One of the difficulties of being a reformer lies in the unexpected outcomes, outcomes that you might not have wanted.
Back in the late 1980s and early 1990s my then Armidale based research group (Aymever) did some work on education as an industry. At the time, education in Australia was regarded as a Government service. We argued that education was moving towards a traded service, that looking at education as an industry with the important elements of structure, conduct and performance could yield important insights.
We also argued in favour of greater competition as a way of improving service delivery. This was, we suggested, inevitable in any case, but would also improve performance. We also suggested that education would move increasingly towards on-line delivery.
Now I look at some of our earlier work with a certain wry amusement. You see, much of what we suggested has happened, but in a way that we might not have wanted. Bear with me in this short muse if I look at some elements of this. I just want to get the patterns down.
One of the central elements in market theory is that businesses rise and fall to the extent that they meet market demand. If a university operates in a competitive market place and is treated in the same way, then it logically follows that some universities will rise and fall. But what happens if it is your university that falls?
A second central element in market theory is that market forces will redistribute resources so as to achieve best returns. But what then happens if it is your area that is disadvantaged?
The concept of perfect competition is deeply embedded in market theory. In fact, we all know that markets are not perfect. However, the ideal of perfect competition remains strong. So what then happens if there are market impediments that lead to distorted results? That is certainly the case in education services.
Finally, what happens if there are externalities not properly captured by the market? Again, this appears to be the case in education services for education serves community as well as individual needs.
I said that I looked at our earlier work with a certain wry amusement. You see, many of my current concerns with education in general and higher education in particular centre on just those questions that I have listed above, the unexpected results.
You can look at what is happening in Australian education in many different ways. Much policy analysis focuses on desired results as defined by policy makers. That analysis centres on the question of what policy makers want, how do they achieve it. Much of the analysis actually ignores the dynamic interactions created by the policies and regulations themselves. To use economic jargon, it's a case of comparative statics.
Just as we first argued back in 1988, to really understand what is happening in education, you need to look at education as an industry independent of Government policy. Government policy is central to industry dynamics, but from an industry perspective it is an external factor. Government is a funder, a purchaser, a regulator, but it still sits external to education as an industry.
Even today, there is remarkably little analysis of education as an industry. If you look at most discussions about future directions within the Australian education industry, it all comes back to aspirations and targets. The techniques developed in industry or market economics are rarely applied. As a consequence, the economic dynamics within the industry are poorly understood. Everything is changing, and the likely outcomes are poorly understood.
In a strange way, the Australian education sector is a bit like Australian manufacturing in the 1960s. Highly regulated and protected, it is now subject to fundamental structural change processes whose results are quite uncertain.
I would go so far as to say that much of current policy discussion on education is fundamentally flawed because it is built on shifting sand. We have no idea what our education sector will look like in five years, let alone ten years. Governments are making decisions all the time in isolation from each other and from industry trends.
I have been watching and to a degree writing about the process with fascination, but also with a sense of frustration.
Let me illustrate with a very simple example.
Education exports have been the only real success story on the service industries side. Those exports have allowed cross-subsidisation of domestic education. Yet policy decisions made for domestic reasons have badly damaged export activity. By contrast, New Zealand has been taking deliberate action to make it easier for overseas students to study in that country.
We discount New Zealand because of its size. Yet relative to the size of that country, it has actually done far better than Australia in the education export market. Further, its international sector is growing at a time when ours has stalled.
To put this in perspective, New Zealand is under a quarter of Australia's size in population terms. As best I can work out, its international education sector is a bit under half of Australia's.
I said that this would be a short muse. I guess that you can expect me to return to the issue because I am seeking to understand what the dynamics mean not just for the sector as a whole, but for the areas and institutions in which I have a particular interest.
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