IN December 2018, the Supreme Court of Pakistan passed an order that forced high-cost private schools to reduce any fees in excess of Rs5,000 by 20 per cent. The order itself was the outcome of a long and protracted battle, taken up by the court, on the insistence of protesting parents who stated that high-cost private schools were charging ‘extortionary’ fees, and subjecting them to arbitrary increases.
Last week, the court — specifically the outgoing chief justice — expressed his displeasure on hearing that high-cost private schools had started to cut back on extra- and co-curricular activities in the wake of its order. The court’s reaction appeared strange given that this was something everyone had predicted even before the price reduction was announced.
The issue of regulating fees in high-cost private schools is not a new one, and has produced considerable debate ever since the latest round of protests broke out around three years ago. Prior to the court’s intervention, it was also not an issue on which one could take a straightforward moral or policy decision. At its simplest, if high-cost private schools were subjecting their customers to exorbitant fee increases, (especially in tandem with one another as some have alleged), then as is the case with any private-sector enterprise some element of consumer protection and regulation is required.
What complicates it a bit (at least for some) is the moral dimension. Should education be treated like a car or a bar of soap? Does a normative component make schooling, especially in its societal function, appear as something distinctly sacred, and the act of wanton profiteering off it as somehow distinctly profane? To many, including myself, the idea of ‘selling’ education for profit appears abhorrent.
Should education be treated like a car or a bar of soap? To many, the idea of ‘selling’ education for profit appears abhorrent.
Education allows individuals to expand their capabilities and opportunities. Any version of a socially just society would not discriminate the attainment of these functions on the ability to pay.
At the same time though, one can recognise that the final responsibility for this distasteful situation lies largely with the state, which has both allowed for-profit activity in this sector, and encourages it to flourish by failing to carry out its own social welfare functions.
However, one must thank the court for inadvertently producing clarity on what has shown itself to be a difficult moral and policy conundrum otherwise. Whether one is theoretically in favour of regulating high-cost private schools or not, it is possible to agree that the way the court has done it may not be correct.
For starters, there is no actual principal at work here. The 20pc reduction does not fall in line with any broader framework of market regulation. In the absence of a detailed reasoning connected to financial forensics, we are left wondering about the basis of this particular number. Similarly, the Rs5,000 minimum at which it kicks in is also entirely arbitrary. Why are parents who send their kids to schools charging Rs4,999 being deprived of the court’s generosity?
Secondly, one does not need to be an economist to realise that price caps produce distortionary effects, and profit is usually the last thing compromised in such instances. Adding to the mess is the fact that school owners know that schooling as a product is relatively inelastic — it’s not easy to swap schools in the middle of a school year — so they can get away with reducing the quality of service provision. It may be the case that this is exactly what the intended message of an over-the-top-quality reduction is — a ploy to get the court to realise they do not agree with its decision. There are already reports circulating of class sizes being increased, teachers being laid off, and salaries being delayed. In the short to medium run those attending these schools will bear the cost of what was ironically intended to provide them with immediate relief.
Finally, as succinctly analysed by education researcher and academic, Minahil Asim, the court’s order carries no substantive redistributive function. Underpinning this point is the fact that the entire issue concerns a minuscule section of the population. As detailed in the short order, the brunt of the court’s attack is on large, high-cost private school chains like Lahore Grammar, City School, and Beaconhouse. Collectively, such schools cater to no more than a couple of per cent of the total school-going population.
The only reason why this is even an issue is because this couple of per cent lies at or near the top of the income distribution, and carries social and political heft, which is why its protests are heard by those in power. At the end of the day, the entire issue results in a short-term monetary transfer from privileged school owners to slightly less privileged upper-middle-class parents. And even that is offset by the reduction in quality schools are currently undertaking.
Without offering any sympathy for elite private school owners, and I certainly have none, one can see that as a policy instrument, arbitrary capping of profit for a small number of businesses is a strange moral crusade, especially when this has no positive spill-over for the rest of the population.
This is not to say there are no smart ways of regulating elite private schools — India and a host of other countries have instituted actual redistributive quotas for the underprivileged in such schools in order to expand quality educational opportunities. Similarly, from a consumer protection point of view, if there is collusion and cartelisation between elite school chains, the Competition Commission must be empowered to investigate and then, if needed, levy a punishment. The larger point here is that the issue needs to be approached holistically, with education, redistribution, and consumer protection forming key pillars of regulation. What is quite clear so far is that the current attempt has none of these as its basis.
The writer teaches politics and sociology at Lums.
Published in Dawn, January 14th, 2019