we have now, or those to come.

How Amazon’s power might lead to higher prices

Many antitrust complaints about Amazon’s practices are based on its position as both a platform and a seller on that platform. This gives Amazon a great deal of power over the companies it’s competing against, as well as an incentive to favor its products over theirs. About 60 percent of Amazon’s online sales come through Marketplace.

This can be a mutually beneficial relationship. Marketplace’s sellers — currently more than 2 million of them — get access to Amazon’s huge customer base, and Amazon gets a vastly expanded selection that has helped make it the first and only website many online shoppers visit.

This model brings in hundreds of billions of dollars in revenue every year for Amazon, which now has an estimated 40 percent share of the e-commerce market in the United States. The company with the second-largest e-commerce market share, Walmart, has just 7 percent.

At the same time, Amazon likes to say it has but a small sliver — 1 percent — of a competitive global retail market. But that’s online and offline combined, and it includes many industries in which Amazon doesn’t sell anything at all. Amazon is also on track to edge out Walmart and become the most dominant retailer, online and off, in the United States as soon as this year.

No company has the kind of ecosystem Amazon built around its retail business beyond Marketplace. Amazon collects tons of data about its shoppers — data it uses to optimize its services and to fuel its burgeoning and increasingly lucrative advertising business.

Meanwhile, Amazon Prime and its fast free shipping has not only created an intensely loyal customer base but also compelled Amazon to build up its own shipping and logistics arm, Fulfillment by Amazon, to reduce its reliance on outside services and give it more control over its sellers. Many of Amazon’s rival retailers — namely, Walmart and Target — do some or all of these things to a lesser extent, but they’re just playing catch-up.

Smaller companies simply don’t have the scale or money to offer such services. Amazon, which has turned itself from a bookstore to an “everything store” to an everything platform, is in a class by itself.

“There are dynamics in digital that are fundamentally different,” Andrew Lipsman, principal analyst at eMarketer, told Recode. “Access to data is fundamentally different than we’ve ever had before. And all the other things that has enabled — all these digital businesses that Amazon has spun off — are underpinned by completely different economics than traditional retail economics.”

Amazon is happy to tell you how good it’s been for the small- and medium-sized businesses making money using its platform and how proposed antitrust actions could harm them. Others argue that Amazon makes even more money off of third-party sellers who have to play by Amazon’s rules because their businesses wouldn’t survive without the e-commerce giant and its customer base. And those rules, they say, aren’t always fair.

Last May, the attorney general of Washington, DC, Karl Racine, sued Amazon for antitrust violations over its treatment of Marketplace sellers. In September, he amended that lawsuit to include the wholesalers, or first-party sellers, from which Amazon buys products before selling them to its customers.

Racine told Recode that he started to wonder what the price of Amazon’s much-touted “customer obsession” was, especially after seeing accusations that Amazon copied popular products on its platform and then sold its own similar products for a lower price. (Amazon says it’s standard practice for retailers to use data about customers’ interests to help determine what to make for their own private labels.)

“I found that offensive,” Racine told Recode. “I felt like Amazon was just a copycat and burying a creative source. They were not focused only on the customer. They were also focused on their bottom line.”

The DC attorney general’s office investigated and found that “Amazon, the dominant player, seeks to maximize its profits at the expense of consumers, third-party sellers, and wholesalers,” Racine said. “It’s kept prices for goods artificially high, hampered competition, stifled innovation, and illegally tilted the playing field, all in its favor.”

Racine’s suit echoes some of the issues raised in other lawsuits and investigations as well as those identified in a recent report from the Institute for Local Self-Reliance, a nonprofit that advocates for locally owned businesses.

The big sticking point is that Amazon’s policies can effectively force other companies to give Amazon the lowest price for their goods. This is due to Amazon’s “fair pricing” policy, which says it can downgrade or stop sales of third-party sellers’ products if they’re priced “significantly higher” on Amazon than at other outlets.

Meanwhile, wholesalers have to agree to give Amazon a certain cut of their products’ sales. But Amazon also sets the prices of those products. If it reduces them to price match another outlet, the wholesaler may end up eating the difference and even losing money. That keeps wholesalers from selling their wares to anyone else for less.

Amazon sees all this as looking out for its customers and making sure they’re getting the lowest prices. But Racine and those who have filed similar lawsuits believe sellers and wholesalers are being stopped from selling their products for lower prices in other stores.

