The KHDA is hindering rather than helping Dubai’s education sector

January 3, 2013

A few weeks ago, GEMS contacted parents to inform them that Westminster School would be closing in June 2014, citing the current fee restrictions in place and the resulting inability of the school to “offer a high quality education at this level that we see as our duty to provide”. This decision has led to the predictable outbreak of nonsense and economic illiteracy in the local media and on the various comment boards. All the familiar tropes are on display: GEMS are once again being portrayed as heartless and immoral racketeers; private education is decried for its emphasis on profit; the government is called upon to ‘do something’; and so on. In general the discourse is not much above the level of ‘It’s not fair’ and, to quote The Simpsons, ‘won’t someone think of the children?’

As the economics writer and blogger Tim Worstall has put it, a great deal of economics can be summed up in two phrases: ‘Incentives matter’; and ‘There is no such thing as a free lunch’. What we have in the current Dubai education market is a situation where the current regulatory framework put in place by the KHDA has created a flawed incentive structure; and where there are fundamental contradictions between the different desires and expectations of many parents.

Simply put, a number of parents seem to want high-quality education; low fee-structures; high levels of regulation; and lots of school choice. The problem of course is that there is a tradeoff between all of these goals, for until someone discovers the magic money fairy (let me know if you do) the old adage of ‘you get what you pay for’ is going to apply in the long-run. In addition, high levels of regulation will both reduce the number of new schools in the market, and will also increase the costs of education, due to the resources schools have to devote to compliance and box-ticking. This is not to say that regulation is not required or that we should have a wholly unregulated education sector, but simply to point out that there is a trade-off here. As I said above: there’s no free lunches.

What I find quite incredible is that hardly any comment on this issue has focused on the root cause of the problem: the frankly bizarre and counter-productive decision by the KHDA to limit fee increases based on their inspection results. In the case of Westminster School, its ‘acceptable’ inspection rating meant it was only allowed to increase fees by three percent. To quote Mohammed Darwish, Chief of Regulations and Compliance Commission (RCC) at KHDA: “The school applied for an exceptional fee increase. However as exceptional fee increases are only granted to schools rated ‘Good’ and above, the school did not qualify.”

There are a number of issues with this policy, not least regarding the inspection process itself: inspection results are not fool-proof and the process of classifying schools into four groups is inexact. There is always a margin for error in any testing or inspection process, as well as an assumption that inspectors know precisely what parents want from the school; which may not always be the case. Beyond these narrow issues, this restriction discourages investment in the sector as any new investor will be deterred by price controls of this kind. It also puts schools outside the ‘premium’ band in a fiscal strait-jacket and increases the likelihood that lower-cost schools may close. In addition, it means that schools are incentivized to put up their fees as much as possible when they are permitted to by inspection results, as they do not know when they will necessarily be able to do so again. New schools will also set fees as high as possible from the outset given this uncertainty.

There have of course been the usual online comments decrying the provision of for-profit education: “This is a decision motivated by nothing more than profit margins. Why close a school rated as acceptable?”; “The reasons given for the closure simply to not add up. GEMS has put profit margins ahead of the welfare of the children at Westminster School. Thanks for the pre-Christmas slap in the face GEMS!”; ““This is a stark reminder of the ground realities of how business houses operate in Dubai. 100% spot-profit-oriented. Every unit which is deemed non-productive in the pure financial sense is treated like the lame horse that must be shot dead instead of keeping it alive and treating it back to health.” And so on.

What these complaints fail to recognize is that it was profit that provided the incentive to build, set-up and operate these schools in the first place. In addition, profit accrues if you create a service that other value and want to avail of. GEMS is a private company: it exists for the purposes of making a profits. It is therefore bizarre logic to expect them to simply maintain a loss-making division, especially when the regulatory structure means that it cannot realistically be turned around. When it comes to education, there is often a strange prejudice against the concept of profit, despite the fact that the profit principle has generally served us pretty well in many fields of human endeavour and that there are numerous for-profit schools that operate at an extremely high standard. To those who say that education is somehow too important to be profit-led, I would argue that surely the production and distribution of food are even more important, and would they therefore propose the nationalization of these sectors? (Quick hint: they’ve tried this in various countries over the years – it doesn’t work very well.)

