keithrankin.com/clip/1999B09HeraldBedggoodRankin.html

rejoinder by Keith Rankin

Dialogue, NZ Herald, 9 November 1999
 

Keith Rankin's ideas for funding education perpetuate the changes of the past decade that have made education servile to more market forces. This is clear when he says that the student loans question should be an income and not an education issue.

This accepts that education is a commodity that is bought and sold by individuals. Universities, as corporate individuals, sell to students as consumers.

How we pay for education follows from education being conceived as either a public good or as a private commodity. Keeping the student loans scheme, with adjustments, is to keep education as a commodity. Therefore, those who reject user-pays and market rules in education must reject the loans scheme.

Even assuming that what Mr Rankin says is true, and that the loans scheme can be made fairer; all this is doing is cheapening the cost of education as a commodity to the individual consumer. It assumes that the needs of the individual are sovereign and that consumer choice should dictate what education is provided.

But this is to make education entirely market-driven. Individual consumers of education demand education that provides skills or credentials in the knowledge economy.

What is that economy? Under the global market, the knowledge economy demands skills that are marketable in the leading firms employing the latest profit able technology. As competition drives these firms to innovate, new skills requiring new knowledge will be reflected in changes in education curriculums.

For example, a leading world company such as the All Blacks may lose to its competitors, and changes in curriculum will follow. New courses in assault and battery will be added to the BSc in sports science. A PhD in reverse psychology will be established. Compulsory learning of Maori will be activated so that the national anthem can have more indigenous value added.

The point? The market demands new knowledge to keep up with competitors. However you rejig it, the user-pays loans scheme is no more than buying the latest knowledge on the never-never. it cannot change the nature of the commodity you buy.

If, on the other hand, we reject the market as the best allocator of educational values, a whole different approach is necessary. Education would be seen as a public good or social capital that benefits society as a whole and is paid for by society as a whole.

This is because education is not merely a commodity that can be sold to an employer. It is true that educated workers do contribute high productivity and profits for their employers.

Therefore, those who are on the highest incomes and who benefit from education as social capital should pay the most for it by means of a graduated tax. If they regard this cost as an intolerable burden on their means, where this investment is essential for society's functioning it should be replaced by social investment.

But much more than this, education informs culture, society and politics about how economic wealth is created and the ends to which it is put. This is what the phrase "critic and conscience" of society means in the Education Act. It assumes that society must freely debate at least the ends to which the knowledge economy is to be put.

But the more that education outcomes are dictated by the market, the less will such debates be possible. They will be defined as unproductive costs, and the courses in the humanities and social sciences that provide this questioning of social norms and values will be deemed unprofitable and closed down.

So long as education is funded by individual consumers through schemes such as the loan scheme, no matter how equitable, students will buy knowledge that has an immediate price in the market. Keith Rankin's assumption that mature students often come to university to "learn for learning's sake" is increasingly less true.

And it will become impossible if the market succeeds in reshaping public education as a provider of consumable knowledge dictated by today's top team and the slaves of fashion and tastes.

The loan scheme is inherently linked to more market thrust in education. It needs to be junked, the debt written off, and education recognised as a public good and fully funded by those who benefit most from education as social capital.
 

rejoinder by Keith Rankin (not submitted to NZ Herald)
 

David Bedggood's argument complements rather than opposes my argument. He, like me, favours universal student benefits, a progressive tax system, and a public knowledge economy. I favour a progressive income tax system of the "basic income / flat tax" variety rather than the kind of graduated tax scale that Ireland has and that New Zealand used to have.

I accept that the official language of the "student loans" scheme suggests that tertiary education is a private good. I was highly critical of that language.

While the scheme adopts the language of loans and loan repayments, I believe it was conceived by Treasury as a tax-benefit scheme. Hence, NZISS (now WINZ) defined student loan living allowances as a form of income (eg for defining eligibility for a Community Services Card) until case law prevented them from doing so. Further, from 2000, student loans will be administered by WINZ and the IRD, much as NZ Superannuation was before the super surtax was abolished in April 1998.

Seen as a tax-benefit scheme rather than as a loan scheme, the student loans do meet many of the criteria for supporting tertiary education as a public good. I emphasised a number of public good issues relating to older students, while also noting the need to remove the excessive tax burden faced by young ex-students.

We must however be careful not to take a binary (ie black-white) position on the public good versus private good debate. Bedggood says education is (entirely) a public good, and hence the market should be rejected as a means of allocating resources to education. On the other hand, some libertarians claim that tertiary education is entirely a private good and that non-market means of allocating resources to tertiary education should be rejected.

A balanced position is to accept that tertiary education has both public good and private good elements, and that the market has some role in allocating education resources. The benefits associated with the student loans scheme do provide that mixture of public funding and student choice. The scheme certainly encourages older students to pursue degrees in humanities and the social sciences; courses with a high public good component that typically do not lead to jobs with high salaries.