Martin Wolf has become an unlikely hero of the left of late – because of his clear support for Keynesian thinking.
But leopards don’t change their spots that easily, and he’s just plain wrong in the FT this morning when commenting on the proposed new charges for University education:
What are the alternatives to such reforms? One would be a return to free provision, with government paying everything. It is astonishing that this idea is supported on the left, since it requires using scarce public funds to provide huge private benefits to those who will be the most highly rewarded in the country: on average, the net private benefit from higher education is over $200,000 for each man. Moreover, the the UK’s higher education sector is underfunded. The government is never going to make up the shortfall.
Another alternative would be a graduate tax. The details are open to discussion: at what income would it begin to be paid, for example, and at what rate? But some difficulties are evident: it would mean centralised control over universities; and it would be almost impossible to apply to graduates who proceed to work abroad, whether they came originally from the UK or the rest of the European Union. The idea that people should pay an extra tax, for life, merely because they went to university, is also bizarre. Fee repayment is a far more logical idea.
No it is not astonishing that the left think that a great deal (maybe not all, but a great deal) of university education be state funded. It’s never been all. The student grant was always means tested. And that might remain relevant – with loans available to those whose parents won’t pay. But the poverty of Wolf's thinking on this is almost as apparent as is his exist language (has he not noticed that women go to university?)
The reality is that if earnings increase for 50% of the population as a result of going to university then the 15% of the population who pay higher rate tax will all, almost certainly, have been to university. And those in that group who have not been will be profiting on the back of the labour of those who have.
Simple, straightforward tax increases can and must pay for university – including an increase in the absurdly low rates of corporation tax paid by big business in this country. This is simple, effective, reflects the increased earnings capacity of many of those who go to university, the universal benefit that results from them doing so, and the simplicity of an effective funding mechanisms without consigning some to the burden of debt for life – a fate for those on £30,000 or so who had a university education and choose to use it in jobs that do not pay the levels enjoyed by those with whom Wolf is used to mingling. Every other alternative is unfair or simply sub-optimal.
Of course the left support university paid for by tax – it’s the best option on the table, by far.