Welfare Economics of Higher Education in Global Perspective.
Evolution and relevance of higher education in India. Education in early times was by experience. Teaching was by oral tradition under guru kula system. India being the cradle of civilization has a long history of Higher Education. We know of early universities like Nalanda, Takshashila, Kancheepuram and many other are of great antiquity. In more recent times the three modern universities for science and humanities were founded in 1857 in Madras, Calcutta and Bombay, a year before the British Crown took over the governance of India from the East India Company. From only three presidency universities to educate the whole large sub continent of India from Lahore to Rangoon Nepal to Ceylon, Madras to Singapore, now for much smaller area we are reaching fast to have nearly a thousand Universities of Union, State, Private and Public Universities. Currently only 25% of the relevant age group has access to University education and a target of near 75%, we are wondering if there are adequate number and desirable high quality Universities.
Peace, Progress and Prosperity through education. Never in the past did humanity enjoy world wide linkages and global possibility for progress, as it is now. With the memory of massive devastation which the nuclear bomb caused in Hiroshima and Nagasaki, the humanity world over has been wise enough to avert another Third World War since 1945. The Second World War was concluded to make the entire humanity safe for democracy by defeating, the Nazi and Fascist tyrannies.
Economists, Social Reformers, Political Scientists and Educationists have been my mentors. My teacher Dr R Balakrishna, from London School of Economics (LSE) was contemporary of Dr VKRV Rao at Cambridge. He was President of the Indian Economic Association (IEA) in 1954 and Founder / Editor of the Indian Economic Journal. The Dravidian icon, orator and my mentor in public life is Dr C N Annadurai founder of the New School of Social Economics. He too was taught economics in the Pachaiyappa’s college by Prof.C D Rajesvaran, who was from LSE and classmate of Lionel Robbins. He was the author of Scarcity Definition. Periyar EVR the leader of Anna is hailed the Rousseau of Indian polity and was the promoter of Social Justice and self respect movement. Both Periyar and Anna have laid a firm foundation of egalitarian society and welfare state, which has shaped the education and economy of Tamil Nadu to reach and remain among the top progressive states of the India. The discipline of Loyola and philanthropy of Pachaiyappa and vision of many leaders of India whom I have known in my parliamentary and legislative career with a spell of service as Cabinet Minister, have instilled in me the keen desire to serve the cause of higher education at global level.
The century vintage origins of the IEA and the Justice Party: The birth of the IEA and the Justice Party was simultaneously a century ago in 1917. The Justice Party was the name in brief, taken from the title of its newspaper The Justice. The Madras government formed under the Government of India Act of 1919, introduced many socio economic reforms like (i) reservation for backward castes (ii) accountability of Hindu Religious institutions, which in due course enabled the famous Tirumalai Tirupathi Devastanam as the richest religious body in the world (iii) spread of technical education (iv) midday meals for children in the schools to encourage them to study (v) temple entry of harijans and (vi) many more social reforms like equality of women and men, self respect etc All these were pioneered by Periyar E.V.Ramaswami. He was my inspirer to get the vision for educational philanthropy. Periyar was given UNESCO award as Socrates of South East Asia for the social reforms. This social and welfare movement of South India spread to the rest of India under similar leaders and was taken to global levels under the United Nations by the Great Twins Dr Sir Arcot Ramaswami Mudaliar(ARM) and Dr Sir Arcot Laksmanaswami Mudaliar(ALM). The elder ARM was a leader in this movement and Editor of The Justice and also active member of the IEA, and Madras Economic Association (f.1915) later named Tamil Nadu Economic Association(TNEA). Dr ARM worked with J M Keynes in 1940s as Chairman of the First and Second Economic and Social Council of the United Nations, which created the World Bank, IMF, UNESCO and WHO. The Oxford convocation in its citation hailed him great economist who brought light to the world lost in darkness. He was mentor of Anna, whose statue, in Chennai on Anna Salai was unveiled by him. His life and times and also that of his younger brother ALM who was the elected Vice Chancellor of Madras University for 27 years – a record in the world – have lessons for Welfare Economists.
