Sunday, December 28, 2014

Global Workforce Crisis: Why For-Profits Will NOT Save The World?

Parag Khanna and Karan Khemka's 'audacious idea', published by Harvard Business Review in 2012, was to 'enrol the world in For-Profit Universities' in 10 years. They were talking about the 'Global Workforce Crisis' as we are trying to frame it today, along with another issue that we seldom discuss now - that of population! Since then, both of these issues have accentuated: The global workforce crisis has reached serious proportions to start threatening economic expansion (with its short term solutions, such as immigration being politically unacceptable), and the surge of population, which the expansion of global markets was supposed to have absorbed into productive work, caused serious disruptions in a number of countries when such market magic failed to materialise. If anything, the need for an education solution is ever more urgent and important.

The 'audacious idea' was however not too audacious as this simply recycled market orthodoxy without regard to the track record of the For-Profits around the world. Simply put, For-Profits have done a fairly bad job at educating so far. The presumption that everything will be alright once the regulators are removed from the equation runs counter to the experience of countries which have had large For-Profit participation in education, as well as what we know about how markets work. In the United States, For-Profit Universities have distinguished themselves for all kinds of unsavoury practises, particularly for making tall claims and misleading their customers: This can hardly be the context for arguing for less regulation. Besides, the mainstream economic theory has now examined the problem of 'assymetric information' in some detail, and we have come to accept that in markets where sellers have more information than the buyers, as it does in education, market mechanisms allow fraudulent providers to operate - and to drive away any scrupulous provider that may be there. Again, this can hardly be the case for unregulated For-Profit expansion in education, as the authors seem to argue.

Apocalyptic proclamations such as these, in fact, undermine the case for For-Profits rather than help it. There are several examples of specific For-Profit companies doing good work of educating skilled workers. These examples are mostly anecdotal though, and there are several cases of even such companies falling into disrepute, reaffirming the 'assymetric information' problem. Indeed, there are more than one solution to such market failure and intrusive regulation can make the problem worse (for example, India's regulatory system has created a morass of corruption and black money in education) but a failure to acknowledge such issues from the For-Profits themselves meant that the sector gained no credibility in tackling the issues that persistently surfaced in their operations. The solutions proposed by Oxford academic Colin Mayer - set in context of restoring trust in corporations but particularly relevant to businesses involved in 'public services' - were passed off without serious consideration. This, and similar approaches which dominated the For-Profit conversation, shows that, despite the isolated examples, the For-Profit Education industry globally is wholly unprepared to tackle its own crisis, much less the wider issues concerning the global workforce.

However, even if we assume that there is a serious soul-searching underway and a new breed of investors are going to transform the industry, there are still two fundamental structural issues that would prevent the For-Profits to become a serious solution for the Global Workforce Crisis. 

First, the For-Profits have done well in delivering education in the specific areas where there could be a tangible economic benefit in the short run - a pay-off - and hence, limited themselves to certain areas and disciplines that could guarantee the same. By their business model, which needs to be predicated on growth in numbers for their investors, For-Profits can do well educating for skills which are already in demand, but not those which may become relevant in the future. Given that Global Workforce Crisis is only partly about simple supply-and-demand for bodies, and a large part of the problem is that we may be at a point of discontinuity in terms of skills and abilities, the solution can not depend on For-Profits. The endeavour to train for the new economy must be driven by the state, as old-fashioned as it may sound.

Second, the For-Profits, by their existential logic, have to focus on people with abilities to pay. Again, broadening the reach of creative and imaginative education (and not just process training) is an essential part of the solution for the Global Workforce Crisis, but, instead of acknowledging the role that For-Profits can play in training a limited population for a specific set of skills, the claims that they represent the whole solution is likely to make the crisis worse. Various bottom-of-the-pyramid schemes are being tried right now, but education itself is a demand catalyst for consumption - a n enabler for bottom-of-pyramid mechanics to even start working. The other solutions, such as extensive public education programmes that was a hallmark of nineteenth century educational expansion, have been largely ignored, primarily because we have caught onto this For-Profit as the panacea mindset. 

The point, then, is that the proposition that For-Profits will solve the Global Workforce Crisis is merely an empty rhetoric of market fundamentalism, which does neither work in theory nor in practise; rather, it undermines the roles For-Profits can play in specific kinds of education, it undermines public education that can bring the bottom-of-pyramid to work for the global economy and it undermines the state and the role of an educated citizenry. We need better and more audacious ideas than this if we have to address the Global Workforce Crisis in any meaningful way.



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