Deepening Information Age: In the US, Public Education is being Undermined by the Internet

The internet seems on path to unravel 20th century welfare state institutions partly through the public education model.

Professor Gary North explains,

Parents are pulling their children out of the government schools. This is happening across the USA.

In city after city, enrollment is declining. This is not a recent development. It has been going on for a half a decade. It has taken place in half of the nation’s largest districts.

The trend looks irreversible.

As the Web offers better programs free of charge, the public schools cannot compete. The inner city schools are catastrophic. They are getting worse. As whites ans Asians flee the cities, the inner-city schools get worse.

The tax base shrinks. The teachers union demands more pay and smaller classes. The city governments are trapped. Solution: cut programs, fire teachers, and enlarge classes back to (horror!) 1959?s 33 students.

Nobody is supposed to talk about this. It is time to talk about it. Public education will not recover. The longer the decline takes place, the more parents will conclude that there is only one solution: pull their kids out.

At some point, voters will not pass any more bond issues. They will not consent to higher property taxes. They will let the public schools sink.

Read the rest here

Democratization (and the de-politicization) of education will become a global phenomenon as educational platform will mostly migrate to the internet.

One example:

Coursera a free internet educational platform that offers high quality courses from the top universities recently announced that 12 universities — including three international institutions — will be joining them particularly, the Princeton University, Stanford University, University of Michigan, and University of Pennsylvania in offering Coursera classes (Coursera Blog)

On Coursera, you will now be able to access world-class courses from:

• California Institute of Technology
• Duke University
• École Polytechnique Federale de Lausanne
• Georgia Institute of Technology
• Johns Hopkins University
• Princeton University
• Rice University
• Stanford University
• University of California, San Francisco
• University of Edinburgh
• University of Illinois at Urbana-Champaign
• University of Michigan
• University of Pennsylvania
• University of Toronto
• University of Virginia
• University of Washington

For traditional schools, it would be adapt or perish.

The salad days of the education bubble in the US or even in the Philippines have been numbered.

War on Education: ADB Disdains Tutoring, Seeks Regulation

The Asian Development Bank (ADB) detests private tutoring which they pejoratively calls the “shadow education”

From Yahoo,

Asian parents are spending billions of dollars on private tutors for their children, and the practice is growing despite doubts over its effectiveness, according to a study published Wednesday.

"Shadow education" is an expanding business not only in wealthy countries but also in some of the region's poorer nations as parents try to give their children the best start in life, the Asian Development Bank said.

Nearly nine out of 10 South Korean elementary pupils have private tutoring, while the figure for primary school children in India's West Bengal state is six out of 10.

"Proportions are lower in other countries, but throughout the region the shadow is spreading and intensifying," the study said, calling for a review of education systems to make such extra teaching less attractive.

Extra academic work is aimed at helping slow learners and supporting high achievers, and is seen by many Asian parents as a constructive way for adolescents to spend their spare time.

However, it can also reduce time for sports and other activities important for well-rounded development, as well as cause social tensions since richer families are able to pay for better-quality tutoring, the study said.

Funny, but are we not suppose to know more of our own interests or what is best for us and our family? Yet these haughty ADB people are saying otherwise...they know more about our children's welfare than us, the parents.

If a family finds that the “one-size-fits-all” educational standards implemented by incumbent institutions has not been sufficient in providing learning services for their children, would it be morally deviant to procure educational services outside of these institutions?

To consider, in the Philippines, nearly 4 out of 10 college graduates are unemployed and one in 10 of graduates go abroad. So how effective has traditional education been? Yet these are the standards which the ADB desires that our children be confined with.

I have to admit I have been a product of tutoring too, as my parents felt the need for me to learn more, when I was in grade school.

Education comes best from the self, as educator John Holt once said,

I believe that we learn best when we, not others are deciding what we are going to learn, and when we are choosing the people, materials, and experiences from which we will be learning

This has been true for me, where everyday is a learning day.

I would extend this idea to say that most of my learning came from self education or “deciding what to learn” and from indirect mentorship (Dr. Faber and the Austrian school for instance).

And I think that most of what I learned from contemporary education has been useless and merely went down the drain.

Yet here is what ADB wants to do…

The study called for state supervision and regulation of the industry, as well as a review of Asia's educational systems.

So the ADB wants to control and regulate the education of your children.

The truth of the matter is that they want our children to become worshipers of state.