Two streams of Academics and Leaders in public life for development of Economic Theory and Practice. Malthus was a priest, Ricardo was a stock broker, Adam Smith for long years was a Government functionary in the UK. In India many Judges, Administrators, Ministers and others have given major contributions to economic thought and policy. Justice Ranade, Parliamentarian Dadhabai Naoroji, Finance Minister Dr R K Shanmukam Chetty and John Mathai, Bharat Ratna C.Subramanian and others are examples and exemplars in fields of national income studies, international finance and Green Revolution. Now there is need for members of the IEA to launch studies in economic thought and policy covering the entire period 17th to 20th century, keeping the doors and windows of academic bodies open.
Oriental Welfare Economics. The dates of origin of Thirukkural and Arthashastra may be same. Kautilya wrote Arthashastra with a view to dethrone the Nanda dynasty and to crown the Mauriya rulers. He achieved his purpose of statecraft. In his work, might is considered right; ends justify the means; right or wrong ways, achievement of success is the central purpose. This is Positive Economics which both Lionel Robbins and Milton Friedman advocated in their works. Famous The “Scarcity Definition” of Economics was given by Robbins in his Nature and Significance of Economic Science (1932). He stated that what ever economics is concerned with, it is not with ends as such. Maximum return from the use of resources is the objective. It does not matter whether the purpose is good or bad. Efficiency alone matters. This is Positive Economics, on which subject Milton Friedman wrote a book approvingly.
Welfare Economics of Prof. A.C.Pigou and three Nobel Laureates K J Arrow, J.R.Hicks and Amartya Sen. Earliest Indian exponent of welfare economics is Tiruvalluvar in his Tirukkural. He places emphasis on moral values. The ends should be fair and ethical. Fairness and goodness are the tests to be met in both means and ends. Fairness in public administration, personal conduct in family and public life, equality of men and women regardless of birth or wealth are the welfare principles taught in Thirukural. Chackravaarthi Rajagopalachaari, writing a commentary on Kural starts with the concept of wealth. That alone is wealth which is based on Dharma. And Dharma itself is wealth.(Arathhal oonghu selvam; ithanai maranthal kedu ( Tamil). states of Kural no.32. Jealousy, greed, anger and evil words should be avoided for good life, is the dictum of another Kural 35. The entire work is a masterpiece in 1330 couplets. It is known as the equal of Gita and Bible. It was made widely known to English speaking peoples by Rev.G.U.Pope in 1885 of the Indian Institute at Oxford. It has been translated in the largest number of world languages next only to the Bible.
Both Arthashastra and Kural on Positive Economics and Welfare Economics, were written seventeen centuries before Adam Smith book Wealth of Nations in 1776 which laid the foundation of Economics in the western world.
The magnum opus, a pioneering work Economics of Welfare (London,1932) is by Prof. A C Pigou, the successor to Alfred Marshall in Cambridge and teacher of J M Keynes. Alfred Marshall dominated the Cambridge school and rest of the world, especially India, till 1930s by his book Principles of Economics. Earlier Pigou wrote on Wealth and Welfare after the lessons and practice of Positive Economics landed Britain in the great depression and unemployment of 1930s. How the economy actually works is not enough; how it should function is the theme of welfare economics. Distributive justice consistent with productivity criteria must examine what to produce, how to produce with full employment, how to manage monetary and fiscal policies and how to ensure regional, national and global goodness.
The market economy, the role of the invisible hand in matching supply and demand, the division of labour for maximization of output and distribution are all in Adam Smith’s Wealth of Nations. These principle were formalized by Alfred Marshall in his Principles. Considerable literature on Welfare Economics with reference to Education, Health and culture has accumulated by the contributions of T.W.Schutz, Gary Becker, Milton Friedman critiques, John Kenneth Galbraith writings, Arthur Lewis Theory of Economic Growth, and many more scholars of Oxford, Cambridge, LSE, Yale, Princeton, Columbia, Harvard universities. Sukhomoy Chackravarty, Amartya Sen, Jagadish Bhagawathi, TN.Srinivasan, Manmohan Singh and many, many others most of them associated with our Indian Economic Association, have given us rich literature which needs updating.