Because of this, competitors can’t offer lower prices to get an advantage over Amazon, and customers end up paying Amazon’s prices even if they don’t shop at Amazon — and paying more. Sellers and wholesalers can choose not to sell to Amazon, but few of them have the size and brand recognition needed to survive in a world where so many shoppers do most, if not all, of their online shopping on Amazon.

“That’s the power of brands: Nike is able to say, ‘You know what, Amazon? We don’t need you,’” Lipsman said. “The more commoditized your product is, the more likely you have to sell through Amazon, and you’re dependent on that channel.”

Amazon has filed a motion to dismiss the DC attorney general’s lawsuit, arguing that it’s simply making sure its customers are getting the lowest prices. The policies don’t force sellers to offer the lowest price on Amazon, Amazon says; they simply discourage them from offering higher prices on Amazon than they do elsewhere. But this hasn’t always been the case.

Just a few years ago, Amazon had a price parity policy, which more explicitly said sellers couldn’t offer lower prices anywhere else. Amazon ended this practice in Europe years ago amid scrutiny there, and then did the same thing in the United States in 2019. Racine says the fair pricing policy that replaced it serves the same function and is similarly anti-competitive.

How Amazon uses its power over sellers to squeeze them for money and data

Even though one of Amazon’s selling points is its low prices, critics say those aren’t necessarily the lowest prices possible, in part due to the increasing costs to sell on Marketplace. Amazon charges sellers a referral fee, typically 15 percent, for items sold. Then it piles on optional services that many sellers feel compelled to buy if they want their businesses to survive, cutting into their margins and forcing some to raise their prices to maintain a profit.

Fulfillment by Amazon, or FBA, is one example of this. Amazon doesn’t require that its sellers use its fulfillment and shipping service, but doing so makes them eligible for Prime, and it’s exceedingly difficult to qualify for Prime if they don’t.

That recognizable Prime badge is important. There’s a higher likelihood that Amazon’s customers will buy Prime products, because the shipping is free for Prime members and because Amazon gives preference to Prime items when it assigns what’s known as the “Buy Box.” When multiple sellers offer the same product, the Buy Box winner is added to carts when customers click “buy.” More than 80 percent of an item’s sales go to the Buy Box winner, so sellers are very motivated to do everything possible to get it. That may include using FBA even if it costs them more than shipping items themselves.

This practice has already gotten Amazon into trouble abroad. In December, Italy’s antitrust regulators fined Amazon about $1.3 billion for giving sellers who use FBA benefits over those who don’t. Amazon says it’s planning to appeal the decision, but more trouble could be on the way: The company is facing a similar investigation from the European Union’s European Commission, and India is also investigating Amazon for violating its antitrust laws.

Sellers have also complained about ads, which give their items better placement in search results. Reports say that Amazon has increased the number of ads, upping its revenue and pushing organic results down even further — which, in turn, compels sellers to buy ads to regain the prominent placement they used to get for free. Amazon told Recode that sellers wouldn’t use FBA or buy ads if those services didn’t add value or come at the best price, as they can always use other fulfillment services and buy ads elsewhere.

But it’s not just fees that Amazon gets from its sellers. Critics say the company uses data it collects from third-party sellers to give itself a competitive advantage. This was the subject of a “statement of objections” from the European Union, and as the DC attorney general has made clear, Amazon is notorious for creating its own versions of popular products sold by third parties.

The company recently opened up some of its data to sellers, possibly in an effort to ward off some of this criticism, and says it prohibits the use of non-public data about individual sellers to develop its own products. But founder Jeff Bezos told Congress he couldn’t guarantee that policy has never been violated, and multiple press reports suggest that it has.

The company has also been accused of self-preferencing, or giving its products preferential treatment — and a competitive advantage — over those sold by third parties. This could take the form of giving its own products the Buy Box or prominent search rankings they didn’t earn. Amazon has total control over its platform, so the company can really do whatever it wants, and there isn’t much sellers can do about it.

Self-preferencing has become a catch-all term for many of Amazon’s alleged anti-competitive practices. It’s attracted the most attention from regulators so far. The company denies that it gives preference to its own items in search results and says the reports that it does are inaccurate. Many legislators aren’t buying that and have proposed bills forbidding self-preferencing, with Amazon specifically in mind.

