I was in a debate not long ago on the topic whether For-Profit Higher Education should be allowed in India. In a way, I have a predictable position, given that I have spent most of my working life in For-Profit companies. But there are more reasons why I should generally answer in the affirmative to this question. First, because I always argue for diversity of provisions in the Education sector. Second, and more importantly, I believe that the government is generally incapable of providing services, and should confine itself to providing infrastructure and maintaining regulatory frameworks.
The aforementioned debate was conducted in equally predictable lines. There were some, arguing against For-Profit Higher Education, rooted their argument on a moral revulsion of Profit - that one should not be in education for making money! The other group, arguing in favour, was logic of the market - that it would improve access, bring innovation and enhance efficiency of the sector. These arguments, at its core, were so familiar that another debate on this seemed wholly superfluous.
Such a debate has a predictable outcome - stalemate! One could perhaps see that the two sides, clearly drawn, are using quite different arguments and appealing to their respective, committed to convinced, audiences. There is no basis, other than moral outrage, of saying that one should not make money out of education, when it is perfectly fine to sell food for money, for example. And, indeed, despite its rational sounding appeal, the other group would be hard put to prove that introduction of For-Profit Higher Education would expand access, bring innovation or enhance efficiency. In the end, such a debate is never a debate, but claims of entitlement - the academics were arguing against a loss of privilege (justifiably, as For-Profit Higher Education shifts the focus from academic staff to processes in search of efficiency) disguised as moral outrage, and the entrepreneurs and investors were arguing for a share of the education pie, one of the growth businesses in this slow-growth world, but pretending to use economic rationality.
In context, my position is nuanced, and perhaps because I have no battles of entitlement to fight. I have no moral outrage against Profit, which I see as a reward of taking risks - something essential if one has to deal with uncertainties and build forward. At a time when education needs innovation and be forward-looking, there is no doubt that For-Profit enterprises can, and should be allowed to, play a role in the sector.
However, at the same time, I do not think the claims of access, innovation and efficiency really measure up.
The objective of For-Profit is to earn a profit, and not to expand access. It is pretentious to say For-Profits would serve who need access. In fact, going by the track record, For-Profits serve the most profitable. This may indeed include some people who do not have the money to pay, but For-Profits only serve them if the Government - or some other agency - comes forward with the money. And, indeed, For-Profits do not lower the cost to expand access - they charge, following the business logic, the maximum that could be charged given the market mechanism. The task of expanding access, therefore, remains with the Government, and introducing For-Profits in the equation often increase the cost of expanding access rather than reducing it.
The same goes for innovation. The For-Profit business model is about extracting value by removing inefficiencies (I shall explore the efficiency argument further), often by refining processes or employing technologies. These innovations aim, more often than not, at cost savings than better outcomes. The important thing to understand about education is that at least at present, when India has only a fraction of the population who could go to college going to college, the sector experiences infinitely expanding demand - or, supply creating its own demand. In this setting, the business logic would dictate outcomes just as good as the other existing institutions. In summary, in situations of excess demand, there is no incentive for innovation for better outcome, though innovation for cost savings would go on.
Finally, the efficiency argument. It follows from the innovation argument that For-Profits have no incentive to create better outcome. However, one could go further and say that introducing For-Profits in the mix would actually result in a loss of efficiency of the sector as a whole. Those who are familiar with the arguments made by the economist Albert Hirschman would recognise this process of voice and exit as it plays out in a sector which is partly privatised. The point is that the public sector is designed to be driven by voice - when a public university becomes inefficient, it is inherently designed to be driven to efficiency through active protests and participation of students and the faculty. The introduction of the For-Profit option in the mix would reduce the incentive for such voice, and would introduce the option of exit - those students and faculty dissatisfied with the system would simply leave. As Hirschman observed in the case of private schools, those who leave are likely to be the most active students (in case of schools, parents), denuding the public system of its most important incentive of efficiency - voice!
I argued that our approach to For-Profit Higher Education should neither be defined by moral outrages nor by simplistic pretensions, but a more realistic approach balancing the two. If we accept the argument of the For-Profit side that they would either expand access, bring innovation and enhance efficiency that would create value for all stakeholders - and not just their owners and stock-holders - we need to create conditions so that the For-Profit intervention indeed does so (and offset the negative effects, such as the loss of efficiency in the public sector). There are possibly two ways of creating such options, and allowing For-Profits to play a role.
First, One of the key value propositions that For-Profit Education bring is the ability to manage future risks, and to build educational options in nascent sectors and areas, and they should be allowed to do so. For-Profit education in IT, before the sector really expanded in India, was of enormous value, and the society benefits significantly by allowing a role for For-Profit players in such sectors.
