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Why don’t you just get ahead you lazy bum

March 28, 2011

In this extremely depressing look at employment stats by usually ultra-left-wing-Marxist-Commie Gordon Campbell (not really, he’s mostly just a reasonable, what would you call it, “free market leftie”?) we find this statement:

In sum – despite the cost and effort involved in getting a university degree, many twentysomethings are finding the investment that they (and their parents) have made in tertiary education isn’t necessarily paying off with a commensurate job, let alone with a substantial wage and a career path.

This suggests that Mr. Campbell has pretty much bought into the “tertiary education as private investment” idea. As you can see from the Gordon Campbell article and the Paul Krugman article he links, university degrees are not in actual fact a particularly good investment. But I can’t be alone in thinking that this entire concept is actually a red herring. Why must it be a private investment? A few objections of mine:

1. A lot of people just want to learn about cool stuff, whether it’s the way language works, abstract philosophy, or ancient history. Studying at university is just about the only way to learn from world experts in topics that don’t have immediate commercial applications. It’s a good thing for a society to be aware (through the presence of experts) of the history and present state of human knowledge in all fields, not just currently fashionable/profitable ones.

2. As demonstrated by the comment of Yvonne Godfrey in the Campbell article, the entire notion of ‘getting ahead’ by having ‘better qualifications’ is self-defeating. Hardly anybody can ‘get ahead’ of everyone else, and those not ‘ahead’ have ‘failed’. This leads me to believe that anyone uttering the phrase ‘get ahead’ can be safely ignored because, as an ironclad logical deduction from the plain meaning of the phrase, they don’t care about where most of the population is going to end up. Also, because ‘everyone’ (poor people excluded) gets a bachelor’s degree nowadays degrees are ‘worth less’ in the marketplace, but people without bachelor’s degrees are becoming even more ‘worthless’ because of that same fact. It’s kind of a weirdly perverted crab mentality: a degree won’t make me better than everyone, therefore there’s no point everyone having them.

3. Many of the astonishing changes in the world during the last couple of centuries have been due to research whose consequences were impossible to forsee at the time. For instance, GPS navigation systems would be impossible without Einstein’s abstract theoretical edifices. Yet somehow Einstein (even though he worked in the patent office!) never got his justly earned future income from companies that make and use GPS systems. Alan Turing basically invented the entire concept of software in the 30s, then went on to apply his strange and super-abstract training in mathematical logic to play a major role in the defeat of Germany in World War II. It’s pointless to view this type of education as a “money in, money out” investment.

We're all nothing but crabs in a bucket marked 'knowledge economy'...

Ultimately these objections are probably futile, and the economic investment view may slowly choke the life out of Universities. Because public education is such a tremendously useful public good, and because people without rich parents can’t afford to pay all the costs* of a university education, some amount of government spending on universities is needed. But when a degree is viewed as a voucher for higher pay in the future the inevitable conclusion of the market is that students should basically pay something of the order of the future income they expect to gain from the degree in order to get it.

How else do I think we can determine what should students pay though? Well dammit, I’m not even a medical doctor let alone someone who can work that out. But I don’t need a perfect replacement to see that the current method of squeezing people between (a) paying all that they might earn from their degree to the university because they’ve made a sound private investment and (b) paying all the costs of their education in a ‘useless’ field because they aren’t going to immediately turn their degree into a piece of marketable intellectual property is dumb. The crazy rate of increase of fees simply makes no sense when (by all accounts) the ‘investment’ is becoming less valuable.

*As currently reckoned, but let’s not get into the discussion about whether universities should spend so much on marketing and admin, or how the ‘profitability’ of departments is measured, or (as in the US system) spend tons of money on stadiums and sports coaches.