The distribution of purchasing power to individuals and groups optimality is the central issue in Welfare Economics. The Democratic State and its Welfare measures depend on the integrity, efficiency and stability of four major institutions: Legislative, Executive, Judicial and new Print and Digital Media. Prof. K.J.Arrow points out how voting takes place in democracies and strengthens these Institutions. The individual votes for whom he likes or equally he may vote with or without willingness, for the person, because of the group to which he belong. Even if he does not choose him he will vote because of the party to which belongs. Individual rationality or group rationality makes the choice. Hence the power of castes, communities, parties, ideologies of the left, right or centre in democratic welfare choices and economic behavior.
Rapid growth of higher education and its welfare implications. After independence, India had 20 universities and 500 colleges. Recent figures for universities and colleges are over 900 and 50,000 according the HRD ministry. The capability of the graduates to add to national income is higher than what illiterate and unskilled. In 1920s it was about Rs 20. Income per capita in England and America was then Rs 750, because of higher level of education. Welfare increases whenever one in a group becomes more satisfied without any other individual in the group less satisfied. Higher educated people increasing in number will not injure the earlier privileged group to great extent, except in opportunities for secure and privileged employment.
International role of money and foreign exchange resources of India. The foreign exchange as resource was the lowest level in 1991 at US$ 60 billion which as enough only one week payment for import. India had to pledge her gold stock of the Reserve Bank of India to the Bank of England to escape default. The Economic Reforms of 1991 was therefore a forced event. Any finance minister in that period would have opted for reforms to save India. Currently the resource is around US$ 400 billion. This is a safe amount but compared with US$ 3,062 billion holding of China with about the same population and with higher export capability, India cannot afford to be complacent.
“Make in India”, “Make for India and the World” are moves for increasing import substitution and export promotion. With IT, Digital and new technologies in Agriculture, Industry and Services in all countries of the world, without increasing investment in Research and Development it is not possible to hold our head above water. Resurgence of India in the long run depends upon massive investment in research generating patents and invention and also new ideas in social and economic sciences. Happiness and quality of life are related to policies and practices related to legal, political, social and economic Institutions. Laws and principles in these fields are country, region and culture specific, unlike laws of mathematics or physics.
Till about 1960s Presidency Universities of Madras, Calcutta and Bombay were mainly Research oriented with marginal teaching and colleges were mostly teaching institutions. The Professorial Chairs were few and research minded faculty in colleges migrated to Research Universities. Facilities, incentives, global linkages of the university faculty equated them to best counterparts world wide. The present day Oxford, Cambridge and Harvard leadership in world academics prevailed even then, with one difference, our numbers in universities increased, with lower per capita investment and capability to absorb even that investment. We continue to send our scholars in search of quality abroad; foreign students do not come to study in India except in soft subjects of traditional skills in language, literature, music and few other subjects like Computer Science and English Language. With three centuries of linkages with the best Universities, which advantage China did not have, India should have overtaken China five decades back. The future looks bleak, if do not wake up and move fast in R&D and patents.
Role of Professional Associations:; I appeal to the professional associations, their individual members, past and presidents, office bearers to join the vision of making the Indian Universities equal and in at least a few subjects, globally competitive. World class universities in economics sciences is one such path. The practice Nobel foundation is to include in Economic Sciences, commerce, management, history, sociology, philosophy and law. These are subjects in which Indian experience in the last five decades in without equal in the world. India being a liberal largest functioning democracy.
The economic reforms since 1991 has enabled India to have the growth rate in the range of 7-9% as against only 6% in China less then 3% in USA Brazil and European Union. With only 3% world growth rate, India could aim at 9 to 10% provided out institutions are increasingly strong, accountable with lowest transaction costs. Some State Governments like Andhra Pradesh in Economic Management with the Chief Minister Mr Chandrababu Naidu himself an economist in his own right, and Tamil Nadu and Kerala in Education and Health Services, have impressive records. Cooperative Federalism, rewards for success and checks on inefficiency, could deliver results. For all this the key is higher education which is high, not in name sake, but in reality. In the VIT University we give incentives for publication. Efforts in R&D are rewarded.
