Oliver Hartwich argues free university education is the reverse of income redistribution and a regressive policy

Oliver Hartwich argues free university education is the reverse of income redistribution and a regressive policy

By Oliver Hartwich* 

The flagship policy in Labour’s ‘State of the Nation’ speech was the announcement to roll out three years of free tertiary education should Labour get in power at the next election. It is good politics since it will increase the party’s appeal to young people – and probably also to their parents.

Whether it is good policy is an entirely different matter. I have my doubts.

Before anyone calls me a hypocrite, I should start with full disclosure. Since I received all my education in Germany, I benefited from free primary, secondary and tertiary education. I even got more than three years’ worth of free university education, all the way to my doctorate.

And it is not despite but because of this personal experience that I reject the idea that tertiary education should be free. That is because it made me experience first-hand what it does to universities and their students. So read the following as my personal reflections on free tertiary education and not an analytical policy piece.

The first thing I would say about free education is that it suffers from a basic flaw: If something does not cost anything, it is not valued much either. What it means in practice is that when university courses are free, students will think about them differently. Some students may begin their studies without much commitment because, well, it does not cost anything. They might also then take a more relaxed approach to studying since, again, it does not cost them anything (other than opportunity costs which are harder to notice). With this attitude, these students may not even bring their studies to a conclusion.

There was plenty of this behaviour on display when I studied economics. At my university, you were supposed to receive your Diplom-Ökonom (equivalent to a master’s) after 9 semesters. However, the average time a student at Bochum University took when I was there was 13 semesters. Today, more than a quarter of students enrolled for a bachelor’s degree in Germany quit their studies before receiving it.

Of course, there are plenty of reasons why students can fail but a lack of proper reflection on what they really want to study and a lack of discipline caused by the fact that education is free are probably among them. The other issue I noticed was that as the recipient of something free, you are not in the best position to demand better service. As a paying customer, suppliers need to treat you better if they do not want to lose you. If customers are not paying, they may well be regarded as a nuisance.

Of course, not every lecturer or professor whose courses I attended was bad. But it is fair to say that most of them did not regard students as their clients. A great exception was a marketing professor I very much enjoyed but his client-focussed thinking was what he was teaching anyway. He only practised what he preached. For many of his colleagues, you sometimes thought they would enjoy their jobs much more if only it was not for the annoying students.

For a university to be run like any good service provider, it should think about its students as clients. And for students to take their studies seriously, they should be paying for them. Of course, for students who cannot afford to pay the fees, there need to be financing options. But university education as such should not be free.

Finally, as someone who has successfully completed a master’s and a doctorate, of course I have a much greater ability to generate income than someone without such qualifications. So the question is, why would I expect that other person to subsidise me? What right do I have to demand people with poor skills in a low-wage jobs to pay for my university education that would yield me a much higher income than they would ever have? Isn’t this grossly unfair for them?

Free university education is not just middle-class welfare. It is actually the reverse of income redistribution: from the bottom to the top. It is not a progressive but a regressive policy. As such, it is surprising that it is proposed by Labour. As I said, these are just personal remarks on Labour’s proposal. I do not doubt that there are some genuine policy considerations behind the announcement.

Of course, Labour is right that in a fast-changing labour market, qualifications are important and that education policy should enable New Zealanders to participate in the ‘future of work’. With its proposal to make three years of tertiary education free for all, I just don’t think Labour will get us anywhere nearer that goal.

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*Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative, which provides a weekly column for interest.co.nz.

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14
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I was the beneficiary of the "free" tertiary education system

Then, the administration of the university system was rigorous if not ruthless
If you didn't perform you were hauled up before the dean of the faculty and the riot act read
Fail a subject twice and you were warned - your time was limited
Fail a subject three times and your entry was terminated

Today it is a different story
It is riddled with plagiarism, fraud, bribery and corruption
Stay as long as you like - we like your money

With the system dependent on fee-charging, different rules apply

Icons
The old system was superior
You had to prove intellectual ability to gain entry
There was monitoring of your performance
The result was not a lot of wasted resources
Today’s paradigm of fee paying students encourages universities to operate as businesses
The objective has changed to bums on seats for cash
The students who do pass complete their degree with significant debt
Many more never complete their degree in greater numbers today
The US student debt is well over one trillion dollars and will never be repaid
This paradigm has failed

Corruption in the tertiary education system
http://www.interest.co.nz/property/75148/net-migration-hit-56275-march-y...

