It’s been said that when it comes to Capitalism, the Poor often have much to teach the Rich. And if there’s one place where the Poor are a veritable petri dish of experimentation, it’s India. Marginal Revolution has an interesting series of posts on the emergence of private education in this sector of da homeland. They quote a Washington Post column by Sebastian Mallaby who cites a growth story of nearly Google-esque proportions –

Vellore is a small town in southern India, poor enough for some of its buildings to have thatched roofs rather than the rain-proof metal sort. Until a few years ago Vellore was notable only for its large Christian medical center, erected with the help of foreign money. But now it has sprouted this 9,000-student technical college, complete with a sports stadium, an incubator for start-up high-tech businesses and a bio-separation lab.

…The college started out in 1984 with just 180 students…In 2005 India produced 200,000 engineering graduates, about three times as many as the United States and twice as many as all of Europe. But the really astonishing statistic is this: In 2005 India enrolled fully 450,000 students in four-year engineering courses, meaning that its output of engineers will more than double by 2009.

The lesson for other developing nations? The role of private education –

What’s made this engineering takeoff possible is not an increase in the supply of universities financed by taxpayers or foreign donors; it’s an increase in demand for education from fee-paying students — a demand to which entrepreneurs naturally respond. More than four out of five Indian engineering students attend private colleges, whose potential growth seems limitless. In 2003 the Vellore Institute of Technology received 7,000 applications. In 2005 it received 44,000.

This sea change isn’t just confined to higher ed but can be witnessed in primary and secondary education as well –

Something similar is happening to the Indian school system…Since the early 1990s the percentage of 6-to-14-year-olds attending private school has jumped from less than a tenth to roughly a quarter of the total in that cohort, according to India’s National Council of Applied Economic Research. And this number may be on the low side. James Tooley of the University of Newcastle in Britain has found that in some Indian slums about two-thirds of the children attend private schools, many of which are not officially recognized and so may escape the attention of nationwide surveys.

The good folks at Marginal Revolution dutifully note how here at least, India’s poor appear to be aping their formal colonial masters –

A description of a public and private school next door to one another explains why a farmer earning $22 a month will spend nearly a fifth of his income ($4) sending his child to a private school…the private schools of India have much in common with the private schools of nineteenth century England, Wales and America. Contrary to common belief, attendance and literacy rates in England and Wales, for example, were 90 percent or above before any major state involvement in schools. James Mill (father of John Stuart) illustrated the parallel with modern India when he wrote in 1813, “We have met with families in which, for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”

Mallaby’s takeway – while education can lead to growth, past some point, the causality is actually reverse – growth, then education. It might be a shock to some, but individuals acting in their own and particularly their Children’s best interest, when presented with choices seem to be achieving an ends far better than meddling Educrats –

Since India embraced the market in the early 1990s, parents have acquired a reason to invest in education; they have seen the salaries in the go-go private sector, and they want their children to have a shot at earning them…Once parents understand that education buys their kids into the new India, they demand it so avidly that public money for schoolrooms becomes almost superfluous.

…Apparently unconnected development policies — cuts in tariffs and oppressive business regulation, or projects to build roads and power grids — can sometimes stimulate new educational enrollment at least as much as direct investments in colleges or schools.

None of this is to say that India’s private sector ed system is producing a uniformly high quality product on par with IIT. For one thing, they start with a decidedly non-uniform, mass market set of inputs far removed from the frothy elites at IIT. There’s no doubt that buy-a-degree scams are probably as plentiful in India as they are in my Spam email bucket. Today’s Cambrian explosion in educational service providers will eventually be followed by an extinction of the ill performers (and perhaps an Enron-esque scandal or two). And the critics will seize all of these examples. BUT, focusing on these “ill trees” and growing pains obscure the forest – demand for education has hit a proverbial knee in the curve since the 90s and the private sector is filling the gap far better than any of the alternatives.