If parents resent the profit principle to such an extent, then the logical step is for them to create their own non-profit establishment. Of course, just as a start, this will require them to raise and risk the investment capital; spend the time liaising with the relevant government departments to obtain the required permissions and permits; obtain the land for the school; plan and oversee the construction; create the systems and procedures; and put a management team in place. The fact that this is an extremely rare occurrence would seem to indicate that the profit motive plays a pretty vital role in ensuring that new schools start and that existing schools stay operating. For those who believe that the removal of the profit-principle would magically improve matters, I would point you in the direction of the UAE’s public education sector’s well-documented difficulties, with the majority of Dubai’s Emirati children now being sent to private schools by their parents.

Some parents and columnists have tried to argue that GEMS should keep the school running at a loss by using the profits from the other schools in the GEMS network: one columnist described this as ‘taking one for the team’. As well as not addressing the root problem (the KHDA’s fee policy), this approach also fails to take into account that this relies on other parents in the GEMS group effectively subsiding those at Westminster. It also leads us to the obvious question: what happens the next time another school tips into loss-making territory due to the fee cap? Should GEMS continue to run that school at a loss as well by having parents at other schools subsidise that establishment as well?

Ultimately, the closure of Westminster School is the product of a flawed regulatory structure. The KHDA’s attempt at top-down fee controls is counter-productive policy. If we want more competition and school choice in the Dubai educational sector, the KHDA needs to make it easier to establish new schools and guarantee autonomy over fees. In attempting a short-term fix over rising fee levels, they have undermined the long-term development of the sector and the viability of budget or mid-market options. If the KHDA still wishes to ensure some safeguards for parents, then perhaps a minimum notice period for fee increases could be established which strikes a balance between the needs of parents and those of school operators.

The KHDA can still play a valuable role in improving parent choice and school standards in Dubai, provided it moves away from attempts to micro-manage the sector and instead seeks to make the market work more efficiently. One of the most effective ways of doing this is by improving the information that is available, something it has already started by publishing the school inspection reports online. It could, for example, do the same with examination league tables for the various international exam boards, so that parents can then easily compare different schools in terms of their exam results in recent years, as well as seeing if a school is improving its results or not year-on-year. Such an approach would certainly be more productive than the current policy.


Invaluable Guidance

July 29, 2012

I’ve long been concerned about what I would do if I ever became the guardian of a nubile woman. I have scoured local bookshops in vain for ‘Nubile Woman Guardianship for Dummies’ and Google searches for ‘nubile woman’ brought up some eye-opening but unhelpful results.

Thankfully, the Oman Observer came to the rescue this weekend with the following article. It’s heartwarming to see such sound and useful advice in the pages of a national newspaper.

 

 


They’ve only just got around to this?

November 23, 2011

Dubai: President His Highness Shaikh Khalifa Bin Zayed Al Nahyan issued a decree amending by-laws of the Federal Government Human Resources law. 

Under Federal Law No. 9 of 2011, the decree stipulates that all federal bodies are obliged to sign employment contracts with their staff, detailing their vocational rights and duties, and professional ethics that they must abide by when performing their governmental duties.

This is particularly amusing given that it’s the Federal Government that regulates the contractual arrangements between employers and employees in the private sector…


Schadenfreude – The Johann Hari Edition

June 29, 2011

There may be some amongst you who recall a piece of execrable weekend journalism by Johann Hari entitled ‘The Dark Side of Dubai’. It was published in the Independent in 2009 and caused something of a furore in the UAE blogosphere. Most Dubai-based writers accepted that there were (and are) undeniably a lot of problems with Dubai that deserved to be reported on, and that Hari is a very effective writer, if polemic or propaganda are your cup of tea. However, Hari’s article was deeply flawed as a piece of journalism: lacking balance or perspective and filled with jarring stylistic flourishes, sensationalist hyperbole and rhetorical tropes.*

As well as these flaws, a number of Dubai-based bloggers and writers also observed that Hari’s piece contained a number of implausible anecdotes, conveniently apt quotations and exaggerations. Few people were willing to suggest outright fabrication given Hari’s status in the world of journalism, but nagging doubts have stayed with me since then. I am therefore very glad to see that Hari has been caught out recently over his use of quotations and is now facing some very awkward questions over his journalistic conduct.**

I am fully supportive of free speech and the media’s right to investigate; there is certainly plenty about Dubai that can and should be written about. However, if a journalist can actually be bothered, there is more than enough interesting subject matter out there without having to resort to lazy caricature, sensationalism and outright fabrication. It is a pretty damning indictment of the journalistic profession that there have been some journalists lining up to defend Hari’s transgressions and that his rhetorical style has been rewarded with the Orwell Prize for Journalism, particularly given Orwell’s own attitude to language (my emphases):

The inflated style itself is a kind of euphemism. A mass of Latin words falls upon the facts like soft snow, blurring the outline and covering up all the details. The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish spurting out ink.