How Amazon could be changed by new antitrust laws

Per its policies, the FTC has stayed mum on what, if anything, it’s investigating on Amazon. Congress, on the other hand, has been very public.

The House Judiciary Committee spent 16 months looking into competition and digital markets, focusing on Amazon as well as Apple, Google, and Facebook. Last year, a bipartisan and mostly bicameral group of lawmakers proposed a package of Big Tech-focused antitrust bills. The House’s bills made it through committee markup last June, but have yet to be put to a vote.

The American Innovation and Choice Online Act is the only Senate bill to be scheduled for markup so far. The House’s Ending Platform Monopolies Act, which still doesn’t have a Senate equivalent, is likely the most expansive of the bills in the antitrust package, forbidding dominant digital platforms from owning lines of business that incentivize them to give their own products and services preference over third parties. Should that bill become law, it could have a huge impact on Amazon, forcing it to split off its first-party store from its sales platform.

Amazon has fought back against the bills. It has sent emails to certain sellers and set up an informational website warning them about how the bills, if they become law, could negatively impact them. Amazon claims that it might have to shut down Marketplace or limit its ability to offer Prime services. The bills’ supporters say that companies would still be able to offer all of those services, but could finally compete on a level playing field.

“We urge Congress to consider these consequences instead of rushing through this ambiguously worded bill,” Brian Huseman, Amazon vice president of public policy, told Recode in a statement. He added that the bills should apply “to all retailers, not just one.”

While Amazon waits to see what the FTC and Congress do, its antitrust battles, real and potential, haven’t seemed to harm its bottom line. Business is good, growing, and disruptive. Amazon is even reportedly preparing to take on Shopify, a platform that helps businesses create their own online shops and has grown exponentially during the pandemic, with a similar offering that could come out as early as this year. If true (Amazon wouldn’t comment), it shows that Amazon isn’t afraid of going after potential threats even while under more scrutiny than it’s ever experienced.

That’s exactly the attitude Racine, the DC attorney general, takes issue with. “Amazon claims to be all about consumers,” he said. “What our evidence shows is that Amazon is all about more profit for Amazon, at the cost of competition and at the expense of consumers. And we’re looking forward to proving that in court.

Sara Morrison

Sara Morrison covers Big Tech and antitrust regulation, in addition to personal data and privacy. She previously covered technology’s impact on the world for Vocativ. Her work has also appeared in the Atlantic, Jezebel, Boston.com, Nieman Reports, and Columbia Journalism Review, among others.

Source: What’s the true cost of Amazon’s low prices? The FTC and Congress have antitrust concerns. – Vox

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The Push For Equity In Education Hurts Vulnerable Children The Most

America has always had an uneasy relationship with brilliance. Cultural tropes, like the mad scientist or the nerdy computer whiz, show both a respect for high accomplishment and an anxiety about how smart people fit into society.

This cultural uneasiness is most apparent in the educational realm. Schools recognized the existence of students with high academic aptitude by providing them with gifted programs and advanced classes. Outside of school hours, many sponsor honor societies or academic competitions. And the old tradition of publicly recognizing a graduating class’s valedictorian remains strong.

However, the educational industry has never let these programs shake the field’s commitment to egalitarianism. The spending on education in the United States is disproportionately directed towards struggling children. Sometimes this policy is explicit, such as earmarking billions of federal dollars annually for special education and little or nothing for advanced academics.

Other policies implicitly support struggling learners more than students who excel, such as the No Child Left Behind Act and its successor, the Every Student Succeeds Act, which encouraged states to reward schools that help struggling students reach basic proficiency levels. These laws, though, did not incentivize or reward schools for helping students reach high levels of academic accomplishment. As a result, the numbers of high achievers stagnated.

Equity over excellence

This truce of carving out a few advanced programs and classes from a system concentrated on educating the lowest performing students worked reasonably well for decades. However, that arrangement was shattered within the past few years in the United States as districts and states embraced “equity” initiatives with the goal of achieving equal outcomes across individuals as well as groups. The policies inevitably sacrifice bright and high achieving students to the social goals of activists.

The push to hobble high performing students in order to achieve equity can take many forms. In Oregon, the state legislature eliminated the requirement that students pass a high school exit exam to demonstrate proficiency in reading, mathematics, and writing for two years until the state can re-evaluate its graduation requirements. The reason: the testing requirement was “inequitable” because higher percentages of black and Hispanic students were failing the test.

