The debate on tuition fees misses a number of core issues.
It’s been rightly noted that it treats education as if it is training, and it is not.
And it’s also been noted that it treats that education / training as if a personal benefit and it very clearly is not just that, there is also a massive social gain arising from it.
And of course it has been noted that increasing fees is discriminatory by almost any definition one can use.
But there is another argument as well, which appears to have been little noted, if at all. This is that this whole debate is not about education or its affordability at all. This debate is about whether or not education should be used as a mechanism for creating another form of financial product that lays burden on those least able to pay to ensure that the owners of capital have enhanced claim on the resources of society, and including the mass of the population, and so control them. That is the argument that I am making here.
The simple fact is that our society can afford to send all the students who currently want to go to university to enjoy the benefits of the education they desire. I know that because, firstly, a great many of them are already going and secondly there is significant unemployment in our society meaning we have no alternative use for the net labour of those currently denied the opportunity to learn and those denied the opportunity to teach.
In a very real sense this argument is complete, in itself as I have just expressed it. After all, the process of teaching and learning is ephemeral. Of course it creates human and social capital, which is of enormous value and yet unquantifiable in terms of the financial system — so valueless to it.
If however we use the terms of that financial system, as a matter of fact the tutors who teach at universities are being paid now, and consuming now, and so are their students consuming education, and quite a lot else besides now, and society can clearly sustain both of those patterns of behaviour and not face any form of economic or financial crisis as a result. In other words, we can afford to sustain, without problem, the hundreds of thousands of thousands of students and staff who are engaged in this activity out of the wealth that our society is creating at this point of time. And because if we deny these students and staff the access to education they want it looks highly likely that they will be unemployed the net social cost of that denial is actually very high indeed.
So, the economic reality is that university education on the scale we have enjoyed it is possible, and it appears sustainable. The crisis with regard to student education is not then one of a need to ration for fear that suitable resources are not available to sustain the population in education, or that by sustaining them other more productive activity is squeezed out of the economy. Neither is true. The question is instead what is the best way of recording the consequence of this current consumption (for that is what is happening) in the financial system?
Very obviously the best way is to record it as taxation. After all, as a matter of fact society is allowing large numbers of people — a million or so — to consume whilst engaged in the process of education which will, it is hoped, be of benefit to the long term goals of all in society. Therefore, quite reasonably since it is society that has created this education system, provided it with the physical capital it needs to operate and has geared its whole education system for those under 18 to meeting its needs, indicating in the process the value it attributes to the university education that follows, it would seem not just wise, but the best indicator of where the decision to engage in this activity arises and where the benefit from it is realised that tax on the population as a whole — assessed, of course, according to the means of each to contribute — should accept the cost of this current consumption within the financial system, just as it is already doing in the fields of social and human capital. There is, very obviously, no better solution than a social goal being paid for socially.
And this does also, of course, accord with the fundamental pension contract which underpins society. This is that one generation, the older one, will through its own efforts create capital assets and infrastructure in both the state and private sectors which the following younger generation can use in the course of their work. In exchange for their subsequent use of these assets for their own benefit that succeeding younger generation will, in effect, meet the income needs of the older generation when they are in retirement. Unless this fundamental compact that underpins all pensions is honoured any pension system will fail. Provision of education is just one form of capital that should be exchanged using this equation — best done through the social mechanism of tax - which is precisely why the older generation in work should pay the education of the young yet to enter work.
But it seems we wish to ignore these deep underlying truths that exist within our society and instead lay over the education process a financial mechanism which appears to make no sense to most who engage with it, and most especially students, their parents and most of those who teach those students. That is, we wish to turn this social and human gain from education that accords with the fundamental premise in society that the knowledge of one generation should be passed to the next without charge being levied in exchange for provision in old age into a financial commodity that has as its underpinning the premise that this education is training from which the sole benefit that arises is attributable to the beneficiary of that training who then has as an obligation not just to pay for it, but to pay for it with interest added over what may be a lifetime of work.
The consequences are all too obvious. First education does indeed become training, and is debased in the process. Second, the owners of capital no longer have a duty to train, increasing the return to capital from which they then demand that only limited tax be charged. Third, students now emerge from their university saddled with debt: an obligation they can only meet during a lifetime of servitude in most cases, to which will be added further burdens for paying for overpriced housing and individual pensions, none of which they can possibly meet if at any point misfortune is to become them, for which the state will offer little or no safety net. They do as a result become beholden to their employers whatever their circumstance and are increasingly destined to lives of quiet desperation under an ever present yoke of interest payments to the owners of capital.
