[Kajian Post] What if All Higher Educational Institutions be Privatized?

Oleh: Nathaniel Rayestu | Kadiv Kajian Kanopi 2012 | Ilmu Ekonomi 2009

Some time ago I wrote an article (http://bit.ly/uU9I7e) explaining why subsidies for higher education is such bad thing to have. It is highly regressive and favors the rich instead of the poor, and might in fact widen the gap between them. But now an idea came across my mind, is it possible to have a completely privatized higher education system? A system where the government does not interfere with the provision of higher education, and let private enterprise work it out.

Let’s start imagining things here. A completely private education system would provide society with the kind of graduates which are needed by the private sector. Private companies will have a stake at how well universities are doing their teachings. It will help make sure they produce the efficient amount of graduates of different subjects. It will make sure that the kind of pedagogy the students receive in university will turn them to useful graduates later on that can work well in the private sector without much more training being necessary.

A good example is Indonesia’s own Bakrie University. As a private group with dozens of subsidiary companies, the Bakrie group has a large incentive to make sure its future employees endured quality education and will be eloquent for their jobs when they graduate. I imagine other private institutions could follow suit, or if establishing their own universities is such a tough ask, they can then invest or buy shares in existing current private universities.

The debate that always arises when this kind of question is put forward is ‘how about the kids from poor families who cannot afford private education?’, or ‘the state should have a responsibility to provide affordable education for the less fortunate’. Now let us think about it. The pricate sector has a huge incentive to make sure the kids that enroll in universities are the best students around, regardless of their economic backgrounds.

Let us twist our mind set a little: we should not think of how privatising higer education means universities will act as business institutions trying to grab as much money from students. Instead, think of it as the private sector needs these universities to produce quality gaduates for them. I believe they will then make sure bright but financially lacking kids will get ahead in the enrollment than the not-so-bright kid with a lot of money. Scholarships and student loans might be provided for these kids. It is simply in their interest to make sure the best kids get in.

A legitimate question to ask though is this: will the private sector backed education system underproduce graduates of subjects which are not beneficial for the private sector, but might be good for the society in general to have? Let’s say (apologies) literature or arts. The society might benefit from having poets or artists in town but if the private sector do not see the benefit in them, these graduates will be underproduced.

What to do then? The government should step in. If such graduates are considered a public good, or might produce positive externalities to the society, the government then might step in and provide educational institutions for such subjects. Just as any other government interventions.

PS: I am generalizing a lot of things in this writing. It is simply an imagination that might never happen in real life. Hence the title ‘What if’.

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