As the country continues to suffer from the economic bite caused by the covid-19 pandemic, there has been calls for the government to bailout institutions that are struggling to cope. Chief among those institutions has been private schools, a number of which are struggling to pay their teachers given that it has been almost four months since the government shut down all schools in the country. It is not surprising to see private schools looking to the government for a bailout. It is in our nature to look to the government to solve almost all our problems. Ask an average Malawian on what should be done about any of the myriad of problems our country faces and their first thought will be about what the government must do to solve the problem.
The truth of the matter though is that the government has no business bailing out private institutions and here is why.
First, owners of private schools are entrepreneurs and in entrepreneurship, the fittest survive at the expense of the weak. This is true in any business. It takes perseverance and ingenuity in problem solving to make it in a competitive environment. So let those private schools that cannot survive the tough times the whole country is going through face a much deserved demise. Our country has seen a proliferation of private schools, many of which have no business being operational in the first place. Such schools are simply used as a conduit for money-making by their owners. Why should taxes paid by a granny in Dyeratu Trading Center in Chikwawa go to billionaire school owners somewhere in cities and towns?
Some people respond to the argument made above by saying it is the teachers that are suffering, not the school owners. My response to such claims is twofold. For starters, it is the responsibility of a school owner to pay his or her employees. Any bailout will absolve owners of their responsibilities. On top of that, aren’t we all suffering one way or the other? We have seen our football players facing massive pay cuts; some have gone unpaid since the end of last season. People in other sectors have lost jobs. Unfortunately, more people will lose jobs over the coming months, if the virus continues to spread. So, I do sympathize with the predicament the teachers in some of these private schools are enduring, especially those who joined private schools mainly because the government was not able to hire them.
That said, there are other teachers who choose to teach in private school simply because they do not want to teach in remote areas. Growing up in my village in Nkhata-Bay, I remember the days when some of the teachers at the schools I attended were unqualified volunteers who simply helped out to alleviate the problem of shortage of qualified teachers. So if some teachers made the choice to join private schools instead of going to teach in the villages of Malawi and now their schools are struggling to pay them, then that is the choice with which they have to live. In fact, the government could take advantage of this situation and hire some of those teachers and send them into the villages. Children who grow up in the villages also deserve to be taught by well qualified teachers.
Lastly but not least, the government would be opening a Pandora’s Box if it bailed out private schools. In economics there is a term known as moral hazard. In a moral hazard, an entity will continue to take upon more and more risk if it does not bear the full cost of the risk. If the government bails out private schools, other people will be encouraged to open up their own schools knowing that whenever they get into trouble down the line, the government will be there to help them out. Not only that, people in other businesses will also want bailouts. There are already plans by other non-governmental institutions to approach the government for help the moment it decides to help out the private schools. In the end, the government will spent way too much money just to keep failing private institutions afloat. Keep in mind that the money spent will constitute consumption spending. In other words, spending money on bailouts will not help the country’s future growth. If anything, any bailout will potentially take money away from investment spending. That is a luxury we cannot afford as a country.