BOSTON — A California real estate developer was sentenced Friday to one month in prison for paying $75,000 to cheat on his daughter’s college entrance

What is your craziest public policy idea? Why do you think it may work?

(The answer is written around the environmental factors of a middle income, developing country like Pakistan which has severe problems in providing public services to it’s citizens. Some of the ideas presented here may not be applicable to a wealthier, developed country like say Norway or something.)

Using Smartphone apps to help provide public services in developing countries where the government is lacking.

2 examples of this:

  1. An investment app that allows investors to invest money into students (in the form of tuition fees and student expenses) in exchange for a percentage of their earnings after they graduate and get jobs.

A kind of “Investment security” like Mortgage securities but instead of mortgages, we have promising students instead. Technically speaking, such a system is already in place in the US with student loans. Student loan securities are investment options for investment firms on Wall street where they purchase student debt in order to make money off the repayments.

The App idea sort of works like this:

Students who are doing well in school but need money for college sign up on the app. They show which university programs they have been accepted into, what their high school grades and achievements are and what their future career plans are after college. Some might also choose to share what max amount of their earnings they are willing to share after they get jobs on graduation.

Similarly, people looking to invest their savings or profits or money also sign up. They browse the student pools before them. Investor A decides to sink Rs. 10,000 into the kid going to engineering school for software engineering (Student A), Rs. 8,000 into the kid going to the top business school in the country and Rs.2,000 into another engineering student who is going to a low-medium ranked engineering program.

What the investor has just done with Student A is that he’s paid Rs. 10,000 of the total tuition and student expense fee of the student (the student can set the student expense amount. So the total cost would be tuition fee total + student expense total for the duration of the program).

The investor now asks for a % of the students monthly income. The student argues for 1%. They settle for 2%. The student finds 9 other investors from other sources to fill the rest of the tuition and student expense fee and manages to get his entire tuition covered from a variety of investors in exchange for 12.5% of his monthly income returned to his investors once he gets a job after college.

Some investors are nervous. They want more assurances for return on their investments. The students sense this and decide to link up with other students on the app and they together form pools of students. For e.g. a pool of 10 Straight A students with top school admissions. Or a pool of 100 students with As and Bs and mid-high university ranked admissions. A mix between engineering, business, medical, arts etc. So that if a few students are unemployed or don’t get well paying job, the pool as a whole on the average pays off the investors.

Similarly, the investors too can pool their resources using the app. Market demand and supply rates decide who pays how much and gets what in return.

Example: A pool of 5 investors have a capital of Rs 50 lakh. They decide to invest in a student pool of 10 students who are all going to engineering schools. The student pool and the investor pool negotiate a rate of return of around 6% on all incomes of all the students. The pooling allows less financial burden on the investor and greater flexibility by allowing them to invest in a more diverse bunch of students. The student pool is also an attractive option for students as it ups their bargaining power as a pool and they have a lower risk assigned to them as a pool.

The app is backed up by a number of mechanisms that provide security to both the investors and the students. Investors have the option to renegotiate their investment if students completely change their major or start having bad semesters. Students are also protected from investors completely withdrawing their money for no reason if the student is performing well as per agreed terms.

Investors can get regular grade and transcript related reports of students to make sure they are on track. They can pay semester by semester or pay in full from the start (obviously most would prefer month by month but higher ranked students with exceptional grades and top school admissions can demand full in advance, especially as a pool).

Legal apparatus and ID verification apparatus built into the app will also ensure that students cant just run away after they graduate. Legal bonds and documentation will be signed during the agreement process between students and investors to make the investments legall binding. Investors too cant harass or pressurize students outside the bounds and norms of what the app allows.

Investors will have to risk their student investments not panning out in the form of students not landing good jobs and not being paid well which mean lower returns on their investment. Obviously, the legal apparatus would have to verify students aren’t lying about their payslips and earnings.

There would be rewards too. You pick up a brilliant but undiscovered mathematical genius from Baluchistan and pay for his college in return for his monthly payments. The kid goes on to become a a young professor or highly paid researcher or financial analyst and you get high returns on your investment. This would be the ideal case of the app working: Kids with academic talent being put through college by private citizens and in return, the investors getting high returns.