China has sent in recent years 3 million students to study in British and US Universities and over one million have returned with competence. The Indian return rate is low; the exit rate is high. An Independent Commission for R&D with national and international experts, could be set up to repair the damage of the last few decades in Higher education in Union and State levels. The best test after following the recommendations of that commission will be to measure the increasing entry of UK, US and EU students in Indian Universities. This is not much to ask. India has to its credit three Nobel Laureates in hard sciences of Physics, Astronomy and Chemistry all from one Madras University, whose educational leadership of the Vice Chancellor Dr Sir ALM, was rewarded by Presidentship of the World Health Organisation and Presidentship of the International Civil Service, etc. all for the Great Twins, who were products of high level education in Madras University and its Christian College. I am a product of this system Loyola College and can realize the difference between then a few decades back and now. Diagnosis apart we need the remedy.
The US Leads the world in the number of Patents and Inventions for leadership and productivity. Their patents office was created in 1836 and the issue of the 10 million patent was granted this year. The steady increase form 1900-2000 was from five lakhs in 1900, to 75 lakhs in 2000 and 100 lakhs in 2018. was possible. Private Enterprise and funding by philanthropic bodies are the main institutions which enable high patents, besides the leadership are universities. The creativity in Harvard, for example, the enterprise of Harvard President Derek Bok raised over US$ 14 billion as reserve fund. A few IITs in India have done this. We are trying in the VIT to strengthen the Alumni bodies across the world and would expect them to act when they think that VIT could absorb and render justice to their zeal for investment in their alma mater. Willingness to give is not enough. The capacity to use and the accountability are essential criteria. The Governments in the UK and USA step in to fund long term return from fundamental research in mathamatics, pure sciences, philosophy, medical invention and the life from which immediate financial return is not possible. The market economy takes care of quick yielding engineering technological, management education. What the market cannot do the state must do. This is the lesson for the union and state governments of India which have neglected fundamental studies for a long time. Only the Tata funded Indian Institute of Science, Bangalore and the Tata Institute of Fundamental Research, Bombay are rare examples to emulate will arise when capability to absord and ability to give results are sure.
In China 1.1 million patents were issued in 2016. R&D funding was less than US$ 25 billion US$ in 2001. China equals European Union investment of US$ 300 in 2014. It is almost double the Japanese investment. Indian investment is not even US$ 5 billion.
During 2040s according to the present claims, China will overtake best UK EU, USA Universities. India should attempt to have a vision for research funding upto global excellence. In respect of Ph.D Degrees in Science and Engineering of India output is around 5-7 thousand from 2000-2015.China starting at the same level as in India in 2000, has 27 thousand Ph.D degree holders in 2015. Scholars in private, state and union government funded universities without any discrimination, should get substantial research grants and fellowships so that India can catch up with China which is the emerging competitor. In India patent rules have been changed in 2016. Disposal rates of patents application has improved, video conferencing has increased efficiency and cost effectiveness. These are marginal improvements. Much more by massive investment needed to encourage patents.
Outlook for the Indian Economic Association(IEA) for the 21st Century. It is not enough for the members of the IEA, to meet and disperse every year with papers read and discussed. The papers should be submitted quite early so that the peer evaluation could be done in time before printing. The plagiarism software could be used to ensure originality which is the hall mark of professional contributions. Each author is entitled to get 25-50 copies for use by them as evidence of original contributions. Our Indian scholars and NRI professors abroad do this with great credit. It is possible for the IEA to do this equally well. The IEA must encourage individual members to study current policies and actions of Union, State and Local governments and give reports for reform. Though the IEA, as a scientific body,shall not commit it to any partisan opinion, each member is free to shed light and learning on current issues. This will make this body a Nursery for winning many honours including the Nobel Prize. The American Economic Association has done this. The largest performing democracy of India should emulate this model. The US has about one fourth the Indian population, The American Economic Association(AEA), has more than 20,000 members world wide and gives all its members. All the members get the following journals (1) American Economic Review (2) Review of Economic Literature (3) Insights (4) Applied Economics (5) Economic Policy (6) Macro Economics and (7) Micro Economics. India is rich enough and our print media is strong enough to do this academic service. Only the will and leadership is required.
To be global the Indian economic profession with large number of NRIs in EU,UK and US should have the vision, team work and will to match the learning and research, publication in peer evaluated journals to make theoretical contributions to world economic literature. We are in a globalised age and India has to think and act in rhythm with it. This is the call to Welfare Economics of India and the Indian Economic Association.
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