Make In India’s Obstacles

People often complain that they are being underpaid or overcharged yet continue to work with the same employer or continue to buy the same overpriced product. Why ? It is because the alternative is even less paying job or even more overpriced and bad product.

The real “fair price” or “fair compensation” has nothing to do with what a person wants or needs or deserves but rather what is the alternative.

Even though none of us realize this, we continue to use this principle in our everyday lives. We chose to fly a low cost but cramped flight because train is bad, we chose to use BSNL’s shaky broadband because alternative simply does not exist. Yet, we complain about low cost airline’s legroom and BSNL’s non-existent customer service.

Today’s complains are tomorrow’s products, so said a management prof. and he is correct. But is it the case that airlines have a secret deal with Knee doctors to hurt your knees ? Or BSNL is so sadist that is loves when its customers are left clueless without a customer service ?

The reality is that the airlines or telecom operators have not figured out how to give the customer those things without making significant loss. The very reason why low cost airlines can keep their fare that low is because they resort to many tricks including reduction in legroom.

If we purely look at the alternative costs of these transactions we realize that both the passenger and airlines gain by reduction in legroom. Airline makes tiny profit where as passenger takes a more comfortable journey than lengthy and unsafe train journey.

The government. 

These sort of transactions are called “positive sum game” which means both parties who are willingly getting into this transaction gain in the process. They may not acknowledge this gain themselves, but it is visible as we see more and more such transactions with time.

There is always an expectation mismatch despite the positive sum game. The passenger would always love more legroom for the same price and the air-line would love to increase its profit.

Both are perfectly right in their motives. It is these sort of motives that drive people to crating amazing new products and services. But every now and then, one of the party uses the government to achieve its end.

For example all the passengers can gan up together go to consumer court and demand that the airline should increase the legroom. Governments always know which side to take in such cases.

When government steps in to maximize the interest of one of the sides, the other party’s gain reduces substantially and hence the other party increasingly seeks to “engage less and less” in such transactions.

One of the finest example was of Movie Theaters. Government made laws where government would set the ticket prices so that poor people could afford to watch movies. This law actually kept the number of screens to minimal in India. No one would invest in move theaters because the profit they could make was extremely limited.

Despite the fact that India is a movie crazy society, our movies remained small budgeted.

With the rise of multiplexes everything changed. India saw 20% increase in available screens year on year. The ticket prices in some multiplexes increased but they decreased substantially in large theaters.

Today many movies make 100-crore business in the first week itself thanks to large number of screens. Note that, no movie is house-full these days. There are always empty seats. But yet movies make obscene amount of profits.

Applying the logic to Make in India

India is a country where people give undue importance to “job security”. Indians think that “job security” is more important than good products of service, competence at job, price of products and services, future of children, quality of education and employment in general.

One reason why government services are so pathetic is that government servants can not be fired from their jobs very easily, surely not for incompetence.

Just like the law I have mentioned above, government has made draconian laws, that take side of the employee, labor as a result the “other party” the Employer is less and less willing to participate in “giving jobs”.

Arvind Panagariya in TOI.

The high-profile launch of the ‘Make in India’ campaign today is a good occasion to remember the development experience of East Asian economies such as South Korea, Taiwan and Singapore in the 1960s and 1970s and China more recently. East Asian economies principally relied on growth in labour-intensive industry and accompanying expansion in jobs at ever rising wages, as the principal means of prosperity for the bottom half of the population. India focused more directly on social protection for workers through legislation, foregoing good jobs and to a great extent growth as well.

In the East Asian economies sustained rapid growth of labour-intensive manufacture created well paid jobs for the low skilled and paved the way for the migration of vast numbers of agricultural workers into manufacturing. As a concrete example, South Korea grew at an average rate exceeding 8% between 1965 and 1985. During the same years, the employment share of agriculture fell from 59% to 25%. Industry and services absorbed the workers so released.

