HESA

Higher Education Strategy Associates

February 04

Presidential Salaries

One perennial meme in higher education is that presidential pay is sky-rocketing, at the expense of salaries elsewhere in the institution.  Latest example: news from England this month of university heads getting raises of $30-40,000, while opposing hikes in staff pay, which certainly looks a little piggish.  But what about here in Canada?

I showed in this post last year that Canadian presidential pay is significantly lower than it is at comparable public universities in the United States, Australia, and the UK.  And two years ago, I showed (using data from Nova Scotia only) that although Senior Administrative pay has risen more steeply than professorial pay over the last half-decade, the rate of increase is only about 25% higher than for that of professors.  But let’s take another, more national look at this.

The data below comes from the CAUT Almanac.  I’ve taken data from the 48 institutions where data was available for both 2006 and 2011, and for at least three of the four intervening years.  Here’s what the presidential salaries looked like between 2006 and 2011 (latest available data):

Figure 1: Average Presidential Salaries in Canada, in Nominal $

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(If you’re at a big university, these numbers probably look impossibly low; no U-15 university President has a salary below $350,000, for instance.  Just remember: the average includes presidents of quite small universities, too).

Figure 1 shows some pretty jerky upward movement.  2007 saw an 11% jump, followed by increases of 1%, 5%, 1%, and 4%, for an average of 4.7% per annum over five years.   For professors during roughly the same period (2006-7 to 10-11) the increase was about 3.1% per annum.  But if you look at year-on-year salaries, you’ll find that there is some enormous inter-institutional variation in Presidential compensation.  In fact, in 2011, Presidential pay for sitting Presidents was as likely to fall as it was to rise.

Distribution of Salary Increases for Sitting Presidents, 2011

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The key to understanding rising Presidential compensation in Canada is this: the big ratchets in pay don’t accrue to sitting Presidents.  If you just look at the 11 Presidents who sat continuously from January 2006 to December 2011, and whose salary data is public, their pay only rose on average by 3.1% per year – that is, by exactly the same amount as professorial pay.  The ratchet effect occurs much more often at the start of contracts, when the new President takes a starting salary that is significantly above that of the previous incumbent.

Are Presidents overpaid? Maybe.  But their rates of salary increase aren’t significantly out of line with other university staff.

February 03

The Crucible: Higher Education in the Mao/Deng Years

Chinese higher education wasn’t up to much during the Mao years.  After 12 years of war – with Japan from 1937 to 1945, and a civil war thereafter – there wasn’t a great deal left when the war was over.  Some universities relocated for the duration of hostilities, others closed and re-founded themselves in Taiwan after the Communists triumphed on the mainland.  Though the Communists oversaw a huge increase in basic schooling and literacy, higher education remained hampered by purges, famines, and poverty.  A few scientific areas (such as nuclear physics) thrived, but for the most part science could do nothing but suffer in an environment where any idea not founded on dialectical materialism was seen as suspect.

And all of that was before the Cultural Revolution began in 1966.  For the first two years, campuses were the site of intense (occasionally armed) factional struggle; after that, universities were effectively shut down – partly so that effete urban students could work in the countryside and have their consciousness re-wired by working alongside the revolutionary peasant classes (erasing the distinction between mental and manual labour was a key Party goal at this stage).  Enrolment plummeted from about 600,000 to about 50,000 or so – and these were chosen on the basis of class origins (workers, peasants, soldiers; i.e. *not* the remains of the middle-class) rather than academic excellence.  By 1976, these policies had left Chinese higher education – and indeed scientific knowledge, generally – in a parlous state.

Even before Mao died, Deng Xiaoping had identified science and technology as being key to China’s economic development.  This may sound like a no-brainer, but at the time “increased ideological zeal” (as defined by the Gang of Four) was the more orthodox solution to the productivity question.  Among Deng’s earliest policy initiatives, after his first rehabilitation in 1973, was to initiate student exchange programs with the US so as to give some bright graduates exposure to advanced scientific practices; and on every subsequent foreign tour, he pressed whatever country he was visiting to allow for more student exchanges.  Deng was responsible for re-opening Tsinghua University and ensuring that academics, not commissars, were placed in charge.  In 1977, he led the fight to ban universities from selecting students based on class origins, and requiring them to accept students who had proved their merit through a new National Higher Education Entrance Examination (the famous “gaokao”).

