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Against public education, health

Why obsession with investment in mass public education and health in poor countries could be less optimal policy

Let me articulate a heresy. I am increasingly suspicious of the obsession by governments in poor countries to invest in “education and healthcare for all” as a strategy to combat poverty. This is not to say health and education do not matter in reducing poverty or its effects. There are economic benefits and welfare dividends that come from a healthy and educated citizenry. But these benefits can be realised without the state being a provider or even financier (as I used to argue) of such services. These can, and should, be funded by families, religious institutions and other charitable bodies.

In attempting to provide education and healthcare for all, poor countries spread their meager resources (both human and financial) too thin. Consequently, what citizens get is often half-baked education and poor health services. Yet to have impact, governments in poor countries need to avoid the political temptation (supported by donors) to be seen to do things directly for people. The most impact can come by doing things indirectly that trigger, stimulate, instigate or precipitate change. Such policies can seek to stimulate private and public investments that drive economic growth and create jobs. Working citizens can use the incomes from their jobs to fund their children’s education and families’ healthcare.

Since 1998 (the year when I have consistent and reliable data on government of Uganda budgets, our country has spent $3.72 billion on health and another $9.06billion on education (all figures adjusted to 2016 dollars). This excludes donor support because I am aware donors impose conditions on their money. This money has done a lot of good; building classrooms and health centers across the country, paying salaries for teachers and medical workers and buying scholastic materials and hospital equipment. Of course in all these activities many people get jobs from which they earn incomes to cater for their families. But is this the optimal way to spend this money in a poor country like Uganda?

The biggest challenge of poor countries is how to sustain growth over a long period of time. One of the main constraints to growth is infrastructure. If the money above ($13 billion) was spent on financing the construction of dams to generate cheap electricity for manufacturers, ports, railways and roads to move goods, people and ideas to markets where they are demanded, wouldn’t Uganda’s rate of economic growth have been much higher?

The other constraint is investment in transformative projects. These require capital investments far in excess of what private entrepreneurs in poor countries can marshal. Besides, foreign investors in whom our people and leaders have so much faith will never undertake such risks. Poor countries need the state to play the role of investment banker by mobilising (or creating) long term funds to finance such investments and by reducing the risks to private capital and thereby make it more attractive to make transformative investments.

In 1999, Harvard University professor, Lant Pritchett, did a study for the World Bank titled “Where has all the Education Gone?” He constructed a series on the growth in human capital (education) and could not find any positive association between growth in education and growth in output per worker. The study actually found a negative and significant relationship in some statistical exercises.

Indeed, countries like Ghana, Sudan, Zambia, Madagascar and Senegal that enjoyed rapid growth in human capital between 1960 and 1987 were growth disasters. Yet countries like Japan with modest growth in human capital over the same period were growth miracles. Zambia had slightly better growth in human capital than South Korea over this period but its growth was seven percent points lower. Growth in output per worker (labor productivity) in poor countries actually consistently declined just as growth in human capital accelerated – from 3% in the 1960s to 2.5% in the 1970s to -0.5% in the 1980s to 0% in the 1990s.

Poor countries need the state to play the role of investment banker by mobilising (or creating) long term funds to finance such investments and by reducing the risks to private capital and thereby make it more attractive to make transformative investments.

We know from history that Western Europe and North America, the first countries to industrialise, did not have “education and health for all” programs until they were rich. The National Health Services (NHS) in UK was established in 1946. Medicare and Medicaid in the USA were established in the mid-1960s. The welfare state was a consequence of development, not stimulant of it.

On health, the founder or social medicine, Thomas McKoewn, drew a series of famous diagrams showing, for a whole series of diseases, that mortality rates were falling before the introduction of effective treatment and continued to fall at very much the same rate after its introduction. McKoewn found that medicine was not very useful. He concluded that the root of health improvement lay in economic and social progress, especially better nutrition and living conditions. If McKoewn is right, then it is economic growth that creates jobs from which people earn incomes to pay for better nutrition and improve the quality of their living.

I am aware that Economist and Historian Richard Easterlin, failed to find a direct correlation between the on-set of economic growth and improvements in health. But having read Angus Deaton’s majestic work, The Great Escape, I believe that improvements in health resulted from control of disease through public health measures especially improvements in sanitation and in water supplies – not hospitals, nurses and doctors. Reductions in child and infant mortality, which explain increased life expectancy in poor countries, were also a result of vaccination against a range of diseases. May be poor governments should restrict their meager resources to such public health actions, not hospitals.