The impetus to eliminate tests that show differing levels of academic success is also apparent in admissions tests. At the Thomas Jefferson High School for Science and Technology, a magnet high school in Virginia often touted as the best high school in the country, admission is no longer based on high test performance. Instead, a new system assigns seats at the prestigious school so that each region in the school district is evenly represented, and then all students that meet basic criteria (a 3.5 middle school grade-point average) are entered into the lottery.

The result is a student body that is more racially diverse (from 73 percent Asian to 53 percent Asian, from one percent black to seven percent, and from three percent Hispanic to 25 percent Hispanic), but much less academically elite. Magnet schools in Philadelphia and Boston also revamped their admissions procedures to de-emphasize tests and to improve the admission chances for Hispanic and black students.

Reducing or eliminating the impact of admissions tests is not unique to high schools. Concerns about equity have also caused universities to make college admissions tests optional for applicants. College admissions tests show well-known differences in average scores, and applying the same admissions standard to all groups will inevitably admit higher scoring groups at higher rates than lower scoring groups. This mathematical reality makes admissions tests a target of equity advocates.

The test-optional movement has been underway for many years, mostly at small liberal arts colleges. Making standardized tests optional seems like a good idea to counteract the unequal admissions rates across groups. However, research shows that it does not improve the socioeconomic or racial diversity of a student body. It does, however, raise a college’s reported test score average (because low performing applicants choose not to report scores), which improves the school’s rankings. Test-optional universities also increased tuition at higher rates than universities that required test scores. None of these developments help disadvantaged students.

The test-optional movement accelerated recently during the COVID-19 pandemic and in response to growing concerns about equity. The movement to drop testing requirements reached its greatest success when the regents of the University of California system voted to make admissions tests optional for applicants—despite their own faculty making a strong recommendation against a test-optional policy.

Even this move towards lowering standards was not enough. Advocacy groups sued the University of California system, which settled the lawsuit by agreeing to ban the consideration of any test scores in the admissions process. This outcome was exactly what university president Janet Napolitano had previously proposed and what many California politicians had wanted for years. What an amazing coincidence!

Even when admissions tests remain in place, institutions often apply different admissions standards across racial groups in order to improve the diversity of the student body. A prominent example of this can be found in the lawsuit alleging anti-Asian discrimination in Harvard admissions.

According to the plaintiff’s expert analysis of Harvard admissions data conducted by economist Peter S. Arcidiacono, an Asian student with a 25 percent chance of admission to Harvard would have their chances of admission increase to 36 percent if they were white and had the same academic qualifications. Hispanic students with the same academic qualifications have a 75 percent probability of admission. An equivalent black student would have a 95 percent chance of admission.

In other words, what is an iffy one-in-four chance of admission for an Asian student is almost a sure bet for a black student with the same admissions qualifications. Among admitted black students, 45 percent had academic qualifications in the bottom half of all applicants, while only eight percent of admitted Asian students had similar academic qualifications. The admission rate for a student with academic qualifications in the top 10 percent of all applicants is 4.25 times higher for black applicants, 2.61 times higher for Hispanic applicants, and 1.37 times higher for white applicants than for Asian applicants.

Differing admissions standards across racial groups also occurs for law schools and medical schools. Indeed, it is likely that admissions standards vary for different racial and ethnic groups at most American institutions of higher education, except for open enrollment institutions. Data for any particular university is often unavailable, though.

When differing standards are not equitable enough, one proposal to advance equity is to eliminate admissions standards completely. That is what the journalism school at UNC Chapel Hill did when eliminating the minimum GPA for admission to its programs (previously a 3.1 college GPA was required). A more revolutionary change is the proposal for the NCAA—which governs college athletics—to remove its minimum high school GPA and test scores for student athletes.

The minimum standard is a sliding scale, but for Division I universities, a 2.3 high school GPA in core subjects is a required minimum. Students with this GPA must earn an SAT score of at least 980 points. Students with lower test scores can compensate with a higher GPA in high school core classes. A student with a 3.0 high school GPA in core subjects, for example, needs to obtain an SAT score of only 720 points to play intercollegiate sports. For most college students, these standards are easily met; but for advocates of equity, even these standards are too high because a disproportionate number of African American students fail to reach them.

