Monday, June 23, 2014

Monday Forum – disruptions & conundrums 1

I am, I fear,  a very confused person. Today’s forum demonstrates that! Feel free to roam in whatever direction you wish as a consequence!

Disruptive Innovation

Comments on Rear Vision - The Market for Higher Education, drew us into the current debate started by Jill Lepore in the New Yorker. These pieces will give you a feel:

In a comment, Winton wrote:

It seems to me that it is futile to attempt to argue that any particular business model is best under all circumstances. In some circumstances disruptive innovation is desirable. In other circumstances continuous improvement is desirable. In some circumstances there may even be virtue in going back to the old ways of doing things.

In a sense, that was part of my point. You can’t, but people do just that and at a cost.

How do we stop the blind application of models regardless?

Mr Abbott (and Winton’s) Bravery

In a post, How can desirable economic reforms be pursued more effectively in Australia?, Winton came to a partial defence of the Howard/Hockey budget. He said in part

Perhaps I should apologize to Tony Abbott and Joe Hockey. The government has made some tough decisions in its first budget. I don't endorse everything they have proposed, but it is good to see a government proposing action to deal with a looming problem before a more painful adjustment becomes unavoidable.

So just following up on Winton, what were the good features of this budget?

Education for National Efficiency

The second half of the nineteenth century saw significant expansion in technical and adult education, driven in part by the ideal that such education provided a vehicle through which ordinary working people could advance themselves. In a way, the Scottish/American philanthropist Andrew Carnegie exemplified this trend. Born in 1835, Carnegie was a self-made man who built a huge industrial empire.  In  1901 he sold his steel company to J P Morgan and devoted the remainder of his life (he died in 1919) to large-scale philanthropy, with special emphasis on local libraries, world peace, education and scientific research.

Carnegie believed passionately in the power of education for the ordinary man and in self-help. His interview with Napoleon Hill forms the basis of How to Raise Your Own Salary, one of the early and still very popular self-help books,

In his philanthropic work, Carnegie focused on building infrastructure and especially public libraries. His work continued after his death. In New South Wales, for example, the creation of the public library system during the 1930s was facilitated by Carnegie support.

Just as Carnegie was launching his philanthropic work, a new trend in technical education was reaching a peak. This was education for national efficiency. Driven by European power rivalries and especially the rising power of Germany, this was education and especially technical education for national economic and political power, a vey different concept from education for individual advancement. It had profound effects.

Which to your mind is more important, education in the service of the state for national efficiency or education for individual advancement?

The New Zealand Model

Back in 2006, in Changes in Public Administration - the New Zealand Model, I looked at the flowering of a particular approach. When these ideas first emerged, I was attracted to them and studied them, visiting NZ on multiple occasions.  I can still their relevance, although I feel that they have been misappropriated. Is the NZ model still relevant? Why?

I was going to give further examples to encourage discussion, but that’s enough for a start. 


Winton referred to this speech by Minister Pyne. Address to the Committee for Economic Development of Australia (CEDA), 16 May 2014, Adelaide. I have added it to extend the discussion.


Winton Bates said...

I am not sure where to begin. Perhaps the notion of education to pursue national objectives is as good a place as any. I think the question to ask is what are the national objectives that are not reflected in the interests and aspirations of individuals.

It might make sense to argue that the government needs people with particular skills in order to fight a war, but that is quite similar to a major firm deciding that it needs people with particular skills (e.g. engineers) and offering scholarships to people to acquire those skills.

I suppose there are some basic skills that people need to function as citizens - but it is getting late, so I will end here and see if I can still prove I am not a robot.

Jim Belshaw said...

Good morning, Winton. You get words and then the perceptions that lie behind the words.

The perceptual shift in the education case shifted the weighting from the interests of the individual to that of the state. This shift had all sorts of effects and is still with us today in the Abbott Government.

Carnegie believed strongly in the importance of individual endeavour. His focus was on making it easier for the individual to succeed, to overcome the barriers that prevented advancement. He was also something of an internationalist.
On libraries, for example, he supported them because of their contribution to the individual. He would have found the idea that spending on libraries could only be justified because of some contribution to national growth as very strange.

