The Long Read: Tuition Fees Don’t Work

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There’s an ominous trend developing here in ‘The West™’ and that is to do with higher education, or, as it is more recently known, ‘a waste of time’. The reason being is that the cost of educating yourself is rising dramatically, but the value of the education you’re getting is dropping dramatically. Got a degree in 1970? Straight in at management level and enjoy that extra pay packet, you put the work in, now get the reward. Degree in 2017? Go do several unpaid internships before starting on the bottom ladder of the company… oh and be grateful for it.

Neither the declining value nor the rising costs are a surprise though. Countries are increasingly capitalising their education systems, and by countries I mean the UK. 20 years ago higher education was free in the UK, now it will set you back £9,250, and nope not £9,250 for your whole degree, that’s just for one year. Making it the most expensive public higher education system in the world. Yes, the whole wide world, including American public universities.

Mmmm capitalism, you serve us so well. For anyone not familiar with the 3 principles of capitalism, they are; reduce costs, increase profit and fuck everybody else blame everyone and anything other than yourself for problems you create.

Despite what the left says though, ©apitalism of course has some benefits, and those are seen especially where products are concerned. For sure it increases top line wealth, just look at the UK and the USA. You can also credit a lot of the supreme rate of technological improvement to capitalistic approaches as well. Whether that top line wealth and technological advancement is worth the destruction of the environment, culture, communities, or the development of questionable moral tendencies is another matter.

When it comes to services though, capitalism does very few people proud. Hand over your transport network and you’ll see rising costs, patchy coverage and huge discrepancies in quality. Hand over your healthcare system and you’ll get rising costs, patchy coverage and huge discrepancies in quality. Hand over your education system and you’ll get rising costs, patchy coverage and huge discrepancies in quality. Hand over your prison system and.. ok you get the idea.

So why do governments do this? Well they spend lots of money on short term visions like war and bailing out failing businesses (amongst many other things), which produces huge debts (UK & US owe around £25 trillion between them). It doesn’t take a 5-year-old to know that these debts eventually need paying, the interest payments are so vast though that they’re eating up huge amounts of the Governments income. So now they need to do what capitalism does best and reduce costs. The problem governments have however, is that all their costs are public goods. They’re things that benefit the public and things that we need; emergency services, healthcare, welfare, transport, education and many other civil services.

Not only do we need them but it is the sole reason we pay taxes. So things get awkward rather quickly when governments talk of privatising all the things we pay taxes for, but still want us to pay taxes for them.

It is not just awkward though, well, no more so than just plain naive anyway. This is because it just doesn’t work (for the people). To use a bit of basic economic theory here; when an industry is publicly funded, it doesn’t act on the free market, i.e supply of the services and demand of the services don’t dictate the cost. This produces a false equilibrium, meaning the place where supply meets demand is actually artificial. What that really means is the costs and prices assosciated with that good are artificially low too. So if the ‘good’ was to operate on the open market this artificially low-cost should, in theory, rise dramatically. I say theoretically, however it has happened in every single case of privatisation of education around the world.

OK, lets step away from education and look at another service. The US healthcare system. The US government spends more than double per person on healthcare than the UK, but the UK system is free for everyone and the US is not. To most people that doesn’t make sense, how can that be? Especially when you realise US citizens still pay huge insurance premiums, or in many cases have no coverage at all. Well as mentioned above in a purely publicly funded, open access system, the costs are artificially low, doctors wages are heavily restricted, as are nurses, then there’s the restrictions on drug use, facilities and so on. Not to mention the burden of health is on the state, not the people.

Change that to an open market and you will see wages rise dramatically (average GP doctor starts at around £55k in UK, in the US that is around $170k). Sounds great! more money! Well no. You see, it is a service, so that cost must be spread across the people who use the service. Plus when the burden of cost is on the insurer they have an incentive not to insure people. Therefore the patient pool is smaller but the costs are larger, meaning every patient must pay more to access medical care in the US.

As the burden of health is on the people not the state in this model, they become unhealthy because the state can be more lienient when it comes to what food is allowed to be distributed in society i.e. high sugar, high fat, deep fried nonsense. This makes people more unhealthy and more of a risk for insurers – increasing premiums again, or simply refusing access.

Capitalism also pushes money upwards in a society, benefiting the few. So in a health care system which has to service over 320 million people; a capitalist system will be built around its 12 million employees (US system), and more so around the healthcare companies – not around the 320 million people who need the service. So the 12 million employees and the companies will earn more, but at a huge cost to the population, and that cost could manifest itself through poor health or straight monetary loss, or both. In a publicly funded open system the money doesn’t flow upwards. Costs are reduced and the needs of the population are much more valued. Meaning better access, less cost.

That is the reason the NHS is still an extremely cheap system, with open access for all.

So again then, you could ask rather legitimately why are governments wanting to privatise everything? Well it is also to do top line wealth. How wealthy is the country? This is a very misunderstood obsession. Especially where public services and public goods are concerned, as neither of those things exist for wealth generation, they exist to service the populous as best as possible. The idea of absolute wealth generation, i.e. the more top line wealth we have (GDP) the easier it becomes to pay for the things we need. It is a nice idea, but it is naive.

For instance the US will say their private ‘public good’ systems generates wealth for the country, and it is true, their GDP will, and has increased. Economics, however is not about how much money you have. Economics, by definition, is about management of resources. Therefore by privatising everything, you send money upwards, generating ‘#Wealth’ but not much else. Not a great way to manage your resources.

It is easy to see that the ‘wealth’ generated, benefits the few. It is also easy to see how it could decimate services required by the people. The few people who benefit from this huge increase in wealth, want to spend the money on themselves, through products, cars, houses, computers, clothes etc. They don’t want to pay for someone else’s healthcare, or schooling or whatever.

