Service of Education - Essay Example

?Running Head: Service of Education Service of Education [Institute’s Service of Education Education of a child benefits not only child or his parents but contributes to society’s welfare by promoting a steady and independent society. Hence, it is not possible to identify individuals who get benefit from single child’s education or determine the money value of education benefit. “There is therefore a neighborhood effect” (Friedman, 1995). Neighborhood effect occurs where an activity performed by one party directly affects the satisfaction of another party. Therefore, this means that society can avail benefits overall in terms of economic growth, social cohesion, democratic benefits, law and order (Friedman, 1995). Because of this neighborhood effect, both public and private sector are involved in the provision of education. Both these sectors gain and lose by providing for education to society. We will explore these advantages and disadvantages for both sectors in detail below. Public sector or government should provide for education because it will provide government with long-term benefit in terms of higher income and hence higher tax revenues to finance public services such as healthcare, etc. In addition to above advantage, government gains from education provision multiplies as it has to spend less on social security or welfare payments in the form of unemployment benefits or health benefits as individual can himself afford to pay for his expenses by earning. Crime researchers found that education reduces the crime rate by both juveniles and adults. The two main causes of crime reduction because of education could be either behavioral mechanism or better financial stability. By attaining education, an individual might be able to increase his earning and therefore, reduces pressure to commit crimes and escalates opportunity cost (Barr, 34-36). The major reason of government involvement in provision of education is to increase economic growth. This occurs when education results in an increase in human capital in the labor force which soars labor productivity and thus, leads to higher level of output. Another way in which education increases economic growth is by enhancing “innovative capacity of the economy” (Hanushek & Wo?mann, 2007). This refers to “knowledge of new technologies, products, and processes which promotes growth. In addition, it can facilitate the diffusion and transmission of knowledge needed to understand and process new information and to implement new technologies devised by others, again promoting growth” (Hanushek & Wo?mann, 2007). The above point is substantiated by research done by economist that each year of schooling is associated with .58 percent increase in GDP points (Hanushek & Wo?mann, 2007). Government’s motive to provide for education is to achieve economic growth, which could ultimately results in increase in international competitiveness by producing in bulk, and exporting those products to rest of the world. Appreciated exchange rate is also an outcome of international competitiveness. In order to create equal distribution of income and wealth, government of any country is obliged to provide free education to all its citizens. This would not only reduce income disparities but also result in reduced poverty rate through income effect, which is a great concern of any government. Furthermore, social cohesion is also an obvious outcome of education. This occurs when common cultural experience boost communication with different people both in current and future time. There is also strong evidence that higher education is associated with higher political participation, voluntary work, and community affairs. These reasons are binding enough for government to provide education service (Barr, 34-36). Although there are multifarious advantages from government’s free service of education to its citizens, there are numerous costs which government has to bear as result of its provision. This cost could range in the form of financial to administration problems. The major disadvantage of public education is the opportunity costs of the next best alternative forgone because of governments’ spending on education. There could be other more crucial areas, which require public spending such as defense, security, which private sector cannot handle where as private sector could provide quality education. For instance, UK education secretary, Michael Gove postponed the building of 700 schools in future in order to save one billion pounds and spent on some other area (Nikkhah, 2010). Although it is easy for government to calculate its benefits of education provision, it is quite herculean and strategic task to measure some of the inputs required in education service. For instance, it is possible to measure teacher’s and pupil’s time, building and equipment cost but “the quality of teachers and inputs such as natural ability and quality and quantity of parenting time are beyond measure” (Barr, 34-36). It is very important for government to estimate these inputs somehow in order to determine the actual expenditure on education. It is even noticeable that even estimation of these inputs requires precious resources such as time and money (Barr, 34-36). In addition