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Poverty and Education

Ken Nesmith

We frequently make the assumption that because the private market is driven by the profit motive, goods like healthcare, education, and transportation should not be left to the market. If they are, the poor will suffer. Public finance experts like to talk about this problem in terms of “market failures”: if something that people want is not available on the market at the price they want it, the market has failed. Market failures are used to justify government intervention in healthcare, unemployment insurance, welfare payments, and other areas of public life.

There are problems with the assumption that the poor are hurt in a free market environment. Often, we decline to consider those problems, and become locked in to a belief that government needs to provide goods like education. Unfortunately, we preclude ourselves from finding solutions to genuine problems by doing so.

Our country has a weak educational system. We lag behind most of the world in basic tests of skills taught in elementary and high school. Inner-city schools are especially problematic. Some reformers propose that more money be spent. Unfortunately, throwing more money at this problem has never solved it; furthermore, public schools spend far more per student than private schools and do a worse job at educating their pupils. Others propose letting parents choose where to send their children to school, to create a bit of competition between schools and introduce a new pressure to reform and succeed. Objectors warn that this will drain money from failing public schools, and the poorest will be hurt.

Depending on how you define a “crisis point,” some schools are either at it or are approaching it. But few U.S. schools have gotten as bad as schools in rural India. We might learn something from their experience, documented in the Jan. 3 Financial Times (“A fortunate at the bottom of the pyramid.”) In Indian public schools in poor areas, between one third and one half of all teachers are absent at any one time. Those teachers have formed a strong trade union to protect their rights, and so cannot be fired for not working. Public schools in India are simply failing to teach children any of the skills they need to give themselves hope for a better life than their parents, who eke out subsistence as grocery sellers or rickshaw drivers.

In response, parents and students are simply leaving the public schools, and attending the numerous private schools that have sprung up to meet the demand for adequate education. There are over 1000 such “slum-education entrepreneurs” in Hyderabad, a South Indian city, all created in the last 15 years or so. The schools are not luxurious in the way that we often think of private schools, but they teach effectively. Students learn English, which is not taught in government schools, but is seen as a means of upward mobility and a ticket to a better life. The teachers are not as qualified as public school teachers, and they are paid less than half as much as their unionized counterparts. But because their jobs are not guaranteed by state fiat, they are present, and teaching. The end result is that children in private schools score higher on almost every subject tested except Urdu and Telugu, the languages used to teach in the public schools.

The Indian government doesn’t make this education revolution easy. A host of regulations are in place, designed to ensure a good educational experience. The size of classrooms, the distance between desks, and the size of playgrounds are all specified to avoid crowding and so forth. The students and parents who have prompted the creation of these schools have little need for such regulations, since they can examine a school and its offerings, and choose whether or not to attend freely. But complying with all of the rules can be difficult to impossible for the private schools, so state inspectors use the rules as a tool to extract bribes. Private schools spend about two percent of their annual revenue on paying state officials to let them remain in existence. It’s a small amount, but for the poorest in society, every bit really does matter, and can mean the difference between having a meal or going hungry. That is the extent of government involvement in these schools -- demanding periodic bribes. No help with funding or curriculum is offered, nor is it requested.

Nonetheless, they succeed. For about $11 a month, a price affordable to this poor sector of the population, these schools offer an education that gives students a chance to succeed in life. In the face of the most miserable conditions, abject poverty, and trying circumstances, these children and their parents refuse to be victims of the system and circumstance. They’ve bypassed these completely, and lent powerful validation to the free market at an epicenter of poverty. Here in America, commentators consider private schools the exclusive realm of the wealthy. That’s an inaccurate characterization that reflects an ignorance of many private schools across the country. But the more important fact is that if regulations and policy allowed it, a demand could arise for inexpensive private schools to offer a basic education at a low price. In India, that’s exactly what’s happening.

Instead of presenting obstacles to reform as we currently do, we could encourage it. Right now, if parents wanted to take their children out of a public school and into an inexpensive private one, they would have to pay for two educations: one, through their property taxes, and another, in direct tuition to the private school. We could change policy so that they’re only charged for one education.

Sadly, we’re so strongly tuned to the ethos that “government must provide for the poor because the market will not” that I don’t think we’ll take any such steps for a long time. Our indolence and near recreational political debate have very real victims today, and sow a dangerous social, spiritual, and economic future for our country. Meanwhile, our students will suffer thanks to our distrust of the free market. We needn’t look far from home to see the effects: we can meet some of the victims of our folly by spending time at Boston inner city schools.

Incidentally, the schools I mentioned, those in India serving the poorest in society, are profitable.