Grattan Institute advocates cutting university research funding

John Quiggin44 Comments

Andrew Norton of the Grattan Institute has received quite a bit of attention for a piece arguing that universities don’t need additional funding because money intended to fund teaching is going to support research instead. Norton suggests that the funding going to research is around $2 billion a year

University research matters to Australia, but the evidence that it improves teaching is less clear. Direct spending on teaching, by contrast, is far more likely to ensure that universities offer the high-quality courses students want.

The obvious question is, if university research is important to Australia, won’t cutting $2 billion (or some substantial component of it) from research funding harm our national interest. As the quote above shows, Norton merely asserts that redirecting funding from research to teaching will benefit teaching.

The core of Norton’s piece is a misuse of accounting categories. The implicit claim that, since university funding is allocated on a per-student basis, it must be intended entirely for teaching. The further implicit assumption is that the only research that should be undertaken is that explicitly funded through bodies like the Australian Research Council.

But this has historically never been the case. In Australia, and (as far as I know) in every other country, university academics are expected to undertake research as part of their duties, whether or not they have grant funding. The standard proportion, which hasn’t changed in my 30+ year involvement in the system is 80 per cent teaching (and associated service), 20 per cent research, which appears to be exactly the proportion cited by Norton.

It’s true that more transparency in the allocation of resources between teaching and research would be a good thing, if it were feasible. But as the travails of exercises like the Excellence for Research in Australia process have found, this is easier said than done.

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For-profit education: plenty of blame to go around

John Quiggin33 Comments

Success has a thousand parents, failure is an orphan. The truth of that proverb is illustrated by the blame game now going on around the disaster that is for-profit Vocational Education and Training (VET) in Australia. In the last couple of weeks, I’ve seen dozens of different stories illustrating the extent of the failure. The Oz alone has at least ten.

Reading these stories, it’s clear that this isn’t a matter of bad apples or abuse of the rules. The for-profit sector as a whole is delivering abysmally poor results while chewing up billions of public dollars.

Unsurprisingly, Labor is blaming the government for allowing this to happen. Equally unsurprisingly the Oz is running the line, pushed by Minister Simon Birmingham that it’s all the fault of the ALP who extended the FEE-HELP scheme to the VET sector in the first place.

I had to check back on the history, which reveals that this was actually an initiative of the Howard LNP government, announced in its final year, implemented by the Rudd Labor government, and carried on by the Gillard and Abbott governments. Victorian governments of both parties led the charge at the state level. So, there’s plenty of blame to go around.

But, that’s history. The real problem is that no one is willing to admit the obvious lesson, already evident from the US; for-profit education, funded by public subsidies, is a recipe for disaster.

I should concede though, that Birmingham is already edging towards the right answer, saying that he is and not as keen as he was to extend subsidies to bachelor and sub-bachelor courses at private colleges.

Another piece of good news is that the ACCC and Auditor-General are finally getting their teeth into this, doing what should have been done by the supposed regulator, the Australian Skills Quality Authority, which has been asleep at the wheel ever since it was established.

But no amount of tightening up at the edges can fix this problem. The only solution is to abandon subsidies to for-profit providers and put a serious effort into restoring and upgrading the TAFE system.

Finally, a blast from the past. Back in 2012, ACPET, the for-profit VET lobby group cited me as saying

“I think we will continue to see many examples of (dodgy) educational institutions. They are going to be much more common than examples of successful profit driven training or educational enterprises”.

The report in question (paywalled) concluded by quoting me as saying

The only solution is ultimately for the federal government to take over this area [of VET] and to then have a much more robust accreditation system for private providers than we have, and a much more sceptical one”

ACPET suggested that my position was reminiscent of the Flat Earth Society. At this point, I’d say the Flat Earth Society has at least as much credibility as ACPET.

No New Coal Mines

John Quiggin42 Comments

Along with 60 other Australians, mostly more eminent than me, I’ve signed an open letter to world leaders calling for a moratorium on new coal mines and coal mine expansions. The letter focuses particularly on Adani’s proposed Carmichael mine but it’s important to be clear that this is part of a global movement to stop new coal mines everywhere in the world.

