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Money and Education (Dr. Raghuram Rajan Governor - May 7 2016 - at Shiv Nadar University Delhi)

News and Press Release - Dated:- 9-5-2016 - 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 .....

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nge 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 expans .....

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c 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 their time to bid for seats - the one who stands the longest wins the seat - or we can auction seats for money. .....

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n what we hope to achieve. If we want to increase society s productive efficiency, people s willingness to pay with money is a reasonable indicator of how much they will gain if they have access to the hearing. Auctioning seats for money makes sense - the lawyer contributes more to society by preparing briefs than standing in line. On the other hand, if it is important that young impressionable citizens see how their democracy works, if it is important that we build social solidarity by making c .....

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ems wrong when a lung or a kidney is sold for money. However, we celebrate the kindness of a stranger who donates a kidney to a young child. So, clearly, it is not the transfer of the organ that outrages us - we do not think the donor is misinformed about the value of their kidney or is being fooled into parting with it. Nor, I think, do we have concerns about the scruples of the person selling the organ - after all, they are parting irreversibly with something that is very dear to them for a pr .....

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ety to turn its back on the underlying problem, either moving the trade underground, or forcing people in dire circumstances to resort to worse remedies. But I also think part of our unease has to do with what we perceive as an unequal exchange. The seller is giving up part of her body in an irreversible transaction. The buyer is giving up only money - perhaps earned on a lucky stock trade or through an overpaid job. If that money was earned by selling a portion of a lung, or by pain .....

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is perhaps with the unfair distribution of money. What he also seems to ignore are the virtues of anonymity. 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 e .....

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en society s support for free markets and the fairness with which wealth and opportunity is distributed among 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 a .....

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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 further help enhance society s acceptance of great wealth. Finally, as you .....

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source, 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 for .....

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ing colleges, even for their undergraduate degrees where students do little research. Let me conjecture why. It is not that research professors know more about the basic material that has to be taught - their research is often specialized in a narrow area. Neither does research necessarily make you a good teacher - understanding the material at a deeper level may sometimes make it more difficult to explain. I do think, however, that good research requires curiosity. Almost all researchers remain .....

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people better. Given the need to broaden access to all the deserving, we have to make degrees affordable. One part of the solution is student loans, but 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. A secon .....

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