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The fee market model

Why single out service providers of education?

The fee market model

The recent debate around increase in fees charged by private schools represents different, if not conflicting, conceptions of the role of the state.

What is important to acknowledge at the outset is that this is not a debate on the quality of education. Also remember the state is not arguing, and indeed it cannot argue, that education has become unavailable to the bulk of the population as a result of actions of private actors. If there is any failure here, it is that of the state. These are important things to bear in mind.

In some ways the debate is linked to the view that one takes of the constitution — does it envisage socialism, free market or an Islamic welfare state? One answer, frustratingly enough, can be that the constitution envisages all three. But for the most part, the free-market model prevails. The state’s duty to provide free and compulsory education to all children of the age of five to sixteen years was included through Article 25A. This envisages enabling legislation and, with education now being a provincial subject, this has not seen any uniform development. However, even this constitutional provision leaves you free to choose to send your child to a private school. And even if the relevant enabling law was enacted, many who can afford private schools would choose them.

The state promised quantity — because that is what rhetoric is about — not quality. And right now rhetoric is its only weapon and defence.

The ugly reality remains that parents of school children attending high-end private schools are the reason the state is finally worried. And since those with financial and political muscle often have disproportionate influence/reach when it comes to advocacy of a cause, the state cannot ignore this. The state, of course, was caught off-guard. For decades it has benefited from this tacit agreement with the bulk of the upper-class that as long as money buys private healthcare, private education and even private security, there is no need to cause a ruckus.

However, one must not oversimplify. A lot of parents who are neither rich nor well-connected send their children to expensive private schools in the hope of giving them a better life. As people vie for social mobility, and the schools you or your children attend are no small part of this, there is increased pressure to belong to this class which promises opportunities and avenues. And not everyone can handle the increasing financial pressure. Therefore, the parents have a genuine grievance. No one should dispute this. The question is how to address the problem.

The state of Pakistan, for far too long, has looked the other way from the cause of education. This has had ramifications for people at the top as well as the bottom tier: the bottom tier has suffered quietly for the most part — some among them turned to madrassah education while others gave up or surrendered to the execrable state-run schools. Those not completely destitute waited for the private school model to trickle down.

Read also: Shopping malls of education

The top tier (economically well-off and often politically connected with corridors of power) had a better option: it chose not to sit around. Survival and need were principal reasons the private school model took off. And like all sound business ideas, it was need that guaranteed success. In capitalism once you fulfill an actual or perceived need you can sell it as a commodity. You can even create a need. And to be fair, the private schools (at all levels) are providing a most useful service. If they are to provide quality education they need to attract and retain a talented workforce. It is notoriously difficult to quantify a fair price for services. People pay what they think gets them what they want. Otherwise, they go elsewhere.

As I have discussed in this space before, the free-market model tells us everything we need to know about efficiency but very little about fairness. Granted that fairness is an abstract notion but it affects citizens deeply and thus is politically as well as socially relevant — even if not theoretically water-tight.

So, have the private service providers of education, up to higher secondary school, crossed a line? Punjab has recently introduced legislative measures to essentially cap the fees at current levels. Its executive measures go a step further and, as far as District of Lahore is concerned, hint at refund of over-charged fees and conducting audit of private schools — an exercise more appealing in rhetoric than logic. The broken state is being itself again.

Why single out service providers of education? Some might say it is dealt with specifically by the constitution but so is access to justice — it is recognised as part of the corpus of our fundamental rights. Should the state be allowed to violate its constitutional promises and point fingers at others? If we get into this then there would be no logical reason to avoid capping fees of universities — and that will have severe impact on faculty as well as research.

The sooner we realise that providing education is a commercial service, the better. Universal education was promised by the state, not private actors.

An important question then follows: should there be no check on private actors?

There are laws in this country that allow the state to step in to ensure that certain legislatively specified ‘essential commodities’ remain available to the people. It even has the power to regulate their prices. And of course we all know the heavy regulation that, through the support price mechanism, goes into commodities such as wheat and sugar cane. Yet commodities are a different ball-game by their very nature: finite and fungible. You can literally run out of commodities. Services are fundamentally different.

By trying to regulate fees charged by a handful of private schools the state is admitting its colossal failure — in effect the state is saying, we failed to provide something we promised and till we are able, we will dictate what price others, who meet a desirable quality, charge.

With education now a provincial subject, the Federal Government has its hands mostly tied. There is one law, namely Competition Act 2010, which the federation might invoke. However, this will not be easy or without controversy. A high-price, by and of itself, is not an anti-competitive price. The Competition Commission of Pakistan (CCP), one of the most important regulatory bodies in the country, recognises this better than anyone in the federal government. It has consistently rebuffed the temptation to become a price regulator. Can multiple private schools providing education be said to be independent of competitors and consumers in the way that a large corporation manufacturing and selling a unique product is? Classic example: Microsoft selling Windows. A detailed inquiry by CCP and counter-arguments will answer this, and generate more debate, in the coming days.

Where competition is, perhaps, more obviously in peril is the practice of private schools of specifying stores to buy uniforms, books, stationery etc. But this too will require other pre-requisites of a nuanced law to be met.

Not too far from the imagination here should be a strike by private schools. If they shut down in protest, what will the state do? Of course, some will say that the police power of the state can be put to use but prosecuting, punishing and coercing private actors in a domain where the primary failure is that of the state will make the government look extremely bad.

The state is out to restrain or punish a small number of service providers who have unhappy customers — and their complaint is: you are charging too much. However, there are other service providers too. Just because the state decided to treat education as a constitutional duty does not mean that private actors have to do the same.

There are genuine grievances of the parents. But punishing private service providers and discriminating against them is no way to solve this problem.

Waqqas Mir

waqqas
The writer is a practicing lawyer. He can be reached at [email protected]

2 comments

  • “People pay what they think gets them what they want. Otherwise, they go elsewhere.”
    With all due respect sir, this isn’t fruits and vegetables whose prices are being bargained over. What do you think will happen if the parent’s can’t afford the school fees? They’ll have to take their kids out, which means that they won’t get the “non-refundable security deposit fees” back. Which also means that they will have to pay the admission fees, non-refundable security deposit fees and the three-months advance monthly fees for the new school.(which is a considerable sum, I might add)
    Now the school administration knows all of this. They know the parents are helpless. They know the parents took the bait; hook, line and sinker the minute their children’s got admitted into their esteemed school. So they keep increasing the fees under various pretences without any fear of reprimand. THIS IS ENTRAPMENT

  • “If they are to provide quality education they need to attract and retain a talented workforce”
    Seriously?? Do you really believe that?? That the school has to get more money from the students because high-quality teachers are demanding more?
    The extra money is spent on adding new buildings and branches and more extravagant infrastructures to swell the already puffed-up egos of the people running the school administration. Its not about the students or their education any more.

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