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July 13, 2015
A colleague at the beginning of a university career in another country wrote to me:
What is the purpose and structure of the seminar in your experience? What is the role of the student, and what is the role of the teacher?
As this is one of the most difficult questions I've ever been asked, it took me some time to work out a reply. Of course there is an simple answer: The point is to develop an atmosphere in which all students arrive at the seminar well prepared to discuss the topic and answer and debate your questions. Each one is willing to both listen to others and speak up themselves, so that there is a lively and equal exchange. At the end, everyone has learned from each other and so acquired deeper insights into the subject.
It's simple to write. The difficult thing is to make it happen. When I started to try to explain that, the effort made me think about what Clausewitz wrote on war:
Everything is very simple in War, but the simplest thing is difficult.
This analogy is not accidental. For me, a good metaphor for the problem of the seminar is the problem of the military unit. How do you get soldiers to behave like heroes: to lead the attack, to expose themselves to danger, to give their all to the success of the mission, and not to shirk or run away, even when no one is watching them? It is true that no one joins an army without expecting at some point to have to go into combat. And everyone in the army appreciates the commitment of their comrades to fight together and not run away, and understands that they should match the discipline that others show. Nonetheless, each soldier would prefer not to have to kill or be killed in the next 5 minutes. This is the problem. Left to itself, without leadership, such a unit will lapse into military passivity. Let someone else do the fighting.
In the same way, every student goes to college in order to learn, and that includes preparing for seminars and taking part and speaking up in the seminar. Every student benefits from their peers’ advance preparation and participation, and understands that s/he should also prepare and contribute. Nonetheless, when faced with preparing for the seminar or going to a party, each student can prefer to go to the party. When the tutor asks a question, each student can prefer that someone else should give the answer. The outcome is a silent conspiracy in favour of collective silence, in which a student who speaks up and answers your question is a social deviant. Then, the only person left who can answer your question is you, the tutor.
In the worst case, the silent conspiracy is binding. The students are silent in the face of questions. Because they are silent, you (the tutor) fill the silence by giving a lecture that gives the answers. Students learn quickly. They learn to expect that you will answer your own questions and you will use the seminar to give a lecture. Therefore, they do not prepare. Because they do not prepare, they have nothing to say when you ask questions, and there is silence unless you fill the silence by giving the lecture. When you ask a question, meet with silence, and answer it yourself, the silent conspiracy has won.
To beat the conspiracy and overcome the silence requires leadership. Thus a tutor is a leader in the same way that leadership is required to send a military unit into battle.
Here are various strategies that I have used to lead a class at various times, with my notes on pluses and minuses. None of them is a perfect or complete answer. At various points we find that the analogy between the classroom and the battlefield breaks down. The casualties do not bleed, although they can desert. Also, when I say I have used these strategies, I do not mean that I am a superior practitioner. Far from it.
The absent tutor
Each week, pose a question. Leave the room, saying that you will return in half an hour, and you expect that the students will have agreed on an answer and who will present it. The first time you do this, the students will be shocked. SHOCKED! How can you be doing your job if you are not in the room? Plus: The students have no option but to contribute. They cannot rely on you to fill the silence; they must rely on themselves. This is already an important lesson. It is like training the soldiers to use initiative and fight in a self-reliant way. Minus: If the discussion is incompletely prepared or informed or goes off track, you are not there to correct it. Here the analogy between the scholarly discussion and the military mission hits one of its limits. When you send a military unit into the night to capture a bridge, in the morning they and you will know with certainty whether the mission was achieved. When the mission is to deepen understanding of the causes of the Great Depression, the success of the mission may not be clear until much later, and it is all too tempting for everyone to applaud poor performance. Another minus: If the tutor is absent, you do not learn about individual strengths and weaknesses because you do not see them.
The student presentation
Each week one student must prepare a presentation, followed by questions and answers. Plus: the silence is broken. Minus: only one student prepares anything; the rest are released from any obligation. If the student presentation is of poor quality, it is difficult to retrieve the situation without causing them to lose face. Again, here, students are not like soldiers. The sergeant-major can bawl out an incompetent private. In the seminar room, every student is entitled to retain their dignity.
The group presentation
Each week a sub-group of students must prepare a presentation. Plus: This widens the circle of students who are drawn into preparation, and they must learn to work as a team by dividing the work of preparation among themselves. Minus: Each member of the team may become familiar with only a part of the problem. There is some evidence that sub-groups of students who know each other and collaborate with each other, and so rely on each other to fill gaps in individual learning, will learn less well than if they were forced to learn individually, in a self-reliant way. [Problem: This is something that I saw quite recently. I tried to find the evidence again and link to it, and I failed. Can anyone help?] Again, if the student presentation is of poor quality, it is difficult to retrieve the situation.
Fighting from house to house
In this approach we treat the classroom like a city that must be occupied from house to house. Every building must be seized and inspected and its occupants interrogated and verified. Pose a question directly to one student, chosen randomly. If they can’t answer it, put it to another. Go around the room, student by student, until the question is answered. Offer hints if necessary but do NOT answer the question yourself on any account; if you do, you have lost this game forever. Once you have received an answer, don’t stop, but continue around the room, student by student, checking their understanding: Do you understand? Do you agree? Do you have any uncertainty or different views? (Of course uncertainty and differences are permitted, but they must be brought out and disclosed.) Having been right around the room, pose the next question to some other student. Continue like this throughout the seminar. Plus: This forces every student to speak or admit ignorance, and there is nowhere to hide. In some settings this has been my favourite method. Every student has to arrive as fully prepared as they can be. Again there is no hiding place. It seems like a tough approach, but your students presumably want to learn and nobody told them it would be easy. Minus: It is psychologically demanding; you cannot do this if you want everyone to like you. It may not work in a large class, or if the atmosphere is impersonal or intimidating. It helps tremendously if you learn every student’s name (but you can do this gradually; you just get every student to give their name before answering, and you try to guess their name first). With more than a dozen students it is hard to give attention to each in turn. If students give a wrong answer you must never, never make fun of it or let them feel stupid by criticizing them directly. Instead, you have to help them work out what they got wrong or did not know, by giving a hint or by reminding them of some supporting fact or by asking another question. The important thing is that students must learn that it is worse to be silent than to speak up and make a mistake.
The battlefield is not for the faint hearted. A surprising thing about the battlefield is that, given decent leadership, people who would otherwise seem to be quite ordinary can rise to the occasion and show themselves to be outstandingly brave.
September 30, 2014
Today's my last day as a full-time employee of the University of Warwick. I started in the autumn of 1974, so forty years ago. You might well think: It’s about time, too. That’s enough! I agree, so my departure is completely voluntary.
What did I learn in those forty years? Not much that is worth repeating. Our world is changing continually. As it changes, most lessons of experience fall by the wayside. In 1974 it was another world. The world was local; I never thought of looking for a position in another country. Your first appointment could be a job for life (mine was). My colleagues were not exclusively white but they were all male. Warwick was at the forefront of quantitative economics: this meant every faculty member had a desktop machine that could add, subtract, multiply and divide in a cutting-edge sort of way. An equipment room held a box the size of a banana crate that did means and standard deviations. We banged out our work on typewriters; cut-and-paste meant working with paper, scissors, and glue.
