Home > Economic policy > The end of open access to universities

The end of open access to universities

December 22nd, 2017

I’ve had plenty of disagreements with Andrew Norton about education policy. But I couldn’t write a better response to the government’s decision to end open access to university education for young Australians than this one. So, I’ll just link to it and open comments.

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  1. Scrubby Creek
    December 22nd, 2017 at 15:01 | #1

    Open access to universities has been a complete disaster. It fuels pointless credentialism and churns out kids with huge debts and little chance of getting a job related to their studies. I have four of five nieces and nephews with tertiary qualifications in areas raging from music, law and science who now do low skill jobs. The piano maestro has been washing dishes in a private boarding school for five years and the budding scientist is now a check out chick in a pharmacy.

    My own social science degree was a complete waste of time so I got a white collar job and I sat beside teachers, nurses and historians who similarly shuffled paper.

    One of the upshots of this nonsense is that many companies want students with tertiary degrees for menial tasks.

    The Atlantic had a good article on this a couple years back. Here’s a quote:

    “Degrees and good grades have long been proxies for the kind of cognitive skills required for jobs in knowledge industries. But many say that these credentials don’t meaningfully predict job performance, and companies are starting to catch onto that. “There is a long literature in psychology showing that job performance and college grades are poorly related,” says Peter Cappelli, a professor at the Wharton School of the University of Pennsylvania who studies hiring and the American workplace. “It is remarkable how frequently companies rely on hiring criteria for which there is no evidence of it working.””

    ***.theatlantic.com/business/archive/2015/09/ernest-young-degree-recruitment-hiring-credentialism/406576/

    Notably a small number of large now realise that a degree is not a reliable indicator of performance on the job.

    The real problem we have is a huge shortage of jobs and we’ve addressed that to some extent by warehousing often bored and unsuitable young people in tertiary education. I think we need a better answer than that.

  2. Anthony
    December 22nd, 2017 at 16:15 | #2

    I preferred open access. However, if every year 12 graduate went to university (or even 75%) it would be a strain on the public purse. Not to mention it would force the elite students to do unnecessary postgraduate degrees to differentiate themselves.

    I argue that the degree if govt funding should reflect employment of graduates. If 90% of engineering graduates from a particular course end up employed as engineers after 5 years the govt contributes 90% of the course. If only 25% are employed the the govt contributes 10% etc. The downside of this is that it does hollow out the function of universities of making good citizens. That said, those with an interest in public goods derived from university education could provide scholarships for courses that lack good economic outcomes.

  3. December 23rd, 2017 at 06:50 | #3

    It’s a shame. Who knows better what is worth learning, the young and not-so-young adults who have to invest their own time and energy on study, or planners? Manpower planning is usually wrong , except in areas where the government is the principal employer of graduates (teaching and medicine).

    Demand for higher education is self-limiting by the effort and opportunity cost. Rich countries like Australia can afford to let everybody learn as much as they want. Where it’s been tried, as in the great days of the Californian public HE system, the strategy generally pays off as well in narrow and broad metrics of social welfare.

  4. Ikonoclast
    December 23rd, 2017 at 07:35 | #4

    @Scrubby Creek

    The failure of the economy to provide enough jobs is the primary problem. Graduates (and non-graduates) from any education system will not find enough jobs if the economy itself is not creating enough jobs. It’s a whole-of-system problem. It requires whole-of-system planning.

    “The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor – not by force, but on the whole in faithful compliance with legally established rules. … I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society. Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual.”

    – Albert Einstein, Why Socialism? (1949)

  5. Ikonoclast
    December 23rd, 2017 at 07:51 | #5

    Einstein’s entire essay is relevant to this topic and makes points about education for a Socialist or Social Democratic society. It also touches on dangers and problems with progress to Socialism.

    https://monthlyreview.org/2009/05/01/why-socialism/

  6. totaram
    December 23rd, 2017 at 11:28 | #6

    @Scrubby Creek
    The fact that these students end up with “huge debts” is purely an artefact of the funding system for University study in Australia. In Germany for example, they wouldn’t have any debts at all. Perhaps you are not aware of this.