to these costs, government faces a dilemma of whether to invest on education in rural areas or urban areas or on primary education or elementary education. Because of these costs to the government and gains achieved from education, it is no more a consideration as a public good and private owners are highly involved in education service. The foremost motive of private owners to provide for education is to earn profit as they treat education like any other commodity. Hence, entrepreneurs enter school market because they know that education is a need of every individual so it has an inelastic demand and therefore, it is easy to earn money and make profit through school business. After the profit motive, private owners might want to supply for education “for the welfare of students and education mission animates their lives” (Pierson, 2000). Some private school owners also realize the neighborhood effect of education and hence decide to provide for education. These neighborhood effects could include reduction in crime rate due to behavioral mechanism and financial stability of individual from acquiring education. Decrease in crime rate would lead to better security for these private owners as well as for whole society (Nikkhah, 2010). Social cohesion might be another reason for providing private education service. This occurs when some people are inclined to develop public relations, contact with people, and have free resources such as time and money to invest in education. Because of education provision, they reckon that they are better able to make use of their time, money and ultimately able to increase their social circle through contacts with teachers and parents. Apart from these advantages, private owners even have to bear enormous cost of providing for education service. Firstly, it is quite lengthy and complicated process and it becomes further difficult if someone is not available to guide these private owners. The long procedure includes identifying your niche, forming a committee of talented supporters, developing a business plan, develop a budget, choosing key staff members and solicit contributors, identify your faculty requirements and train your faculty and finally to spread the word. Since education is becoming a profitable business for private owners, every entrepreneur is finding an easy deal to enter this business. This results in intense competition in school industry and competitive pricing which might result in decline of profits for these owners (Patrinos et. al, 7-9, 2009). Providing for education involves careful attention from owner and other supporters as education determines the future of individual and makes person a responsible citizen. They have to pay attention to diversity, fund raising, financial management, hiring practices and much more (Patrinos et. al, 7-9, 2009). Apart from focusing on main product that is education, entrepreneurs have to take into account many other factors to provide for quality education. This includes children’s’ safety, extracurricular activities, and sports. Hence, education provision becomes expensive after including all these expenses. Substitute products can also affect any business. Similarly, in school business, trend towards tuition is deriving the market for schools to decline. For instance, in developing countries, some pupils prefer to do A-levels through studying at private tuitions rather than bearing a cost of going to school which requires both time and money. In personal opinion, advantages from providing private education and government education clearly surpass the disadvantages. The best way to minimize these disadvantages is to form public private partnership in which government can give funds and pay management fee to private entrepreneur to run schools and later on monitor their performance. As a result, private owners will be able to earn profit and pay for other management costs while government will be to reduce its opportunity cost and ensure better welfare of society (Patrinos et. al, 7-9, 2009). References Barr, Nicholas. n.d. The benefits of education. Retrieved on March 22, 2011: http://www.hm-treasury.gov.uk/d/252.pdf Friedman, Milton. 1995. The role of government in education. Retrieved on March 22, 2011: http://www.freerepublic.com/focus/f-news/1173402/posts Hanushek, Ludger, & Wo?mann, Eric A. 2007. Education quality and economic growth. Retrieved on March 22, 2011: http://siteresources.worldbank.org/EDUCATION/Resources/278200-1099079877269/547664-1099079934475/Edu_Quality_Economic_Growth.pdf Nikkhah, Roya. 2010. “Building schools for the future plans to be scrapped.” The Telegraph. Retrieved on March 22, 2011: http://www.telegraph.co.uk/education/educationnews/7869783/Building-Schools-for-the-Future-plans-to-be-scrapped.html Patrinos, Harry Anthony, Osorio, Felipe Barrera, & Guaqueta, Juliana. 2009. The role and impact of public-private partnerships in education. Springer. Pierson, Geoffrey. 2000. “To run a private school.” New York Times. Retrieved on March 22, 2011: http://www.nytimes.com/2000/01/30/opinion/l-to-run-a-private-school-574970.html Preston, John, & Green, Andy. 2003. The macro-social benefits of education. Retrieved on March 22, 2011: http://www.learningbenefits.net/Publications/ResReps/ResRep9.pdf Read More