Nobody likes to change. But business as usual in the public education system is going to put us out of business. Unless we change for the better -- and soon -- policymakers are going to find a cure that will be radical and painful. Look at some of the cures out there now: 

Local school boards as we know them are in jeopardy. Many states no longer trust them to do their jobs. And so the states are doing it for them, through huge books of regulations. Some have even passed "educational bankruptcy" laws allowing state takeovers of failing school districts. Other states now believe that parents can do a better job than local boards and professionals. The Illinois legislature decided that each of Chicago's schools would be run by a majority-parent board. In Chelsea, Mass., the school board has put itself out of business by turning its failing school system over to a private institution - and ending democratic control. And there is mounting pressure to use public funds for private schools. 

Why have school people let things go this far? Why aren't they taking the lead in turning around our schools? People are making heroic efforts to do that in a number of schools and districts. These are places with exceptional leadership where the union, the administration and the school board realize just how bad our educational problems are. But there are 16,000 school districts in the U.S., 100,000 schools - and a limited number of heroes. We need system-wide change. Why isn't it happening? 

It's time to admit that public education operates like a planned economy, a bureaucratic system in which everybody's role is spelled out in advance and there are few incentives for innovation and productivity. It's no surprise that our school system doesn't improve: It more resembles the communist economy than our own market economy. 

But we live in interesting times. After decades of economic failure, even the Soviet bloc seems to have concluded that only markets work, that a system without incentives and rewards drives out the good and favors the mediocre. 

President Bush agrees: He wants public schools to operate more according to market principles. He has proposed spending $500 million to reward "merit schools." The money will be doled out in small cash awards to schools identified as having improved in one year. 

But the money will be wasted. The program talks about the incentives and rewards but it is only talk. The rewards are so small and the odds of winning so long that the program won't interest many people, let alone promote system-wide change. Giving rewards after only one year doesn't give people enough time to take risks and innovate; it's an incentive for people just to work harder at doing the same old thing. 

If Bush wanted to earn himself the title of education president, here's how he could do it: by setting up a real incentives program that would revolutionize the way schools operate. 

Let's say he took the same $500 million, but instead invested it for five years. And let's say he invited every school to participate in a five-year, national competition. The winners would be the IO percent of schools that achieved the greatest improvement relative to where they began five years earlier. If every school volunteered to compete, that $500 million, invested for five years, would yield $15,000 for each of the staff in the winning 10 percent of schools. If only half participated, the incentive award would be $30,000. That's real moneyand since one in ten would win, that's a real incentive. 

For this scheme to work, participating schools would have to be free to try new ideas. So management would be required to waive all regulations that might keep schools from considering any and all promising changes except of course for rules dealing with health, safety and civil rights. And unions would have to grant staffs the right to waive provisions of union contracts that get in their way. School boards would also be required to give each participating school total control over its budget. Since lots of central regulating would be eliminated, the central budget would shrink - which means lots more money to turn over to schools. Finally, since the participating schools would vary a good deal in what they were doing, school boards would have to permit parental choice. 

The five-year time period is essential. A year or two wouldn't give people enough time to experiment with new ways of doing things. If you take a wrong turn during the first year of a two-year project, that's it you're not going to recover. So most people would just play it safe and do some simple thing. That won't do. 

The terms of the competition and methods of assessing the competitors would need careful thought. Some people I've mentioned this idea to have said, "That's a great way of rewarding schools that are already on top." But of course we would need to figure out how to create a level playing field so an inner-city school whose students aren't used to success can have as good a chance of making it into the top I0 percent as a school whose students are usually winners. 

The assessment would bear no resemblance to the current crop of multiple-choice, standardized tests. They would test students' ability to do valuable things: to understand complex ideas and events, to set up and solve problems, to build something and explain why and how it works .... 

Would this work? In the short run, there would be problems. In the long run, it's bound to work. School staff would be united as a team. They'd read and try new methods. They'd make painful decisions they now avoid. If their math staff were weak, they might offer a higher salary to attract new talent. They'd shape up their weaker colleagues. They'd reach out to the community, explore technology. They'd focus on student learning. 

It's the same as in any team activity or business. If there's something in it for everybody, people are much more open to change. 

We've been running our schools as planned economies for so long that the notion of using incentives to drive schools to change may strike some people as too radical - even though that's the way we do it in every other sector of society. But no law of nature says public schools have to be run like state-owned factories or bureaucracies. If the Soviet Union can begin to accept the importance of incentives to productivity, it is time for people in public education to do the same.