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.
Arguably, the elite institutions such as the IITs and the IIMS in India do produce some exceptional graduates who go on to achieve success outside India. That achievement loses much of its shine when one considers that these institutes admit about one percent of those who apply to them. The top one percent of any population could be expected to be above average anyway, never mind that in this case the population is itself comprised of very hard working motivated individuals. Severe competition for the scarce seats guarantees that the graduates of these institutions will be successful even if the actual training imparted by them is nothing remarkable.
India is a large country and Indians are definitely not slackers when it comes to ingenuity, hard work, and drive. The resources required for creating a large supply of quality educational institutions are well within the reach of the Indian population. There is ample evidence to suggest that whenever some sector of the Indian economy has been unshackled, the people and corporations in India have produced results. So how does one explain the state of affairs in the Indian educational system? Why does the government continue to maintain a stranglehold on the system even though it leads to such obvious failings? More importantly, why do the Indian leaders go around begging foreign nations for assistance with improving the education system when Indians themselves are fully capable of helping themselves with creating great educational institutions?
Consider this report in the Indian express of 21st August: “Help us build eight new IITs, with money and faculty, India tells Japan” (Hat tip: Ashish Asgekar.)
Within a week of the Prime Minister’s Independence Day announcement of eight new IITs, India today asked Japan for helping in building these institutions, sources told The Indian Express.
The government’s request comes in the wake of a massive infrastructure upgradation exercise in the higher-education sector being planned by the government, which includes seven new IIMs and 30 new Central universities.
India is not just looking for “financial assistance” but also “technical expertise” in building state-of-the-art infrastructure for these new institutions.
(See also a related report in the Times of India of 9th August: “Japan to help in setting up IIT”.)
So here’s the puzzle. The physical and human resources exist domestically to solve India’s educational problems; yet the Indian leaders go around begging other governments to help improve the system. Wouldn’t it be far more rational and exceedingly dignified to just unshackle the educational system from the clutches of the government and let the people of India work out their own educational system? So what gives? Why don’t they do that?
To address not just this question but a whole family of related questions, I propose a general theory of “Power, Scarcity, and Corruption.” Basically, the three form a nexus, with mutually reinforcing influences. Scarcity in general is not a chronic condition in any functioning economy; it has to be engineered. Given economic freedom, people work their way out of any transient scarcity. For persistent scarcity to exist, it has to be carefully nurtured. The motivation for engineering scarcity is that it allows the consolidation of power. This is Econ101 and even a superficial reading of the chapter on monopolies is sufficient to persuade one that monopolies do restrict quantities to maximize “profits.”
The relationship between power and scarcity is bi-directional. You have to have power to engineer scarcity, and through that engineered scarcity you gain power. Political power allows you to dictate policies that give you monopoly control and then you use that for gaining even more political power. Then of course, where there is scarcity, corruption cannot be far behind. Corruption is therefore a mechanism which allows the collection of rents that arise from the scarcity.
If scarcity were to vanish for some reason, both the corruption and the power to extract rents would disappear. For those in power, therefore, the primary objective is to somehow maintain an artificial scarcity both for maintaining power and for gaining from the corruption.
Now back to our educational system. The government has a monopoly control of the sector through many institutions such as the Ministry of Human Resources and Development, the University Grants Commission, etc. Licenses and other requirements force the private sector from fully and freely participating in providing education. The resulting scarcity gives the government a handy lever for manipulating voting blocks. Quotas and reservations are handed out to favored groups. And more directly, the bureaucrats and politicians extract rents from handing out the licenses and permits to those who have the deepest pockets.
So now it becomes clear why the government would not liberalize the educational sector and instead shamelessly go with a begging bowl to foreign government. The begging bowl into which the foreign government throws its money is in the hands of the government. This gives the bureaucrats and politicians even more power. If instead the government were to relinquish its monopoly control of the educational system, they would lose power as the private sector steps in and removes all scarcity. And with no scarcity, corruption also disappears. This, of all things, cannot be allowed to happen.
It is India’s misfortune that it is governed by a rapacious, stupid, narrow-minded, immoral, shameless bunch of politicians and bureaucrats. But then, it is hard to see how it could be otherwise given that we have a “democratic” system and the basic characteristic of a democratic system is that it reflects the wishes of the people. Democracy is a cruel joke when instituted among a population that is not informed.
It’s all karma, neh?