Compensating differentials, field of study and the Quebec student strike

Only something like 35% of Quebec students are on strike*, and in a column in today's La Presse, Yves Boivert notes that those on strike are overwhelmingly from the arts and social sciences faculties; those in natural sciences, engineering, medicine, etc have all stayed in class and their session is ending normally. His argument is that since people in the arts and social sciences cannot expect the sort of salaries that students in other faculties will likely get, the tuition increase hurts them more, so it is to be expected that they will be more likely to object.

My first reaction was: "Okay, that makes sense."

My second reaction was: "Hold it, what about compensating differentials?" Increased salaries are only one form in which the returns to education are realised, and it's one that is a relatively recent addition. For centuries, people had been studying philosophy, history and literature for their own sake. Students would take all forms of returns into account when choosing their fields of study, and those at the margin between electrical engineering and English literature would view the combinations of the two sorts of returns as equally balanced in each discipline. Increasing the cost shouldn't change anything.

A complication is that the high-earning programs usually have limited enrollment, so applying marginal analysis here may be problematic.

What do you think?

*For non-Canadians: The Quebec government decided last year to increase tuition fees in Quebec by 75% over 5 years, to a level just under the Canadian average. A student strike has been in progress for 11 weeks or so.

Comments

[Frances Woolley]

Stephen, I think you mean compensating differentials not compensating variation (which is a technical term used in welfare economics). Please feel free to delete this comment - I'm currently in marking mode.

[Stephen Gordon]

Corrected, thanks. This is why we have colleagues.

[Nathan Tankus]

This is a bad comparison. a literature major can't convert the additional utility they get from a love of their subject into currency to pay their debts. not being able to meet a certain minimal standard of living can't be compensated by one's love of literature. The effects of a tuition increase are still asymmetric in reality, even if one theorizes that the utility benefits of each major are equal.

In other news, I think this explanation of social science and art major behavior is rather specious. i suspect that it is more likely the case that these majors invoke a sense of equity or justice that the tuition increase violates that perhaps an electrical engineer hasn't gleaned from he or she's studies.

[Stephen Gordon]

As long as we're indulging in stereotypes, maybe the people in arts just have really bad analytical skills.

[Nkmtl]

Not really an answer to your question, but wouldn't Boisvert's observation be an argument for scaling tuition rates according to faculty?

[Nathan Tankus]

@Stephen Gordon: it's funny how utility analysis always comes out against the non-trained analytical abilities. reminds me of a Keynes quote "But the classical school ignored the problem, as a consequence of introducing into their premises conditions which involved its non-existence; with the result of creating a cleavage between the conclusions of economic theory and those of common sense. The extraordinary achievement of the classical theory was to overcome the beliefs of the “natural man” and, at the same time, to be wrong."

http://www.marxists.org/reference/subject/economics/keynes/general-theory/ch23.htm

(remember Keynes, confusingly called neoclassical analysis classical).

Maybe it's my student bias showing, but i think protesting tuition increases is perfectly reasonable.

[Nkmtl]

Stephen, care to dedicate a post to this piece by Michel Girard in La Presse?

http://lapresseaffaires.cyberpresse.ca/opinions/chroniques/michel-girard/201204/02/01-4511564-combien-ca-rapporte-un-diplome.php

[Marion]

If I understand Boisvert correctly, fees in Quebec are even across the board?

He makes the argument that a liberal arts major pays about 40% of the cost of their degree, while a med student pays under 10%, and therefore, even if the med degree cost doubles, it's still a bargain, particularly since they can expect higher earnings on top of that.

Did I get that right? And is that something that should be discussed as well?

[Stephen Gordon]

Yes, and there is the idea that people should pay higher tuition in the fields that cost more to teach.

But this is about the idea of compensating differentials: the arts generate non-financial returns as well.

[Kuze]

Engineers engineer, doctors heal, advocates advocate. These students are merely acting in accordance with the worldview that they've been taught. Is it really necessary to stroke our beards and ponder why people who have spent years studying in fields such as "Gender Equality and Social Justice" are somewhat invested in the notion that socialism is a good idea?

This applies to the occupy movement as well. If you spend $50K on a degree in Post-Colonial Eco-Feminism and -surprise, surprise- nobody will voluntarily give you money for your skills perhaps you too would be a tad angry? Add to that the fact that the skill you've learned is not only not in demand but an explicitly resentful worldview and it should surprise nobody why these people are doing what they do. If the only way you know how to serve your fellow man is to shout slogans at them and tell them why they're immoral, well that's what you end up doing. There's only so many government and academia jobs to go around.

[Stephen Gordon]

Nkmtl: That article explains why it's a good idea to partially subsidize tuition, because part of the financial gain does come back to the govt in form of increased tax revenues. But most of the financial gain is private.

[Phil]

That analysis has its limits. If striking students behaved in a strictly revenue-maximising behavior, then no students would be protesting in the streets because the impact of one additional protester is virtually nil. I'm of the opinion that students in the social sciences are simply more prone to join social movments.

[K]

Given that the grade cutoff for getting into a science program (never mind medicine) is much, much higher than for the arts, I think it's safe to say that the arts students aren't all there as a first choice. Maybe the compensating differential is negative, I.e. they wish they were doing something else. Obviously not true in all cases, but certainly true for many. On average, who knows.

[Determinant]

It's easier than that. Engineering and Medicine are professional degrees and therefore have a greater proportion of "right-wing" thinking. It's not a stereotype, it's true. Anti-Communists are most frequently found in Engineering while those sympathetic to the Communist Manifesto are found in Arts & Science.

Medicine is different in that it is a graduate degree or a second degree; intake is tightly controlled and the ability to practice easier to predict.

Both lead to the classical, marginalist idea that markets always clear given the ability to find a price. That is the line most often taken in Engineering and Medicine. I am an Electrical Engineering grad.

I wasn't always a left-winger. In university I was a Business Liberal. I even voted Tory. It wasn't until I graduated and found out that the market for Electrical Engineers was completely dysfunctional that I became a left-winger. I didn't purchase an NDP membership until last year.

Though even university I was in favour of tuition caps. The faculty I was in planned a $1,500 tuition increase. Engineering in Ontario is deregulated. But Dalton McGuinty was elected and imposed a tuition freeze that put a halt to that idea. The Dean was incensed. I was joyous. Dalton saved me money which came from my summer jobs and RESP.

If you want to test this take a poll of Canadian university students by faculty and see how they vote. Quebec would be a problem though, politics there cleaves on the Separatist/Federalist axis rather than economic issues.

[K]

One thing's for sure. You'd have to have pathetically low expected future earnings/utility to be willing to blow off a year for the sake of a $1500 tuition hike (gradually over a few years!!!???). Are they planning on working after they graduate? Assuming they get off their asses and get back to school, these kids will be in the top 20% in a few years. What entitles them to disproportionate subsidies? Did we suddenly solve our poverty problems?

[Determinant]

First there is collective solidarity, K, and then there is the pathetically low earnings potential of grads in general these days. Trying to get a job is like trying to push spaghetti uphill with your fingers.

[K]

Determinant,

If they can't get jobs when they are done they should, indeed, be livid. They should be livid that universities waste public resources and precious years of their lives while teaching them nothing of productive value. They've been scammed. But the $1500 has got nothing to do with it.

The solution is for universities to be paid a fraction of their graduates' future earnings. Imagine all the great minds suddenly spending their time dreaming up ways of maximizing their students future success. Ah well, never gonna happen.

[Michael]

Striking is a thing students can do?

Not that I've ever really had a reason to strike, but the possibility of it had never even occurred to me.

[DavidN]

I remember from the news (a while back) high school students in France were protesting over pension entitlement cuts they weren’t going to benefit directly from for many decades. I think applying standard marginal analysis is superficial in these cases.

[Marion]

I don't know. The differential is different for different people with different interests (LOL! I just reread this and I used "different" 4 times in the same sentence!). For centuries, people have also been studying science and engineering for their own sake. Many inventors were amateur men of leisure. In the case of Leonardo Da Vinci, he was paid to be an artist and did his inventing on the side.

I mean, look at all the stargazers, birdwatchers, airplane enthusiasts and computer programmers out there. If they were actually working in those fields rather than being just amateurs, they would be getting a compensating differential out of it too. As do doctors who save someone's life, help them walk again, deliver healthy babies, etc.

So I'm not sure that people in Liberal Arts degrees get more of a differential than other subjects. I think it's a matter of individual preference.

[Jack]

Undoubtedly, the arts & social sciences provide a compensating differential. But those students on strike presumably made their decision assuming little or no change in tuition in the next 3 yrs. Given much higher tuition (though still low in absolute terms), their decision is no longer optimal, and they are frustrated.

However, given that a few hundred $ should not make a big difference in lifetime earnings (net present value, etc.) I suspect the strike might be better explained by David Laibson's idea of hyperbolic discounting (a relatively small loss of wealth today is blown out of proportion): "Individuals using hyperbolic discounting reveal a strong tendency to make choices that are inconsistent over time—they make choices today that their future self would prefer not to make, despite using the same reasoning. This dynamic inconsistency happens because the value of future rewards is much lower under hyperbolic discounting than under exponential discounting"
source: http://en.wikipedia.org/wiki/Hyperbolic_discounting

[Stephen Gordon]

But why isn't that frustration more evenly dispersed? The same increase in costs is being borne by everyone.

[Jim Sentance]

Quite aside from stereotypes about student attitudes, the way courses, programs and job markets are structured in engineering, sciences and so on would I think make the consequences of striking more problematic for those students than those in arts and social sciences.

[Marion]

@ Stephen Gordon: The same increase in absolute costs, yes. But not the same increase in costs in terms of the proportion or the cost of teaching the course, and the work time it will take to recoup those costs.

Though in terms of job prospects, if you are in med school, your prospects are much better than if you are in some science courses, so that may not be it either.

I wonder if there is a difference in socio-economic family status that is noticeable between the striking and non-striking disciplines?

[Stephen Gordon]

Jim: That sounds plausible. The worst-case scenario for students is generally portrayed as losing a session. But if you're in a program where the job market operates on a fixed 12-month cycle, they'd lose an entire year - and be forced to compete for roughly the same number of positions in a double cohort.

[Mandos]

I remember from the news (a while back) high school students in France were protesting over pension entitlement cuts they weren’t going to benefit directly from for many decades. I think applying standard marginal analysis is superficial in these cases.