Issues with this idea:

First off, easy student financing options always lead to a spike in tuition fees charged by colleges and universities. Once students and universities see students flush with cash and ready to spend money on degrees, the increased demand for education means a corresponding increase in tuition fees by colleges. Students who had financial resources and were willing to pay for college based on their parents savings and such might be priced out or forced to become part of the app’s process and it’s monthly payment to investor schemes.

Secondly, in a weak law and order state like Pakistan, the App business would have to invest heavily in making sure their legal department is up to par. The biggest problem with programs like this is students absconding after getting their degrees. The legal department must be able to pursue cases such as these, sometimes even in foreign states. I should mention that people abscond on similar government programs all the time and rarely are they bought to justice. An honor system, public shaming system (lol) and others can also be considered.

There is also the matter of moral principle: education is supposed to be a right enshrined in the constitution. Not something that must be bargained for. But this legal formality only applies to high school education and not college in our country. Still, i have qualms thinking about the close parallels with bonded slaves in our country. But this might be too extreme an example. If you can get a education you once couldn’t afford and alleviate your lifestyle with a good job, monthly repayments that you can negotiate with investors are sometimes a price worth paying.


Notes:

The idea is important for Pakistan because we have a severe deficit in college aid and college financing for students, especially the ones from poor, public schools. Several students are left out of the academic pool simply because they cant pay college tuition. We have top scorers in school examinations selling vegetables from carts on the road side or cobbling shoes. A shocking and dismal failure on the part of the government which should be doing more to tap into their youth bulge.

What’s even worse is that as a gross total, our education budget is approaching the same levels as our enormous defense budget but not showing results on the ground in terms of increased literacy rates. We have little to show for it due to gross mismanagement and misspending.

Should we double the education budget, or seek 100pc literacy?

The App cuts out this middle man waste and directly connects education investors with academic students lets some market based pricing principles determine the situation.

The app does what other apps like Air BnB and Uber do. It takes out the large, organized businesses like hotels, hostels, cab companies etc and puts in place a Peer to Peer model which drastically reduces costs and puts flexibility into the system as well as a ground level, micromanaged view.

Given how large our informal, undocumented sector of the economy is (nearly $83 billion USD undocumented) , with vast swathes of wealth being untaxed, unregistered and invisible to the government, the app would function as a way to channel some of this untapped and untaxed wealth into public sector services without requiring citizens to pay tax for those services (which they are loathe to do because of our governments perception as a corrupt entity). It helps solve some of our untapped uneducated youth bulge with a larger college aged population and also helps investors channel money to good potential sources of income.

It’s also a far better way for one generation to pass on wealth to the next. Currently, older folk prefer to invest in real estate as a safe investment. Real estate doesn’t educate the populace or generate human resource needed for a knowledge based economy. You just end up with residential palaces cleaned by an army of under-aged servants, one of whom could be the next Einstein.

Also, we have a cultural emphasis on the young caring for their elders. I feel like this App system could tap into that with the students willing to pay for the elderly who invested in their education using their savings and pensions, with an honors system. It’s a far more human face for students to care for than large banking firms and wealthy investors.

Such a system is already in place in Pakistan with several large government and military organizations recruiting students on a “bond system” where they pay for student school fees in return for a period of service in said organization. This has permitted such organizations to rapidly expand their human resource pools with extremely talented individuals who would have otherwise been left working in low paid, uneducated roles. The wealthier kids capable of paying private tuition often want to go abroad or work in the better paying private sector within the cities. The bond or student investment programs allow military and government organizations to recruit academic high achievers who can then be posted on less desirable postings like in rural, remote areas or other jobs they cant find people willing to do. Improving public services in those remote areas and undesirable roles.

I’m gonna tag Habib Fanny here because he’s written a lot about student loans etc and might have some insights into this process that i know little about.