Second, the For-Profit players could be allowed to play a role in the mainstream Higher Education only if a regulatory structure could be created to align the maturity mismatches that arise in sectors which are being privatised. This is not about regulation of Higher Education, rather - this is about regulation of corporate structures. In this, I follow the argument of Colin Mayer, of Said Business School, that in sectors like this, regulatory structures should seek to create incentives for long term value creation. Indeed, the usual For-Profit cycles of IPOs and exits create maturity mismatches for educational assets, and the history of For-Profits is, therefore, littered with instances of overreach, abuse and plain fraud. Before one opens doors to For-Profits to set up educational institutions, the government is better off by exploring what kind of corporate structure these entities should have.
In the end, I shall recommend the two books that inform my perspectives in this debate. The first is Albert Hirschman's Exit, Voice and Loyalty (Harvard University Press, 1970) which offers great insights into the operations in the condition of excess demand (where inefficiencies are common, for the usual tight balance of supply and demand, and therefore, competitive markets, do not exist), which is indeed what we see in education. The other is, of course, as cited, Colin Mayer's Firm Commitment Why The Corporation Is Failing Us and How To Restore Trust In It (Oxford University Press, 2014) which looks into corporate governance issues, particularly in the context of privatisation of public services and explore various regulatory tools, including the use of tax codes, to create incentives for long term value creation. I have studied the history of For-Profit Education in different countries in the world (see my notes here) and believe that we are better off learning from the experiences and taking a nuanced view, rather than either resisting the phenomenon as evil or embracing it without reservations.
Popular posts from this blog
A friend has recently forwarded me a quote from Lord Macaulay's speech in the British Parliament on 2nd February 1835. I reproduce the quote below: "I have traveled across the length and breadth of India and I have not seen one person who is a beggar, who is a thief. Such wealth I have seen in this country, such high moral values, people of such calibre, that I do not think we would ever conquer this country, unless we break the very backbone of this nation, which is her spiritual and cultural heritage, and, therefore, I propose that we replace her old and ancient education system, her culture, for if the Indians think that all that is foreign and English is good and greater than their own, they will lose their self-esteem, their native self-culture and they will become what we want them, a truly dominated nation." The email requested me to forward me to every indian I know. I was tempted, but there were two oddities about this quote. First, the language, which
Introduction : The Business of Gift Giving Business gift giving has always been common and contentious at the same time. Business gifts are usually seen as an ‘advertising, sales promotion and marketing communication medium’ (Cooper et al , 1991). Arunthanes et al (1994) points out that such gifting is practised usually for three reasons: (a) in appreciation for past client relationships, placing a new order, referrals to other clients, etc.; (b) in the hopes of creating a positive, first impression which might help to establish an initial business relationship; and (c) giving may be perceived as a quid Pro quo (i.e. returning a favour or expecting a favour in return for something). The practitioners of gift-giving generally argue that doing business is often an aggregation of personal interactions and relationships, and gift-giving should be seen as a natural way of maintaining and enhancing these relationships. ‘Business gifts, especially one given in the course of the festive s
Today, Helen Goddard, 26, a highly popular music teacher of a City School for Girls, has been sentenced to 15 months in prison. Her crime was to carry out a year long lesbian affair with one of her pupils, who appeared in the court and admitted that the affair was consensual and it was she who pressured Helen into the affair. For Helen, a bright musician and a devout Chistian, this is an extraordinary lapse of judgement. Also, she was teaching in the £13,000 private girls only school in London. She was surely aware what the consequences of her action will be. The fact that she still could not stop herself tells us that lovers do not always act rationally, something we always knew. There is more in this affair than personal tragedies. For a start, this has all the dramatic elements: a bright, beautiful teacher more in Julia Roberts mould [as in Mona Lisa Smile], a stiff upper lip school [not unlike Wellesley] and a story like Notes On A Scandal with an added twist. Indeed, Helen
Buzzwords have disadvantages. Right now, experiential learning is one, and that means we put the label on everything and it stops to mean anything. Also, this means reasonable conversation about experiential learning becomes difficult - at times such as this, either you preach experiential learning or you are traditional, antiquarian and hopelessly out of touch. But, overlooking the limitations of experiential learning can cause big problems. Experiential Learning does many things - putting practice at the heart of learning is an important paradigm shift - but not everything, and it is important to be aware what it does not do. Usually, we equate the terms Project-based Learning (the method) with Experiential Learning (the idea) and Learning from Experience (the ideal), treating them as one and the same and using the terms interchangeably. Any talk about distinctive meaning of these terms is usually seen as pedantic, but really represent very different ideas about education.