Again John Holt,

Education... now seems to me perhaps the most authoritarian and dangerous of all the social inventions of mankind. It is the deepest foundation of the modern slave state, in which most people feel themselves to be nothing but producers, consumers, spectators, and 'fans,' driven more and more, in all parts of their lives, by greed, envy, and fear. My concern is not to improve 'education' but to do away with it, to end the ugly and antihuman business of people-shaping and to allow and help people to shape themselves

It may NOT just be the state, which the ADB promotes.

They may have secondary objectives. They may serve as mouthpieces or shills for established educational (politically connected) institutions whom have feeling the heat from online competition and from homeschooling.

The following video are the kind of stuffs which statists (like the ADB) hates:


Indian education scientist Sugata Mitra, in a TED talk, tackles one of the greatest problems of education—the best teachers and schools don't exist where they're needed most.

Some great quotes from Sugata Mitra:

1:41 children will learn to do what they want to learn to do

16:33 Education is a self organising system where learning is an emergent phenomenon

Like John Holt, the message from Mr. Mitra is simple: education is self determined.

Information Age Education: Student Focused Online Platforms

The information age will massively disrupt (20th century classroom mass based) education as we know of it today.

Hedge fund manager Andy Kessler in his interview with Artificial Intelligence expert Sebastian Thrun, published at the Wall Street Journal, gives us some clues. (bold highlight mine)

Yet there is one project he's happy to talk about. Frustrated that his (and fellow Googler Peter Norvig's) Stanford artificial intelligence class only reached 200 students, they put up a website offering an online version. They got few takers. Then he mentioned the online course at a conference with 80 attendees and 80 people signed up. On a Friday, he sent an offer to the mailing list of a top AI association. On Saturday morning he had 3,000 sign-ups—by Monday morning, 14,000.

In the midst of this, there was a slight hitch, Mr. Thrun says. "I had forgotten to tell Stanford about it. There was my authority problem. Stanford said 'If you give the same exams and the same certificate of completion [as Stanford does], then you are really messing with what certificates really are. People are going to go out with the certificates and ask for admission [at the university] and how do we even know who they really are?' And I said: I. Don't. Care."

In the end, there were 160,000 people signed up, from every country in the world, he says, except North Korea. Rather than tape boring lectures, the professors asked students to solve problems and then the next course video would discuss solutions. Mr. Thrun broke the rules again. Twenty-three thousand people finished the course. Of his 200 Stanford students, 30 attended lectures and the other 170 took it online. The top 410 performers on exams were online students. The first Stanford student was No. 411.

Mr. Thrun's cost was basically $1 per student per class. That's on the order of 1,000 times less per pupil than for a K-12 or a college education—way more than the rule of thumb in Silicon Valley that you need a 10 times cost advantage to drive change.

So Mr. Thrun set up a company, Udacity, that joins many other companies attacking the problem of how to deliver the optimal online education. "What I see is democratizing education will change everything," he says. "I have an unbelievable passion about this. We will reach students that have never been reached. I can give my love of learning to other people. I've stumbled into the most amazing Wonderland. I've taken the red pill and seen how deep Wonderland is."

"But Wonderland is also crazy!" I interrupt.

"So?"

Ah, another Thrun project that can radically disrupt the old way of doing things. "But isn't that exactly what we should be doing? I'm going part-time at Google to pursue this. I really care. Isn't this the American history? Can't you pinpoint almost everything that happened back to some technological breakthrough?" Indeed, this is going to disrupt public schools and teachers unions and universities and tenured professors and so on, Mr. Thrun effectively interjects: "The dialogue always focuses on what's going to happen to the institutions. I'm totally siding with the students."

I ask why he always takes on these quantum changes instead of trying something incremental. "That's what Google taught me. Aim higher. Udacity is my playground—to radically experiment and find out. I've seen the light."

Education in the information age will see a deepening trend towards personalized (demassified) learning, will focus on job related skill building (which does away with useless subjects aimed at indoctrination) and on increasing specialization.

Continues innovation, competition and noncontiguous platform which should cover the entire world (in terms of providers, educators and students), will become important forces in driving down the cost, or the “democratization” of education.

Finally, job hiring based on the education credential system model will be challenged, if not transformed to meet the new digital realities.

Explore Sebastian Thrun's Meet Udacity website here.

Free Education: 3 Best Websites offers University Level Education

From Makeuseof.com (hat tip Professor Mark Perry)

The idea that you are never done learning has never been more true than today. The Internet has revolutionized the way we access information and knowledge – formerly a luxury accessible only to the rich and highly gifted – which is now freely available to anyone with Internet access.

