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Amanda & the university “brats”

Amanda Vanstone makes two key points in her op-ed this morning:

(i) That university students free ride on the community by having most (about 60%) of the costs of their education paid for by taxpayers in general (including those who do not benefit from tertiary education).
(ii) That these subsidies mainly go to the wealthier sections of the community since, on average, it is these wealthier students who end up going to university.

I think she is partly right too that the current mob of protesters look like an unattractive looking bunch of spoiled brats. They don’t offer logic or arguments only adolescent slogans.

Setting low education costs can be justified if there are externalities from having a well-educated community in terms of less crime, better social decision-making and so on. The fees then cover the private benefits students get in terms of better incomes. This sort of perspective suggest a lower charge for all students attending university – irrespective of their income. 60% average subsidies suggest these external benefits are quite hefty. It might be hard – but I imagine not impossible – to come up with a solid justification for them. It is certainly crazy to seek “free education” since then people will be consuming an expensive service that yields social benefits less than the cost of delivering the service.

Another argument for subsidies is based on an equal opportunity starting point in society. This seems a much stronger argument to me. People irrespective of their socio-economic background should have the chance to attend a university if their abilities are great enough. But this does not seem to steer things in the direction of the current HECs. Rather it suggests giving targeted scholarships to those from economically disadvantaged backgrounds or perhaps highly concessional HECs arrangements for such students.

I guess a final argument that can be advanced is that education is not primarily an investment in an individual’s human capital but is a basic right that enhances a community’s sense of intellectual well-being.  As an economist I have only limited respect for these types of arguments –  current trends in the universities seem to me to suggest a diminishing role for promoting learning in general.  The universities are primarily unadorned degree factories. This is one of the reasons the protesting students appear to be such barbarians – they have not, in fact, received much of an education.

HECs is an intervention that helps people fund their educations in capital markets that don’t work well but the scheme doesn’t substantially address the inequality issue.

I am pessimistic about the future of the Australian universities on the basis of what I have seen as they have evolved over the last 30 years. The rise of managerialism and the “dumbing-down” of curricula are doing far more damage to the community than changes in the way fees are levied. But that is a topic for another post.

11 comments to Amanda & the university “brats”

  • I generally don’t approve of the budget changes to universities, but there is one that I like. If universities set their own fees, they can choose to means test them, and theoretically, fees for low socioeconomic background students could actually fall.

    The current system is far from perfect. There are some perverse incentives for universities.

    It is in the interests of universities to enrol students who can’t possibly hope to get degrees. Sure the university only gets their money for one or two semesters, but money is money, and large first year units are money spinners that cross subsidise other parts of the university. And it is actually pretty easy to look at a students high school marks and tell them what the probability of surviving a particular unit is.

    It is also in the universities interests to retain students who are found to have plagiarised. In at least one case I know of, tutors make unpaid work for themselves if they identify plagiarism. So they don’t.

  • Peter Rickwood

    Having left high school in 1993 and been involved with the universities as student, tutor and/or employee for most of the period since, I just have to pipe up and say I agree with you Harry about the bad trends in Australian universities. My observations:

    * A proliferation of managerial staff: Research Development Managers, External Engagement Officers, etc.

    * Lower standards for undergrads, and especially for full-fee-paying students. This includes, as John Brookes says, taking a head-in-sand approach not just to poor work, but also plagiarism.

    * A push to diversify income away from a shrinking category 1 funding pie. This is not necessarily bad, but in my experience has caused universities to lose sight of their core reasons for existence (public good research, teaching, and contributing to public debate).

    * Increased gaming of the funding system and university level performance indicators. In my experience it was more common a couple of decades ago for an academic to concentrate on his/her research, and trust that high-quality publications would follow from that. Now, publications are centre-stage, which admittedly makes academics more accountable, but has also encouraged the production of a lot more low quality research papers, and a “minimal publishable unit” mindset that is bad for research, even if good for research outputs.

  • Michael

    I’m sorry but I can’t believe how easily you people have fallen for a cheap reframing of the issue. So higher education is going to be reduced to a matter of personal acquisition? A simple exchange of money for empty salary ranking credentials? What a joke. You shouldn’t be taking up space in universities if that’s the game you’re playing.

  • Stan Griswald

    “HECs is an intervention that helps people fund their educations in capital markets that don’t work well but the scheme doesn’t substantially address the inequality issue.”

    Professor , help me understand- what capital markets? Are you talking about the government going to the bond market to finance HECS?

    How does inequality come into it? Two med students, one upper the other lower middle close will both come out of the course with the same degree and enter the workforce at the same salary base.

  • hc

    People can’t borrow against future income to finance studies in private capital markets.

    Doesn’t address the issue that poor students face greater difficulties funding education.

  • Stan Griswald

    How would they face greater hurdles? Fees aren’t paid upfront while the impact is felt on potential future earnings. As you’re not advocating funding for pocket money I fail to see the problem.

  • 2 tanners

    The protesters are not barbarians. They are radicals who have been presented with their first genuine issue affecting themselves and their fellow students in donkeys’ years. I’d guess that their personal appearance will do them no favours and their attitudes are likely to stir up animosity in the undecided.

    The bigger question for me is how this will play out in the broader space. Will people think “Look at those animals” a la the attitude towards the early Vietnam protesters, or will they think (because they ARE or sympathised with those same protesters) “At last the kids of today have a social conscience”?

  • hc

    That’s true it is better to see many university students as older children. Is it social conscience to complain about fees you have to pay or is it self-interest? It seems to me more unambiguously self-interest than complaining about the Vietnam War (as I did in the early 1970s) given that I faced the prospect of being conscripted. The recent surge of student activity seems to me to reflect self-interest. Fair enough but do it with civility not as a demanding brat.

  • derrida derider

    I really hate that line about uni education being a gift from taxpayers to the well off. We have had a strong HECS scheme in Australia since 1915; it’s called “progressive income tax”.

    Any private economic benefit from a uni education is recovered by the government at the graduate’s marginal tax rate – and for much of their lifetime that will be at or near the top rate (plus, of course, you should add on consumption taxes from the higher spending that higher income permits). Simple calculations based on the graduate earnings premium, adjusted down for screening effects, show that free tertiary education is a really good investment FOR OTHER TAXPAYERS. And that’s before you even think about positive externalities, non-income benefits, equality of access, etc.

    How hard is it to grasp that income and consumption taxes are, inter alia, a tax on the return to human capital investmment? And that therefore an appopriate use of these taxes, on efficiency grounds, is a heavy offsetting subsidy to this investment? There is no call for a further discriminatory tax.

  • derrida derider

    “… it is actually pretty easy to look at a students high school marks and tell them what the probability of surviving a particular unit is” – John Brookes

    My understanding is that the TER or similar score correlates very poorly indeed with the dropout rate. Admittedly I haven’t looked at the literature in many years, but that used to be the case – is it not still so?

  • hc

    DD, I assume that you are saying that transfers to wealthy students ares offset by the higher taxes they pay. But many people pay high rates of tax who don’t go to university – particularly middle income earners. I think the well-off do get a transfer on balance.

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