Allow competition in education.

THE STATE OF AMERICA'S K-12 school system is reminiscent of the steel industry while in its long decline--every player fought to defend its interests, but in the final analysis, the industry failed, at least in its original form.

Similarly, today's school system is an intellectual monopoly in which federal and state education officials, local school boards and the teachers' unions all think they're doing the right thing, yet the evidence is overwhelming that they aren't. (See cover story, page 22). CEOs know that the system isn't producing enough young people with the right skills and interests. Poor math, science and language skills are the most visible problem. CEOs have been saying "let's fix education" for years and have thrown hundreds of millions of dollars at programs such as "Principal for a Day" or student mentoring. But those solutions have only helped at the margins.

It's time to acknowledge that more sweeping solutions are necessary. They should be built around the notion of competition. Administrators, principals and teachers need to see a connection between performance and pay. Government funds should shift to schools that do the best job.

Charter schools should play a role in creating competition. It's true that some have an ideological or religious agenda. But we believe they are a viable alternative, particularly for kids in urban areas where public education has failed.

So one priority for CEOs, as advocated by New York City Schools Chancellor Joel Klein, is to push for an end to legislated caps on the number of charter schools per state, and to push states that haven't allowed charter schools to do so.

Another potential strategy for CEOs, who are already spending to support programs in public schools, would be to shift dollars into private schools or public-private hybrids.

In a competitive setting, where funding is at risk, it's reasonable to assume that educators in the public sector might undertake reforms that would really pay off. We also could hope that public schools might attract better principals and might allow reform of the tenure system, such as the merit pay idea that California Gov. Arnold Schwarzenegger is pushing. (See story, page 26.)

CEOs are used to thinking about entire industries or sectors, so you should apply your systematic thinking to K-12 education. If you can't find qualified Americans, you will hire in India or China or Ireland instead. But the risk is that you will become more vulnerable to social and political backlash against "corporate elites" who don't care about American jobs. That's why chief executives can't afford not to engage in the education debate.