Education and learning should be a lifelong process and the Internet is your chance to get a university level education for free, regardless of where you are in life. This article introduces you to the three best websites to get started.

1. Khan Academy

2. Coursera

3. Academic Earth

Education from the information age will give traditional 20th century based education a run for the money.

Quote of the Day: The Information Age will Revolutionize Higher Education

Mainline universities loudly proclaim their love of online learning — and pedagogical innovation more generally — while doing everything possible to retard it. The strategy has been to make a few easy, low-cost, conservative moves that preserve the status quo, such as putting some existing courses online, while trying to suppress the innovative outsiders like Phoenix, DeVry, TED, Kahn Academy, etc. It’s a classic example of what Clayton Christensen calls sustaining innovation — incremental changes that keep the existing market structure intact. The last thing the higher-ed establishment wants is disruptive innovation that challenges its dominant incumbent position.

This is from Austrian economist Peter G. Klein at the Mises Blog.

Accelerating instances of "disruptive innovation" from the information age will help collapse the current education bubble.

The Kind of Education that will Get a Job in the Information Age

As I have been repeatedly saying, the information change will radically change the way we do things. This will partly include the nature of digital economy businesses which will be reflected on jobs, as well as, many aspects of the employee-employer relationship such as recruitment.

Andrew Coulson of the Cato Institute has this insightful piece of advice for job seekers.

First is to give less importance to college

So many college degrees today are intrinsically worthless that it should really not be possible to find people willing to pay for them

[Edited to add: In the US 1 out of 2 college graduates have been unemployed. In the Philippines 2 out of 5 graduates have been unemployed.]

Next is to build relevant skills through self-learning by using the web. (bold emphasis)

So what’s the alternative if you’re a high school senior seeking higher education? How about this: instead of handing control over that education to someone else, decide what it is you would like to learn over those four years and then… learn it. Thanks to the Web, the material covered in virtually every undergraduate program is readily available at little cost—and the same is true for many advanced programs. And, having learned it, spend a few hundred dollars to create a website or even simply a YouTube channel on which you demonstrate your new skills/understanding. Conduct research. Write it up. Build something. Translate Cyrano into English, maintaining the Alexandrine meter and rhyme. Whatever it is. Then, when you’re ready to apply for work, submit your resume with a link to this portfolio of relevant work.

Employers, ask yourself this question: Would you rather hire someone with a portfolio such as the one described above, visibly demonstrating competency and personal initiative, or someone with a degree that is generally supposed to signal that competency, but that you can’t readily assess for yourself?

My blog is a testament of self-learning acquired through the web. But I am self-employed.

Sweden’s Free No-Classroom Schools

A private school in Sweden jettisons the conventional classroom based education

From the Businessinisder,

A new school system in Sweden eliminated all of its classrooms in favor of an environment that fosters children's "curiosity and creativity."

Vittra, which runs 30 schools in Sweden, wanted learning to take place everywhere in its schools -- so it threw out the "old-school" thinking of straight desks in a line in a four-walled classroom (via GOOD).

Vittra most-recently opened Telefonplan School, in Stockholm. Architect Rosan Bosch designed the school so children could work independently in opened-spaces while lounging, or go to "the village" to work on group-projects.

All of the furniture in the school, which looks like a lot of squiggles, is meant to aid students in engaging in conversation while working on projects.

The school is non-traditional in every sense: there are no letter grades and students learn in groups at their level, not necessarily by age.

Admission to the school is free, as long as the child has a personal number (like a social security number) and one of the child's parents is a Swedish tax payer.

As I have been continuously pointing out, the information or digital age will radically change the way we live or do things.

And the secular trend will evolve towards the personalization of educational services. And moving away from the classroom model, as the above, is just an example of such transition. Aside, online platforms, and other competition-driven innovations will drive such transformations that will send the current firmament high costs of (industrial era designed) education spiraling down.

Pivotal changes happen at the fringes. As I earlier pointed out the Khan Academy’s P2P collaborative tutoring, free online education as the University of People and Stanford University’s expanding online courses could be representative of the early movers.

And as the cost of education falls, knowledge will surge. Thus, the knowledge revolution will serve as the critical backbone to decentralization trends.

Stanford University Expands Free Online Courses

I’ve been pointing out how the information age will reconfigure and transform almost every aspect of our lives including education. (see here here and here).