Winton Bates said...

Sorry Jim, I am having difficulty understanding what you are referring to when you say that the shift from the individual to the state in education objectives still with us today in the Abbott government. I think the shift has gone the other way. I went looking for statements along the lines "As a nation, we must ensure that we have more engineers etc. ...." in Christopher Pyne's address to CEDA following the budget - and didn't find any. It is full of sentiments along the following lines (which I endorse): "In the best higher education system in the world students could choose to study where and what they want, and universities and higher education colleges would have the freedom to provide the very best education in the world to meet the needs of their students".

Regarding libraries, I guess your reference relates to reduced funding in the NSW budget. I haven't see anyone attempt to justify the cuts on the basis that this would make a positive contribution to national growth - but I haven't gone looking to see how the cuts have been justified. On a personal note, I have observed that when I visit libraries my interactions are increasingly with machines rather than lovely library ladies. I guess the funding cuts will promote further efficiency measures along those lines and thus reduce the non-economic benefits I obtain from visiting libraries. However, I am not sure that it is the role of the state to provide me with pleasant social interactions, whether in libraries or in supermarkets.

Anonymous said...

My problem with the Budget is less the boldness of the decisions than the correctness of them. By reducing our tax base, the Budget will return to surplus later than if the Government had done nothing. It therefore implies a heavier public burden which as I understand it directly contradicts the stated justification for most of these measures.

I am with Winton on the Education budget. Mr Pyne's talking points appear to have been drawn uncritically from the US - a genuine application of the one-size-fits-all philosophy, but disguising the fact that the universities themselves do not have the flexibility to implement large price-raising regimes.

Winton Bates said...

You make a good point about the carbon tax. Some of the spending increases are also difficult to justify in my view - except in terms of keeping election promises.

However, the government has tackled some of the rapidly growing areas of spending that pose big problems over the next few decades. I think they deserve praise for attempting to introduce reforms in those areas now, rather than allowing people to become increasingly dependent on government, until an economic crisis forces savage cuts to be made.

Anonymous said...

You are talking about "higher education" as if your definition of that is the same as Pyne's; he's moved (thus wedged?) the argument - you should be talking about 'tertiary education' and why one branch/stream deserves more support than another. Like (I think?) Winton, I can't see much justification.

Which to your mind is more important, education in the service of the state for national efficiency or education for individual advancement?

A badly put question. Allows for no recognition of both - or at the least that 'individual advancement' might feed into 'national efficiency'. I'd say "both" are more important than "neither".

And also anon, I can see nothing bold in the budget, if by "bold" you mean strikingly different to that which was hinted at prior to the change of government. Actually quite boring really: stiff the poor and powerless, empower the rich - what else did you think was on the cards?


Anonymous said...

Winton, to be clear, the above 'anon' was not mine.


Evan said...

I think education for citizens and training in line with national objectives.

I do think Australia will need to choose where to head. This will mean some industries (e.g. renewables, medical technology, education etc) and not others.

Jim Belshaw said...

Picking up comments as I go along.

Winton, on libraries, I wasn’t referring to any budget; my focus was on the reasons behind the library movements that led to the establishment of the public library system that we have today. I actually focused on Carnegie because it could be argued to support some of Winton’s views.

Jumping forward, kvd, I didn’t understand your comment on higher education. While the first part of the post dealt with Lepore, I didn’t discuss higher education. I was making a general comment that is especially relevant, in fact, to school and especially vocational education.

Winton, returning to you, I have added Mr Pyne’s speech to the body of the post. Before responding, I need to return to kvd. Pretty obviously, I would support a mixture of both. My focus was on the primary focus. It was a consciously put question based on my knowledge of history.

Winton, you have to look at words. What does Mr Pyne mean by best? Best for whom? Best how measured? The measurement against “world standards”, the idea as espoused by the Government that at least a few Australian universities should score high in the world rankings as expressed elsewhere, leaves me cold.