Therefore, the greatest mistake poor countries have made is to try and replicate the spending structure of a welfare state as designed in developed countries. Rich countries fund a large basket of public goods and services precisely because they can afford it. They only began doing so after state revenue per capita, public spending per capita, and income per capita reached a certain threshold.

I am not saying that health and education are not important. They are. But they don’t need to be funded by the state in a poor country. There can be a few exceptions in public health. For the most part, the state in poor countries should aim at growth so that people can find jobs and earn incomes to fund their own education and healthcare bills. Just imagine the $13 billion spent on public education and health over the last 18 years had been spent on financing industries and factories to employ people. Where would we be?

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7 comments

  1. Andrew, you must either have copied this from the DRC unwritten policy or thinking on same wavelength. In DRC education is funded and ran by the church, healthcare or what passes for that, Red Cross. The result are there for all to see. Is that what you want or wish for Uganda? Answer. don’t theorise from an air-conditioned office.

  2. Yet again another great piece from the “Old Man About Town”.

    While the evidence to support your argument exists, there is evidence suggesting that in fact health begets wealth. That for certain conditions such as maternal mortality, it is the supplies at health facilities including labour (human resources for health) that are the game changer. May be the contexts are different, spatially and in time, cognisant that the absence of evidence doesn’t necessarily imply evidence of absence of effects.

    The crux of the problem, however, lies in how we value and therefore measure social progress in the different contexts, a thesis I shall revisit at a later time.

  3. Are you suggesting that mothers should give birth under trees since government has no business building hospitals, and that will be fine? withall the mosquitoes in the forests you want them to give birth from, how will you prevent malarial deaths, hence reduce maternal mortality :-). Why do you want to take the world back to dark ages? Have you heard that nutrition is an immediate outcome of health and food intake? How do you improve nutriton of a sick population? Heard of the fact that an investment of $ 1 in nutrition results in $16 in economic gains? My friend, you did say something but what are you exactly saying???

  4. I have not exactly picked the point. For me its a chicken and egg discussion. If you invest in infrastructure, the question then would be who would be the human resource to make the roads? or those investiments?

  5. Matsiko Arthur Mugumya

    “”Working citizens can use the incomes from their jobs to fund their children’s education and families’ healthcare””. Quoted from your article Andrew. Where will you get these uneducated working citizens with enough incomes to fund their children’s education?? Do you mind telling us how many uneducated employees you have and you are paying them enough to fund their children’s education? I don’t see any difference between you and the recent comments where someone advised parents to use food flasks for packing their children’s lunch at school. very detached from reality, of course not knowing that there was no food to pack in the first place while the food flask is seen as a luxury for the rich.
    Secondly you tend to think that public health and hospitals are different and independent of each other e.g if i may quote you once again as saying what you read from Angus Deaton’s majestic work: ”I believe that improvements in health resulted from control of disease through public health measures especially improvements in sanitation and in water supplies – not hospitals, nurses and doctors. Reductions in child and infant mortality, which explain increased life expectancy in poor countries, were also a result of vaccination against a range of diseases. May be poor governments should restrict their meager resources to such public health actions, not hospitals”. Is it normal for a right thinking adult in his normal state of mind like Andrew to believe that public health programs can be successfully implemented without involvement of doctors, nurses and hospitals?? Because really if life expectancy increased in poor countries e.g through vaccination, why didn’t your good author with this ”majestic work” also include which personnel were vaccinating and from where since Andrew and the author seem not to see the importance of improving hospitals, doctors and nurses welfare??

  6. Now i see why Andrew gets in trouble with some people, his ideas are for tomorrow and people perceive them for yesterday, today and daily living. just the difference between Macro and Micro Economics, its a very brilliant argument Andrew, I must confess. I wish you had Written this 18 year ago!!

  7. There is logic in the argument. It may as well be true that the Industrial Revolution came before the establishment of the welfare state.

    I believe it comes down to choice – tough choices. I read somewhere that Stalin in managed to turn Russia into an industrial country between the late 1800s and early 1900s; This was at the expense of some of the population that died of starvation. Basically, you choose to invest in capital goods or current consumption.

    Both are essential. Striking the right balance is what is supremely complex given the multiplicity of inter-related macro-economic variables in an economy. Do we train as many doctors as we can but have no cancer or other expensive machines for them to use? Do we invest in power stations, refineries and super highways but have no local capacity and hence suffer from the vagaries of capital flight?

    There are no simple answers; But there are politicians…

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