<>Listener: 13 August, 1994


Keywords: Education;


You might think on the basis of their public stance that all university economists support higher tertiary fees. Ten economists from the Auckland University Department of Economics wrote a 1987 report advocating student loans and student related to tuition costs. This was seized by the Wellington professor of economic history in his 1988 report on Post Compulsory Education and Training. The Waikato economics professor on the just published Todd Task Force on funding tertiary education and training has written newspaper articles supporting the view, while at least two economists from the University of Canterbury have similarly gone public.


Bertrand Russell says that if all the experts agree, they may not necessarily be wrong. So what are we to make of this agreement?


Behind the advocation is the “human capital” model, which says that just as we invest in physical capital to increase productivity and obtain a positive return, we invest in humans. One means of human investing is to obtain a qualification which has vocational value and enhances the possessor’s market income. Now if an individual obtains a higher return from obtaining the qualification, why need the state subsidize it? It tries not to subsidize investment in physical capital, leaving that to market forces. Why then subsidize investment in human capital? Practically, why should not students pay the costs of their own education and training, knowing that they will recover it in higher renumeration later?


(This leads to ask why only the timid recommendation of 50 percent of fees which was the upper recommendation by the Todd Task Force? Why not 100 percent? And why confine the charging only to tertiary education? Is it not logical to equally charge for secondary, primary, and pre-primary education? Roger Douglas and ACT are more logical when they advocate full charging for all education.)


There is a second theme to the argument. Subsidizing students is inequitable, so it is claimed. One curiosity of the debate is the passion with which equity arguments are promoted, the only place in current public policy where the Establishment does so. Those who have ignored the vicious cutting of benefits, the impositions of charges on the poor, the rising unemployment, the abolition of estate duty, and the cutbacks in health, are willing to die (or at least write an article, which in academic terms is much the same thing) to make our universities fair.


One academic argued that free education meant butchers pay for the education of surgeons. Even ignoring that the butcher’s child may be the one training for surgery, the issue is surely how the funds would be financed. There would not be too many butchers affected by raising the top income tax rate to 40 percent, but a lot of surgeons. One is left with the uneasy feeling that the passion for equity is not far from a deep personal concern to keep down income tax rates on the rich, including the passionate.


Anecdotally, it is probably true that children from better off families do better out of tertiary education than those from the worse off. But I was astonished, and appalled, at the incompetence by the Todd Task Force when they considered the evidence. Moreover, no one seems to have done any research (a fate worse than death for many academics) to show to what extent different policies will affect the degree of equity. It is not difficult to think of ways that the equity effects of the policy recommendations will be thwarted. We have here a typical New Zealand debate, long on rhetoric; short on content.


For that is a feature of the human capital model. I was probably one of the earliest New Zealand users of the approach. Its conceptual framework helps me think about some issues, but it is far from complete, and some of the gaps in theory especially as it is empirically applied, are enormous. (For instance the theory works better if there is slavery.)


Pushing the model well beyond the conventional wisdom, I am intrigued with the idea that just as we have human rights, each citizen is entitled to an educational endowment; an opportunity to acquire human capital. The size is a function of the level of economic and social development. A poor country might be only able to afford an endowment of primary school education, a middle level one would add secondary school education, and a rich and technologically progressive one would include some free tertiary education. (Which is New Zealand?)


I shant expand the argument here. It is clearly unfashionably within the economists’ discourse. But recall the classic statement of Peter Fraser (written by Clarence Beeby, and slightly amended to encompass women):


“Every person, whatever her or his level of academic ability, whether he or she be rich or poor, whether he or she live in country or town, has a right, as a citizen, to a free education of the kind for which he or she is best fitted and to the fullest extent of her or his power.”


They dont make educational policy like that any more.