Though it’s not often recognized, higher education management issues were where Deng chose to fight his key ideological battles with Maoist radicals in the period 1974-1978.  In effect, as Joel Andreas says in his book, Rise of the Red Engineers, Deng replaced a Marxist view of science with a Saint-Simonian one, where the talented would lead.  The long-term effects were two-fold.  First, the raising of standards in Science & Technology has been an enormous force behind China’s 35-year spurt of economic growth, which has brought hundreds of millions of people out of poverty (restoring some property rights and allowing firms to earn profits didn’t hurt, either).  And second, it has put scientists and engineers at the centre of the country’s power system (nearly all members of the Politburo are Engineers).

In most developing countries, higher education and science is a lagging indicator of economic growth.  China was one of the very few countries where getting higher education policy right was an essential catalyst to economic growth.  And Deng himself was the one who got it very, very right.

* Many thanks to Ryan Dunch for comments on an early version of this, and last Friday’s,  “One Thought” *

January 31

The Universities of Imperial China

Today kicks-off Chinese New Year, and so I wanted to devote some time to the subject of higher education in the People’s Republic of China.  Given the immensity of the topic, the usual one-off, “Better Know a Higher Ed System” piece seemed inadequate – hence, I’ve written a series of posts, which I’ll be publishing over the next 15 days (the duration of Lunar New Year celebrations).  Enjoy.

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China is one of the few places in the world that has an indigenous version of the university – namely, the Imperial Academy, or “Taixue” (later “Guozijian”).  The first of these was set up in the first century BCE in order to prepare the bright and upwardly-mobile for appointment to the Imperial civil service. In later dynasties, a system of examinations (mostly concerned with Confucian moral philosophy, with a bit of poetry sometimes thrown-in) was introduced to govern entrance to the civil service, and schools for degree-holders and aspirants spread throughout the empire. Though their stature would rise and fall as dynasties grew and collapsed, they still existed in some form or another right through to the early twentieth century, when their abolition (in favour of western-style universities) fatally turned most of their suddenly-futureless students against Empress Cixi’s tottering Manchu regime.

There are two notable things about these academies, which are important for understanding modern Chinese universities.  The first is that they were significantly more open to people of humble origin than their medieval European contemporaries.  During the Tang dynasty, there were separate academies based (roughly) on class origin. The lowest of these was the largest (but also worst funded), admitting 1300 students per year.  Yes, stratified and therefore bad.  But also: open to talent from below, which for the time was strikingly unique.  Higher education has, in a sense, always had an access mandate in China because of the Confucian commitment to meritocracy.

More important, however, is the specific way that the concepts of universities, high-stakes exams, and desirable jobs interact.  Recall that the exams came before the university – that is to say, the purpose of universities was to get people to pass the exam, and into desirable jobs.  There has, in other words, never been a conception of higher education in China that wasn’t related to the job market.  Even though the curriculum was highly – even aggressively – humanities-focused (lots of poetry and philosophy, with a smidge of mathematics and astronomy), it was still all “applied” in the sense that the goal of higher education was about putting people into specific types of employment – though higher studies in Confucian societies do also confer on a student an aura of “virtue”, distinct from the acquisition of jobs or titles.

Thus, in China, the belief that meritocracy requires broad access to higher education, and the belief that universities are about passing exams and getting jobs, both have roots going back to before the birth of Christ.   Given this, it’s no surprise that they continue to exert a major influence on the region’s policy, today.

January 30

Essential? Beware of What You Wish For

So I see that COU has commissioned a poll, which has come back with the result that: Ontarians think universities are almost as essential as hospitals and primary/secondary schools.

Some highlights:

  • 88 per cent of adult Ontarians ranked universities’ overall contributions to the province as important, just behind hospitals (92 per cent), and elementary and high schools (90 per cent);
  • 72 per cent of adult Ontarians say that teaching at universities to increase knowledge and skills is a very important contribution to society;
  • 79 per cent believe that, through research, universities make a very important contribution to understanding science and healthcare;
  • 87 per cent believe Ontario university students benefit greatly from university programs.

The purpose behind this poll is obviously to say, “Hey!  Don’t cut our funding, because Ontarians think we’re almost as important as hospitals!”  And while it’s tempting to dismiss this with a simple, “good luck with that”, I think it requires some much deeper reflection, because it actually worries the bejesus out of me – not because I think the results are bad, but because I’m terrified of how politicians will interpret them.  COU seems to hope that government will see the word “essential” and think: “money!”  But it’s just as likely that they will see the word “essential” and think: “holy moley, we’d better regulate that sucker”.

You see, when something becomes “essential” to citizens, they tend to blame the government if things somehow go wrong.   Heat, water, electricity?  All either government owned or heavily regulated. Phones, ditto.  Hospitals, primary schools, same thing.  They’re all, in essence, utilities – things taxpayers expect to have at their fingertips when they want it.  And governments judge their success on utilities by how little whining they hear about it.