In subsequent years, especially under Prime Minister Indira Gandhi, India brought legislative changes that further raised protection to organised labour by imposing restrictions on the use of contract labour and forbidding layoffs of workers in firms with 100 or more workers. The outcome was devastating not just for owners of large-scale firms but for workers themselves.

The great Bombay textiles strike under union leader Datta Samant saw once flourishing textiles industry uprooted from the city, with its 1,50,000 workers thrown out of employment. Later large mills and their workers in Kanpur, Ahmedabad and Kolkata met a similar fate. Most of these workers had to eventually find jobs in the unorganised, informal sector.

 

 

Remembering government monopoly in education on Teachers day

Teachers Day is day dedicated to our hypocrisy with respect to education and blind rhetoric about teachers and their greatness.

I am not use I should be happy or sad about the fact that my generation and my parent’s generation had the opportunity to study under some wonderful teachers. The reason why I feel sad is that many of the teachers I studied under were overqualified for their job, the country simply did not have enough economic opportunities for them and they ended up become school/college teachers. Many of these people could have been doctors or engineers in a modern day and time. It was their misfortune and student’s fortune that they ended up becoming teachers.

I sensed the change in society when I entered the pathetic institution called Goa Engineering College. The college faced a strong crunch of faculty, our department did not even have a building. Solution ? Those senior students who could not find a job anywhere were hired as contract faculty and then made permanent. Imagine the despair. Those people who in 4 years could not gather enough skills to be employable were hired to train young minds to be productive and employable.

This is not the fault with the government. This is the fault with the values of Indian society. On one had we blabber about knowledge based society, greatness of Indian traditions of learning and importance of Guru-Shishya tradition, on the other hand we value job security of incompetent teachers more than the quality of education they are capable of imparting.

As a society we give more importance on keeping the costs of education low than giving importance to quality of education. That explains the sad state of our education, low salary of teachers and pathetic quality of education.

One of the biggest fallacy in Economics is that prices can be controlled without affecting the quality. When government steps in to control prices, depending on the price set either there is smuggling or drop in quality. For example a school that decides that it will go strictly my government decided fees, it has 0 incentive to improve anything because that does not result into any kind of additional revenue. Those schools and colleges give better quality education take donations and other type of money from the patrons to cover the costs.

One of the best examples of why our schools have failed can be seen from the Tution business. Our 11th, 12th education has failed student expectations so badly that students are happy to pay more money from their pockets and visit tuition classes instead of demanding better education from HSSC colleges.

Are tuition teachers greedy ? are HSSC teachers worthless ? Are student foolish ?

Not at all. HSSC teachers are unable to teach what student want. What student want is not what HSSC teachers are teaching. Tuition teachers have identified this need and they have stepped in to provide the solution. Tuition teachers are not greedy on the contrary they compete on quality. I remember my physics tuition teacher was so good that  I got 95 out of 100 in physics and the lost 5 marks were because I simply forgot to answer one question on the last page. He was a very good teacher and students flocked to him in such large numbers no matter what fees he charged. He could have auctioned the seats but he stuck to first come first serve method.

Were my HSSC teachers worthless ? Not at all. In fact they were easily among the best in the country. My Physics Prof was main trainer for Indian Physics Olympiad team for years.

The real problem was that Chowgule College had to stick to the guidelines set by someone in Goa University, which was eventually controlled by Goa government. No matter how good the college was they could not prescribe their own notes, could not decide on their own college timing, could not decide to number of tests they could take or the amount of fee they would charge.

The government control meant students had no option but to take tuition which were sometimes provided by the same teachers who taught in HSSC.

One one hand we want teachers to get more salary but vilify those who earn money through tuition. That is the hypocrisy of Indian society.

The pathetic nature of Engineering Education

Goa Engineering College was a nightmare for me. I learned more about computer science and engineering from internet, from peers and books than what any of those lecturers could ever teach. Some of the stuff they taught was outright wrong.

