Friday, June 05, 2009

Funding of Universities

Chris Fellows writes in the Australian:

I KEEP reading reports ("UNE legal bill rises to $1.3 million", HES online, May 29) that the University of New England receives a larger proportion of its income from the federal Government than any other Australian university as if this were a bad thing.

A public university should be accountable to the public and align its activities with the public interest. This is most likely to happen if it is funded by the citizens of Australia through our federal Government because he who pays the piper calls the tune. Every week I read in the HES stories about universities in trouble because their investments have tanked, or overseas student numbers have dropped, or a sweet deal with industry has led to a conflict of interest.

It would not be in the national interest if the federal Government provided 50 per cent of the navy's funding and forced it to obtain the rest by offering cruises and hiring ships out to foreign countries. Equally, it is not in Australia's interest to make public tertiary education - a critical part of our national infrastructure - dependent on narrow sectors of the community, or overseas customers, whose goals may not align with those of the nation.


Marconomically speaking, of course, I disagree with the specifics of the assertion, that universities are better for the country if they are run by the public purse, while at the same time agreeing with the gist that "Infrastructure" should be publicly funded.

The question is, which aspects of a university are "infrastructure" (Long term investments which benefits a lot of people, with no easy way to charge the people that benefit), and which aspects are products and service that people need and/or desire at an individual level, are willing to pay for, and private enterprises can make money from it by providing it the best way?

The infrastructure aspect of a University (Buildings, utilities, roads, long term equipment, general research projects etc.) ought to be funded publicly, and the Product/service aspects( gaining qualifications suitable for employment, industry specific research and development etc.) ought to be funded privately.

The private enterprises ought to be charged a rental and or tax for the infrastructure aspects which they use to sell the products or services which they charge for.

This issue screams that Universities should split off private arms, and look at divesting the aspects that are better handled by private enterprise.

7 comments:

Chris Fellows said...

In a world of maximum economic efficiency, it might be best if nobody lived here: there might not be any economic justification for Australia to be inhabited. But, given that our continent is inhabited, we sacrifice efficiency in order to maintain some degree of self-sufficiency. It might be more efficient to outsource our defense entirely to the United States: but just in case, we maintain our own defense forces. These are publicly funded because their composition should reflect national priorities. It might be more efficient to source all our trained professional people overseas: but just in case, we should have the capacity to train a minimum number here. The services of these people are a public good, as well as a public benefit, and *if we are to have public universities*, if nationally we make the decision to have this capacity, the selection of these students should be based on merit, not income, and their training should be publicly controlled in order to reflect national priorities. Perhaps we don't really want the 'insurance' of a capacity to train our own professionals; perhaps we can get along without it; perhaps we only need 10% public universities, and the rest should be private: those are all different arguments. But given that we have a 'public university', it ought to be (nigh) fully funded, like a public school or a public hospital. Private companies will not put money into public universities unless it enables them to do something more cheaply than they can do themselves: which means the bottom line is really that the government is subsidising their research activities, they are not necessarily supporting research and education to meet national priorities.

Marco said...

In a world of maximum economic efficiency

I'm not so much talking about maximum economic efficiency as (as my marconomic rule of thumb vis-a-vis public vs private funding) is as much as getting the most of what we want from the taxes we pay to get it.

The services of these people are a public good, as well as a public benefit, and *if we are to have public universities*, if nationally we make the decision to have this capacity...

Your argument is sounding a lot like the argument of the EU regarding farm subsidies. You may think that EU farms are private, but so much public money is poured in that, marconomically speaking, European agriculture is (to use your own words) "publicly controlled in order to reflect European priorities"

My argument against that is that Europeans are getting very little (food security) insurance benefit for the huge amount of tax money invested.

Just because Universities are coming from the opposite direction (Public owned seeking private finance) as opoosed to EU farms (privately owned relying on public finance), this makes no difference marconomically - The conclusion being that our taxes are more wasteful on the aspects of Universities which could be funded privately, just as they are with EU agricultural subsidies.

On the other hand, I do agree with you that Universities should not be judged on what percentage their public funding is. Other forms of accountability would be much better.

Marco said...

Ooh. I haven't addressed this bit: the selection of these students should be based on merit, not income, and their training should be publicly controlled in order to reflect national priorities

The research I have heard about, found a correlation between "academic merit" and "income" (like those with more money nurture their children to perform better at school), and by the time students reach university, it is too late for those naturally gifted poor as their funding in earlier childhood is way more relevant in that regard. Thus any publicly controlled training has to be publicly financed from early primary school or earlier to be effective at all in the way you are talking about.

Chris Fellows said...

My argument against that is that Europeans are getting very little (food security) insurance benefit for the huge amount of tax money invested.

That is a quantitative argument, which I have already conceded in saying that we may not need public universities, or may only need 10% of the public universities we have now. It is not a qualitative argument that Europeans should *not* invest (a smaller amount of) tax money in order to obtain a food security benefit.

I agree with you that "our taxes are more wasteful on the aspects of Universities which could be funded privately," but we need firm data on what those aspects are. I think that because we are such a small market, there will be many more things that the market cannot do in comparison to Universities in Europe or the US.

Chris Fellows said...

...by the time students reach university, it is too late for those naturally gifted poor as their funding in earlier childhood is way more relevant in that regard.

I am not talking about stastistical correlation between academic performance and socio-economic status. I am saying that if you come out of high school with exactly the same levels of achievement, you are more likely to go to university if you are rich than if you are poor. Thus, the higher education system is failing to capture the best talent produced by the earlier tiers.

Our primary education system is still stuck in a 19th century paradigm designed for converting peasants into manual labourers: it is only of value in environments where it can do much the same thing, in rescuing those children who are in danger of becoming part of a permanently unemployed underclass. For higher achieving students, the ones we want to exploit for the national benefit when they get older, I assert that it is usually either superfluous (we haz teh interwebz) or actively pernicious (conform to the mediocre norm, you potential innovator and wealth-creator! conform, conform, conform, conform, and become a good little automaton drone only good for working on the assembly line).

Marco said...

"our taxes are more wasteful on the aspects of Universities which could be funded privately," but we need firm data on what those aspects are

Who needs firm data when you've got Marconomics :)

If Harvard (say) was a multinational company able to operate in Australia, they could lease whatever University *infrastructure* (infrastructure may include inhouse academics who may be doing research separate to Harvard) was here and generate Australian Harvard graduates which may be more valued by industry.

It works for the car industry(heh maybe not :)). I think Universities have to get away from the thought that they have to be the place, the buildings, the research, the graduates and the equipment all with the one entity.

You might think we need firm data. I think it is bleedingly obvious. Presumably the private universities in the USA get grants for infrastructure, equipment or specific research. He who pays the piper still calls the tune with any and all of that.

Marco said...

you are more likely to go to university if you are rich than if you are poor. Thus, the higher education system is failing to capture the best talent produced by the earlier tiers.

I can see what you are getting at here. The time frame for a university degree is just about short enough that an "employer" (or parent, defence forces or whatever) of graduates could see a direct return on the "investment" in paying for their private university degree (although 2 years is the usual future discounting timeframe) In theory, gifted people who have reached high school graduation should be able to get funding from private sources or scholarships of some type to alleviate the issue. It doesn't quite work that simply in the USA, but the other thing is that a lot of gifted people can benefit society more effectively *without* a university degree.