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5 Comments leave one →
  1. James permalink
    April 18, 2011 1:45 am

    Wrt 1: People are perfectly capable of learning about cool stuff without going to university or, if they do go to university, without other people being forced to pay for it. In addition, that “cool stuff” is of interest to a person makes it a private benefit. If you like (though I admit this is by no means part of current practice) you can include these benefits in the return on the educational investment. This boosts the supposedly low return that Krugman quotes. A quick flick through this http://www.oecd.org/dataoecd/52/4/37392653.pdf, however, suggests that the return to a bachelors degree in NZ is around nine to ten percent – a very good investment for young New Zealanders [I couldn’t be bothered looking for a more recent study – but this is still indicative]).

    wrt 3: you’re presenting your own red herring here that is really arguing for liberal public funding of universities, here, not against prospective students making more considered decisions in their choice of education (or investment, if you will). The average student is not Einstein or Turing, or anything like them. Even most bright students won’t become researchers. You can have your public funding AND suggest that students and parents think more carefully about what to do after highschool. I highly recommend reading this http://www.overcomingbias.com/2011/04/what-arent-they-thinking.html.

    A couple of other things: I’m finding myself less and less inclined to buy the “university education as public good” line. Take this for example: “Counter to modernization theory, increased human capital [from education] did not produce more pro-democratic or secular attitudes and, if anything, it strengthened ethnic identification. – That is from an RCT study of girls in Kenya.” ~ http://marginalrevolution.com/marginalrevolution/2011/04/sentences-to-ponder-9.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+marginalrevolution%2Ffeed+%28Marginal+Revolution%29&utm_content=Google+Reader

    Kinda gives a decent knock to the ol’ “we’ll all be so much more democratic and civic minded once we’re educated!” idea. I note also, that other than in economic assessments of the public returns to education, I’ve never seen a serious justification for “education as public good” other than ALDaily-style wanking over the aforementioned line. (And if you DO want to look at those economic analyses, you’ll see that higher-education is least good “good” of all of the levels of education – early childhood education has the highest social return, university the lowest).

    “The crazy rate of increase of fees simply makes no sense when (by all accounts) the ‘investment’ is becoming less valuable.” – it makes perfect econ101-style sense: university education has a fairly static short-run supply, but demand for it has increased rapidly. What happens when demand increases but supply doesn’t change? Say it with me: “the price of the good rises”.

  2. April 18, 2011 3:37 am

    “I’ve never seen a serious justification for “education as public good” other than ALDaily-style wanking over the aforementioned line.”

    How about the influence that research done at universities and by people who learned how to do research at universities has had on the development of computers, lasers, nuclear power, GPS, cellphones, industrial robots, healthcare, education theory, economics, art, and everything else?

    It seems to me that by far the greatest difference between life in 1900 and 2000 is that technology is unimaginably more powerful, and (to turn your question around) I’ve never seen an argument for how all this could have developed without ‘blue skies’ research that has so far only really been done by universities. Does that count as a public good or do you have a solid historical argument that it all would have happened with the market paying Schrodinger and Heisenberg the value of their marginal product or whatever the jargon is…

    “Wrt 1: People are perfectly capable of learning about cool stuff without going to university or, if they do go to university, without other people being forced to pay for it. In addition, that “cool stuff” is of interest to a person makes it a private benefit.”

    I would answer:

    Poor people won’t be able to pay for the entire cost of a university degree themselves. Bad luck I guess.

    Good teachers and course designs etc. are infinitely better than self-directed reading from textbooks (and any uni textbook is written by…an academic anyway). Also before you know about a subject it’s pretty hard to know what kind of path to take…I dunno this point kind of seems like saying “there’s no point in getting piano lessons as you can just teach yourself.”

    The government provides many things that are in a sense ‘private benefits’ (in the sense that you could say to someone: BUT I DON’T WANNA PAY FOR YOUR THING), but society generally agrees that you pay your taxes and you get some mix of stuff for them. (examples: healthcare, disability support, libraries, parking spaces).

    Is it really so abominable to assert something along the lines of “I want to live in a society where everyone is able to learn about subjects that interest them, the learning of which can improve their experience of the world in general in way that can’t really be measured in an economic sense” and subsidising education? I think it’s possible to go beyond an absolutely self-interested perspective where any government spending of ‘your taxes’ that doesn’t directly benefit you ought to be eliminated. For example I don’t want to live in a society where art is treated as a simple economic product, so I like the idea of subsidising artists because even if lots of their work turns out not to be to my tastes some of it will be and a great work of art is one of the few things that it’s worth having a job for: so that you can afford to eat and not die so you can experience it.

