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Ajit Balakrishnan: Private, public, private, public…

My friends in Mumbai, where I live, constantly complain that India’s government meddles too much in the affairs of the Indian nation. I would have been convinced about this except that when I travel to New York, my American friends equally constantly complain that the American government meddles too little in the affairs of the American nation.

As an example, many Indians believe that the problem with school education in India is that most Indian schools are owned and run by the government and what needs to be done urgently is to privatise them. On the other hand, many Americans believe that the problem with school education in America is that the privatisation efforts of the past two decades through the Charter school movement need to be reversed. In fact, in the recent mayoral election in New York City, this was one of the planks of the winning candidate, the present mayor of New York, Bill de Blasio. The reality is this: at the elementary school level, according to Pratham, about 30 per cent (and fast rising) of Indian children already go to private schools. By contrast, a mere 10 per cent (and declining) of American children attend private schools.

Similarly, most Indians believe that India’s higher education is hobbled by the dominating presence of government-owned colleges and that what we need to do is go the American way, privatise these colleges and make them run as for-profit institutions. The reality, however, is that practically all American colleges and universities are not-for-profit institutions. So far, the record of the newly established for-profit American universities is troubling: they account for a mere 10 per cent of all enrolments, but make up almost half of all student loan defaults. In other words, graduates of these for-profit universities are finding it tough to get jobs at salaries good enough to keep up with payments of their student loans.

When it comes to industry and innovation, both my American and Indian friends sing a chorus in unison – the secret behind the world-leading innovative companies in America (Google and Facebook of the current era and Pfizer, AT&T and Motorola of an earlier one), in their view, can be traced almost wholly to the work of dynamic entrepreneurs with venture capitalists cheering them on.

For instance, it is assumed that the Wright brothers’ invention of the airplane is what led to world-dominating American companies in both the civilian and military aircraft fields. In reality, the Wright brothers’ historic 1903 flight lasted a mere 12 seconds and covered only 120 feet; after that America lagged far behind Europe in aircraft manufacture. What really drove the American aircraft industry was that, when World War I erupted, the US government in a mere nine months between 1917 and 1918 placed orders with American manufacturers for 12,000 airplanes and 42,000 engines. When the war ended, so would have the American aircraft industry – but new military procurement Acts in the 1920s nurtured the emerging companies of that time, including a little-known manufacturer called Boeing.

The hidden hand of the US government has been noticed behind many other “entrepreneurial” breakthroughs: semiconductors (US Air Force procurement drove down prices enough for semiconductors to find mass-market applications), computer science (grants from the US military’s Advanced Research Projects Agency established the first university computer science programs at the Massachusetts Institute of Technology, Stanford, Carnegie Mellon, for instance), the internet (again, defence contracts), to name a few.

Rebecca Lowen (Creating the Cold War University: The Transformation of Stanford) goes so far as to say that universities such as Stanford are merely the academic component of the military-industrial-academic complex. She traces the current travails of the American higher education system (difficulty balancing expenditure and income in spite of fees that students find unaffordable) to the end of the Cold War and the consequent pullback of the US government’s defence funding of American university research.

Institutions originally designed as publicly owned to serve the public interest may not be able to discharge that function with the passage of time or with the evolution of technology. When voice telephone services were delivered through physical connections, a publicly owned telephone or heavily regulated monopoly was seen as best serving the public interest; with the arrival of wireless technology, we have discovered that multiple private players in a competitive market situation best served the public interest.

Merely because an institution is publicly owned does not mean it serves the public interest, as those of us who had to endure the constant delays and high prices and still fly Indian Airlines in the 1980s will testify. Today’s privately owned domestic airlines serve the public interest of reasonably priced on-time service far better. Similarly, “privately” owned Jesuit schools in many Indian cities serve the public interest of reasonably priced high-quality education as well as any publicly owned school does. It is tempting to conclude that in order to truly unearth what is “private” and what is “public”, one has to look behind the façade. What appears as an institution that is run in the public interest may well be the one that is actually run for private interests, and what appears to be a private institution could well be the one that serves the public interest the best.

Ajit Balakrishnan is the author of The Wave Rider: A Chronicle of the Information Age.


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