Um, this. Rises in tuition are just another front in a much, much larger conflict, and these students rightly see themselves as being on the front line of this battle. This conflict will affect their lives in many other ways throughout. Every capitulation is a license for the political-economic establishment to apply "standard marginal analysis" to other aspects of life. Consequently, they correctly realize that they need to at least put up some form of resistance to economism, at least to delay the opening of other fronts.

[Mandos]

BTW, as a techie who started his post-secondary life in a CS/eng/math type program back in the day, I was never impressed by the apathy-to-right-wingery of techie students. They possessed a certain amount of narrow-mindedness and a pollyanna-ish view of what their future was going to be like compared to those "stupid artsies" who were always demonstrating and striking.

Few, if any, have risen to the commanding heights of capital like they had always believed that they were destined. Most of them (myself included) will spend the rest of their lives as tech peons of some rank or another.

[David]

I would have expected economics students to be out there in droves, too. They of all people should understand why student debt is undesirable in itself: it incentivizes students to take conventional jobs with steady income streams in order to pay back their debt. That means less entrepreneurial innovation, and a society that is worse off for it.

Or maybe I'm confusing economics students with b-school students...

[Bob Smith]

DavidN

The french high school students were seemingly even wackier than that. Realistically they will never get those pension (France will go bankrupt long before they can retire) and, in the meantime, they'll be bled dry paying for the generations ahead of them. At the time I chalked it up to French irrationalism (vive la difference).

I now gather, based on the policies of both socialist and conservative French presidential candidates, that it's just that conventional economic rules don't apply to France (or so they believe). Maybe the residue of that belief is what makes Quebec a distinct society.

[Jon]

Determinant, I wait eagerly to hear why you think the market for engineers is dysfunctional?

[genauer]

LOL,

as somebody who has in one of his former lifes (co)organized and financed a student strike (starting and ending in the MINT area :-), I would like to make the follwoing remarks:

- student strikes are nonsense (you are simply not in a position to withhold anything, causing any pain/loss to anybody else)
- student strikes can still be a lot of fun and an organisational experience, largest demonstration in Munich after Hitler :- )

- MINT students have to prove their abilities (like constructing a house, which doesnt break down) in exams, how and when they learned that is their own choice

- nobody ever died from a misconstrued poem, so the more the social studies folks get on each others nerves in strategy discussions, the more fruitful
(as from my "strike" experience : - )

[genauer]

Within that strike, It was also a very worthwhile experience to have a podium discussion with our minister for culture, universities, schools (Wolfgang Wild, our former TU Munich president), organized by the strike commitee / student representation.

And defending freedom of assembly and freedom of speech against the incoming social studies / socialist hordes tryinng to storm the place and drowning out the discussion. Two solid, interlinked chains of technical freedom fighters against the left mob. The bones were nearly breaking, but we had our open and frank discussion.
He did not make any significant promises, but quite frankly told us, well, as the end of the baby boomer bulge, we are numberically a little disadvantaged, and that this will not change in our whole life.

The Mayor of Munich, Kronawitter, told us that he had a lot of citizens in more need than us, and he was right.

Why do I tell this ?
I would be surprised if the expenses for present day students in Canada would not also be a lot larger than 20 or 30 years ago. But please tell me !

Within that strike, It was also a very worthwhile experience to have a podium discussion with our minister for culture, universities, schools (Wolfgang Wild, our former TU Munich president),
organized by the strike commitee / student representation.

And defending freedom of assembly and freedom of speech against the incoming social studies / socialist hordes tryinng to storm the place and drowning out the discussion.
Two solid, interlinked chains of technical freedom fighters against the left mob. The bones were nearly breaking, but we had our open and frank discussion.
He did not make any significant promises, but quite frankly told us, well, as the end of the baby boomer bulge, we are numberically a little disadvantaged,
and that this will not change in our whole life.

The Mayor of Munich, Kronawitter, told us that he had a lot of citizens in more need than us, and he was right.

Why do I tell this ?
I would be surprised if the expenses for present day students in Canada would not also be a lot larger than 20 or 30 years ago.
But please tell me !

[genauer]

Finally, on tuition fees I did change my mind a few years ago, from pro to against.

The reasons are as follows, in the broadest possible stroke:

Yes, univ educations costs, and usually results in a significantly higher income later.
(LOL, I had pretty expensive toys as a Physics PhD, a million a piece and liquid nitrogen on tap :-)

So, why not let them pay for at least part of it ?

So I thaught, too, until a few years.

Because it is a uncalculable risk, especially in non-MINT, and especially for people coming from a less than rich background. If they make enough money later, we will tax them on that. If there sits a person more or less in a seminar, whats the difference ? To play with the expensive stuff, like above, or human lifes, you have to survive tough exams first.

And I think it is very beneficial for social peace, if one can say:

"Nobody can say, he didn't have his chance."
http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/03/what-is-a-university-president-worth.html#comments

I think, what you are missing in your "marginal analysis" of "compensating differentials" is exactly the Variation / Risk component and the relative utility of the various outcomes. You should have more fincance classes as part of macro economics, and then understand the needs of the poor better : - )

[Jacques René Giguère]

The "only 30% are on strike:"
Depending on the vagaries of various local conditions, strike results vary widely. In my cegep, the vote ( secret over 2 days, supervised by the Association Générsale des étudiants, the Administration and the Professors's Union), the result was 228-228 with 6 cancelled ballots, So, no strike. It doesn't mean there is no sympathy here. Far from...

Students in STEM often live in a bubble. They sometimes see designing nuclear bombs as neat technical challenges. Or maybe they understand what happened to those who had thoughts about what they did, like Oppenheimer. Though , once they grow older, they see how corrupt elites can't make false numbers add up and turn into Sakharov.

Anyway. Students here have seen the abject disfunction of the university system. Why should they for Îlot Voyageur scandal? Why should they pay for the first-class airplanes tickets for the McGill higher-up junket to Brazil?
Funds are fungible. Anyone with a straight head can clearly see, even if they are arts majors, that
their tuition increases are going to pay for $ 1.25 billion environmental clean-up left by the cronies mines and that they will pay for the sweet-heart deals of the Plan Nord as well as the cost overrun currently targeted by the Operation Marteau.
The rhethoric of "we can't be governed by a minority" (unless they are lobbyists for the minig or construction industry) is thin.

Yesterday, the International Herald tribune
http://rendezvous.blogs.nytimes.com/2012/04/27/obama-will-need-young-voters-to-keep-his-job-even-if-they-dont-have-one/

warned Obama how a growing dissatisfaction among the young couls lead to problems for his reelection. They specifically cited the "french canadian students" ( some long-ago names die slowly...)

[Determinant]

Determinant, I wait eagerly to hear why you think the market for engineers is dysfunctional?

Lessee, graduated in Electrical Engineering in 2006. Behind the hundreds of resumes sitting on this there are a few stories. Among them are these gems:

1) Attended a "recruiting night" at a well-known consulting firm in 2007 that wanted 30 people to talk to. They got 600. The floor was swamped. I still got an interview, but they never called back. I followed up, I wanted to work in power lines. I was rejected for not having a "civil" background, this from an electrical engineer who got his civil experience as an oil roughneck in another recession.

2) I was rejected by another consulting firm for a position entitled "Electrical Engineer-in-Training" for having no work experience. I had a degree, but no experience. EIT jobs are usually intended for new grads, or so the PEO says....

3) In summer 2008 I was at an avionics manufacturer of long standing and solid repute. I had worked at a sister plant as a summer student. The job I was interviewing for was a contract position. "All of our engineers are on contract, you will not be an employee. It's so much cheaper." No benefits, I was encouraged to incorporate and get deductions by the interview. This is borderline illegal, the CRA has gone after these arrangements. I did not want precarious employment for reasons that do no bear discussing here. Market power, what market power? Pension, benefits? Different planet.

4) Attended another interview three hours from my home in October 2008. I thought it went well. The company's customers were in Ecuador and Finland, it was a real export company, not exporting to the US. I was told at the end "We like you, we'd like to hire you, but our customers have had their bank loans pulled and they have cancelled their orders. Sorry, there is nothing for you." They could have told me that on the phone that morning. They gave me gas money, the only company who has ever given me gas money. This was during the height of the financial crisis.

This is why I say trying to get a job is like trying to push spaghetti uphill.

More recently, I lost out on a $55,000 position with the Public Service of Canada, full employee status (pension, benefits, the works) due to a test question translated from French to English that had a calque in English, the English translation was very bad and unclear, the question was composed in French.

On the other hand, the market for bilingual engineers in government is better. I recently submitted a resume to a government research lab in Montreal, the engineering job category requires French and I have taken lessons on this, plus I have decent results from previous interviews that let me bypass one of three tests. The job classification had a Terminable Allowance put on it last year, that means an extra $12,000 to keep people because of recruitment or retention problems. I pray my resume will be "screened in", as they say in Government job circles.

Have I made the dysfunction clear?

[genauer]

@Determinant

http://marginalrevolution.com/marginalrevolution/2012/04/the-cultures-that-is-europe.html
and link therein, and comments

ever thought about Germany ?

We love engineers.

[Determinant]

I'm familiar with the culture difference, I'm not sure it means much. One summer I worked at an avionics plant which had a sister plant in France. There was an exchange engineer there from France, we became good friends. He was doing some tax-deductible experience program and was paid in Euros. The lines to get a job as an Engineer in France were as long as the are here, he wouldn't have taken it but he had no choice because it "got him in the door".

Loving engineers isn't the same as hiring them.

Canadian industry says the same thing about "technical innovation" and "knowledge economy" and "educated workers of the future" but won't actually pay those workers for that education nor attempt to incorporate them into the workforce.

It's why baby-boomer worries about a demographic labour shortage are just wrong.

[genauer]

Determinant,

the point I wanted to make, is that Germany is HIRING. Youth unemployment in Bavaria is at 3 %.
You will get around easily with English.
In 2009 French workers took foreign managers of closing factories as hostages, several times. Now Hollande threatens 75% income tax. Investors and Managers don't forget that. You always pay for such behaviour later. No such nonsense in Germany, but high wages, universal health care, etc. Income distribution most equal, after the Nordics. An open country with 10 neighbours, all without border controls, huge exchanges, not only commercially, a little warmer and more temperate than Canada. I ll have 3 Anglo stuff stores /Cafes within 20 minutes walking distance.