There are benefits to being a utility, of course: you roughly know how much money you’re going to get each year; there’s certainly no need to compete with others; and there’s no need to be world-class or anything like that.  And this is just as well, because governments don’t care if their utilities are world-class.  They just care about them not causing problems with the voters.

But what if “essential” universities start doing things the government doesn’t like?  Well, then the government might do things like get stuck into enrolment policy, telling universities who they can and can’t enrol.  They might dictate to whom they give scholarship money (not foreigners).  Veto some choices for President.  Amend the strategic plan so that it meets “system-wide” objectives.  It’ll start slowly, and then before you know it, they’ll be in control, micromanaging universities to death.  Even if they do pay less than half the bill.

The basic problem here, once again, is that university costs continue to rise faster than university revenue.  The instinctive university response to this problem seems to be to go hunting for more money from government.  But there’s a price to pay for that – and for how long will universities pay it?

January 29

Why is Student Debt Not Increasing?

Yesterday, we discussed why student debt burdens were falling.  One of the key ingredients in that recipe was that student debt had remained stable, or even fallen, over the last decade or so.  This is a puzzling piece for many because it seems counterintuitive.  So what’s going on?

Well, costs are increasing, but only modestly so: since 2000, tuition has only been rising about 2% above inflation.  There’s been no real change in the percentage of students living away from home – and for those who do live away from home, the picture is mixed: students in Western Canada are paying a lot more than they did 10 years ago; students in Ontario, on the whole, tend to be paying less.  Nationally, it mostly evens out.  Given these changes in costs, one would expect modest but noticeable increases in borrowing, ceteris paribus.  So something else must have changed in order to offset this.  But what?

Is it a question of students themselves having more resources?  Probably not.  As Figure 1 shows, student employment is remarkably stable over time.   So, too, is their average hourly income from wages, which surveys show is almost always 20-30% above minimum wage.

Figure 1: Student Employment Patterns, Canada, 1997-8 to 2009-10

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What about money from parents?  This seems to be up a little bit: average transfer in 2001-2 was about $2000 (in $2011), and is now about $2500.  What has changed, however, is the amount of money students get through RESPs.  This was negligible ten years ago; now, roughly 30% of students receive money from this source, and it’s a significant amount, too ($4,000/year, on average).  Obviously, much of that’s going to students who aren’t on student aid, but for those who are, it’s more than enough to explain the slowing rise in debt.

Then there’s the rise in student assistance.  Institutions have massively increased their scholarship budgets.  In the 1990s, about one in three new students got some kind of entrance scholarship.  Now it’s two in three.  The total amount spent on grants and remissions by provincial and federal governments jumped from $600 million/year in 1995, to almost $1.8 billion in 2010 (both figures in $2011 real dollars).  And of course, governments have added an extra $1.5 billion in tax credits.  Not all of that ends up in students’ pockets (some ends up with parents, some gets deferred until after graduation), but enough does to take a bite out of rising costs.

Figure 2: Increases in Total Government Student Assistance, Canada, 1993-94 to 2010-11 (in real $2011)

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None of these, on its own, amounts to a silver bullet to explain why student debt is stable or falling.  But together, it’s easy to see: more grants, more tax credits, the creation of the RESP are, together, probably putting about $3 billion extra into students’ hands every year.  Call it about $3,000 per year, per student.  Then add institutional aid, and throw in the extra billion or so that has gone to grad student funding in the past fifteen years.  That brings us to about $4,000 extra, per student.  That’s more than enough to explain why debt isn’t increasing.

In fact, the real question may be: why hasn’t it decreased more?

January 28

Why Student Debt Burden is Falling Like a Stone

Everyone talks about “rising student debt burdens” as if they are real.  But they’re not.  In fact, the burden of carrying a student loan has fallen significantly over the past decade.

Student loan burden is best measured by looking at the percentage of monthly after-tax income that it takes to service a loan each month.  This figure will therefore be affected by four different factors, namely: the size of student loan debt, interest rates, post-graduation income, and taxes.  Here’s what’s happened to each of those over the past 25 years:

1)      Student debt rose very quickly in the 1990s, more than doubling between 1992 and 2000.  This was because the federal government raised lending limits, and provinces by-and-large cut their grants programs.  Starting in the early 2000s, however (for reasons I’ll get into tomorrow), growth in student borrowing stabilized.  As a result, student debt has been roughly constant in real terms for over a decade now, as I showed back here, and may even have decreased a bit.