It is being corrupted

Watch the Four Corners investigation program - open your eyes
http://www.abc.net.au/4corners/stories/2015/04/20/4217741.htm

10
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God, stopped reading at the 'if its free it ain't valued' comment. This website roles out more and more propaganda.

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State Primary, Intermediate & High Schools are all free in NZ (apart from a small fee/donation which is a minuscule percentage of cost). So are schools not valued by families and students?
However schooling in NZ is highly valued, most schools are well run, delivering good teaching.

If you want examples of poor education in NZ, take a look at some Private Education Enterprises, fully commercial, running a mix of NZQA Unit standards, churning out certificates & Diplomas of debatable quality , pushing through international students for income, - a commercial model does not automatically translate into a better quality of delivery.

I'm waiting for a diploma course in beer bottle emptying and cigarette rolling. Must be a fully subsidised one coming along soon. (Apologies for being a reprobate).

I agree with you mortgagebelt that lots of tertiary education provision is dreadful and hopeless. But it's clear that the public institutions are as appalling as other providers. Take the money, get bums on seats and thats all they need to do. These civil servants are truely corrupt, and worse, quite superior about it.

Interesting evidence to back this up out of the UK where government funded free schools are performing so much better than private schools that the wealthy are ignoring private schools in favour of normal public schools

http://www.theguardian.com/education/2016/feb/05/massively-improved-stat...
I had a free education for which I am incredibly grateful. Most of my contemporariness took the opportunity seriously as did our lecturers. I think that our culture was different. I hesitate to say a reverence for education, but certainly a respect for it (and a lot of things.) Sure some played up to the point that they failed (particularly in the first year) I doubt that things are that different today. In fact in some ways they may be worse, but I would put that down to a shift in culture to the me generation, a sense of entitlement and a reduced sense of personal responsibility. Ask any lecturer about the changes in student culture.
At the risk of repeating myself; the accommodation supplement to under 20 year olds should not be available to students if the subjects that they are studying are available in the city where their parents live. There are too many life skills that they are having to learn at that age without adding living independently and everything else that comes with that.

This article is typical of the philosophy of putting a price on everything and knowing the value of nothing. Put a price on knowledge and a meter on its distribution. .

Once universities were morphed into businesses everything went rapidly down the drain. I will never forget Chris de Freitas, supposedly head of environmental studies at the University of Auckland, declaring that carbon dioxide was a harmless gas and that burning more coal was perfectly acceptable. (We are, of course, in the midst of a CO2-induced planetary meltdown.)

Propaganda took precedence over truth.

A complete clean-out of universities is required (as indicated by other commenters). However, there is no time for such a clean-out. The global economic collapse which is underway will overwhelm everything and everyone mainstream before Labour gets elected to governance.

.

Seriously, this guy is a director of something? So many fallacies I don't know where to start but I'll try randomly.
1- no cost no value bullshit. other commenters already sorted this on
2- "more than a quarter of students enrolled for a bachelor’s degree in Germany quit their studies before receiving it" isn't that a good thing and evidence that Universities are working as they should???? Or since I paid even if I'm the most stupid retard in the world I get my Masters so after I can become director of a Neoliberal propaganda wankfest?
3- so does demand better service mean paying your way through Uni? If a professor is not interested enough, slip him 1000 bucks in the pocket and you'll be the best student ever.
4 - the last part is just nonsense don't know if the guy believes it or if the boss told him to write it. Just to explain it to you, Oliver, once the student finishes his free education, he will start paying taxes at a much higher rate then if he was a check out assistant. And he might even come up with few ideas, patents new ways for atomic bombs or Nobel prize, FFS.
Disclaimer: got free education in Italy, where universities are not seen as awesome as the anglo-saxon ones, but they taught me how to tell truth from bull#%^ propaganda.

