Twisted Logic

Some ideas are so bad, that they can only be the product of a public education system.  Take this mob for instance:

LOBBY group Innovative Research Universities warns against allowing increased competition from private providers, and demands protection for existing public sector institutions in its submission to the Bradley higher education review.

“We argue against applying a pure market model to universities – they are critically important to this country. We don’t want to see the risk of market failure, as happened in the case of ABC childcare, effecting universities” IRU executive director Lenore Cooper told HES.

Sadly, a lot of people seem to hold such view about the market.  If it’s important, then the market can’t be trusted!  But the following paragraph just doesn’t make any kind of sense:

IRU cautions against competition from private providers, arguing that further deregulation would “drive greater homogenisation” in higher education as all providers focused on low cost courses in high consumer demand and that student fees would rise.

You got that?  Private universities would provide cheap courses that people actually want to undertake (which is apparently bad), and this will… uhm… cost them more money.

41 thoughts on “Twisted Logic

  1. I think the main problem in Australia is that the public also want free degrees and free other stuff from universities, so everyone is stuck. Until that changes and universities can charge what they want, dump courses that don’t make money that the public happens to like (e.g., nursing), not have to put up with “equity” concerns, not have to put up with 1000s of silly rules and regulations etc. they’ll always have a quite legitimate argument against competition from private providers, who don’t have to do all this shit.

    Of course, the simple solution would be just to privatize the universities, but then where would all the children of middle-class parents get their almost free degrees from?

  2. “We argue against applying a pure market model to universities – they are critically important to this country. We don’t want to see the risk of market failure, as happened in the case of ABC childcare, effecting universities” IRU executive director Lenore Cooper told HES.

    Can we impose something like the Godwin’s and Rothman’s rule to the term “market failure”. Godwin’s rule covers bringing up the Nazis. Rothman’s rule says that if a certain professor brings up the tobacco lobby he automatically loses the argument.

    Market failure should be like that.

  3. The rich should only have an education bugger this metitocracy stuff, hell all it does is lead to scientist that warn us about global warming. Back in the good old days it was the arts, can’t do no damage with the arts.

  4. What you mean Charles is that the middle class have a right to free ed paid for by the less well off. Good deal if you can get it.

  5. I think that’s not quite right JC, since the poor pay very few taxes overall in Aus. What you should be saying is that they have the right to participate in a non-market failure and get a free poor quality education paid for by everybody.

  6. It seems that some are so used to thinking in slogans that they’ve lost capacity to use reason – hence the twisted logic.

    Charles, the IRU were complaining that private enterprise would concentrate on cheap and popular courses (popular?! oh noes!!!!!!!!!11!!1 – the masses can’t be allowed to decide!)

    Stop pretending you’re interested in educating the poor. It’s the middle class who benefit from public universities (if you can call it a benefit). Is it really fair that those who don’t go to university subsidise those who do?

  7. It’s actually the Australian economy that benefits from a well educated work force. If you want to find a market failure in education look no further than the trades, a few business take a long term view and put on apprentices to have the the qualified tradesman ( or is that now tradepeople) these are pinched by the firms that don’t look past the current economic cycle.

    Then on the other side of the coin consider the shortage of doctors, this occurred because of a lack of funded places ( a situation cause by 20 years of poor government planning).

    As an aside, which doctor would you prefer, one who got his place on merit, or the one who got his place because dad could come up with the $100,000.

    We live in a very complex economy and to think in terms of direct personal benefit is really pretty short sighted.

  8. As an aside, which doctor would you prefer, one who got his place on merit, or the one who got his place because dad could come up with the $100,000.

    Dunno, Charles but I would take my chances with a doctor came from Harvard, Yale, Stanford, Cornell and Columbia medical schools (all private) over a Macquarie grad, but then that may be just me. How about you?

    It’s actually the Australian economy that benefits from a well educated work force.

    Oh yes, the too important to be left to the market spiel. Charles would you think your food supply is too important to be left to the the market too?

    If you want to find a market failure in education look no further than the trades,

    Okay. You lost the argument. That’s it. Invoking market failure loses the argument.

    a few business take a long term view and put on apprentices to have the the qualified tradesman ( or is that now tradepeople) these are pinched by the firms that don’t look past the current economic cycle.

    Bullshit. They take the view that they can train people while paying a lesser wage and make a buck doing so. Good for them. But why shouldn’t the tradee then accept a higher paying job? The old firm could always pay a higher rate to keep them. That isn’t market failure.

