Austerity is hitting lots of people, across pretty much all social classes, except for the top 1 per cent, who are rapidly recouping their losses in the GFC and will soon be pulling even further away from the 99. Just at the moment, academics seem to be in the crosshairs, from Washington to Sydney and beyond. Here’s a post on the subject from my friend and former colleague Rohan Pitchford. To forestall a possible line of criticism, let me observe now that, while academics have it better than plenty of others under attack from austerity policies, anyone who plays on this kind of division is a tool of the 1 per cent, and will be treated as such by me.
Sackings Hit Economics School Hard (Guest post from Rohan Pitchford)
I was surprised and dismayed to hear that that several of my former colleagues at the School of Economics at the University of Sydney have been told to leave their jobs by July. A remarkable aspect is that the sackings happened by edict, several layers of administration above the School level. How is it possible for such a removed group to know the details of people’s work life, their roles and the reasons behind their roles without any form of consultation? (ANU also faces budget cuts, but is taking the enlightened bottom-up approach.)
I know all of those concerned personally, and the group includes both talented researchers, teachers and administrators. They were apparently selected using retrospective publication criteria. We all know that most people experience a ‘bare patch’ in their publications during the life course, whether it be because of a new child, a death in the family, illness (admin duties!) etc. Knowing the people involved, the criteria seem to me unfair and random.
Perhaps the most astounding fact in all of this is that Sydney Economics has been perennially understaffed– as a Professor there, I estimated that they were some 10 academics short of what is required to deliver requisite courses: The average class size is 110, I conjecture larger than any other department. There are not enough staff to cover all the classes taught, let alone to reduce class sizes to educationally appropriate levels. Sydney typically has had to hire part-timers to fill the gap. The department generates some 20 million dollars per year in revenue from its teaching program. I cannot imagine that this will do anything but hurt this important revenue base.
A big question is this: Are the sackings due to productivity, or are they in response to an administration that has grossly over-spent on buildings? I have heard rumours of expenditure of 100m on a new medical centre, and 360m on a new obesity centre preceded these sackings.
Solutions? I discuss a possible way forward for Australia here:
John Quiggin 
I think shedding this is inevitable and irreversible in the arts, law and economics faculties. Ever since they dropped Latin in school educational institutions have to ask what their courses actually prepare students for. Maybe it will take a BA or BEc to flip burgers in future. LLBs get to become supervisors. I could point out that blogs are doing journalists out of a job. In the US and UK secondary school leavers ask what is the point of incurring massive debt when likely underemployment is the end result.
My gut feeling is that it will turn even worse than we think. The successors to the educated middle class will spend their days growing vegies in communal farms, commuting by bicycle. This time of year the take home pay will be a basket of turnips. The worry is the loss of erudition we see in mob protests in which the aggrieved fail to see both sides of an argument. Thus education for its own sake is a social calming influence even if the precise subject matter is less relevant to job prospects.
In a non-accusing tone I ask; how come the economics profession didn’t see this coming?
“I was surprised and dismayed to hear that that several of my former colleagues at the School of Economics at the University of Sydney”.
Does it include Political Science?
@Magpie
There were cuts like this across the University, which might well have included some political scientists.
I don’t want to be pointing fingers at anyone. But, from what I heard, it does seem like a little too much money have been spent on the new buildings, at least in ANU. I have heard from fellow friends working in the new science buildings that some parts of the building are currently being rebuilt again as they don’t fit the technical (i.e. temperature) requirements of what are needed of those rooms. These rebuilds are apparently quite costly. These errors could have easily been prevented if there was better communication between the designer of the buildings and the people using the buildings? Well, for all we know, these additional money spent could well have been within budget.
JQ says: “To forestall a possible line of criticism, let me observe now that, while academics have it better than plenty of others under attack from austerity policies, anyone who plays on this kind of division is a tool of the 1 per cent, and will be treated as such by me.”
I agree with this sentiment and back it 100%. I am not an academic myself so I am not speaking from any immediately self-interested position. However, I deplore these attacks by corporate managerialism and capital on academics and intellectuals.
We have now reached the stage where corporate capital is overtly anti-democratic, anti-science and anti-intellectual. This is a very dangerous and indicates a proto-fascistic state of affairs.
I might also note that UQ Connect Internet, at least in its services to the general public, is closing down from 31st March. Is this an austerity measure?
Great example of the New Nazism (yeah, I know- Godwinned).
As Hermit says, it is an extension of the long term policy of killing off arts soc sciences and humanities in favour of tech vocational training.
You are taught to do some thing but not know why. Very thirteenth century and the educational equivalent of the dumbing down of public broadcasting; all very self defeating and self- blinding.
