Link:Tim Harford on Private Schools for Global Poor

Primary version of this post, with visual content, at Barry Stocker’s Weblog.

‘Why millions of the world’s poor still choose to go private’ by Tim Harford, Financial Times, 22nd August, 2009

This article refers to something I first heard about a few years ago, but which would probably surprise a few people. There is a growth in private schools amongst low income people in Africa and Asia, not the rising middle class or the rising bourgeoisie but people on very low incomes, 2 dollars or less a day. As Harford points out, publicly provided education is so bad that it’s worth even very poor people paying for private schools. The private schools concerned are not exactly little Etons, low grade buildings and teachers less qualified than publicly employed teachers. The difference is that the private teachers have to turn up to class and do a reasonable job; publicly employed teachers don’t turn up, go to other jobs, or fall asleep in class.

What lessons can be drawn from this? Most generally, education improves with competition between providers, incentives for teachers who perform well and sanctions for teachers who do not pay well. That applies generally to education in general in all countries, and was discussed by Adam Smith in The Nature and Causes of the Wealth of Nations, as I mentioned in my last post. This does not mean we should want the Third World Poor to pay fees for education, it does mean we should hope the governments concerned will use economic incentives for public education, and parents should have a choice of schools bringing a slice of public funding to the school they choose, maybe through government issued education vouchers.

Other lessons can be drawn from this about Third World development. Bad education and the restraints that places on individual, and social, economic chances are not just the result of existing poverty; Third World governments are not passive victims of ‘globalism’ supposedly sucking resources out of the Third World. There is injustice in the way, the wealthier countries behave to Third World countries: support for unjust and economically inefficient governments, blocking imports, trying to plan even well-meaning economic reform from outside. The solution is not to block trade and investment as ‘unfair’ to poor countries, or to pump development aid to governments which are wasteful and best and often kleptomaniac, or to scapegoat financial institutions which are trying to recover loans from governments which have wasted the money.

The ‘anti-globalists’ are right to say that reforms should come from within countries; they might be surprised by how much free marketeers make the same point, and are critical of the way development aid and externally suggested reforms largely benefit politically powerful groups. I don’t suggest that the solution is to cut all aid, but the focus should shift from development aid to humanitarian aid directly delivered to people who need it. Development can only come from governments making the right decisions and making decisions with develop the society as a whole, not influential client groups. Economic restructuring should be largely left to the responsibility of governments, though trade negotiations should lead rich and poor countries to agree on eliminating trade barriers on both sides.

Trade barriers in Third World countries do not benefit the population, they benefit producers with privileged political contacts. Trade barriers push up prices, they push up the price of food for people hovering on the edge of starvation. Open trade means some companies close and economic sectors lose jobs, but also creates incentives for investment in new companies and sectors. An economy cannot succeed as a static entity, it can only create growing wealth for everyone, including the poorest, through change. Growth means change, and means responding to market demands, not state interventions on behalf of politically powerful companies and sectors.

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