    I’m pretty sure that if there was some way to do the accounting the benefits to society from research done at universities are worth the costs…how can you really measure the ‘value’ of the existence of lasers, or intellectual developments which mean eg. people with Down syndrome can live in normal society instead of being locked up in institutions, or the feelings of wonder inspired by Hubble Space Telescope images? I think the narrow degree-by-degree economic investment analysis of universities just leaves out so many fundamental changes to the world and people’s perceptions (both individually and collectively) that it feels like assuming your conclusions to even start thinking of education as entirely a consumer/product relationship.

  3. James permalink
    April 18, 2011 11:00 pm

    I present the book (or, at least, movable printed type) as an invention of immeasurable societal and technological progress that was invented in whatever could be called “the market” in the thirteenth century. I present only one because I don’t want to say that all technological developments that were developed at publicly-funded universities (side note: are you certain that all of the examples you mention are entirely, or even partly, publicly funded…?) would certainly have been developed otherwise. I just want to suggest that it’s possible: I don’t think anyone’s in a position to state with any kind of confidence what social happenstance would or wouldn’t have occurred in this or that counterfactual world.

    I wonder whether you are confusing “public goods” with “positive externalities” or “spillovers”? The defining characteristics of public goods are that they are non-rivalrous (I can consume them without diminishing the amount available for you to use) and non-excludable (I would find it impossible or very, very difficult to stop you using them). The products of tecnological improvement are almost always rivalrous and excludable: nuclear power is not in unlimited supply and simply lying around on the road for me to use; there are a limited number of computers and while I’m using one, you cannot. This means there is good reason for private firms to develop these technologies. However, if the goods have positive externalities (my use of them benefits you in some way – e.g. the benefit to you of me using your blog… :-P), then private firms will produce less than the socially optimal number of them. There may be a case for government subsidization here. However, the case is based on the good producing an externality, not on the (apparently incorrect) fact that it is a public good.

    [I wonder whether you mean that it’s the “knowledge” that is the public good, though. But I’m still not convinced in this case because you often can exclude people from that knowledge – think of the fees journals charge to access their content. Is this what you meant to refer to, though?].

    On your last points: you’re making a social contract argument, right? Something like “we’re all implicitly agreeing to paying for some of each others’ pet projects”? Aside from the obvious moral hazard problem (people saying they’re interested in having the tax-man pay for more than they really are so that they get a better deal than they would have otherwise), I find this line of conversation fairly uninteresting. You’re not saying anything about how society ought to be, just how it is and how you’d like it to be (your words: “For example I don’t want to live in a society where art is treated as a simple economic product”). You ought to know better than to confound “is”es, “I’d like it to be like”s, and “ought”s, Giles.

    “I’m pretty sure that if there was some way to do the accounting the benefits to society from research done at universities are worth the costs” – In what way is this not “assuming your [own]conclusions”, Giles?

    [Also, I don’t like your final comment. It’s middle reads too much like the ALDaily wankery I mentioned before.]

  4. April 19, 2011 4:26 am

    I dunno, I just absolutely detest the idea that everything in life is a tradeoff between values etc. I mean surely you’ve fallen in love with a girl and forgotten about how much money you’re losing in the time you spend kissing her, yet you can spend practically infinite time making out…suddenly you’ve “lost” $250 in what you could have earned working for the Reserve Bank Resarch Department, I suppose that girl was probably worth >$250 right?

    “I don’t think anyone’s in a position to state with any kind of confidence what social happenstance would or wouldn’t have occurred in this or that counterfactual world.” Yes. Effectively I find that a great percentage of economic arguments aren’t really based on real life ie. historical facts in fact they are “just so stories” which make sense but have no solid basis.

  5. Poms permalink
    November 3, 2011 1:26 pm

    Giles is always right. I think we need to abandon Phil Goff on the left and elect Giles as new prime minister of New Zealand, or at least have him going foot to foot in some kind of debate.

    Interesting how an argument with an economist always seems to come down to some kind of statement along the lines of: “oh you just don’t understand economics, if you did, you’d agree with me” or “Things that aren’t stated in my language, don’t count/are not interesting, not worthy consideration.” Bleeds logical positivism, or even Freudian psychology.

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