I am not an academic either and agree it is a regrettable situation. When most public servants had to give up job security in th cost cutting days of the early 90s there were redundancy payouts and award increases to compensate. Now it seems academics are simply losing it with nothing in return.
You guys really need to organise yourselves as a (more militant) union, and treat the VCs as just managers, which is all they are now. Clearly most intend to exploit an oversupplied phd job market. Putting hope in the old career paths seems futile to me now. Our universities have overexpanded, neither side demonstrates any intention to increase funding, so attrition is inevitable. Frankly, I wouldn’t advise anyone young to go into academia. My private employer gives me more time to write research papers than my academic wife gets. As far as government is concerned, academia is an export industry, nothing more. Whether the product is visas or degrees, I am not sure.
Elephants Down Under
By THOMAS L. FRIEDMAN
Published: March 27, 2012
“In New Zealand and Australia, you could almost fit their entire political spectrum — from conservatives to liberals — inside the U.S. Democratic Party.”
Instant classic.
Until a very short time ago I would have agreed with Friedman, but if I stayed where that viewpoint is I’d still be lulled into a false sense of security and deluding myself.
Newman’s immediate attack on enviro indicates a Koch bros event starting in Australia that will smash the small liberal consensus beyond retrieval.
Until a very short time ago I would have agreed with Friedman, but if I stayed where that viewpoint is I’d still be lulled into a false sense of security and deluding myself.
Newman’s immediate attack on enviro indicates a Koch bros event starting in Australia that will smash the small l liberal consensus beyond retrieval.
There is a certain academic division at a certain suburban university which employs a Pro-Vice-Chancellor for Finance and six finance consultants to manage its finances, and which as a consequence cannot afford to maintain an adequate teaching workforce in its degree programs.
Sounds like the ABC.
When economic academics are sacked because of economic reality – we can say they are hoisted by their own petard.
It is the economic productions of universities that have laid waste to our economy and our future. Also, I wonder whether the same cutbacks are headed towards the business schools?
If society can get rid of typists, bank staff, public servants, factory workers, and family businesses, I see no reason why academics should be protected.
If the NTEU and ACTU cannot deal with the economic reality then there is going to be a whole swathe of unemployment now reaching into the middle class. They should have realised this in the 1990’s.
@Chris Warren
In violent agreement. As much as I don’t like anyone getting the chop from their jobs, it’s the academic economic rationalists that created this never-ending forced restructuring of the economy (job turnover) and there’s no reason why they should be immune to it also.
Saying that, I’m sure as John and others have mentioned, lots of really good quality academics from many unrelated fields will also suffer which is a crying shame, but hey, look at all the increased productivity we get from such policies… NOT!
@Chris Warren
Chris, that’s going a little far.
Point 1: What if some of the economic and political economy academics are experts in Marxism?
Point 2: Economic faculties are not homogenous (yet). They are not all neoliberal “rationalists”.
Point 3: The worst of neoliberal ideology and economics comes out of Business Management schools not out of Economics schools.
Point 4: Academics, teachers and intellectuals (all brain workers and human services workers) are workers not capitalists. Where is your solidarity?
Point 4: It’s corporate capitalist business that has pushed the “economic rationalist” agenda, infiltrated its managerialism into universities and attacked democracy, science, the humanities, social equality and the sustaining environment.
Are there any public choice theorists in economics faculties today? Do they count as Marxists? 😉
Is it just possible that to some extent this could be related to the proliferation of universities offering courses online and via distance. The so called “flexible learning” movement. Sandstone institutions like Sydney may well experience a drop in student numbers and therefore academics if they continue to trade only on reputation.
Actually, the only point necessary to correct Chris Warren’s latest spray is that economists have laid waste to neither our economy nor our future.
@Ikonoclast
I suppose:
Point 1: Your expertise is maintained.
Point 2: In my expereince, Economics Departments are strangely homogenous. To get diversity you have to set up alternative departments eg Political Economy. It is not neoliberal rationalism that is the problem, but the underlying equilibrium, marginal, and subjective theories that embed capitalist forms – Keynes’ ‘user cost’ is the epitome.
Point 3: Yes.
Point 4: Middle class “workers” rely on general exploitation to achieve their status, indicated by their incomes that are many multiples of the minimum wage. This occurs in big business, corporatised universities and the public service. Solidarity was needed in the 1980’s – why seek it now?
Remember it was the NTEU membership who refused to let their union act in solidarity with other unions and affiliate with a political party. The NTEU leadership in the 1980-1990’s were quite conscious of the need for “solidarity” it was the rank and file who blocked it.
