Tuesday, May 20, 2014

Does Private Higher Ed solve Development Problem?

The conventional wisdom is that developing societies must tap private capital to build their Higher Education capacity. 

The reasons are pretty clear. First, the governments may be indebted and have the money to build universities. Second, the developed countries are increasingly allowing private Higher Education, and therefore, this must be a good model. Third, private Higher Ed is supposed to be more focused on practical and employment orientated education, so must be good for countries struggling with skills and employment. 

But, in this discussion, several other issues remain unsaid. For example, in a developing country, the government's job is development. Not subsidies, not fighting wars, development first and foremost! And, the reality of these countries will tell any observer that the first two things that the governments need to do for development is health and education. Indeed, the business friendly rhetoric that the governments are just needed to build the roads, and business will take care of the rest, dominates the agenda, but private capital is much more successful at building roads than doing education. 

One is not sure that allowing private sector in education has worked out well for developed nations. The fascinating example is Britain's new student funding system, which was opened up to private sector only a couple of years ago. The result is a complete subversion of the system, over-recruitment of students who have no desire or reason to be in Higher Education and high rates of default, and the poor education that goes with it. The US experience is also well known. So, at the least, there is no proven model of making private higher education work towards a development agenda.

Indeed, one needs to differentiate between Private For-Profit and Not-for-Profit at this point and highlight that the scandals primarily, though not exclusively, pertain to For-Profit sector. However, the options open to developing countries primarily come in the shape of For-Profits. The opportunity to tap private capital markets is limited with the Not-for-Profit form, though some countries have effectively developed a pseudo non-profit format for Higher Education: Because the legislation does not allow For-Profit operations, they have created Not-for-Profit operations which offer education but gets charged, overcharged in most cases, by a For-Profit arm, which supply them with 'services'. However, the point remains that For-Profit so far has fallen short, and there is no reason to treat this as a panacea for a country's education capacity shortfall.

Finally, does private Higher Education offer a more relevant education? Evidence does not support what seems to be common sense. They indeed make the claim that they are doing employment orientated education, but this is more to change the conversation about education than to offer something substantive. Where is a conversation what employment-orientated education looks like? L K Advani, a senior leader in India, complained about educating a nation of sales boys and sales girls; his observations are not too far out from William Galston's, though the latter blames it on the shifting job market in the US (read here). There is no evidence that For-Profits can do anything to adopt to the shift of the job market, and the reality that corporate employment will not be the predominant form of economic activity of the urban labour in the coming years. Add this to the fact that For-Profits tend to maximise recruitment but do quite poorly in retaining them or actually making them successful, and one knows that For-Profit education may rarely solve the education problem.

This is not about saying that the state institutions are doing alright. But the urgent task is to reform them, rather than the state abdicating the responsibility of education altogether. We need a serious conversation about values, processes and role of higher education in the society, rather than trying to sweep all of it down under the privatisation carpet.

 


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