The number of GEC teacher I feel indebted to can be counted on fingers of my one hand and still more fingers would remain uncounted.

Again I don’t blame the GEC management of lecturers. The fact that they have no incentive to improve anything given that the Government’s goal is `mediocre education for all` and doing anything outside it is generally illegal and unlawful.

The maximum salary that can be paid to teachers is linked to some random pay scheme which takes nothing into consideration about actually performance of the teacher but purely his degrees and seniority. A college simply can not hire person by paying him more salary even if the college management is charitable.

Scenario in non-medical, non-engineering areas is even more grim. Most of them stick to hiring only contract based temporary teachers. The simple reason is that there is huge surplus of non-science graduates in the country with little direct employment opportunities. Most of them are more than happy to work as contract faculty with lesser salary and no job security. But the moment you hire them as permanent faculty members, you need to pay them based some what some babu in Delhi working for UGC has determined arbitrarily. Not to mention the job security actually changes their attitude towards process of education as well.

Summary

Quality education needs resources. The resources include both material infrastructure as well productive people who act as teachers. All this is expensive. Either students or the government need to pay for this quality. Using the Milton Friedman’s law of expenditure, the expenditure will be economical when students spend money on education they need rather than when government spends taxpayers money on students.

More ever when students spend money they are the paying consumers who will drive competition. Competition will lead to suppliers (colleges) innovating to make their business more and more economical and delivering more and more value.

When government pays for student’s education it is essentially killing any possibility of competition. Draconian institutions like UGC and AICTE ensure that all colleges stick to the bottomless pit of mediocre education.

Finest example is how Ms Irani dealt with Delhi university and IISc through UGC.

Less hope

There are clear indications that Narendra Modi government will do nothing to change the situation. Both Irani and Modi have made it clear that they will only strengthen the government control of education. Change in rhetoric is the only change we could expect.

Happy Independence Day!

Independence Day is merely a celebration of British leaving this country. Unfortunately we are still far away from actually getting anywhere closer to the idea of freedom.

Freedom is not freedom from foreign rule. Freedom is the freedom of individuals just to be themselves without the government interfering in their personal lives.

Here is the list of freedoms that Indians don’t have :

  1. Freedom of Speech
    Indians are not allowed to speak anything that may hurt someone else’s sentiment even if what is being said is 100% true to work of fiction.
    Indians are not allowed to speak anything that the local police officer might think annoying.
    Indians are not allowed to critize or pass jokes on politicians.
  2. Freedom of Worship
    Hindu temples are controlled by government and all donations to Hindu temples would go to government where as all other religions are free to setup their own places of worship and run them whatever way they want.
  3. Selective Freedom. Some are more free than others.
    Some of us are less free than others. Based on the religion and caste you were born in the law treats you differently. If you belong to a majority community you can not build institutions that are free from government interference. Only minorities get that right.
  4. Freedom to build education institutions
    Indian government does not give you the freedom to setup any educational institute of your choice and impart education of your choice. Only non-profit organizations are allowed to setup institutions and closely follow dictats of UGC and State governments.
  5. Freedom to love
    Same sex couples loving each other is a crime in India.

The list would go on. But the key point is that we are very far from getting “free”.

Curing India’s education system

Prof. Arvind Panagariya writes about what is ailing Indian education system. Honestly, there is nothing new in that. It has been argued by several people that government control in general and UGC/AICTE/BCI (At 14 other regulators) are responsible for ensuring that mediocrity is the objective of Indian education.

Smriti Irani who herself does not know what exactly her own education qualification is, who mistakes certificate from Yale with degree from Yale. Degrees are mere certificates and competence is all that matters, but Smriti Irani has proved beyond reasonable doubt that she is not capable of handling MHRD.

Prof. Panagariya outlines various important points as how our MHRD and its regulations have converted the higher education space into a bog in which talent is sucked in and destroyed.