There is no other city like Kolkata for me: It is Home. The only city where I don't have to find a reason to go to, or to love. It is one city hardwired into my identity, and despite being away for a decade, that refuses to go away. People stay away from their homeland for a variety of reasons. But, as I have come to feel, no one can be completely happy to be away. One may find fame or fortune, love and learning, in another land, but they always live an incomplete life. They bring home broken bits of their homeland into their awkward daily existence, a cushion somewhere, a broken conversation in mother tongue some other time, always rediscovering the land they left behind for that brief moment of wanting to be themselves. The cruelest punishment, therefore, for a man who lives abroad is when his love for his land is denied. It is indeed often denied, because the pursuit of work, knowledge or love seemed to have gotten priority over the attraction of the land. This is particularly
In most societies today, making profits are accepted as moral, if not especially praiseworthy. This was not as obvious as it appears today – people used to be embarrassed about making a profit not so long ago. Crazy as it seems today, it is worth thinking why it was so. Profits, as economists will put it, is the reward for risk-taking, for putting a business enterprise together in the pursuit of an objective. In this definition, remember, profits are not what it is commonly understood to be – the gross middle-line towards the bottom – but a figure net of entrepreneur’s earning [wages for his labour], dividends and interests on borrowed capital, and provisions for building and other physical assets [a sort of rent, offsetting what these assets could have earned if leased out]. This pure profit – surplus – accrues to a business as a reward to its organisation, for the act of entrepreneurship itself. Economists were divided on how this surplus comes about. The conventional wisdom was,
Nations are ideas. We try to fashion them as territories. But how can a river, a mountain ridge or sometimes an imaginary line in the middle of a field can explain the wide division in the lives, thoughts and futures of the people who live on different sides? Nations are not the people too. Indeed, people build nations and become its body. But the soul of the nation is an idea: People come together on an idea to build a nation. While that's what a modern nation is - an idea - and that way exceptionalism is not an American exception, very few nations are as completely defined by an idea as Pakistan. There was hardly any political, geographic or military rationale of Pakistan other than the idea of an Islamic homeland in South Asia. [In that way, the ideological brother of Pakistan in the family of nations is Israel] This, abated by the short term political calculations of some backroom colonialists, created a modern state which must be solely sustained on that singular idea. Reli
Introduction: Hastings in the history of Indian Education Whether or not one includes Warren Hastings in the history of Education in India is a matter of perspective. If writing the history of education means writing the history of schools, the impact of Hastings' administration would be quite limited. If anything, the rapid implosion of local rulers in Eastern, Southern and Northern India during Hastings' tenure had meant a bleak period for the indigenous education system, as patronage and funds would have dwindled away for many of them. The Company administration really concerned itself with the schooling of the natives only after 1813, as Nurullah and Naik rightly pointed out ( see my earlier post ) and one can legitimately start the story at this point. However, if history of Education in India is to encompass the transformation of Indian Scholarship, on which foundation the new, colonial, system of Education would be built, the story must start with Warren Hast
India's employment data is sobering ( see here ). The pandemic has wrecked havoc and the structural problems of the economy - service sector dependence, uneven regional development and health and education challenges - are more evident than ever. Something needs to happen, and fast. To its credit, the government acknowledges the education challenge. Belatedly - it took more than 30 years - India has come up with a new National Education Policy. It is a comprehensive policy, which covers the whole spectrum of education and perhaps overcompensates the previous neglect by advocating radical change. As I commented elsewhere on this blog, it shows a curious mixture of aspirations, cultural revival and global competitiveness put under the same hood. However, despite its radical aspirations, the policy document often betrays same-old thinking. One of these is India's approach to foreign universities. The NEP makes the case for allowing foreign universities to set up operations in Ind
Italy recently apologised to Libya for its occupation of the country between 1911 and the Second Word War and offered an investment deal of $5 Billion over next 25 years towards reparation. This is largely symbolic, and investment deals could have been done without adding this moral halo . But the apology itself is an important step. The key question is one of principle, indeed. It is about whether the occupying countries do accept that their colonial exploits did enormous harm to the occupied, and whether they are ready to accept the responsibility. As the world becomes more sensitive towards the wrongness of occupation [even George Bush was heard saying that occupation of Georgia by Russia is unthinkable in the 21st century!!], and the world justice system gears up to try the leaders causing genocide and violence, paying for past crimes - including occupation - becomes ever more relevant and important. There are several issues which are still hotly debated - slavery, for example,
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.