  7. Scrubby Creek
    December 23rd, 2017 at 12:25 | #7

    Totaram,

    In that case the cost of otiose education is borne by everyone.

    From the SMH:

    “The Australian Financial Review had a terrific piece this week on the oversupply of university law graduates. The author, Frank Carrigan, blasted universities for producing nearly 15,000 law graduates each year in a market of 66,000 solicitors.

    Graduate oversupply is rampant in other fields: journalism, marketing, teaching, pharmacy, dentistry and medicine, to name a few. Universities that resemble overpriced degree factories are exploiting their social licence – and Australia’s youth.”

    ***.smh.com.au/small-business/managing/the-venture/why-do-students-enrol-in-massively-oversupplied-university-degrees-20160810-gqp2u2.html

    The reality is that we have a huge shortfall in jobs. The answer to that, in my humble opinion, is to either accept that not every prospective employee will be able to score 38 hours of paid work a week and/or for government to create meaningful jobs that will not be created by the market. The NDIS is an example and a step in the right direction.

    By the way, I’m not a philistine opposed to education. Hopefully in a not too distant future, productivity will be such that education for its own sake will be available to everyone. It might be nice if we could all have the chance to learn to be master craftspersons, poets or philosophers while the machines do (nearly) all the work.

  8. totaram
    December 23rd, 2017 at 12:44 | #8

    @Scrubby Creek
    “In that case the cost of otiose education is borne by everyone.”

    Indeed. If the Germans and others are prepared to bear the costs why aren’t we?

  9. Scrubby Creek
    December 23rd, 2017 at 14:06 | #9

    @totaram “Indeed. If the Germans and others are prepared to bear the costs why aren’t we?”

    Misallocation of resources. The money wasted on training battalions of unemployable lawyers, historians and journalists could be better spent paying farmers not to grow alfalfa, for example.

  10. December 23rd, 2017 at 14:52 | #10

    @Scrubby Creek That 15,000 figure is not correct because it counts all law qualifications being completed, including diplomas needed for professional admission and postgraduate qualifications. The underlying number of JD and LLB graduates is about half that.

  11. Scrubby Creek
    December 23rd, 2017 at 16:44 | #11

    Thanks, Andrew, I saw something about that after I posted. But it doesn’t change the fact that we have a massive glut of law students and students of many other stripes.

    @totaram

    Totaram, according to my googling, only 27% of Germans go to uni and 5% of these go to fee paying private unis. I think Oz is getting up towards 40% of post secondary students going to uni. If we follow the Germans in that respect, our unis are in for a blood bath.

    Even in the 1990s, out of the ~ 100 paper shufflers in my office, ~ 15 had superfluous degrees in the Arts/social science (i.e. me and several others), law, teaching, nursing etc…

    The skills I needed were in payroll, word processing, database management, spreadsheets and admin law and all of these were obtained on-the-job and in short courses.

    I suspect we could lop university placements by 50% and not suffer a jot of economic harm.

  12. Neil
    December 23rd, 2017 at 21:13 | #12

    @Scrubby Creek
    “In that case the cost of otiose education is borne by everyone.”

    Education – real education, which gives you thinking skills – is never otiose. The acquisition of technical skills which are soon outdated may be, and that’s what governments (of both sides) encourage with their “what business wants” mantra.

  13. Collin Street
    December 23rd, 2017 at 22:11 | #13

    real education, which gives you thinking skills

    Like the skills to twig that the structure of german and australian higher education is pretty different — owing to the dawkins revolution, and to the abandonment of high-school streaming — and raw “going to university” rates not directly/naively comparable.

    So, yeah, I think the education was wasted in this case.