[rsj]

No such nonsense in Germany, but high wages, universal health care, etc. Income distribution most equal, after the Nordics.

But all contingent on permanently running massive net exports to the periphery -- something that is unsustainable. If germany was forced to run a balanced current account for, say, 10 years running, it's economy would collapse. There is something very wrong about the pattern of prices and interest rates in a nation that forces it to permanently be a next exporter just in order to maintain full employment.

[Determinant]

*sigh*

I have a niece who I want to see and an ocean would interfere with that.

I'm also a Type I diabetic (inject needles) and diabetes hates long and especially irregular work hours. The reason I want to go for government work was the regular schedule. That and I am extremely able verbally for an engineer, engineering has lots of math geeks who can barely communicate but I'm not one of them.

Ten years ago Nortel was hiring like mad in Canada; it was a bubble and it burst. The US economy had a real estate bubble and it burst. I have no idea what will happen to Germany but for family reasons I'm staying here.

Lastly, Canada does not benefit from EU rules on immigration; I would have to come as a guest worker to Germany and go through the full process of the German immigration system, I do not get a exception or a break on any of it.

It's not that Canada doesn't love engineers, it seems that companies cannot find enough market demand and enough capital to find, create and sustain profitable markets for any length of time.

The 30% appreciation of the Canadian dollar against the US dollar and the US recession did not help Canadian manufacturing at all, we have a recession in manufacturing's biggest customer and Dutch Disease on top of that.

I posted a few experiences in relation to a specific question. If Jon was being a wind-up merchant I am going to be very angry with him.

[genauer]

@rsj,

this "permanently running massive net exports" is a wide spread myth.
As you rightly say, it is the Current Account, which counts. And the Accumulation of this is the
"net international investment position" Line 2 in the EU scorecard
http://ftalphaville.ft.com/blog/2012/02/14/879781/whos-the-most-imbalanced-of-all-eu-members/
Germany is at 38%, not bad, but nothing dramatic. And it just built up in the last 5 years.

Why ? Because we have traditional a trade surplus, but that was all eaten away by tourism, resulting in a 0 % position in the mid eighties. Went a little bit up until 1990, then was slightly negative after reunification, we sucked in a little money, and the cumulative net position was NEGATIVE as late as 2005
(http://www.slideshare.net/genauer/currencies page 2, just focus on the cum CA curve, the slide was originated for a different purpose, how you can understand that from exchange rates, with some delays, and recently some tax stuff, I dont want to explain here)

Why should Germany be hurt by a situation we lived with for the first 60 years after WWII ? Price are set in the market, and not by committee decisions of some closet communists. The interest rate is set by the ECB, which has by treaty a price stability mandate only, and not the Bundesbank, and how would that change, how much Chinese and other Asians love our cars, and investment machines ?
Wages are decided on by employers and employees (their unions) and not some foreign control freaks, Greek union bosses, or economist professors from other places. The whole notion is ridiculous.

Did we do anything unfair in 2003 - 2005 ? No! We just shortened the length of unemployment payments somewhat, and reduced the marginal tax rate to now 48%. And we made a lot of government services more efficient enabling less gov employees, while maintaining a high service quality.

[genauer]

@ Determinant

How is your Diabetes different in Canada vs Germany? People have this here as well.
As the article mentioned, People in Germany love short and regular working hours here as well.

As an entry level engineer, you start here with a union contract, which in most cases are 35 hours a week, 6 weeks vacation. And in many companies, the amount of overtime is strictly limited (unions prohibit payouts), even if you would want to.

I have here colleagues from all over the world, main-land China, Americans, Malaysians, this can not be that difficult for Canada. According to Goldman Sachs www.irisheconomy.ie/GSGEP195.pdf
we are now the only large country without a large financial correction, if we assume that the US still has it in front of them. Germans love stability, prefer to correct early, and quite a number of old american colleagues came here for the same reasons. You pay for this with a little higher taxes, but my neighburs even want to increase them. Sigh.

[Mandos]

The German immigration system is actually very sensible and straightforward if you have the good sense to find the job first. If you just take the standard statutory insurance (rather than opt out into the private tier), the diabetes treatment is going to be covered.

[Mandos]

As for German competence in English, I think some Germans overestimate how good their English is :)

[genauer]

Mandos,
LOL, my active English grades were "passing" : - ). But I also got a test, that says my reading and comprehension skills are good enough for Stanford :- ). I worked and lived for 7 years in the US, without any difficulties, and in a group of 9 engineers from different countries (we even had one male US whitey :- ) the joke was: we all speak a common language: broken English.

Why do engineers use Powerpoint ? Because they can not write a complete sentence :- )

Searching for yourself and sticking with the standard health insurance is definitely good advice.

[Bob Smith]

"Assuming they get off their asses and get back to school, these kids will be in the top 20% in a few years. What entitles them to disproportionate subsidies? Did we suddenly solve our poverty problems?"

That's where the argument for heavily subsidized tuition has always lost me. Here we have a government program that disproportionately benefits the offspring of today's well-to-do (there's no shortage of empirical evidence indicating that, regardless of tuition fees, universities draw disproportionally from the ranks of the top-third of the income distribution), to say nothing of tommorow's well-to-do (there's also no shortage of research to the effect that unversity graduates experience signifantly better job market performance than college or high-school graduates). Hard to justify that on any "social justice" grounds that I've ever heard of, unless "greed" and "self-interest" are social justice principals. To that extent, the "social justice" merit of universal subsidies for post-secondary education is about the same as the "social justice" merit of accross-the-board tax cuts (i.e., not much).

Mandos may be right (who ever thought that I'd say those words) in that this is about students thinking their part of a broader conflict. Too bad they're fighting to protect the privileges of the well-to-do...

[Mandos]

Mandos may be right (who ever thought that I'd say those words) in that this is about students thinking their part of a broader conflict. Too bad they're fighting to protect the privileges of the well-to-do...

1. Of course I'm right. I just have an unfortunate habit of being right prematurely. I need to work on this.

2. The concept of "well-to-do" is changing. The race-to-the-bottom in wages is starting to affect parts of the top 19%. Just watch. The students know that they won't be getting the same deal that their parents did, even with their degrees, and they're right.

[Mandos]

Too bad they're fighting to protect the privileges of the well-to-do...

OK, this really gets on my nerves. In the past, only a very small percentage of the population was "well-to-do." Through social reforms and difficult labour strife, and throw in a couple of world wars, we finally got to the point where, at least in Western industrialized countries, we could reasonably call a significant chunk of the population "well-to-do"---in the sense of "has a comfortable life until they lose their jobs, which hopefully they won't because we gave them job security".

If we're not going to subsidize the continued existence of that "well-to-do", if we aren't going to support the stability of that *emergent* class, then what are we planning on doing? Return to the old situation of a very rich 1% and a huge class of (techno)peons?

Well, guess what. That's exactly what we're going to be doing. That's exactly what we *are* doing. We've made that (illusory/ephemeral) "well-to-do" compete with cheap labour in Asia and Mexico, and we're wondering why the kids are protesting...

And for this some of us are going to begrudge subsidized tuition. Fighting each other while the whole ship sinks.

[Bob Smith]

"The race-to-the-bottom in wages is starting to affect parts of the top 19%."

Interesting theory, tommorow's wealthy won't be as wealthy as todays's wealthy, so we need to give them more public money - maybe some tax cuts too. Even if true (highly debatable), it still doesn't make a particularly compelling public policy argument.

[Bob Smith]

Interesting, Mandos arguing in favour of subsidizing the "well-to-do", well this is a historic morning. Maybe, along the same lines, we should cut the marginal taxes rates for the highest income earners to zero. Won't that do wonders to promote the "well-to-do" in Canada? Hey, think of all the corporations who would move their head offices to Canada if their CEOs could double their after-tax income.

You know, instead of making silly argument about the need to subsidize the rich, you (and the Quebec student protestors) might make much better arguments about the need to subsidize (and, in fact, to provide greater subsidies for) students from poor backgrounds (through targetted need based subsidies, rather than universal subsidies that accrue predominantly to the children of today's wealthy) or the need to provide subsidies for graduates who engage in socially valuable, but financially unrewording work (i.e., doctors, teachers or nurses who work in Northern Quebec, etc.) or who otherwise can't repay their student loans due to illness, misfortune, etc. (i.e., not to tommorow's rich).

The problem isn't the Quebec students' objectives (or, at least, not all of them), it's that the policy instruments they're pushing to achieve those objectives are the most inegalitarian and inefficient possible policy instruments. Just because they're lefties doesn't neccesarily mean that they have to be stupid about it.

[genauer]

Since this coming up every time, even with this silly social studies student strike.

Income distributions are in Germany exactly the same as 20 years ago, 50 years ago, 100 years ago, same as US 50 and 100 years ago, and within the error bars, where they were 2000 years ago in Rome.

The usage of intentionally vague terms like "well-to-do" or "middle-class" just helps a lot with obfuscating the numerical evidence. And there is some noise and some tiny bowing in the data. 1973 was the best year for US unionized labor (they still complained about "living in a world of pain") and 1999 was the point of maximum equidistribution in Germany, because we taxed the s**t out of everybody, before we realized that we have to cut a little bit.

That the strike is silly, doesn't make the tuition fees the greatest thing either.

The accumulated debt is not a problem, when things go right, but frequently they don't. And then this is a pretty significant risk.

Why have we invented stock corporations, where you can not lose more than the value of your shares? Why limited liability corporations? Because it is beneficial for society that people take certain, substantial, but ultimately limited risks. It enables people with very limited resources to start businesses, but gives their creditors (often vendors) some confidence, to be paid as long as somehow possible.

And if everything goes terribly wrong, people always know their is a lower limit, social minimum payments and universal health care.

How good can a 19 year old and their parents without a engineering degree judge the risk of profitable employment for him personally , especially in non MINT (or you say STEM) areas? Not at all ! Should they be excluded from that based on that? I don't think so !

What is good to encourage entrepreneurs, limited liability, is also good for students coming from modest backgrounds. It is good for the society as a whole.

The "broader conflict" is between ideology driven extremists and people, who look at the facts and find the best common good solutions. Universal retirement plans and health insurance were introduced 125 years ago by Bismarck, our first Iron Chancellor, who nobody would ever call a socialist.