So what do you call the long run tendency for per capita debt to increase?
Cornucopia?
The money for the new science buildings at ANU came as a direct grant from the Federal Government. I’ve also been told they have a 1 year warrantee, any out-of-spec problems are the builders to remedy. I’m also not aware of there being any cost overrun.
The new buildings have added a large additional depreciation cost to recurrent spending. This is an issue.
There is a great deal of confusion about how much of the budget should be used to when calculating the percentage surplus, e.g. monies paid to staff from ARC grants cannot possibly generate a surplus.
Warrantee = warranty.
Good grief. Brain explosion.
I should have read Prof Quiggin’s blogsite before going to the Dean’s (of Arts and Social Sciences) Reception at Sydney Uni last night. Had I done so, I would not have been surprised meeting only 1 former colleague from the former Faculty of Economics at Sydney Uni and I would not have been surprised finding quite a lot of name tags uncollected at the end of the evening
Apparently, enrolments for 2012 are higher than ever before in the School in question but there is apparently a shortage of large enough class rooms. (Literacy is apparently not enough for management after all.)
@aidan
“The new buildings have added a large additional depreciation cost to recurrent spending”
With due respect, there is something wrong here. ‘Depreciation costs’ are a non-cash item. That is, while accrual accounting treats the calculated or allowed depreciation as an expense, it does not mean it affects the cash budget. An ‘expense’ in accrual accounting is not the same thing as ‘spending’. (Even a math-econ person like myself knows that.)
On its own, Chris, I don’t this the fact that an economy is experiencing is a long run increase in debt (whether in aggregate or per person) tells us much of relevance at all. Certainly it gives little clue as to whether an economy (or its future) is being “laid to waste” or, in fact, is or is about to flourish. Presumably that would depend in large measure on the stream of benefits and costs that have and would arise from the stream of debt.
But even you could advance valid grounds for being concerned about our debt build up, to substantiate your jaundiced world view about economists (or, at least, the “neoliberal” economists you imagine are in charge), you’d actually need to show that their policy advice or other actions were responsble for that debt – or at least the bad bits of that debt – and that alternative policies would have produced a better outcome. Good luck.
I claim NO knowledge of this area, I thought I was simply repeating what was in the statement, and I quote:
“In addition, the significant capital investments made in recent years mean that depreciation costs have increased by approximately $10 million compared with 2011.”
Perhaps I was remiss in describing this as a cost to recurrent spending in my original comment. I can see that these things have very specific meanings.
Still, the VC is targeting a 4% “surplus on budget”. Should this include costs for depreciation?
@Tom N.
The debt bit is not difficult – have a look at Hyman Minsky’s Financial Instability Hypothesis.
The neoliberal economics bit is also pretty easy: as Michael Hudson puts it, neoliberal economics has been a PR engine for right-wing economic policy. In particular, the denial of market failure and the supposed efficiency of markets have played a deleterious role here.
@Chris Warren Since I warned against precisely your line in the post I feel no need to hold back. You’re a tool of the bosses just like Michael Thompson.
To all those who want to attack academic economists, I have a simple message. Go to the CBD of Sydney, New York, London, Frankfurt, Milan and ask who is occupying these expensive high rise buildings. I am very confident in saying you will find: Government offices, banks and other financial institutions, accounting firms and law firms (don’t count the chambers of barristers necessarily as law firms, nor the judicial buildings). Then I suggest you read Econometrica, the Journal of Mathematical Economics, the Journal of Economic Theory, and you will find no ‘neo-liberal writing’. Now, put 2 and 2 together and reach a logical conclusion.
Where is Terje P when one needs him?
@John quiggin
Agree about the overspending on buildings. I’ve just been for a walk around UQ, trying to find a quiet place to have lunch. Literally everywhere green and shady seems to come with complementary jackhammer and earth-moving equipment.
well here we are–the continuing (i almost said ongoing) consequences of eighties corporate governance-capital light-open discussion-share price sensitive-ponder the matrix-significant leg over(oops,i mean leg up)of higher education institutions having to pretend they are just another pay as you go business.
druh.
@Tom N.
This smacks of a head-in-the-sand approach. There are not too many people who really hold this. Of course it is open to you to “think” whatever you want and people also think that the climate is not warming.
You have to move from “thinking” to knowing, and the data, and trends in debt is completely relevant – particularly when it is combined with – inflation, Current Account and Unemployment.
What you get, from the 1950’s, is a long-run tendency for instability to increase over time – debt is just one aspect.
