However, in reality business – or any entity – has those obligations that we place on it.

That’s a nice one. Who’s the we? On what basis do “we” impose obligations?

Just a side note on education and public service. Privatizing primary education is a useful step towards improving education quality. However, it only works where markets will function. There are several problems with private operation of education – particularly the exclusion of children based on non-financial criteria. Please remember that while free-markets may be great, they don’t always work. See my post Private Education for the Poor (Part 1 and Part 2 on Vouchers

It is more closer to Libertarian view than socialism. But then you need to think about it little bit.

“sanb, you just don’t get it, do you. Here’s spelling it out for you:PRIVATE SECTOR GOOD;”
Ahh Bush democracy, should have caught on earlier.

“Here’s something from an ancient document which has some bearing on what the government should do and what if it doesn’t: ” … Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,”

US Declaration of Independence and Bill of Rights were Ho Chi Minh’s favourite documents as well. Those were his guiding principles for his fights against the French and Americans. So that cuts both ways too.

That’s patented socialist bullshit. Dangerous unadulterated patented socialist bullshit.

Economic growth happens because of the actions of free agents producing and trading economic goods and services. Government does not produce economic growth nor is its job to facilitate economic growth. The only job the government has is to guarantee that people are free from coersion. And it is the job of the people to ensure that they are free from the coersion of governments. If a government starts getting too uppity, it is time to overthrow it. Of course, idiot socialists (but I repeat myself) would like to impose government in every freakin’ aspect of an individual’s life.

Here’s something from an ancient document which has some bearing on what the government should do and what if it doesn’t: ” … Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness…”

Now you are off arguing like an indologist. First try and understand the issues more clearly, get all your data current, don’t try to hold onto to dogmatic beliefs – in short think like a rational human being. Sometimes, stand that you have hung your hat on may have to be modified to fit facts as they roll in. Otherwise you sound like a blathering indologist.

The first point i had made was – public (government) funding and private control hasn’t worked, i gave you a very specific example in kerala. Don’t give me drivel about econ-101 and monopoly control.

Now on your second example – When AK Antony was the chief minister of Kerala last time around – he decided to granted licenses to every one who had applied for medical and engineerin colleges. Primarily because he didn’t want to offend any one, but the net result was large number of colleges. Did that in any fashion improve quality and reduce prices – no. There are lots of reasons for that, and requires analysis beyond econ-101. It has been a relatively similar story in Karnataka as well.

Your econ-101 text books need to be updated to reflect the learnings of the great california electricity experiment, and probably even the coming meltdown of the US airline deregulation experiment. Too much of any thing is bad, privatization or free market is not a magic wand that can solve every thing. One would have thought that is common sense, but alas..

Finally, the government needs to be a primary facilitator of economic growth and that is the only role that the government should play. If you have any pointers that prove otherwise please share that. I definitely can’t claim that i am educated enough to dismiss any even slightly contrary opinion as “idiotic ill-considered nonsense”.

The rant at Krishworld was boringly circular – that guy doesn’t know what he’s talking about (even about Adam Smith) – I’ll take the last phrase from previous (Atanu’s) comment to describe it

Suppose you want to start a medical college with 200 seats. You get a call that tells you that you will send Rs 10 lakhs per seat in cash to Mr X before you get your license. The cash Rs 20 crores is distributed according to the rank — the politician gets say Rs 10 crores, the bureaucrats who mediate the process Rs 5 crores, and the rest for the entire set up.

Now you start your college. Not that you really have much medical training to impart. But hey, there are people desperate to get a medical degree. You charge a fee for admission. You ask for only Rs 15 lakhs per seat on average in cash. You have to recover the Rs 20 crores in cash you paid. You get Rs 15 lakhs per seat precisely because the number of “licenses” handed out is kept low — a monopoly control by the government. If you don’t understsand the implications of monopoly control, brush up on your Econ101. (Patronizing? You bet.)

Monopoly: restricts supply so that the price charged is way above cost and thus maximize rents.

The effect is low quality and high prices.

Anyone who says that the government should control education has some serious difficulty in distinguishing the problem from the solution.

Patronizing? Yes, the only rational response to idiotic ill-considered nonsense.

