This is a true story. The faculty member involved emailed me yesterday. Scene: an IIT professor interviewing a potential candidate for PhD in a technical subject.

“Suppose you have two integers, each between 0 and 5. You add them up. What is the range of their sum?”

“It can vary.”

“Sure, it can vary, but what is the largest possible value of the total?”

“Five.”

“I said sum, not average. What is the maximum possible value of the sum?”

“Five.”

[FYI, my original intention was to say these two random numbers were uniformly distributed and ask what the distribution of the sum was. This person had traveled to IIT by train, possibly using IIT money, to do an interview like the above, with the hope of doing a PhD some day. Your tax rupees at work here, folks. Lest you think there was a language problem here, I give another example below.]

“Consider the loops below:
for i = 1 to n
for j = 1 to i
loop body
How many times will the loop body execute?”

“n times”

“How much time does it take to sort n items?”

“Big oh of 1.”

["Uh oh"]

Let’s remember that this student has spent at least 16 years of his life in school (four of which in undergraduate studies). This is a telling vignette which is indicative of how woefully inadequate our educational system is.

Allow me a personal anecdote. Some years ago, my friend and thesis advisor Peter Berck at UC Berkeley requested me to receive a visiting faculty from Delhi University at San Francisco International. The visitor was coming to Berkeley for a summer teaching and research appointment. I went to the airport and hung about for about three hours fruitlessly. The guy was not on the flight.

Later that day I received an email from him from Delhi. It seemed he needed permission from some Indian governmental bureau to take up the summer appointment at UCB. They kept him waiting and denied him permission at the last moment. He did not get on the flight. He was severely disappointed as he was looking forward to being back, however briefly, in Berkeley where he had received his PhD.

Governmental policies matter. And they differ from country to country. Peter told me later that Israel not only allows their faculty to take short-term positions abroad, but that they actually encourage it. They give their faculty full pay even when they are working abroad short-term. They consider it a win-win situation: the faculty member grows professionally through contact with the outside world. The country gains because the terms of employment include the freedom to come and go as they please and therefore a professional is more inclined to work in the country.

I can imagine that really competent professors give up on trying to build a career in India after a few years of struggling with the bureaucratic machinery of India. Not only are the teachers paid poorly but to add insult to injury, they are arbitrarily denied the freedom to pursue their professional goals. The list of top-notch economists (just to take one small sample) that the Delhi School of Economics has lost to the US makes dismal reading.

The hollowing-out of Indian universities should be a major cause for concern. Without the foundation of great universities, it is unlikely that India will ever be able to compete in the world. We should take a break from patting ourselves on the back about how many BPO call centers we have and take a serious look at what ails our education system. Granted that many non-resident Indians are returning to India by the droves, at least as compared to before when the traffic was mostly one-way. But the picture does not look quite as rosy under even minor scrutiny.

The returnees are mainly those who come to India as ex-pats employees of multinational corporations such as Yahoo, IBM, and others. They are managers and executives whose contribution to the economy certainly cannot be ignored but is nothing as substantial as those of professors and researchers. If there is any flow which can be termed as “brain-drain,” it is the one-way migration of those who form the cornerstone of a modern economy, namely, top-class highly educated researchers and teachers, and who not just make the university but are the university. Ultimately they are the ones who train the thousands of bright young men and women who go on to build society in all its aspects—social, commercial, political, and educational.

Clearly, those returning are doing so for personal and professional reasons, just as those leaving are doing so. The liberalization of the economy from the clutches of the government has offered some degree of opportunities in India and thus the limited reverse migration of the managerial and executive class. That should give us a clue: to halt the migration of educators and indeed reverse it, what is needed is liberalization of the educational system. This may be equally, if not more, critical to India’s development as was the liberalization of the economy.

Liberalizing the educational system must begin with the dismantling of the bureaucratic control of the system. There are examples of countries freeing up their educational systems. New Zealand abolished their Department of Education and transformed their dysfunctional school system within a few years to one which is world-class. It is hard to fathom what good bureaucratic control of the educational system does in the first place. What do bureaucrats have to do with education anyway other than not allowing the moribund system from changing?

Bureaucracy rules in the Indian school system. Who is allowed to run a school, what is to be taught, who is allowed to teach, how much a teacher is to be paid, who is allowed to attend and for how long, who must be allowed to attend, how much can be charged—all these things are bureaucratically determined and no freedom of choice is permitted. The system lacks freedom and the not so surprising effect is the system is dead.

I am confident that Indians are no less smart than any other group. Indians are poor because they lack freedom to act, to perform to the best of their abilities. Given the opportunity, in free societies Indians do just as well as the others. It is time for Indians to build world-class schools and universities. It is time for Indians to have real freedom from the government of India, not just the political freedom won from a colonial power over half a century ago.

Right now, in the education sector there is severe competition for the market—a limited number of entrants are allowed. So there is limited competition in the market leading to high prices (and economic rents, part of which has to be paid to the operators of the state control machinery to gain their patronage). Limited competition in the market implies not just high prices but assures low quality also. The people, given the supply constraints, in desperation put up with high prices and low quality.

My prescription is simple. Allow free entry into the education business. Give absolute freedom to schools and universities to charge what they wish, to hire who they wish, to pay what they wish, and to admit who they wish. By allowing free entry in the education business, there will be no competition for the market. There will be competition in the market. Prices will reflect true costs and quality will improve.

One hears the argument that if you allow free entry, would not all sorts of shady fly-by-night operators open up schools and bilk the general public? Let’s paraphrase that argument a bit. If you allow anyone to open a bakery, would not people who have no expertise in baking open up shop and sell garbage to the general public and make tons of money? Now that is a stupid argument, is it not? After all, unless the general public is totally brain-dead, the bakeries with crappy bread will go out of business because given free entry, there will be other bakeries. It is only when the government hands out limited number of licenses for bakeries that the people don’t have any choice but to take what they can get from government licensed bakeries.

Of course, one must distinguish between different levels of education. First, there is primary and secondary education: all, irrespective of their ability to pay, must have access to that. The government must help those who cannot pay by financing their education. School vouchers is the mechanism. The government must not be in the business of running schools—whether primary or secondary.

Next there is college education. Again, the role of the government is limited here. For those who cannot pay and are credit constrained, the government should guarantee educational loans which are given by financial institutions.

That’s it. Get the government out of the education business. And within a generation you would have India really shining in education.