By Nikhilesh SinhaOn
Education is the ability to listen to almost anything without losing your temper or your self-confidence.
 
                                                                                                                                            – Robert Frost

 
I find the Robert Frost quote particularly apt because the subject of education is one that is oft debated  and where opinions are polarized to a very great extent across both the developed and the developing worlds. So much so that supporters of privatised education find it hard to engage with those who support the need for publicly funded education, and vice versa. While many of the arguments presented by both sides apply to higher education as well, I shall restrict the discussion to K-12 education, or schooling of individuals between the ages of 6 and 18 years. This is arguably the phase during which education has the greatest impact on our mental development, though some argue that much of that is already determined by the time we have reached the age of 5. The merits of pre-school are no doubt an interesting subject for debate, but again I shall leave that aside in order to examine the more serious bone of contention. The question is can the private sector provide inclusive education, which gives every individual a fair chance at maximising their personal potential or is it necessary for the state to subsidise education?
There are several assumptions that need to be made in order to frame the qustion in this way, most importantly that education is the single most significant determinant of future success. While this may be debatable, it is the one assertion that both sides seem to agree on, hence import of the issue. The arguments against public education are familiar ones, and not without merit. The average quality of public education in most countries where both systems coexist is usualy lower than the quality of private education on offer…at a price. State-funded schools in India that offer free or heavily subsidized education are quite often badly run, and produce students who are barely literate. Rent-seeking behavior (the economist’s fancy term for corruption) is prevalent in every government department, and the public school system is no exception. This means that funds earmarked for education gets diverted more often than not into the pockets of government officials and bureaucrats, but also that school teachers in governement schools often supplement their income by forcing students to pay for private lessons in order to matriculate. There is also the issue of teacher incentives, and given that private schools offer better compensation, it is natural that teaching talent would flow towards jobs in the private sector. Given the choice and the budget, parents would thus prefer to give their children the advantage of a private education. There are now several low-cost private schools that have sprung up across the country, some of which offer genuinely god quality education, and several that are only marginally superior to dysfunctional state-run schools in the area. However the prevalance of dysfunctional  public education is not restricted to India, or indeed the developing world. Public education in countries like the United States and the United Kingdom while certainly better than that which is available in India, suffers from similar if less extreme defects.
 
In order to understand why some of us continue to argue for state-funded education despite being aware of all its shortcomings, it is necessary to go back the the assumption that education represents the single most important determinant of an individual’s future success. When you look at the graphic above, the important caveat to keep in mind is that causation is not unidirectional, and that there are other factors at play. Relatively well-off families are more likely to push their kids through school, and that a high school education does not guaruntee one employment, a fact that is even more relavant in a developing country context, where the numbers of the educated unemployed are far from inconsiderable. However, the fact that a high school education is the gateway to a better life acnnot be deinied, and while this may seem obvious it is important to note that an advanced degree, which corresponds to an average salary of $75,000 is only possible once you have passed high school.
Let us imagine a system where all schools are for-profit institutions. If we make the usual assumptions about utility maximizing rational agents, schools which are able to offer the highest wages will attract on average, the best teaching talent. Given that this immediately raises the running costs of these schools realtive to those that pay their teachers less, the cost of attending these schools will consequntly also be higher. On the demand side, wealthy parents will bid up the price of access in an effort to enroll their kids in the best schools, leading to what I will take the liberty of terming a ‘vicious cycle of prosperity’. 
 
I will grant you that this is what many would term a ‘straw man’, an abstraction that does not truly reflect reality. I will however assert that despite the simplistic nature of the depiction, it captures in essence that which characterizes private for-profit education. Let us examine some of the assumptions implicit in this argument:
1. Higher pay will attract superior teaching talent: It is true that good teachers are not motivated purely by monetary reward, but unless we assume that teaching in schools that pay less is somehow by definition more rewarding it would be irrational for any teacher to accept lower wages.
2. Higher quality of teaching staff implies better quality of education: If we assume that the basic curriculum at all schools in the system is similar, the only differentiation is the quality of teaching staff, and of course facilities. Wealthier schools will naturally be able to afford better infrastructure, and it would be hard to argue that there is no correlation between quality of teaching and the quality of education.
3. Children of wealthy parents will be better educated: What about merit? Going to the best school, does not necessarily mean that a child will emerge a star. There is of course much to be said for talent and individual ability. But if we assume that ability is normally distributed, and we look at the median level of talent, those with average ability who attended a better school will outperform those of similar ability who attended a mediocre school.
There are two important aspects to what education provides. I have concentrated for the most part on capacity building, which is the the primary function of education. There is another function that education serves, which is that of a market signal. Which school you attended serves as a signal to employers. On an average, attending a better school will ensure you a better job. If for no other reason than the likelihood that your future employers may have attended the same school.
The above argument was merely looking at the public cost of a purely private school system in terms of the fact that students with parents with higher incomes woud get access to better schools, and those born into less wealthy families would have to be content with low-quality education and consequently lower paid jobs. In relative terms this a a bleak picture. However, there would be those who would not even be able to afford to pay the fees to attend the most inexpensive school. 
Publicly funded education is rife with inefficiency and in most countries offers low-quality education, but can we afford to go completely private?