India lags behind comparator countries in both the quantity and quality of education. Gross enrollment ratio-the proportion of those enrolled in higher education to the total population in the age group 18 to 23 years-remains around 20 per cent compared to 28 per cent in China, 36 per cent in Brazil and 55 per cent in Japan. None of the Indian degree-granting institutions appears in the top 200 institutions worldwide in the Times Higher Education-QS World University Rankings. In contrast, each of Hong Kong, China, Singapore, South Korea and Japan has two or more institutions represented in these rankings.

None of the Indian institutions feature anywhere in the top 200 institutes in the world. Which means 1/6th of world’s population which was unfortunate enough to be born in India does not have access to world class education no matter how rich or smart a student be.

We always have our own reasons to dismiss why we cant feature in that list. Someone its is diversity or sometimes India has bigger problems to solve. But in reality it is the government control that alone is responsible for holding education back.

Post-1991 reforms have entirely bypassed higher education in India. Successive human resource development (HRD) ministers have either neglected reforms or tried to implement them, but failed. The essential governance structure in the sector has remained unchanged for more than five decades. The University Grants Commission (UGC), originally formed in 1952 and given statutory status through the UGC Act of 1956, stands at the apex of the system. It, along with its various councils such as the Medical Council of India (MCI), the Bar Council of India and the All India Council for Technical Education (AICTE) and the Central and state governments fully control different aspects of higher education such as the creation of universities, their internal governance and regulation.

There are only two avenues to the creation of universities in India whether they are in public or private sector. Under the first avenue, the Central or a state government must pass legislation; and under the second, the UGC deems an existing institution to be university. Degree-awarding institutions of national importance such as the Indian Institutes of Technology (IIT) and All-India Institutes of Medical Science (AIIMS) are created by central legislation and are outside the ambit of the UGC. Management institutes such as the Indian Institutes of Management (IIM) in the public sector and Indian School of Business in the private sector are also outside the UGC ambit because they award diplomas and not degrees. All degree-awarding colleges, whether owned by the Central or state governments or private entities, must be affiliated to a Central or state university. Private and deemed universities are unitary with no powers to affiliate colleges.

Both IITs and IIMs are outside the purview of UGC and they seem to have done much better than the other tinpot colleges. That should be the first lesson.

Most of the MBA colleges in India give PGDBA which is a diploma and are outside the purview of UGC. Not only these colleges have done well, they seem to do good to lot of smart non-engineering/non-medical students get much higher salaries than what they would have got with mere B.A. or B.Com.

Control of the UGC, its councils and Central and state governments over governance of universities and colleges is near absolute. Central and state governments fully control the funding of the universities they own. They routinely intervene in the decision-making processes of these universities. Government appointees often sit on the governing bodies of the universities. Universities must seek government or UGC approval for starting new academic programmes and disciplines.

Faculty hiring is subject to interference from both the government and judiciary with the latter granting stay orders on university hiring decisions at the drop of a hat. The governments and UGC determine tuition and faculty salaries as well. Colleges require approval of the affiliating university for introducing any new courses and changing the subject matter of existing courses. No new degrees can be introduced without the approval of the UGC.

Often the law says that a teacher can not be paid more than secretary level IAS officers. As a result even if a college may get a Noble Laureate to teach, that person can not be paid a high salary because of some random law. There is hardly any incentive for good competent teachers to get job into educational institutes if their worth is more than the maximum salary permissible by law.

Indian government can do the most basic thing:

Begin with the entry of new universities. The requirement that legislation must be introduced to start a new university must end. A set of norms in terms of basic infrastructure, faculty, curriculum and endowment may be laid down. Any institution, whether public or private and whether for-profit or non-profit, that satisfies the norms should be granted approval as a university.

But that wont happen. Private players will make profit, private players will fool students, we will be told. It wont matter that government controlled colleges and universities have fooled a million and wasted uncountable amount of money provided by taxpayers while making lakhs of students unemployable.

Smriti Irani is not capable of doing this job. This job should have gone to someone much better.

