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Our view

Markets leave some people behind

by Hans Dembowski

Opinion

Preschool kids at a private school in New Delhi.

Preschool kids at a private school in New Delhi.

Government-run education systems are failing in many developing countries and emerging markets. Too many children still cannot read after leaving primary school, and too many universities churn out worthless diplomas. Typically, these institutions are underfunded and understaffed. Accordingly, private education has become a growing business in many places – from preschool through to Masters courses.

To a considerable extent, international donor agencies appreciate the trend. Proponents argue that private schools:

  • perform better,
  • are more flexible and innovative,
  • lessen the burden on public schools and
  • stimulate competition.

Such free-market reasoning is not entirely wrong, but it misses an important point. Markets respond to purchasing power, not to need. Leaving essential social infrastructures to market forces means reinforcing privileges. Wealthy parents can afford to invest in their offspring’s education. Illiterate slum-dwellers or smallholder farmers cannot even help their kids with homework. Their children’s future opportunities depend on good education too.

The fourth Sustainable Development Goal (SDG) is “quality education”. The big questions are whether private education can contribute to achieving it and whether it is actually the solution. Let me explain why the first answer is “yes”, but the second is “no”.

Many public institutions are so bad that even people from low-income communities voluntarily opt for private ones. Their choice obviously matters. Moreover, private institutions increase the diversity of an educational system in healthy ways. Not all students have the same needs, talents or interests. The more options there are, the more likely it becomes that everyone finds a suitable school. The more diverse a system is, moreover, the more its elements can learn from observing one another.

However, private schools do not necessarily lessen the burden on public schools. They are likely to poach the best teaching staff, which means that public schools further deteriorate. Expensive private schools attract prosperous clients and become centres of undeserved privilege. There has been some excitement about low-budget private schools outperforming state schools. That may be so in some cases. It is absolutely clear, however, that high-fee private schools outperform the low-fee variety.

Markets are not an alternative to the state – they interact with governments in complex ways. Public policy can counterbalance unwanted market effects to some extent. Scholarships and grants can be made available to disadvantaged children. Affirmative action can ensure that minorities get access to elite schools. Stringent oversight and sensible curricula can safeguard minimum standards at all schools. Successful societies thrive on prudent regulation. To achieve it, governments must be competent and capable. Such governments, however, should prioritise that public schools are well-run.

In every advanced nation, including the market-oriented USA, public-sector institutions educate the vast majority of people. Private schools are an add-on. The public system always requires substantial government spending, which in turn depends on adequate tax revenues. Public infrastructure – including schools – must not be neglected any longer.

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