ANNUAL LECTURE 2011

Public Good, Public Interest and the State of Public Tertiary Education in Nigeria.

 

By

Professor Eric A. Arubayi

Vice- Chancellor,

Delta State University, Abraka- Nigeria

 

 

 

 

Introduction

           For the purpose of this lecture, and for better understanding, some basic terminologies, which may appear semantic and confusing, would be clearly delineated with concrete examples of their applicability to make the presentation to be as unambiguous as possible. In the process,   concepts like public goods, their forms and characteristics; public interest, and public tertiary education would be ex-rayed. The lecture would also examine their relationships and implications on the state of tertiary education as a public good and the implications on the state of public tertiary education in Nigeria.

The Concept of Public Good

           The concept of public good as often used in Economic palace, is credited to Paul A. Samuelson as the first economist, who developed the theory of public goods.  According to Samuelson (1954) a public good or a "collective consumption good", is a good which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good. It is a good that is freely available, and if supplied to anybody, is necessarily supplied to everybody, and from whose benefits it is impossible or impracticable to exclude anybody. In effect, a public good is one that is non-rivalrous and non-excludable.  Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good. Another uniqueness of a public good is that while the benefits accrue to individuals who consume it, the good can only be accomplished through collective actions. Good examples of public goods which practically meet these two conditionality in real life situations are air, defense, law enforcement, street lights, fireworks, traffic lights, lighthouse, television sets on the streets etc.    

By its very nature a public good cannot be owned exclusively by an individual where their exclusivity over a resource denies a right of access to other people. In the same vein, public goods are not provided by the free market because of their peculiarity and because of their nature, the private sector is unlikely to be willing and able to provide public goods.( http://tutor2u.net/economics/content/topics/marketfail/market_failure.htm)  

        More often than not, public goods are mistakenly applied as merit goods. Merit goods are those goods and services that the government feels that people, left to themselves will under consume and which therefore ought to be subsidized or provided free at the point of use. Merit goods and services can be provided by both the public and private sectors of the economy. The peculiarity of merit good or service is that its consumption is thought to generate positive externality effects and the social benefits exceed the private benefits. Examples of merit goods and services include health services, education, public libraries and inoculations. These categories of  goods or services  could be rivalrous but non-excludable, and hence cannot be seen as pure public goods from the economic view point, as conceived by Samuelson, but can rather be conceived as such from the  social and political perspectives. The opposite of a public good is a private good, such as food, personal properties like cars, clothing, electronics, houses etc. Unlike public goods, private goods are excludable and rivalrous.    In order words, the owner of a private good can exclude others from using it, and once it has been consumed, it cannot be used again. As is commonly said, you cannot eat your cake and still have it. Private goods are inalienable, and the benefits can only be secured by a few who have the right of access or who are willing to pay to have the right of access. This is where public goods are very essential and instrumental in dealing with some of the challenges of access, inequity and poverty alleviation.  Indications therefore, are that a purely public system is ill-positioned to satisfy the demands for excellence and access, and that a purely private system does not adequately safeguard the public interest, hence  hybrid systems deserve serious consideration.

 

   Public Interest

   Available literatures appear not to provide any consensus or a coherently uniform view on the concept of public interest.  This controversy is predicated on the premise that in actual practice, it is extremely very difficult to identify where the public interest lies when political decisions are taken.  Nevertheless, from the varied view points, two issues stand out.  From one extreme, an action is seen as being of public interest in so far as it benefits every single member of the society, and at the other end, it is of public interest as long as it benefits some of the population and harms none (http://en.wikipedia.org/wiki/public_interest).  Public interest is a broad term that refers to the body politic and the public weal. It is a common concern among citizens in the management and administration of the affairs of the local, state and national governments aimed at the achievement of common weal.

   The concept of public interest in actual sense could apply more concretely when used to address a group of non-specific persons or in-specific- just such that any one qualifies. In effect, an unknown group of individuals is referred in that it is not known exactly who might be exactly affected. This consideration further agrees on the cost-benefit approach, which argues that the interest of the public can be no more than the sum of the interests of the relevant individuals, considered in their concrete circumstances. As such, the question of whether a policy is in the public interest is settled by assessing the potential gains and losses which it is predicted will follow from its adoption. It is therefore any action whose benefits overwhelmingly affect the rights, health, finances and well-being of the public at large (http://www.answers.com/topic/public­_interest).