Education’s evolving online platform will put a lot of pressure to the incumbent school models designed out of the industrial age. And today’s high cost of tuition will eventually crumble, not only from online competition but also from globalization--where education will become less dependent on local or territorial access, and instead, will increasingly be facilitated by distance learning.

From ZDNET

A couple of months back, we reported on how some IT professors at Stanford University were opening up their courses for the world to participate, with no tuition cost. This fall, courses onIntroduction to Artificial Intelligence, Introduction to Databases and Introduction to Machine Learning were launched, all delivered between October and December. (I have been participating in the AI course, it’s really extremely well presented and informative.)

Three million people have checked out the AI course page since it was announced (now doubt driven by my blog post here), and course co-professor Peter Norvig reports that 35,000 students have stuck with the course and exams. There are also 135 students taking the course onsite, Norvig is quoted as saying in the Good News site,

Now it is being reported that due to the great success of the program, Stanford plans to offer eight more computer science classes beginning in January, including Software as a Service,Computer Science 101, Machine Learning, Cryptography, Natural Language Processing, Human Computer Interaction, Design and Analysis of Algorithms I, and Probabilistic Graphic Models.

Here is the write-up on the SaaS course:

“This course teaches the engineering fundamentals for long-lived software using the highly-productive Agile development method for Software as a Service (SaaS) using Ruby on Rails. Agile developers continuously refine and refactor a working but incomplete prototype until the customer is happy with result, with the customer offering continuous feedback. Agile emphasizes user stories to validate customer requirements; test-driven development to reduce mistakes; biweekly iterations of new software releases; and velocity to measure progress. We will introduce all these elements of the Agile development cycle, and go through one iteration by adding features to a simple app and deploying it on the cloud using tools like Github, Cucumber, RSpec, RCov, Pivotal Tracker, and Heroku.”

Being in the heart and brains of Silicon Valley, Stanford professors will also be offering two online courses on entrepreneurship. The entrepreneurship courses include Technology Entrepreneurship—a class on how to launch a successful startup, and The Lean Launchpad, which will teach how to turn “a great idea into a great company.”

At zero bound tuition costs, education will eventually become democratized worldwide, will not require or justify taxpayer funding and will become increasingly specialized.

Free Education Now A Reality

I have been saying that the internet would enable free markets to provide free education. This is now a reality. And this will radically reshape the education industry which has been founded on the industrial era template.

The ball just got rolling with University of People. (pointer to Jeff Tucker Mises Blog)

University of the People (UoPeople) is the world’s first tuition-free online academic institution dedicated to the global advancement and democratization of higher education. The high-quality low-cost global educational model embraces the worldwide presence of the Internet and dropping technology costs to bring university-level studies within reach of millions of people across the world. With the support of respected academics, humanitarians and other visionaries, the UoPeople student body represents a new wave in global education.

UoP’s Mission

University of the People (UoPeople) is a non-profit organization devoted to providing universal access to quality, online post-secondary education to qualified students.

The vision of University of the People is grounded in the belief that universal access to education is a key ingredient in the promotion of world peace and global economic development.

Spiraling costs of industrial era education is about to crater, whether in the US or in the Philippines. And so will public (tax payer funded) education. Credentialism via certification will likewise be transformed.

Video: How Video Will Reinvent Education

I've been saying that the third wave (or the information age) will bring about massive structural changes in how we do things.

Salman Khan in his talk at the TED explains how video will 'humanize' the classroom [via P2P tutoring collaboration etc..] which should reduce the one-size-fits all programs from which the current system operates on.

Great stuff (hat tip: Arnold Kling)

Does Higher Education Pay Off?

Higher education is not only in a bubble, but is fast becoming an unviable activity or unworthy of personal investments—meaning costs exceeds the returns.

So argues Professor Laurence Kotlikoff at the Bloomberg, (bold highlights mine)

The notion that education pays and that better education pays better is taken for granted by almost everyone. For college professors like me, this is a very convenient idea, providing a high and growing demand for our services.

Unfortunately, the facts seem to disagree. A recent study by economists Stacy Dale and Alan Krueger showed that going to more selective colleges and universities makes little difference to future income once one accounts for the underlying ability of the student. Their work confirms other studies that find no financial benefit to attending top-tier schools.

It’s good to know that Harvard applicants can safely attend Boston University (my employer), and that "better" higher education doesn’t pay better. But does higher education pay in the first place?

The answer seems obvious. On average, doctorate holders earn more than those with master degrees, who earn more than those with bachelor degrees, who earn more than high school graduates. How can education not pay?