And all this to achieve the ultimate goal — a new line of securitised debt obligations that can be sold in financial markets for trade to underpin the returns of the owners of capital — or more especially, those who trade in the assets that those owners of capital make available for that purpose, for the owners of capital — often those contributing to the underperforming pension funds they are forced to subscribe too as a result of the failure of the state to supply a decent alternative — are in the majority of cases denied any option about how their assets are used and traded by those who have created opaque mechanisms to capture much of the income arising from them to service the demands of a financial elite.
That is what is really happening when students are forced into more debt, university fees are increased still further and taxes for those who should be making contribution to society for the opportunity to profit they have enjoyed are not paid. This is a vicious cycle: once such markets are created the demand for more of the securitised debt product is unending until it is shown that the debt mountain, accumulated in a form of frenzied and blind Ponziesque fever has no underpinning. This happened with mortgages, of course. And it will happen with student debt: the rate of non-repayment and default will rise exponentially as fees also rise. And then, as with mortgages those who made the loans for gain will demand the state recompense them for their losses — which we will, but with the obligation on the student borrower remaining intact, none the less.
The result will, of course, be that in then end the state will pay for much of this education by way of financing a future financial crisis that it will precipitate. But the state, and the ordinary student and taxpayer will see no benefit. That benefit will have long gone to the City, to the financial elite and to a tax haven far away where the funds can no longer be traced.
This is the real reason for creating student debt: so that the wealth of the many can be captured and transferred to the few. If mortgages can no longer deliver this trick then, say the financiers, let us use student debt to do the same thing — and let us win again.
Which is why the whole debt mechanism for paying for student education is so abusive; which is why so many people instinctively know that and which is why, when society can clearly actually afford students to have the education they need and want from which we all benefit this option is so completely unnecessary, unless of course you are a banker, student loan trader or member of the financial elite.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Richard – this is all fine in theory. But, I suggest you cast your eyes once again to my green and pleasant isle and take a look at what happened after the abolition of tuition fees by the FG/Lab government of 94-97. Result? Actual enrolment tertiary education by working class students DECREASED. Comfortably upper middle class students such as myself got a massive subsidy.
Now you’re right in saying that university education is a social good – but only up to a point. My BA, Masters and (fingers crossed) doctorate will significantly increase my own personal earnings potential. I may do great good for British society as a result. Just as likely (due to my specialised skills and increased labour mobility) that I will do great good for Canadian, Irish, American, Russian, or some other society. And that benefit will be indirect, and will probably represent a tiny, tiny amount of money to the vast majority of the people. Almost certainly less than it would have cost them to finance these degrees.
On the other side – my BA is in Politics and History. It cost UCD a lot less to educate me than say, a physicist or medical student because I didn’t need any equipment beyond a lecture hall bench. Yet the moneys actually allocated TO the university for my education was the same, as it is with regards to top-up fees if I’m not mistaken. End result? UCD has a massive incentive to recruit foreign students who they can charge greater sums (and still ends up deep in the red BTW.) In the UK, Oxbridge is slowly and steadily falling behind the Ivy league because it simply cannot keep up in terms of funding.
And finally, my experience of US vs. UK/Irish educational institutions is that the former have simply a far wider array of grants/scholarships/work placements/other opportunities for students to support themselves at University. Fees aren’t the only, or even necessarily the most expensive part of Uni education – food and shelter are just as important. Yet UK universities tend to have fewer resources for low-income students, further deterring them from leaving home to study even if that education is ‘free.’
Now in principle I’m not against a graduate tax. But as a practical matter I think fees at the point of use coupled with a) a robust system of grants and scholarships geared towards lower-income students, b) low-interest, ideally government provided student loans can ensure the two most crucial fairness tests of any system: that no student that meets the academic requirements is denied access due to inability to pay, but those that can pay (like me) don’t get subsidised.
actually,GDP is finite……
The university debate is very straightforward.
We can either just send the clever kids to Uni like we used to and afford to pay them a grant, so that they leave with very little debt; or we can allow all the duffers to go, in which case we can’t afford to subsidise every one of them.
Simple. That’s it. That’s all there is to it.
