Which market offers a safe investment...

innovation in businessĀ and market risk analysis

Subscribe

Subscribe to Whythawk BlogWhythawk Blog

Follow Whythawk on TwitterWhythawk on Twitter

Blog

School vouchers offer the poorest an opportunity to learn at better schools

More choice ends poverty
More choice ends poverty
Universal provision of formative education is considered a basic right in our constitution.  The standard approach, followed by virtually every government in the world, is that they should build schools, staff them, and supply their services at a subsidised price in order to promote education equality.

The surest sign that this is a dismal failure is the astonishing growth in the number of private schools as soon as this is implemented.  And the fact that no South African politicians send any of their own kids to state schools.  Waiting lists at private schools are groaning under the weight of demand.  This entrenches the rich – poor divide and creates a form of educational aristocracy where the children of the rich have greater access to opportunities.

Fee-paying parents flee poorer schools which become ever poorer and less able to serve the needs of their remaining students. 

Governments around the world have responded by offering perverse incentives to failing schools.  Bad, under-resourced schools receive extra money but, since the teachers and staff are not incentivised to improve or penalised for failure to do so, there is no reason to change the status quo.  This often achieves the bizarre end of rapidly increasing education budgets with just as rapidly increasing failure rates.

As good an example of this is South Africa's latest education results .  Despite an increasing budget pass-rates have been falling steadily since 2003.

South Africa has a middle road between pure government owned and subsidised schools, and private schools.  These are the Model C schools where parents take an active role in the school’s governance to ensure participation and standards.  Many Model C schools have become as elite as their private counterparts.

Now government has a bright new idea:  force these schools to take on more non-paying students.  The choice the schools have is to raise fees – in essence punishing those who can afford to pay – or offer a lower standard of care as class sizes increase and resources become stretched.

Parents will respond either by moving their children to private schools and so result in further hardship as the amount of revenue drops; or the schools will go private.

Either way the objective of offering disadvantaged children better access to education fails.

There is another way of solving this problem.  It is by recognising that the purpose is not to subsidise school operations, but the educational opportunities of youngsters.

If the government intends on spending money subsidising education then that cash can be issued directly to learners as a voucher to take to any accredited school to pay their fees.  If the school charges more then the parents have to make up the difference.

The beauty of this system is that it encourages competition between schools to attract learners.  It allows parents the choice of including private schools in the range of places they can send their children.  It should not matter, after all, where children are educated as long as they receive a high standard of care.  Even more importantly, it will attract educational entrepreneurs to open new schools or expand existing ones.

And for any politician who would deny young, disadvantaged learners the opportunity to choose a school best suited for their needs, I pose a simple question.  How many politicians have entirely abandoned government schools and have sent their offspring private?

If the politicians exclaiming the benefits of state-provided education refuse to send their kids to government schools, why should the poor be forced to?

Read more: School vouchers offer the poorest an opportunity to learn at better schools

 

"Madiba's children" failed by their government

Umlazi's Zwelibanzi High School "A" Matriculants
Umlazi's Zwelibanzi High School "A" Matriculants
A slow-motion tragedy has unfolded in our education system over the past 12 years.  In 1995 the newly elected democratic South African government swore to ensure that education would be at the centre of their agenda.

Since a low-point in 1999 when only 46.4% of final-year school leavers (matriculants) passed the department worked hard at improving the numbers.  Not by improving the education system but by ensuring that fewer people wrote the final exam (4 000 fewer wrote this year than last) and also that the exam was made easier.  That worked well to 2004 when a high of 73.2% of matriculants passed.

Now to 2006, and the class of Madiba (so called because they are the first crop of students to have started school after the 1994 democratic transition).  This year students managed a paltry 66.5%.

The 350 000 students who wrote included only 4.8% who passed maths on the higher grade.  Without maths learners stand little chance of gaining entrance to university or taking on higher educational studies in the technical subjects required of a modern worker.  Even more worrying than any of these numbers, though, is the dwindling number of students achieving a sufficient education to allow them to even gain entry to higher-education:  16.2%

It should be a cause for shock and despair regarding the much vaunted "outcomes-based education" system introduced by the state in 1995.  The system was declared as the saviour of modern education.  It has failed, and failed spectacularly.

It is no surprise that the number of private schools in South Africa is blossoming.  There are now 1 098 of them, and their university-level pass-rate was 78.8% with a spectacular 21.4% achieving an "A" aggregate.

Instead of simply forcing state schools to accept more non-paying students, it is time for the Department of Education to adopt the same mechanisms of the private sector and give our children hope for employment and success.

Read more: "Madiba's children" failed by their government

   

The danger of wanting to believe in the power of good intentions

The market for something to believe in is infinite
Just because you believe doesn't make it so
Every now and then a fad for donating online takes hold.  This is especially so around the festive season when many feel an urge to assuage some imagined guilt with a little virtual charity. 

There are three reasons for caution:  the first is that it makes solving the world's most difficult development problems appear simple; second is that it creates a remote and emotionless void between the giver and recipient; and, third, that there is a massive assumption that the organisation you're giving to (mostly a third-party intermediary) knows who to give the money to and how to go about it.

Gifter.org, an online charity project, has launched the Million Dollar Blog Post as an initiative to raise funds for charity.  Without in any way disparaging their intentions, the most important aspect of this is not creating the interest or drive.  As Hugh Macleod says, in the inspirational gapingvoid.com, "The market for something to believe in is infinite." And nothing is more inspirational than the idea and belief that solving the world's most intractable problems is a mere mouse click away.