The underlying reasoning isn’t spelt out but ought to be clear enough. If we are to stabilize greenhouse gas concentrations at 450 ppm or below, as the world’s leaders have already agreed we should, it is necessary for carbon dioxide emissions to peak soon, and decline to zero over the next 30 years or so. Given that burning coal creates major health hazards in addition to C02 emissions, coal burning needs to eliminated even more rapidly. That means first, that no new coal mine can expect to work for an operating life of more than 30 years, and second that any new coal mine must be offset be additional closures of existing coal mines. Once these factors are taken into account, it’s essentially impossible for new coal mines to make economic sense within the constraints imposed by a limited carbon budget. Certainly, that’s the case for Carmichael, which is a massive boondoggle keeping alive only in the hope of extracting some form of government assistance or compensation.

Labour Lords Resign the Whip (crosspost from Crooked Timber)

John Quiggin8 Comments

I don’t have much to say about this, but I couldn’t resist the multiple absurdities embodied in the title. For those who haven’t heard anything about this, two appointed members of the House of Lords (Warner and Grabiner) have announced that they will no longer follow the direction of the Labour Party on how to vote, and a third (Mandelson) has made noises suggesting he may go the same way. This is a result of the party’s leadership election, in which the members a (nominally, at least) democratic socialist party chose a (nominally at least) democratic socialist leader.

Flogging a live horse

John Quiggin49 Comments

A while back, I mentioned in passing the failure of the Queensland Greyhound Racing Board to do anything about notorious industry practices such as live baiting and the slaughter and dumping of dogs that failed to run fast enough. But, even if these practices were well known, the perpetrators made some effort to hide them. By contrast, the practice of whipping racehorses to make them run faster is open and unchallenged. Can there be any justification for this beyond “it’s always been done this way”?

Obviously, there’s no inherent interest in the absolute speed attained by the horses, just in the race between them. There’s no obvious reason why a race without whips would be any less interesting. And if we wanted to see the horses go as fast as possible, we’d allow the use of stimulant drugs.

Apparently, defenders of the practice have made the claim that it doesn’t hurt the horses. That’s ludicrous on the face of it – if it didn’t hurt obviously it wouldn’t work – and has been shown to be untrue.

I’d be interested to know about the legal position. Again on the face of things, whipping horses would seem to be illegal cruelty to animals. Is there a special exemption, or has the proposition never been tested?

Testimonial

John Quiggin32 Comments

Former Minister Eric Abetz was in the Oz the other day, complaining that

How often, for example, have I had to put up with the tag of ‘religious Right’ or ‘far Right’, whereas you hardly ever hear it of the ‘religious Left’ or the ‘irreligious Left’ or the ‘far Left’ or the ‘extreme Left’ when talking about the Australian Greens or vast elements of the Australian Labor Party,

That reminded me that I needed to update my testimonial list with one from Michael Stutchbury, then at the Oz. It’s appropriately placed on the far right of the page.

Worthwhile Canadian Initiative (crosspost from Crooked Timber)

John Quiggin48 Comments

I’m writing from the other side of the planet, but there are enough Oz-related links to offer some thoughts on the Canadian election result.

First, taken in conjunction with the recent removal of Australian Prime Minister Tony Abbott, this is a big win for the planet. Abbott and Harper were the only two world leaders who were clearly climate denialists (despite some official denial-denialism) and now they are both gone. That leaves only the US Republican Party as a serious political force dominated by denial (of course, a big “only”). The chance for a decent agreement coming out of the Paris conference in December has improved significantly

Second, as the UK election also showed, the combination of multiple parties and First Past the Post voting is highly unpredictable. If things had shaken out a little differently, Harper might have managed it back into some kind of minority government, or we could be seeing the NDP rather than the Liberals winning on the basis of strategic voting. Applying this to the UK example, the idea that Cameron’s victory was in some sense inevitable is fallacious. Had a few things gone differently, we could all be talking about the mysterious appeal of Ed Miliband.

Third, the supposed dark magic of Oz spinmeister Lynton Crosby did Harper no good. If anything, Crosby’s dog whistle strategy motivated the majority to vote strategically against Harper. But I suspect that people like Crosby are better at selling themselves to politicians than at selling politicians to the public.

