Nerve Endings Firing Away

Although it has nothing to do with my professional life, I am deeply interested in education. Perhaps it is because I have essayed the role of a student for a long time now although in a broader sense of the word, we all never stop learning. Or perhaps it is because of the role of formal education in our lives. As with any Indian family, education has been given top priority and it takes precedence over almost everything after you learn to talk and at least until you are old enough to drink. And rightly so too because education has been the greatest enabler and often distinguishes the haves from the have-nots. I have briefly flirted with the idea of returning to India and setting up a school of a different kind; I am also heartened by the fact that my family shares a similar sentiment. And perhaps someday I will.

Atanu Dey, the resident expert on exploring innovative trends in education has been writing an excellent series on the topic on his blog. His last two posts have been particularly enlightening.

On the role of the government in education:

…let the private sector supply educational services in India. The government must not be in the business of providing education at any level. Let the market have a go at it. The government of India is not capable of providing education. It has demonstrated its incapacity over decades, and there is no reason to believe that it is even theoretically up to the job. Education is too critically important for the future of India for it to be left to the government.

On opening up the education ‘market’:

…it is misguided government policy that lies at the root of our dismal education system. The policy change required is to allow the private sector unfettered access to the education market. Will the private sector supply educational services? An unqualified yes because there is money to be made. Currently around 10 percent of GDP is spent on education, which amounts to around US$60 billion.

The first post was linked on DesiPundit and got an interesting comment from Vishal who claimed that the Indian government should be in the business of providing education and should make it affordable *and* free. The claim that the Indian government can provide quality education is demonstrated by the success of IITs and IIMs, Vishal says. I countered his arguments there but feel it requires a detailed response (without dissecting each argument) hence this post.

The government provides nothing free since it doesn’t generate goods or services out of thin air. Any programs or services provided free are funded through the taxpayer’s money. Sure, education, health care, public transit, and other necessities can be ‘free’ if the government takes away 70% (or more) of your income but the concept of free becomes much more clear when you pay a heavy opportunity cost. Market failures allow for provision of public goods by the government but I don’t think education is one. You have to accept the ‘free’ goods provided by the government in the condition they provide it to you so if you want to complain about the lack of quality of education or the cleanliness of your transit station, the government will respond that this is the best you get given the cost of providing it free to all citizens regardless of whether they pay taxes or not. That’s the catch that we often aren’t aware of.

And hey, it is free what are you complaining about? There is little or no accountability when things are given to you for free. If you buy a television at an electronics store and you don’t like its quality, you can always take it back and rant at the guy who sold it to you. More often than not, you will be given either a refund or a replacement. If you get it for free, there is no incentive for that store to give you a quality product. So why is the government any different from that store? Admittedly the government isn’t a business but when you demand it provide something, it is going to treat itself that way. Accountability is further diminished through myriad layers of bureaucracy as no one is really invested, economically or otherwise in provision of those services. And most of all, if you aren’t satisfied with the services of your government you have no choice because there isn’t any option. There is no other government you can go to. It is monopoly at its worst.

The concept of getting something ‘free’ is a socialist one that we have become attuned to thanks to the policies laid down by our previous policy makers. If something is offered free, everyone gets an equal share whether you deserve it or not. Vishal cites the example of France in providing quality education. I’ll go one step further and say that even the business-friendly United States offers free education in its public schools. But do those public schools necessarily provide better quality education? Some do and others aren’t so bad. But if you look closely at the schools that fare well are those that are located in certain neighborhoods.

Education in the United States is funded through the property taxes of the neighborhood that the schools serve. Anyone buying a house here will attest to the fact that the quality of the school is the primary factor that prospective buyers look into. The better a school is, the higher the property prices which in turn generate higher property taxes which can be ploughed back into the school district system. Thus it is a cyclical process which ends up with good public schools in high-income neighborhoods. Why? Because the parents are paying for them – through higher property taxes. So effectively, schools aren’t free.

In spite of the availability of ‘free’ public schools, there is an ever-present demand for private schools. Quality of a private school over an equitable public school at least in United States is debatable but parents given a choice almost always prefer a private school if they can afford it. Other subtle aspects are that private schools often open the doors either through reputation or through networking to a reputed college which is a given if you wish to rise above a certain economic level.

As Atanu mentions, education can be treated as a service whose quality would be greatly enhanced through the entry of private players operating in a free market. To satisfy the provision of equal opportunity to those unable to afford it, the government could hand out vouchers (to subsidize the fees) that let those individuals make a choice regarding which school they want to attend. The vouchers are capped at a certain level given the average cost of education in an particular region. Thus, the government steps out of the often painful business of providing education and managing infrastructure and instead provides monetary support to those who are unable to afford it. Economic inability can be the only criteria the government can monitor to provide these vouchers. This will work best at a K-12 level and Atanu provides additional options for higher education. But I agree with his point that the only way out of our education-system morass is to allow opportunities to grow via expansion of options in the marketplace. The automobile and telecom market was almost instantaneously transformed through such a move so I don’t see why education would not.

Of course, you will have sub-par schools or colleges (like IIPM) but eventually their reputation and inability to compete with graduates from better schools and colleges will catch up. Every market witnesses a plethora of players until the redundant and incapable ones are eventually weeded out. The government should not be in the business of providing education but instead should be interested in providing better access to education. Identifying the factors that keep children away from schools and ameliorating them is frankly the only way for a long-term effective education policy.