Does any of you think, we Germans are more intelligent, a superior race (cough)? Or that we have the secret sauce, found the Ark of the Covenant ? I hope not.

So why is it then, that the living standards of the "poor" are good ( 36k$ for unemployed family of 4), median pay is high, capitalist like me are not happy, but OK, and state finance are in relatively good order? Because we fight each other every day? Or because, in general, we try to optimize together and find consensus.

Do we engage in dark machinations, first we lure Determinant to Frankfort, and then Valdemort (Weidemann) will chain him in the dungeon of the Bundesbank ? : -)
Subsidizing Photo voltaics will cost the German consumer 100 billions and counting, but we are WTO conform to a fault and see German pv factories closing every month now.

[Mike]

An interesting theory Professor Gordon. I can't think of a way of proving the theory, but I can think of one way of ruling it out. Suppose Charest doesn't alter his tuition rises anymore than he has - and the $254/year increase goes through. Would the proportion of Liberal Arts students to STEM students decrease? If less and less students enter into Liberal Arts (because they don't see a compensating differential in accordance with their rise in tuition, and their relatively low post-grad wages) then the theory could be wrong. However, if the proportion of Liberal Arts students remains the same over the next 7 years, this theory could have validity.

[Shangwen]

Stephen: "But this is about the idea of compensating differentials: the arts generate non-financial returns as well."

I have always this argument hard to take. I know that there are some arts students who do generate non-financial returns: brilliant scholarship, insightful books on public affairs and history, philosophy, etc. But they are a small minority of all arts grads. I know plenty of people with BAs and MAs in the humanities: they are as politically obtuse/irrational as most people, and most have gone on to work in mid-level government or private sector jobs like marketing. They aren't philosophizing or writing great literature. And the idea that arts grads have superior critical thinking is, in my experience, bogus. What a lot of them emerge with is the ability to write or talk with spurious yes-but arguments, appeal to "deeper causes" and descriptions of just about anything as "systemic". What is helpful about that?

So, I think their strike is silly. But I also think it is tragic that we hold such an intense and irrational bias for going to university when there are so many other ways for young people to prepare themselves for a fruitful and productive life.

[edeast]

Bob Smith, "That's where the argument for heavily subsidized tuition has always lost me."

I never understood it either, until I heard an NDP candidate rail against student dept because it would force university grads to work for corporations rather than having the freedom to work for non-profits or gov' or other more community minded organizations.

[Bob Smith]

"I heard an NDP candidate rail against student dept because it would force university grads to work for corporations rather than having the freedom to work for non-profits or gov' or other more community minded organizations"

Yeah, but even that's sort of a silly argument, since even if tuition were free, the vast majority of students would end up working for "evil" (assuming one shares the NDP's worldview) corporations. I'm not sure why high tuition fees would discourage people from working for the government since (a) the public sector often pays more than the private sector for the same work (at least outside of the top ranks) and (b) faced with high debt, the job security associated with a government job would make it that much more appealing. As for not-for-profits, the reality is that employment with not for profits is, and always has been, tiny relatively the economy as a whole, and as I noted earlier, if that's what you want to do, wouldn't you be further ahead to subsidize those graduates who end up working in the not-for-profit sector than to subsidze 100 graduates who go to become tax collectors or mid-level bank functionairies, in order to subsidize the one graduate who ends up working with orphans?

This was a running gag at law school, where everyone complained about how high tuition fees meant they couldn't work for non-profits or governments. But non-profits have never hired lawyers in significant numbers (regardless of tuition fees), and those they did hire were invariable more experienced lawyers, rather than new graduates - so really, high tuition fees had no impact on the likelihood of working for non-profits. As for government, the high tuition fees didn't discourage applicants for jobs with the crown or the department of justice. Quite the contrary, it was often harder to get jobs working for the government than it was to get jobs working on Bay Street (and the pay of government lawyers is nothing to sneeze at - a crown in Ontario in their first five years of call makes $100K+ a year, plus a pension - putting them solidly in the upper echelons of Canadian income earners). I always thought it strange that people thought that it was a good idea to subsidize hundreds of future corporate lawyers (people who will, in the future, make small fortunes foreclosing on widows and orphans) in order to encourage a small handful of lawyers to, maybe, work for non-profits.

[K]

edeast: "it would force university grads to work for corporations"

OK, but debt is also a disincentive against taking risk. Some of the greatest companies are created by young people who have sufficient breathing room to take a chance on a great idea. Those who have parents or spouses who are able to support them have a major advantage over those who are saddled with large quantities of student debt. To the extent that students care whether they end up living useful, productive lives, their incentives are well aligned with the public interest. The universities, not so much. If we want to modify the incentives that lead to unproductive educations, we probably need to look at who earns the rents from the current system.

[Determinant]

The "broader conflict" is between ideology driven extremists and people, who look at the facts and find the best common good solutions. Universal retirement plans and health insurance were introduced 125 years ago by Bismarck, our first Iron Chancellor, who nobody would ever call a socialist.

Social welfare in Anlgo-Saxon countries traces its heritage to the Beveridge Report, not Bismark. Bismark and Beveridge are two parallel, competing models.

A diesel engine is not a gasoline engine and vice-verse.

Speaking of photo-voltaics, I applied to a government research lab that includes that in its portfolio of research topics. The lab is in Quebec and requires French ability and you have to pass non-trivial government French tests to work there. I pray that the line will be short enough that I get a call. They only had one screening question for that job, a very low number. I put my degree award date in and into the inventory I went.

Disclosure: I paid $5,000+ tuition each year for my degree. I sympathize with the students' desire to control tuition, but like Bob said there are other ways to do it. In University I was exposed to people who do have lots of money and don't need support.

[Bob Smith]

"I know plenty of people with BAs and MAs in the humanities: they are as politically obtuse/irrational as most people, and most have gone on to work in mid-level government or private sector jobs like marketing."

Which jobs, sadly, would have been done 50 years ago by the exact same people, albeit minus 4+ years of post secondary education. Part of the issue (and I'm not sure how to address it) is that we've allowed credentialism to run amok without asking whether those fancy credentials translate into any incremental increase in ability. 80 year ago, my grandparents taught elementary and hich school students with the benefit of a high school diploma and 1 year of "normal" school. If they wanted to do the same thing today, they'd need at least 5 (6 in some provinces) years of post-secondary education (and given that school boards pay a premium for people with graduate degrees, they'd have an incentive to run up 7 or 8 years of post-secondary education). Are today's teachers that much better than teachers 80 years ago?

[Patrick]

"credentials translate into any incremental increase in ability"

Add grade inflation and the whole post-secondary education exercise becomes essentially futile; it's all about signalling, nothing about ability. University degrees are bling.

We have a system for educating people on the public dime; it's called primary and high s school. If this system is insufficient for the needs of society, then why aren't we talking about reforming it? Universities were never designed for the masses; they were designed for the elite. I went to McGill (usually considered a pretty good school) and I had no business being there (similarly for most of my class mates). Am I better off for having gone? Sure, but that's not the point. It was a waste of high value resources to be teaching me stuff I could have been taught in any respectable tech college at much lower cost (both actual and opportunity).

[Determinant]

*sigh*^n, n=2 at present.

Germany's immigration system is fine *if you have a job offer*. Catch 22: Germany does not let foreigners* into the country to look for work on their own. I don't know any countries that do allow this. The immigration system is a labour-supply mechanism, not a job-matching system.

*EU members excepted due to specific treaty rights/obligations.

So, back here on Planet Determinant, I am hoping to hear from that engineering lab in Quebec. Meanwhile, I again get to complain to the Public Service Commission over a misleading translation. Anyone else amused by the irony of an Anglophone making a Charter-based Language Rights complaint because of a piss-poor translation such that the right to be assessed in English or French equally was not respected?

Would somebody please pick Jacques off the floor after he's done laughing?

[Mandos]

Catch 22: Germany does not let foreigners* into the country to look for work on their own. I don't know any countries that do allow this. The immigration system is a labour-supply mechanism, not a job-matching system.

Don't believe this is quite true for Germany. You can enter Germany on the 3-month visitor's visa (which Canadians get by showing up), and it's acceptable to look for work as long you don't overstay the 3 months without putting in an application to the Ausländerbehörde with your work contract in an acceptable category (like engineering and other STEM fields). This is not true for every country since many countries still require pre-authorization to enter the Schengen zone, but Canada is one of those for which Germany doesn't require this. Germany has a very liberal immigration policy pretty much intended for "job-matching".

However, nowadays for techie jobs does anyone really require you to show up in person?

Anyway, I sympathize with the desire not to leave one's own country and end up far from friends and family. I have become an international nomad because no one in Canada wants to employ a SNURFLESNURFLE MUMBLEMUMBLEologist these days.

[Mandos]

Interesting, Mandos arguing in favour of subsidizing the "well-to-do", well this is a historic morning. Maybe, along the same lines, we should cut the marginal taxes rates for the highest income earners to zero.

Obviously, I don't *actually* think that "well-to-do" is the right word, since by my lights, a few paychecks to the poorhouse (includes the bulk of the population, including most of those sending their kids to university) are not actually "well-to-do". Most of the folks in university do not have parents who are the "highest income earners", and reducing their tax rates doesn't create a population with a well-rounded liberal education.

Secondly, as I have tried to explain in the past, the left is not a charity organization. "Helping the poor" doesn't really need a political analysis. Ending poverty as such, is. How is casting down the the gains of a formerly impoverished middle class a route to ending poverty?

You know, instead of making silly argument about the need to subsidize the rich, you (and the Quebec student protestors) might make much better arguments about the need to subsidize (and, in fact, to provide greater subsidies for) students from poor backgrounds (through targetted need based subsidies, rather than universal subsidies that accrue predominantly to the children of today's wealthy)

No, absolutely not. Not as a substitute for universality. That is forced charity, and the politically most vulnerable way of (not) changing class structure. Means testing is utterly corrosive to the social purpose of universal provision. This is how it is (in theory) done now in the USA, and it is turning out to be increasingly and obviously disastrous.

Interesting theory, tommorow's wealthy won't be as wealthy as todays's wealthy, so we need to give them more public money - maybe some tax cuts too. Even if true (highly debatable), it still doesn't make a particularly compelling public policy argument.

I don't see why you conflate providing universal education with a tax cut, unless you subscribe to a view that "public policy" consist strictly of moving numbers around in a manner hermetically sealed from reality.