Not many lessons of that era have stood the test of time. In fact, all I seem to have learned is what not to do. Here are some of the mistakes I’ve made or seen that have stayed with me. See if you agree.
Mistake #1. Collective responsibility is good
The professor didn’t show up to the class, the exam questions were off the syllabus, and the grades were random numbers. The students have revolted. What shall we do? Let’s have a committee to investigate, apologize, and take collective responsibility. Oh, and let the guy whose fault it was off the hook. The institution can soak up the damage. Now, you might think that the odd spot of bad teaching is inevitable in a research-led university. I take the opposite view: if you want the university to be research-led, demanding good teaching of everyone is an absolute requirement. Why? It’s simple. One hour of one person’s bad teaching will cost 100 hours of the research time of others; that’s the time everyone else will have to spend tied up in meetings and conflict resolution procedures and inventing new quality assurance rules and monitoring mechanisms to cover up for the bad guy and ensure it will never, ever happen again. Oh, until the next time. Bad teachers are thieves who steal everyone else’s time. It’s their fault, so they’re the ones who should pay – with their jobs if necessary! It’s their fault we are stuck with the teaching quality bureaucrats that make good teachers miserable, hike up the costs of trial-and-error, and hold back innovation. Let's hear it for personal responsibility. You want to complain to me about so-and-so? Their office is down the corridor. Go and shout at them.
Mistake #2. Our commitment to learning is 24/7
Warwick’s learning grid is open to students twenty four hours a day, seven days a week. In the weeks before the summer examinations, the library stays open all night. Students can come in and study any time they want. To facilitate that, librarians and advisers are available and on call around the clock. Inside, I'm silently shouting: “No-o-o … !” Students don’t sleep enough! Already we can’t get them to show up for a 9AM class. To use our scarce building space more efficiently we’d like to lengthen the teaching day at both ends so that classes begin at eight, but that’s out of the question because the same students were in the library reading (or networking) at half past three that morning. They won't get up till midday. We should stop for a minute and reflect on why the rest of the world has a routine called “working hours” and a “working week.” By existing, this routine solves a coordination problem. Everyone must work, relax, and sleep. All of these activities go better in themselves, and are better balanced with each other, if we all work at the same time, have fun at the same time, and turn out the light at the same time! If university is a preparation for the adult world, we should encourage our students in an adult routine. Being open for business 24/7, even for educational business, is just a bad idea.
Mistake #3. The university is a therapeutic community
He’s silent with misery while you explain that he needs to go home. He should be with his family and be looked after for a while. He might need to break his studies. “No,” he whimpers: “I want to carry on. I can work through this. I don’t want my parents to know.” Legally he’s an adult, so he gets to make the decision. You know it’ll be a disaster, but you have to go along. Our students come to us physically fit, but the same does not apply to fitness of the mind. They’re away from family and friends for the first time. In our hothouse community they’re trying to put down roots, put out feelers, and climb all at the same time. They fight for the sunlight of academic, social, and sexual success. They don’t sleep enough. They overcommit to student societies and other competitive sports. They neglect their studies and rely on last-minute revision. They’re haunted by unresolved childhood issues and family conflicts. They’re vulnerable to rejection and failure. But they still want to make it on their own. Mum or dad is the last person they want to bring in. So, when rejection and failure come round, as they do, we try to help them stay in class, supported by counselling and their friends, as though the university can make them better. The truth is that it can’t. The classroom is lonely and competitive. However long postponed, essay deadlines and exams add to their stress. Their friends have their own fears and fragilities. Their tutors must reckon with the needs of all students, not just one. More often than we recognize, the student who is suffering needs to go home to heal. Let them go.
Mistake #4. Let’s take a holistic approach
You’re in a meeting that’s been called to discuss some problem: A solution’s on the table. Everyone’s about to decide in favour. Suddenly an objection appears: “Hold on. We need to take a holistic approach.” What that means is that our little problem touches on much larger things, and before we solve the little problem we need to solve the big ones. So, in that moment the issue is changed from a small problem you can solve into a far bigger one that you can’t. Instead of being solved, the problem must be escalated into higher committees and wider communities where it will be dispersed and lost in a thousand inconclusive conversations. How many times have you seen a useful idea founder in that moment? It may seem strange that an economist should disfavour a holistic approach. After all the idea of a general equilibrium is a basic economic concept. Isn’t a holistic approach the same as seeking a general equilibrium solution? Yes, in a way. But in many practical situations the model of a general equilibrium serves to remind us only that particular solutions may well give rise to further problems. While this is salutary, economists have also learned that sometimes you should settle for second best. Too often, the quest for a holistic approach offers only procrastination and avoidance.
Mistake #5. Collegiality is our goal
The word “collegial” is linked to two other important words: “college” and “colleague.” It implies equality and sharing. When we make decisions in a collegial way, we discuss as equals, sharing reasoned arguments. We negotiate our way to a consensus. That’s fine; we’re academics, which means we are (mostly) reasonable people who hate conflict. We’d all like to work in a collegial atmosphere. But sometimes there is no consensus, and a decision must be made anyway. And someone (inevitably, it’s someone who disagrees with the outcome) responds: “Well. That’s not very collegial!” Their implication is that that should put a stop to it. But collegiality should not be our goal or our criterion. We are not employed to be colleagues; we are employed to be scholars. Our goal should be to do great research and teaching, and we should be judged by the standard of excellence that we achieve, not the standard of our collegiality. I have seen departments that have made collegiality their goal, and forgotten about excellent scholarship. Oddly enough, they have tended to be quite nasty places, because everybody is checking up on each other all the time to see if their behaviour is falling short of a collegial standard, rather than working to improve their own research and teaching. In a department where each one is striving to become a better scholar, everyone cannot help but be great colleagues to each other. But the collegiality will be a by-product of the striving after scholarship. Collegiality cannot be forced and should never be a goal.
I didn’t expect to stay at Warwick all this time, but for some reason I never got away. I have absolutely no regrets; Warwick has been a fantastic place to be. I never got bored with Warwick because every few years something would happen that changed what I did beyond all recognition: for example, computers came along, the Cold War ended, Russia became a normal country … and then not so normal. I also travelled and visited a lot, and then I came back. Anyway, here is one thing I learned that is not a mistake: if you are looking for a place to work or study, Warwick will be a wonderful choice. As for me, I’m not going anywhere so you will continue to see me around. Bye for now.
July 13, 2013
Writing about web page http://www2.warwick.ac.uk/fac/soc/economics/news_events/conferences/kenwallis_open/
On Thursday evening I was asked to say a few words at a conference held to honour Ken Wallis at the age of 75. Ken is Emeritus Professor of Econometrics at Warwick. There were a lot of distinguished people there from the world of econometrics. I would guess I know less about econometrics than just about anyone else that was present. I was there to thank Ken not for what he taught me about econometrics but for what he taught me about life.