2)      Interest rates.  Nobody remembers this, but during the early 1990s, when we had the triple-whammy of the peso crisis, the sovereignty crisis, and an inflation-obsessed John Crow as Governor of the Bank of Canada, our interest rates were regularly 400 basis points higher than the Americans’.  They’ve come way, way, way down.  In 1991, prime briefly hit 14%, and throughout the 90s it averaged about 7.5%.  Today it’s 3%.

3)      Post-Graduation Income has remained remarkably constant over time.  Between 1988 and 2005, it didn’t change a bit in real terms.  Growth has been below inflation in the last few years because of the long recession, but it is still growing in nominal terms (we know this thanks to the many provincial graduates surveys, which have replaced the NGS as our key source of data on this subject).

4)      Taxes.  They’re down a fair bit.  Someone with average graduate income, 2 years out of school, paid out 28% of their income in taxes in the early 90s; now they pay 22%. (Thanks to Kevin Milligan and his great CTaCS program for the help in calculating this.)

In other words, things were pretty bad in the 1990s.  But since then, most of the relevant forces that underpin student loan burden have been heading in the right direction: debt is stable, or even down a bit, interest rates are down, taxes are down, and until quite recently income was more or less stable – and even now isn’t down very much.  Put it all together and what you see is that the after-tax repayment burden for someone with average student wages, repaying an average-sized student loan, has fallen sharply in the last decade:

Figure 1: Percentage of Average After-tax Earnings of Graduates, 2 Years Out, Required to Service an Average Student Loan

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That’s right: the burden of carrying an average loan, with an average salary, has fallen by over a third in the past decade.  It’s actually back down to where it was in 1992, before the rapid rise in tuition and debt of the 1990s.

I no longer expect facts to get in the way of people trying to manufacture a good crisis, but if anyone does happen to care about the data, there you go.

January 27

Tenure and Academic Freedom

There’s a line you tend to hear in Canadian universities: that tenure “is essential to the defence of academic freedom”.  There’s no question that historically, in North America, the two concepts grew up together, and have been intertwined here for about a century.  But it’s demonstrably false that tenure is the only way to defend academic freedom.

In Europe, tenure has an entirely different historical origin.  Civil servants in many countries have tenure, and since university professors in many places were (and in some cases still are) civil servants, they simply picked it up as well.  The link with academic freedom is non-existent; it’s simply an employment benefit.  That doesn’t mean there’s no academic freedom in Europe.  In France, academic freedom is protected by statute.  In Germany, academic freedom is actually inscribed in the federal constitution (though with the anti-Nazi rider that academic freedom does not absolve teachers of loyalty to the constitution).

Then there’s the United Kingdom.  The UK had tenure until the early 1980s, when it was abolished under the Thatcher government and replaced with a system of long-term contracts.  But the same government also passed a statute which ensured that academic staff have the right to, “question and test received wisdom and to put forward new ideas and controversial or unpopular opinions without placing themselves in jeopardy of losing their jobs or the privileges they may have”.  To my knowledge, no serious observer thinks the state of academic freedom is any worse in the UK than it is, say, here.  Certainly, it hasn’t prevented UK universities from being held in great esteem by academics around the world, as endless rounds of THE and QS surveys of academic reputation keep telling us.

Heck, let’s even look here within North America.  Over the past couple of decades, the proportion of teaching staff with tenure has declined.  And while this is widely held to have a number of drawbacks (as well as financial benefits), a reduction in academic freedom at these institutions isn’t usually one of them.

The point here isn’t that tenure fails to protect academic freedom – there are certainly lots of cases one could point to where it has been useful.  Rather, the point is that it is not the only way to protect academic freedom.  This is important because if academic freedom could be protected outside the institution of tenure, then tenure would simply become – as it is in Europe – a form of job security universities might wish to retain as an employment benefit, but which is not seen as a “right”.  More to the point, it would actually be negotiable.

So, how about it: academic freedom legislation, anyone?

January 24

Canada’s International Education Strategy – How Did It Get So Bad?

When our Department of Foreign Affairs, Trade and Development (DFATD – not DFAIT as I said a few days ago; sorry) delivers something as bad as our new International Education Strategy, an inquest is in order.  But since self-reflection isn’t exactly an abundant resource in Ottawa at the best of times, it’s an inquest we’re going to have to undertake ourselves.

