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Sandpit

November 12th, 2010

Another thread for lengthy debates, off-topic exchanges, long posts on regular hobby-horses etc.

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  1. Alice
    November 14th, 2010 at 08:42 | #1

    Whoopee – another sandpit. Spare a thought for British uni students who have had their uni fees tripled by the conservative fiscal hawk government. Nice one. The bankers crash the economy and the conservative govts shifts the costs to youth.
    As one student put it

    “Politicians don’t seem to care. They should be taking money from people who earn seven-figure salaries, not from students who don’t have any money.”

    Couldnt agree more but we all know how upset the seven figure salary earners get when you mention the word tax. There goes the youth vote for the old fogeys party.

    http://english.aljazeera.net/news/europe/2010/11/2010111014445069753.html

  2. Jarrah
    November 14th, 2010 at 12:22 | #2

    “They should be taking money from people who earn seven-figure salaries, not from students who don’t have any money.”

    How are they taking money from students?

  3. November 14th, 2010 at 17:13 | #3

    It wasn’t bankers that crashed the British economy.

    They have had 13 years of a particularly inept government. In short, the Blair government ran out of British people’s money.

    Uni students being asked to pay their own way. Gee no free ride? (sob, sob, sob)

  4. Alice
    November 15th, 2010 at 07:19 | #4

    @Jarrah
    Its called Monopoly pricing Jarrah – the Monopoly of Government pricing – ie a tax by any other name – There is limited supply by the Government, a captive student pupulation already half way through their studies in many cases, and a sole legislative pricemaker.
    Tell me how it differs to a tax except that poor youth are being burdened instead of those on seven figure salaries.

  5. Alice
    November 15th, 2010 at 07:24 | #5

    @Steve at the Pub
    says “Uni students being asked to pay their own way. Gee no free ride? (sob, sob, sob)”

    Another pat cliched comment. Nothing real about the sound of those sobs. More “bugger you Im alright Jack and Id dont want to pay a cent in tax for public capital investment” courtesy of SATP.

    Trouble is SATP students like the odd beer in a pub. Im not that amazed that you cant put two and two together.

  6. Jarrah
    November 15th, 2010 at 10:35 | #6

    Alice, you still haven’t shown how they are “taking money” from students. Reducing subsidies is a lessening of giving, not a taking.

  7. Ikonoclast
    November 15th, 2010 at 16:06 | #7

    JQ, I think Steve at the Pub should be banned until he removes the beer advertisement from his picture icon.

  8. Chris O’Neill
    November 15th, 2010 at 20:07 | #8

    I brought the following non-nuclear comments from the radio-active thread which is currently not accepting new comments.

    Myself:

    We could reduce CO2 emissions at a cost of $15/tonne CO2 at the flick of a switch (well a few switches anyway). Just switch off the electricity to the Aluminium smelters in Victoria and for every tonne of CO2 emission avoided, the reduction in revenue to the electricity generators is $15 (at 2c/kWh).

    Chris Warren:

    Switching off aluminium smelters doesn’t make sense,

    to you, unsurprisingly,

    and your calculations are a jumble.

    Pretty simple to understand for most people. 1 MWh of electricity generated in Victoria causes 1.356 tonnes of CO2 to be emitted. Aluminium smelters pay $20 for 1 MWh, so the electricity supplier receives $20 for each 1.356 tonnes of CO2 it emits, i.e. $15 for each tonne of CO2 emitted. We could pay the electricity supplier $15 for every tonne of CO2 he now emits but pay it without him actually generating the electricity or the emissions. The electricity supplier gets the same revenue as he used to (which should make him happy, especially since he doesn’t have to generate as much electricity as he used to) and it only costs us $15 for every tonne of CO2 emissions avoided.

    Chris Warren:

    I would imagine that a better scheme would be for the government to fore go a couple of stupid planes and build a solar panel manufacturing plant

    Yes, all you have to do is tell the government they’re stupid and they’ll do anything you want. I can tell you’re the master negotiator, Chris.

  9. Alice
    November 15th, 2010 at 21:12 | #9

    @Jarrah
    Jarrah – what on earth is that in your icon?
    Some sort of voodoo man?

  10. Alice
    November 15th, 2010 at 21:17 | #10

    @Jarrah
    Higher price for education of students = taking more money from students Jarrah. Why should those students with intelligence and with merit and with a hardworking attitude be excluded from the education market Jarrah. You know the benfits of skills – it adds to productivity. Whoever said education is a market is completely cracked. Education is a public good that adds value now and in the future by training and educating a workforce for the private sector to get value. Only a stupid country run by stupid policy makers would see education as a user pays service Jarrah…and we know many countries have lost the plot in terms of reducing all social infrastructure to market models. Markdown models more like.

  11. November 16th, 2010 at 10:46 | #11

    It is not exactly “taking” money. It is an investment. They get an education in return for the money. This education enables them to draw a higher salary. This higher salary is theirs to keep.

    Socialised cost.
    Privatised profit.

  12. Jarrah
    November 16th, 2010 at 10:48 | #12

    It’s a lifesize sculpture in Tasmania, hewn out of wood. I thought it haunting, took a picture, then on a whim chose a close-up as a gravatar.

    “Higher price for education of students = taking more money from students Jarrah.”

    Actually, since they have a HELP-like system, no money is “taken” from students. They get guaranteed loans from government at a below-market interest rate that only has to be paid back once they go over an income threshold. Students pay nothing, workers who have benefited from an education pay instead.

    The changes means more students have access to the loans, more scholarships, and that graduates pay less per month.

    See here: http://www.bis.gov.uk/studentfinance

    Your ill-informed point of view will now hopefully be tempered by these facts, as you mentioned should occur on another thread.

    That dealt with, let me bring up another point – since taxpayers are paying for students to learn (about half the total will be paid by graduates, the remainder made up from the rest of the population), and not all taxpayers went to university, and those that go to university are more likely to be among the wealthier end of the social spectrum, this means that university subsidies are a shift in wealth from the public to people already privileged – in other words, regressive middle-class welfare.