Locke’s Road to Serfdom

John Quiggin20 Comments

The second instalment[^1] of my critique of Locke’s propertarian liberalism is up at Jacobin. I’m looking at an obvious (but, AFAICT, rarely asked) question about Locke’s theory: if land is acquired through agricultural labor, how is it that agricultural laborers have mostly been landless? The answer is simple: thanks to slavery and serfdom, it’s the owners of the laborers who acquire the property. To quote Locke

the grass my horse has bit; the turfs my servant has cut … become my property

Locke’s political practice in the Americas was consistent with his theory. In his Constitution of the Carolinas, he suggested the creation of “leetmen” — a hereditary class of landless laborers, tied to specific areas, and bound to work for aristocratic landowners. As I observe (the point isn’t original)

Locke didn’t really need a new word for this institution. The founding figure of classical liberalism was proposing, literally rather than metaphorically, a Road to Serfdom.

[^1]: I’ve done with Locke, but I’m planning a third instalment on Jefferson, his most important successor.

Populism, Patrimonialism and US politics (crosspost from Crooked Timber)

John Quiggin22 Comments

Nuance is nearly always appealing to academics. For a long time, that was true of my approach to economic issues, particularly including income distribution. When presented with simplistic populist solutions to inequality like “Make the rich pay!”, I was inclined to responses along the lines of “It’s more complicated than that”.

A big problem with “Make the rich pay!” is that with the kind of income distribution that prevailed in the mid-to-late 20th century, any change to income tax that would raise significant revenue would have to apply to the top quintile (20 per cent) of the income distribution. People in the top quintile of the income distribution mostly derive their income from (typically professional or para-professional) employment, don’t think of themselves as rich, and aren’t, in general, seen this way by others. So, the slogan didn’t match the implied policy.

But with the rise of the patrimonial society that’s largely ceased to be the case. The top 1 per cent of the US population now get more than 20 per cent of all pre-tax income, considerably more than the total revenue of the Federal government. Within that group, the top 0.1 per cent have done better than everyone else, and the top 0.01 per cent even better.

So, taxing the 1 per cent more makes sense. I responded a little while ago to a piece trying to argue increasing the top marginal tax rate would make no difference to inequality. And while I was drafting this post, the NY Times came out with an article that reached broadly the same conclusion as mine.

There’s nothing inherently ludicrous in the suggestion that the very rich should pay most or all of the costs of sustaining a system that benefits them so greatly[^1]. And, as in the 1920s, the very rich are different from everyone else. Their wealth is derived primarily from capital, or from control over capital (as business owners or from the financial sector). And, while most of the current cohort of ultra-wealthy did not inherit large fortunes, that’s an inevitable consequence of the fact that there weren’t many large fortunes to inherit until recently. As Piketty demonstrates, a society dominated by large accumulations of wealth will inevitably one in which inheritance, rather than effort, education or talent, determines life outcomes.

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Thinking the unthinkable

John Quiggin24 Comments

Thirty odd years ago, Richard Cockett wrote a classic analysis of the role of UK think tanks, most notably the Institute of Economic Affairs, in the economic counter-revolution that ushered in the present era of market liberalism. The crucial “unthinkable” idea put forward by the thinktanks was that profit-driven firms might do a better job of providing a variety of services that were then part of the public sector. This contrasted with the dominant view that any failings of the public sector were the result of specific problems such as poor management that could be overcome by better oversight, organizational restructuring and so on.

The resulting policies of privatisation, corporatisation, competitive tendering and contracting, PPPs and so on have transformed the public sector. Their success has also transformed the public debate, rendering their own ideas as part of the common sense[1] of the political class, and making other ideas unthinkable.

The case of for-profit education provides an example. There is now overwhelming evidence that for-profit education has been a disastrous failure wherever it has been tried, and particularly where for-profit firms can gain access to public funds through policies designed to enhance “consumer choice”. Here are some recent examples:

* A New York Times report pointing out that for-profit universities are getting millions of dollars in public funds every month despite a sustained track record of fraud and failure

* One of many reports from Sweden, until recently the poster child for the for-profit sector, now in a state of crisis, with declining performance an growing inequality

* A Senate Committee report, describing “rampant abuse, accelerating costs, and doubling of bad debt” under the FEE-HELP scheme for vocational education

The common element is that the abuses are well known and long-standing, but the proposed remedy is more of the regulation that has failed in the past. The unthinkable option is to shut off the flow of public funds to the for-profit sector and return to the combination of public and non-profit provision that has worked so well in the past.

Of course, once this unthinkable thought is allowed into public debate, the entire premise of National Competition Policy, based on the idea that “contestable” markets are invariably good for the public, would be cast into question. That would open up a reassessment of reforms in electricity, telecommunications, water, health and many other services provided successfully by the public sector over the course of the 20th century.

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