    This is the trouble with most statists, you can’t think past first base. And that’s why a lot of us have a problem relying on you guys when it comes to AGW. If you can’t even think through these sets of issues how in hell can we expect you to have thought about optimum solutions for AGW?

  9. I think that’s not quite right JC, since the poor pay very few taxes overall in Aus. What you should be saying is that they have the right to participate in a non-market failure and get a free poor quality education paid for by everybody.

    I wasn’t talking about the poor as such, Conrad. Less well off doesn’t mean poor.

  10. Charles,

    a different way to look at it is what direction Australian universities are heading. What you’ll find is that the quality of undergraduate degrees are going backwards. These degrees are massively regulated and no-one wants to pay the full cost (neither students nor the government). This is why university like Melbourne basically want to get rid of or massively scale down undergraduate education (it’s also why they now teach only subjects that are cheap to teach — i.e., huge courses that can marked via multiple choice questions — you can call them McMelbourne courses). If you look at their reasons, one (and surely the most relevant) is that undergraduates cost _more_ to teach than you are paid for. Alternatively, the postgraduate sector (charge what you want, far fewer rules) is booming. Here students can learn anything if they choose well, and can actually train do something where training costs money, etc.

    The obvious consequences of all this is degree inflation, so postgraduate degrees (which you generally pay full fees for) become the new degrees. So no-one benefits — it’s an illusion. All that happens is that people are stuck at university for longer, and they also pay full fees at some time in their lives. Apart from that, this subtracts from long-term workplace productivity, since you are basically taking people out of the workforce for a few more years.

  11. Some good insights there Conrad. “Degree Inflation”… the undergrad degrees are becoming worthless, except as an entry requirement to post-grad study.

    The same thing happened with years 11/12. Both sides of government – but especially the ALP – seemed to make a big deal about increasing the number of students going to year 12. This trend now seems to be continuing with university degrees.

  12. From JC

    “Bullshit. They take the view that they can train people while paying a lesser wage and make a buck doing so. Good for them. But why shouldn’t the tradee then accept a higher paying job? The old firm could always pay a higher rate to keep them. That isn’t market failure.”

    JC I own businesses that train apprentices and I am well aware of the costs. I can assure you ignorance is one of your strengths.

    The problem with taking on apprentices is the 4 year commitment, one has to pay for them to go to school and you are trying to get useful work out of someone untrained. The value from an apprentice comes from from the forth year on, third year is about break even.

    Market failure is obvious, there are now not enough tradesman.

    Judging from your comments however I assume your really not that interested in reality are you.

  13. Conrod, I think your basically spot on. The University sector is currently a mess, too many administrators, too many rules and too be blunt, pretty boring subject matter. I have studied part time all my life and for the first time I am doing a master courses from at a private institution.

    In my view the question is what do you do about it, you need an educated work force.

  14. No Charles, it’s you that seems to live in delusion.

    Why do you take on apprentices? You may be a charitable person, but it can’t always be so. So if you see value in the 4th year it must make it worthwhile. And since when has finding a higher paid job been considered market failure, Charles? It’s a silly comment to make. If you or anyone else want to retain fully trained people after they have been trained, pay them or. They aren’t indentured servants.

  15. An educated work force and people holding college degrees are not always the same thing. The whole socialism miscalculation idea that Ludwig Von Mises outlined was that the central planners would be able to measure the ever changing needs of society as well as a price system and as a result would overproduce in some areas and under produce in others. The University system produces a lot of people with degrees but the concern is that the make up of the degrees does not accurately represent the economic needs of society. As a result the system may be producing far to many people educated in some fields and too few people educated in other fields.

    The problem with over producing college degrees is that people who have them have no real advantage in the economy. The problem we are getting here in the states is that now these people who are ‘educated’ yet can’t find desirable work are not considering taking up another trade but blaming the market for being unable to provide them with a job in their field of study.

    The purpose of an education in the real world is to equip people to be able to supply some demand in the economy. With a market based price structure people can more accurately determine what field they want to go into and educational institutions can then try to profit from this by expanding their facilities. When people seek high paying jobs they find that they may need some sort of education/training. A marketized educational system would be able to better calculate the market needs and offer more of it and find what the market in excess of and scale that dept down. Yes there will be many common patterns as people will seek educations that best suit them and being that Australians mostly live in urbanized, mild climate, modern cities that the educations mostly offered would reflect upon this. In places with more industrial settings there would be more industry education, with more farming, more farm education (a very important field in many places and a completely useless field in others.

