This Policy, Alone – Part 3

Part 1
Part 2

The modern world is different from the world of the recent past of, say, just 50 years ago. The nature of manufacturing, agriculture and services — the three broad categories of human enterprise — have been transformed in just a matter of decades. The biggest change has been that labor productivity has increased tremendously because of technological advances. These technological advances have increased the role of capital in the production process. That means every aspect of production, distribution and consumption of goods and services involves more machines and more automation now than it used to be the case.

Look around yourself and notice that practically everything that you use has been manufactured. Most, if not all, of the things you consume couldn’t have been produced without machines. Take the lowly aluminum soda can which you discard without a thought after use. It’s impossible to produce without extremely sophisticated machines. In the factories where these cans are made, you can barely see a human being. (Watch the videos here and here to get a sense of the astonishing automation involved.)

The fact is that practically everything we use is made with the use of extremely sophisticated machines and is nearly impossible to make with human labor alone. No matter how skilled or intelligent a person is, he cannot make even a single soda can — only machines can turn out the 180 billion soda cans used in a year.

Human labor is important but it can no longer be unskilled labor. The humans required in the production process are for creating the machines that are involved in all the multiple stages of production. For instance, machines are required for mining the aluminum ore, and then machines to extract the aluminum from the ore, and then machines that roll the ingots  into sheets, … , all the way to the machines that form the cans, and then fill the cans, etc, etc.

Those machines are made by people who use other machines which are also made by people. All these people have to have the knowledge, skill and training to do what they do to produce machines that produce the stuff we use. Skilled labor is in demand, not unskilled labor.

That implies that if the educational system is not up to the task of producing skilled labor — in every field from surgeons to scientists to mechanics to accountants,  ad infinitum — then the economy will fail.

A most helpful way of understanding the modern world is to recognize that unlike in the not-too distant past (say 100 years ago), today ideas matter more than objects. Ideas create what we call “technology.” Without a good education system, you will not have people who create technology. The people who only have to contribute raw labor are not needed any more.

If you can educate every person to the full extent of his potential, then you have a diverse labor force that can meet the needs of the economy. If the education system is flexible — in the sense that it changes rapidly to the demands of the economy — then it will provide every person with the opportunity they must have to become appropriately skilled to earn a decent living and thus enjoy freedom in the broadest sense of the term.

The education system which was designed a couple of hundred years ago (by the Prussian government) is not suited for the modern world. It fails to educate people. India fails to prosper because it is stuck with an archaic system designed to meet the needs of a bygone era. It is run by bureaucrats who themselves have little or no understanding of what education is all about because they are products of that outdated education system. It is little surprise then that Indians are totally ill-prepared to be productive in the modern world.

But there’s still hope. I argue in this essay that the education system can be rapidly transformed. It can be made productive. Indians are in no sense born stupider than the citizens of any advanced industrialized nation. Indians are handicapped by the government stranglehold on education. Once the government releases its control over the sector, India can progress rapidly and catch up with the rest of the world.

What about the poor? How are they going to pay for it? Who will control this “free market” education system? Will not unscrupulous operators cheat people? Who will ensure the quality? Will not profit-making corporations impoverish the country?

I will address those and other questions in a bit.

{Continue to the next — Part 4.}

Author: Atanu Dey

Economist. View all posts by Atanu Dey