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October 27th, 2006

My former ANU colleague and occasional co-author Bruce Chapman is well-known as the progenitor of the HECS scheme, and as a proponent of income-related loans more generally. He and I along with Arie Freiburg and David Tait worked on a proposal for income-related fines for criminal offences a while back.

Both schemes and others are discussed in Bruce’s new book, to be launched next week. It should be well worth reading.

Hecsbooklaunchoct272006

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  1. Terje (say tay-a)
    October 27th, 2006 at 21:48 | #1

    He and I along with Arie Freiburg and David Tait worked on a proposal for income-related fines for criminal offences a while back.

    Is that like where a person who earns $100 per hour is fined one hour of their time, whilst for the same offence somebody who earns $20 per hour gets fined one hour of their time?

  2. wilful
    October 28th, 2006 at 11:10 | #2

    Apparntly a similar proposal is already operational in Finland, the country with the lowest gini coefficient. Perhaps apocryphally, the CEO of Nokia was caught speeding, and faced a fine in the tens of thousands of dollars. Finns generally support strong measures to reduce inequality (following empirical evidence that this is the best utilitarian goal for all members of a society), but considered this to be a bit too much.

  3. wilful
    October 28th, 2006 at 11:14 | #3

    Oh, and as a victim of HECS (it was introduced the year I started Uni), I thoroughly support it in it’s initial application. It was when the bastard politicians started offering upfront discounts for the rich, and when the Government lowered the payback threshold to quite a low level, oh and when the GST spike was passed directly through to me, that I got pissed off with it.

    Apparently it is, even in its original form, still a barrier to University entry for poor kids, who are understandably far more debt-shy than middle class kids.

  4. October 29th, 2006 at 07:29 | #4

    What good came of HECS – besides a debt to the tax office? It led to ‘income support’ loans to make up for the defficiency in AUSTUDY, which remainded at its sub-poverty levels with no need to increase now that the ‘poor’ could further obtain loans to cover the difference. Of course, it would only be repaid once you hit the average wage, and the interest rate was cheap. The threshold now is way below the ‘average wage’, repayment rates have gone up. The ‘good idea’ brigade seem to be either those who got a free eductaion, can afford the rich repayment bonus rate, or those blithely self confident students who assume that they will make a cool million within five years of obtaining their undergraduate degree. I think it sucked, sucks , and will continue to do so until it is abolished.

  5. proust
    October 29th, 2006 at 09:55 | #5

    If I am going to pay income/asset-related fines, why shouldn’t I get an income/asset related vote at elections? Seems fair to me.

  6. proust
    October 29th, 2006 at 10:04 | #6

    HECS is a good system provided you get value for money, which in Australia you do not. You get a choice between sclerotic, inefficient, non-performing state-run institutions. The only two Australian universities to make it into the world Top 100 are ANU (at 54, and it is a special case since the undergraduate part of ANU is terrible by comparison to the graduate schools), and Melbourne, at 78.

    My advice to talented Australian students (and I readily give this) is to go to a top US institution if you can find some way to get there, particularly for graduate studies but even for undergraduate if you have the resources.

  7. Ernestine Gross
    October 29th, 2006 at 17:51 | #7

    proust,

    As for your advice:

    Would you care to check your statistics, please. And, would you,
    please, state your source such that you come up to the standard
    of first year, first semester Australian undergraduate students
    in state-run universities.

  8. proust
    October 29th, 2006 at 18:57 | #8

    http://ed.sjtu.edu.cn/ranking.htm

    There are plenty of other global comparisons if you don’t like their methodology. Australian universities do poorly on all of them, except perhaps when ranking by percentage of lefty academics.

  9. Ernestine Gross
    October 29th, 2006 at 20:06 | #9

    proust,

    thank you for stating your reference. I have some questions:

    a) Do you think the London School of Economics has such a poor rating because they hired v. Hayek as a response to Keynes from Cambridge?

    b) Where is Syracus university? It does not seem to rank anywhere.

    c) What is a “lefty academic”

    d) Would you agree that no education other than primary school is required to read ranking tables?

  10. wilful
    October 29th, 2006 at 20:08 | #10

    Marko, what is wrong with HECS? It has no connection whatsoever with Austudy. It doesn’t have to be paid off until well after Uni days, no one who couldn’t afford it would be taking out a loan to live on. That ‘debt to the tax office’ is a small proportion of the cost of your education.

    I’m not in any of your three groups. I incurred my debt, got a decent paying job becuase of my not free education (‘free’ education still means someone has to pay for it, including all the poor PAYE middle income suckers who didn’t go to uni), then over a decade or so, paid it off. The system worked. Howard has fiddled with it, but in its original form it had few issues. The only substantive issue anyone has come up with is that poor kids are afraid of any debt – that’s a real problem but not an insurmountable one.