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And yet this guy probably doesn't think that the tax payer paying rental/accommodation subsidies to private landlords is not regressive or unfair.

Please, I'm very sure if you had done your Bachelor's, master's and doctorate degrees and had come out with a 50k student loan that your tone would be much different.

This whole screed of unsupported propaganda rests on one highly questionable premise - that money is the only way to value something and the only way to pay for something.

Bollocks. People also value what they earn and work for. What they put time and practice and effort into. That's much more difficult than just shelling out a few bucks, or your parents shelling out a few bucks.

A huge shortage of practically skilled young engineers in the UK.

See the reasons why this sounds so familiar:

https://youtu.be/Yqz1huhyqJw

Not engineers, those are tradesmen. I was an engineer once I got sick of being treated badly and made redundant.

A real productice economy requires engineers of all kind to facilitate innovation.. Your experience only highlights our warped sense of what is important

...If something does not cost anything, it is not valued much either.
- Oliver Hartwich, 2016

...Oxygen is free, deprive yourself of it and see if it has no value to you.
- OnwardsUpwards, 2016

"free"? Yet Nestle wants to own all the water and charge for it. I am sure if they could do the same for O2 they would.

..actually if we had to pay for oxygen we might find that air pollution was less of a problem...we might also take more care of our forest and oceans...

So many things wrong with this Opinion piece..
But I guess It may be down to the fact the author received one of those third rate - value less - free educations.

We should have free education. More importantly we need some quality. What we have now is such time filling fluff. Clearing out about three quarters of the staff and the institutions from the industry would be a good start

I give Labour a tick for this proposal in concept. One of the aspects of this policy that I like is that it enables eligible workers the opportunity for retraining mid career for those that find their own occupation obsolete through no real fault of their own. As technology increases at an ever faster pace the necessity of this will become more commonplace. Id like to see some checks and balances that it doesn't end up with us taxpayers coughing up for a massive flood of say BA students when say we need more engineers and I wonder if for school leavers some courses should subject to achieving mandatory standards to get the full subsidy.

Agree, I have had to swap careers several times, the burden is significant. "BA students when say we need more engineers" I used to be a Marine engineer, got made redundant. I went and did a B.Eng part time in building services and energy a decade later as that was of interest. Bleeding edge and in supposedly in demand. (The UK supposedly needed 300+ per year and was training 1/2 that) In my last year I got got made redundant, hardly no work for a year (then worked for myself like crazy for 2). I came to NZ worked 6 years and got made redundant and was competing with retired engineers for jobs on pin money rates, so I retrained in IT and have had no problems for 16 years, so who needs engineers? Not a career I want my kids to go near.

I suggest a compromise. Students of MINT courses get free education, while arts and economics students pay double. After all the latter mostly harm society throughout their careers and should compensate society at the outset, or better be deterred from frivolous studies altogether.

But seriously, I think Dr. Hartwich's personal reflections tell us more about the rotten attitudes of economics students than about anything else. The smart and ambitious kids study maths or physics or even IT, but certainly not economics. Economics is taken up by those who dont really know what to do with their lifes or those forced into it by their CEO parents.

There is in my view little evidence that introducing fees for tertiary education has made NZ a more prosperous place. I rather feel there are now fewer educated and interesting people around than 20 years ago and this means in turn that there is little hope for innovation, sizable start-ups etc. We are stuck with agriculture, tourism and real estate speculation and fit better into the 3rd world than the OECD, thanks to shortsighted economists who have taken the fun and imagination out of our way of life.

Not all economists are worthless, some like Steve Keen can clearly show an understanding of the "real world" What gets in the way is politics. Personally I think the idea of differing levels of support is sensible and the UK had that at one stage. So for instance if we have an excess of lawyers, accountants and architects the Govn should cut support say 50%. That will never fly I suspect though due to politics. While some degrees might seem useless such as (say) art I would be reluctant to penalise broadening of mind, as there is a place for such arts in enriching our society IMHO.