For one thing, you conflate funding of education with government control. They are not the same. My position is that government control is harmful, and public funding of certain aspects of education is required. If you distinguish the two, you may not make such a muddle of the whole thing.

Now here is a simple lesson. (Patronizing? You bet.)

The poor quality and high price of the existing private educational institutions is because of limited competition IN the market. That limited competition in the market arises from the government’s control of the sector which leads to competition FOR the market. There are barriers to entry which force high prices and corruption. Yes, sir, corruption is the most striking feature of Indian education. More than the police or organized crime, education is the most corrupt sector. Here’s how it works.

(continued in the next comment)

Let us make an attempt to play civil, silly and rude comments aren’t necessary to discuss this topic.

Public control of primary and secondary education is a prejudice that was forced into my head after observing and to a certain extent suffering through a bunch of aided and private schools. Private enterprise anywhere has a very specific agenda, for some private schools it just might be to generate profit, and in some other cases it is to push certain relegious beliefs and generate a profit as well. In either case, the overall quality of education that a child receives suffers. How much do you think a teacher in a typical private school (convent/church school) gets paid? In Bangalore the going rate is 1 or 2K Rs p/m. Do you really think that you will receive quality teachers at that level? The same story can be repeated for any other type of resource. Certain investments in a society will take a long time to deliver a return – education is definitely one of them, and this is where the public (or government) really needs to invest. Especially since barrier of entry for a private participant is very high (regulatory and other wise) so competition is not going to drive up quality except at the very high end of the cost scale. Accessibility of educuation is another important reason why primary and secondary education has to be publicly funded. Yet another reason is to provide help to children with learning disabilities. Private schools typically tend to throw out childer who doesn’t necessarily perform very well in their tests – one can’t blame them, after all they don’t exist for public good.

Good private education is typically extremely costly, bad and mediocre private education typically offered by christian churches in India combine the worst – bad quality with a very solid religious agenda.

Now let us look at University of Phoenix and Harvard/Stanford University. One has an immediate profit motive (UoP) other has a well endowed trust and a really long term view and there is a difference in the quality of education that they provide.

You don’t have to go too far to find educational institutions that are/were essentially private that have provided excellent education – example in India would be IISc (Tata Insititute) and TIFR. Both have these had the same quality – well endowed trust and no immediate profit motives or agenda other than education just for the sake of public good.

In pretty much of the developed world publicly funded education is a primary aspect of the society for all of the reasons that i have described above. In the US, for profit charter schools have not really done that well either, for all the same reasons as above. Even in India compare the quality of education in kendriya vidyalaya with private schools or compare well run government schools with private schools (another very specific example is a Govt Girls High School in Trivandrum called Cotton Hills they consistenly outperform most of private schools in the state in the most common measure Secondary school pass rates).

Now let us go to the last point you made – primary and secondary education in India has been grossly underfunded especially after independence. There are a variety of reasons for that – bureaucratic control, pre-dominance of education mafia etc. End result is the spectre of parents queuing up to pay through the nose for fairly bad education. So don’t confuse bad implementation with the need for public education, and privatization and profit motive does not guarantee good decisions, efficiencies or good execution either. If it did you wouldn’t have hundreds of large corporations failing due to very bad operational decisions.

So there are several good reasons to have a good public education system. It has nothing to do with socialism, capitalism, marxism or any other ism for that matter, and this isn’t Zen or advaita philosophy to ask questions and arrive at answers myself. I don’t care too much for your patronizing/condescending tone either. If you want to have a rational and civil discussion on this topic either on these pages or elsewhere we could have that.

You may want to see the responses to these posts by Andrew Leonard, over at Salon.com; and by Krish, at Krishworld Politics

To turn Nitin’s point around, they are not directly helping “employ thousands of people”, that can be viewed as a side-effect of their primary objective -to rake in profits for the shareholders. Infosys I think has campuses in China and other places trying to reduce its operational costs below Indian levels.

That’s not turning my point around. That’s my point.

I see many commenters debating on whether IT companies should pay taxes. Perhaps they should. But don’t forget locational elasticities (in other words, their ability to move to lower cost locations) may be high for some business segments, and also that taxes on corporations are ultimately taxes on people. But the debate over taxes is beside the point of this post. Even if they do pay taxes as in other industries, that still does not excuse their chronic underinvestment in improving governance.