  There may be public interests that can only be achieved by direct government provision of higher education.  For example, the Nigerian Defense Academy, the proposed Police University represent such interesting examples. There are, certainly, some distinctions between the public interest in tertiary education and the interests of public tertiary institutions. First, the public interest is not well served by efforts to achieve a higher education system with a particular proportion of public and private institutions. Nor is the public interest best served by public policies designed to ensure that public and private institutions have similar missions or comparable status. Rather, the public interest is best served by policies which assure that all publicly subsidized institutions of higher education -- whether they are public, private not-for profit or private for-profit – provide quality education to the society in the most efficient and equitable means possible.

Tertiary Education as Public or Private Good

Generally, tertiary or higher education  performs broadly, three major functions:

1- The development of new knowledge (the research function)

2- The training of highly qualified personnel (the teaching function)

       3- The provision of services and ethical functions to society (FGN, 2004). A careful analysis of each of these roles and functions would suggest combined elements of public and private nature.    For example, there are instances of legal means in both domestic and international laws such as the Intellectual Property Rights Agreement for excluding access to knowledge derived from privately commissioned or sponsored researches; while others may be widely circulated for public consumption. In the same vein, the Universal Declaration of Human Rights that education is a right has made education to become widely adopted as a public good.  However, article 26 of the Human Rights Declaration which indicates that ‘higher education shall be equally accessible to all on the basis of merit.’ becomes a mechanism of exclusion, and hence a private good. On the aggregate, benefits of tertiary education which include: increased vibrancy of economic activity, enhanced communication skills, increased tolerance, more thorough input into democratic processes, increased earnings and more empowered individual agents are both private and public in nature. In all, higher education could be perceived as a public, mixed or private good depending on, amongst other variables, the mode of education offered

 

               The concept of public goods has been central to economists’ analysis of the role of government in the allocation of resources.  The debate as to whether education is a public or private good has been controversial and contending. A number of experts in   economics of education like Dreze and Sen (1996), Tilak (2004), Baum and McPherson (2011) have argued that education is a public good, which produces a variety of beneficial externalities to the public and  its provision should be entirely free, to be provided and shouldered by the government.  By this definition the observed decline of state support for tertiary education all over the world makes it injurious to the public interest (Barr, 2004 ).  In the US for example, some public universities like the Darden Graduate School of Business Administration, the public University of Virginia, the University of North Carolina Chapel Hill and many others now receive no share of the state allocations  and support themselves exclusively through high tuition fees,  private funding,  active engagements in profit-making activities, entrepreneurial developments and  sales of research outputs. Indeed, the  goal of  contemporary universities is to earn a profit, or a surplus of revenues over expenditures (Dill, 2005) . Thus, it is such that both private and public tertiary educational institutions engage largely in profit making enterprises, except that they do not dispense these profits to owners or shareholders, but reinvest them in institutional activities that supposedly serve the public interest.

          The economist’s traditional definition of a public good  or service, which is neither rivalrous in consumption nor excludable in ownership implies that  such goods will either not be provided or provided in insufficient quantities by the private sector and therefore must be provided by the state. Not surprisingly economists applying this definition conclude that tertiary educational institutions and more specifically the services they provide are not public goods (Barr, 2004). This may not be entirely true, as the traditional functions of tertiary education; particularly the universities are three fold, teaching, research and community service, which are basically social.

To others the meaning of public good applied to education delivery is interpreted to mean “collective responsibility” such that the public and the private sector are involved in tertiary education provision and financing.   As the proportion of public university budgets that comes directly from the state continues to decline and as the proportion that comes from student fees, endowment, private gifts, and clearly commercial activities continue to grow, the concept of the public university changes to the reality of the “publicly-supported university.” In the process the distinction between public and private institutions further blurs. Also, a traditional distinction between public and private tertiary educational institutions across countries lies in government regulation and control over setting and retaining tuition and other fees. Again, with deregulation of the education system over the years and the resultant imposition of some form of fees or levies in public tertiary educational institutions further erodes the distinction, and places it more appropriately as a merit good.