The answer is that education isn’t free. Top undergraduate programs are now charging students $50,000 a year to eat, sleep and, hopefully, attend class. But that’s just the direct cost. Education’s hidden cost is the time spent learning rather than earning.

Read the rest here

Again the soaring costs of education are largely due to government’s numerous interventions, which renders what used to be a stepping stone personal development, as unfeasible.

Moreover, rising costs of education also reflects on the old political economic order. This is going to change see here and here.

Knowledge Revolution: Globalizing Education

Technology enhanced globalization forces are likewise enveloping the education industry.

This from Ben Wildavsky at the Foreign Policy (bold emphasis mine)

But over the long term, exactly where countries sit in the university hierarchy will be less and less relevant, as Americans' understanding of who is "us" and who is "them" gradually changes. Already, a historically unprecedented level of student and faculty mobility has become a defining characteristic of global higher education. Cross-border scientific collaboration, as measured by the volume of publications by co-authors from different countries, has more than doubled in two decades. Countries like Singapore and Saudi Arabia are jump-starting a culture of academic excellence at their universities by forging partnerships with elite Western institutions such as Duke, MIT, Stanford, and Yale.

The notion of just how much a university really has to be connected to a particular location is being rethought, too. Western universities, from Texas A&M to the Sorbonne, have garnered much attention by creating, admittedly with mixed results, some 160 branch campuses in Asia and the Middle East, many launched in the last decade. New York University recently went one step further by opening a full-fledged liberal arts campus in Abu Dhabi, part of what NYU President John Sexton envisions as a "global network university." One day, as University of Warwick Vice Chancellor Nigel Thrift suggests, we may see outright mergers between institutions -- and perhaps ultimately the university equivalent of multinational corporations.

In this coming era of globalized education, there is little place for the Sputnik alarms of the Cold War, the Shanghai panic of today, and the inevitable sequels lurking on the horizon. The international education race worth winning is the one to develop the intellectual capacity the United States and everyone else needs to meet the formidable challenges of the 21st century -- and who gets there first won't matter as much as we once feared.

Read the rest here

Two comments

In terms of education, people should focus on the general or macro trend more than just looking and interpreting localized developments. With the introduction of the internet, what used to be local has increasingly become global.

I’d also say that there is more to expect than just the above. We’re likely to see an explosion of web based education that would bring down the cost of education, which subsequently should increase demand for it. The vertical flow of knowledge and communication process will enhance the Hayekian Knowledge revolution, education will be part of it.

Moreover, the web will possibly rearrange or restructure many aspects in the education-job process such as decentralization and more diversification (curriculum), more specialized jobs, reconfigure recruitment and hiring process, adaption of new certification or recognition standards and etc….

College Isn’t For Everybody

From Bloomberg (bold emphasis mine)

The U.S. is focusing too much attention on helping students pursue four-year college degrees, when two-year and occupational programs may better prepare them for the job market, a Harvard University report said.

The “college for all” movement has produced only incremental gains as other nations leapfrog the United States, and the country is failing to prepare millions of young people to become employable adults, said the authors of the Pathways to Prosperity Project, based at the Harvard Graduate School of Education in Cambridge, Massachusetts.

Most of the 47 million jobs to be created by 2018 will require some postsecondary education, the report said. Educators should offer young people two-year degrees and apprenticeships to achieve career success, and do more to ensure that students who begin such programs complete them, said Robert Schwartz, academic dean at Harvard’s education school, who heads the Pathways project.

Here in the Philippines, we share the same phenomenon.

The following charts from tradingeconomics.com...

College graduates constitute about 2/5 of Philippine unemployment!

13% of emigrants have been college graduates.

Both of the above represents fundamental evidences why “education is a right” fails.

More comments

-Education does not guarantee employment.

-Employment depends on Profits or the Rate of Returns on Investment, which is determined by many factors (mostly by the varying degree of government restrictions)

-Mass production of college graduates which doesn’t conform to the market’s demand (mismatching) leads to unemployment.

-Growing trade specialization patterns requires increasing skills specialization.

This also means tradition educational platforms will shift: where learning will occur from the unorthodox platforms (such as web based education) than from typical classrooms.

And because of this compulsory, learning will likely become shorter and not longer (as the Bloomberg article above shows) and this is why proposals impose regulations to extend years of education runs contradictory to the direction of the present trends and reeks of vested interests.

Education, writes futurist Alvin Toffler, will become more interspersed and interwoven with work and spread over the lifetime.

And this means trends towards learning through apprenticeship.