A few years ago I was at a dinner where, in a fit of vicarious generosity (after all, he wasn't giving away his own money) the host requested that we all put money in a hat so that he could give the proceeds to a good cause.  I stuck up my hand and asked who he was giving the money to.  The vague response was, "Oh, there were some street kids hanging about in the parking lot.  I'll give it to them."

Money is never more than a quick fix to economic problems at the best of times.  Giving money directly to people who have lost the capacity to know what is in their own best interest is simply wasteful and may leave the giver feeling all warm and fuzzy but does little for the recipient, who is unlikely to invest it.  This may sound harsh but the experience of most professional development agencies is this: if the poor knew what to do to help themselves they'd be doing it.

The responsibility of people who wish to do good is to do far more than simply give themselves a short-term and spurious feeling of "doing good" and ensure that any intervention in another human being's life really does produce tangible benefit for that person.

Gifter.org may be wildly successful at raising money.  Bob Geldof with his Live Aid concert in 1985 raised £ 150 million for food sent to NGOs in Ethiopia.  Much of the food and money went to local warlords who traded it for influence.  The vast bulk simply rotted in warehouses for lack of the infrastructure to deliver it (and the will of the government who care more about power than the good of their own people).  Good intentions mean nothing without the will and capacity to see it through.

Charity Navigator has just introduced online giving on their website.  The real power of their initiative is that they, similarly to Whythawk, are a charity rating service.  By donating via their site the donor can at least verify that the organisation they are supporting has the capacity, ability and track-record to deliver on their promises.

Without that third-party verification any fundraising initiative is so much hot air which makes the donor look good while doing nothing to alleviate poverty.
   

What do Richard Branson and Che Guevara have in common?

Viva la mobile revolution
Viva la mobile revolution
Richard Branson’s image has appeared all over South Africa done up as Che Guevara.

Promising a mutiny in the way South Africans can purchase cell-phone airtime, Branson is taking on the monolithic incumbent operators using the language of a revolutionary.  His intention is to make money for himself and his investors by undermining the fat profits that existing businesses are already making.  The reason he is able to do so is because of free market capitalism which allows anyone to start a business in competition to anyone else and will protect them from anti-competitive behaviour while they do so.


Capitalism is certainly a brutal system; but that brutality is not aimed at consumers.  It is aimed at the very businesses that revolutionaries hate so much.  Any change in customer preferences (the choices of the proletariat) results in a massive concentration of effort by businesses to keep up with those preferences.  Businesses that can’t do so (such as businesses caught using child labour when it is no longer politically acceptable to do so) get left behind and shut down.

Branson has claimed the very principles of subversion promoted by arch-Communist Guevara in the pursuit of globalisation and capitalism.  It was Guevara who said, “We must bear in mind that imperialism is a world system, the last stage of capitalism — and it must be defeated in a world confrontation. The strategic end of this struggle should be the destruction of imperialism. Our share, the responsibility of the exploited and underdeveloped of the world, is to eliminate the foundations of imperialism: our oppressed nations, from where they extract capital, raw materials, technicians, and cheap labour, and to which they export new capital — instruments of domination — arms and all kinds of articles, thus submerging us in an absolute dependence.”

The commercial sector appears to have an astonishing ability to reinvent itself and to claim the very criticism aimed at their destruction.  For socialist revolutionaries the problem is that they have misidentified capitalism.  

Capitalism is not a political system;  it is simply a mechanism by which people value things they want and trade for these things from their possessions which they consider of lesser value.  A person’s time and labour is sometimes all they possess.  If they value it less than any amount of money then they will trade their effort for that cash.  The economic thinking behind ending slavery was that slaves should enjoy the right to sell their own labour for a price of their choosing – just like everyone else.

Any act to change the political system of a society will result in an adaptation in the way the effected people value things.  A government may decide that food is a strategic resource and a food staple will henceforth be sold at a fixed price no matter what it costs to produce.  Farmers will look at that price and, if they realise it will cost them more to produce than they will earn from selling, they won’t farm.  Communist governments frequently find themselves buying in vast amounts of expensive food that they used to grow themselves from the very capitalist governments they hate.

Any wild accusation can be levelled at businesses: they harm the environment; they exploit poor people; the steal from the masses.  Business owners listen and observe.  If they note that the accusations are affecting their business then they adapt.  If the adaptation costs them then they simply pass those costs on to their customers.  If they aren’t allowed to do so then they quietly close down operations, cut their losses and move elsewhere.

Give businesses a measurable problem and they will solve it.  WalMart – a US-based retailer – has frequently been accused of causing environmental harm.  A new WalMart in Aurora, Colorado has been built entirely to appease environmentalists:  recycled asphalt parking lot, solar panels and a windmill for power, waterless urinals, efficient lighting.

Major retailers have come out with organic and locally sourced produce.  Restaurants and coffee shops dutifully sign up for Fair Trade goods.  Major manufacturers buy carbon credits.  And brands, like Virgin Mobile, have adopted the discourse of anti-globalisation campaigners.

There is no hidden agenda in this.  Business owners are quite up-front about their intentions.  Firstly, no-one wants to be a target of insults and slurs.  Secondly, they want to stay in business and keep providing for themselves and their families.

The customer is always right and, if you like the teachings of Che Guevara, then the teachings of Che Guevara you shall have.

People may fight for the cause of socialism, or freedom, or democracy but – while they’re out fighting – someone is going to have to stay home and make sure the revolutionaries are fed and clothed.  And they’re going to charge you for it.    Any attempts to stop this process results in a lot of people sitting around waiting for the government to provide.

If revolutionaries really want to put business under pressure then free market capitalism is the way to do it.

   

Page 54 of 54