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Should We Control Private Sector Investment in Education?

13/03/2014 10:32 GMT | Updated 12/05/2014 10:59 BST

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Bill Gates fundamentally believes that - despite the switch from "blackboard to whiteboard" - not much has changed in education. His Foundation has supported some outstanding new projects and is a leading force in the movement towards educational reform.

But the best is yet to come.

He believes education is at this Gladwellian 'tipping point', where we're just on the cusp of allowing technology to truly change the way education is delivered.

Hardware is becoming affordable enough for school's to deploy at large-scale. Google, for example, are selling their Chromebooks in schools, saying that schools can save "on average, over $5,200 per device over three years."

Software, such as educational gamification and digital textbook learning, is becoming functionally rich enough for teachers and students to prefer using over traditional paper-based textbooks. Some 44 percent of students in grades 6-8, Gates says, want to read on a digital device. Think about what could happen when this number gets to 60 percent.

Education made up a mere 1 percent of all venture capital deals between 1995 and 2011. In comparison, technology accounts for 38 percent and healthcare 19 percent according to Gates. Over the next 5 to 10 years, this 1 percent is going to turn into a much, much larger piece of the pie. There's no doubt of this.

The expectation is: we let this play-out, as a market economy does, and hope and pray these funds will go to the 'right' places to solve our crisis. But inherently, investment will always go to the places with the largest dollar return for investors, which isn't necessarily going to fix our society-scale problems.

Coursera is a perfect example.

They received $22m in funding in 2012, and another $40m in 2013. Their courses are reaching millions of people across the globe, but just how impactful is it and what's the benefit to society? I'd argue not that much, given the ubiquitous nature of information these days.

Instead, why don't we fund the sectors that empirically prove a positive social impact?

Nobel Prize winning economics professor, James Heckman, authored the 'Heckman equation', which essentially says the more we invest in early childcare (birth to five) education, the more we - as a society - are saving in remediating problems later in life - such as obesity, crime, and school dropouts.

Whether or not this is true, we should not take a laissez-faire approach here. Regulatory bodies and education ministries need to work with economists, sociologists, and educators to understand the societal benefits of particular educational services - then encourage investment in those areas through subsidies, tax breaks, and other incentives.

This may involve a subsidy for early education providers purchasing technology solutions, which, in turn, would create a demand for gamification providers to develop more high quality applications; or it could be telling ICT companies they get a tax break on hiring new grads from secondary schools where they've helped co-develop the curriculum (or sponsored in-school ICT services).

New York City's Investment Tax Credit was passed in 2012. The bill reimburses teachers up to $100 of out-of-pocket expenses for classroom supplies and also provides tax breaks for charitable donations. While this may not be directly supporting the 'tech tipping point' Gates is referring to, it's definitely a step in the right direction.

Either way, solving a big, complex, global issue such as education needs some market control, government regulation, or investment incentives to encourage a desired outcome that benefits all of us.