If the gradual reversion of industrialized society into a techno-Dickensian dystopia is not a "compelling public policy argument", then nothing is. Y'all are rearranging the deck chairs on the Titanic.

[Determinant]

*sigh*^n, n=3 at present.

I don't have $5,000 to spend on a speculative job hunt in Germany. Can we stop this unproductive Germany tangent now?

On universal provision, if said high-earning families are high-earning, just tax their parents. And if the kid turns into a high-earner, tax them. Oh wait, that would require a progressive tax system or a more progressive tax system than the one we have now. The right tends to have conniptions over that one.

[genauer]

@Determinant, I am not giving up that easily.

Is Malta, NY too far away from Montreal ? It would be a 2.5 hours drive.

As mandos said: travelling on a tourist visa is pretty easy, contacting companies first via email or corporate websites like http://www.siemens.ca

What companies also want, is to see some initiative and "can do" approach.
People who "have been there, done that", working for a time abroad, are much more likely to show that, they also know how things are done in other places.
The last thing they want in a leading position are people, who just wait that somebody else solves their problem.

Companies will always need some folks, who live in their small specialist box forever, often they get a little grumpy beyond the age of 45, because often they know very good, what does not work, and are pissed, when people come from
the outside with a working solution :-)

The very most people, I know, have worked for some time in a different country.

I think Siemens is certainly not the only corporation, also present in Canada,
where a career starts in Germany (since decades they have to fill internal foreigner quotes !), you take up the German "Stallgeruch", and then you are the perfect canditate for a leading position in Canada.

@Mandos

We will never "end poverty".

The game goes as follows. Historically countries like the US defined "poverty" somewhere around 40 % of median income. Central European and Nordic countries raised the social minimum to ca 45% of median. -> no "poor" people anymore ?

Bureaucrats, and do-gooders beware. Next thing the EU defined "poor" as exactly 50 % of median. Noawadays the minimum level is around 55%, or higher, depending on family configuration. -> No "poor" people anymore in Germany ?

Hold it! Now we have invented "endangered by poverty" at 60 % of median, which then again gives you numbers of 8 - 12 % of the population, so that many socially conscious people can be concerned about, and conveniently can forget the "endangered by" in their second sentence.

I would be surprised if this is not similar in Canada.

Otherwise I remember that Social security (pensions) were partially means tested in the US as late as 2000. UK pensions are thoroughly means tested

[Bob Smith]

"Most of the folks in university do not have parents who are the "highest income earners""

Really? According to Stats Canada, children from families in the top income quartile are almost twice as likely to attend university as those from the bottom quartile. You want to quibble about whether people in the top quarter of the income spectrum are the "highest income earners", fine, but it seems like a silly quibble.

"Secondly, as I have tried to explain in the past, the left is not a charity organization."
Well, it is when it's promoting subsidized post-secondary education - specifically it's a charity organization that disproportionately benefts the upper half of the income spectrum. In any event, fine, the left isn't a "charity", it's about helping the poor, great. Kindly explain your reasoning about how subsidizing the wealthy helps the poor.

"No, absolutely not. Not as a substitute for universality. That is forced charity, and the politically most vulnerable way of (not) changing class structure."

Funny the left's fixation on universality in terms of government spending. I wonder if giving money to the wealthy was what Marx had in mind when he said: "From each according to his ability, to each according to his needs" ("Hey, man, I need a new polo pony"). I doubt it. The irony here is that in this instance, universality harms the well-being of the poor by diverting limited public resources to people who don't need it.

Of course, your comment about the left not being a charitible organization, I think gives away the game. A good chunk of the left doesn't really care about the poor, except as an instrument to achieving their own ideological goals. If subsidizing the rich diverts resources that could otherwise be used to help deserving students, well, hey, when you fell a forest...

"I don't see why you conflate providing universal education with a tax cut."

Surely it should be self-evident, even to you? The same people who run around damning tax cuts that disproportionately benefit the rich as regressive give-aways to the well-to-do (and fair enough) then go to the barricades over government spending policies that have the exact same distributional implications (without even the gloss of an efficiency rationale), namely to give money disproportionately to the rich, on the grounds (incorrectly) that this is a progressive policy.

[Bob Smith]

"On universal provision, if said high-earning families are high-earning, just tax their parents. And if the kid turns into a high-earner, tax them. Oh wait, that would require a progressive tax system or a more progressive tax system than the one we have now"

If taxation were costless, that would be a great way of doing things. But it isn't. The problem with the tax system isn't that it's progressive, per se, it's that the progressive tax sytems typically advanced by the left in North America (with high marginal tax rates on investment income or income that's highly mobile), tend to have hefty efficiency costs. That needn't be the case, but I doubt we'll see the Occupy movement out today lobbying for a 25% VAT with refundable tax credits.

In any event, even if your raise the funds through a more progressive system, there's still the awkward fact that subsidized post-secondary education invariable benefits both the current and future wealthy. I can't help but thinking that there are better uses for those public funds. As K said earlier, have we solved our poverty problems?

[genauer]

Bob,
please take a look at Fig. 2 of
http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Economic_Mobility/EMP_Chasing%20the%20Same%20Dream_Full%20Report_2010-1-07.pdf

Does that look like that the income of the children are strongly determined by their parents ?

People, who pursue a university education, already forgo the income earned during that time, which should be a significantly larger portion.
Offloading the whole risk of the decision, including the tuition, on them, is a substantial deterrent.
When we started much smaller tuition fees in Germany, like 500 / semester, this was visible in the starter numbers from poorer households.

[Bob Smith]

"Does that look like that the income of the children are strongly determined by their parents?"

Agreed, but to some extent that's inevitable. Children inherit many of the traits of their parents (including the obvious genetic traits, but also culture, work ethic, etc.). To the extent that economic success is closely linked to those traits, you would expect the incomes of parents and children to be closely corelated. So I'm not sure what that adds to the discussion.

"Offloading the whole risk of the decision, including the tuition, on them, is a substantial deterrent."

Whoa, whoa, whoa, hold on a second, cowboy. We're not talking about offloading the "whole risk" of going to university on students. In Quebec we're talking about making students pay more than 17% of the direct cost of their education. In most of Canada, students bear 30-50% of the direct costs of their education (depending on the program). For poor students, the real cost is often reduced by grants, bursaries and scholarships. Moreover, there are a number of mechanisms provided by governments and universities to mitigate that risk (largely through debt forgiveness programs).

And is it a "substantial deterrent"? Hard to say, but I wouldn't presume that to be the case. The empirical evidence is that the rewards to post-secondary education are fairly substantial, and the income distributions of university graduates tends to be centered further up the income spectrum than for, say, high school graduates. So it isn't clear that the risks of going to university are that significant.

While I can't speak to the German experience, in Canada (outside Quebec) tuition fees have increased steadily without an apparent decline in enrolment amongst the poorest households (in part because a good portion of the increased revenue from tuition fees increases was used to fund increased student aid - meaning that the "real" tuition cost for poorer students hasn't gone up or may even have declined).

Also, too many discussions of tuition fees look only at the demand side of the equation. Yes, all else being equal if you increase the price of a university degree, demand will fall. But when you're looking at enrolment, you can't just look at the demand side, you have to look at the supply side too. Increased tuition fees means that, for a given level of public funding, universities can provide more spaces (or better quality education). To the extent that demand (at the subsidized price) exceeds supply (and I'd be curious if the provinces had databases on the ratio of university applicants to university admittances), tuition increases might (perversely) even increase enrolment. On the flip side, a common observation in jurisdictions that have frozen tuition fees is that the quality of the educational experience has fallen (with larger class size, more teaching assistants doing the teaching, decrepit facilities, etc.). One of the critiques of universities in countries like France (outside of a handful of elite universities like the EN) is that the tuition is free and students get what they pay for.

It's worth noting that, according to the OECD, countries like Canada and the United States have much higher university enrolment rates than many European countries with "free" education. And when you look at the OECD financing numbers, it's easy to see why. Canada and the US spend the same (or more) as a percentage of GDP on public funding for universities as do countries like France or Finland or Germany, but universities in Canada and the US can also draw upon a much higher degree of private funding than their European counterparts. As a result Canada and the US often spend something like 50% more (relative to GDP) on post-secondary education than "free" tuition jursidictions, and can provide a better education to more students.

[genauer]

LOL,
I just wanted to add my note, that this study, like most of these, has the problem, that you have to wait a long time, more than a scientists career. So the interrup to early and take measure at age 35 or worse, which means that they underestimate the correlations, mostly badly.

There was obviously the irony lost in translation. Look at this Figure 2. If this distribution would be really that equal, you would be closet communists :-)
A son of a top-tenth decile father having a 50 % chance to end up in the lower 6 deciles?
Even if you would separate the children from their parents at, lets say, age of 6, I would expect a stronger correlation.

In Germany tuition is "practically free" with fees of about 500 Euro per semester, and I didn't complain about the quality of my Alma Mater, the TU Munich. I see it more as a self selection of people staying in a small university close to their home town, lower failure rates because of lower selectivity and less ambitious professors.

And, yeah, we actually do not believe in just raising the number of University grads or having them spend many years there. One reason to change from the diploma to the Bac/Master System (Bologna Process) was, to get the majority to work after 3 years, and not after 6, like before :-).

[genauer]

typo corrections for the second sentence:
So, they interrupt too early ....

[Cornelius]

@Bob Smith: you should read the work of Gintis and Bowles, on education. That might dispel some of your notions about children magically "inheriting" parents' attributes like work ethic and IQ.

This discussion is, unfortunately, lagging about sixty years behind the latest literature - for a starting point, see Mancur Olson.

[genauer]

@Cornelius
Bowles's and Gintis's work came into prominence in British Sociology of Education following the emergence of a famous Open University course (E202 Schooling and Society 1976).Their main book Schooling in Capitalist America (SICA) offered a systematic marxist account of the role of schooling in modern society. (http://www.arasite.org/nbg2.htm)

Looks like the usual Marxist garbage, which uses many words to determine what can not be, and is short on data and analysis. Or did you really read it, and promise it is different. How many systematic plots with what degree of sophistication of analysis ? Please compare it to Herrnstein /Murray.

with respect to your website, I assume you don't want comments on your blog ?
You should take the RAND study, especially the Table from page 141 with a ton of salt.
The Red Army fraction here in Germany simply retired out of frustration, a category which simply does not exist in their catalog. I would say something similar for the provo-IRA. Schematic analysis of mislabeled database entries gets you nowhere.

