Make knowledge utilitarian
P. V. INDIRESAN
For the poor, utility is what counts most. Insisting that the poor must
have ten years of academic schooling, is like asking them to eat cake
when they do not have bread. The education system is designed for the
well-to-do by copying ideas from rich Western countries. This, says P.
V. INDIRESAN, ignores the need of employable skills.
A MIX of academic education and vocational training can be meaningful to
the poor.
The previous article (Controlling growth of disparity, September 4)
ended with the observation that eliminating rich-poor inequality is
impossible, not even desirable. That is so because disparity is an
important driving force for progress. Societies stagnate, even collapse
when people have few opportunities to go higher, to get richer. Attempts
at absolute equality (as in the Kibbutz in Israel) have all failed. That
raises the question: What level of income disparity combines best both
equity and progress? For instance, will curbing high wages of the IT
industry hurt the poor by taking away their due, or will it help them by
multiplying jobs?
Debatable comparisons
International comparisons of income disparity do not inspire much
confidence. If the latest World Development Report is to be believed,
Pakistan has the same Gini Index of 0.27 as Norway (one of the most
egalitarian countries). With a figure of 0.33, India is better than the UK.
Statistics of disparity are evidently unreliable. On the other hand,
there is no disputing two facts: In India, (a) earnings of the poor are
not enough to buy even food; (b) wages of the rich are not competitive
enough to prevent large-scale migration. Hence, we have a problem at
both ends.
There are many descriptions of poverty. I prefer to describe poverty as
shortage of Maslow Needs. The poor are concerned about the two lowest
Maslow Needs — the physical and the security needs. The upper
middle-class would be more concerned about higher needs (the status, the
autonomy and the self-actualisation needs). Lower needs depend on money;
higher ones depend less on money and more on healthy social/economic
environment.
Food, water, domestic fuel and clothing are basic physical needs. Only
regular income can meet those needs. Shelter, employable skills (plus
healthcare) are basic security needs. These three are lifelong assets.
Among all these factors, employable skills appear most crucial because
they guarantee income. If the skill is good enough, the income will be
enough to meet all physical and security needs too. Thus, the resolution
of the poverty problem starts with the provision of employable skills.
Big Brother Knows Best
Employable skills involve three factors: the person, the training
institution and the employer. In India, training institutions operate
autonomously in splendid isolation. They have little or no compulsion or
incentive to satisfy either the student or the employer. Currently, the
expert view is every student must have ten years of academic education.
The theory goes further: Education should not only be compulsory, even
its contents should be decided centrally. Students should have next to
no choice in what they learn, whether they like it or not, need it or not.
Sherlock Holmes had encyclopaedic knowledge on criminal matters. At the
same time, he did not know that the earth went round the sun. When Dr
Watson remonstrates about his ignorance, Holmes replies, "Now that you
have told me, I will endeavour to forget it because your information is
of no use to me."
`Eat cake' syndrome
Holmes had an extreme view about learning but was making an important
observation: Knowledge should be utilitarian. The rich can afford
esoteric knowledge but for the poor, utility is what counts most. When
we insist that our poor (who have not enough to eat) must have ten years
of academic schooling, we are echoing the idea that the poor should eat
cake if they do not have bread.
Our education system is designed for the well-to-do by the well-to-do
who are copying ideas from rich Western countries. They forget that the
needs of the poor in India are different from those of the rich
economies of the West; that our poor are in dire need of employable
skills. Rampant indiscipline in Western schools implies that there too
many students do not see value in the education they are getting.
If school education should result in employability, schools should
produce the kind of skills employers want. Schools may teach more but
only as a supplement and not as substitute for what employers want.
According to the prevailing ideal, children must do what educators
decide. In the case of the poor, the reality is otherwise: Poor children
do what employers (including parents) decide they should do. That is why
dropout rate among poor children is almost 100 per cent. That is why
child labour is widespread.
Let us have a compromise: Where parents cannot afford to educate
children, let educators decide what a child should do for half the time
only; let employers decide what it should do for the other half of the
time — on the condition that employers guarantee those children
employment at the end of the exercise.
A useful mix
In that case, employers indent students with specific skills, and
schools contract to provide them. Educators and the government top-up
such skills with whatever else they consider important, but the base is
what employers specify. Such a mix of academic education and vocational
training is meaningful to the poor. Such a mix alone will alleviate
poverty. However, employable skill is not enough by itself unless the
youngster can reach the employer. That requires connectivity between the
home and the market.
