Atanu Dey On India's Development

On Education, IT and the Government

| 3 Comments

In my previous post on “The Rational IT Policy” I claimed that there “is no need for any specific IT policy. The use of tools is the outcome of a set of rational processes which arise from a set of rational policies that address rational goals. IT use is a derivative demand, not a final demand. IT and its tools are an intermediate input to a process whose end result is desired.”

The point about “derived demand” is central to my argument that there is no need for an IT policy because IT is a collection of tools the demand for which derives from an analysis of goals, and specific tools must not be mandated before the goal is determined. One can, for instance, have a policy on education and from which it could happen that some IT tools are determined to be appropriate to satisfy the goal. The use of a tool is contingent on the desired result.

To illustrate the point in the context of education, I wrote “that people who are in the business of education are much better placed to know which tools to use than some government bureaucrat who has little knowledge of what tools are most effective in education.” To which the GnuVision Blog responded with:

The people who are in the business of education are literally in the “business” of education – they simply know how to make money out of it – and they can use all the wrong “tools” and still merrily make money (eg: use proprietary software instead of vastly better FOSS alternatives). At least, Atanu should have acknowledged the necessity of strong government policy in the context of Free/proprietary software and software patents.

First, a bit of a rant on the use of scare quotes around “business” in the above. Is it meant as a general disapproval of businesses, and specifically based on the presumption that education should not be a business? I think that is the general drift. I have noticed a fairly generalized disdain for businesses among certain people, especially among those who have imbibed the milk of socialism in copious amounts.

Business is what humans do in a state of freedom. Whether as individuals or in a group, we all do business spontaneously. Doing business is what creates all the goods and services — also called wealth — that we enjoy. One useful measure of the value of the production that a business creates is the revenues it generates. It also incurs costs. Costs measure the resources that it consumes. The value that a business adds is the difference between the costs and the revenues, and is normally labeled as profits. The fact that a business makes profits is a good thing: it means that the business produces more than it consumes.

Education is a service like any other valuable service. There is no reason why the production of education should be not profitable. By profitable, I mean that its benefits must exceed the costs. Indeed if it were that its costs exceed benefits, education would be a sink for wealth rather than being a source. Education is one of the most important endeavors of humans. It has intrinsic value (a good in its own right and is itself valuable) and instrumental value (it can be used for other good things.) If there is any activity which can be undertaken profitably, it must be education.

By proscribing the production of education by for-profit businesses, nothing good is achieved. It merely limits the production possibilities of education. Limiting the production of a good is not the smartest thing to do. Limiting the production of education is a horrible thing and anyone who supports that is a wrong-headed uneducated cretin.

End of that rant on the disparaging of business.

Now back to the quoted bit above — “. . . they simply know how to make money out of it – and they can use all the wrong “tools” and still merrily make money (eg: use proprietary software instead of vastly better FOSS alternatives).”

Using wrong tools is inefficient. It increases costs. Inefficient businesses will get competed out of the market because firms that use the right tools will be able to produce at lower costs and thus offer their products at lower prices. The presence of inefficient producers in a market indicates that there are entry barriers to the market.

Indian education is costly and Indian education businesses are inefficient precisely because there are barriers to entry. It is controlled and this leads to high costs, low quality and inadequate quantity. That some entities are “merrily making money” is a consequence of the government control that disallows free entry into the sector.

The misunderstanding of the role of government is distressingly common. A blog post on 6 AM Pacific declares my post on the rational IT policy “to be wrong-headed.” Then adds the non-sequitur, “I think it is important for any government that comes to power to nurture and encourage the use of IT in government, business, education and at home.”

I am hard pressed to see where it is that I have advocated that the use of IT should not be nurtured or encouraged. The government has a role in enabling the use of IT where it is appropriate. What I am against is the government mandating of specific tools and technologies. It is not the government’s job to pick winners. It has to get out of the way of people and businesses and let them figure out what is the best use of their resources. The ones who use the tools are best able to judge what is appropriate, not some bureaucrat in some government office. The bureaucrat has the right to choose what is used in that government department, not elsewhere.

The larger issue here is the question: why do people have such immense faith in government? Do they really imagine that the government is composed of divinely wise, selfless, incorruptible, infinitely rational bodhisattvas and enlightened beings? Have they not figured out that the people in government are as short-sighted, greedy, selfish, stupid and irrational as the rest of us — and perhaps even more so?

Deva, deva!

  • blogreader

    Thank you for this post. A few points:

    In a given business sector, whenever there are competing options

    between a risky and a relatively safe enterprise, most businesses will

    take the latter. This is because after optimizing for profits they will

    chose a point where there is scope for handsome profits at a certain

    level of risk, not too high. In case of hi tech firms which innovate,

    companies get to keep at least a portion of their profits through

    patents etc., in case their risky enterprise bears fruit. In case of

    education, at least in the Indian context, the only criterion by which

    an institution is judged is its success in somehow placing its sudents

    in a job. Under such a situation, institutions cannot ‘innovate’ in

    terms of curriculum, research, etc. as the job market is not simply

    interested in such things.
    Hence to really change things, the nature of the demand for education

    needs to change, which is not going to happen in this country any time

    soon. On the other hand, the government has an advantage here, as it is

    not interested in immediate profits, and can afford to wait till this

    social investment bears fruit in terms of invention etc.

    A second point. There are areas of knowledge where market demand is nil

    or small, in terms of jobs. So small that it is difficult to achieve

    economies of scale in such areas. So even if there is a small demand

    for education in such areas, it would not be very efficient. Hence

    institutions delivering education in such areas would close down. This

    is probably already happening in the Indian context. This is immensely

    harmful in a larger context, as though their market demand may be

    small, their utility in terms of societal goals cannot be

    overemphasized.

    I read somewhere that only about 5% of any population is capable of

    benefitting through higher education. I am not aware of the current

    thinking in this regard. If possible please throw some light on this

    issue.

  • Aravind

    Atanu,
    I have been following your blogs for quite a long time now. I eagerly wait your blog entries everyday. Thanks for writing. It helps me see things differently often from a better perspective.
    Regarding this particular blog: What do you exactly mean when you say education is controlled by government? I see lot of private schools and colleges all over the country. So, why do say government is not letting private enterprise in education?

  • ghost_writer

    haha … your economic thoery and rants; a curious mix of the sublime and the ridiculous. apart from merely assessing the output-input i.e. value of education; surely you see it as a public good and one that should be funded and supported by government (notice I did not say run by government). even the great economist Milton Friedman accepted that government has a role to play in education. of course, he recognized that it is a very small role and one that should be based on competition between providers (as opposed to the Indian model of monopoly of state provider, high entry barrier etc.)

    I am curious – in a similar way would you not see providing bandwidth connectivity as a public good? If yes, how would you propose to fund and maintain it in a manner that maximizes economic outcome (again note – I am talking of connectivity as opposed to tools, companies or technologies)