    If there was a shortage in some field, like the previously mentioned tradesmen, then their wages would go up dramatically to reflect this shortage. Simple supply and demand. People now see that tradesmen wages are going up dramatically and this lures them into entering the field. If tradesmen wages are going down then this reflects the market’s need of their services and is a signal to go do something else. This is not a market failure this is simple supply and demand. It is inevitable that many industries will expand, others will scale down or disappear entirely and this is NOT a market failure.

    People do benefit by living in a society in which people in their pursuit of profit are able to meet the needs of an economy. To meet these needs in the 21st century requires particular skills, training, and attitude, and for many people this may come in the form of a college education. Likewise the people who do the work to obtain these skills are heavily rewarded in the form of high wages and are now owed anything extra for their hard work.

  16. and Charles, one other thing.

    There were plenty of times we took on graduate trainees to eventually become traders themselves. Some left as soon as they were promoted to trading roles simply because we mistakingly took them for granted and underpaid them. So you’re example occurs in any industry. Never underpay good staff as they will leave and are extremely difficult to replace. Furthermore this isn’t market failure, Charles, that’s actually quite the opposite. The market actually working ensuring labor is receiving the marginal product for his/her labor. This is a good thing.

  17. “In my view the question is what do you do about it, you need an educated work force.”

    I think you need to start where fleeced suggests — part of the problem is in high school. My suggestion is to use harsh means testing on government schools, which would force people that have the money (almost everyone in my books) to pay more at that level (and money of course makes people more concerned about the product they get). This should lead to a higher paid teaching workforce (average pay is basically the only thing correlated with overall teacher quality). You might argue the government should pay more, but I would argue that’s never going to happen, so I’m in reality land here. It would also lead to more private schools, which would allow non-politicized curriculums to be used (e.g., the IB), which are far better than the slop the state governments come up with from time to time. You could keep a small number of government schools for those that really are poor (the unemployed and so on), and fund them properly because you have far fewer.

    Based on the above, universities would get a far better selection of students than before. Some might actually have a decent level of numeracy so you didn’t need to teach really basic stuff anymore when they enrolled in degrees like engineering. You could then privatize the universities (many only get 30% of funding from the government as is, so you are really just letting them out of beauracracy), which means the undergraduate curriculum could be fixed, since you could actually charge what the real cost is. You could also introduce other private providers if you liked then, since everyone would be on fair terms and universities would have nothing to complain about.

    For areas which are market failures for one reason or another, the government could simply tender university places, in which case they would set the outcome standards, unlike now, where there are essentially no outcome standards in many areas. The government should be particularly harsh here on what constitutes a market failure (basically, it should be only for things where long term government monosponies have led to under pay of entire sectors), as lots of businesses are simply whining — as jc points out, if businesses need employees, they should pay for them.

  18. In my state there is a shortage of alarm installers. Some employers have told me that the problem is nationwide, don’t know. Is this market failure?

    To operate as an alarm installer, you need to be licensed (at a cost of ~$600 in the first year, with additional, though lower, costs every year thereafter) and must have completed a training course. As best I can tell, the main provider of training is TAFE, and their training places are tightly controlled. I’m not sure about the number private sector training places. Nonetheless, I suspect this represents a significant govt-regulated barrier to entry into this occupation.

    Employees are paid around $20-$25pa. But here is the rub. Contractors can earn much more than this, in some rare cases as much as $100 per hour. So when employers complain that there is a shortage of installers, what they REALLY mean (and won’t tell you!) is that they can’t find anyone prepared to work for $20-$25ph.

    This phenomenon is widespread among the building trades and other trades where workers can choose between working on wages or self-employment. It even occurs in the nursing profession where RNs get higher wages and better conditions when employed by an agency. Of course, hospitals, nursing homes, etc. hate this arrangement and complain bitterly of ‘shortages’ and blown budgets.

    I therefore suspect that many (though not all) so-called skills shortages are non-existent. In these cases its all about wages and nothing about numbers.

  19. Because JC I’m a liberal, not a right wing nutter, and I believe you should give to society what you take. I did what I could for the next generation.

    I’m also a farther so I know how selfish the baby boomers have been. We had large government companies that took on a lot of apprentices, giving many a trade, we had free education so those of us that wanted a degree could get it.

    That access to education has served this country well. For all our faults an educated generation has server Australia well.

    The government companies have gone so the trade system is under greater pressure, we have replaced free university education with HEX. As a society we have not treated our children well.