When Ken became chair of the Department of Economics at Warwick (I would guess around 30 years ago), he gave me my first serious admin job. I became exam secretary for the department. Now, this job was a real headache. One reason is that in those days we had no administrators, so the exam secretary did it all. Another reason is the nature of university exams. We have a lot of rules and courses, and students come in all shapes and sizes, and somehow you have to fit every single one of them to the rules. It's like being given a packet of screws of different types and threads and the only instrument you have is a hammer.
Anyway, because the students gave me many problems of that kind, I found myself knocking on Ken's door a lot. For example, in my first year it just happened that a lot of our best students were cricketers and they suffered a lot of injuries in the warm days of May when they should have been indoors revising. So I had a succession of sufferers from broken thumbs and sprained wrists. The first time this happened, I went to Ken and said: "What do we do?" He asked right back: "What do you think?" And I said: "I have absolutely no idea!"
The next thing, Ken gave me a look. This was a look that I got to recognize and know quite well. He would sit back in his chair, tilt his head slightly, and his mouth would twitch as if he might be going to smile, or maybe not, but he was definitely about to say something that I knew I had to listen to carefully.
Then Ken said: "Okay, you go away and spend a bit of time working out what you think we should do. Then come back and tell me, and probably, almost certainly, I'll agree with you." So, that's what I did. But I also realized Ken was telling me something deeper. He was saying: "Don't be part of the problem. Be part of the solution." And this was a very important lesson for me, one that I have always tried to follow.
In passing, I'll add that this lesson was particularly useful later on, when I became chair of the department myself. I soon realized that if you go to the faculty chair or the vice chancellor and you say "I have a problem" they quickly get to hate you because they are already extremely busy and you're just adding to their burdens. But if you go and say "I have a problem but I also have the solution" they love you because they feel reassured that you are in control and you're not going to make their lives any more miserable, and they can focus their hatred on the ones that are just burdening them with problems that have no clear solutions.
Here's another thing I learned from Ken. One year I was going through the exam files and I came up with what I thought was a big problem: a student whom we had misclassified or misadvised or mistreated in some way -- it's a long time ago and I really don't remember the details, but nobody knew about it except me, and I was panicked by the thought of what would happen if other people, and particularly the student, found out about it. I knocked on Ken's door and told him about the problem and said: "What do we do?"
I looked at Ken and once again Ken gave me that look. So I waited and listened, and then Ken said: "This isn't even a problem. If we messed up, we'll just tell the truth. If we need to do something to fix it, we'll do that, If we need to apologize, we'll do that too." This was my second lesson from Ken, and again it was important to me later: I learned that it's wrong to cover your misdeeds.
My third lesson was the hardest one. It's in the nature of exams administration that everything comes at once. Every June I found myself working my socks off to get all the exam scripts distributed to the right people and get all my colleagues to follow the rules about marking (in those days everything was independently double marked) and get their marks in on time and correctly recorded, and I also had to do my own marking at the same time. It was hard going. So in my last year I went to Ken, and I explained the problem and in the way that I had learned from him I also suggested a solution: "Can I give myself a discount on the marking load?"
Again the look. Then, Ken said:"No." (My audience laughed a lot when I said that.) Ken went on: "The officers have to lead from in front. You can't send the troops into battle while you're sitting in the rear." As I said, this was the hardest lesson for me personally, but it too made a deep and lasting impression on me.
Anyway, Ken never succeeded in teaching me any econometrics, but he taught me a lot about life and leadership, and these lessons have stood me in very good stead over the years since then. So Thursday evening was my chance to say "Thank you" to Ken at 75.
PS If you want to know more about Ken's contributions to econometrics you can look him up on RePEc, where he is listed among the top 5 per cent of economists worldwide on a whole string of criteria.
March 18, 2011
Writing about web page http://www.bbc.co.uk/news/education-12767850
According to a new report on the BBC website, headlined in last night's BBC TV and Radio news, "Graduates 'could pay back double their student loans."
It sounds scary. I can see another few hundred families around the country listening to the news and deciding university sounds just too expensive.
That would be a shame. There is a story here, but it is not the story on the surface. It is a deeper story, one of distortion and misrepresentation.
- First: There is nothing new in this "news."
Anyone who borrows will eventually repay more -- mechanically adding up the cash amounts, year after year -- than they borrowed. Interest charges ensure this result. Moreover, the longer is the period over which you borrow, the greater is the excess of cash repayments over the initial loan.
But why do borrowers pay interest? Because not having to wait is valuable. This has an important implication. A pound today is worth more than a pound next year or the year after. When you take out a loan, you've made the calculation that it's better to have the house or car now than wait for years in rented accommodation or sharing public transport while you save up. It's better to borrow and buy despite the fact that, having borrowed, you will have to repay more later.
By the same argument, the money you will have to repay next year should be considered worth less than the same money now. This is called discounting: we discount the future compared with the present.
Because future money has to be discounted to find what it is worth today, it is wrong to add up money in different periods without adjustment. Rather, the future values should be discounted, year by year, before they are added up.
Imagine the following scenario. In the BBC's story, the graduate has a debt of £43,000. In my scenario, you decide to borrow the same sum, but as a fixed rate mortgage, not a student loan. Suppose the lender's interest rate is 3 percent a year. Suppose you repay the debt in full, in equal annual instalments over 30 years.
On these assumptions, the sum of your undiscounted cash-out repayments will be a little over £67,000. But, if we revalue your payments in every year by discounting them back the present at 3 percent annually, the present value of the sum of your discounted repayments will fall to ... oh, £43,000.
The present value of the repayments is the same as the value of the loan!
- Second, therefore, there is no story. You repay -- in present value -- exactly what you borrowed.
But wait. That leaves a puzzle in the BBC account.
Remember that, in my example, you repaid everything at the market interest rate, and yet the undiscounted sum of your cash-out repayments was just £67,000, compared the £43,000 borrowed.
Compared with that, under the government's student finance proposals, graduates will enjoy three concessions. They'll repay nothing, and accrue no interest, while their salaries remain below £25,000. Between £25,000 and £41,000, they'll pay a reduced interest rate. And anything outstanding after 30 years is forgiven. Under those assumptions, surely, graduates should end up repaying less than you?
Yet, in the BBC version, graduates have to repay much more than you. The BBC puts the sum of undiscounted repayments at sums varying between £72,000 and £84,000, depending on the income of the graduate. It's the latter figure that lets them claim: "Graduates 'could pay back double their student loans."
What's going on?
The BBC commissioned "leading accountants," including the firm Baker Tilly, to support this story. It's based on a spreadsheet, available from the BBC website, "showing the calculations." The spreadsheet shows that the BBC's accountants sneaked in a hidden assumption, not reported in the story.