  13. Alice
    November 16th, 2010 at 19:17 | #13

    @Jarrah
    You mean my quote “if the facts change I change my mind. What do you do Sir?”

    Do you know who owns this quote Jarrah and it was used while he was playing poker?

  14. Alice
    November 16th, 2010 at 19:25 | #14

    Jarrah and SATP

    May I refer you to this quote on the erosion of public funding for education (and Prof would know ALL about how its eaten away at unis).

    “And so I really believe very strongly that the willful undermining of universal public education by our governments and the direct or indirect encouragement of private education is the most flagrant betrayal of the basic principles of middle-class representative democracy in the last 50 years.

    Start with this link

    http://www.abc.net.au/specials/saul/fulltext.htm

    Then move to something even deeper and better

    http://www.workingtv.com/johnralstonsaul.html

    Then come back and tell me if you have changed your minds.

  15. Jarrah
    November 16th, 2010 at 21:41 | #15

    Ah, Alice. If ever I got a response that addressed my points, I’d know it wasn’t you.

  16. jakerman
    November 16th, 2010 at 22:12 | #16

    Jarrah :
    since taxpayers are paying for students to learn (about half the total will be paid by graduates, the remainder made up from the rest of the population), and not all taxpayers went to university, and those that go to university are more likely to be among the wealthier end of the social spectrum, this means that university subsidies are a shift in wealth from the public to people already privileged – in other words, regressive middle-class welfare.

    1) Would be more regressive if there is a bias toward the more wealthy accessing uni;

    2) Society in general benefits from better education, thus putting all the cost on the graduate would be a subsidy to society;

    3) Not all uni grads are at the wealthier end of the spectrum (Social Workers, etc.)

  17. November 16th, 2010 at 22:19 | #17

    Graduates only have to pay for their education if they make big money. Those far from the wealthier end of the spectrum would not be paying.

    Society in general may benefit from better education, however the better educated expect to be paid more, society may have paid for the education, but every time that education is applied, society has to cough up (again).

    The poor little dearies, expecting to socialise the cost, & privatise the salary.

  18. Jarrah
    November 16th, 2010 at 23:25 | #18

    Jakerman, we already know those who will attend uni (ie before they start) tend to be wealthier than those who do not. I’m not talking about afterwards. Society benefiting is no argument. Positive externalities do not make a public good (another thing Alice got wrong), and there’s an endless list of activities that provide positive externalities – should we subsidise them all?

  19. jakerman
    November 17th, 2010 at 07:34 | #19

    Steve at the Pub :
    Graduates only have to pay for their education if they make big money. Those far from the wealthier end of the spectrum would not be paying.

    No so, the wealthy end of spectrum starts at about $55k, but repayments start at $12k lower than that, and below the average income for non-uni/non trade jobs (retail and hospitality).

    http://www.livingin-australia.com/salaries-australia/
    http://www.ato.gov.au/individuals/content.asp?doc=/content/8356.htm&pc=001/002/046/002/013&mnu=&mfp=&st=&cy=1

  20. jakerman
    November 17th, 2010 at 07:41 | #20

    Jarrah :
    there’s an endless list of activities that provide positive externalities – should we subsidise them all?

    Yes. We should subsidies them at least to the extent that the sum produces net improvement to society. That is an element of social democracy.

    Just like we should tax ‘unsustainable bads’, we should promote ‘sustainable goods’.

  21. jakerman
    November 17th, 2010 at 07:59 | #21

    Jarrah :
    Jakerman, we already know those who will attend uni (ie before they start) tend to be wealthier than those who do not.

    The biggest inroads into this disparity came with free higher education.

  22. BilB
    November 17th, 2010 at 08:37 | #22

    I don’t think that I know a single person with a degree who came from a privileged background. For my brother took 17 years to get his MBA working and studying part time. My very high achieving mate Lionel, who comes from a zero wealth background, took a lot of years as well to get his degrees with honours paying his way every inch. I’m with Jakerman on this. Higher education should be subsidised, for a lot of reasons. But one of the most compelling reasons is for the contribution to our social, art and technological advancement that comes largely free to us from the work done by universities of all kinds.

  23. Jarrah
    November 17th, 2010 at 08:59 | #23

    “Yes. We should subsidies them at least to the extent that the sum produces net improvement to society.”

    So we’re going to subsidise mobile phones, good-looking people, the eating of vegetables, being kind to mothers, durable shoes, sewing lessons, good musicians, webcams, reading Shakespeare, etc etc etc ad infinitum?

    How will you measure the net improvement each activity brings? Even just taking my extremely short list, who is going to agree that all those things produce a net improvement at all?

    Public goods are a good reason for government funding or provision (though some public goods can be provided privately), but the existence of positive externalities does NOT mean the activity is a public good.

  24. Jarrah
    November 17th, 2010 at 09:24 | #24

    Bilb, your anecdata is undoubtedly true, but meaningless. It is well established that higher income deciles have a much better chance of getting into university. So if you think it should be subsidised, you are in effect arguing that we should subsidise the rich and middle-class.

  25. BilB
    November 17th, 2010 at 09:49 | #25

    I don’t have a problem with that, Jarrah. I prefer to think of each young person as an individual starting their life independent of their parents. It is far more probable that unsubsidised tertiary education is a deterent for lower incomed university aspirants that priviledged ones.

  26. jakerman
    November 17th, 2010 at 09:54 | #26

    Jarrah So we’re going to subsidise mobile phones, good-looking people, the eating of vegetables, being kind to mothers, durable shoes, sewing lessons, good musicians, webcams, reading Shakespeare, etc etc etc ad infinitum?

    We do subsidies telecomunications to regions, and subsidising good looking people in the form of healthy people, and the other “goods” as part of school system.