Back in the K-12 world, another popular strategy for achieving “equity” in education is to eliminate advanced classes and programs, such as gifted programs or accelerated classes. New York City mayor Bill de Blasio eliminated the city’s gifted program. In Charlottesville, Virginia, the standards for being labeled as “gifted” were lowered so much that 86 percent of school children qualified for the label, and the district eliminated any specialized classes for high performers.

California’s proposed K-12 math guidelines states, “… we reject ideas of natural gifts and talents …” and encourages a lockstep math sequence for all students to take the same classes through the end of 10th grade. Lest any students try to escape from a lockstep program, the guidelines explicitly discourage grade skipping individual students, even though there is absolutely no evidence showing negative effects of grade skips.

Avoiding—not solving—the problem

The problem of disproportionate representation of different racial and ethnic groups in educational programs is fundamentally caused by the achievement gap among groups. It is a mathematical fact that when groups differ in their average scores, then the percentage of group members exceeding a cutoff will be higher for groups with a higher average and lower for groups with a lower average. If all groups had equal average academic performance, then students in elite academic programs would much more resemble the demographics of the general student population.

What all these “equity” strategies have in common is that none of them achieve their equity goals by improving the academic performance of low-performing groups. Instead, “equity” almost invariably requires hiding deficiencies of low-performing groups, lowering standards, or eliminating or watering down programs that encourage excellence. These proposed policies are, at best, stopgap solutions. At worst, they hide the problem and allow it to fester.

Instead, solving the equity problem permanently would require closing the achievement gap by lifting the performance of lower-performing groups. The causes of achievement gaps among groups are hotly debated in the educational world. What is not debated is that meaningfully increasing the performance of low-performing groups will not be easy. There are some experts who have proposed policies and practices to increase achievement in low-performing groups.

School psychologist Craig Frisby, for example, has found that successful schools that teach large proportions of minority students focus on core achievement, provide strict discipline, and base policies on the science of learning—and not on trendy sociopolitical ideas.

Some projects to increase achievement of Hispanic and African American students have had promising results in increasing the number of these students who qualify for gifted programs. Another reason for optimism is that achievement gaps are narrower in the 21st century than they were in 1971, according to the National Assessment for Educational Progress reading and mathematics tests. (However, achievement gap sizes have stagnated since 2012.)

Equity advocates seem unwilling to do the long, hard work of improving the academic performance of the very children they claim to be concerned about—black, Hispanic, and low-income children. Instead, the equity policies are generally a quick fix that makes the demographic makeup of an academic program more palatable while allowing the underlying problem to remain.

Indeed, many of the newly popular equity policies imply that equity advocates have given up on increasing the achievement in low-performing groups. Anyone who thought that struggling students could perform as well as high-achieving groups would not try to lower or eliminate admissions standards, force students into lockstep programs, water down the curriculum, or eliminate advanced academic programs. All of these equity strategies are prime examples of what George W. Bush called “the soft bigotry of low expectations,” and they are coming from a postmodern ideology that claims to protect and fight for marginalized students.

Unintended consequences

The students that are most hurt by equity policies are the ones that the activists claim to be helping. Wealthy students who have a gifted program eliminated from their school have parents who can transfer them to a private school or pay for after-school educational opportunities. However, the child from a poor family does not have this option. They are stuck in their neighborhood public school, unchallenged and ignored.

Likewise, a policy that eliminates or de-emphasizes standardized tests closes off the easiest pathway to a challenging educational program for bright students from low-income families and under-privileged backgrounds. When many selective grammar schools and the 11+ admissions examination were eliminated in the UK, the percentage of students from working-class backgrounds who attended prestigious schools decreased. In other words, eliminating the standardized test favored the wealthy and well-connected.

In the college admissions scene, eliminating admissions tests benefits the moderately talented from wealthy families because they have more resources to make their child into an attractive applicant. Students from wealthy families can afford to have an impressive list of extracurricular activities, and these parents can manipulate other components of a college admissions application, such as grade-point averages (e.g., by pressuring a teacher, or transferring a child to a school with lenient grading standards).

Even admission preferences for student-athletes often benefit the wealthy. When was the last time an elite college’s sailing, lacrosse, or water polo teams consisted of students from working-class backgrounds?