@william
Sure – but we can already afford this cost, as I show
“our society can afford to send all the students who currently want to go to university to enjoy the benefits of the education they desire. I know that because, firstly, a great many of them are already going and secondly there is significant unemployment in our society”
Complete non sequiturs.
@Nick Mahon
That’s a crass comment – and also so hopelessly wrong I presume we an guess which group you put yourself in
“university education on the scale we have enjoyed it is possible, and it appears sustainable.”
Only to a fool.
The idea that we can send half the population through university all merrily funded by the taxpayer is an idiot proposition.
You complain that one debate missing from the argument is that of affordability of education. That’s because virtually nobody – even the Labour Party – believes it is affordable.
There is a social gain from higher education (so long as it’s targetted at the right people) but the overwhelming benefit is felt by the graduate in the form of enhanced earnings. This massively outweights social gain.
That’s why no one seriously suggests making taxpayers cough up more for something which benefits the graduate so clearly.
Yours is a really weak argument, Richard.
Richard,
This is just pure, unadulterated horse shit. You are a fantasist. You know it. And you are stupid.
Two “ironies” spring to mind:
1. That the current government’s fixation with deficit reduction amounts to reducing the debt burden on future generations by, err, increasing the debt burden on future generations
2. That in borrowing to “save” their economies most governments have quite literally bought into the very problem that created the financial crisis in the first place (and quite a nice bonus for the financiers that all that government debt is no longer AAA rated and thus offers greater returns)
@Brian Bradnock
So it’s weak, foolish, stupid etc ect ect
All of which goes to show that Schopenhauer was bang on the money when he said that truth goes through three stages. In the first stage, it is ridiculed. In the second stage, it is violently opposed. And in the third stage it is accepted as self-evident.
You’ll just take a little time to get there
@Peter
Actually, I think Richard’s argument is a good deal more intelligent than you think, not least because (as I understand him), he’s arguing that, ultimately, the real cost to society of the alternative to state-funded higher education is greater, not just financially but also in terms of the social cohesion necessary for a stable, prosperous and caring society.
@xyresic
That’s a mighty short synopsis of it
But a good one
its an interesting thesis. I believe Tony Blair had a similar view, although cynically perhaps it was just a good way of reducing the dole queue. That would appear to be at least part of your argument as well. Problem is that the last lot had to instigate a review of university funding because of the funding hole Blair’s policy created, even accounting for the tuition fee changes they implemented – which sort of suggests your thesis is flawed.
@alastair
Just because Labour reworked it why is my thesis flawed?
“That’s a mighty short synopsis of it…But a good one”
I do think the argument needs a synopsis. It’s not often I lose the thread of your argument, Richard, but I have in this post (maybe it’s me, and I’m just tired).
How would you put this argument in a different context, eg a speech made to a student demo against increasing student debt?
I liked the line “all this to achieve the ultimate goal — a new line of securitised debt obligations that can be sold in financial markets” – and certainly believe that the City and Lord Browne are capable of being that cynical – but how can we make people see that “we’re all in this together” is the big motherlode lie concealing the true objective to “capture the wealth of the many to transfer it to the few”?
@Strategist
This is an occasion when it is true that I was thinking with my finger tips
It’s not my clearest argument – and there’s a sentence of well over 100 words in there – which even by my standards is long
But the essence is that we can clearly afford to educate people now
And we can do so out of current income – because as a matter of fact we are
What we’re not doing is recording that fact – through tax – and are instead creating a financial obligation that suits a tiny minority at expense of the majority
That’s absurd – and will fail – at cost to us all – a lesson we seem not to have learned
And yes labour got this wrong too – and should say so
the lessons of securitisation of this sort should now be understood
It has a role – but not this one
@Richard Murphy
Doh! so they implemented a policy of paid for university education for all who want it, and found out they could not afford it.
Richard, do you sincerely believe “all this to achieve the ultimate goal — a new line of securitised debt obligations that can be sold in financial markets”?
@Greg
Yes
I do
It seems entirely logical to think so
I do believe:
a) There is a desire on the part of finance / big business to ensure people are in debt and so compliant
b) There is a rapacious desire to create financial commodities to fuel trading – to advance the income of a few
c) Those with these objectives have massive budgets available to promote them
Two words really – “in denial”. It is fanciful to say we can afford taxpayer funded higher education for all who want it. There has to be a point where the economic justification for sending more than x% of the cohort to uni just do not exist. This must be the point where holding a degree has no social gain to the public and no private benefit to the individual (in the form of enhanced earnings). What we need is apprenticeships and vocational training for those for whom a higher education is neither necessary nor desirable – not to say to the school leave “you’re thick”, but to equip the economy with the skills lacking as a result of higher education having been come to seen as the be all and end all in the last two decades.