There is one more complication: In villages, employment generation
schemes generally fail. According to newspaper reports, even the latest
effort, the Rural Labour Employment Guarantee Scheme, is floundering. In
contrast, large cities absorb immigrant labour in thousands every week;
they do so without any help from the government. Large cities expand;
villages shrink. Therefore, if aspiring youth are connected to large
markets the employment problem will take care of itself. Without that
connectivity, like a flower in the wilderness, even the best employable
skill goes waste.
Then, poverty alleviation becomes a two-step process: One, schools
provide precisely the training employers seek. Two, houses of the poor
are connected to large markets, the larger the better.
Link up villages
The large market problem has two solutions: One, let villagers migrate
to large cities. Two, link together enough villages to form a large
market on their own. Currently, rural-urban migration is the preferred
solution. No one has considered seriously how villages can be linked to
generate large markets on their own. Few realise that it is cheaper,
two-three times cheaper, to create large markets in rural areas than to
enlarge cities.
There are two problems with rural-urban migration: One, cities provide
large markets but not homes; they offer slums instead. Two, the
purchasing power of money is much less in cities than in villages. The
latest craze, the Special Economic Zone, is frightfully expensive.
Worse, it devotes no thought on housing the poor, on employment for the
poor.
Considering the way SEZs are attracting tens of thousands of crores of
rupees, finance is not the problem. The problem is investors do not
think it worthwhile to invest in the poor. They do not bother about
housing the poor, or about educating poor children, or finding
employment for them. The organised sector market is not friendly to the
poor.
So far, the government has treated poverty alleviation as charity.
Charity does not create jobs. With the Eleventh Plan leaving 70 per cent
of the investment to private enterprise, the government cannot let
private enterprise abandon the poor.
On the other hand, private enterprise will cooperate only where it is
profitable. Hence, the government should make poverty alleviation a
profitable enterprise.
(To be concluded)
SEZs: How to land a good deal
P. V. INDIRESAN
If SEZ developers plan large, comprehensive settlements, of a thousand
hectare or more, on uncultivable or degraded land, and introduce quality
transport services, build hospitals, schools, and offer such other
services, they will be welcomed with open arms, says P. V. INDIRESAN.
The previous article ended with two observations: (a) Proposed Special
Economic Zones do not cultivate the poor. (b) They will not do so until
it becomes profitable to do so.
F. W. Taylor, the Time and Motion Study pioneer, measured how much time
he could save by using both hands to shave. He found that to be 1.2
minutes. However, that saving was offset by the more than two minutes he
had to spend patching up the nicks and cuts he suffered. Our business
plans are of the same kind: Businessmen calculate how large a Return on
Investment they get by concentrating on the well-to-do. They do not
calculate how much they lose by neglecting the poor, how much they
suffer from the violence that erupts thereby.
The true losses
For instance, the true losses incurred by the anti-Narmada agitation are
hundreds of times what it would have cost to rehabilitate displaced
families to their satisfaction. The true cost incurred in Orissa and
West Bengal because of political opposition by industrial groups and
others in Orissa are several times what it would have cost to
accommodate the poor. It appears that every time a high-wage job is
created in SEZs and other capital-intensive schemes, one Naxalite is
born. As a rule, the poor do not object to poverty but they become
bitter, even violent, when confronted with increasing disparity. SEZs
are planned the same way Taylor used both hands to save time. On the one
hand, State governments try to garner windfall profits by charging
astronomical prices for land. On the other, they accept losses by
extending tax concessions. State governments would have been wiser and
richer too had they done neither; acted neither as greedy middlemen, nor
as patrons of the rich. Likewise, promoters of SEZs would emerge richer
if they take over (and develop) even ten times more land than they do
now at reasonable prices than by paying the astronomical sums
governments are demanding.
At first sight, this proposition that SEZs acquire ten times more land
than they do now will appear strange, even absurd. It is pertinent to
ask what logic is there to attempt acquiring 10,000 acres when farmers
will not part with even a thousand acres. This counter-intuitive
proposition becomes clear when SEZs are organised not — as their name
implies — as pure economic enterprises but as comprehensive habitats.