    JC, for the first year do you send your traders to school one week in four, and pay them to go?

  20. Charles,

    The number of apprentices has been increasing for years. So we didn’t need ‘government companies.’

    The number of students at university has increased. So we didn’t need so-called ‘free education.’

    The unemployment rate is now at a 30 year low. So our children will inherit a better economy than the baby boomers did.

  21. Charles:
    Because JC I’m a liberal, not a right wing nutter, and I believe you should give to society what you take. I did what I could for the next generation.

    charles, to be frank I’m confused with your motivation.

    If your motivation was/is altruism then why complain when these young guys get a higher paying job when they’re fully qualifies. Isn’t that your reward right there? However you seem to complain they are doing that and receive a lower wage.

    Doesn’t work like that, Charles. People can be eternally grateful not having to work for a lower rate.

    As a society we have not treated our children well.

    What you mean is that it’s ok for others to stick their hand in our pocket to ensure their kids get an education possibly leading to a higher paying job. Lets not be under any pretense as to what is involved here, Charles. Great deal if you can get it.

  22. JC I started this discussion by pointing out a market failure, you asked why our companies are one of the few who put on apprentices.

    Quite frankly it’s about givers and takers, I hold no grudge for the people that went elsewhere, my complaint is the elsewhere that take instead of training apprentices. If all companies and all of society behaved like that the whole system would collapse.

    JC you continue to make the same mistake, you only think of the me, society is a very complex system and it happens to work because some think a little deeper.

  23. conrad

    I will take engineers as an example because that my first qualification.

    There is a looming problem in Australia, basic numeracy is not the issue, not enough kids doing science. It’s very simple for a society to get into a situation where there is not enough qualified people to go around, with math’s we have managed to get there. When the baby boomers retire there is going to be serious issues.

    In the USA they have had a problem for years, there the basic problem is the cost of education is too high.

    Unfortunately education requires decades of commitment, our current commercial focus is at best two years. Yelling markets, markets does not solve the problem.

    It has long been my view that the solution to high school education is simple to put a bounty on a kids head, the school that attracts the student gets the money. Society is saying, we want the child educated no matter what wacky views the parents may have, how the education happens is not an issue. You want the state system to be a quality system, not somewhere for those with parents that don’t care.

  24. “I will take engineers as an example because that my first qualification.”

    This isn’t the fault of the university system — almost anyone can do an engineering degree if they want. This suggests that the wages for engineers are too low. I might point out here that at present the profits to wages ratio of companies is the lowest in decades, so it’s pretty clear to me that this is just companies whinging, and not some failure of the education system. If they way want engineers, they should pay more, and I’m sure lots of people will take those unfilled university places and any long term problem will be solved. If there is a short-term problem then there are simply zillions of Chinese engineers (and builders for that matter) that would love to work here if we really need them.

    “Yelling markets, markets does not solve the problem.
    It has long been my view that the solution to high school education is simple to put a bounty on a kids head, the school that attracts the student gets the money”

    Perhaps you hadn’t noticed it, but these two sentences actually say the opposite thing. In any case, this is already the way schools work — the government pays schools (and universities for that matter) a certain amount for each student. But it pays neither enough for the standards that it hopes for — so either they increase it and everyone pays , or the individuals that use the system pay. Personally, I don’t think it fair that people with the means get the government to pay for it (it’s Robinhood in reverse in my books), which is I why I suggested that the users should pay. However, I do think there is a need to increase the total amount of money going into the system, and that’s why I suggested means testing (I’m happy to hear other alternatives).

  25. “In the USA they have had a problem for years, there the basic problem is the cost of education is too high. ”

    Since education costs in America have come up… Just to throw out some numbers for reference. Here in California you can pick up a 4 year bachelor’s degree in Engineering for under $8,000 (2 years at a community college $2000, Two years at a Cal State $6000). Engineering and Science students typically never have any problems finding scholarships, grants, or other things of the sort. I was once a physics major and while I changed my mind after the community college many of my friends went on to get 4 year degrees and worked in a physics research lab, typically people in the field have absolutely no problems paying for it. I knew people who received FAFSA and got $10,000 per year to go to school where tuition was only $1000 MAX per year. You could make a rigorous physics education FREE, admit anyone who has completed the prereq courses and a school with 20,000 students would have a difficult time producing more than 30 people per year who get through the program. I know this from my own personal experience, in 2004 I was one of 30 or so people to finish the physics program at my school. My brother recently obtained a BS in Chemistry and was one of 15 that year to do so, out of a school of 40,000 students. Getting a technical education here is not an expensive thing to do.

