Why Education Matters


I cannot resist relating (yet again) Robert Solow’s view of Milton Friedman’s — both celebrated Nobel laureate economists — obsession with monetary policy. Every macroeconomic problem and its solution lay eventually in monetary policy, according to Friedman. Solow in exasperation said, “Everything reminds Milton Friedman of the money supply. Everything reminds me of sex, but I try to keep it out of my papers.” Everything Indian reminds me of India’s education system and I don’t keep it out of my blog posts.

I find a connection between India’s education system and everything good or bad that has happened, is happening and will happen in India. It’s a justifiable obsession. I believe that if one were to fully explore just this one facet of the economy — education — one would see how it affects the whole system and how the system affects this sector. The linkages from education to other sectors are strong and bi-directional. If there is any hope of figuring out what keeps India an under-developed country and thus be able to do something about it, one has to understand how education is at the center of all economic growth and development concerns.

Here we are talking about India’s development. It matters because India represents a sixth of humanity. India’s development or underdevelopment has profound consequences for the world at large. Since India’s development is linked to India’s education system (which I have explored on this blog before but I am merely asserting here), the nature of Indian education has global implications, especially in an interconnected and increasingly globalized world.

The education system has failed the majority of Indians. One indicator is that around 33 percent of Indian adults are illiterate. That is, they cannot read and write a short simple statement relevant to everyday life. Imagine not being able to write a simple note to one’s family saying how one is or not being able to read the news headlines. Perhaps half of Indian adults cannot even read a simple children’s story with comprehension. This may have been acceptable in a world of a few centuries ago but in today’s far more complex world where the ability to process written information determines one’s fortunes, this incapacity cripples at the personal, social and economy-wide levels.

Clearly it is not impossible for any group to attain 100 percent literacy. Unlike listening and speaking which come naturally to humans, admittedly reading and writing are “unnatural” and have to be learnt. But any child given instructions for an hour or so everyday for a couple of years is capable of becoming literate. Yet despite vast expenditures amounting to hundreds of billions of dollars over more than half a century, India is far from having universal literacy.

These questions arise. Is this a deliberate policy? If so, why is it in the interests of the policy makers to keep a large segment of the population illiterate? Is there a connection between this illiteracy and the democratic system — that there is universal adult franchise in a country without universal adult literacy? Is it that those who come to power under the system of universal adult franchise cannot hope to do so if there were universal adult literacy and therefore have an incentive to make universal adult literacy a difficult if not unattainable goal?

I am sure that there is no secret cabal of powerful people with evil glints in their eyes plotting to keep Indians illiterate. But individual behavior motivated by private incentives — micro behavior — have consequences at the social level — macro outcomes — that are not intended by individuals. The most famous example of this Adam Smith’s “invisible hand” — the market mechanism that grinds out the socially beneficial outcome even though an individual is only interested in his or her own welfare. So also, there could be what we can call the “invisible fist” of the government which can pummel the life out of a society even though no single government official is doing anything more than making his or her life comfortable.

In this series on “IITs and Institutionalized Insanity” (previously part 1 and part 2) I will explore nearly all important economic aspects of India. The starting and the ending points will be education. All of India’s problems and all the associated solutions lie in education.


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