See: http://uploads.wikidot.com/instability
You can also see the long-run trend in America by viewing “The American Way of Debt” accessed through the series index link at:
tinyurl.com/5ayjc3
You only have to look at Iceland, and Europe to fathom the impacts of debt.
The main concern over debt, is that it is needed to boost consumption sufficient for capitalist temporary stability, and the need to repay debt means the total amount compounds into the next cycle. Under capitalism, the circular flow does not balance without injections to match the prior insertion of capitalist profit.
You just need to review Menzies response to the vernon Report (or lack thereof).
You can also see the evolution of damaging economic policy in
TREASURY ECONOMIC PAPER N0. 2. Economic Growth: Is it Worth Having?
Then of course there are also crazy presentations in undergrad textbooks, etc etc.
@Tom N.
This smacks of a head-in-the-sand approach. There are not too many people who really hold this. Of course it is open to you to “think” whatever you want but people also think that the climate is not warming.
You have to move from “thinking” to knowing, and the data and trends in debt is completely relevant – particularly when it is combined with – inflation, Current Account and Unemployment.
What you get, from the 1950?s, is a long-run tendency for instability to increase over time – debt is just one aspect.
See: http://uploads.wikidot.com/instability
You can also see the long-run trend in America by viewing “The American Way of Debt” accessed through the series index link at:
tinyurl.com/5ayjc3
You only have to look at Iceland, and Europe to fathom the impacts of debt.
The main concern over debt, is that it is needed to boost consumption sufficient for capitalist temporary stability, and the need to repay debt means the total amount compounds into the next cycle. Under capitalism, the circular flow does not balance without injections to match the prior insertion of capitalist profit.
You just need to review Menzies response to the vernon Report (or lack thereof).
You can also see the evolution of damaging economic policy in
TREASURY ECONOMIC PAPER N0. 2. Economic Growth: Is it Worth Having?
Then of course there are also crazy presentations in undergrad textbooks, etc etc.
Nice to see you starting to try to fashion the beginnings of an argument to justify your statement about economists laying our economy to waste, Chris, rather than thinking that a thought fragment about debt would save you. Your latest post still feels a bit like a random walk through some though bubbles though, and statements like “you only need to look at X to fathom Y”, or “you just need to look at X’s response to Y”, don’t rate highly in the rigour stakes, I suggest.
Dan, debt has pros and cons, but the statement I was responding to was the the economy and its future had been “laid to waste” and the only evidenc or elaboration given was to tie this to increasing debt. Sorry, but greater economic instability is not the same as an economy having been laid to waste. To justiy even that part of Chris Warren’s initial statement would involve consideration of much more complex issues and trade-offs – and I don’t think anyone would find it “easy”.
The “neoliberal” economics bit is also not as “easy” as you think – at least, its not easy if you want to be rigorous. I called JQ on what I saw as his conveniently loose use of the smear term “neoliberal economics” at the time he was writing Zombies (so I’m not just making this up now). In your case, you say that neoliberal economics involves inter alia “the denial of market failure”. Please name the economists involved in economic policy making in Australia who deny market failure. I doubt that you’ll be able to name any – I certainly don’t know any. THat’s because real economists tend to be quite different from the straw economic men that people who use the term “neoliberal economics” generally have in mind.
Neoliberals in their various guises have wreaked havoc both through their economic policies and through the corrupting influence of their ‘values’. By infiltrating government and both sides of politics they have made their belief “that government doesn’t work” a sad reality because, intentionally or not, in their hands, government certainly doesn’t work. A vain hope it is, but given the manifest failures of their ideology, one might hope that they would slither back into that dark and desolate place from whence they came.
If I recall correctly this is the same U Syd Department of Economics that has waged a vicious, 20 year campaign to drive their political-economy teaching colleagues out of their department (successful) and out of the University of Sydney entirely (unsuccessful – so far) (cf Political Economy Now! The struggle for alternative economics at the University of Sydney. Now they are suddenly discovering the need for workplace solidarity, unions, defence of academic freedom against the managerial class, etc.
I note that the Political Economy Student Society is demonstrating and organising to support staff, including economics staff, against the arbitrary sackings. At the risk of incurring Prof Quiggin’s wrath, I can’t help wondering if the economists would be similarly leaping to the defence of their Political Economy colleagues if the latter were the ones under threat. They never have before.
Sam @31, Griffith’s Nathan campus is in a similar state of repair.
@James Haughton
As a political economy masters student at USyd, I’d argue that ECON101 and ECON102 (not just their poor ECOP cousins) should be economic history courses.
@Tom N.
It may be best if you listened more. My statement was:
This was in reply to someone who denied that debt was relevance.
