Irish Liberty Forum

Who Should Pay for Education?

with 4 comments

It’s been quite interesting to observe the protests regarding the reintroduction of 3rd level fees over the past number of weeks. The case against student payment of fees has a familiar formula. Generally I’ve come across two types of argument. The first concerns the students themselves, and claims that education should be a right, not a privilege; that it would be unacceptable if poor and middle-class families could not afford to go to university. Simple. The second type of argument is less idealistic and concerns the wider economic effects of universities: It says that an educated workforce is essential to a “knowledge economy”. This might be supported by claiming, for example, that the higher taxes paid by people who go to college prove that paying fees is a good investment for the State. I’ll examine each type of argument in turn.

Type I: Problems in Enforcing Rights

Firstly, the claim that education is some kind of “right” seems absolutely no different to the same claim about healthcare, housing, food, shelter, or any other good which is considered essential to living a good life. Such arguments appeal to the sense of injustice which many of us experience when we reflect on how many people miss out on the opportunity to live with the same level of prosperity as ourselves. It seems, then, that the moral high ground is found by agreeing with the designation of essential services as “rights”, access to which should be enforced by the State.

What these arguments are missing out on is some kind of appreciation of economic scarcity. Indeed, economic truth has even been jokingly summarised by the rules:

  1. There is no such thing as a free lunch.
  2. Incentives matter.

Rule #1 simply means that goods can’t be created for free. In this sense, “free fees” is just as imaginary as “free healthcare”. Somebody is going to have to pay for these things somewhere down the line. What proponents of free fees need to do is try to consider the nature of the costs of this scheme imposed on those who are forced to bear them. This firstly requires acceptance of the fact that costs are being imposed on others (namely, taxpayers).

To explore a stereotype, picture this: the taxation costs of funding university tuition, including for children of wealthy families who can afford private secondary-level education, marginally prevents a childless couple on modest salaries from being able to afford to buy a house in the area where they would like to live. Can we not interpret this as violation of that couple’s “rights”? The socialist may reply that housing should also be a “right” and that under a planned economy everybody could afford to live wherever they wanted. But assuming that I am not talking with someone who wishes to abolish the price system completely, they should concede that costs are necessarily imposed on some people by State funding of tuition fees, and that this might be interpreted as a violation of those people’s “rights”. The problem with saying that something is a “right”, then, is that enforcing this right imposes costs on 3rd parties who may also have rights which are worth defending. And if university tuition is something which is ruinously expensive for most people, this only means that 3rd parties are violated to an even greater extent under the “free fees” scheme.

It’s worth noting in passing how difficult it is to define exactly which services should be considered as universal rights. Almost any definition seems hopelessly arbitrary (e.g. can we leave out leisure time, computers, holidays, cosmetic surgery, alcohol, good food, spare bedrooms, cars, cuddly toys?). This suggests that the method being followed by such an approach might not be logically consistent.

What scarcity teaches us is that there are not enough goods to satisfy everybody’s demand. In a perfect world, goods would not need to be rationed by the price system or by government fiat. To be completely accurate, “goods” could not really be said to exist in a perfect world, since scarcity is one of the necessary conditions which defines what we mean by “good”. In a state of perfection, all of those things we desire would be the “general conditions of human welfare”, available instantly to us in an infinite supply.

Of course we do not live in such a world, and a finite supply of goods (such as university tuition) must be distributed in some way among us. The economic problem, then, is to find the optimal distribution of goods, and to consider different institutional frameworks and modes of organisation which might bring about such a distribution. Once you understand that this is the problem facing us, that there is no free lunch, that it’s impossible to provide goods to some people without imposing costs on others, then you will no longer be impressed by calls for the State to enforce rights to healthcare or education. You will want to know if the costs imposed by enforcing such rights outweigh the benefits.

Type II: Helping the Economy

The second type of argument is really interesting. It is argued that education is a type of “public good”, since the activities of graduates enhance the lives of everyone with whom they interact for the rest of their lives; that everyone benefits from having the type of advanced, high-tech economy that is provided by skilled graduates, and that in any case university graduates benefit the Exchequer far more than the cost of their fees.

These are pretty good arguments but there are some serious problems in terms of how they hold together. For example, the argument that fees are a good investment for the State relies on the belief that the health of the State should be our primary concern – something which is far from obvious.

Similarly, it’s not clear why we should assume that a technological, “productive” economy is the highest political end. A libertarian might treasure the benefits to human health and happiness accruing from 21st century technology without necessarily agreeing that the development of such technology should be the purpose of political activism. Rather, the fact that technological improvement arises spontaneously from the actions of free individuals in the marketplace demonstrates that such improvement is what people actually want, and is therefore something to be welcomed. In the starkest possible constrast, experiments in warfare carried out governments, funded through coercion for the purpose of improving their violent capabilities, could never be welcomed in the same way. Libertarians believe in technology only to the extent that it relates to the advancement of human welfare.

One often comes across the belief that a certain percentage of school leavers should be going to university. How would we discover that number? It seems to me that claims of this nature lack a good deal of rigour. From my perspective, the number of people who should be going to university cannot be separated from the number of people who choose to go. Similarly to the point made immediately above, this is in accordance with the concept of “demonstrated preference”: that values can only really be revealed to us through action. And if your starting assumption is that each person’s values should be respected equally, it follows naturally that the preferences they reveal through their actions are what really ought to be respected. For these reasons, when choices are made in a context of liberty, where costs are not socialised but are borne by those who truly value the investment, then they have a much greater significance in terms of explaining to us how things ought to be. In this context, the choices made provide us with the best possible illustration of genuine preferences. To apply this to the topic at hand: if State payment of fees was abolished and the system made voluntary, then we would have the best possible estimate of the percentage of people who ought to go to university: it would be the percentage of people who actually chose to do that.