They built in 2 percent yearly inflation. In each year, they added 2 percent inflation to the repayment thresholds, 2 per cent inflation to the graduate's salary, and 2 percentage points to the interest paid.
What's wrong with that? Nothing -- except this: The 2 percent inflation assumption also pumps up the nominal undiscounted cash sums that their graduate repays every year. That was how they made the figures support that scary headline: "Graduates 'could pay back double their student loans."
Inflation is a further reason why it's wrong just to add up the column of annual cash repayments. Except in the first year, the annual payments are not in present-day prices. They are in different prices of different years, all of them higher than today's and some of them much higher. It's just plain wrong, and misleading, to lump them all together.
The BBC's calculation should have been done throughout in constant prices, so that the purchasing power of £1 would be the same in every year. But, if done at constant prices, there would have been less of a story. After proper discounting, there would have been no story at all. In fact, it would have emerged that:
- Most graduates will repay less, in present values and constant prices, than they borrow at the outset.
This brings us back to "the leading accountants." Given who they are, I guess they know their stuff. But do they? The mess behind this story leaves only two possibilities. They understood these issues perfectly well when they made their calculations -- or they didn't.
Either way, it looks bad for the accountants. Incompetent, or colluding with a misleading agenda? I'll leave it to you to decide on that.
It looks bad for the BBC, too. Remember, this is not the BBC reporting the news. It is the BBC inventing the news.
- Finally, a note for readers interested in open-source data.
The BBC website provides the spreadsheet with the figures, in their words, "showing the calculations." That's good.
The problem is that, before uploading the spreadsheet, they converted all the spreadsheet formulae to values. It is the formulae that enable to user to track the links from one number to another, and see at a glance how the calculations were made. The truth is that the spreadsheet does not show any calculations at all, only numbers. That's bad.
I can see no purpose in it, except to make checking more difficult.
October 13, 2010
Writing about web page http://hereview.independent.gov.uk/hereview/report/
A Browne study
The Browne report, Securing a sustainable future for higher education in England, says higher education should be paid for by those that benefit from it: our graduates. It also says they should pay later, in easy instalments, and only when they can clearly afford it, with all risk transferred to the government and universities.
It looks to me like a no-brainer ... Yet lots of people are showing signs of moral outrage.
A question the critics seldom address is: Who else should pay for my degree?
The taxpayer is usually implied. But here's the problem: tax-financed higher education involves a lot of poor-to-rich redistribution.
Robin Hood in reverse
Today's students are a large chunk of tomorrow's wealthy. Today's taxpayers, in contrast, extend well into the ranks of the poor. In the UK, you start paying income tax at an annual income of just £6,475. Under the Browne proposals, student loan repayments won't kick in until annual income reaches £21,000. If the graduate's income doesn't make it to that dizzy height, you pay nothing.
Somehow or other, there are people who figure it's fair for the guy on £6,475 to start paying for someone else, but not for the guy on £21k to start paying back. (If you take expenditure taxes into account, which everyone pays, it's even worse.)
I'm sad to see clever people, like Warwick's own student representatives, dressing up in the mantle of social justice to call for poor people to go on paying to make others richer than the payers will ever be.
They say that one thing clever people are good at is defending the indefensible. Is it them or is it me? Well, the reader can make that choice!
Better than a mortgage
The private net present value of a degree, according to an interesting but underexplained chart in the Browne report, is at least £100k (the actual figure shown is a bit over $200k, which is useful for international comparisons, but still confusing). If you include the "social contribution" from today's taxpayer, then it's a little more. For the sake of argument, let it be £120k.
Warwick University Students' Union puts the likely burden of student "debt" (I'm putting it in quotes, because it's not real debt like a mortgage, where they come after you if you can't make the payments*) under Browne arrangements, at "well over £40,000."
That sounds bad. But, the last time I checked, £120k minus £40k would still leave around £80k to enjoy. Nice.
* A roof over your head is a more fundamental right than higher education. Millions of working families, who have not had the benefit of higher education, take on much larger sums of mortgage debt in order to own their homes. If their incomes fall and they have to skip payments, they must sell up or risk repossession. Don't you think they'd jump at exchanging that for "debt" on the terms proposed by Browne?
My experience is that student finance is the one topic that attracts lots of comments. Feel free to say what you think. Right now, I don't promise to reply. That's not because I don't care or don't have an answer. It's because I've got to turn away from this to earn my salary! And do some teaching!
November 23, 2009
Writing about web page http://news.bbc.co.uk/1/hi/education/8350051.stm
Student fees are in the news again. These are the top-up fees paid by British and EU students to take degree courses at British universities, presently capped at £3,225 a year. They're called "top-ups" because they help to bridge the gap between the public money that goes to universities and the actual cost of degree programmes -- which is considerably more. So, should our universities be allowed to raise their fees?
The government has announced a review. The lobbies are brushing up their arguments. Everyone has their opinions about the justice or injustice of student fees. As it turns out, fairness and economics are closely connected, but not always in the way that the lobbies think.
- Myth #1: It's unfair if higher fees deter some young people from going to university.
Let's think about the choice that people make when they decide to study at university. There is a benefit and a cost. The cost is the fee, plus the time you have to give up to study. The benefit ... well, there can be a financial benefit if you get a higher paid job as a result, and you probably will: a recent goverment survey put the average lifetime graduate premium at around £150,000. Just as important, there can be non-financial benefits. These include having more time to grow up, geting better networked, having more rounded knowledge of the world, a clearer motivation, and so on.
Just to be clear, I would never argue that money is the only thing that matters. But, along with other factors, money should matter, because higher education costs money and someone has to pay.
Add up the costs on one side, and the benefits on the other, and you should choose to study at university if the benefit exceeds the cost. Of course, not everyone tots it up in two columns and a common currency, like an accountant. Consciously or unconsciously, however, that's what is implied when we say that a young person should reflect on whether going to university is worth it or not.
In anyone's personal calculation the cost element is bound to be the private cost. Young people ask what it will cost them, not what it will cost society. But, as things are, the social cost of a degree course is a lot more than the private cost, which is the fee. The social cost is on average four times the fee, and in some courses more than that.
That has important implications. It is sometimes feared that many potential students will deterred by higher fees. That may not be true, given the size of the benefit compared with the cost -- but suppose it is. It would imply that many young people are currently opting in favour of going to university when the benefit is little greater than the private cost. A small increase in the fee would tip them against this choice. That is why they would be deterred.
Yet any small increase in the present fee will still leave the private cost far below the social cost. In other words, the claim that many young people woud be deterred from choosing university by an increase in the fee, when the fee still falls well short of the social cost, suggests that by going to university these same young people will impose a significant net loss on society.
If young people take up university places that cost more to provide than the benefit, there is a loss. Who will suffer the loss? Well, taxpayers. When money is short for nurseries, hospitals, and the care of old people, it's unfair if the average taxpayer, who is poorer than the families of most potential students, and also poorer than most graduates, should have to pay for something that gives less value than the money they have to give up.