    How will you measure the net improvement each activity brings? Even just taking my extremely short list, who is going to agree that all those things produce a net improvement at all?

    By evidence, reasoned argumentand and democracy, the later which need some repair to bulster it against plutocracy (which will be aided by good accessible eduation).

    Public goods are a good reason for government funding or provision (though some public goods can be provided privately), but the existence of positive externalities does NOT mean the activity is a public good.

    I don’t understant your argument in that latter half of your sentance.

  27. jakerman
    November 17th, 2010 at 10:05 | #27

    Jarrah :Bilb, your So if you think it should be subsidised, you are in effect arguing that we should subsidise the rich and middle-class.

    Except that the public subsidee reduces the disparity, by broadening the range of people in uni. And increases the public benifit of increasing education.

    The current trend to more psuodo market model and user pays is damaging the quality of education and thus is costly to society.

  28. Alice
    November 17th, 2010 at 10:41 | #28

    @jakerman
    One thing that always amazes me amongst the “pro private markets anti public services view” is that they absolutely deny in many cases that, as May stated so well in another post
    the concept of user pays (and pays and and pays and pays) is now becoming quite commonplace ie so called private provision has not increased competition in many privatisation expeditions, but instead has granted monopolies to private firms who now engage in monopoly or oligopoly price tactics.

    Yet the market faithfuls dont seem to notice that many such services are now hideously more expensive ie bank charges, toll charges, energy costs, rates, grocery costs and are accompanies by governments scrambling to get their income from new creations like registration fees, levies, parking fines and traffic fines…

    which all conspire not only against the household budgets of the poor but also of the middle and the wealthy.

    So we are overally paying higher prices for many now “marketised” services that were once public. The economies of scale have been lost to the government and to private firms as a result of this fundamentally flawed view that the market always does it better and cheaper.

    Its a nonsense view and its costing us all more – not just the poor but its also slowly sapping the economy.

    The reality is some people would rather pay much higher prices across the board for many services, higher than any tax rise by the government, just so that their taxes do not go to help another single human being in need.

  29. Alice
    November 17th, 2010 at 10:50 | #29

    @Jarrah
    Lol Jarrah. You know we sit on the opposite side of the fence on this one. We could go around in circles for days (weeks..years even). Kind of interesting Avatar though.

  30. Jarrah
    November 17th, 2010 at 10:55 | #30

    Or you could acknowledge the plain fact you got it completely wrong, as did the student you quoted, when you said they were “taking money from students”, and no circles need be gone around.

  31. Alice
    November 17th, 2010 at 11:07 | #31

    @Jarrah
    Jarrah you also say…without any recourse to the history of rises in hecs since 1990..
    “It is well established that higher income deciles have a much better chance of getting into university.”

    My point exactly. The parents of the poor cant afford the books or hecs or subsidising their kids needs whilst studying. Its not cheap. That is why subsidies and lower hecs and no hecs for the poor are needed. Every child in Australia should have access to tertiary education if they want it. In many cases they now need it when we have been made to all “get used” to the idea of a higher permanent NAIRU (what a load of garbage), unions have been smashed, the rich have gotten richer and now the mailroom boy needs a degree to work in mail sorting – add to that the removal of once publicly subsidised government vocational training like nursing and policing to unis where you now need a degree in nursing and a degree in policing plus they probably now have to buy their own uniforms (standard issue once).

    Jarrah – the government has come a long way in fifteen years in shrinking not only itself bit its fiscal committment to and responsibility for pro employment policies.

    In other words they have saved themselves a bucket load by shifting the costs on to our youth.

    Im not surprised more rich are likely to go to uni Jarrah…now. It wasnt always that way. Hecs wasnt always so onerous and you know what they say…the higher the price etc

    I dont want to go back to the years where only the elites can afford to go to uni. Do you really Jarrah? What a very bad idea that is when the mailroom boy needs a business degree. Do something about lowering NAIRU and you can charge what you like at unis, so those who can afford it can swan about studing hieroglyphics, and those who cant can get work, but you cant squeeze both ways.

  32. Alice
    November 17th, 2010 at 11:10 | #32

    @Jarrah
    No such luck. I never got it wrong at all Jarrah. Neither did the student.

  33. Alice
    November 17th, 2010 at 11:17 | #33

    A huge problem I have with only the rich going to uni is also the fact that the bastards will be sure to develop policies that are pro rich when they are there, so the rich will employ them after graduation and they later earn a rich salary and develop rich ways to pay less tax.

  34. Jarrah
    November 17th, 2010 at 12:47 | #34

    “I never got it wrong at all Jarrah. Neither did the student.”

    HAHAHAHAHAHAHAHA!

    Delusional to the bitter end, I see. Immune to facts. Students pay nothing, but according to you money is being taken from them!

    “the government has come a long way in fifteen years in shrinking not only itself”

    More delusion. Government is bigger now than ever before.

    “when the mailroom boy needs a business degree.”

    Delusion upon delusion. Even accepting this statement as hyperbole illustrating a saner idea, the dilution of degrees and the inflation of requirements is down to the proliferation of people going to uni, not the other way round!

  35. Alice
    November 17th, 2010 at 13:43 | #35

    @Jarrah
    says “Students pay nothing”.

    In the delusion stakes Im running a sad second to you. Now back to the link between NAIRU and going to uni instead of getting a job? You dont see any substitution effect there at all? Why do you think the government is so keen for youth to head off to “training”? Why do you think the private sector moans on and on about the need for “skills” and ‘education”. If they want it so bad and think ot will improve productivity (and give them more profits) why shouldnt both government and business tip in?
    In the 1990s there was such a thing as “the training guarantee levy”. Even now some firms will pay for the education of their employees but many more would fight such legislation tooth and nail just as they did when we had it.

    Consider compulsory levies on private firms for education it a user friendly way of imposing a higher price on those who also get the benefits of a students education – giving something back to employees who have been shafted by the great neoliberal scam.