MHRD’s assault on institutions of excellence

It is not very hard to see why those who loved Modi before elections are quickly disillusioned.

It is sad that both NDA and UPA governments found most incompetent people to be appointed as MHRD. First it was MM Joshi who tried to make Astrology a science. Then it was Arjun Singh with his reservations bomb. After it was Zero-Loss Sibbal with his RTE disaster.

Higher education in India is in an urgent need of reforms. Large regulatory bodies should be totally abolished or if that is not politically feasible at least their role in education needs to be reduced to minimum.

Not only private colleges should be freed from the clutches of Universities but even for-profit players should be allowed to make a business out of higher education.

Here is Mr. Arvind Panagariya talking about what is wrong with our Higher Education and what needs to be done.

And here is a piece of  Prof Swati Sarkar that tells us how Smriti Irani is playing with our Higher Education.

Now, either her inexperience or her limited regard for this core area is showing in her decisions. IISc had a prestigious FYUP operational since 2011. There was no report of student or faculty resentment. One fine morning, UGC (read HRD as UGC was fine so far and follows the diktats of the regime of the day) orders that it be scrapped. Growing up in a left regime, I have seen how higher education in Kolkata, which used to be a premier center of learning once upon a time, was decimated through such abject political interference from the left. I have also seen how academic freedom and lack of (or at worst limited) political interference has ensured that higher education in US is where it is. Thus, I am appalled by the fact that GoI is following the left on this core issue and in the process may well ensure that few academic institutes that India can be genuinely proud of bite the dust. To be fair, even the despicable Sonia regime did not actively undermine higher education in India, just didnt care about it.

I am willing to admit that government might get itself into creating a set of “bare minimum” standards that all institutions must adhere to till the time independent private organizations can come up with accreditation systems that are values by industry.

But there is absolutely no sense in trying to curtail those institutes which are exceeding those standards. If teachers and students are happy with a 4 year program I do not see why government should put its nose the affairs of the university.

Congratulations to Modi and Parrikar for refusing anti-Goan demand of “Special Status”

Some trouble mongers in Goa presented the demand of so called special status under which resident Goans will not be allowed to sell their property to anyone outside Goa. This is a blatant violation of private property rights of Individuals (which sadly aren’t as important in India as in more freerer countries).

More importantly this is a violation of private property rights of the Goans themselves. Why would any self respecting proud Goan would expect such horrible “special status” in first place ?

Firstly, there is a Church and other political groups who fear that inward migration will damage their political clout in Goa. Secondly, there are genuinely ignorant individuals who can see the problems with migrants and property buying spree but cant see the benefit that it brings.

Migrants are clearly creating a public nuisance in India by shitting in public spaces, crimes and so on. But at the same time they bring in the economic advantage of cheap labor which is not worth overlooking.

Also, the amount of money that outsiders are pouring in Goa to buy property and create apartments actually leads to better quality projects and much lesser costs. It is outright stupid to think that any major construction company will build the same quality of Apartments as now with lower price points in future just because of special status. On the contrary, we can look at Ruby Residency’s example as what kind of apartments we will get everywhere in Goa if investments from outside the state stop.

I think Mr. Parrikar has shown a great political acumen in smartly shelving off the Special Status demand and for that he needs to be congratulated.

Interestingly when Late Shri Mathani Saldana passed away the church was quick to prompt his wife’s name as a possible candidate leaving BJP no choice but to field her. It was clear that this lady was probably a remote controlled MLA of different religious-political groups.

 

 

The origins of the word Hindu and Hindu religion

A new trend among the internet Hindus is to refer to Hindu religion as “Sanatan Dharma” claiming that is the original name of the Hinduism. Nothing can be farther from truth. I believe this new trend is a defense for the typical Christian and Islamic criticism of Hinduism is that Hinduism is not a religion but just a phrase given by Arabs to the people living beyond the Sindhu river.