[Cornelius]

genauer, please let us not descend to ad hominems.

Judge Bowles and Gintis' work for what it is, not for what it is labelled. Their work has appeared in prestigious journals, including the Review of Econ and Statistics? These guys are Harvard trained economists, after all, and very well respected in the profession.

[Cornelius]

@genauer, when undertaking studies of the RAND sort, there will inevitably be controversy over the coding. Yet you cannot simply cherry-pick two examples out of hundreds, and then claim that the study is ultimately flawed. That is just ridiculous.

[Bob Smith]

"That might dispel some of your notions about children magically "inheriting" parents' attributes like ... IQ"

Yes, the magic of genetics. Cornelius, there's an abudance of research showing a strong genetic component to IQ.

In any event, nothing like be damned for the staleness of my knowledge by a guy citing a 36 year old book.

G

[Bob Smith]

Getting back to the original topic, I saw Finnie and Mueller had an interesting article on tuition fees in today's Globe, making many of the same arguments I make above (ttp://www.theglobeandmail.com/news/opinions/opinion/tuition-isnt-the-problem/article2419410/), though obviously much more articulately.

[genauer]

@ Cornelius

1. I dont think anybody would see the "marxist garbage" as an ad hominem ad you. It was certainly not meant this way.

2. After you introduced Bowles and Ginni, I somehow clicked on your website, and found the contrast with your RAND reference interesting enough to click on that too :-)
I have no problem with them, actually bought some of their studies (e.g. Fukuyama, Virtual Corporation) and dont buy into left wings calling them right wings :- )
I did not spent much time with it, just looking up the first thing, which came to my mind, our home grown ex-Terrorists, I know about (I gave my first paper/talk about them nearly 30 years ago) and found that at least very misleading. I looked up the second next thing the p-IRA, and then the potential classifications as missing a very important option, the retirement /flame-out, which quite frankly is the most prefered option in many cases, from my long ago carefully considered point of view. 3 things looked at, in about 5 minutes, 3 found wanting, definitely not cherry picking, one last look at the content page, and closed. Worth a short and specific comment for you, to be careful, and I think my wording reflects that properly in this case. In general, sometimes I am a little sloppy with the wording, I have no problem to admit that, especially not for quick quips in blogs.

3. That some folks got tenure in an ivy league institution like Harvard, does not mean, that I have to bow down to their authority, if they say or write nonsense. If it helps you with "authority", I was repeatedly skying, discussing etc with half a dozen nobel prize winners.

4. Proposal:

You come up with
- one or two papers or (small) chapter of a book,
- I can read somewhere wihtout buying,
- from somebody who was, like Bowles, called "marxist" not by you
- which YOU would called "good science"

Looks for me like a constructive way forward

5. But until then "marxist" gets from me the default attribute "most likely garbage"
I have seen this too often. In eastern Germany we had whole departments full with "scientific marxism", until 20 years ago.

[DavidN]

Bob Smith and Mandos,

Yes, 'there's an abudance of research showing a strong genetic component to IQ' but there is also research that suggests heritability is correlated with income, i.e. environmental factors can be major factor for people from lower socio-economic background. Here is a recent Lateline (a news program in Australia) segment on new research into brain formation during a childs first few years: http://www.abc.net.au/lateline/content/2012/s3478797.htm

To quote, '[T]hese sorts of things have a huge impact on your development and they overwhelm your genetic potential. Genes are not expressed in an adverse early social environment'.

With respect to fee funding for university education, here in Australia we have a income-contingent loan system where students incur a government 'debt' but effectively you have no obligation until you earn income (see http://en.wikipedia.org/wiki/Tertiary_education_fees_in_Australia). It has two main benefits:

1. It’s not as regressive as full public funding of university fees. The people who would benefit most from university education will also be the ones who incur the cost of it (over time);
2. Like it or not, people from lower socio-economic background have a greater aversion to debt and this effectively works as a barrier to social mobility. The income-contingent system works to ameliorate that effect by relying on time inconsistency/hyperbolic discounting. The obligations under the student 'debt' only kicks in once the person starts working and even then it’s progressive as the payment is in form of higher income tax rates (higher income, the higher the student payment);

A con is that the federal government regulates university fees (ie. acts like a price ceiling) but I don’t necessarily think that’s terrible given the fee inflation in recent decades in the US.

You can argue that you can achieve the same objective as the Australian system through targeted programs but I think our system strikes the right balance. The problem with targeted programs (presuming they’re means testing on households) is that individuals aren’t households i.e. students may be from high income household but that doesn’t guarantee parents will support them financially. Secondly, I thinks it’s more effective to serve progressive objective through the income tax system rather than ad-hoc. Third, our system reduces down side risk but incentives are still aligned to discourage waste.

[DavidN]

Forgot to add,

To sum up, our system preserves the objective of reducing barriers to social mobility but avoids or ameliorate regressiveness fee funding.

[Bob Smith]

DavidN,

I think the Australian system has a lot of points in its favour. In fairness we often have informal arrangements that achieve the same effect (i.e., relief programs for student loans linked to income - when I went to law school, my school had (and still has) a program by which they would forgive principal and interest on a portion of debts for graduates whose income fell below certain threshold). They're different structures, of course, but they have similar implications to the income-contingent loan repayment system (although they can be criticzed for being ad-hoc and, in some cases, discretionary).

Certainly, I think a big point in favour of the Australian system (or any system that bases repayment on future income) is that it links subsidies to future income, rather than parental income, which I think is fairer (both because, as you note, parents may not support their childen and because it's not entirely sensible to be subsidizing the future wealthy). Subsidizing the education of future corporate lawyers because they came from modest backgrounds, doesn't make sense - helping them to finance their education, so that they can access their higher future incomes does.

But, both you and I are light-years away from the Quebec student protestors.

[genauer]

The Globe and mail sounds pretty reasonable to me,
although I would be happy, if you, Bob, had some references to numbers handy for some of the claims made in this newspaper article.

To add some more german stuff to this primarily Canadian discussion:
For 40 years, in socialist eastern Germany, strict university quotas were given to farmers, workers, and intelligentsia,
significantly independent of scores. Incomes were very equal. But still you can see in many personal examples, how this family cultural imprinting dominates later "intellectual achievements".
in lack of a better description of that.

@DavidN

The more I look at this, Germany looks like a socialists paradise.
In Germany tuition is practically free (< 1000 Euro per year),

and the Government provides loans for consumption !
http://en.wikipedia.org/wiki/Student_loans_in_Germany

and as comparison
http://en.wikipedia.org/wiki/Student_loan

One question to both Bob and David:
how difficult is it to get Grants ?

When I was young, in Germany that was for something like the 1 % best grades.

@Cornelius

please take a look at http://www.marxists.org/archive/marx/works/download/Marx_Mathematical_Manuscripts_1881.pdf

Marx is endlessly trying to understand differential calculus, 11th grade math, never ever gets to the point of integrals, integro -differential equations. The whole point of Langrangian Operators, basically developing beyond Leibnitz, Newton 100 years earlier.

The failing 11th grader is so full of shit, hyperbole, that he utters his tiny little baby steps as relevant for anybody else. Painstakingly, again and again, writing every little trivial step down like a revelation.

page 227: "He set himself the task of providing a foundation for analysis dialectically, relying on unity of historical and logical aspects" because the things he couldnt understand, he declared "mystical".
page 228: "Marx reproached Lagrange" (one of the leading math genies of the world at that time)
page 229: " Marx critizises (textbook editors)"

Just read the whole thing to understand the whole hyperbole of this marxist language and the people who were forced to see something relevant in this garbage.

[DavidN]

genauer,

As long as a university admits you to a CSP (Commonwealth Supported Place which is pretty much the majority of university places excluding places for international students) you’re funded by government. It effectively works as universal funding. Bob and me agree on this point, we don’t see free tuition is a positive because university fees paid for by government is a form of regressive taxation.

With respect to Bowles and Gintis while they may have been former marxist (AFAIK both Bowles and Gintis are critical of marxist economics these days), they have a lot of insightful things to say. Forget about their politics and read the substance of their research.

[Jon]

Determinant, I would suggest looking for a job in the US. In fact there is a shortage of power engineers in the states. Most of these positions are at utilities; the market is very fragmented so there are many employers.

Good luck.

[K]

Bob,

"Certainly, I think a big point in favour of the Australian system... is that it links subsidies to future income"

Well that gets us *half* way there. But unless it's the universities, and not just the public, shouldering part of the burden of failed careers, they still won't give a crap whether all that art history knowledge is helping you flipping burgers. What we need to do is to make a significant portion of university revenues derive from a fraction of their own graduates future earnings. 18 year olds who come from working class families have literally no idea about their future prospects. They, and their parents, believe that a world of opportunity has been opened up to them by virtue of having been admitted access to such a glorious institution. Changing their "incentives" through debt will do literally nothing to change their behaviour. If you want to make a material change you have to end the universities' rent-seeking, gate-keeping, stamp fee-collecting addiction, and actually make them give a damn about what happens to the kids *after* they get their degrees.

If we, as a society, need lots of taxi driving anthropologists (maybe we find it funny!), fine, lets pay for it. But don't scam some poor kid and his parents into indulging our entertainment.

[Bob Smith]

"you, Bob, had some references to numbers handy for some of the claims made in this newspaper article."

I don't have anything off hand, but I know Ross Finnie has a done a fair bit of work on university enrolment for Statistics Canada, and his research there is generally available on their website. My recollection is that the article summarizes his accumulated research on the point.

In terms of grants, most universities and governments have (generally) moved to needs based assistance, rather than assistance based on grades. I couldn't tell you off the top of my head how many students receive grants, bursaries or some sort of financial aid (and it probably varies from program to program), but certainly much morethan 1% of students receive aid of some magnitude. If someone told me 20-25% for your typical undergrad program, I wouldn't be surprised.

[Nick Rowe]

I gotta echo DavidN on Bowles and Gintis. Very strange sort of Marxists, if that's even what they are nowadays. Trying to build in methodological individualism, for example. One of them (Gintis?) does really good book reviews on Amazon.

[Bob Smith]

"But unless it's the universities, and not just the public, shouldering part of the burden of failed careers, they still won't give a crap whether all that art history knowledge is helping you flipping burgers."