2. An App that connects “favors”.

So here in Pakistan, whenever we need something done from a government organization, the first thing we ask isn’t “how is this done?”. The first thing we ask is: “Do i know anyone who works in this organization?”

Need your drivers license made? “Who do i know in the traffic police”

Need your bank related work done? “Who do i know in this bank?”

The underlying theme here is that normal channels of government processing of citizens appeals are slow, cumbersome and opaque. Which is why citizens normally rely on contacts inside the department to get their case processesed or their file moved.

The app would basically set up a social network of people in both the public and private sector who could exchange favors with each other to get their work done in a quicker more efficient manner.

For example, Ali works in the Traffic police. He sets up his account as the Traffic police guy and opens himself up to requests for people requiring drivers licenses, traffic exam info or case processing in the traffic department.

Ahmed sets himself up as a worker in the National Bank. He sets up his account as a favors guy in the National bank and assists citizens needing help with their bank accounts, bank statements and so on.

Kasim sets himself up as a guy in a real estate property firm. He opens himself up as someone who gives favors and advice from his position.

When Ahmed the banker needs his drivers license, he calls Ali in the traffic police. When Ali the traffic warden needs to know when a low priced plot is for sale, he asks Kasim and Kasim lets him know.

People accumulate credits by giving favors (sort of like how Quora credits used to work once). By building up credits, you can then ask for favors in return. Obviously some people in key government offices like the Police etc will have very high credit from the start. Someone working as a field doctor in Balochistan might not.

The app would cut down the work and time required by citizens by giving them a personalized, human contact to deal with who has more motivation than the normal government employee because he needs to earn his credits in order to be able to call in his own favors.


Issues:

The first and most obvious one: This is almost like a bribery ring. I’ll be the first one to admit it. If this app came out, it would probably get banned or heavily scrutinized at least. People without enough credit on the app might just straight up start offering cash and money to the contacts listed to get their favor done. Legalized bribery almost.

People without the app or without credit would rightfully feel resentful why their toeing the line of due process and having their work done the correct way by following proper procedure are being jumped by people using the app.

Some people would also want to know how privacy worked. I think most people would be open to using the app but would not want their personal info like name, cell and face made public. They would just want to be known as “the contact in the passport office” or something. Because obviously, you don’t want to be outed in the whole passport office as someone granting favors on the app. Or some might not care.

It’s obviously a controversial attempt at solving the problem of slow, bureaucratic and cumbersome public service procedures. That goes without saying.


Notes:

And yet, it does have the option of alleviating the problems of lower-middle income class families who increasingly have access to smart phones and app services.

The thing is, people in upper class families already do use such a favor system. It’s just embedded in their social networks, rather than on an app. The app is just opening up the playing field to others as well, people who didn’t go to private schools and pricey colleges and rubbed shoulders with the right people. Upper class folk benefit immensely from such a favor based patronage system, exchanging favors among each other that lead to increased access to public services.

The app would most benefit lowly peons in government offices, clerks in public sector orgs and employees in private SMEs who can form their own networks of favors to get access to public services the same way higher ranked officers, wealthy business men and politicians do.


Conclusion

Both of these ideas are fairly controversial, flawed and easily exploitable for the wrong purposes. Which is why i list them in the “craziest public policy ideas” and not the “well thought out public policy ideas”.

None of them are new either and have been in place in some form or another across the globe.

They can either be tweaked a little and put in place under strict supervision or we can do the most obvious thing: Actually improve government services.

But in Pakistan, I have a dim view of the ability of our government to deliver such public services especially to lower-middle income families atleast in the immediate term.

The apps are at most a stop gap measure. They are an informal system in place till we have an actual formal system in place. A way for people without access to much resources and contacts to get services from a dysfunctional, cash strapped and developing world government. It’s also a way for citizens to bypass some of the hurdles they face from their own personal situation and government restrictions and access public services directly.

I am not comfortable with either of these ideas. In an ideal world, we would have excellent public transport and government managed temporary residences and wouldn’t need Air BnB and Uber. But we don’t. We live in a world of band-aid government.

These are band-aid public policy ideas and hence fall under the “crazy” category.