To me this worry that many students will be deterred is not a serious concern. For most students, a degree is an excellent deal -- probably worth as much as a small house. Most would not be deterred by having to pay the social cost. The few that would be deterred, however, should be.
There is one qualification to this argument -- a serious one.
- Myth #2: But what about young people from poorer backgrounds? Isn't it unfair for them?
Potentially, yes; social justice for people who are relatively worse off should be a serious concern. Some young people have the aptitude and motivation to benefit from higher education, but their families are too credit-constrained, or too risk-averse, to support their children through three years of a degree course. I can well understand how a family contemplating the costs of sending a child to university for the first time would worry greatly about whether it would be truly worthwhile. We should definitely be imaginative in working out ways to ensure that candidates from low-income backgrounds are not disadvantaged as a result.
Here's my suggestion.
The government should make available low-interest loans to students from low-income families. The loans should both cover fees and contribute to the living costs of attending university. The repayments ought to be both income contingent and capped to ensure that nothing has to be repaid until the graduate's income reaches a certain level (for example, £15,000), and that repayments cannot exceed some modest proportion of the graduate's income above that level (say, 9%). Finally, after some period (say 25 years), any remaining debt should be cancelled.
The effect of this proposal would be to relax the cash constraint on low-income families and also remove all the risk from debt-based student finance.
Oh. Someone just told me we have that already! How cool is that. In fact, we have it for everyone, not just the ones from low-income families. Hmm. That might be making it too easy for potential students from well-to-do families. I guess that's the price we have to pay for being allowed to help the ones that truly need it.
- Myth #3: If I have to pay higher fees, I'm entitled to expect more for my money.
It sounds only fair, doesn't it? You pay more, so you should get more back. More contact hours, more personal support and guidance, more feedback.
But there's a problem. Think back to the mid-1990s, to the time before fees, when you would have paid nothing. Does that mean that, at that time, university courses cost nothing? Well, no. They probably cost just as much to provide then as they do now.
The only difference was: then, someone else was paying for what you would have got then. Who? Well, the average taxpayer. Who, by the way, was probably earning less than either the parents of most students, or the students themselves after they graduated. That's why the old system of free higher education was socially unjust; it redistributed income from poorer to richer, across both families and generations.
So, if you -- today's and tomorrow's students -- are not entitled to feel more entitled, what should you feel? Yes, there is a sense in which you should feel more demanding. You should expect more for your money. But you should not expect it from your tutors, who are being paid no more than before. You should expect more from yourselves.
What does that mean? There is a message in higher fees for those who want to go to university for no good reason: to avoid making choices, maybe, or to fill in time, or to party. Don't do it. It's not worth it. The bar is being raised. Think twice, for you may not rise above it.
If you have good reason to go to university -- you want to exercise your brain, study something worthwhile, develop your talents, and broaden and deepen your outlook on the world -- then a degree is still an absurdly valuable investment. In return for a few thousand pounds, you will walk away with a lifelong asset.
I already suggested a degree can be worth as much as a house. Most people see it as completely normal to go into debt to buy a house; they call it "getting on the housing ladder." In fact, a degree is worth more than a house because, even if you fall behind with the payments, no one will repossess it.
- Myth #4: Forty years ago I got my degree for nothing, so it's only fair that young people should too.
It's true: I got my own university education at the expense of the average taxpayer. It has been a lifelong benefit to me. Through most of my life, I have been paid considerably more than the average to do a job I love. I couldn't have done this without my degree.
Does that make it right? Does precedent mean that past unfairness can never be stopped? The argument sounds like the average taxpayer, having paid once over to make people like me richer than they are, is condemned to go on paying over and over for ever and ever. I don't think that's a good argument.
If you care about social justice, put taxpayers' money into nursery care and primary and secondary schools, which have far more power to re-engineer society than do universities. It is nurseries and schools that truly enable the talented to rise and make good citizens out of all of us and our children. And let those that will reap the benefit pay for their own university education.
- To go with the four myths, a certainty: raising student fees will not be popular.
According to a recent NUS survey, a majority of those polled was in favour of abolishing student fees; only 12% favoured higher fees.
In some ways that is a strange result. The main beneficiaries of raising student fees will be everyone in the country that pays any sort of tax -- income tax, VAT, excise duties, and the rest: in fact, just about everyone. The main losers will be the future graduate middle class, but their loss will be tiny compared with the gain from graduating with a degree. (There will also be a few that lose because higher fees deny them access to a public resource that they would fail to make good use of. I won't lose sleep over them.)
So, you'd expect the vast majority to favour higher fees. Yet, that's not what we find.
Most likely, two confounding factors are at work. One is organization. There is a well networked lobby of students and middle class parents that like the existing system for siphoning money from poor to rich. In comparison, the average citizen that suffers the loss is poorly organized and poorly networked.
The other confounding factor is the value of gains and losses. Hundreds of thousands of middle class families know they can benefit to the tune of tens of thousands of pounds from no fees or low fees for their children. In contrast, the gain to society from higher fees will be spread more thinly over millions of citizens, none of whom may feel confident of reaping a personal gain -- particularly if they have children that may become students in due course.
In the words of Raquel Fernandez and Dani Rodrik (in the American Economic Review, 81:5 (1991), pp. 1146-1155), there is "status quo bias." The defenders of minority privilege can have a louder voice than those that prefer moving towards greater justice and transparency for the majority.
In a democracy, however, social justice and transparency will sometimes have their day.
May 18, 2009
We sat round the table discussing what is missing from the reading lists of today's graduate students in economics. Today's syllabuses concentrate heavily on stocking up their mathematical and econometric toolkit. I don't have a problem with that. On the contrary, I regret the technical deficiencies in my own background, and I regret them more as it becomes less likely that I'll ever make them good.
Still, we worried: do today's syllabuses neglect a broader understanding of how institutions have evolved and of what history shows? What should every economics graduate student read?
There has been a lot of comment recently on how to educate today's kids in animal spirits, neuroeconomics, and behavioral stuff. But that was not at the centre of our concern, important though it is (I wrote about it recently here). This is a correction that is already under way. When Thomas Sargent says that rational expectations is "oversimplified," it won't take long to trickle down into advanced macro.
What bothered us is deeper issues: are today's graduate students learning, discussing, and debating how successful market economies have evolved, and how and why markets work, what stops them working, and how best to let them work?
One suggestion was that the graduate students should all read The Wealth of Nations by Adam Smith (1776). The only Nobel laureate at the table (for this was Stanford) dismissed the idea with a wave of the hand. "Too eighteenth century," he said.
Overawed, I kept my mouth shut. Here is what I thought afterwards.
My first recommendation is an article called "The Use of Knowledge in Society" by Friedrich von Hayek (1945). Here, Hayek explained how markets economize on information. In a market economy, supply and demand allocate resources without outsiders or superiors needing to possess complete information about individual preferences or firms' capabilities. Bureaucracies, in contrast, need to know everything about you, me, and everyone else, before they can make decisions. Where market economies thrive on information, bureaucracies choke on it -- something that I see daily, sitting in the Hoover Archive among the milliions of documents bequeathed to history by the Soviet command economy.