That's a fair position to a degree, and you do see some programs do something along those lines (as I mentioned, my law school had a debt forgiveness program of its own, in which the law school in effect took on some of the economic risk). In some cases, it enrages me to see some universities increasing enrolments while their graduates can't get jobs (I don't know if it's changed now, but a few years ago, the UofO faculty of law was jacking up enrolment while a significant chunk of its class, 10-15%, couldn't secure articling positions. In the US some law schools have been sued, with some justification, by their graduates for misrepresenting the job prospects of graduates).

That being said, I can see a couple of counter-arguments. First, I think it's fair to say that a university education offers more to society than just higher salaries (in fact, if you believe, as I do, that a great deal of the premium associated with university graduates is a function of signalling rather than increased productivitiy, it's questionable whether they even do that). I mean, let's face it, a fine arts degree has never been a big money maker, but that doesn't mean that whatever skills come out of that degree don't have some (albeit, non-market) value to society. So, to that extent, it doesn't make sense to have universities bearing the risk (or even certainty) of low incomes after graduation. Also, since post-graduation income is function of graduate behaviour, it's not clear that the university should bear the risk that I'm a lazy lout.

Second, and I admit this is old fashioned, but the lack of accountability of universities is what makes universities, universities. They're supposed to be intellectual institutions, whose occupants focus on the pursuit of ideas. That their graduates may or may not be losers is really secondary to their primary goal of figuring out whether Aristotle was right or Newton was wrong.

What I think we do need is better information for would-be university students. As the securities lawyers say about prospectuses, disclosure cures all (and the comparison isn't so silly, a post-secondary education is an investment of time and money. Maybe UofT should have t send would-be students a prospetus setting out risks associated with their proposed investment). If someone's running up a $40K student loan in pursuit of a sociology degree on the theory that he'll be making $90k when he graduates, someone had better disabuse him of that notion post-haste. If, with full information, he still wants to pursue a degree in sociology, hey, university students are responsible adults, they can make informed decisions. Also, to the extent that we're subsidizing post-secondary education, there may be something to be said for providing that money to students, rather than to universities, if only because it might make universities more responsive to student demands (i.e., if students are paying the bills through tuition using government money, unviersities are likely to be more responsive to their demands than if the students are payin 1/3rd of the bills, with the government giving the university the difference).

[genauer]

Now, before we get into nature-vs-nurture debate Nr 127,
could we take a very short gut-feelings poll ?

How much of "general ability / g-factor / IQ" does everybody here attribute to the various factors?
No evidence / references / just quick gut-feeling !

I say each 1/3
genes ,
environment (education, family upbringing) ,
random/ noise.

Or to incite your creativity:
1/6 each
former generations gene pole ,
first generation (mom and pap) phenotype,
familiar education,
public education,
luck of getting into the right school / university /circumstances,
other random / noise

I think we should not be that far away.

How this than translates in a second step into real lifetime earnings,
and in a 3rd step into good policies, should come after that.

For those, who did recommend reading this Bowles / Ginni,
I would be delighted to hear from, what those 2 (ex-Marxists?) say.

Should not take anybody more than 1 single minute.

PLEASE !

[K]

Bob,

"First, I think it's fair to say that a university education offers more to society than just higher salaries"

Excellent argument for society paying some (more?) of the cost. But it has nothing to do with the question. The question is what part of the student's contribution to the university should be fixed tuition (typically debt financed) and what part should be an equity stake in the student's future earnings.

"the lack of accountability of universities is what makes universities, universities."

And how should we fund the cost of obtaining this social benefit? a) Naive children of working class families should pay for it, or 2) society in general should pay for it?

"What I think we do need is better information for would-be university students."

"hey, university students are responsible adults"

They are 18 and they are super-naive. All of them think they are *special* because wherever they came from they *were* special. Almost everyone who posts or comments on this blog came out of high school thinking they were very brilliant, elite and special, because in their high school *they were*. They have literally *no idea* how they rank in society in general so they have every reason to believe that they will be the next Marshall McLuhan, Charles Taylor or whatever. Well they ain't, but you aren't supposed to stop them from dreaming. That's what being 18 is supposed to be about. Universities exploit these dreams by jamming undergrads into massive classes, and taking in vastly more masters, phds and postdocs, than can ever achieve tenure and funding the scheme via the kid's leveraging their  futures. It's like pro sports for smart kids. Waste your youth here, kid!

Why are you so averse to shifting *some* of the risk onto those who are living super-awesome lifestyles at the expense of these kids and society in general (tenured profs, in case that wasn't obvious). The silence of the tenured staff around here is deafening. Don't want to insult your burger flipping training colleagues in religious studies?

And in case anyone thinks I have something against sociologists, I don't. But I'm not in favour of enabling kids who dream of becoming one, and who should not be expected to voluntarily surrender their dreams and hopes, to leverage their futures away. These kids are *supposed* to believe they can do anything. If *we* want more sociologists, then *we* better be prepared to pay for it.

It's a scam, Bob.

[Bob Smith]

"They are 18 and they are super-naive".

They're 18, the can enter into contracts, they can vote, they get criminal records when they commit crimes, and they can join the army and see the world (and kill people). They can make responsible decisions. And we should expect them to make responsible decisions. (Usually at this point I'd go into a rant about the next generation of 25 year-old teenagers, but I'll spare you).

They should be given better information so that they and their familes can make informed choices, no doubt about that, but ultimately the decisions are theirs.

"Well they ain't, but you aren't supposed to stop them from dreaming"

Says who? Damn right we should stop them from dreaming, at least if the dreams have no relationship to reality - welcome to the real world kids. Your actions have consequences, and you have to live with them, so start choosing wisely. That's the downside of adulthood. And if you want to chase those dreams, great, but there are risks.

"Why are you so averse to shifting *some* of the risk onto those who are living super-awesome lifestyles at the expense of these kids and society in general (tenured profs, in case that wasn't obvious)."

Just to be clear, I firmly believe that the life-style lived by tenured faculty hired in the 60's and 70's is on its last legs (and one need look no further than the rise of contract instructors, and the pressures on university pension plans, to see that). I suspect few people have any illusions about that. And certainly, if universities collected their funding from students rather than governments, we'd see an increase in competitive pressures on the part of universities to keep costs down ("Hmm, 3 classes a year? Try 5. Sabatical every few years? Yeah, maybe not.") - frankly, that's only a matter of time one way or the other. And who knows, maybe a university might offer a "money back guarantee" to its graduates to attract students.

But that's not the same things as saying that faculty or universities should bear risk associated with the employment of their students. It's hard to see why universities should bear the risks associated with the bad choices of their students - they're not insurers.

[genauer]

@ Bob, and all

My general picture, substantially reenforced during the last 3 years with some systematic research, is, that the very most people are nothing but "homo economicus". The most, and even very educated people like PhD & MBA are mainly driven by very crude rules, family habits, very crude pictures.
And that trying to overturn that with facts, calculations, scientific evidence, is a tough thing.

Real world rules have to work with mostly not so clever real world people. In countries like Canada and Germany we do not let people die from hunger or disease, because they miscalculated or forgot to pay their health insurance. In the end the taxpayer picks up the tap, somehow.

You can interpret wage based universal insurance schemes like Bismarck / mainland Europe (just to tease Determinant a little bit) also in a (somewhat negative) way, that you take by government tax force the money for certain serivces, while you can, because you will provide the services to them somehow in the end anyways.

For quite a while I did subscribe to the classical exogenous (Solow like) long term growth model, as exemplified in the epic Goldman Sachs Nr 99 paper (BRIC). Which would mean, with a little Keynes in between (unhistoric, I know : - ) that Germany should "lend freely" to the GIPSIs.

Most people forgot the rest of Bagehots sentence "against good collateral and at a steep rate".

Going through the false data analysis, that edifice was built on, I converted recently to a very, very endogenous point of view. Forget about the savings / capital data, focus on nation / community / rules building.

Like "Arrival City", "Why Nations fail", and for Europe a die hard Bundesbank approach, Ordnungspolitik :-)

Politics have to be very simple, open, long term stable, easy to understand, to enable the 99% to make good choices.

I can and do VaR / Stress testing of my (life time) strategies, but I am still waiting to meet one single person outside the financial sector, who can do this really (like quantitately), the very most can not do this even schematically.

I do second "K" that this Feeling of specialness is not good, but dangerous.
I was told age 1.x to do equal kitchen duty, carefully, http://www.slideshare.net/genauer/stollen-11956034
(that when you want to get to the sweet dough early, you have to be creative, I figured on myself)
I was one of 3 in the family, 1 of 45 in the class room, 1 of 400 in the entry level lectures in an elite University

But to be clear:
The strike is silly, the government should not even pretend to contemplate giving in

And that a university becomes liable to bad choices of students is madness too.

But, as Bismarck, we have to limit the consequences of bad decisions for them AND of society, early on, and not when it is too late.

In Germany, adults are not able to do just any economic decision.

[Mandos]

I...really don't know where to begin with Bob Smith's response to me. I started one last night and deleted it because I couldn't really believe that he would genuinely miss the point so badly, and yet I've been on the internet long enough to know that, yes, it is possible that he isn't just having one over me with his obtuseness.

Really? According to Stats Canada, children from families in the top income quartile are almost twice as likely to attend university as those from the bottom quartile. You want to quibble about whether people in the top quarter of the income spectrum are the "highest income earners", fine, but it seems like a silly quibble.

A silly quibble? Did you completely miss the whole thing about the 99% vs. the 1%? Most of the people in the top 24% have ancestors that were far poorer in relative terms than they are now---a crucial point you simply ignore---and they basically still mostly belong to a modern proletariat whose prosperity is directly linked to the security of their wages.

Well, it is when it's promoting subsidized post-secondary education - specifically it's a charity organization that disproportionately benefts the upper half of the income spectrum. In any event, fine, the left isn't a "charity", it's about helping the poor, great. Kindly explain your reasoning about how subsidizing the wealthy helps the poor.

The "wealthy" in terms of class structure is clearly not the upper half of the income spectrum. Let's take it to its limit: would you apply that barrier to Bangladesh? It's a ridiculous and mean-spirited way to define it on its face.

I didn't say "helps the poor" anywhere at all. I said "ending poverty". You can help the poor by tossing out change on the street. It doesn't mean that there are going to be fewer poor people.