The same holds for the idea that universities and higher education colleges would have the freedom to provide the best education in the world to meet the needs of their students. Leaving aside definitional problems with best, this is market jargon. It means nothing. Or at least nothing to me.

First anon, to avoid confusion among our various anons, pls leave initials!

I think that I agree with you first para, but on the second I think that you have misunderstood Winton. I’m also not sure that I understand your price point. Care to amplify?

Winton Bates said...

Sorry kvd.

Anonymous said...

Jim, I made the comment that Pyne was talking about tertiary education, not simply uni education - and you suggest this was not understandable or maybe not relevant when this post is the latest in a series of posts basically about the changes in our universities? I do of course accept you did not restrict yourself specifically to such in this post.

Then you note for Winton that "you have to look at words". Yet in the very quote Winton used, Pyne himself refers to not just universities - and it was this point I was trying to address, rather than your own writing.


Jim Belshaw said...

Okay, kvd, we seem to have been talking at cross-purposes. More precisely, I have been!

Winton Bates said...

I can't explain what Pyne means by "best", but I can tell you what I think.
I think the question of what is best ought to be a matter to be decided by consumers (with the help of their advisers) and suppliers of services. The outcomes of that process may not be perfect but I think they are likely to be better on average than for the alternative i.e. an assessment made by a government agency.
Pyne suggests that suppliers should have "the freedom to provide the very best education in the world". I take that to mean that they should be free to specialize in whatever segment of the education market they choose. I hope no-one is offended by my use of the word 'market' but I can't think of a better word to use. I don't think suppliers should be prevented from providing a vary expensive product, if that is what they choose, or that they should be forced to provide an expensive product if they want to specialize in providing a low-price product. If they want to provide both a high price option (complete with residential colleges) and a low price option (tuition by internet) that should also be permitted in my view.

Perhaps externalities should also be considered. I think it would be nice if Australia had a university which people in other countries considered to be one of the best in the world. But saying that is like saying that it would be nice to have a soccer team that is one of the best in the world. I would not volunteer to pay higher taxes to achieve such objectives.

Jim Belshaw said...

Kind of suspected that that was your position, Winton. I do intend to have a debate on your views at some point!

But on the specific point of Mr Pyne's views, beyond the market emphasis in higher ed, There seem to be three threads: a world class education system as measured by global benchmarks, including one or more unis in the top group as defined; a focus on the vocational importance of education; and the need for the Government to dictate standards.

Assuming that I am correct, I stand to be corrected her, I am not sure how these things fit with your market choice model.

Anonymous said...

First, to all, apologies for any confusion that I caused. I am anon at 4 and will in future post as '2 tanners'.

To kvd, regarding the boldness of the budget, it had the in-your-face bravery or rashness (take your pick) that I would have thought a graduate of the school of WorkChoices would have avoided like the plague. To be utterly frank, Mr Abbott basically had a mandate not to be Ms Gillard, but not much else. 61% of the population thought it was bad on budget night. That figure has not changed, although his disapproval rating has, and not the way he would want it.

In terms of education pricing, the rating of universities does not change no matter what system is used - the top 12 US universities have been unchallenged more or less since they were founded in the 1800s and the Aussie big 8 have not moved either, despite the founding of Bond University, the Dawkins reforms etc.

The point I was trying to make about pricing is that if you accept that post secondary education is massively and distortingly subsidised and if you accept that in a market that has been freed up by the withdrawal of those subsidies you will have better educational outcomes, then Mr Pyne's arguments might be credible. However, I don't think that Australian institutions exist in such a well funded market. All that will happen is that fewer educational outputs will be produced at a higher cost or our institutions will become more like degree factories than they already are.

I don't think I was making a distinction between types of education. Mr Pyne was, I think, trying to appeal to vice-chancellors of universities but if so, they could immediately tell each of them was going to be worse off and the support he sought was not to be found.

2 tanners

Jim Belshaw said...

Welcome 2 tanners!