raghuram rajan : money and education speech by dr raghuram rajan, governor of the reserve bank of india, at shiv nadar university, delhi, 7 may 2016. * * * thanks very much for inviting me to speak today. first, congratulations to all of you who are receiving degrees today. congratulations also to your teachers, family, and friends who have invested in you and supported you. convocation speeches are meant to give you one last set of issues to ponder on before you are let loose on the world. i will actually talk about two issues – an economic point deriving from my training as an economist, and a point about private universities deriving from my work at one for over 20 years. i embark on this talk comforted by the knowledge that the bar for convocation speeches is low. if you even remember a word i say a few years from now, i will have surpassed the average convocation speaker – most people don ’ t remember who spoke at their convocation, let alone what they said. first, the economic point : in a very interesting recent book, harvard philosopher michael sandel points to the range of things money can buy in modern society. he seems to want to make us angry at the growing dominance of the market. 1 professor sandel worries not just about the corrupting nature of some exchanges as they are monetized but also questions their effectiveness ; for instance, do kids really develop a love of reading if they are bribed to read books? he is also concerned about unequal access to money, which makes trades using money inherently unequal. more generally, sandel fears that the expansion of anonymous monetary exchange breaks down social cohesion, and argues for reducing money ’ s role in society. while sandel ’ s concerns are not entirely new, his examples are worth reflecting on. for instance, some companies pay the unemployed to stand in line for free public tickets to congressional hearings in the united states. they then sell the tickets to lobbyists and corporate lawyers who have a business interest in the hearing but are too busy to stand in line. clearly, public hearings are an important element of participatory democracy. all citizens should have equal access. so selling access seems a perversion of democratic principles. the fundamental problem, though, is scarcity. we cannot accommodate everyone in the room who might have interest in a particularly important hearing. so we have to “ sell ” entry. we can either allow people to use

the population. unfortunately, even while inequality between countries is diminishing today, inequality within countries is increasing. 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. the winner - take - all nature of many occupations, where a few of the most capable entrepreneurs and the best workers take most of the income ( think apps, architecture or acting, for example ) accentuates the value of early childhood preparation ; and hence the benefit of being born to the right parents in the right community. 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, as reflected in the founding of this school, can bis central bankers ’ speeches further help enhance society ’ s acceptance of great wealth. finally, as you embark on careers that are likely to be very successful, you should earn by creating perceptible value and, equally, spend to create value. not only will your work be more enjoyable, but you will strengthen the economic freedoms we sometimes take for granted. let me turn briefly to my point about private education. private education across the world is expensive, especially in high - quality research universities, and getting more expensive all the time. that is because the critical resource, good professors, is in short supply. two solutions are proposed. one is technology. why not have the best professors 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. 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. a second solution is to di