Decline Education

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Several reports have warned recently that the quality of education is falling in the U.S.A and is worse in comparison to 1955. There has been 71 per cent decline in the education quality and productivity index over the last 34 years, according to Grandfather Education Report by M W Hodges. Robert T Jones, President and CEO National Alliance of Business argues in an article that the higher education in America is facing one of the most severe challenges in the recent years. The article highlights several issues resulting from global competition and, makes a strong plea for a system of corresponding change in American education. An article in Businessweek of March 16, 2004, "America's failure in science education" makes a strong case for the necessity to improve American education on the basis of America falling behind their competitors in Western Europe and the advanced Asian nations. A case in the American Supreme Court Zelman vs Simmons-Harris, a case in American Supreme Court has raised a series of issues concerning state funding and education. The issue in context of education raises the pertinent question of the market failure of education. The closure of Chemistry and Music departments at Exeter University in 2004 exemplifies what we mean by the market failure of education. The vice chancellor of the university equated the closure with the market failure. The move at Exeter was justified by a budgetary deficit of 4.5 million pounds. Human wants and needs are unlimited, while the supply of scarce resources is limited. Therefore, there arises the need to make choices between different resources that can be used in competing ways. The fall in Chemistry enrolment (and pure science) means fall in demand while the supply is surplus. This justifies the action taken by some of the universities like Exeter, on purely economic grounds, in shifting resources to areas where demand could be relatively higher from the areas with low demand like a course in Chemistry. Market failure occurs when markets operating without the government intervention get so inefficient as to fail to deliver or allocate the resources optimally. As a result the economic and social welfare may not be maximized resulting in a loss of allocative and productive efficiency. This constitutes the welfare losses for the society. In a situation of market failure, the outcome of market is not efficient from the standpoint of the economy, because the benefits conferred by the markets on individuals or firms digress from benefits to the society as a whole. There are externalities not taken into account. The concept of education as a merit good is relevant here. Education is considered to be the merit good, which the government should subsidize. Positive externality is applicable in case of education because the benefit of education spills over to the society as a whole. There is compelling evidence that human capital increases economic productivity and the growth rate. The 'spill-over effects' of improved educational provision renders it purely as a merit good and towards meeting the characteristics of a public good. A merit good is what the government believes consumers undervalue and under consume because of lack of information, even as it is deemed to be socially desirable and also better for the consumer. Education has both private as well as public benefits. Although a value judgment is involved whenever we discuss about merit good, it is equally necessary to understand that there is nothing called a free lunch. Higher education is never free. Some one has to bear the expenses of education, whether it is the individual consumer of education or the taxpayers in general. The government intervention with an intention to correct the distorted market could be in the form of subsidy, tax, regulation, direct provision or any other method. While the market may be partly corrected in doing so, it may also have an impact on other related and non-related markets. Some...
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