It is a partial truth that the word “Hindu” is derived from “Sindhu” and was widely used by Arabs than the Hindus themselves. However this is not a criticism of Hinduism in any sense. Replace “Hindu” with “Banana loving cow worshippers” or  “Omega 5721″ and that doesn’t really change much.

The reality is that people who living beyond the river Sindhu were different from Arabs. The people themselves had figured this out and used the phrase “Mlenccha” for the Arabs and others.

The fundamental difference between Hinduism and monotheistic religions is that the so called “Hinduism” or whatever else you might wish to call it is free from dogma, prophetism and mindless conformance to some centuries old book.

This is not a disadvantage or a bad thing, in fact the strength of Hindu religion.

The kind of politics that wins 44 seats

Narendra Modi’s government is so far is not very much distinguishable from UPA-2. The same socialist, leftist policies being followed.

Government of India maintained a neutral stand on Israel/Gaza conflict in Parliament but voted against Israel at UNHRC.

India also lost huge territory to Bangladesh recently in UN court.

Giving important to such Kangaroo courts is idiotic. Tomorrow Pakistan might want a UN commission of inquiry against Gujarat riots, what will GoI do in that case ?

Opportunity Cost

Opportunity cost is something that people and politicians often ignore and make incorrect decisions.

How much is education from 1st to 10th worth ?

A lot of people will calculate the fees paid, money spent by student and government on books, teacher infrastructure and come up with a figure of say Rs 5 L.

This might be the money spent on that education but the opportunity cost is the cost of second option which was mutually exclusive to the option 1.

If government had freed education from its clutches and independent and unaffiliated, unregulated institutions were allowed to give primary and secondary education. A lot of above average students could have gone to these schools and completed their 10th standard in say 8 years instead of 10.

This basically means those students would have started earning 2 years ahead of everyone else and would have retired two years late. So the additional money they would have earned by staying in that job would been 2 years of salary while retirement. Which could be anywhere from Rs 1 crore to Rs 50 lakhs.

So the opportunity cost of the government controlled education to students with above average IQ is few lakh rupees and not just Rs 5 Lakh.

 

Note: This is a reflective post. I am just trying to learn.

Is public education worth it ?

Everyone believes that all children should go to school. Even in the remotest villages and even for the most disinterested student, parents and teachers argue that S.S.C. is the bare minimum that someone should aspire for. We are told that education is the key to future.

Education is not a good thing in itself. It is not essential for human welfare by default. For example my great great grandfather did not go to school or college, he was fairly well off and well respected in society. So was everyone else’s great great grandfather.

In last 100 years human productivity has improved by a huge factor. This gain in productivity has come from human creativity and intellect. Just the way our ancestors had to learn basic skills like hunting to stay alive, in a modern world a human being is required to achieve certain level of productivity to survive. This productivity is what is essential and education happens to be the only way to achieve this. The mistake people make however is to equate this sort of productivity enhancing education with “school education” which is totally controlled by government. Indian students for example have absolutely no choice but to go to a government controlled school.

What makes education a good choice is the fact that in the absence of Education a person can be productive only by doing physical work. Physical work means a person burns his calories to produce some output (say a porter on train station). The amount of energy generated by burning a liter of Petrol is several times higher than the kind of energy human body can produce as a result there is not much demand for physical labor in our society and people for whom physical labor is the only option to be productive do not earn enough than those who use their mind to be productive.

Like all things human, education is not a predictable process. Different people have a different rate of learning and hence the kind of productivity they would acquire post formal education is different. It will depend on the kind of education they get, the kind of environment they would learn, quality of teachers and the intellect of the student himself.

Can it be the case in certain cases a student is better off not going to school altogether ? Can we apply some economic analysis to answer this question ?

Actually it is not very hard to do that. Please note that when I say “schoo” I am referring to government controlled formal schools teaching government prescribed material.

Assume that the cost of putting a student through school from 1st to 10th std is Rs 5 Lakh inclusive of all direct and indirect costs (salaries of teachers to money spent on books).