As Charles Murray of the American Enterprise Institute writes in a 2008 Wall Street Journal OpEd, (bold highlights mine)

Here's the reality: Everyone in every occupation starts as an apprentice. Those who are good enough become journeymen. The best become master craftsmen. This is as true of business executives and history professors as of chefs and welders. Getting rid of the BA and replacing it with evidence of competence -- treating post-secondary education as apprenticeships for everyone -- is one way to help us to recognize that common bond.

-Public funds spent for education that ends up in the unemployment statistics account for as enormous waste. Think 40% of unemployed, many of which comes from Public schools.

Further, the same unemployed will likely consume ‘safety nets’ which further bloats fiscal budgets. This should add to the lack of competitiveness which undermines investment and increases unemployment--thus a vicious cycle.

In short, the popular illusion that education automatically leads to jobs has been exposed. The welfare state fails.

-Even in the indoctrination to uphold state’s supremacy over the individual, technology has been eroding this, as information acquisition becomes increasingly decentralized.

-With lack of investment opportunities and the subsequent job opportunities, restrictions on migrations should be eased, if not lifted. This gives the people opportunity to learn and work where they think would best serve them or make them productive.

Quote of the Day: Decentralized Education

As the centralized control over the content of education fades, the diversity of choices will undermine the existing political order.

That’s from Professor Gary North on how digital technology or the internet will radically transform or democratize the educational process which subsequently will likewise spillover into the socio-political realm.

An earlier related post: A Bet On Free Education

Is There A Brewing Bubble In The Philippine Education System?

The Philippine educational system seems to be in a bubble. By bubble, this means that the current setup is unsustainable. As famed economist Herb Stein once puts it, if something cannot go on forever it will stop.

The cost of private education has been exploding, as exemplified by the estimated 7 year annual fee increases by PIDS on architecture and engineering courses from 1994-2001 (left window). This has been way beyond the rate of inflation (tradingeconomics.com-right window).

Yet it would be misleading to claim that competition among private schools doesn’t exist.

Most school participants of the major sports tournaments as the UAAP and NCAA demonstrate not only competition for sports superiority, but likewise “competition” for privately funded education.

And competition ought to have brought down tuition fees to market (affordable) levels. But this hasn’t been happening. So what’s wrong? Is this a case of market failure?

Competition Is In The Real Resources

Table from the Department of Education

Even as public schools dominate the education market in the primary/elementary (37,607 for school years 2008-2009) and secondary/high school (5,359) relative to the private sector (primary/elementary 7,084 and secondary/high school 4,707) based on the DepEd report, the relationship between the private sector and the public sector is incomparable or can’t be discerned as either “monopoly” or “market based competition” in the traditional sense, because both cater to distinct constituents, particularly to the underprivileged for public schools and to privately funded education.

However, where factual competition is going on is in the real resources department. Both the private sector and the public sector basically compete to consume the same materials, such as pencils, papers, food and etc... And this includes manpower (e.g. teachers).

Yet the fundamental difference will be on how the consumption patterns are being carried out, i.e. the private sector is sensitive to price mechanism via profit and loss discipline, whereas the public sector is politically determined.

A good example of how this competition for resources is being waged is in the subsidies provided by the Philippine government to private school students.

This from the Inquirer.net, (bold highlights mine)

Monsignor Gerardo Santos, national president of the Catholic Educational Association of the Philippines (CEAP), said private schools needed more subsidies from the government because their lowly-paid teachers were transferring to the public schools.

“That’s not just okay with us. We are advocating it [subsidies]. We are fighting for it,” Santos said in a recent media briefing.

“We want it increased. I hope the government hears us. We really need more,” he said.

The Department of Education estimated that almost half of the country’s 1.3-million private high school students are subsidized by public funds though the Government Assistance to Students and Teachers in Private Education (GASTPE). The program provides a P10,000-subsidy to first- and second-year high school beneficiaries in Metro Manila.

Junior and senior high school beneficiaries in the metropolis get P5,000 while all the beneficiaries in the provinces also receive the same amount.

The government allotted P3.59 billion for the GASTPE program this year.

We learn of several things from the article;

1. There is a mandate for private schools to accept or accommodate welfare constituents via tax funded subsidies.

2. Since government subsidies are considered as deficient, then the private schools shoulders the additional load of expenses (resource consumption) incurred by the welfare students.

3. Operating similar to the mechanics of the senior citizen’s discount cards, the subsidy gap contracted will have to borne, not by the school owners (through profit or earnings), but by passing these costs to the paying consumers, in this case, the paying students.