Other equity policies hurt poor students in profound ways, even if a child does not qualify for an advanced academic program. When standards are lowered in a school district, or the curriculum becomes politicized, then the basics are neglected. A school year consists of a finite amount of time, and it is impossible to teach every topic.

When politicized classes are required (as has happened with California’s new ethnic studies high school requirement), foundational knowledge must be de-emphasized. Students trapped in ideological classrooms have less instruction time to develop strong skills in the core subjects of math, reading, and science, thereby stunting their academic and employment prospects in the future.

No help from the educational establishment

Don’t expect the educational establishment to fight against equity initiatives. For example, the only American advocacy organization in gifted education, the National Association for Gifted Children (NAGC), has committed itself to social justice orthodoxy. In June and July of 2020, NAGC released multiple statements committing itself to diversity and equity, as a response to the death of George Floyd at the hands of a Minneapolis police officer. What George Floyd had to do with gifted programs was never explained. No matter! NAGC has recently reaffirmed that it intends on incorporating equity in all its future work.

As a result, NAGC is paralyzed when gifted programs come under attack. The organization has done nothing to respond to the proposed California math guidelines, and it did nothing to mobilize support for gifted programs in New York City. The best it could do was issue a feeble statement on the day of Mayor de Blasio’s announcement saying that NAGC was “deeply disappointed.”

Simply put, bright students cannot count on education bureaucrats to fight for their educational needs. Most people with power in the education industry are already committed to social justice causes. This is apparent, for example, at the college level. In a 2019 Pew Center poll, 73 percent of Americans were against race having any influence in college admissions decisions. Even 56 percent of voters in California last year preferred race-neutral procedures in college admissions.

Yet, college administrators consistently buck public opinion on this point and implement racial preferences (often covertly) and vigorously fight for affirmative action in the courts. Fighting an anti-Asian discrimination lawsuit to preserve its affirmative action practices has cost Harvard University over $25 million in legal expenses. K-12 controversies tend to be less prominent, but in many parts of the country, the commitment to “equity” and other leftist values is common in many school districts.

With gifted programs under attack and no professional advocates to fight for them, bright students are at the mercy of the winds of politics. A few weeks after de Blasio announced that gifted programs would be eliminated, Eric Adams was elected as New York City mayor. During the campaign, Adams had promised to reinstate gifted programs (though the details are unclear). Bright children corralled into slowly-paced math courses in California will likely not be so lucky if the proposed mathematics guidelines are implemented in their district. The progressive worldview is entrenched in Californian politics, and that seems unlikely to change.

It is too early to tell how a shift in the political winds will impact other students. In the recent Virginia elections, education was a top issue for many voters, and there seems to be a backlash against critical race theory in schools in that state and other parts of the country. However, gifted programs rarely rally the voters because they tend to serve a small percentage of students and are easily branded—sometimes correctly—as elitist. Thus, gifted programs are unlikely to be a sole source of populist sentiment.

A new 6–3 conservative majority on the U.S. Supreme Court gives affirmative action opponents hope in eliminating race considerations from college admissions and the varying admissions standards for different racial groups. Until a case reaches the court, though, it is unknown whether the justices will be willing to overturn more than four decades of consistent precedent supporting affirmative action in higher education.

Lessons from history

While the focus on “equity” may be dismaying for advocates of excellence and individual merit, America has been down this path before. When the cultural zeitgeist of the 1960s and 1970s prioritized equity, academic standards and performance decayed. In the early 1980s, the nation’s political class—not the education establishment—led a pivot towards encouraging high achievement in America’s schools. This was most clearly seen in the 1983 report A Nation at Risk, which stated:

If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war. As it stands, we have allowed this to happen to ourselves.

The 1980s saw the birth of the accountability movement, higher academic standards, and massive growth of the Advanced Placement program. As happened a generation ago, the focus on equity will likely diminish as political leaders and the American people become dissatisfied with the mediocrity that results from an emphasis on equity.

Unfortunately for bright students stuck in lockstep academic programs, the change in political priorities may come too late—if it comes at all to their state or community. Implementation of newly popular equity policies will hinder the learning of many students before those policies are weakened or reversed. Perhaps one day the mad scientist trope will be replaced by the stereotype of the unchallenged gifted child, wiling away years of boredom in the classroom. At least the activists can feel good about the mediocre equity they have achieved.