  11. chrisl
    October 29th, 2006 at 21:04 | #11

    The real story here is how much tradesmen are earning.
    While the nerds are unhappily incurring their HECS debt the tradies are earning as they learn
    With moderate savings they should be able to have savings equivalent to a uni student’s HECS debt
    And when they are finished their apprenticeship, the sky is the limit
    How did it come to this? Closing tech schools,privatisation,job snobs. Who knows?

  12. proust
    October 30th, 2006 at 03:29 | #12

    Ernestine:

    a) I doubt it. Have you been to LSE? It’s your typical sleepy, non-competitive public UK institution.

    b) Syracus is not in the list. But Syracuse is. I assume you have the requisite education to find it for yourself (see D below).

    c) An academic with left-wing political views.

    d) Agreed.

  13. Ernestine Gross
    October 30th, 2006 at 13:44 | #13

    Proust,
    (a) You agree that the London School of Economics (LSE) has a ‘low rank’. But you don’t think that the low ranking of the LSE is due to it having hired F.A.v.Hayek in response to Keynes at Cambridge. You suggest that the ranking of the LSE has something to do with “It’s your typical sleepy, non-competitive public UK institution.� Interesting, proust. Why would F.A.v. Hayek – the champion of ‘free enterprise’ have worked at a ‘non-competitive public UK institution’ rather than at one of the ‘top’ US private universities you advocate Australian students should go to? Is it because the ‘top’ US universities did not recognize ‘the value’ of F.A. v. Hayek at the time or is it that the ‘top’ US universities did recognize ‘the value’ of F.A. v. Hayek? (I do not wish to be disrespectful to F.A. v. Hayek – it is really those who are building up F.A. v. Hayek as a guru of sorts with whom I have a bone to pick).
    I recall you having said you are not an economist but you come from a math background. Given this information, why is it that you didn’t recommend the second place in the world list over the first place (ie Cambridge, UK. over Harvard, US)? And, are you sure, some Australian universities wouldn’t be ‘better’ in this field than number 1 in the world?
    (b) You are perfectly correct, Syracuse is listed somewhere on the many ranking tables you provided. Syracuse is not in the top 100 (‘world’). Syracuse is not in the top 100 regional (Americas). It is listed in the 200-300 ‘world’ list. (There is hardly an Australian University below this category.)

    But what about “Syracus� – the university I was looking for? Syracus as in:
    University of Syracus, Sawyer Law and Politics Program Research Workshop: Petra Hejnova, Maxwell School, “Women’s Mobilization and Democratic Transitions: A Study of Regional Patterns”
    Source: http://lsolum.typepad.com/legaltheory/2006/01/legal_theory_ca_1.html

    And what about this: http://encyclopedia.thefreedictionary.com/www+syracus+edu ?

    c) Thank you for telling me that the term ‘lefty academic’ means to you an academic with left-wing political views. Operationally, and IMHO, a ‘lefty academic’ as defined by you, is a straw-man, created by people, like you, who publish quite ridiculous and derogatory stuff about Australia universities..

    d) I should think the meaning of ‘agreed’ is now ambiguous.

  14. proust
    October 30th, 2006 at 15:27 | #14

    Ernestine:

    a) I did not advocate the specific ranking in that list, just that Australian institutions rank badly no matter how you cut it. Cambridge and Oxford are both fine institutions. Given a choice I would still recommend Harvard, sinply because on graduation you have far greater opportunities on your doorstep than you do in bureaucratic Europe. Insofar as Hayek is concerned – unfortunately one guru does not an institution make.

    b) Umm, Syracus is a misspelling in that case. They meant the same “Syracuse” as in the list. Or do you know that already and this is just some kind of joke?

    c) It is hardly ridiculous and derogatory to point out that Australian Universities rank poorly internationally – that is just a fact. And it is hardly ridiculous and derogatory to therefore conclude that HECS payers are not getting good value for money.

  15. Bingo Bango Boingo
    October 30th, 2006 at 17:12 | #15

    That ‘Syracus’ line is a cracker, Ernestine. Your absurd formal style is also brilliant. Come on, ‘fess up to your obvious parody and put poor old proust out of his misery!

    BBB

  16. stephen bartos
    November 1st, 2006 at 09:42 | #16

    for those interested in a really good overview of the business of university rankings, see Simon Marginson’s keynote speech to the recent national conference on University Governance. rankings all have limitations; the Jiao Tong list cited by proust for example overweights the number of Nobel prize winners at a university (I suppose it’s a proxy for something useful – just not sure what).

    that’s off the topic a bit though – the Chapman book seems worth getting, and I mostly support the line; however one of my difficulties is the proposed use of income contingent loans in situations where nothing at all would be preferable (eg, at the risk of opening up another very complex debate, drought): in these circumstances an ICL is very much a second-best solution.

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