The last thing that anyone would do is to apply the onus of the cost of government compliance to their own income or earnings. Instead, it would be intuitive for them to just pass it to consumers. This means that any subsidy that comes out of the pocket of the owners suggests that market pricing limits have been reached and that consumers can bear no more. Alternatively, this means lots of marginal providers will go kaput upon reaching this level.

Hence, the exploding costs of private education partly reflect on the subsidies covered by private students on welfare recipients.

And perchance, the high cost of education has significantly diminished the rate of college enrolment from 2001-2005 (tradingeconomics.com).

4. Since government has extensive controls over private schools at almost every aspects, from welfare accommodation to curriculum mandates, enough to designate private schools as extensions of the public school system, then the operating ‘competitive’ environment may not be seen as genuine market based competition but a semblance of cartel-like pseudo-competition.

Thus the first pin to the bubble is when these indirect costs of private sector subsidies become too onerous to bear.

Of course, this resource competition represents only a symptom to a much a larger disease-the education welfare state.

The Original Sin-Welfare Education

For the public ingrained with state paternalism, it would seem like blasphemy to talk about the ills of welfarist education. The deeply entrenched popular opinion is that the state is the only dutiful and rightful provider of education and thus must supply, and if not regulate, almost every activity associated educational development.

Hardly anyone ever realizes that throughout world history, schools or the educational system have been frequently used as the primary conduit by the state to inculcate or impress upon political or religious agendas to commandeer society’s acceptance or what is known as theory of passive obedience.

Murray N. Rothbard in Education: Free and Compulsory wrote,

``It is inevitable that the State would impose uniformity on the teaching of charges. Not only is uniformity more congenial to the bureaucratic temper and easier to enforce; this would be almost inevitable where collectivism has supplanted individualism. With collective State ownership of the children replacing individual ownership and rights, it is clear that the collective principle would be enforced in teaching as well. Above all, what would be taught is the doctrine of obedience to the State itself. For tyranny is not really congenial to the spirit of man, who requires freedom for his full development. Therefore, techniques of inculcating reverence for despotism and other types of "thought control" are bound to emerge. Instead of spontaneity, diversity, and independent men, there would emerge a race of passive, sheep-like followers of the State. Since they would be only incompletely developed, they would be only half-alive.” (emphasis added)

And all these ‘romance with the state’ through education has clearly been visible on budgetary allotment of Philippine government as shown from the above table from National Statistics Coordination Board.

Budgetary allocation for education has ballooned to Php 185.5 billion (Philstar) out of the Php 1.541 trillion or accounting for about 12% of the national budget for the year 2010 (Sunstar).

Yet for the many who embrace Sta. Claus economics, nothing is ever enough. There are many who still clamor for more spending as if government is a fountain of endless wealth.

Never has it occurred to them that government’s primary source of revenue is mainly through taxation which means government redistributes rather than creates wealth. And government can only redistribute what is available, or that there are effective limits to redistribution.

The worst part is that by depending on government, welfare recipients have been relieved of their major personal responsibilities such as family planning, by which the ensuing dependency mindset could have contributed to the above world average population growth for the Philippines (Google Public Data). “Why not have more children”, welfare beneficiaries might think, “since government pays for their education anyway”.

The dependency mindset via the welfare state is the most obvious way to manipulate society to create a political constituency that could ensure the preservation or the expansion of power by the political class.

Yet what we aren’t told about is that resources consumed by the public sector, in this case Php 185.5 billion worth from the education department, represents as lost productive opportunity or money that could have been used by the private sector to get invested into productive ventures that could have increased the per capita of the Filipinos, from which would allow them to finance out of their own pockets, a quality education of their choice for their own children.

Besides, private sector charity or philanthropic activities would surely get amplified once the burden of taxation will have been mitigated from the diminished pressures of government expenditures. But all these aren’t likely to happen until the unsustainability of the system will forced upon by economic laws.

The crux of the bubble in welfare state is that the bubble can only last for as long as the taxpaying population is willing to tolerate the costs or comply with government’s redistribution program or the market is open to funding fiscal spending requirements.

For now, this would seem to be the case, as per capita GDP of the Philippines appears to be picking up.

Three Pins To Pop The Bubble

Nevertheless, I see three possible proverbial pins that could implode the education welfare bubble.

One, An Overdose of Welfarism.