There is the notion that the public university provides goods and services that contribute to the public good and that these contributions are being threatened by market forces and particularly by the unrestrained activities of profit-making institutions. In this regard, the application of the concept of public good to higher education clearly reflects the public interest just as public subsidies to higher education in all countries are in the public interest because of the human capital that graduates provide to society. From this perspective it could further be argued that the public interest is best served by a system of higher education that maximizes in as efficient and equitable a manner as possible the knowledge, skills, and values learned by university graduates.

           The essence of public good is for the pursuit of policies aimed at attaining the interests and desires of majority of the citizens of a society, who, more often than not, are the poor.  However, adopting tertiary education as a public good policy to be entirely paid for by government amounts to an imposition of indirect taxation on the poor to subsidize the rich. This is so because, the rich are often able to afford the high costs of quality educational opportunities at primary and secondary school levels and are therefore often better prepared for university entrance examinations. Providing free and qualitative basic and secondary education policy would appear a better option in serving public interest and hence represents more a public good than tertiary education. This is what is obtainable in the developed countries, where basic and secondary education is offered free and sometimes compulsory while tertiary education is only subsidized so the rich and poor can have equal opportunity to access.  

        A more generous support of students at the basic and secondary levels than tertiary level amounts to the proper viewing of the later as a “private good” and the former as a “public good.” This further supports the common claim that the lower the level of education the greater the benefits to the public and the higher the level of education people receive, the greater the benefits to the individuals, hence tertiary education is more of a private good while basic and secondary education a public good whose responsibilities and costs should be publicly born.

      State education is inclusive, both in its treatment of students and in that enfranchisement for the government. State education is generally available to all. In most countries, it is compulsory for children to attend school up to a certain age, but there is the option of attending private school. The term "public education" when applied to state schools is not synonymous with the term "publicly funded education". Government may make a public policy decision that it wants to have some financial resources distributed in support of, and it may want to have some control over, the provision of private education. Grants-in-aid of private schools and voucher systems provide examples of publicly funded private education. In the United States, institutions of higher education that are operated and subsidized by U.S. states are also referred to as "public."

            However, unlike public secondary schools, public universities charge tuition, though these fees are usually much lower than those charged by private universities, particularly for "in-state" students. Community colleges, state colleges, and state universities are examples of public institutions of higher education. In particular, many state universities are regarded as among the best institutions of higher education in the U.S., though usually they are surpassed in ranking by certain private universities and colleges, such as those of the Ivy League, which are universally, a state school (including one run by a school district) may rely heavily on private funding such as high fees or government rather than private entities. But in countries like Australia, New Zealand, South Africa, and the United Kingdom, the terms 'public education', 'public school' and 'independent school' are used for private schools, that is, schools primarily funded by tuition, endowment or charitable donations and not through public means, which is different from its application in Nigeria

 

 The Extent to which  Tertiary Education Satisfies Public Interest

 

 Generally, investments in tertiary education, either entirely or heavily subsidized through public funding with the taxpayers’ money or funding entirely by the household, families or the individual educate, there are certainly social and private costs as well as opportunity costs involved. In effect, when an individual chooses to attend tertiary institution, costs are involved for both the individual and the rest of society. In the same vein, investments in higher education may produce benefits to the individual’s households and the rest of society. The public benefits, which are  commonly referred to as positive externalities include a  critical mass of highly educated and informed citizens composed of  a larger pool of capable business and political leaders, scientists, and academics who augment society’s stock of basic and applied science.

       It is clear that there are substantial benefits to education other than higher lifetime earnings, which flow from all levels of education that are both  private and public in nature. For example, the better educated tend to live longer and healthier lives. In addition better educated women tend to have a smaller number of “higher quality” children and are less likely to experience maternal mortality. These are private benefits enjoyed by the individuals who make the investment. But they have a public character as well. The better educated the parents and individuals; the more likely they are to positively impact on the aggregate on the possibilities for socioeconomic development decades after they are made.  