When both the Independent and Guardian leader articles broadly welcome the Browne Report, your position is left looking daft. The only other organisation I can think of to support your position is the NUS. I think that says it all.
http://www.guardian.co.uk/commentisfree/2010/oct/13/lib-dems-university-fees-cable#start-of-comments
http://www.independent.co.uk/opinion/leading-articles/leading-article-the-least-unfair-way-forward-2104805.html
The argument about inter-generational cohesion is daft – we survived for many decades with only a minority going to university without prejudicing it.
I don’t get quite why the Right is so emotionally invested in the “we can’t afford higher education for all meme”.
Even if students study courses the Right rather too airily discounts as “mickey mouse” (although there is a table
here which shows that the subject with the largest proportion of grads going on to get jobs is the much maligned Media Studies!), surely there are softer pro-business skills like report writing (dissertations), research and problem solving that are picked up on the way through?
@BenM
Precisely
@Ralph Thomas
Ah, so I’m daft for daring to offer a different opinion?
I’d remind you of a quote from George Bernard Shaw:
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
I’m unreasonable
So be it
But daft? I’d draw your attention to Schopenhauer, noted above
I don’t think you are correct. It almost sounds like you think there is some massive conspiracy theory….which I feel taints the rest of what you are saying.
Banks have plenty of ways of creating new and more complex products, and don’t need the government to introduce higher tuition fees to help them!
@Greg
The letters PFI come to mind
I do agree with Richard, it is crucial that knowledge is handed down from generation to generation. We only impoverish ourselves and our children if we neglect this. The coalition treats knowledge, especially specialist knowledge, as utilitarian only, rather than for the common good and therefore sets a price for it’s dissemination. The coalition is not fit for purpose, by their own incompetence they are too weak to stand up to the markets and are in thrall to them; therefore are cutting back on public services including teaching grants to Universities by a massive 80%. The markets caused the problem, driven by a misplaced political ideology which celebrated deregulation and ‘free’ markets. As for the wonderful Lord Browne, wasn’t he head of BP which the Americans say cut corners for profit,thus contributing to the Gulf of Mexico disaster?
@andrew
Yep, that’s him
Also the one who had a little problem telling the truth in court
http://www.guardian.co.uk/business/2007/may/02/media.pressandpublishing
@Nick Mahon
@Brian Bradnock
@Ralph Thomas
And any others missing the point….
What is the marginal cost of putting an eighteen year old through university as opposed to sitting them at home doing nothing?
A classroom? Lecturers? Books? If private colleges in London can deliver a degree at £7k p/a, with some profit (and they can) – do you not think the state could do it for £5 – 6k?
Bearing in mind many can and will take a loan to cover the 3 years fees – what is the cost to the state? A bit of low interest finance.
The benefits to society and the economy are potentially vast. To illustrate the absurdity of this policy, the firm of accountants I work for is busy recruiting Polish and South African accountants because we cant get enough British graduates with finance or related degrees. They all went to the city.
Why are so many on the political right in awe of university? Why do they act like a degree ought to be a mark of the elite?
I went to Bristol for three years, drank too much, learnt a bit, grew up a lot, and left I hope a slightly more open minded and inquisitive individual. Isn’t that enough?
@Greg said: “I don’t think you are correct. It almost sounds like you think there is some massive conspiracy theory….which I feel taints the rest of what you are saying. Banks have plenty of ways of creating new and more complex products, and don’t need the government to introduce higher tuition fees to help them!”
Is Richard a conspiracy theorist, or are you a naif? Banks are pretty big organisations (too big to fail…). In one office you’ve got some whizzkid dreaming up PFIs, and next door you’ve got another one working out the business opportunities from student debt. And in the boardroom you’ve got a sociopath like Bob Diamond going ‘hey, let’s have them all’. Of course a bank would lobby and get its people into the inside of an inquiry like Browne’s to help fix its findings.
@ Strategist, no, not a naif but someone who actually works in the industry (unlike yourself, it appears). It’s completely abusrd to suggest that the whole increase in university fees has been done to provide something else for us to package up and sell. And if you think we’ve lobbied the government to do it on our behalf then you’re rather naive yourself.