[…]

Political language — and with variations this is true of all political parties, from Conservatives to Anarchists — is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind. One cannot change this all in a moment, but one can at least change one’s own habits, and from time to time one can even, if one jeers loudly enough, send some worn-out and useless phrase — some jackboot, Achilles’ heel, hotbed, melting pot, acid test, veritable inferno, or other lump of verbal refuse — into the dustbin, where it belongs.

Hari has sought to defend his practice but the fact remains that he has been caught out presenting a false picture to his readers to achieve a rhetorical aim. By presenting these quotes with his own dramatised context and tone, he has shown a disregard for accuracy and truth that calls into question the convenient anecdotes and quotes he has previously presented as fact. The only reason that he has been caught out in this instance is because the quotations have been from famous or prominent individuals: he can be even more cavalier with quotes and events that are below the radar and impossible to properly verify.

I am reminded of something Albert Einstein once said to me, as we had lunch together at a charming Bistro in Penge. He put down his glass of Merlot, fixed me with his gaze and said: “Anyone who doesn’t take truth seriously in small matters cannot be trusted in large ones either”.

* – Brilliantly parodied and dissected by Chris Saul.

** – Links galore as follows: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11.


The Federal Ministry

June 24, 2011

With documents all ready I arrive;

A licence is the thing for which I strive.

I’m sent to wait at counter number three.

I’m visiting the Federal Ministry.

-

I queue with hope still stirring but I find,

Another piece of paper must be signed,

For which another man I have to see.

I’m visiting the Federal Ministry.

-

The man in question proves a tad elusive:

His desk sat in a corner most reclusive.

He looks me up and down quite critically:

I’m visiting the Federal Ministry.

-

His manner cannot be described as warm,

Eventually he deigns to sign my form,

For this I must agree to pay a fee.

I’m visiting the Federal Ministry.

-

The cashier’s desk is where I must go next.

So off I slowly trudge a trifle vexed.

This is no place to find efficiency.

I’m visiting the Federal Ministry.

-

Apparently a stamp is also needed;

Had I really thought that I’d succeeded?

A slave to bureaucratic tyranny -

I’m visiting the Federal Ministry.

-

I’m told to visit counter number two:

Forced to join another lengthy queue.

The clerk is playing with his Blackberry.

I’m visiting the Federal Ministry.

-

The line is one of crushed and broken spirits

Our patience has been pushed beyond its limits.

We’re baffled by this strange reality.

I’m visiting the Federal Ministry.

-

Bureaucracy at last begins to work

I quickly grab the licence from the clerk

I cling to shreds of tattered dignity

I’m exiting the Federal Ministry.


Rubberneckers

June 21, 2011

Rubberneckers

I

There’s gridlock where the traffic freely flowed

The cause: an idle hubcap by the road

A clear non-event; completely mundane

That yet still causes necks to crane

 II

Whether prang or crash or minor collision

These ghoulish spectators earn our derision

Beguiled and entranced by an accident

To them each smash is heaven-sent

 III

They take their own sweet time to gaze their fill

The shards of Perspex form their daily thrill

They slow to idly gawp and watch and stare

Frustrating all around them without care

 IV

A rear-ended Kia; a Mercedes now smashed;

A Volvo whose front has been horribly bashed;

A Lancer now broken in multiple pieces:

Their morbid interest, it never ceases

 V

Of chaotic scenes they seem not to tire

They thrill with delight when a car catches fire

The daily commute thus grinds to a halt

Do they not realise that they are at fault?

 VI

Their gruesome obsession is hard to bear

Since when did courtesy become so rare?

Is there no other way to show my scorn,

Apart from the sounding of my horn?



The Libya Security Council Resolution

March 18, 2011

 

“Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.”

– Winston Churchill

 


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