Private schools for all?

“The boom in India’s private sector has been accompanied by an outright failure of the state, and the poor – having little or no access to public services and unable to pay the high prices for private services – have borne the brunt of this failure. Children of the rich go to exclusive private schools, children of the middle class use a mix of private and public schools, and children of the poor often do not go to school at all or go to low-quality public schools. [Yet] even the late economist Milton Friedman, who advocated a school voucher system, did not want the state to withdraw totally from the field of education. The state cannot totally abdicate its responsibilities… but must provide basic education for the sake of intergenerational equity.”

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I work for a small international management consultancy, and have spent the last 5 months in our brand new Mumbai office doing a good deal of consulting work for the private education sector: private universities, private schools, English-language colleges. At the same time, I have been supporting a charity in Mumbai’s great slum, Dharavi, which pays bursaries for school fees to students from the slums. And so the extract quoted above, from an excellent article on microfinance in last summer’s Stanford Social Innovation Review, touched on an issue particularly close to both my professional and personal interests.

Much of the work I have done in the past few months has helped the education of the middle class, not the poor – because, in many cases, that is where the profit lies for private schools. But the reason these companies do so well is the vast gap between demand for high-quality teaching in India and the complete absence of public sector supply. And this yawning gap between supply of and demand for education reaches down all the way from the elite to the slums – where the charity I work with puts most of its resources into vouchers for slum children to “go private”, because sending them to the local government school is a complete dead loss. Put another way, from top to bottom of the social scale, the state in India has almost totally abdicated its responsibilities in the field of education.

Private schools, of course, are castigated as part of the problem – part of the reason for this state failure. The assumption is made that if the private sector were not there, pulling out the middle class and thereby removing political pressure for public sector reform, a strong state would step into its place and provide quality public schools for all. Certainly, it is all very well to hope that “the state provides basic education for the sake of inter-generational equity.” But how is this miraculously to happen? Political pressure in India, as any observer will tell you, actually comes from the poor, not the middle class – yet despite this the poor have sadly had no success in demanding education reform. In a country with such a notoriously inefficient public sector, one where 25% of public school teachers play truant, I cannot believe that such an appeal to public education is more than a pipe-dream solution. On the other hand, private sector initiatives in education – both for-profit and charitable – are already pushing India towards our goal of basic education for all. Private schools catering directly to the poor are flourishing in Hyderabad. Charities in Mumbai provide substitute school management, extra-curricular education or bursaries for poor children to attend private schools. The only opportunities the poor are likely to see come from this sort of dynamic bottom-of-the-pyramid innovation in private sector education, not from the deeply dysfunctional Indian public school system.

Underpinning most arguments against private (or even charitable) education in developing countries is an assumption about incentives and the role of the state. To Western eyes, though, it is a very odd incentive problem. Concerns about the role of the state in Western political discourse have for the last 30 years focussed on the damaging incentives created by the state’s tendency to crowd out private enterprise, and the disincentives to work offered in the form of benefits & hand-outs. Much recent public-sector reform – most noticeably in Germany and the UK –has been driven by the argument that if the state provides a means for the poor to live then they have no incentive to find work; hence benefits should be withdrawn. But the powerful counter-argument, of course, runs that such “incentive-based” measures are unacceptable because they risk abandoning the vulnerable of society - and hence, rightly, such European countries fundamentally maintain their strong welfare safety nets.

It is therefore not a little ironic to find that the argument about the incentives and the Indian state runs in reverse. Here, we are told that the private sector is crowding out the state; here, it is private sector “benefits” – private education, private healthcare – which apparently must be withdrawn to force the public sector to step up to its responsibilities. As in the West, however, the incentive-based argument has similar drawbacks. If people do not have the skills or training to get jobs, nothing is gained by withdrawing unemployment benefits. And if a government does not have the skills, the money, the tools or the political will to establish a decent state school system, nothing is gained by calling for private education to be replaced by public. In a world where the state fails so miserably in its present task, well-meaning reformers trying to improve education excluding the private sector and thus "solving an incentive problem" do nothing but increase the vulnerability of the poor.