Having read that, a natural question, particularly in our present-day context, is: what should be done when markets nonetheless fail? Here I turn to Oliver Williamson (1985), who proposed the idea of the "impossibility" of selective intervention. Most people think we should aim to combine the best of market forces and political action (I do too). Let the market economy do its wonders where it can; where it can't, let the government intervene and fix things. Williamson points out that in principle this cannot work out. The reason is that there is intrinsic uncertainty about where political action can allocate resources better than markets. If you give politicians the power to intervene selectively, it is certain that some of their interventions will make things worse. (And they do! Look around you!) As a result, no government, democratic or otherwise, can commit to intervene only when the result will improve social welfare.
Despite this, governments do intervene. When they do, do they improve things on balance? An essential handle on this question is provided by an article on "The New Comparative Economics" by Djankov et al. (2003). I do not know whether this article has truly founded a "new comparative economics" but it does conceptualize and model a fundamental idea. This is that every society faces its own trade-off between losses from political action and inaction. The absolute losses can be large or small, depending on each society's institutional arrangements, but every society has its own optimum. There is no guarantee that an optimum will be reached, however. Learning where we are in relation to our own optimum is similar to understanding whether we are suffering from too much or too little intervention.
Finally, although selective intervention is impossible, government have historically intervened and have often required the advice of economists to do so wisely. And they will continue to do so. Therefore, graduate economists need to understand how their advice can affect both economic policy and the economic lives of millions. In particular, every graduate student should know more about the Great Depression. No one has written a better account than Peter Temin (2000), and the story he wrote ten years ago has vivid, extraordinary relevance for the present day. I hope he is proud of it; he should be.
Unless you have a better idea ...
- Djankov, Simeon, Edward Glaeser, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2003. The New Comparative Economics. Journal of Comparative Economics 31:4, pp. 595-619.
- Hayek, F.A. 1945. The Use of Knowledge in Society. American Economic Review 35(4), pp. 519-30.
- Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. In four volumes. Edinburgh.
- Temin, Peter. 2000. The Great Depression. In The Cambridge Economic History of the United States, Volume III: The Twentieth Century. Edited by Stanley L. Engerman and Robert E. Gallman. New York: Cambridge University Press, 2000
- Williamson, Oliver E. 1985. The Economic Institutions of Capitalism. New York: The Free Press.
March 02, 2009
Writing about web page http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/
Last week, the Economic and Social Research Council awarded a £3.6m contract to the University of Warwick for a centre on Competitive Advantage in the Global Economy.
This seems a good moment to ask, where is Coventry's competitive advantage? What do we do best today? At a time of recession, when many are losing what little sense of security and prosperity they had, what is our city's future?
I arrived in Coventry in 1974. At that time, Coventry was England's motor city -- its Detroit. A friend told me half the city's population belonged to two trade unions, the transport and general workers and the engineers. I don't know if that was true, exactly, but it certainly felt like it.
Between then and now, Coventry has not had it easy. In a way that is nothing new; Coventry's industrial history has seen continual change, from ribbons and watches to bicycles, munitions, machine tools, motor cars, and synthetic fibres. But in the 1980s deindustrialization hit our city hard. The great vehicle building and tool making factories melted away. Employment and wages sagged. Then, other jobs sprang up. Coventry recovered.
What has taken the place of manufacturing? Coventry has a new competitive advantage. It sells to an international market. In the current downturn this market is proving resilient so far: in fact, while global demand for everything else is falling off the shelf, the market in which Coventry is now competing is rising against the trend.
Leading this trend are new corporate giants that have grown up stealthily among us. They are local firms, with their roots are firmly bedded in our region, but they already export a large fraction of what they make.
What are they? The new giants are our city's two universities, Coventry University and the University of Warwick. (For those reading this column at a distance, the University of Warwick is nowhere near the town of Warwick; it is on the edge of Coventry, half in the city and half in the fields of Warwickshire. Coventry University is right in our city centre.) The two universities are not only among our city's biggest employers. Their combined corporate revenues come to around £500 million a year, or nearly £1,700 for every one of Coventry's 300,000 residents.
The universities are part of a bigger picture. Around them, and not only because of them, a new economy has sprung up; according to the West Midlands Regional Observatory, knowledge-based activities now employ half of Coventry's working population.
Coventry once had a competitive advantage in engineering things. Now, what Coventry does best is the engineering of ideas. At one time, half of Coventry bashed metal; forty years on, half of us bash keyboards. Science and technology parks have sprung up where engines and car bodies were once assembled in giant hangars. The toilets are a lot cleaner, even if the language is just as filthy.
Like the motor factories they have replaced, our universities are big exporters. Instead of selling metal fabricates, they sell and certify knowledge and understanding. One difference is that the customer comes here to collect. Every year more than 10,000 students arrive from continental Europe and beyond to study in our city. The typical international student is likely to pay around £6,000 in annual fees and spend another £6,000 in annual living costs. That would make their total contribution to the economy of Coventry and its South Warwickshire hinterland, and to our national export revenues, £120 million a year and rising.
The demand for higher education has an important feature that makes it different from the demand for motor vehicles -- it moves against the business cycle. When the economy booms and there are many vacancies, young people entering the market are tempted straight into employment. When the vacancies evaporate, they enroll for courses in order to improve their chances when things pick up. Right now, both our universities are experiencing a small boom in admissions, particularly to courses in management and economics. (Unfortunately, they are also suffering from the slump in everything else from the arts and entertainment to the conference trade.)
How can Coventry make the most of its future? Good management of our universities is important, but it is not the only thing that matters. The poor management of the British motor industry has been criticized, but would better management have saved Coventry's industrial past? It seems unlikely. At best, the decline might have been postponed by a few years.
More important is to understand how our future will remain bound up with the global economy. The international recruitment of academics and students is vital to the competitiveness and prosperity of Coventry's knowledge sector. That's obvious. Less obvious may be what follows.
If we are to maximize our new competitive advantage, and so focus on what we now do best, we have to let others do the same. One country can't do everything best. Today, we are best at science and education. If we are to put our resources into that, then let others exploit their competitive advantage in making the textiles and machinery we used to make and now buy from elsewhere.
Sometimes people feel bad about buying cheap clothes from abroad. There's a "Buy British" lobby that works to make us feel guilty when we do this. We should resist it; it is bad logic. Buying British would mean chopping out the roots of Coventry's knowledge economy just when we need it most.
Think about this: if students from Austria, Bangladesh, China, Dominica, Ecuador, and the rest of the A to Z of nations are to come to Coventry to be educated, their families or governments must have the pounds to pay for them. They can have these pounds, only because we are willing to buy the goods that they make cheaper than we can. When we buy their stuff, we enable them to buy ours. It's a virtuous circle: by trading, everyone can do what they are best at. When everyone is free to exploit their competitive advantage, everyone gains! There are not many such virtuous circles in this world, so we should make the most of them when we find them.
