Education and Ethics

Recently, I was at the BW Education’s Top Education Brands in India 2017 conclave in New Delhi as an invited speaker. The theme of the panel was ‘Ethics vs. Business: How We Need To Perceive Education in India’. To me, the ‘versus’ in the the theme statement simply did not make sense. After all, ‘Ethics vs. Business’ is truly as odd as ‘Ethics vs. Living’ is!

Business is about voluntary transactions, and not about transfers. A transaction is where both the parties give up something less valuable to gain something more valuable, and therefore, ends up with more on both sides than before the exchange. A transfer, on the contrary is, often a zero-sum game, where one gains at the expense of another.

While almost all can see that transactions are preferred to transfers, and no one wants to see schools/institutions gaining at the expense of the students, many seem to be advocating that students should gain at the expense of schools. In other words, implicitly, many seem to be preferring transfers to transactions in the case of education. What else does it mean when one expects interest-earning capital to be invested in something which does not generate returns? Many people who may not endorse pick-pocketing – an example of a transfer – as a way for reducing inequality, endorses transfer and charity as ways to address the terrible shortage that we have in education.

Of course, there could be lack of transparency in many exchanges, which eventually render them as transfers. And, transactions held at gun-point or hostage situations are, in effect, transfers. But, if we recognize that business is about voluntary transactions, then all business ought to be ethical. If a certain business is unethical, then it is about transfers and not transactions, and to that extent, don’t qualify to be called businesses in our definition!

Unfortunately, many, given their experiences, associate businesses with such transfers and cheating, so much so that ‘Business vs Ethics’ in themes such as the one I came across don’t appear as ridiculous as it actually is! Most transfers are unethical and unless, we are fighting for transfers and not for value creation, we ought to be pitching for businesses and for transactions, and not against them!

It is Business and Ethics vs Transfers and Distortion!

Almost everyone recognizes that the real cost of education is TIME and not money. You can lose money and make money. But, you can only lose time or invest time. You can’t make time! We can’t provide the education that we need to provide today to our students, ten years later without a humongous cost! So, the question then is whether we have adequate supply of quality school seats in our country? Unfortunately, the data is clear that there is shortage even in terms of availability of schools, not to talk about access and affordability!

What should then be obvious is that if all educational institutions have to be established by altruistic promoters, there would be such a dearth of institutions that we can never meet the demand for education in this country. One needs to keep in mind that we had a similar perspective on most other infrastructure sectors and until a couple of decades ago, we depended almost exclusively on the government for infrastructure creation. But, as we realized the opportunity cost of slow capacity creation, we opened up these sectors. We have now accepted private airports and toll-charging roads almost as the norm and the country is better off that private capital has flowed into segments which are laying the foundations of a better tomorrow.

Yet, even today, with education, in spite of India having 25% private schools with 40% of school-going children in them, we don’t have a legitimate mechanism by which private capital can be attracted into school education. One still can’t invest in a school as a school still needs to be set up by a not-for-profit society, which can’t accept investments! Can we imagine the cost of such constraints for our country? For our next generation?

Many who still want only altruistic interventions in education, don’t even realize that what may be considered an altruistic motive by one – eg. promotion of religious or linguistic interests – may not be considered so altruistic by another. In any case, why don’t we insist that doctors should work only with altruistic interests and hospitals should be set up only by NGOs? Why not lawyers be asked to make only 15% surplus in their business? After all, the right to justice and legal help and access to health care cannot be any less nobler than education!

This is not to argue for a regulator-free environment. Regulatory interventions may be required to make sure that transactions are indeed transactions, and not transfers. Yet, wherever the public and private sector are operating in the same sphere, the regulator has to be an independent body. Imagine, BSNL as the regulator in the Telecom sector? Or, Air India as the regulator in the Aviation Sector? Yet, in education, the government is the regulator, while also being the operator of 75% of schools. In spite of this, for all that is wrong with the sector, disproportionate blame is on the private schools. And, this is when governments often go way beyond a regulator’s role and become controllers.

Today in infrastructure, including in defence production, private investment, including from foreign capital, is welcome and rightfully so! That’s because the opportunity cost of not building capacity is immense. Yet, why do we not recognize this requirement in education? A generation lost is lost forever.

On the other hand, wherever price controls have existed, the parallel economy and unethical practices have flourished. As a country, we have recognized that the deadweight loss created by price-controls are too huge. Many sectors have become cleaner in the last two decades thanks to liberalization! Yet, somehow, when it comes to what matters to our next generation, we think noble intentions matter more than the ground reality. Can we really afford to continue that?

We in education need to take pride in being in the business of education. We create value in a sustainable manner and we invest in the growth of our country and of the economy. We have increased the availability of education in this country and have improved the access to it. As for affordability, that would go up when supply increases and not when supply is restricted. And, that can happen only when we are willing to accept that investment in education ought to be allowed to generate returns on it. It is only when education is duly recognized as a legitimate business would it truly become ethical!

“Stand up for what you believe in even if you are standing alone”
― Sophie Scholl

Mahender Reddy on Linkedin
Mahender Reddy
Mr. Boyapati Mahender Reddy is in the business of building institutions of excellence. A Mechanical Engineer with a Masters in Business Administration from the University of Hull in U.K., he brings in proven expertise in running educational institutions, having provided leadership to St. Mary’s Educational Society now for over two decades. He is an avid golfer and a voracious reader. He has authored a biographical book, ‘The School of Life – The Life of a Stalwart in Education”, which celebrates the life and times of his educationist father, Mr B. Arogya Reddy.

1 Comment
  1. You wrote the article very earnestly. If one is providing quality education, it is in itself a service to the society which doesn’t require validation by being tagged as a not for profit business. Doing one’s job sincerely is a noble job and commands respect.

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