RBI governor Raghuram Rajan in a speech at Shiv Nadar University’s convocation ceremony spoke extensively about free markets, the problems in education sector, student loans and finally his mantra for setting personal goals.
Rajan said, “There is a strong link between society’s support for free markets and the fairness with which wealth and opportunity is distributed among the population…Today, even well-run market economies seem to be favouring those who already have plenty. In part, this is because skills and capabilities have become much more important in well-paid jobs, and those born in good circumstances have a much better chance at acquiring these.”
“Income inequality is on the rise, with some having colossal incomes and others worrying about the next meal,” he said. However, rather than prohibiting the use of money and wealth, let us think about increasing society’s tolerance for its use, he said.
We take a look at seven gems from Rajan’s speech:
1) Increase society’s tolerance for use of money: In a free market, all it takes to buy what you want is money. You do not need a pedigree, a great family history, the right table manners, or the right fashionable clothing or looks. It is because money has no odour, because it is the great equalizer, that so many people across history have been able to acquire resources and invested them to make the world we live in.
Indeed, making it easy for Dalits to start businesses may do more for their social status because money empowers than many other forms of affirmative action. Rather than prohibiting the use of money and wealth, let us think about increasing society’s tolerance for its use.
2) Dealing with inequality: Income inequality is on the rise, with some having colossal incomes and others worrying about the next meal.
What can we all do to restore faith in markets? We have to work to provide effective access to schooling and healthcare for all, a non-discriminating job market with many jobs, equal opportunities for further advancement regardless of gender, race or background. All this will increase the perceived legitimacy of wealth and society’s willingness to broaden the areas where it is spent.
Thoughtful philanthropy can further help enhance society’s acceptance of great wealth.
3) Cautions on student loans: We have to be careful that student loans are repaid in full by those who have the means, while they are forgiven in part for those who fall on bad times, or those who take low paying public service jobs.
We also should make sure that unscrupulous schools do not prey on uninformed students, leaving them with high debt and useless degrees.
4) Develop culture of alumni giving: Philanthropy in education should not just be by the founders, but by the successful students from a university. Giving back to the university is a way of subsidizing the costs of future generations, acknowledging the subsidies you received from the founders when you got your degree. I hope we develop a strong culture of alumni giving in India.
5) Problem with online courses: Since good professors are in short supply it is thought that the best professors can beam lectures at thousands of students over the net. The problem is that while such classes seem theoretically attractive, completion rates are abysmal. We do not finish such courses perhaps for the same reason we do not simply take a course syllabus and read the recommended books in the library – there are too many distractions in life for us to complete without other forms of compulsion.
Therefore, online courses still need to figure out, not just how to get student commitment, but also how to provide the learning support that a university community and environment offers.
6) Why students prefer research universities: Students prefer degrees from research universities in US to those from teaching colleges, even for their undergraduate degrees where students do little research. It is not that research professors know more about the basic material that has to be taught.
However, good research requires curiosity. Almost all researchers remain curious through their lives, and constantly update their teaching material. I would conjecture, though I have no proof, this is why teaching at research universities is, on average, preferred to teaching at teaching colleges – you are taught more up-to-date challenging material in the former.
7) Goal setting: India is changing, in many ways for the better. You will be able to help shape our country, the world, and your place in it. By all means set yourself ambitious goals.
But remember that, as both ancient Indian philosophers and modern day behavioural psychologists say, the achievement of narrow personal goals — greater wealth, rapid promotion, or increasing renown – rarely brings you anything other than brief pleasure. Often the most enjoyable journeys are those where your goals are broader and where you take others with you, especially others who could not make it without your help. In doing so, you will make this world a better, and more stable, place.