28 November 2006

Student loans: a bad idea whose time has come

In an earlier post I wrote:

Further to my post on Gabriel Rozenberg criticising students in The Times for complaining about having to pay for their degrees. I suggested that turning the university system over to the market was not necessarily the best outcome, although perhaps unavoidable in a mediocracy. In a mediocracy it cannot be permitted that only a minority get subsidised to develop their intellectual skills. Therefore no one gets subsidised. (There is an intermediate stage in which a lot of people get subsidised, but it doesn't last long since it's not economically viable.)

Rozenberg replied as follows to readers' comments:
"I'm struck by how many of those who disagreed with me think that the answer lies in going back to an elitist concept of higher education for the top 2-5% of the country. My view is that such a system would damage the chances of millions of young people who will need advanced skills to get ahead. ... By calling mass higher education a "mediocracy", Dr. Tassano, you're saying they shouldn't get a chance to succeed."

Actually I didn’t call mass higher education a mediocracy. I said we live in a mediocracy, implying that mediocre standards prevail. The claim that “people will need advanced skills to get ahead”, and therefore need to go to college, is pure Blair-speak. Even if it’s true that totally new skills will be needed, where is the supporting argument that what is taught in degrees actually supplies these skills?"
Rozenberg commented on my response as follows:
Given your keenness for liberal economic theory elsewhere on the blog, I presume you believe that market choices indicate rational appraisals of trade-offs. In which case, the onus is on you to provide evidence that the hundred thousand or so students now paying £3,000 a year for their degrees are irrationally wasting their money.

Your main point is topsy-turvy: that "mediocre standards prevail" because of the expansion of higher education. Since when did competition for a service drive down its quality? Just as big businesses complain about red tape while simultaneously colluding with their regulators to block out new market entrants, so too are anti-competitive arguments like this now heard from representatives of a befuddled university as an excuse for rent-seeking.

Thankfully, in the future, students will more and more wield the power of their wallets. It's the only way Oxford will ever get better.
My reply

- The fact that lots of people are willing to pay £3000 to study for three years doesn’t prove much about the value of what they are taught. The process currently has very little in common with a typical consumer purchase decision. (Though conceivably if we went down GR's route it would become more like that.)

- I have never said, nor do I believe, that free markets are perfect in the sense of resulting in the best possible outcome, in terms of what people want. I merely reject the idea (in almost all cases) that anyone else’s paternalistic decisions – those of experts, or the government – would be better.

- As I said in my original comment on GR's article, I don’t think forcing marketisation, particularly partial marketisation, into a previously un-marketised area necessarily yields positive results. GR doesn't seem to have addressed that point. That was one mistake of Thatcherism which I thought the Tories might have learned by now. A completely free market is one thing, a pseudo-market another. (See e.g. NHS internal markets, railway privatisation, public finance initiative, etc.) I am also open to the idea that some things don’t work best on a free market at all (e.g. postal delivery), and I am prepared to consider universities under that head. In that sense, I am a conservative – I think, for instance, that Oxford’s priority at this stage is not to “get better” as GR suggests, but to stop getting worse.

- Following the massive expansion of higher education, it's now extremely rare for anyone from a middle class background not to go to college. A degree has therefore become more or less a sine qua non, without which the average employer would regard your CV rather dubiously. That, I would have thought, is in most cases enough to make people think they cannot afford not to go, regardless of whether they will enjoy, or otherwise benefit from, what they actually do there. If I were 18, that’s what I’d think.

- The economist Michael Spence’s model of college education suggests that the function of a degree for most people is largely as a signal of minimum ability. To quote Wikipedia, “employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them. ... For the model to work, it is not even necessary for education to have any intrinsic value.”

- GR's argument about increasing competition seems muddled. In what sense does increasing the number of universities from 50 to 100, or increasing student numbers from one million to two million, increase competition? Should one expect increases in quality if the number of soft drinks manufacturers went up from 50 to 100? By the way, I didn’t actually say that mediocre standards prevail because of expansion, just that they do prevail.


Paul said...

"Since when did competition for a service drive down its quality?"

This remark gave me pause, as it's indisputable that there is indeed more competition, and it also seems to be the case that quality has been driven down. However, it occurs to me that the answer to this conundrum lies in the definition of "service" here.