  14. John Quiggin
    December 24th, 2017 at 10:24 | #14

    @Scrubby Creek

    Your family seems to be unusually unlucky as regards education outcomes. On average, the financial return to university education is high, and graduates earn a significant wage premium which increases over time (not to mention non-monetary benefits of education).

    https://www.ncsehe.edu.au/publications/private-rate-return-university-degree-australia/

    If this hasn’t happened for you, or those close to you, that’s unfortunate, but not a good basis for forming policy conclusions.

  15. crocodile
    December 26th, 2017 at 10:53 | #15

    Judging by the lawyer’s fees I doubt very much that there is an oversupply.

  16. SamB
    December 31st, 2017 at 20:17 | #16

    @John Quiggin
    Oh come on John, pull the other one. There is overwhelming evidence that the so called “.. return to university education…” is a misleading indicator.

    I think it is pretty clear that when Lachlan Murdoch collects his $20M per year that has more to do with his surname than with his Princeton degree, and the same principle is even more true of Ivanka Trump, Prince William, or Kourtney Kardashian. Even the the most superficial analysis will make it clear that the number of “high paying” jobs made available by Macquarie Bank or the top tier law firms or corporate CEO positions is not being calibrated to the number of people graduating from University.

    All that a significant proportion of University degrees does is raise the minimal entry level for resumes being considered well beyond what the job actually requires.

    Once upon a time, an entry level job at a Big-4 Bank did not require a degree (and in fact, I recall when they had an explicit policy against hiring people who planned to go to University for those jobs).

    Of course that doesn’t mean that ALL university education is useless … we certainly need more engineers, architects, nurses, perhaps doctors, etc … but you of all people (I’m presuming you actually teach rather than having a research-only gig) should know how many of your students are wasting everyone’s time and money just to collect a credential, and how many “business” graduates don’t understand basic concepts such as “discount rate” … I certainly did when I was in that role.

  17. SamB
    December 31st, 2017 at 20:19 | #17

    Just in case I was unclear, by “I certainly did when I was in that role” I mean knew how much my students were (or were not) learning when I was teaching.

  18. J-D
    January 1st, 2018 at 10:37 | #18

    SamB :
    … I’m presuming you actually teach rather than having a research-only gig …

    Professor Quiggin has mentioned here only recently that most of his career has been in research fellowship positions, which involve supervising research postgraduate students but not regular undergraduate teaching.

  19. John Quiggin
    January 1st, 2018 at 12:42 | #19

    @SamB

    As you say, being the child of a billionaire is a much better economic strategy than going to university. I’ll bear that in mind next time I’m asked for advice on the matter.

  20. SamB
    January 1st, 2018 at 14:38 | #20

    @John Quiggin
    Well, if we are descending into sarcasm and deliberate misinterpretation, you may also want to be honest enough to suggest to those people to whom you are providing advice that the fact that children of billionaires (and multi-millionaires) attend university at a higher rate than the children of poor people may help to explain why university graduates are on the average better paid. But I see that level of analysis requires would be too much of a challenge to your position. I guess Sinclair’s line about “…difficult to get a man to understand something, when his salary depends on his not understanding it.” applies to mildly leftish economists too.

    @J-D

  21. Smith
    January 2nd, 2018 at 07:44 | #21

    @John Quiggin

    SamB might have half a point. The evidence says a university degree increases life time earnings on average. But where there is an average, there is a distribution. It is not difficult to believe that degrees at the far left of the distribution, such as some business degrees, are a waste of time and money.

  22. Smith
    January 2nd, 2018 at 07:48 | #22

    @Andrew Norton

    7500 JD and LLB graduates each year is still a very big number. How many of them get jobs as lawyers?

  23. Ikonoclast
    January 2nd, 2018 at 07:48 | #23

    A reporter once asked the Duke of Westminster what advice he’d give to young entrepreneurs keen to emulate his success. “Make sure they have an ancestor who was a very close friend of William the Conqueror,” he replied.