    The problem isn’t costs levied on the student, the problem is that so much of the school budget goes to very nontechnical or in demand subjects and in many cases goes to unnecessary building projects such as a $50m parking structure which is only needed about 6 weeks a year and didn’t need to be built if they reworked their scheduling system.

    Our Free and Compulsory K-12 system has absolutely insane operating costs even though the consumer will never see them. In some states costs are up to $14,000 per student per year. A classroom with 25 students and one teacher costs $350,000 per year to operate. This does NOT include any other major construction which usually ranges several million per year as our schools are constantly under construction. I have been told by an architecture professor that if you want to keep working all the time build schools since they are constantly being worked on. Despite the fact we spend a ton of money on this education system it has been constantly letting kids down. Then again, an education system which operates similarly to a soviet based farm system these dismal results should not be surprising.

  26. My mistake, the school my brother went to had 14,000 students, not 40,000, just misheard him. He was still one of 15 though. 1 out of roughly 1000 students to receive a degree of chemistry is still dim results.

  27. “The problem with taking on apprentices is the 4 year commitment, one has to pay for them to go to school and you are trying to get useful work out of someone untrained. The value from an apprentice comes from from the forth year on, third year is about break even.

    Market failure is obvious, there are now not enough tradesman.”

    So what charles, you don’t want to make that commitment (which you get subsidised for anyway), which is tied to restrictive provisions of the trade practices act and insider captured, government imposed regulation so there is “market failure”?

    What a steaming pile of bullshit.

  28. JC I started this discussion by pointing out a market failure, you asked why our companies are one of the few who put on apprentices.

    And then I realized your motivations seemed confused to me.

    JC you continue to make the same mistake, you only think of the me, society is a very complex system and it happens to work because some think a little deeper.

    Charles, What I did was present an argument as to why there is no market failure. I’m right.

  29. Riley, Do you in America have anything like our Australian ‘School of the Air’ system? This is where kids on remote stations are schooled over the radio- a radio class-room. they also recieve booklets and are in touch through mail. These days, I suspect there would be an internet link. Does America do anything similar for hard-to-reach families?

  30. I have never heard of a radio classroom being used here in the states. In extreme rural cases I imagine that people would be homeschooling their kids. Most rural places still have some sort of community though and in these small towns there would be a school house for kids to go to. There are also independent study programs where kids just go once per week or so. I take it that the nature of rural America is a bit different than Australia. For being in the middle of no where here you are still only a few hours away from a small town. Being roughly the same size the US has a population density 15 times greater than Australia so there are fewer places where people are really hard to reach.

    I have been through out a good portion of rural America have friends who live in some very remote areas. Typically they just have small schools with perhaps a dozen kids ranging from 5-18. Other places just bus the kids to school where parents take their kids to a drop off point which may be a few km away from their ranch and then a bus cruises around to the various drop off points and hauls the kids to school.

    There is also the element that many people in the VERY remote areas do so intentionally to be off the grid and therefore would not want their kid going to school.

  31. Mark,

    I still don’t follow. Presumbably the restriction on bonding has been in place since Federation, so what is its relevance to the current shortage of tradespeople?

  32. The ‘popular courses’ tend to be psychology, law and arts, You know the ones that usually lead to a field that is already massively oversupplied…..

    A degree opens the mind no matter what it is on… but why encourage folks to waste their time and money on a degree that isn’t going to help their job prospects?

  33. “but why encourage folks to waste their time and money on a degree that isn’t going to help their job prospects”

    They do — this is a misconception about what employers want. The starting salaries in Australia at least for most graduates is only weakly related to degree type (there are a few exceptions, like dentistry). Psychology graduates do better than business and most hard science degrees, for example.

  34. Competition in any free market introduces new ideas and alternatives. It encourages all parties to be better. When privately chartered schools compete with purely government chartered schools, both show improvements. Both learn from the other. Everyone wins!

    The real fear is someone discovering, through a practical example, that the emperor has no clothes. How embarrassing!

    Freedom works very well if we just give it a chance. It takes time, but it works very well. Here in America we have such an “just add water” and “drive through” mentality that we just can’t wait to let the market behave in a normal and natural manner. Worse yet, we believe that government control and interference is natural and normal.

    If you don’t believe me, just ask King Obama.

    Clair

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