Having attended two red-brick universities (one of which is and has always been very strongly associated with left-wing politics), I would argue that the "service" being offered is not necessarily what the writer might imagine. Universities are run like corporations, and as such, compete for custom very well: they have come to recognise that the student body to which they now have to appeal comprises an ever-increasing number of individuals who are completely unsuited to - and frequently quite uninterested in - traditional intellectual endeavour. Consequently, universities now market themselves strongly as "lifestyle choices", emphasising the social side of university life as much as the academic side, and giving young people the courses they want to do. Almost every avocation, interest or passing whim can be turned into a honours degree, for a small(ish) consideration.

Judged on these terms, competition has greatly improved quality: no more do our young adults suffer the privations endured by their forbears. Universities have become world-class "lifestyle" providers, and circulate advertisements featuring well-rounded students relaxing, playing sports, laughing and "partying". Their literature typically refers to quantities (of students, courses, exam passes, money) and is apt to feature near-meaningless formulations such as "delivering excellence". Indeed, life looks to be quite excellent at these places, if one is a gregarious, "laid back" sort.

But the enjoyment of camaraderie, revelry, intoxication, romance, political activism and - with the concomitantly expanding "gap year" market - travel, is rather transient, and students do seek something more tangible and of greater practical use. Hence they aspire to ownership of a piece of paper; a piece of paper which is preferably as prestigious as possible, as inexpensive as possible, and as easily obtainable as possible. (Acquiring a certificate of ostensive cleverness is far more important than actually acquiring greater proficiency in using one's brain.) The university chosen by an individual will depend mainly on their ordering of these desiderata and the degree of importance attributed to each. Of course, if the first is the overriding consideration (so that the student seeks, say, an Oxbridge or Ivy League degree), then extra work is needed - but even this does not require the capacity for original thought, let alone intellectual brilliance. And universities will, of course, cater for all tastes, increasingly offering places to the most inappropriate candidates. Well, their money's as good as anybody else's!

So in a sense, increased competition has not driven down quality, it has improved it: our universities constitute a huge and sophisticated service industry, a sort-of Club 18-30 experience for both chattering and working classes alike. Of course, if one is talking about quality of education, then obviously there has been marked decline. But then has there been any competition on that front? Or indeed, are students (or academics) even very interested in that front? The piece of paper proves that one is clever (in relative terms at least - and who cares about absolutes these days?), so there's no need to worry about verifying its worth.

And lest I sound too sniffy, I myself write as an educational abomination. Despite initially being earmarked for academic greatness (a sure curse, but at ten, I hadn't yet heard of Cyril Connolly), I came to loathe school and tried unsuccessfully to avoid being bullied by skiving and aping "normality". Seeing higher education as three more years of misery, I was set on avoiding it, until the careers teacher finally ran me to ground in the library; mine being the only name on her "UCCA" list not to have the obligatory tick beside it. I placated her with a random selection of universities, which resulted in another eighteen months of skiving (though much more enjoyable skiving), before I started thinking about the piece of paper at the end. Alas, I thought too much about it, and I underwent a sort of mental disintegration during examinations: gone was my erstwhile insouciance, and replacing it was a feeling of creeping dread which left me staring skywards or out of the window, and trying to calm myself with breathing exercises (which usually ended in hyperventilation). These episodes soon extended into my wider life, which really terrified me, but thankfully started to wane after I'd finished my finals (I just about scraped a reasonable degree, achieving nothing conspicuous). I then drifted into a doctorate at another university, spending five increasingly depressing years becoming ever more disillusioned with academe, until I simply upped and left, fearing for my sanity once again. My failure complete, I felt oddly elated - at finally escaping from the tread-mill I'd been on for as long as I could remember. Were I ever to have kids of my own, I'd do everything within my power to keep them out of state education, and I'd think carefully about encouraging them to bother with university - for fear of their ending up directionless, unemployed drifters like their father...

Anyway, there's my twopenn'orth. And I do like your site.

Best wishes,


Fabian Tassano said...

Interesting comment, Paul. I think you're right that the meaning of "degree" has changed. People may debate the pros and cons of marketising "degrees" but they're talking about something different than acquiring intellectual skills. As you say, it's become more of a cross between (1) a piece of paper which says something about you (not necessarily anything much to do with intelligence) and (2) a particular social experience which it's the done thing to acquire, sort of like an extended gap year.

Sorry to hear your experiences of the educational system were less than happy. I think a lot of very bright people face the same problem, and more so these days. The university system is no longer geared to the bright, it's geared to the mediocre (in the case of undergrad degrees) and the anally retentive (in the case of postgrad research).

Glad you like the blog, I'm always very open to positive feedback ...