Education should not just be an investment vehicle
A press release distributed last year throughout this region claimed that “with new investment vehicles facilitating the investment in schools, alternative investments diversify the investor portfolio and have the potential to improve the overall risk-return profile. Both retail investors and institutions are seeking greater exposure to non-correlating alternative investments that provide consistent income with low volatility”.
It took me a while to realise that what was being discussed was not a stock or a share, not even a fund or even a tracker. It was an invitation for investors to offload their risk-return profile on to your children.
Parents need to be worried when education, a public good, is described in the terms of a sophisticated investment vehicle.
When adult investors and businessmen meet openly and exchange shares at the market rate in companies that manufacture products or provide services, then let each man decide the fair value of those shares.
As adults who have completed their education they are either equipped to analyse and evaluate their options themselves or to pay for the services of a professional adviser to do so on their behalf. Sometimes people will win and sometimes they will lose but as the adage goes, caveat emptor, let the buyer beware. When the commodity or service being bought or sold directly involves children, however, then we have a moral obligation to think very differently.
As a former product development manager for a UK stockbroking firm, I am acutely aware that there are only two emotions which govern the market: greed and fear. It is, therefore, profoundly troubling that education should be subject to these two capricious forces.
To my mind there are some things such as love, beauty and values which are physically and economically irreducible and education fits squarely into this bracket. To educate purely is to cultivate the capacity to love, the appreciation of beauty and the defence of values. What is more, education is the social enterprise of youth. For the most part children do not choose their education; it is chosen for them by their parents, guardians and their governments. As soon as schools are described as “alternative investments [to] diversify the investor portfolio … [which] have the potential to improve the overall risk-return profile” we need to be very afraid for the future of humanity.
As ever investors will always be motivated by maximising their returns and cutting their losses short. If schools are peddled as investment vehicles, then those losses harm our children and our communities. If schools are promoted as non-correlating alternative investments, then it will always be impossible to say for certain that a school’s shortcomings are an honest oversight rather than a failure to invest a 15 per cent surplus into finding the solution because there was a need to guarantee a profit.
That said, we must acknowledge that private for-profit education companies are often invited to fill a gap in the education market which the state either cannot or will not fund and as a consequence defenders of for-profit education argue that these companies and their investors bring much-needed money into the sector. This much is true and while the market is growing, families, communities and countries are often grateful for the service provided by for-profit education companies.
However, the existential purpose of any business is to make a financial rather than a social profit. So what happens when the financial profit fails to materialise? Examples from the United States reveal that half a dozen schools within a profit-making education group can simply close overnight, leaving several thousand children without schools.
Education Not For Sale, a report by the trade union organisation in the UK, clearly highlights what this will mean for those involved: “Closing schools can be traumatic for children ... Pupils, parents and their local communities lose out. When market forces lead to a school closure, children’s education and social development are disrupted, with learning delayed and friendships destroyed, with a significant practical impact on parents.”
While encouragement of for-profit education companies can seem like a good idea when business is booming and markets are growing, ultimately, much of that money is still going to be taken out of the sector, to pay shareholders their dividends rather than creating a sustainable debt-free school for the future. When markets saturate, and growth slows and then declines – which it always will do – then experience tells us that asset strippers will clean out unprofitable schools and sell on their husks. Our children will then be left educationally homeless.
If we are truly looking to create a sustainable society, then governments and communities need to recognise that not-for-profit education must make up a significant proportion of the market. It will be the not-for-profit schools which will survive. Why? Because they are invested in the social fabric and can afford to streamline their enterprise and mothball their buildings until they are needed. There is no imperative for them to close if their profit margin dwindles or greedy shareholders take a vote to close a school with little consideration for its occupants.
Historically families, followed by communities, followed by societies and then entire civilisations have recognised the desirability and necessity of education to sustain themselves. The 21st century is not the time to turn a blind eye to this overriding purpose of education for the sake of a tidy profit.
Michael Lambert is the headmaster of Dubai College and part of a not-for-profit group of schools in Dubai
Updated: February 20, 2017 04:00 AM