Whatever we do, times are going to be hard. It looks like our political class is going to let us down; obsessed with blaming the bankers and each other, they are failing to do elementary things at home (enacting a fiscal stimulus) and abroad (coordinating fiscal action) that would rapidly improve our situation. To turn our face away from the world, from our competitive advantage, would just make our future harder still.
For the time being, Coventry's future lies in the global knowledge economy. It is what we do best. It is another chapter in our history, one that is still being written.
February 03, 2009
Writing about web page http://news.bbc.co.uk/1/hi/uk_politics/7866614.stm
So a lot of people would like to send them home – the foreign workers contracted to work in Britain. To judge from the tone, these people are not that interested in a level playing field. They want one that puts the foreign workers on a steep slope – preferably down to the sea.
How much better can that get?
As far as I can work out, there are about six million British citizens living abroad. In the countries where they live and work, they take up jobs, homes, schools, medical facilities, and even benefits – just like foreigners here. In those countries, jobs are going to be just as short as they are here. So, if we succeed in sending the foreigners home, our compatriots abroad are going to be equally vulnerable to the same pressure from the citizens of the countries where they live.
I wonder if these "patriots" are ready to see tens or hundeds of thousands of British citizens forced out of the countries where they have made their homes and sent back here to crowd the jobless queues and social security offices. That is the predictable consequence if they succeed.
We live in an interdependent world. How hard it is for us to weigh the benefits against the costs. All of us benefit, but at any one moment the benefits are imperceptible because they come in thousands or millions of tiny packages. Export industries appear and jobs are created by the invisible hand. Moreover, we do not benefit equally; some gain more than others. And some lose, but each job that is lost is clearly identifiable. At moments of difficulty, our common interest in free trade and movement can be all too easily drowned out by the vocal lobbies that want to block these things.
Take "Buy American." The current amendment to the U.S. fiscal stimulus package before Congress will protect the jobs of a few thousand American steel producers. A hundred million steel consumer in the U.S. will lose in higher prices. It's tragic, but unsurprising, that the U.S. steel lobby could win this one.
The same applies to "Buy British." If we all buy only British, that will cut our imports – but it will also cut our exports! How will foreigners have the means to continue to buy the goods and services we export if we buy nothing from them?
Worse, we will become poorer as a result. "Buy British" will make us buy more of the expensive goods that we are least good at making ourselves. It will protect the jobs that are of least value. At the same time, it will undermine the markets for the goods and services that we are best at, and so add most value.
Take Coventry, where I live. Once, Coventry was Britain's Detroit. It produced motor vehicles for a mass market and exported them across the world. No longer. But Coventry has not dropped out of the world market. Our city has a new export industry: higher education. Two universities, Warwick and Coventry, bring thousands of students from across the world to study here. They pay high fees and living costs worth many tens of millions of pounds to the local economy. The money they spend doesn't come out of thin air; it is financed by the pounds their countries earn by selling goods to us, cheaper than we can make them ourselves – Korean motor vehicles, for example.
"Buy British" means killing Coventry's new exports. It means rolling the clock back from the new to the old -- giving up on what we do with greatest success, and going back to what we once could do but then failed in.
Folly that cloaks itself in patriotism is still folly.
We need all the major countries to cooperate to keep trade and [policy coordination going. On that note, Jeff Frieden has written something that everyone should read. Frieden's point is the importance of political leadership: our governments must create social consent at home and political agreement abroad keep open the channels of international trade and movement. He says:
At the domestic level, governments need to work out an equitable and politically sustainable allocation of austerity across the population.
This means ensuring that those sectors of society hit hardest by the crisis are not also the ones asked to bear the stiffest sacrifices. ... Governments that ignore the social and distributional implications of the crisis are likely to find themselves either driven toward extreme and counter-productive policies, or swept away.
At the international level, governments need to work just as consciously to coordinate not just words, but actions.This will not happen of its own accord ...
January 26, 2009
Writing about web page http://inderscience.metapress.com/link.asp?id=xj92884n72203v41
Hugo Radice has written a fine critique of the management of higher education in the United Kingdom ("Life After Death? The Soviet System in British Higher Education," in The International Journal of Management Concepts and Philosophy 3:2 (2008), pp. 99-120). Radice's case is that British universities work under the same centralized command-and-control regulation as the old Soviet economy, and are subject to the same perverse incentives and the same dysfunctional behaviours that arose as a result: "plan bargaining, endemic shortages, sectoral autarky, and the battle for political control of decision."
I have shared this view since I first came across Radice's paper (and another on similar lines: Ronald Amann "A Sovietological View of Modern Britain," in The Political Quarterly 74:4 (2003), pp. 468-480). Now that Radice's paper has been rightly published in a refereed journal, I find I have somewhat less sympathy for its conclusions than I expected. It hits the right buttons on many core issues. And yet ...
Radice took six years to write and revise his paper. For three of those years, I chaired my department. From my first days in that role, I found that I had an accidental advantage – one of inestimable worth – over other novice chairs: a lifetime of studying Soviet bureaucracy. The aspects of university administration that baffled others seemed natural and obvious to me: the plan bargaining that Radice describes, soft budget constraints, the importance of networks and coalitions, and so on. I felt like a fish in water.
I reminded myself of the things that Stalin thought of as critical to power. At one time Stalin said: "Politics decides everything," so I became a political animal. At another time Stalin said: "Organization decides everything," so I tried to ensure that my department was clearly and well constituted, and then to respect that constitution. On yet another occasion Stalin said: "Cadres decide everything," so I gave almost all of my time to "cadres" – the identification, recruitment, promotion, and retention of academic talent. Stalin never said: "Money decides everything," so I limited the attention I gave to money. I didn't ignore it, but I tried to ensure that money followed academic priorities, not the other way around.
I recalled what Soviet managers said consistently when asked what was the the most important condition for them to do their jobs: "To have good relations with everyone." No Soviet manager could do their job without cultivating networks of loyalty and influence. They never knew when they would need a friend, or regret having made an unnecessary enemy. I observed how fellow chairs that gave offense or picked gratuitous quarrels with peers and superiors paid a heavy price in their ability to bargain resources for their departments.
I knew Stalin appreciated loyalty, but as a signal of loyalty he also valued the ability to speak truth to power. Showing loyalty to a university that had already employed me for three decades was not a difficulty, but I also tried to tell the truth to my leaders. I cultivated their trust, partly so that my own recommendations would be heard and my own decisions would be respected. I knew that, like Stalin, the vice chancellor could change any decision I made if he wanted to. I also knew that, like Stalin, he had limited attention; he didn't have time to manage my department himself. I wanted him not to want to manage my department; I wanted him to want me to do it, and to leave me to do it. I needed him to trust me, and I carefully monitored the signals of that trust.