As mentioned above, disharmony in the economic system caused by too much subsidies and other interventions could drive up the cost of education to highly restrictive levels. And as consequence, there will be increases in the political demand for more free (lunch policies) education. And instituting more of these welfare policies will push the country’s fiscal conditions into a boiling point where funding from taxation or from market based debt financing won’t be sufficient.

Two, Contagion Effect From Boom Bust Cycles

Since the world operates on boom bust cycles, I don’t see it as a distant possibility for a crisis to happen in Asia or within the Southeast Asian region. And any crisis of this nature is likely to have a severe contagion effect on the Philippines, similar to the Asian crisis of 1997.

Like all cycles, during good times, social programs like education are alluringly on path for expansion. That’s because as the economy expands, political leaders are likely to exhibit more generosity—in order to buy votes or preserve or enhance their popularity ratings—in the expectations that the growth in tax revenue collections will be sustained.

However, once a financial or economic bust should emerge, all these programs will suddenly suffer from a withdrawal or a dearth of funding. It’s not hard to picture a recent noteworthy example of government prodigiousness penalized—Greece.

Three, there is always the transition to the information age to consider.

Acceptability of “affordable” online education seems to be picking up momentum and may displace the overrated industrial age educational system in place.

This from SFGate.com

``Evidence nationwide suggests students could be warm to the idea of online learning.

``The number of college students taking online courses nearly tripled between 2002 and 2008, according to the Sloan Consortium, a nonprofit that encourages online education. Nearly 5 million students took at least one online course in 2008, up from 1.6 million in 2002, Sloan found.

``UC wouldn't be the first university to offer undergraduate degrees online. Among the most successful is the University of Massachusetts' "UMassOnline," which includes graduate degrees. It reported revenue growth of 20 percent since last year, to $56 million, and 14 percent enrollment growth, to 45,815 students.”

And here is how Mises Academy fared with its introductory online course, according to Jeff Tucker at the Mises Blog,

``From our own experience, the success of the Mises Academy has far exceeded anything we imagined. It grows and grows. The venue is super compelling, highly effective, economically rational, and it connects students and professors together again as they were before the rise of the overfunded, unresponsive, heavily bureaucratized brick-and-mortar U. There is no doubt about the future; the only question is who will be making it happen vs. who will be left in the dust.

The major problem for online courses, for now, is that the current business environment has been oriented towards the recognition of credentials via government accreditation procedures or mechanisms. This is actually part of how the state controls our actions.

As Murray Rothbard once wrote,

By enforcing certification for minimum standards, the State effectively, though subtly, dominates the private schools and makes them, in effect, extensions of the public school system. Only removal of compulsory schooling and enforced standards will free the private schools and permit them to function in independence.

But the continued permeation of online education could reach a tipping point where the current credential-accreditation system risks being deconstructed.

And this obviously will pose as another threat to mainstream’s educational platforms, be it on the private sector or on the public schools.

As online education grows expect fireworks (resistance to change) from here.

A Bet On Free Education

This fantastic article from Marketing Guru Seth Godin is simply too irresistible not to share.

From Seth Godin, (blue bold emphasis mine)

``Should this be scarce or abundant?

``MIT and Stanford are starting to make classes available for free online. The marginal cost of this is pretty close to zero, so it's easy for them to share. Abundant education is easy to access and offers motivated individuals a chance to learn.

``Scarcity comes from things like accreditation, admissions policies or small classrooms.

Should this be free or expensive?

``Wikipedia offers the world's fact base to everyone, for free. So it spreads.

``On the other hand, some bar review courses are so expensive the websites don't even have the guts to list the price.

``The newly easy access to the education marketplace (you used to need a big campus and a spot in the guidance office) means that both the free and expensive options are going to be experimented with, because the number of people in the education business is going to explode (then implode).

``If you think the fallout in the newspaper business was dramatic, wait until you see what happens to education.

``Should this be about school or about learning?

``School was the big thing for a long time. School is tests and credits and notetaking and meeting standards. Learning, on the other hand, is 'getting it'. It's the conceptual breakthrough that permits the student to understand it then move on to something else. Learning doesn't care about workbooks or long checklists.

Read the rest here.

So here's how things might shape in the future:

The laws of economics should apply: lower costs equates to higher demand.

Taxpayer funded public education may go down as free online education flourishes.

What should matter now is securing online access for the public and investments (in content and infrastructure) are likely to get focused here.

Consequently too, certificate courses will have to be reconfigured.

It's simply just amazing how free markets, underpinned by innovative technological infrastructure (likewise a product of the markets), have evolved to make society much progressive.