May 26, 2006EconomyPublic Policy

If all the snow flakes were candy-bars and milkshakes

Oh what a world it would be!

This is an archived blog post from The Acorn.

If university students were toddlers and the kept prime minister was a purple dinosaur then his story of a future without scarcity would have been believable.

First, the question of capabilities and intent. There is no evidence that the UPA government, pressed as it is by spending commitments, has the capability to even find the additional financial resources required to fund the massive expansion in the intake of higher-educational institutions. Moreover, what intent it has expressed of late came as an afterthought. For that reason it lacks any credibility. The only commitments that have any credibility are those in its common minimum programme.

Second, and more important, is whether the story makes sense. It is especially rich for an economics professor to claim reservations will become irrelevant if seats became a lot less scarce. More than absolute scarcity, it is a question of relative scarcity. The number of seats will always be less than the number of people who want them. Due to heavy government subsidies, the price” in the market for seats is denominated not in rupees but in examination scores. Reservations will artificially zone out a large chunk of the supply and take it out of the open market. This would have the effect of raising prices in the open market. As demand increases — due to population growth and (hopefully) improvements in primary and secondary education — the relative scarcity created by reservations will remain, or as is more likely, only get worse. In other words, it is incorrect to argue that the effect of reservations will be rendered irrelevant by an increase in the number of seats.

But what is true is that a quota-less increase in the number of seats will make reservations unnecessary in practice, and hence contribute towards the improvement of social equality that everyone wants. And the government can do this without having to double its expenditure on higher education. That’s by way of privatisation and a pro-market policy orientation. Take telephones for example. Hundreds of millions people in India — regardless of caste, religion or even privilege — own, or have access to telephones. Each month, millions more are getting access to arguably some of the cheapest telephone services in the world, not because of government-imposed quotas but because of a lack of them. College seats can go the same way. And they must.

In the meantime, those who are fighting for equality must not be fooled by false promises and faulty logic.

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