That is why the ‘richest’ country in the world has the biggest prison population in the world, the biggest homeless population in the west, the biggest proportion of the population without access to healthcare, and it is a place where 1 in 4 children live below the poverty line. And that list is by no means exhaustive either.

This means that top line wealth is exactly that; Top line. It stays at the top. It doesn’t always benefit the country to have raw top line wealth. Something which is certainly true if you have a capitalistic model.

OK, Maybe I am being unfair.

Maybe I used too narrow of an example; the whole healthcare system in the US. Lets look at another service which is privatised. The UK transport network. Again because it is private, and therefore set free in the open market, you would expect costs to rise – and they do. Monthly commuter travels passes cost around 634% more than their most competitive European countries with public systems. The UK also pay the most travel costs as a percentage of their income too. Ranging from around 10% of their monthly income to 15% (or higher). Higher than any other European country with a public system.

Trying to get private companies to update services and infrastructure is difficult, because you’ll remember, one of the capitalist principles is reducing cost, and updating public services and infrastructure is a huge cost. Private companies have to be forced to spend money on their infrastructure. This results in often long protracted negotiations, usually resulting in some kind of contribution from a Government, whose sole reason for selling the service was to not have to pay for it. The contribution now has to be really high because the capitalist model increased costs, so therefore the ‘part’ contribution is probably closer to the full cost if they hadn’t sold it in the first place – or double the cost in the case of America’s healthcare system.

OK, lets get back to education. This is exactly the process the UK is in the middle of right now. Costs are rising dramatically, quality is dropping dramatically – not one university in the UK moved up in international university rankings this year – in fact the vast majority dropped. The Labour party have had a change of heart and now want to nationalise the higher education system again, a move which would massively benefit the majority – not the minority. The problem is they’re not in power. Even if they were It would come at a huge cost, and that is because there has been 20 years of a pseudo open market system. That system has raised costs and reduced quality – as expected, but if it is not nationalised now the Government contributions to help the ‘underfunded’ private companies that universities are, will eventually be more expensive than the actual cost of running it as a nationalised service. Just like the American healthcare system.

Our very own Michael Gove, who is in charge of the whole of UK education [See edit note], on the basis he got a degree in English studies, has decided that education is not a public good i.e. education does not benefit the greater public. That is an interesting view for two reasons. Firstly, Michael Gove is a public employee and as such gets expenses, which are paid for by the public, and therefore by definition, public goods – things which will benefit the country. His definition of a public good is… an ornamental elephant lamp at the cost of £134 – true story. He actually charged the UK population for elephant lamps. But hey! Its benefits the whole country. That’s why we all paid for it.

Because this is a really long post about a very very dry subject, this paragraph is just to test those who actually bothered to read this far. If you did; well done! But just so I know for sure who read the post to the end, pop the phrase ‘I feel better because of Michael Gove’s lamps’ in the comments and I’ll give you a gold star. Anyway back to the boring words on a screen.

Secondly, had Michael Gove studied, oh I don’t know, EDUCATION. He would have realised that there is no longer a serious debate about education being a public or private good. It is a well established fact that higher education, reduces crime, reduces health costs, increases working standards, increases innovation, increases wealth and social mobility. You’ll notice those things are all public goods and they are all facts.

There are undoubtedly private benefits too, such as increased wages, job opportunities, better health and so on. But the overall benefit of having an educated populace is a benefit to everyone. There will undoubtedly be arguments to say that people have no interest in university should not pay for it, which hopefully should have already been rebuked by my previous paragraph, but if not. Consider the police. I personally have never had a run in with the police and I have never needed their services personally. However, I do understand the grand importance of their work, they are a massive public good. So even though I seemingly haven’t benefited from them personally I have in other ways, such as maintaining a state of order in society whereby I can go about my life. Public Good. That is why I don’t mind a portion of my taxes (which I don’t pay because I don’t even live in the country) being spent on the police.

The fundamentals of funding higher education are no different. The only people who argue it is solely a private good are people who want to make money or reduce costs. I.e [not] Michael Gove, the man with no expertise in the area he is [not] responsible for. Then again we know Michael Gove is not a fan of experts… or facts… or research*.

This article is by no means rigorously fact checked and I would definitely not base any decisions upon the words lay here – this is a piece of lectured ‘entertainment’ and definitely not news. However I can assure anyone reading this that it is infinitely closer to the truth than anything Michael Gove has said since the age of 5. The only true words of advice from me, on my high horse, would be that; at a minimum, the UK Government should only be allowed to put people in positions of power if they have dedicated their lives to studying the thing they are in charge of. An Environment minister who has studied the environment, a Transport minister who has studied transportation economics, an Education minister who has studied education. Its embarrassing.

Exactly. UK Higher Education; embarassing.

Paul Green

*Like me

EDIT NOTE: It was recently pointed out to me on Facebook that Michael Gove is no longer the education secretary… and hasn’t been for rather a long time. Now, I could go back and change this (and pretend I did any research whatsoever) but I think it’s easier to just imagine this was written in the year 2013. 

 

 

 

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53 Comments

  1. ellamonia

    Hey Paul! Just wanted to say I love this read and your other posts. I love your emphasis on thought-provoking topics and being very unappolgetic with your organic wit. I’m a new blogger and definitely am looking forward to following your posts 🙂

    Liked by 2 people

  2. maxlcrepeau

    I wouldn’t even judgement if the ministers just did the administrative overseeing hooey and everyone else was highly educated in the country – but even that seems to much to enquire. I wishing I could order that I feeling better because of Michael Gove’s lamps, but it just makes me require to sigh…

    Liked by 1 person

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