           No doubt, tertiary education is a merit good,  not a pure public good. It is clearly possible to exclude people who do not pay. It partly a public good  because there are positive externalities, as individuals and society benefit when more people receive education. The educated earn more than others, but their higher earnings do not reflect the whole of their contribution. Others who work with them earn higher wages because of the added flexibility, innovation, and productivity of the labor force. People with more education tend to be more active citizens, with their volunteering and other activities benefiting those around them. There are more new products and services for all of us to enjoy because of the contributions of tertiary education graduates In effect,  the benefits of higher education are shared by the participants and the rest of society. It follows that it is reasonable for the costs to be shared as well. It would be inefficient not to subsidize colleges and their students. People would under-invest in their own education if they had to pay the full cost, because they would not choose to foot the bill for the benefits shared by all member of the society.

The State of Public Tertiary Education in Nigeria

       Higher education systems in developing countries, Nigeria being no exception, are under great strain. They are chronically  underfunded,  but face escalating demand—approximately half of

Today’s higher education students live in the developing world. Academic staff are often under qualified, lack motivation, and are poorly rewarded. Students are poorly taught and curricula underdeveloped.  With very few exceptions, across most of the developing world, the potential of higher education to promote development is being realized only marginally (The International Bank for Reconstruction and Development / The World Bank, 2000).  

 In Nigeria as in most of the Sub-Saharan African countries, escalating demand for higher education, coupled with severe regional economic decline , and the limited capacity of  publicly funded universities to satisfy this demand has led to the devastation of public universities and the shortage of university places. In fact, expansion has caused the average quality of education to decline in many countries as resources are stretched increasingly thin.

  For example, a recent UNESCO report showed that   less than 5 percent of the college-age population in the region has access to higher education, compared with 60 percent in industrialized countries. This has spurred the recent proliferation of private higher education in sub-Saharan Africa, with the number of private universities rising to 41 in Nigeria (NUC, 2011).

       Until very recently, African governments have tried to sole fund, own and manage higher education with less than satisfactory results. It is generally accepted that higher education in sub-Saharan Africa is in deep turmoil. The crisis is manifested in declining quality standards, fiscal challenges, increased student enrollments coupled with a large pool of unsatisfied demand; poor faculty moral, irrelevant curricula and rising unemployment among university graduates. The universities continue to suffer from deteriorating and dearth of infrastructures, dilapidated classrooms, hostels, near-collapsed libraries and out dated books and ill-equipped laboratories, poor remuneration for staff and the ongoing brain drain. Traditional public support systems can no longer cope with the severe problems that have undermined the region's systems of higher education, and alternative solutions are being sort in the granting of licenses to private operators.

        Also, the problem of poor state of  infrastructures  frequently cause students to study subjects mainly in the humanities and  arts, which  offer limited  job opportunities creating a large pool of  “educated unemployed”  as well as  a pool of  unmet demand for qualified science and technology graduates. In addition, undue political influences, bureaucracy, corruption, mismanagement and  related problems  where power rather than merit considerations take precedence in the  selection and treatment of both students and staff; and  academic inbreeding that denies universities the benefit of intellectual cross fertilization abound in the systems.

     The public universities in Nigeria as in many African countries were until quite recently too, unable to embrace market-oriented approaches to become more competitive in the globalized labour market. This problem is partly due to  the unwillingness of students who consume  public tertiary education to agree to pay, at least, for part of it, hence not enough of it being supplied with the ever scarce public resources. Coupled with this, is “the free rider or easy rider problem”, which according to mhtml:file://E:\Public good- Wikipedia  the free encyclopedia.mht is the problem of market failures or inefficiency associated with public goods.  This problem is associated with the conception of humans being purely rational and purely selfish and individualistic, considering only those benefits and costs that directly affect them, and since benefits and costs of public goods like education are in the form of externalities, not reaped entirely by them, minimal voluntary contributions and dedication is often attained from them, hence the high degree of inefficiency.

     More often than not, the market failure or inefficiency in public education   requires further public subsidization to correct, and result in efficient and equitable market outcomes. Unfortunately however, the positive externalities which justifies government continuous subsidization of education of everyone, even that of  the wealthy, create further inequalities and unfortunately deprives potential students and their families of the opportunity to invest in themselves. Thus, increased inefficient levels of consumption and investment in education continue to occur among lower income and wealthy families.  The resultant effect is the relatively recent proliferation of for-profit higher education, which has become an alternative route for many students, from wealthy families, to gain access to higher education in sub-Saharan Africa as part of a larger, worldwide trend toward privatization.