What is the lack of rigor in the Llewellyn, Potter and Samuelson charts? Their book seems perfectly acceptable to me. What is the problem – or are you just making issues up?
Similarly with Vernon. The issues here were an early version of the Australian economy being laid to waste – but fortuitously, Australia then entered an era of minerals boom. The Vernon report was effectively shelved.
What is the lack of rigor in looking at the long-run tendency for American consumer debt to increase from 1900? This has direct bearing on the university theory of the circular flow.
Moving from the facts of Europe, through debt, in the context of Llewellyn, Potter and Samuelson, and vernon (previously) is not a random walk through thought bubbles.
If you cannot see the rigor – that is entirely your problem.
@James Haughton
Yes. Exactly. The irony of neoliberal a priori thinking, after savaging so many others, has finally gone around to biting some of its proponents on the posterior.
Also brought to mind is:
“First they came for the communists,
and I didn’t speak out because I wasn’t a communist.
Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.
Then they came for the Jews,
and I didn’t speak out because I wasn’t a Jew.
Then they came for me
and there was no one left to speak out for me.”
@Tom N.
Please show evidence of our economy is prospering.
In my perspective we are not prospering at all but slowly strangling ourselves. At the moment, using growth in the mining industry to support our GDP growth has created in my opinion a ‘fake’ economic growth and been keeping the interest rates above Europe and US. This has attract a lot of foreign investment and appreciating our dollar, and as a result our other industries such as tourism, other export industries and other industries that have a significant link towards tourism such as retail stores etc. are struggling.
A major flaw in the GDP is that it doesn’t measure the depletion of natural resource and they are considered having no value unless value are added or sold for a price. I’ll say my main point in a business perspective for you to understand my point easier, we are actually using our ‘savings’ (natural resources) to maintain our economy; and from excessively drawing out these non-renewable ‘savings’ from our bank account (land), we are slowly reducing our ‘income’ by strangling our income generating economic activities through what neoliberals call economic rationalisation. It doesn’t matter how many hundred years our minerals will last, it still isn’t what economist should consider as sustainable economic development by consuming our saving.
@Freelander
I take the point but I’d have to say you’re committing a bit of a Godwin.
The NYTimes had an interesting graphic. Of the total increase in income in the US, 37% went to the top 0.01%, 56% went to the rest of the top 1%, the other 99% were left with the 7% remaining.
The rationalisation of university departmental staffing is simply part of the process of income moving upwards toward the ‘real’ wealth creators. Ayn Rand would be so happy. The hard done by 1% are slowly freeing themselves from us parasites and leeches.
@James Haughton
Only a tangential Godwin.
@Tom N.
The first point I concede on the grounds of literalism, though I don’t think increasing or cyclic instability is the hallmark of a workable system.
The second point I actually can address in probably precisely the way the you assumed I couldn’t: in my office this week we did have a senior economist from a peak body (I won’t name names) present a rather facile argument in favour of lower taxes and lower gov’t expenditure.
“360m on a new obesity centre”
How ironic.
Thanks Dan on (1). On (2), evidence that an economist has used a facile argument in favour of smaller government is not evidence that said economist denies the existence of marekt failure. Again, I think you will find that the only economists who do this are in fact straw economic men; not real economists.*
The other Tom: I do not need to prove that the economy is prospering, as I was responding to a statement (by Chris Warren) that the economy and its future is being laid to waste thanks to economists. I suggest the burden of proof lies with him. (Regarding GDP etc, these points are all well known among economists – which is why few if any policy economists advocate policies purely for the purpose of maximising GDP.)
Chris: contrary to your post, I did not “deny debt was of relevance”. Rather, I said that, on its own, a trend of increasing debt does not tell us much of relevance. (You left off the “on its own” when you quoted me in your response – but its important. Your only justification (initially) for your statement about the economy being laid to waste thanks to economists was to point to an increasing debt trend. As I’ve pointed out, that does not go close to substantiating your statement; nor, I suggest, do your recent additions).
_____
* Of course, maybe there is the odd fruitloop out there who denies the existence of market failure (though even then I suspect that it would most likely be through some semantic ploy, rather than through denying the substance of market failure as the term is generally understood by economists). However,
Chris Warren, there doesn’t seem to be anything unrigorous about the charts, it’s just that they only show data up to 1981. If you’re arguing that there has been a long-term increase in instability since the 1950s, it would be better if you cited data that includes the last 30 years, which is half the period under discussion.
Of course, you may well be right – it’s just that your data doesn’t show that. It only shows an increase in instability from the 1950s through to the 1970s.