In a similar vein, it is frequently argued that the huge increase in university attendance over the past number of years is proof of the success of the free fees scheme. Such an argument, while perhaps acceptable to those working within an empiricist framework, falls foul of ignoring important distinctions between social science and the natural sciences (e.g. see Mises). To understand the cause-and-effect relationships at work in economics, analysis of historical coincidences is never sufficient. The fact that a huge uptake in university education coincided with the free fees scheme, while perhaps being of considerable interest and a source of motivation to begin the analysis, does not constitute an argument in favour of State payment of fees. For one thing, high numbers of university students cannot automatically be taken as a political objective. But in terms of the methodology at work, such a fact does not prove any particular causal relationship between free fees and high numbers of university attendees. It is an elementary lesson of logic that correlation does not imply causation. If we want to actually understand potential relationships between all of these economic phenomena, only some kind of theory can help us.

Lastly, to the extent that we have a free market, university graduates can benefit monetarily in direct proportion to their improved productivity arising from their educational achievements. The higher salaries they can negotiate for the rest of their lives cast doubt on the view that society owes them a subsidy. Graduates are the greatest single beneficiary of their own productivity. Indeed, their tuition is an investment in themselves which pays dividends for decades. It seems like there is no special reason that the cost of this tuition, which grants talented individuals accelerated entry to the middle and upper classes, should be socialised among the general population.

None of this is to deny that there could be a plentiful supply of aid to those people who genuinely cannot afford to attend university. Where banks will not make the required loans, I personally would hope and expect that there would be a support system of private charities and scholarships for the less well off. Such a system would rely on genuine altruism, not coercive redistribution. It would mean that instead of outsourcing our concerns about the poor to an inefficient government bureaucracy, we would each take responsibility for the charitable giving we supported.

And if I can make one final point: I’m glad that the heads of universities are speaking out now in favour of fees. They believe, and I agree with them, that it will not be possible for us to host the most elite academic institutions without a transition to a private system. As with any industry, central planning of education leads to an atrocious misallocation of resources, without any real mechanisms for fixing it, and with negative implications for everybody associated with the system.

In conclusion, then, I propose that the people who should pay for education are those who want to, which will almost certainly be the students themselves and their families with the help of banks and charitable foundations. Costs should not be socialised among the general population, and universities should be free to set their own policies, including admissions and fees. Such an environment could provide the greatest possible welfare for everybody, including by respecting the property rights of those people who are not engaged with academia at all. It would allow educational institutions to develop as best as they see fit. Since every unit of investment would come directly from its legitimate owner, instead of through government, It would mean a much more efficient distribution of resources to students, lecturers, departments and colleges. In short, liberalising our fee structure would give us the freedom to work towards the best possible academic environment.

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Written by Graham

September 4, 2008 at 12:22 am

4 Responses

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  1. Bravo!!!!!!!

    Retrolives

    September 7, 2008 at 7:42 am

  2. I disagree with this so much, I dont know where to start. Abolish welfare, health care, defence or any other department and I wont care too much. But education is one area that has to control by the gov.

    Don

    September 11, 2008 at 9:15 pm

  3. The reality is that the State is too involved in education. But I wouldn’t necessarily go as far as you in getting it out of it. I favour free education for the very poor, but with everyone else being required to pay for it. I also want all schools to be privatised, so that the taxpayer is not paying their salaries. School league-tables should also be introduced. The poor should be given vouchers to pay for education for their children. You correctly state that there is no such thing as a free lunch – the taxpayer is already paying for education. I would contend that they would pay less if my model of a more market-based education-system was to come in. I would also like this model to apply to health-care. I believe in limited govt and not big govt, but that is not to say I believe in no government. I have a sense of justice that says the role of the State should include helping those who cannot help themselves. There will always be relative poverty in this and any country, because some people are just not intellectually-gifted to allow them to succeed economically. At the same time, I believe the dead hand of the State has provided the country with an unnecessarily large budget-deficit to the tune of billions of euro, and a poorer quality of service in education, health, public-transport, electricity and gas than would be the case were there competition rather than state-subsidised market-distorting monopolies. The State needs to get out of the way and allow the market to determine the price and quality of education, health etc.

    FutureTaoiseach

    September 13, 2008 at 7:27 am

  4. Thanks for the comment, Don. You know this wouldn’t be any fun if everybody already agreed with me! 😉

    FT, as you know, our views are converging more and more. I understand the inclination to believe that some government intervention is required to help out the poorest of the poor. And if that’s what everybody believed, then the Department of Education, while perhaps not yet abolished, could be much smaller.

    As far as educating the poor goes, I actually think the arguments for State intervention might be a little stronger when it comes to primary and secondary level (not that I agree with them!). Because, if an individual really is qualified to go to university, then their potential lifetime earnings as a college graduate should easily repay any loans required for their tuition and living expenses. Thus there would be very strong incentives for universities and banks to cooperate and figure out exactly who should be going to college. But without the mechanism of private fee payment, there is just a free-for-all with a resultant bonfire of educational resources.

    Graham

    September 14, 2008 at 9:39 am


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