I observed the continual battle for resources inside my university. It was a game instantly recognizeable to students of the Soviet economy. There was a centre, hungry for discretionary power over departmental resources; departments were continually working to pool risks and insure themselves against the grabbing hand of the centre. In this context budget constraints were continually negotiated, varied, and renegotiated, so were never hard. Conservatism and short-termism were rife, and intertemporal smoothing nearly impossible. Like the Soviet economy, our system's dysfunctions could be mitigated by intervention from time to time, but fundamental reform was out of the question. Despite the problems, feasible solutions emerged.
There were many times when I didn't know what to do. Sometimes I put myself in the shoes of a party secretary governing an important region of the USSR, or perhaps the director of a big weapons factory in the Urals. What would they do? I did the same; usually, it worked.
Collective responsibility is one of the aspects of the Soviet command system against which its leaders fought a lifelong battle. The excess of collective responsibility in British higher education for teaching and assessment is something that drove me crazy and no doubt will continue to do so. The teaching quality people always go on about collective responsibility as though it is a good thing, a moral value in itself. To me, a little collective responsibility is a necessary evil, required to give some protection to students against sloppy teaching and arbitrary assessment and to shield academics against undue student pressure. But too much of it and no one is responsible; along with responsibility, blame is pooled, and we all end up carrying the can for a few bad citizens that few have the courage to identify and no one can manage because no one person is responsible.
And yet ...
There were some things I knew about the Soviet system, that I found I could not use. I thought of the fear that Stalin inculcated and exploited in those around him. I hoped that my colleagues respected me, but they did not fear me. I did not classify them into enemies and potential enemies (those who were my friends today but might turn against me in future). I did not order them arrested, tortured, and shot, nor did I hold their partners hostage in my Northumbrian Gulag to ensure their loyalty. When they voted me down, I served up my revenge neither hot nor cold but smiled and acknowledged the preference of the majority.
My university did not feel like the Soviet Union! I knew the Soviet Union. I had lived, worked, and breathed in it; my first visit was in 1964; I studied there in the 1970s, and have visited Moscow many times since. After 30 years, I also knew my university. It wasn't the same. But how did it differ?
The big difference was this: I had no barbed wire. With a few coils around the campus, I could have blocked off the exits. I'd have had to give guns and spotlights to the security staff. If I could have stopped my professors from leaving, I would have been able to do things to them that would lower their welfare, and they would have had to accept it. They would have grumbled, and then conspired against me, and I would have needed a political police within the department to listen, detect, and report it to me. I'd soon put a stop to that. Forced labour would be next. But I had no barbed wire. If they didn't like the pay or conditions on offer, and could do better elsewhere, my colleagues would leave. Other universities that could use their talents more productively would make them a better offer, and I would have to match it or lose them. Without barbed wire, I could not accumulate personal power by treating others badly; I could get my way only through reliance on positive motivations.
What motivations? Here I had another revelation: if my department was like anything in the Soviet economy, it was like the parts that worked best! There were parts of the Soviet economy that didn't work; there, enterprises padded their costs and met the plan through false accounting and other manipulations. But in other branches, a relatively poor country could set talent to work and achieve great things: the best tank, the first satellite, and so on.
In those branches, what motivated people to put in effort was not cash but an inner drive to achieve something great and thereby win a prize. I had studied Soviet military engineering. The Soviet designers were motivated partly from within (they wanted to get into space) and partly by reputation (they wanted to be first into space). This motivation was extremely powerful; one finding in my work was that these designers implicitly priced the immortal reputation of being the first in the world to invent something at thousands of times their annual salary.
I saw that this also described my colleagues pretty well: each new idea they had, each new finding they reached, each new paper they wrote was like a ticket in a lottery where first prize was immortality. This motivation was also the thing that made them so hard to manage, since a manager could not easily manipulate it. As for cash, it was important mainly that cash did not de-motivate them by making them feel disrespected or undervalued.
Putting these things together, I saw that what made my department work was competition. There were two markets in which we competed, the market for talent and the market for reputation. In the market for talent, we had to compete to hire great scholars and pay them their worth. To afford that, we had to care about costs and use all our resources productively. In the market for reputation, we were all competing for immortality. My department was competing with other departments in national and international rankings by research quality (approximated, with some error, by the quality of journal acceptances), research influence (approximated, with a variable and unpredictable lag, by citations), research inputs (QR income and competitive grants), teaching quality (approximated, with a wide error, by student evaluations and, with less error but a greater lag, by our graduates' incomes and academic placements), and (in the student market) fee income; but the income side was mainly important to my department in that it would allow us to compete more effectively in the market for talent. And, as individual scholars, we were all competing with each other for immortality (approximated by citations).
It was this competition that aligned everybody's interests. It was't perfect competition; there were clear signs of rent seeking and overinvestment. But we couldn't achieve our plan through false accounting, because we had to meet objective, externally verified criteria of our product quality. We couldn't push up costs all the time, because if we did we would lose competitive advantage to leaner departments. For these reasons, I decided, my university was most certainly not going to repeat the sad history of the Soviet economy.
We were better than that, because we had no choice but to be better.
Radice's model of UK higher education is nearly but not quite mine. In his framework, HEFCE is the funding ministry, the universities are the spending ministries, and departments are enterprises. The targets are set by the RAE and the QAA. The research councils administer the special innovation funds for which ministries and enterprises compete. Some differences are unimportant. The most important one is that university departments are not like the typical Soviet enterprise, but are more like Soviet research institutes and design bureaux. Like their Soviet equivalents they employ a mix of talented people, people that look talented but are not, and people that looked talented once and maybe still have something in them -- or maybe not. Like their Soviet equivalents, they all have a capacity to surprise the world.
Another difference between us might be over the RAE. To Radice, the RAE has us all playing a bureaucratic game. I agree there is an element of that, primarily in deciding whom to submit or exclude. But in three years of trying to recruit world-class scholars from countries that do not have an RAE, my complaints about it have met with little sympathy. Generally, scholars trying to leave Germany, Italy, and Israel, for example, wish that their country had an RAE, and expect it would be easier to stay home if it did. They would tell me that, if the RAE was bad, to have no RAE was worse. The fact is that, beyond deciding participation, there is far less to manipulate in the RAE than in teaching quality, say. And the evidence is that the RAE has been instrumental in a substantial improvement in the international standing of UK research.
Beyond criticism of the RAE, Radice claims that "ultimately teaching quality really is important" but has been bureaucratized without giving it priority. I agree about the bureaucratization; the QAA is a rent-seeking monopolist, not a true regulator. Worse, it has seeded itself into the teaching quality sections of university administrations across the country.
I don't agree about that teaching quality merits higher priority than research. The most important contribution of universities to teaching may be not to what is taught today, nor to how it is taught, but to what will be taught in thirty years' time. What comes out of the best research today will decide how textbooks will be written for the next generation of students. The most important of today's new concepts will be featured in those textbooks, named after their inventors, as the Edgeworth box, the Phillips curve, and Granger causality were in their time.
Radice took time off from teaching his students to write "Life After Death." Good for him; this paper is important for both scholarship and public policy. If that is right, the education textbooks will soon feature added sections on: