Information, Not Plastics
The world has come a long way since the 1960s when the future was defined by one word – “plastics” – as Mr McGuire advised the young graduate Ben. Now the future is defined by another word and the word is “information.” Plastics was a wonder product of the world of industrial technology which fundamentally transformed the world of objects. Information is the new thing, the product of information technology, which is going to transform the world of ideas. Actually, information is not a “thing” in the usual …

Pardon me for the alliteration and the weak attempt at punning in the title of this post. I could not resist the temptation. But anyhow, the Finnish educational system’s successes underlines my convictions about what features define a good system. Here’s a report in today’s Wall Street Journal, “What Makes Finnish Kids So Smart?“. (Hat tip: Abhishek Sarda. Sorry that article will go behind the subscription firewall in a few days.)

The future of education is going to be one of the most exciting things going on in the world. I see a revolutionary change occurring because of two specific reasons. First, the increasingly complex nature of our world. Change is accelerating and therefore to prepare people for that dynamic world, people need skills that were not needed previously. These skills cannot be imparted once and for all in the formal years of schooling. Therefore, what education has to do is to prepare people to be life-long learners. The schools have …

Perhaps you have read it before on this blog. Now “The Age of Profound Ignorance” is available to a wider readership on LiveMint.com. (If the previous link does not work, please use this one.)

Education in India is generally in dire straits even though some people mistakenly believe that it is excellent from the successes of some ex-IIT non-resident Indians in the US who made piles of money. It is not hard to figure out what is the root cause of the distress of the educational system in India: the near-monopoly control of the system by the government.

We find ourselves in the midst of a transition, from the industrial-value-added analog world to the information-value-added digital world of the future. The relatively static world of the past is giving way to a dynamic world that defies comprehension and easy descriptions. The institutions that worked in the past are losing their relevance in an accelerating and rapidly changing world economy – one that is getting more interdependent and interrelated. This change is more radical than that which accompanied the transition from a primarily agricultural to an industrial economy.

Positive Returns on Investment
Education has positive returns. That claim is certainly not the most extravagant generalization about education that one can make. It is true unless of course hundreds of millions of people over centuries have been systematically paying for education and not fully recovering their investment.

I am a big fan of using technology in education. Information and communications technology (ICT) is tailor-made for application in education. What I don’t understand is why some people are going on about the use of “wireless, low-orbiting satellite, fiber-optic” communications in the context of education. Those hi-tech channels are clearly required when the information is dynamic and real-time, such as in the case of market information and sports events. But what does one gain by beaming down static information — say, history or physics content — as opposed to …

From the article How the Open Source Movement Has Changed Education: 10 Success Stories: “MIT provides just one of the 10 open source educational success stories detailed below. Open source and open access resources have changed how colleges, organizations, instructors, and prospective students use software, operating systems and online documents for educational purposes. And, in most cases, each success story also has served as a springboard to create more open source projects.”
The information exists out there. The challenge is to make it accessible — both physically and mentally. Physical …

[Previous post: Part 9.]
The liberalization of the education sector in India, that is, allowing free entry – especially for-profit firms – will result in increased supply of educational services. Here I will explore the predictable consequences of this. We begin by recognizing that education is not an undifferentiated homogeneous good; there are distinct levels within it, from basic primary education to post-secondary and tertiary levels. Each level has different pay-back periods for the “return on investment.” Furthermore, different people have different abilities to pay for the various levels of education.

Freedom
By liberalizing the education sector I mean that it has to be made totally free of government control and involvement. Whoever wants to provide educational services must be free to do so, be it domestic or international, for profit or not for profit, at the primary, secondary, or tertiary level. What would be the expected benefits of doing so?
The supply of educational services will increase, the quality will improve, and prices will come down. These are all everyday first-order efficiency effects of letting markets work. The second-order effects will …

Scarcity
Consider this list: cars, scooters, telephone service, airline ticket, seats in schools and colleges, electricity, and railway tickets. Think of the year 1980. Notice the common feature of the list: shortages. Now consider the list in the year 2007. Notice some things on the list are no longer scarce. It cannot be mere coincidence that only those items which the government has released it stranglehold on are no longer scarce. Could it be possible that if the government lets go of its vise-like grip of schools and colleges, that shortage …

Markets Work
Imagine for a bit what it would be like if education were provided by private sector firms. Can it be done? Would a socially optimal amount, variety, and quality of education be provided? Would there be market failures? If so, how can those market failures be corrected? Can one devise mechanisms to correct those failures?
The answer to whether the private sector can provide education is clearly ‘yes’ because around the world for a very long time private firms have provided education very successfully. Both private sector for-profit and not-for-profit …

Incentive Matters
Alistair Cooke in his weekly radio broadcast on BBC Radio 4, A Letter from America, once explained the theory of public choice to his listeners as “the homely but important truth that the politicians are after all just the same as the rest of us.” It is an accessible, though incomplete, definition of what public choice is about. You could read James Buchanan, who in 1986 won the “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” (popularly known as the Nobel Prize in Economics) “for …

One underhanded way to scare a neoclassical economist out of his wits is to creep up on him and shout “monopoly power.” Economists regard monopolies with the same mixture of dread, contempt and fascination as biologists regard cancer. They recognize the awesome virulent power of monopolies to wreak havoc on their world of mutually beneficial voluntary exchanges. Monopolies, whether public or private, lead to social welfare losses. At the other extreme, perfect competition leads to maximization of social welfare, subject to some reasonable conditions often approximated in the real world.

The absence of universal basic literacy and education is a constraint on present economic performance and future growth. Doubtless, education is costly but the opportunity cost of not having an education is even higher. The old adage about a stitch in time saving nine holds with special force in the case of basic literacy. Here’s the argument. At most one generation requires help in becoming literate; the children of literate parents are overwhelmingly literate; and the children of illiterate parents are more likely to be illiterate compared to those of …

The education system is embedded in the bigger socio-political order of the economy. To a large degree, the larger system dictates the characteristics of its subsystems. In the broadest terms, the government of India is an extractive and exploitative system created specifically for that purpose during the nearly one hundred years of its existence as a British colony before India became politically independent. The British, as a colonial power, created a system designed to control every aspect of the economy to maximize extraction. The challenge of administering such a large …

Education matters immensely when it comes to the health of an economy. There is a positive correlation between years of schooling and the GDP per capita. Let’s look at the numbers that are indicative of the generalization. In 2001, “school-life expectancy” and the ppp GDP per capita for Ethiopia were (4.3 years, and $675); for Indonesia (10, and $2,844), for China (12.4, and $4,065), for South Korea (14.6, and $17,048), Japan (14.3, and $25,559), and the US (15.2, and $32,764).

The fractal nature of the generalization that education matters holds across time and space. Irrespective of the granularity of analysis, education aids development through the intermediate step of economic growth. At the finest level of detail, an educated individual anywhere in the world is more productive than an uneducated one. At the broadest level of analysis, the modern world is more productive arguably because it is more educated compared to the world that existed before. A cross-sectional study of the world today, or at any earlier time, reveals that the …

When I stumble upon something that clearly expresses how I feel about a subject, it is a sheer delight to read. Brain candy to be enjoyed and hoarded. I immediately thank the god of the world wide web (aside: I think I will nominate Ganesha as the ruling deity of the www as he represents wisdom and learning) and kiss the LCD display with gratitude. I carefully save a copy on my laptop and email a dozen people hoping they would drop everything and read the gem I discovered. The …