That's because wealth and poverty have to do with political power first and foremost, broadly construed. The power to hire and fire, the power to consume with little worry about how one pleases one's boss. The income distribution is hardly anything other than a reflection of that.

Of course, your comment about the left not being a charitible organization, I think gives away the game. A good chunk of the left doesn't really care about the poor, except as an instrument to achieving their own ideological goals. If subsidizing the rich diverts resources that could otherwise be used to help deserving students, well, hey, when you fell a forest...

I gave away no "game". This is the part I find the most difficult to believe. Almost totally fundamental to a worldview that can meaningfully be called "left-wing" is the suspicion of political and economic practices that reinscribe the existing class structure. Charity---in the form of transfers forced or otherwise to the (very) poor---re-enacts the social relation that produces the poverty it is designed to alleviate. On its own, it creates an escape valve and social release for the very things that create poverty.

That doesn't mean it isn't ever necessary, needless to say. This distinction is well-known on the left, but it's not even just a left-wing thing.

That's why...

Funny the left's fixation on universality in terms of government spending. I wonder if giving money to the wealthy was what Marx had in mind when he said: "From each according to his ability, to each according to his needs" ("Hey, man, I need a new polo pony"). I doubt it. The irony here is that in this instance, universality harms the well-being of the poor by diverting limited public resources to people who don't need it.

...universality is so important.

People quote Marx out of context. That was at the end of a passage (you can look it up in Wikipedia) where he was clearly referring to the "end state" of his historical process.

Universality is the means by which the more moderate left has attempted to ensure social stability and allow the social-democratic/liberal welfare state to remain in balance. Recognizing that hard-won gains of labour did not lift everyone out of (relative, needless to say) poverty and (relative) exploitation, universality maintains the support of the "winners" from the improvements of the conditions of (some) wage labour for the provision of public goods.

The chipping away of universality has created a mindset of "kicking the ladder out from under them" and the return of race-to-the-bottom politics whose ultimate end is in reactionary movements and an increasingly unstable global political situation. We are seeing a gradual rise in reactionary European politics as a result of this. The Tea Party in the USA is another instance of it.

Surely it should be self-evident, even to you? The same people who run around damning tax cuts that disproportionately benefit the rich as regressive give-aways to the well-to-do (and fair enough) then go to the barricades over government spending policies that have the exact same distributional implications (without even the gloss of an efficiency rationale), namely to give money disproportionately to the rich, on the grounds (incorrectly) that this is a progressive policy.

This is so narrow minded, again, I don't know where to begin. This kind of analysis is what makes people call economics "autistic" (which I don't like as it is a potentially pejorative mischaracterizaton of autism, as an aside).

Free education provides things like, oh, a population that was able to pursue an education that most suited their interests and talents without creating the sort of coercive ties and debt-obligations that we are in the process of creating for many of the people you are calling "wealthy". It was one of the ways in which we elevated many people to relatively greater prosperity and liberty. It represents particular social values that bind together the wage-earning classes, and is probably one of the factors that have allowed them to bargain up the price of labour from Big Capital.

Tax cuts for the 1% do nothing of the kind.

[Mandos]

And like I said, this whole discussion of wealth transfer ignores the actual history of class structure. The purpose of raising tuition has never been advertised by governments as a way of reducing transfers from the poor to the (formerly poor) middle class. It has always been justified by claims that "we cannot afford" what the wage-earning middle class has won in terms of its quality of life. It's actual effect is simply another one of the many things that have been undermining these gains. Rather than elevate the poor, we are going to return the (relatively recent) middle class to the ranks of the relatively poor.

Only, it doesn't work that way. Or it doesn't work that way without a lot of reactionary politics and blood and tears.

[Determinant]

Anybody read Paul Krugman's new book, "End This Depression Now!" I love the title. Very daring for a modern economist to use the d-word.

[Bob Smith]

"Charity---in the form of transfers forced or otherwise to the (very) poor---re-enacts the social relation that produces the poverty it is designed to alleviate. On its own, it creates an escape valve and social release for the very things that create poverty"

Yes, far better to immiserate the poor to create a revolution. As I said, sacrificing the poor in the name of ideology.

"Free education provides things like, oh, a population that was able to pursue an education that most suited their interests and talents without creating the sort of coercive ties and debt-obligations that we are in the process of creating for many of the people you are calling "wealthy"."

Actually, "free" university education does absolutely nothing of the sort. This is the sort of fact-free analysis and wishful thinking to prevalent of the modern left. In fact, the experience of countries with "free" education, is that they invariable have lower levels of post-secondary enrolment, and less opportunity for students to pursue their interests. Indeed, it's worth noting in the context of this discussion, as Ross Finnie pointed out in today's globe, university participation rates are lower in Quebec than they are in other Canadian provinces. But why let facts get in the way of good ideology?

"The purpose of raising tuition has never been advertised by governments as a way of reducing transfers from the poor to the (formerly poor) middle class"

Tsk, tsk, tsk. Gee, why have governments never advertised raising tuition fees as a way of reducing transfer to the upper-middle class? This should be a no-brainer for someone who purports to be familiar with the class structure of moderns western countries. Could it be that governments aren't too keen on pissing off politically powerful upper-middle class families? Nah, couldn't be. In any event, we should look at the merits of the government policies, not the lies politicians tell to justify them.

The "wage earning middle class". Ha! You must have missed the fascinating discussion we had last year about the wage-earning upper-class, namely how the great increasing in the income of the 1% has been largerly driven by labour income. Marx won, labour controls the means of production, capitalist (i.e., retirees and their pensions plans) got shafted. How's that working out?

[DavidN]

'Free education provides things like, oh, a population that was able to pursue an education that most suited their interests and talents without creating the sort of coercive ties and debt-obligations that we are in the process of creating for many of the people you are calling "wealthy". It was one of the ways in which we elevated many people to relatively greater prosperity and liberty. It represents particular social values that bind together the wage-earning classes, and is probably one of the factors that have allowed them to bargain up the price of labour from Big Capital.'

As I’ve been trying to point out above you can achieve the same outcome through government income-contingent loans without subsiding the better off. The problem with free university education is that it overwhelmingly benefits the wealthy. The money to fund free university education has to come from somewhere e.g. primary/secondary education, health, welfare programs etc. So do you really want a policy that takes money from other progressive policies to fund one which is regressive?

[Baris K]

I believe Mr Boisvert is thinking of the returns (not costs) when he says that the students of medicine pay only 10% of their training. Here's what's wrong with his arguments:

1. Those kids are smart, motivated and hardworking. They would have fared better regardless of their education, i.e. Mr. Boisvert's reported proportions suffer from ability bias.

2. Because of 1, it would be a terrible idea to make the contributions proportional to returns. Why would the government want to tax the education of the smart and hardworking while encouraging low-return schooling investments? Does Mr Boisvert mean to say that it would be fair to make fees proportional to costs?

3. All in all, flat fees may not be too bad after all. For such majors with lower returns, the student contribution better reflects the cost of education. Therefore students' decisions are aligned with the opportunity cost. Meanwhile, flat fee would provide a form of "subsidy" for those with higher economic returns. Well, I'm not saying this is necessarily efficient, but at least the government gets back part of the investment yield back in taxes.

As for compensating differentials, I think they are counterfactual. It is true that if students were indifferent across majors, an across-the-board fee hike would put some students from each major out on the streets. Since we don't see this, there must be another reason, perhaps the cliché, that can explain the disproportionate representation of majors among the boycotters. So Mr Boisvert could have been wrong. But I find the CD assumption real hard to swallow, and, hence, Mr. Boisvert's explanation more convincing.

[genauer]

Determinant
Krugman's book is according to the reviews, positive and negative, just the same old story.
Party tonight, and don't care about the law, tomorrow, and who pays for that.

Norbert Walter says it best: “I can’t stand this rubbish anymore,”
http://www.bloomberg.com/news/2012-05-02/krugman-wishes-he-was-wrong-amid-eu-austerity-backlash.html

I am interested in international trade and urbanization / spatial concentration of economic activity,
both areas, where Krugman has supposedly contributed significantly, according to the Nobel committee.
So I read his papers, and then thought, hmm and how do I translate that into making any kinds of predictions in the real world. You cant. He very carefully avoids any contact with the real world.

http://www.nber.org/papers/w17067
"Despite his Nobel Prize, there have been no tests of this idea. This paper
represents the first such test."

Hugh ? 20 years after Krugman 1991, people finally find some data set, that they can mangle, steam, fry and mangle again, to finally get at least the sign of a predicted effect right.

It makes economics look more like a cargo cult than a science.

[Determinant]

"Determinant, Krugman's book is according to the reviews, positive and negative, just the same old story. Party tonight, and don't care about the law, tomorrow, and who pays for that."

Except the Austerity Plan isn't working, as predicted it is inducing a slide back into recession or a worsening of a country's recession. Sure it repeats what has already been said, Krugman's point is we haven't listened to what was said and needed to hear it again in loud and plain language.

Further, it is strange for a German to argue against stimulus and Keynesian policies when the present wealth of Germany owes much to the Marshall Plan paid for (through deficits) by US and Canadian taxpayers (Canada had a smaller counterpart plan as we were in the same economic position as the US). Even stranger when Germany benefited from the forgiveness of its Versailles reparations obligations until 1991, that debt was purposefully suspended in 1945 as Germany was patently unable to pay. The specific clause said that reparations would not resume until Germany was united and a final peace treaty signed, something that did not happen until 1991. The Versailles debts were settled last year when in true Keynesian fashion Germany's economy had grown to the point that they were trivial.

I cannot understand a German not understanding the value of reconstructing debts and letting the debtor grow his way out of them when Germany benefited greatly from this very strategy.

[Anonymous civil servant]

My comment yesterday never made it... Among other things, I wanted to point out (to e.g. DavidN and Baris) that the problem with the notion of students paying back later, true income tax or the Australian system, is labour mobility. The debt/taxes are owed to the Quebec government; nothing stops a student from taking advantage of subsidized education in Quebec, then moving to another province. There no recourse for Quebec to get its money back - especially if we simply expect to recoup it through income taxes paid by high-income earners. Look at all the specialist doctors we train at great costs who then move to Ontario for its obscene salaries...

Serious fee hikes adjusted to the real cost of education, WITH a seriously improved financial support system for students, may indeed be the only way to go.