    Jarrah – keep the capitals down as well or you will over excite youself.

  36. Jarrah
    November 17th, 2010 at 15:00 | #36

    “Now back to the link between NAIRU and going to uni instead of getting a job?”

    Desperately trying to change the subject isn’t going to work, Alice. Admit you were wrong, blatantly wrong, in your original claim at comment #1, or give up any pretence of being a member of the reality-based community. I’ve given you the facts, and linked to the source so you can check for yourself. Persisting in this delusion does you no good at all.

  37. Alice
    November 17th, 2010 at 16:19 | #37

    @Jarrah
    Im not trying to change the subject. You are. I raised the issue of the higher NAIRU which keeps getting higher on the premise we should all “get used to it because its a ‘natural’ rate – which I dont buy for a moment – but which excludes the youngest and the most inexperienced from employment – so what do they do – go get ‘training’ and a ‘uni education’ instead – which is exactly what I would do whilever governments ignore the fact that economic policy isnt creating enough jobs because it thinks the private sector can do it ably (neoliberal claptrap) and neither is the private sector left to its own devices in a free market…

    actually creating enough jobs. Im not into impoversihing our youth Jarrah through higher uni fees when they face the highest unemployment rates if all. You may find it acceptable to apply the user pays price mechanism to this situation but I dont.

    As for your links I will address them and I await your response to my posts and links also which you have not yet responded to (on the link between NAIRU and the need for further education as it affects our youth, who suffer a much higher unemployment rate than NAIRU, to be specific – so dont play this “you did not respond to my post or links” game with me Jarrah.

  38. Jarrah
    November 17th, 2010 at 18:43 | #38

    I’m not interested in your diversions, Alice, until and unless you acknowledge that the facts, plain as day, show that your baseless claim about students having money taken from them was at least an error. If you repeat the error, in the face of the truth, it becomes a wilful lie, and I’ll not bother anymore – it suffices that you’re willing to demonstrate your mendacity to the dozens of people reading this thread, and have it go on the permanent record that is the internet. In a way, I hope you do just that.

  39. Alice
    November 18th, 2010 at 07:46 | #39

    @Jarrah
    Students are having their money taken from them Jarrah. They are enrolled in A uni. The government has monopoly pricing power. A student enrolled in A uni is not in a shopping mall and there are significant barriers to freedom of choice and freedom to switch. Their tuition fees are not a market price in any sense of the word and nor should education ever be solely be seen as a private good. It is a public good with significant positive externalities to which both governments and other citizens should contribute Jarrah. Government subsidies of public goods to which you, I and everyone else contribute with our taxes generate wealth Jarrah.

    It is you who simply doesnt get it and you can get as personal as you want and call up the spectre of the dozens of people who in your mind might be reading this thread. Im happy to be on record Jarrah. The government is taking more money from British students and others of lesser means in the UK and elsewhere across Europe relatively in the name of severe austerity measures to correct the widespread effects of a financial meltdown that likely had little to do with those now paying the thing you want to call a higher price for tertiary education Jarrah. Complete nonsense.

  40. Jarrah
    November 18th, 2010 at 13:40 | #40

    So, despite the fact that no-one pays any money until they are no longer students, you are going to stick to your claim that students have money taken from them. Right. No more need be said then – someone so divorced from reality is not worth the effort.

    PS Here is the definition of public goods. You should probably have it for future reference, since you clearly have no idea what you’re talking about.

  41. Alice
    November 18th, 2010 at 20:46 | #41

    @Jarrah
    Jarrah – I understand the concept of public goods and dont need your link – thanks all the same. I find it odd someone like you doesnt acknowledge the public good in education but …its entirely a matter for you to work out. Ive tired of the personal attack style of your posts Jarrah…as I have tired of this style before – but hey this is the sandpit and I acknowledge your right to throw as much of it about as you want. Thats what the sandpit is all about.

  42. Alice
    November 18th, 2010 at 20:53 | #42

    @Jarrah
    Oh and I dont care when they have to pay the money Jarrah – until then they have a debt burden around their necks. Enough of a debt burden to kill entrepreneurial inclinations and take a safe job working for someone else.
    I dont subscrine to placing encumbrances such as this on youth. There isnt enough of them as it is to support the ageing population. Time to remove the user pays (and pays) shackles from peoples lives Jarrah. Its bloody well costing more than the miserable tax people like you want to save.

    You clearly have no idea what you are talking about – higher prices? higher tax? Either way they both come out of a pocket. Trouble is the prices are higher than the taxes would be. Your damn private sector markets donmt know how to compete Jarrah and the government has sold its economies of scale down the river to keep a few rich bastards happy paying less tax.

    So what. Its a scam. Support it if you want. Be a scab economist for all I care. Its your life. I hope your conscience doesnt bother you as an old codger.

  43. Jarrah
    November 20th, 2010 at 12:23 | #43

    “Jarrah – I understand the concept of public goods and dont need your link – thanks all the same. ”

    Actually, your own words show you don’t – you seem to think positive externalities make a public good. This is false. What is it you purportedly teach again? Because if you’re teaching that you should be reported for academic misconduct.

    “I find it odd someone like you doesnt acknowledge the public good in education”

    I do, and have done on this very thread. So stop lying.

    “Ive tired of the personal attack style of your posts Jarrah”

    Pot, kettle, shade darker than grey, etc.

    “Oh and I dont care when they have to pay the money Jarrah”

    You set the terms, dear Alice, and I showed you how they were wrong. Now you want to pretend that your own terms were irrelevant. That means we can’t trust anything you put forward as an argument because you’ll just abandon it when convenient.

    “Enough of a debt burden to kill entrepreneurial inclinations ”

    Oh, please. Since when did you care about entrepreneurial inclinations? Regardless, your claim doesn’t even pass the laugh test. You could, of course, try to back up your hand-waving with facts and figures – say by comparing employment after graduation both before and after Australia implemented uni fees – but you’re highly unlikely to change your tactics at this stage, so I won’t hold my breath.

  44. Alice
    November 20th, 2010 at 13:57 | #44

    @Jarrah
    Shame Jarrah.

  45. Alice
    November 20th, 2010 at 16:28 | #45

    Actually Jarrah – Ill say why I think shame on you. You know as well as I do that raising student fees in the UK is part of austerity measures imposed by a conservative government in the wake of the GFC. Why should the poor, the young starting out and pensioners or public service workers be made the bear the brunt of the global financial crisis.
    Thats what this fee rise is all about. Dont play ostrich with me. Education has significant positive externalities and Im completely in favour of education being solely in the hands of the government so that each and every child can access it without regard to means if they have the merit to do so.

    I dont agree with your views that its something only those who can afford to pay should access. I certainly dont agree with your views that there should be minimal intervention by government in public goods like education. They are trying this model across the industrial world and its not working. They use this model in underdeveloped countries because they are too poor to afford public education.

    And yes I do care about entrepreneurial inclinations in youth and I do see the dampening effect of a large education debt hanging around new graduates necks as a reason they are less inclined to undertake risker but higher return entrepreneurial activities after they graduate.

    Unfortunately you cant and I doubt you will. The trouble with you Jarrah is you dont connect the dots.

  46. Jarrah
    November 20th, 2010 at 16:34 | #46

    “I dont agree with your views that its something only those who can afford to pay should access. ”

    When have I said that? You wouldn’t be lying again, would you? Wait, you’re typing, so yes you are.

    “They are trying this model across the industrial world and its not working.”

    No, they aren’t. They really, really, really aren’t doing that. That your worldview is sufficiently warped to think that this is what’s happening says a lot about the fog in which your mind works.

  47. Jarrah
    November 20th, 2010 at 16:34 | #47

    “the fog in which your mind works”

    Naturally I’m using the word ‘works’ in its broadest possible sense :-)

  48. Fran Barlow
    November 20th, 2010 at 17:04 | #48

    @Jarrah

    Providing the income threshhold at which repayment of outstanding debt begins is set high enough to be consistent with an income for which a university degree would be a probable prerequisite and the interest charged on the outstanding balance relatively concessional, the repayment schedule not onerous and the inital costs to which the loan relates close to the cost of providing the services I see no reason in principle to object to loans.

  49. Alice
    November 20th, 2010 at 17:18 | #49

    @Jarrah
    says “says a lot about the fog in which your mind works.”

    Insults dont get you with me Jarrah…..but this is the sandpit and you can say what you please but dont think I wont come back to you becaus I will.

    As for the boradest possible sense…I still find it a pretty narrow comment.

  50. Alice
    November 20th, 2010 at 17:47 | #50

    @Fran Barlow
    Sorry Fran but that is utter nonsense too – yer comment…

    “provided the income threshold at which repayment of outstanding debt begind is set high enough to be consistent with an income for which a university degree would be a probable prerequisite and the interest charged on the outstanding balance relatively concessional, the repayment schedule not onerous and the inital costs to which the loan relates close to the cost of providing the services I see no reason in principle to object to loans.”

    Bla bla bla…Oh ramble on you two – you are both of the same mind…(yourself and Jarrah).

    I mean FREE – education should be FREE to students. 100 percent FREE. Read my lips FREE. Subsidised by taxpayers as an INVESTMENT in the younger generation and the future and society, who the older generation expects them to work and contribute to pay for them in their old age. Plus actually be entrepreneuirial and create businesses of their own and jobs.

    Not work in penury and debt to a miserabl tightarse government obsessed witn flattering and fattening the old rich. What about the new young potential rich?
    Take their chains of and make it free and get your hands off your tightlyu shut wallets and pay in tax for youth (better investment than paying for bwanker bailouts Im sure).

    I mean FREE because its a publoc good. I mean free because society and private sector employers also get the benefit of the younger generations skills and knowledge. I mean free because every child should be able to prove themselves a positive good to society. I mean free because Im sick to death of whingers moaning about public deficits when the real problem is private debt and I mean free because it reduces the elephant in the room.

    Private debt.

    As much as I love both of you (Fran and Jarrah) – you are on a track I think is way off beat (and very Foggy minded I might add).

  51. Alice
    November 20th, 2010 at 17:58 | #51

    @Fran Barlow
    Let me try gto understand where your mind is coming from

    Is it this? “oh deareee me – the government has a deficit – we havent got too much money – we have to watch what the government spends because – well we can all contribute but we must be obsessly careful the government doesnt spend too much and doesnt raise taxes…therefore we will put a pricing model on education and that will save us two pounds od the governments budget deficit because some people cant afford to go and we will catch the rich kids whi can afford to go to uni”

    Smart. real smart…no its not.

    You want the education system to catch all smart kids, rich and poor because we will make more from education later because of its collective intelligence and maximising that… for all of us, for society and for its citizens.

    Plus you two just blatantly ignore the bigger threat – the already higher levels of private debt – much bigger than a measly bgivernmet deficit in most nations.

    Whats needed is private sector relief. Take the pressures off families ad youth private debt or your rich clever bondholders will go bankrupt no matter what austerity measures they care to dish up to Mums and Dads. It wont save them.

  52. paul walter
    November 20th, 2010 at 18:02 | #52

    Its no use, Alice.
    Remember Hobsbawm’s quote concerning “death of memory”.
    It’s like the NBN proposals, none of them will put up final costings, not because the costings are right, wrong or non extant, but because of the need to uphold the new dogmas of secretive government by fiat.
    Once upon a time that would have been unacceptable, in a healthy civil society of apparently, bygone times.

  53. Alice
    November 20th, 2010 at 18:04 | #53

    Please excuse all my spelling mistakes a) because its Saturday night and b) because I cant type fast enough and I havent got the patience or inclination to correct sics.

  54. Alice
    November 20th, 2010 at 18:07 | #54

    @paul walter
    Its no use Paul at all – Iget to argue with people who want to split hairs over costings and minutiae of economic definitions but who cant think and cant speak and dont have a noble idea between two of their synapses…and think normative economics is for fools (at least its not for bores) and robotic economics is the go. I think I should go now.!!

  55. November 20th, 2010 at 18:29 | #55

    Does this free education extend to the full cost of apprenticeships? Professional certification? Articulated vehicle driving licences for truckies? Dangerous goods handling courses for fuel pump attendants?
    Surely free education that is so beneficial to society doesn’t end at plain old simple university book learning?

  56. Alice
    November 20th, 2010 at 18:36 | #56

    @Steve at the Pub
    No it doesnt extend to apprenticeships – people like you can pay for those. They work in your pub Steve.

    Dont ask silly questions. Ditto to the rest of your questions.

  57. Fran Barlow
    November 20th, 2010 at 18:37 | #57

    @Alice

    Perhaps you could outline why people who have benefited from education AND are also very well off after tax as a result (and can thus afford to do so) ought not to put a modest something back each year into the common pool so that others who are not so well off can also benefit.

    It seems to me that the only difference between this and progressive taxation (which I also support) is that in this case there is a direct quid pro quo.

  58. Alice
    November 20th, 2010 at 18:41 | #58

    @Steve at the Pub
    Just so as I spell it out for Steve at the pub.

    What are you trying to sat SATP? – if you go to guitar lessons or spanish cooking classes at the age of 36 as a hobby after work or you go to a day course to get your forklift license or your responsible service of alcohol that should be included in my free education?

    Nonsense – claim a tax deduction.

    Primary, secondary, Tafe and Uni but Im not surprised at all I have to spell it out for you.

  59. Alice
    November 20th, 2010 at 18:49 | #59

    @Fran Barlow
    Thats just what I epected of you Fran – use rpays all the way.

    No – I said Free (capital F) education and I meant it. Not a “little contribution if they can afford it”. Sorry Fran – way too vague – and left in the hands of every two bit bean counting middle manager to implement eforce and incrementally increase (plus the paperwork cost). Wont work and nor should it.

    Ive already had a silly query from SATP. Im not going to get bogged down with quibbles. It requires a longer term mindset than yours, Jarrahs or SATPs. Ive explained it already. Im not going to revisit. What do I say? Refer my post at 1 on this page?

  60. Fran Barlow
    November 20th, 2010 at 19:22 | #60

    @Alice

    So should people on “seven figure salaries” pay back the cost of their education?

    What of people on “six figure salaries” or high “five figure salaries”?

    Why should they get off?

  61. November 20th, 2010 at 20:15 | #61

    That’s one way to evade a point where you got totally defeated. Declare it “silly” !!!!

  62. Alice
    November 21st, 2010 at 07:26 | #62

    @Fran Barlow
    says
    “So should people on “seven figure salaries” pay back the cost of their education?

    What of people on “six figure salaries” or high “five figure salaries”?

    Why should they get off?

    They should “get off” the cost of education because we all pay it with our taxes, because its a worthwhile beneficial public good, because it adds to the knowledge base, skills level and increases the employability and productivity of employees and it keeps them free to use their skills when they graduate instead of taking the safe option due to a tertiary debt chained to their necks. They are also free to use that money to eg house themselves. Tell me Fran – do banks take tertiary debt into account when they think about lending for property purchases or business reasons? If so then you can remove more than a few jobs from the construction sector because of it.
    Seems to me that people like you are happy to shackle new graduates to a lead weight yet still expect them to work and contribute as efficiently and productively as they can.

  63. Fran Barlow
    November 21st, 2010 at 08:55 | #63

    @Alice

    They should “get off” the cost of education because we all pay it with our taxes, …

    So what you are saying is that relatively wealthy people should be subsidised by poorer people?

    because its a worthwhile beneficial public good, because it adds to the knowledge base, skills level and increases the employability and productivity of employees, …

    That’s a wave of the hand. It is a public good, but it is also a private good yet the questions are surely about the balance and about the maintainability of the system and about equity.

    it keeps them free to use their skills when they graduate instead of taking the safe option due to a tertiary debt chained to their necks. , …

    More handwaving Alice. Modest debt repayment obligations don’t constrain people from using their skills any more than does progressive taxation, which, presumably, you support. Throwing in rhetorical terms like “debt chained to their necks” and later “shackling new graduates to a lead weight” doesn’t make this any less the case.

    Tell me Fran – do banks take tertiary debt into account when they think about lending for property purchases or business reasons?

    No. They do examine repayments that must be made out of salary for existing personal loans, garnishees, and so forth, but taxation is not asked about. From personal experience HECS was not an onerous imposition — about 1.5% IIRC so if applied to someone on $80k pa about $23 per week. That’s about what hubby and I earn now. You certainly aren’t going to be able to support a mortgage on it. You probably can’t do much more than pay your water rates on that sum. I know because despite renting, that is about how much I pay each week on water rates. Claiming that th imposition of a modest HECS repayment schedule would harm the construction industry is simply more emotive handwaving.

    Seems to me that people like you are happy to shackle new graduates to a lead weight …

    They would only be “shackled” to a modest balloon, and then only if despite being “new graduates” they were earning enough to get the balloon. Most new graduates would not qualify. Personally, I’d favour making it possible (at their discretion) to supply FT undergrads with loans covering some of their lving expenses too — perhaps up to about 30% of AWFTE for 3 years so as to reduce the pressure on them to work while studying. It makes sense to lend them money while they are impecunious and to recover it when they can afford to part with it. I’d also make it possible for them to elect to repay early with substantial discounts on the principal. Those who elected to repay above the threshhold schedule would get deemed to have paid that differential plus the overnight cash rate prevailing during the previous year.

    It sounds fair to me.

  64. November 21st, 2010 at 09:07 | #64

    Alice has some deep reason, waaaay beyond “it is good for society” for uni students to have a free ride in life. Full declaration of interest please.

  65. Alice
    November 21st, 2010 at 12:48 | #65

    @Fran Barlow
    re you ask “So what you are saying is that relatively wealthy people should be subsidised by poorer people?”

    When it comes to education of our youth – yes aboslutely and yes relatively poorer people should be subsidised by wealthy people. Vice versa also applies and if you like relatively middle people should be subsidised by relatively middle people.

    Yes – education should be a free publicly provided good paid entirely from the public purse to which everyone contributes with their taxes.

    I dont know why I have to keep repeating myself for you Fran. I have clearly stated my views in previous posts.

  66. Alice
    November 21st, 2010 at 12:50 | #66

    @Steve at the Pub
    Whatever that deeeep reason is waaay beyond “its good for society” it is a construction of your own fertile imagination and nothing to do with me.

  67. Fran Barlow
    November 21st, 2010 at 13:13 | #67

    @Alice

    I dont know why I have to keep repeating myself for you Fran. I have clearly stated my views in previous posts.

    I’m merely clarifying that you are indifferent to which way equity flows go. If the total effect of “free” tertiary education is a benefits transfer from poor to wealthy, you are OK with that because of the nebulous “good for society as a whole rubric”.

  68. November 21st, 2010 at 13:46 | #68

    So Alice, what is so special about uni students that they should get a free education? They aren’t as valuable to society as apprentices, nor are they as likely to use their education once they have received it.

    If uni students want to be paid more in their career, what is so special that prevents them from paying for their education?

    One (among many) benefits to society from user pays uni would be the elimination of all those claytons degrees & degrees by people who never intend to use them. (Big saving, not having to pay for something which is never used)

  69. Alice
    November 21st, 2010 at 14:08 | #69

    @Steve at the Pub
    re yr comment ” They (uni students) aren’t as valuable to society as apprentices, nor are they as likely to use their education once they have received it.”

    Your ill informed prejudices are showing again Steve as well as the fact that studies indicate the value of a uni education is higher to both the student and to employers and society…but you can think a uni education isnt valuable and uni students arent as valuable as apprentices if you want. Im not at all surprised.

    And Fran – its you who is narrowly focussing on a one way transfer from poor to rich. I dont really think I have to explain to you the benefits of publicly funded education do I?

    Its your choice to mislead by having a narrow view that some rich will get a positive education benefit for free. So will many poor. So will many in the middle. So will employers and society.

    Broaden your mind Fran.

  70. Fran Barlow
    November 21st, 2010 at 15:29 | #70

    @Alice

    And Fran – its you who is narrowly focussing on a one way transfer from poor to rich. I dont really think I have to explain to you the benefits of publicly funded education do I?

    Of course not. Yet the question remains: if “free” education in practice merely exaggerates inequality, whereas HECS-paid reduces it, would not an egalitarian prefer the latter?

    You could, if you wanted, see this as a kind of education support levy on wealthy people since the poor and even those on low middle incomes will never pay it.

    Would you not want a higher proportion of GDP to go into education? Don’t you think wealthier people should contribute more?

  71. Alice
    November 21st, 2010 at 17:18 | #71

    @Fran Barlow
    Fran says “if “free” education in practice merely exaggerates inequality, whereas HECS-paid reduces it, would not an egalitarian prefer the latter?”

    No. There is a strong benefit to public education. Any exaggeration in inequality from pure public education vs a hecs based system is an extremely dubious hypothetical Fran.

    The poor and middle greatly outnumber the rich and it would be free for all. The rich that you speak of with 6 and 7 figure salaries are greatly in the minority and are likely to send their darlings off to an elite Oseas uni anyway. Those sort of salaries dont mind paying. Let them pay if they choose, but let everyone not pay if they choose for public education here.

    The practice of micro managing government investment on a micro scale of industry by industry, firm by firm, department by department for its “competitive market status” and / or profit levels and or micro efficiency is wrong and ignores the generation of social benefits and their flow on effects in other industries completely.

    Education has positive advanatages for many industries. Thats why its worth the investment. Plus students are set free to use it immediately after graduating and not burdened by debt.

    However, given that we have moved from closer to this view in Australia towards the private market dictates that only those who can afford to pay should attend…I have no doubt this will play out in the same fashion here as it is playing out in the US. …along with the removal/ereduction/privatisation (asset stripping by governments) of other public services and subsidies that tradiionally helped the poor and middle classes.

    Free public education is only one method to redress rising inquality and it needs to be addressed – here and in other industrialised nations. There are plenty of other methods to do this as well, but it involves everyone taking a step from the fallacious user pays philosophies of the market oriented right back to the middle and some common sense.
    I have no doubt it will come to that but not before a lot of damage is done along the lines of exactly what is happening in the US.

  72. November 21st, 2010 at 19:44 | #72

    My prejudices aren’t ill informed Alice, I was just using the marketplace to value apprentices & uni graduates.
    I know who gets paid the most, who employers are clamouring for, and who is more likely to actually utilise their education.
    There are no idle tradesmen here, but plenty of girls who soaked up several years of free education then never used it. (they got married).

    In my experience, when a dunny breaks a tradesman will fix it. Uni graduates tend to talk a lot, but aren’t much use in actually getting things done.

    There is one helluva lot of sour grapes on show as tradesmen buy power boats, big houses & go on expensive holidays, whilst uni graduates scrabble along on less than I pay bar staff.

    Deal with it.

  73. Alice
    November 21st, 2010 at 20:46 | #73

    @Steve at the Pub
    I suggest when it comes to sour grapes Steve you should deal with your own first. I detect a certain inability to either understand or handle professional people. Anyone who comes out with sweeping statements like this “uni graduates tend to talk a lot but arent much use in getting things done.”

    Well one of them probably had something to contribute to the industrial design of the beer delivery system you pull on every day except that you wouldnt even notice let alone give credit, stuck as you are in a web of bias. Many uni students are in fact bar staff. Im surprised you havent noticed. You sure youre even responsible for who gets paid in the pub Steve or are you really the dunny fixer?

  74. BilB
    November 22nd, 2010 at 06:39 | #74

    Ernestine,

    Optimal security in an unstable economic environment such as in the US at the moment for lower incomed Americans, comes from secure living environment with minimal overheads. Our primary needs are for food, shelter, communication/mobility. In our lives as we have framed them we also need energy. GenIPV is a piece of hardware that integrates into a building to provide electricity, heating and cooling, and in conjunction with electric vehicles provides sufficient electricity to operate several of these. This enables decoupling from oil dependency at a personal level. In the so doing the dwelling (shelter) becomes 10% more expensive, but it also provides a small amount of income from exported electricity (incidental).

    So having removed one of the key external world dependencies the exercise here is to find the best way to remove the next, payment for the dwelling, in the shortest possible time. I am arguing that the 9% compulsory superannuation, for a young family unit (a very long way from retirement) would be better served by their superannuation accruals if these funds were used to reduce the payment duration of their dwelling.

    This can be done under current legislation. So what are the implications of such a scheme.
    The first is that if people have higher paying power when the approach the purchase of property they usually purchase the most property that they can capture over the longest possible payment period with the smallest deposit. This has the effect of inflating property prices as prices rapidly adjust to absorb the increased purchasing power. That would nullify the effect of having extra funds available to short payment terms, so the first requirement is that the 9% superannuation must not be taken into consideration when undertaking the property purchase and mortgage. So the mortgage calculation must be made on the basis of the purchasor’s primary income. There possibly could be a settling in duration of perhaps 2 years before the supperanution could be applied ot the mortgage.

    The next thing to be understood is that once a property becomes part of a self managed superannuation scheme part of that property is no longer available to “spend” in a cash up situation, the part of the property value obtained by using the superannuation contributions must be deposited elsewhere until age 65. This does allow for relocation where properties are sold in one area and repurchased in another. It is also possible to divide property in the event of divorce as the superannuation component is simply divided.

    So the question to you Ernestine is how does the calculation of payment term look where the 9% compulsory is applied to mortgage payment against the staus quo where funds are paid into an investment fund. Does the average superannuation fund return more with its fees and variable return in a volatile economy compared to self investment? What is the best strategy when advancing towards a “wall of economic tradgedy”.

  75. Alice
    November 22nd, 2010 at 06:49 | #75

    @BilB
    Bilb – I think you mistook this sandpit for the radioactive sandpit.

  76. BilB
    November 22nd, 2010 at 09:23 | #76

    No, Alice. We’ve given up on half lives, we are going for a new full life over here.

  77. Alice
    November 22nd, 2010 at 09:28 | #77

    @BilB
    Dont blame you at all Bilb. Amazed you stood it so long.

  78. Ernestine Gross
    November 24th, 2010 at 08:51 | #78

    BilB, I’ve replied to your specific question. My reply doesn’t show even though I got a message of repeat submission.

  79. BilB
    November 24th, 2010 at 09:05 | #79

    Thanks Ernestine,

    I’m sure that it will turn up. I’ll keep an eye out for it.

  80. Jarrah
    November 24th, 2010 at 10:40 | #80

    “My reply doesn’t show even though I got a message of repeat submission.”

    Ah, so it doesn’t just happen to me. It’s very frustrating, isn’t it? Bloody WordPress. It will never ‘turn up’ despite BilB’s optimism. Your best bet is to try again.

  81. Ernestine Gross
    November 24th, 2010 at 16:12 | #81

    I’ll wait a day.

  82. Ernestine Gross
    November 25th, 2010 at 21:47 | #82

    BilB, I have made minor changes to the text to test whether some words caused my post to not get through.

    The specific question you asked is a straight finance question rather than a financial economics question, IMO.

    The finance question is:
    Given a loan amount L, gross annual income Y, a fixed interest rate, r, for a loan period of t=25 years and a compulsory superannuation of 9% of Y, by how much could the loan repayment period be shortened? The answer depends on the parameter values. In general, the way to answer this questions is:

    1. L = X[1/r-1/[r(1+r)^t], where X is the mortgage payment at t = 1, 2, …, 25 if annual payments (if monthly payments then t=1, 2, …,(25*12)

    Solve for X.

    2. L = X+.09Y[ . ].

    Solve for t (trial and error; annuity tables or a mini-iterative program)

    From a purely financial point of view of a decision maker, who is not under financial distress, a shorter repayment period for a loan used for the acquisition of an asset (residential property) is strictly preferred if the home loan interest rate is greater than the rate of return on a portfolio in an accumulation superannuation fund with a similar risk characteristics.

    I couldn’t find a long enough time series (25 years) on portfolios in my superannuation fund (industry fund). But I have enough data for 10 years; annual data only. Housing loan interest rate data is available from the RBA. In the following Table I list the two portfolios for superannuation (cash and balanced) and a housing loan indicator rate for the years 2000/01 to 2009/10. The superannuation crediting rates are net of investment expenses but gross of account-based fees (ie they are a little overstated).

    Period Cash Balanced Housing interest rates (variable Banks; average monthly rates)
    2000-01 5.3% 5.9% 7.61%
    2001-02 4.3 -2.8 6.32
    2002-03 4.28 1.01 6.55
    2003-04 4.75 14.17 6.86
    2004-05 5.08 15.08 7.13
    2005-06 5.50 14.48 7.34
    2006-07 6.11 14.92 7.95
    2007-08 4.98 -6.03 8.79
    2008-09 3.72 -9.12 7.27
    2009-10 3.70 9.57 6.55

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