Consider two alternatives: One, SEZs confine themselves to economic
needs of businesses.
Two, they leverage the business opportunity SEZs offer; cater to the
physical, psychological, social, political, environmental and cultural
demands of the increased population. In the former case, SEZs will look
like exploiters. In the latter case, they will look like angels. The way
SEZs are organised now, a few lucky farmers get a bonanza of unearned
profits; their neighbours get nothing.
The system increases disparity in two ways: Among long-standing
neighbours and between newcomers who capture high-wage employment
created by the SEZs and original inhabitants who get no jobs. Both ways,
the process is politically disruptive; both ways, unintended losses
mount. Both the critics and the supporters of the SEZs have overlooked
one fact: The country is getting urbanised and the process is
irreversible. Urban expansion is necessary too because agriculture
cannot create the kind of employment, pay the level of wages that modern
youth demand and deserve. Ultimately, the urban population will increase
by almost one billion. To house that many people, to accommodate the
enterprises that will employ them, to provide modern amenities that they
will demand, we will need to convert at least another five to ten
million hectares of rural space into urban settlements.
Whether we like it or not, this conversion of rural space into urban
habitats will happen. If we plan it systematically, it will happen
efficiently, painlessly and economically. If we let urban space grow
haphazard, we will end up with economic waste, environmental disaster
and political disruption. Both critics and supporters of SEZs have
overlooked also that the country has plenty of barren land to spare. It
is estimated that agriculture will not extend beyond 150-180 million
hectares and forests not beyond 70-80 million hectares. That still
leaves 50-70 million hectares of unusable land for urban expansion.
Unfortunately, all that unusable space is not available in large
contiguous chunks but dispersed all over.
Two-part plan
Traditionally, land developers look for contiguous space. Left to grow
in an unplanned manner, urban settlements expand as strips alongside
highways. Both processes are costly and inefficient.
The ideal is a two-part perspective plan for the next 50 years: One,
identify a minimum ten million hectares of uncultivable land that can be
converted into urban habitats with least disruption to agriculture. Two,
install transport links to connect bits and pieces of (otherwise
unusable) land into clusters of thousand hectares or more. Currently,
critics of SEZs are worried that the promoters will make unwarranted
speculative profits. Such profits emerge only when the supply of land is
limited. When the supply is well in excess of demand, there can be no
speculation. Our governments have been releasing land in driblets,
keeping supply always short of demand. That is standard economic recipe
for speculation. That is what happened when production of cars was
controlled, when telephones were in short supply. Liberate land for
urban habitats, there will be no speculation; urban land prices will
tumble the same way telephone prices have.
Critics will counter that telephones and land are not the same: People
will buy all sorts of telephones but they will insist on specific pieces
of land. That is true but only partially: People value urban land only,
but there are takers of such land anywhere provided the connected
population is large enough.
Linked clusters
Suppose we prepare a map of the entire uncultivable/degraded land of the
country. Suppose we install mass transport to link bits and pieces of
such land to form clusters of a thousand hectares or more. Such clusters
can accommodate large city-size populations — large enough to attract
financial and human capital.
If the total area of those planned clusters is several times the area
needed to accommodate the expected urban expansion of a billion, there
will be no scope for speculation. The trick is to plan large settlements
of a thousand hectare or more in one go, not start with small bits and
then try to expand. The trick is to plan for a comprehensive habitat
located (except when unavoidable) on uncultivable or degraded land. The
trick is to maintain supply of urban land several times higher than
current demand. The trick is to impose penal tax on expensive land to
induce investors to take up low-cost land.
Economical plan
That plan will be economical because urban expansion is confined to
low-value land. It will be politically acceptable too because only the
rich are taxed, and the rural poor will get new benefits they never
dreamt of.
Imagine a developer offering to take over only degraded land; introduce
quality transport services; take ten times the space needed for his
business and use the extra space (and the savings from the low-priced
land) to install hospitals, schools, and such other services; offer
affordable housing plots for all. I guarantee such developers will be
welcomed with open arms, and that they will profit more from the
expanded markets they realise thereby.
(Concluded)
(The author is a former Director of IIT Madras. Response may be sent to:
indiresan@gmail.com)
(This is 185th in the Vision 2020 series. The previous article was
published on September 18.)
http://www.thehindubusinessline.com/2006/10/16/stories/2006101601010800.htm