Russell T. Warne

By: Russell T. Warne

Russell T. Warne is associate professor of psychology at Utah Valley University. He is the author of In the Know: Debunking 35 Myths About Human Intelligence and Statistics for the Social Sciences.

Source: The Push for Equity in Education Hurts Vulnerable Children the Most

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How to Build a Brand That Contributes to a Greater Cause

Having a greater cause behind your brand matters — not just for consumer perception of what your brand does, but for your ability to do good in the world. A social impact edge isn’t for every company, but when you give back or align your brand with helping the world, people notice. Research from Zeno’s 2020 Strength of Purpose reported that when consumers perceive that a brand or company has a strong purpose, they are six times more likely to defend or protect the company if there’s ever a misstep. They’re 4.5 times more likely to recommend it to their friends and family and become a champion behind it. 

But despite this research, Carole Cone on Purpose shared that only 24 percent of their business respondents reported having a purpose embedded in their business. And while it’s true that you shouldn’t add purpose or social impact for the sole purpose of resonating more with consumers, it is important to assess: What does my brand stand for? How do we help the world? How can I connect my profit with a greater purpose? Here are some things to consider in that assessment. 

Related: 9 Social Impact Models That Entrepreneurs Can Learn From

1. How can your product truly help others?

Sure, your product is a great help to customers — that’s why it’s doing well. But there’s a deeper consideration here. Can you extend the use of this product to those who need it most? This is similar to the TOMS model of thinking, where one pair of shoes is donated for every pair purchased. The shoes “help” the customers that buy them. But even more so, on the social impact end, they help underprivileged children internationally who don’t have shoes. 

Another powerful example of an entrepreneur using their services for good is real estate developer Christopher Senegal, who is tackling gentrification in a Houston neighborhood called Liberty Square. “Gentrification is always a sensitive topic in neighborhoods that are changing,” Senegal shared via email. “I’m facing the topic head-on. Not by protesting or trying to stop it but instead, identifying ways to be involved in the process.” At 33, he began developing middle-class townhouses in the neighborhood when he saw the development patterns in surrounding areas. 

“I realized that doing so would keep the culture of the community intact while improving the neighborhood and increasing tax dollars, which would improve schools,” he shared. “I made it a point to not only bring those that are originally from the area back from the suburbs but also only hire from the neighborhood and build a team of successful African American professionals around me. My construction team, realtors, preferred lenders, insurance agents and inspectors are all from the community.” 

Related: How Can Social Entrepreneurs Sell a Product While Promoting a Cause?

2. How can you raise awareness about causes that matter?

Your social media or ad campaigns are an ideal opportunity to show what it is that you stand for. For example, P&G created an ad campaign called “We See Equal,” which made its stance on gender equality in the workplace clear. However, they walk the talk, too — 45 percent of P&G’s managers and a third of their board are women. Make sure to put your money where your mouth is, and go beyond the ads and social media posts to show how you’re actually trying to make a difference.

Kris Ruby of Ruby Media Group recently posted an article about brand activism and how consumers are now “voting with their dollar.” Simply put, “consumers expect more from brands nowadays.” This should include actions such as using brand awareness for positive impact, participating in social movements and displaying brand values proudly on websites. 

Related: Cause Marketing Matters to Consumers

3. How can you implement social advocacy within your business model?

How you do business matters, too. Just like your ability to walk the talk alongside raising awareness is so critical, you need to make sure that every step of your business practices aligns with your purpose. An example of this is the online clothing company Everlane, which is working to improve transparency about how they make their clothes and even the details behind how they determined the prices. They do this by sharing “behind the scenes” footage of their factories and production processes, and the exact costs involved in making each piece of clothing. 

With unjust conditions in many international garment factories, a stand like this proves Everlane’s commitment to the cause and their desire to raise awareness about the right way to do things. This may seem hard to implement if your business model has already been running like a well-oiled machine, but consider little things you could do like banning unpaid internships because they’re inherently exclusive for those with socioeconomic disadvantages or ensuring that your products are cruelty-free and proving it to customers. They’re watching how you do everything you do. Prove they can trust you to abide by your greater cause.

Ultimately, these questions should lead you not to what your customers most want your brand to stand for, but what you as a founder deeply care about. How can you prove this through your business? There are countless ways — and you don’t have to be a social impact business to begin.

By: Jennifer Spencer / Entrepreneur Leadership Network VIP

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