Assuming that the student pursues no further education, his going to school was worth it IF AND ONLY IF that education has made him productive enough to earn and save Rs 5 Lakh in next 10 years. ( For simplicity I have ignored inflation and RoI. With RoI of 10% this could very well go up to say Rs 10 Lakh.)

If the answer to this question is NO then it was a wiser choice not to send that child to school at all and instead saving Rs 5 Lakh in the beginning. Which basically means by the time he is of the age of S.S.C. he would already have Rs 5 Lakh in bank + saved 10 years.

The argument might look absurd to many people. It looks absurd because we see a lot of people around us who got just S.S.C. and improved their quality of life while those who did not go to school continue to languish in poverty.

There are two parts to this observation. Part 1 is that; for most of the students Rs 5 Lakh have been spent by someone else. That is the government; which is in turn you and me (taxpayers). So when a SSC pass student earns Rs 4 Lakh over 10 years, it is a net + 4 Lakh for him where as for a society it is a net loss of Rs 1 Lakh. Ordinary people are not trained to see the opportunity cost.

Imagine if that same student was given Rs 5 Lakh in cash before entering the school and he/she had just put it in the bank, he/she would have got richer by Rs 20 Lakh or so after 20 years. So when you factor in this opportunity cost, the student appears far worse despite saving Rs 4 Lakh over a period of 10 years after getting an economically inefficient education than have say Rs 20 Lakh without going to school (10%.  RoI).

Part 2 here is that a good number of students manage to go beyond S.S.C. or are intelligent enough or responsible enough to ensure that they get productive enough “despite the obstacles placed by the school”. This productivity might come from other investments that parents might make such as tutions, other books, training programs etc.

Because of the government control

I suspect that our entire education system remains mostly economically inefficient. I say entire and mostly because all our schools are controlled by government to lowest possible levels which means if one of the school is proven economically inefficient it makes sense to say all of them are inefficient.

Not just high schools but even same might be true for Engineering colleges such as IIT. Too few IITs means the competition of admission is very high and hence more money gets spent on IIT Coaching every year than the money government spends on running these IITs.

Our students will be far better off in life is government simply shuts down each and every school, fires each and every teacher and all educational officers, sells of real estate where schools exist and instead gives a monthly cheque to all children of school going age we might be far far better off than what we are now.

Does that mean our population would remain illiterate ?

If government simply gets out of education, either gives cash vouchers to kids of school going age, it would mean that our kids will not waste their time in a meaningless unproductive activity called government sponsored education.

It will then be up-to parents, kids and rest of the society to figure out how to use this money and the extra time. Very likely parents will come up with better ways to make productive use of their child’s time. Entrepreneurs will come up with far better educational institutions which will give better, more personalized education in a profitable way.

The current educational system controlled by government is just not dysfunctional but also evil because it wastes 10 years of a child’s most important life.

Does it still make sense ?

Parents have actually figured this out. Entrepreneurs have figured this out. That is why good teachers prefer to run tuition centers instead of teaching in a worthless school system and make far more money than school teachers.

Parents overwhelmingly send their kids to coaching classes by paying hefty amounts. The coaching classes are not greedy, in fact they are doing a great social service to the society. The reason why parents pay huge amount for coaching classes because they know that the possible returns on that investment are very high.

What about the poor ?

If government gets out school system how will poor educate themselves ? That is a a valid question but we see that poor people can afford mobile phones, shampoos, cold drinks and DTH sets. Almost every sector of our economy where government has not put its dirty nose has made things remarkably cheaper for our poor people.

If a poor student is intelligent and can achieve productivity level of X+ if expenditure on his/her education is X, it makes sense for any financial institution to lend him/her that money and make a reasonable profit after his/her education is complete.

This incentive for profit will also drive institutions to be as productive as possible, give monetizable skills starting from a very early age.

But it wont happen !