We can afford university education for all who want it – but it pays a few to deny it

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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.