As I foreshadowed a while ago, the financial effects of the pandemic have been reflected in an agreement for university staff to take temporary pay cuts in order to save the jobs of casual workers. Lots of people are unhappy about this, but it’s hard to see an alternative, and the deal seems to be the best that can be reached, with the requirement that senior management take the biggest cuts and (I think) the cuts for academic staff being scaled to protect the lowest paid.
The primary cause of all this is the big reduction in overseas student numbers arising from travel restrictions and the pandemic. But the more immediate cause is the federal governments decision to exclude universities from the JobKeeper scheme, even though they would qualify under the loss of revenue .
This decision is due in large measure to the government’s culture war hostility to the university sector. It’s disappointing to see them pursue this kind of vendetta at a time when we ought to be looking for national unity. But given that this is the case, there is no serious alternative for universities but to share the pain as evenly as possible.
The fundamental problem is the quasi-NGO (quango) status of universities. Even though they are mostly funded by the federal government, universities are (mostly) organized as independent statutory bodies under state legislation. As a result, they engage in wasteful competition among themselves. Indeed, the ACCC watches for signs of anti-competitive behavior, a concept that would immediately be recognised as nonsensical in the case of schools and universities.
Education is a fundamental responsibility of government, and universities ought to be organized as a unified national system, with the responsibility of providing education to all students who can benefit from it. If that were the case, the government would have had to meet the gap in funding just as has happened in public transport and other services where revenue has fallen.
Coming back to the cuts, the NTEU-universities deal ought to be a model for the economy as a whole in important respects. Dealing with the pandemic is going to be hugely costly, and those at the top of the income distribution, in both private and public sectors, should bear most of that cost.
Some responses I gave to a student journalist asking about universal basic income.
There are two main approaches to implementing a universal basic income.
One is to introduce a universal payment to everyone in the community, funded by taxation, and gradually increase this to a “livable income”, that is, one sufficient for people to meet their basic needs on a sustainable basis.
The second is to focus on those who currently don’t receive a basic income and provide it to them. This can be done by first increasing existing benefits, such as NewStart to a livable level and then expanding access to those benefits by removing punitive work tests. This would lead to a “participation income”, where everyone who contributed to society through paid work, volunteering, study or child-rearing received a livable income. I favour the second approach, for reasons set out here.
The government’s response to the pandemic has moved us much closer to a livable income guarantee, at least temporarily. The JobSeeker allowance is twice the amount of NewStart, and compliance testing such as the requirement to make 20 job applications per month has been dropped (at least officially – some case managers haven’t got the message on this). And JobKeeper implies a willingness to intervene to prevent involuntary mass unemployment.
Since this is very much at odds with the government’s policy position before the pandemic, it is unsurprising that they are seeking to ’snap back’ once the immediate crisis is over. But this neither feasible (because the economy will take a long time to recover) nor desirable (because of the benefits of a livable income guarantee).
A new sandpit for long side discussions, conspiracy theories, idees fixes and so on. I’ll open this by saying I agree with the view that even an optimal response to the pandemic by China would have given the world only a few days more notice, and that most Western governments would have wasted that time anyway.
Back again with another Monday Message Board.
Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please. If you would like to receive my (hopefully) regular email news, please sign up using the following link
http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page and at my Economics in Two Lessons page
Thanks to a recommendation from Seth Godin, Economics in Two Lessons is suddenly a best seller in microeconomics on Amazon. Won’t last long, I expect, but nice while it does.
The National Interest has a story headlined “The Coronavirus Crisis and the Chimera of Authoritarian Competence“. I expected to read about failure of Putin, Bolsonaro, Trump and other autocrats to contain the pandemic. But it was all about China.
China is the only autocracy that has had a serious pandemic and controlled it. Xi has told lies and suppressed info, just like all the other autocrats, but at least he hasn’t denied the severity of the problem and actively undermined measures to control it.
Lots of democracies have achieved the same outcome at lower cost, but the article mentions only Taiwan by name.
What makes it truly bizarre is that one of the authors is a Republican member of Congress. He has had more than three years to observe the chimera of authoritarian competence failing at first hand.
A Twitter thread posted using Spooler
For a long time, I’ve used Twitter to publish links to posts on this blog. But a lot of what I write now is on Twitter first. So, I’ve started using a tool called Spooler to turn Twitter threads into blog posts. Here’s the first one
According to Gallup 62 per cent of currently employed US workers have worked from home during the crisis, and 59 per cent of those would prefer to continue doing so “as much as possible”
* not the whole workforce, since so many who do in-person jobs are now unemployed
* binary choice – alternative is “Return to working at your office as much as you previously did”
Still suggests that something like 30 per cent of workforce want to work from home, and can do so reasonably effectively. Will be hard for employers to drag them all back to the office, especially with continued need for social distancing.