Towards Making Tertiary Education a Merit Good for the Attainment of Public Interest

          Generally, all things being equal, the way the state views higher education influences her interest and pattern of funding. For example, when seen as public good, funding remains strong, even increases and becomes a substantial portion of an institution’s resources, reducing the reliance on tuition.  But if viewed a private good to benefit the individual, state support is reduced with tuition and private payments instituted to provide the necessary funding.

        The cost of higher education delivery can be less expensive if Information and Communication Technology (ICT) is built into the delivery system, with relevant infrastructure adequately put in place. The Open Distance eLearning (ODeL) technology and its associated Open Education Resources (OER) is crucial in increasing access and attaining efficiency. This system will bring the children of both the poor and the rich on the same learning/teaching platform and equal opportunity, with its resultant accelerated and sustainable development in Nigeria.
Large scale solar energy power system development will drive the qualitative and quantitative higher education delivery more successfully and at a less expensive cost.

         The resuscitation of student loans, which is strictly based on need, is required, particularly for students from the poorest households, and since tertiary education has a large consumption component in addition to its life-long investment aspects, student borrowing could be economically justified for students’ self investment in human capital, in so far as job openings are available on graduation and students’ loan recovery scheme put in place. In addition, academic and indigent scholarship programmes  or  merit based grants and merit and means based loans and bursaries are required to cushion the effects of whatever payments students may be required to make.

            Private tertiary educational institutions offer a potentially viable alternative for expanding access to higher education in the region without incurring significant government costs. This factor alone has earned private education the praise of government officials. As financially strapped public tertiary institutions find themselves increasingly hard-pressed to absorb the rapidly escalating numbers of secondary-school graduates many governments are actively encouraging private institutions to take up the slack. Hence, the privatization of higher education over the past 10 years or so has become a noticeable trend throughout much of the continent.

          It is true that educating the very best and brightest citizens of a nation is beneficial for the society even if students pay nothing for it. But educating everybody at the tertiary level, including the “dumb and unteacheables” is surely a heavy burden and waste on public meager resources. Public tertiary institutions must of necessity need to carefully examine their admission policies to maximize resources, and use same only for those who have potentials to succeed.

 Like is obtainable in most developed countries where education is highly valued, the Nigerian governments should as a matter of urgent policy decision, enforce a compulsory and free basic and secondary school education  up to the age of 18 entirely funded by government. The curriculum and its delivery should have sufficient components of entrepreneurial education, vocational and technical training to prepare graduates for the world of work. Such a policy would further reduce the burden of tertiary education when cost is shared.   

Conclusion

Not many goods are perfect public goods. Some have one characteristic or the other.  Education, particularly at the tertiary level is a very good example of not  perfect public good, since it is easy to exclude people from receiving it, as limited access has been the bane over the years;  and is also rivalrous.   This argument does not, however, suggest that students should be paying a significant share of the cost of their own education, but that a proper cost sharing mechanism needs to be worked out between the students, parents and governments to make for better and worthwhile investments in tertiary education systems. Such an approach would enable the students, their families and the society at large to equitably enjoy the benefits of quality education, which is desirous in the ever changing competitive globalized knowledge economy. This stand would largely lay to rest the unending debate as to whether education is a “public” or a “private” good.

       The accelerated improvements in the economic, technological, political and social sectors of the developed countries like the USA, European Countries, Japan and the Asian Tigers are attributable to the development of qualitative higher education. The economic improvement that higher education brings to a society like Nigerian that is dominantly youthful is enormous. Giving them all a form of higher education and training would make the nation function and improve in the future.  Again, as a developing nation with very scarce and limited resources the major issues of health care, rising graduate unemployment, crime, decaying infrastructure, universal basic education for all, affordable defense, and security are paramount such that the public benefits from a quality educated population are the development of alternatives and consensus for the solutions to these issues.

 

 

 

References

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( http://tutor2u.net/economics/content/topics/marketfail/market_failure.htm) 

       

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The 2011 Annual lecture

TOPIC

EMPLOYABILITY SKILLS, VALUES, OPPORTUNITIES AND CHALLENGES OF NIGERIAN GRADUATING STUDENTS

GUEST LECTURER

Dr. David Kenley
Associate Professor of History

The 2011 Annual Lecture