On top of that post-degree research still looks to be un-funded/covered, yet that would seem to pay back in spades. So I just wish Labour had been a bit more targetted than splash.

I think Labor has made a start on an important topic, at lot more important than Key's flag nonsense.

I am actually for entirely free tertiary education, even for economists. For me it is a hallmark of civilisation to give everyone an opportunity to reach their whole academic potential. Education is always useful. Maybe not financially, as with your engineering degrees, but certainly in terms of building character.

Btw, they always go on here about Chinese. They ruin Auckland and what not. But if there is one thing that sets many of them apart it is their regard for scholarship. We should learn from them in that regard, or better, remember our own cultural roots as a European people who have brought enlightenment, reason and science to the world. No less than that.

Steven Keen is very good, but he is an advocate of private debt forgiveness across the board which is not exactly fair if the people with no debts dont also get some payback. Thoughts?

Yes, there needs to be some provision for post-grad. Three years free at undergrad level is good incentive for getting on with it and finishing as quickly as possible. So perhaps a system of so many free undergrad years, so many free masters-level years, so many free PhD years, with rigorous selection standards.

If a loan scheme is continued, I'd like to see a middle ground between the punitive regime the 1990s borrowers were hammered with, and the easy ride that the current boomerspawn are getting. Perhaps 10 or 15 years interest-free, give borrowers a strong incentive to pay it back before interest kicks in, and enough time to get established and break the back of it, wherever they're living and working.

old proverb
If you educate a man you educate an individual
If you educate a woman you educate a family (nation)

My partner and I were both born on the wrong side of the tracks, on struggle street, dirt poor
My father was a boilermaker, her father was a stonemason
We both obtained our degrees through free tertiary education
Without free education we would not have achieved that
Our families did not have the money

My youngest son has 2 degrees
Her daughter has an honours degree
Both of them went through the Higher Education Contributions Scheme (HECS) system
His wife has a degree
She married a doctor

It's environmental
If we didn't have qualifications it is probable our children would not have seen the value.
We wouldn't be where we are today and neither would our children.
They were guided and encouraged.

The benefits travel down though the generations
Train one and you train many
It becomes self-fulfilling

Turning students into clients paying for a service leads to an often unwarranted, foolish and dangerous sense of entitlement - 'I've paid for a first class degree or A-plus grades and you owe me these'. As happens often in private schools, it has reached the point in which senior faculty leaders are regularly intimidated and abused, even attacked, by disgruntled second-rate students and their families expecting higher grades. I have had exactly this described to me by globally renowned academics in meetings at one of the world's premier universities.

Having worked at Otago University I can say that that attitude is definitely in evidence: I've paid for this consumer good, now give me a degree. When informed that they have merely paid to be able to attend classes and have an opportunity to learn, but that they still have to work, you usually get a blank look. 'Work' is the modern 4-letter word to NCEA trained students.

The following might have something to do with it......economics students are more likely to be selfish.

" Economics majors and students who had taken at least three economics courses were more likely than their peers to rate greed as “generally good,” “correct,” and “moral. "

” This may be why the late Stanford professor Hal Leavitt lamented that business education distorts students into “critters with lopsided brains, icy hearts, and shrunken souls.”

https://www.psychologytoday.com/blog/give-and-take/201310/does-studying-...

After reading his opinion piece, I have three questions for Mr Hartwich;

1. Dis he graduate from his tertiary courses with any student debt?

2. Has he made any attempt to pay back the cost of his free tertiary education in Germany?

3. If the quality of a free tertiary education is, as Mr Hartwich suggests, lower than that of a user-pays education - why did he not opt for a university education in the US, such as Harvard?

Having benefited from a free (tax-payer funded) tertiary education, the perception is that Mr Hartwich is eager to bite the many hands that fed him.

As with other benefactors of tax-payer generosity (John Key, Steven Joyce, Ruth Richardson, et al), I have little sympathy for people who then change the system to further suit their own circumstances (lower taxes, higher user-pays in tertiary education).

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