    More seriously, those decrying credentialism should not forget that the previous value of credentials was inflated because the poor and disadvantaged could not get them. Giving everyone a fair go leads to a sizeable proportion of the formerly privileged discovering how mediocre they are. That probably accounts for a fair bit of the whinging.

  24. SamB
    January 2nd, 2018 at 11:21 | #24

    @Ikonoclast
    I’d argue quite the opposite. When “…the poor and disadvantaged could not get” credentials, the credentials had no value. Other than in fields like medicine and law, a college degree was understood to be a “consumption good” for rich people.

    It was only when Universities became widely accessible that people made the incorrect inference that because rich people had degrees then a degree must be the pathway to becoming rich. Then, University administrators noticed that most degrees are cheap to deliver (in business and economics, less than 20% of student fees go towards actually teaching, the rest goes to research and overheads), and turned their marketing machines towards telling kids that the business degree is their path to success.

    This is why today, at a university such as UQ, the business and economics faculty represents more than 30% of total enrolments, and two out of three waiters and baristas have paid tens of thousands of dollars for a marketing degree (notably, a discipline in which most universities didn’t even offer degrees 30 years ago).

  25. John Quiggin
    January 2nd, 2018 at 14:52 | #25

    It was only when Universities became widely accessible that people made the incorrect inference that because rich people had degrees then a degree must be the pathway to becoming rich.

    It would be a good idea to read some of the vast literature on this topic before sounding off in a way that it makes your ignorance of the topic obvious, and making claims about “overwhelming evidence” for which you obviously have no basis beyond your own impressions. Here’s a recent paper that will lead you to more.

    https://www.ncsehe.edu.au/publications/private-rate-return-university-degree-australia/

    Also, a pro-tip for new commenters. If you want to avoid a sarcastic response, don’t begin your first comment with “Oh come on John, pull the other one”.

  26. SamB
    January 2nd, 2018 at 16:00 | #26

    Unfortunately pay-walled … so I wont be reading to the details … but I do note that the abstract includes the phrase “…differences can be observed in rates of return according to gender and discipline of study with, generally, lower returns for women and for those holding degrees in the humanities.”

    When I add to that the implications of research that take a deeper view, such as studies showing that lifetime earnings of people attending top-tier universities are indistinguishable from those of people who were accepted but did not attend, or the studies measuring the increase in skills/knowledge of business students which find that after two years of “study” the gains are statistically indistinguishable from Zero, I think my “selection bias” theory holds up pretty well.

  27. John Quiggin
    January 2nd, 2018 at 16:46 | #27

    The study to which I think you refer doesn’t examine people who were accepted into top-tier universities but didn’t attend (any) university. It looks at people who were accepted into elite US universities (eg U Penn) but went to places that are merely excellent (eg Penn State). Australia doesn’t have anything like the stratification that prevails in the US: no Ivy League, and no third or fourth tier either.

    https://www.forbes.com/sites/ricksmith/2014/11/24/your-elite-school-is-not-worth-the-cost-studies-say/#51a84a0826fe

    As to your first point, there is more to life than money, and people make choices accordingly.

  28. SamB
    January 2nd, 2018 at 17:07 | #28

    John,

    It is certainly true that “… there is more to life than money …”, and it is certainly true that for some (perhaps many) people there are significant non-commercial benefits of attending University. But there are also non-commercial benefits of reading or MOOCs (both a much cheaper alternative).

    More importantly for this debate though, that isn’t what the present disagreement – which was started by your “On average, the financial return to university education is high, and graduates earn a significant wage premium which increases over time but that people make choices accordingly.” comment – is actually about.

  29. SamB
    January 2nd, 2018 at 17:08 | #29

    Oops … “but that people make choices accordingly” wasn’t meant to be part of that quote.

  30. SamB
    January 2nd, 2018 at 17:13 | #30

    And I think we’ll leave the debate as to whether the quality of education at (say) UQ or U.Melb differs from that at (say) University of Central Queensland (not to mention the various private colleges) to another day. My observations would lead me to a certain conclusion, but you of course may hold a different view.

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