@Alex S
No, because the cost of an undergraduate place for one year is over £10k. £5-6k is a joke figure. The tuition fees of £3k currently charged don’t even nearly cover the cost.
Of course the choice you offer of the 18 y/o staying at home is false – they should be doing vocational courses and apprenticeships.It also ignores the fact they could also be doing the same jobs that were done 30 years ago by school leavers.
@BenM
It’s not just the Right, it’s newspapers like Independent and Guardian. In fact, it’s not a political point.
It’s simply anyone with a brain.
@Greg
Now why was I at a major bank this week hearing discussion of how a new securitised income stream could be developed?
Please don’t talk nonsense Greg
Because you are – and I know it
@ Richard, of course banks look constantly at new revenue streams that can be securitised. But (and correct me if I am wrong) you seem to be suggesting that the whole increase in tuition fees is actually for the benefit of the City.
Which (to use your phrase) is nonsense. And you know it.
@Greg
And I entirely disagree with you
I think I do know it
I think it is true
As I suspected, your real agenda is wanting to keep the lower classes in their place. Leave the professions to the chosen few.
Britain’s most successful industries are music, electronics (and in particuar mobile telephony), publishing, new media, tourism, clothing design, computer games. The list goes on. The common factor is the need for quality graduates.
We are seeing the effect of lack of investment in subjects like engineering already. And you want to restrict this further?
Vocational courses will not fill the vacancies at my firm for accountants and auditors. Only university education. Its that simple.
@Ralph Thomas
“the 18 y/o staying at home … should be doing vocational courses and apprenticeships”
Can you please tell me about all the apprenticeships on offer for which these 18 year olds should be applying.
@Greg: are you denying that the bankers and the finance interest have completely captured the Treasury and State of Britain, Ireland, USA? Are you seriously denying that? If you work in the industry, as you claim, did you notice at all that little thing called the bail-out?
Here’s an excerpt from a post by Charlie McMenamin at Excuse Me While I Step Outside (full piece at http://itslifejimbutnotaswknowit.blogspot.com/2010/10/university-fees-driving-down-house.html):
“Righty-ho: as widely prophesied, it has come to pass: the state isn’t simply cutting stuff, it’s withdrawing from whole areas. Specifically – and this is a surprise — it is withdrawing from funding most undergraduate tertiary education. Frankly, this is a surprise to me – in its sequencing at least. I thought they’d first go for Social Care for the elderly.
But the same three card trick is likely to be played in that field as well: first issue ominous but anonymised threats of financial Armageddon; then set up a commission or special study to look into creating opportunities for creating individual debt obligations to cover the gap; and then sit back and wait for the providers to conclude that their only hope is to persuade the ‘consumers’ that the only serious game in town is to take on additional financial risk personally. Bingo! You’ve re-defined the boundaries between the obligations of the state and the basic social requirements of individuals. Something similar happened in housing a generation ago.
…
‘Course, if I were one of those bug-eyed Marxist wallahs,I might make some point about the way unproductive (aka finance) capital constantly seeks to re-order the world to create more opportunities for it to reproduce itself. But that would just be extremism of a most old fashioned stripe and hardly welcome in today’s Big Society.”
The additional taxes raised from university graduates over their working life (both income tax and VAT) due to their higher than average incomes more than pays for their tuition.
The problem is taxpayers’ money being wasted on other things (like the war machine and bailing out the banksters), not spending on education.
Seen from the other end of the telescope, the Browne review, if implemented will have a pretty disastrous impact on the quality of education, embedding consumer sovereignty in a sphere within which it has little business. Browne told Channel 4 News: ‘Under these plans, universities can start to vary what they charge but it will be up to students whether they choose the university. The money will follow the student who will follow the quality. The student is no longer taken for granted, the student is in charge.’
Even if it were possible, why would you want to put students in charge of their education? I know that asserting the authority of teachers and lecturers isn’t very cool these days but it is undeniable that lecturers know better than their students. We might like to believe that the customer is always right but students can’t be. Students by definition should be seeking enlightenment, so to stand the student/lecturer relationship on its head is to disregard expertise, knowledge and learning, and replace it with the unending quest for the Holy Grail of value for money.
Browne’s remit was never to improve education (what would qualify him for such a task). So if education isn’t the beneficiary of the review (and by extension they neither are the students), who gains if not the financial bods? And if neither benefits, then WTF has Browne been doing all this time?