Let’s start with the document’s basic failures:

  • It talks about increasing enrolment without assessing capacity constraints;
  • It shows no obvious signs of being conversant with international education markets, how students choose their destination countries, or how students subsequently choose a country of residence;
  • It spends an inordinate amount of time talking about discussions with the rarely-before heard-of “Canadian Consortium for  International Education”, which is made up mostly of Ottawa-based industry groups (e.g. AUCC, ACCC, CBIE) who – surprise, surprise – reciprocated by praising the document to the skies, despite its evident thinness.

What, you might wonder, links these points?

It seems clear that the document’s authors valued pleasing the Minister and Ottawa-based education groups more than they valued functioning relationships with provinces and institutions.  That’s a fairly common Ottawa problem.  It’s much easier to work with tame, de-fanged Ottawa interest groups, who will always say “thank you” for a new government policy no matter how silly it is, than to deal with provinces who keep rudely reminding you that education is in fact their jurisdiction.

But that’s too easy an “out”.  Lots of federal departments still talk to their provincial counterparts in a constructive way over areas of shared jurisdiction.  The Canada Student Loans Program, for instance, manages to do this reasonably well – why can’t DFATD do so?

I see three possible reasons.  The first is that the people asked to run with this file were junior, and didn’t know any better.  The second, more likely reason is that Foreign Affairs is too sniffy to talk to mere provinces (“I joined the service to go to Rome, not Regina!”).  But most likely of all is simply that the government just doesn’t care enough about this file to do a good job on it.  Partly, that’s due to the regime, but the culture at DFATD is a culprit, too.  My sense is that international education is a bit of a backwater there; people on the rise don’t stay very long.  Actually doing a good job would require lots of tedious consultation with provinces and institutions.  By the time the file actually achieved something that could be thrown on your CV, you’ve already moved on to your next rotation, so why bother?  Better to dash off something quick for an “announceable” than to do the hard work for which someone else will inevitably take credit.

If that’s true, then the problem runs deeper than a single, deeply flawed report; there’s a whole institutional culture that stand between us and good policy-making.  And the Ottawa NGOs’ habit of thanking the government any time it announces something, regardless of how inane, far from making things better is just enabling the dysfunction.  We need to deal with this.  Soon.

January 23

International Education Strategies – How Others Do It

By now, a lot of you will have read – either on our Blog or at the Globe and Mail – my rant about the new International Education Strategy, released last week by the Government  of Canada.  A number of people said they agreed with me, but wanted to know what I would have recommended in its place.  I won’t do that (that’s the stuff I charge for, folks); instead, I want to contrast emerging international education strategies elsewhere, with our own.

Take Norway, which has just launched a new strategy designed to get more of their students to study abroad.  It has recognized that the main barrier to achieving this is financial, and has come up with better financial packages to help students go abroad.  In addition, because they have a desire to forge strategic relationships in particular parts of the globe, they are making deals to improve mobility to specific places: North America for graduate studies, Asia (mainly China) for undergraduate study.

The easy hit here is to note that the Norwegian outward-looking strategy is in stark contrast to the self-centred, mercantilist stuff that DFAIT released last week (“WE need skills!  WE need foreign students! It’s all about US!”).  The more important point, though, is that the Norwegians actually understand what “strategy” means.  They diagnosed a problem (Norwegian students not worldly enough), identified a barrier to a solution (need more money to make students more mobile), and threw appropriate resources at it.

Now compare this to our strategy.  Instead of diagnosing a problem, we picked a target out of the air – double the number of international students (Why double? Why not triple?  No clue – that’s how “out of the air” the number is).  We did not identify any barriers to the solution, other than the speed at which we can process visas.  No thought about institutional capacity factors, or reasons why foreigners might not want to come to Canada.  As for appropriate resources – $5 million for marketing, spread thinly over more than half the planet.  That’s not concentrating resources on a problem, that’s just tossing money around.  Norway 1, Canada 0.

Or take Sweden, where a number of CEOs have asked the government to re-think its policy of charging non-EU students full tuition, because it is reducing the number of young, Swedish-trained foreign graduates available to the Swedish tech industry.  Again, a goal (not enough foreign grads), a barrier (fees), and a solution (lower fees).  The Canadian strategy, on the other hand, assumes that huge cash payoffs from international student fees AND immense benefits from higher-quality immigration are both possible, and simply waves away any possible tension or trade-off between the two goals.  Sweden 1, Canada 0.

No point moaning now, I suppose.  We’re stuck with this abortion of a strategy at least until the next election.  The important thing now is to diagnose how we produced a document this bad, and how to prevent it happening again.  More on that tomorrow.

January 22

Better Thinking About Program Prioritization

As most of you probably know, there’s been a lot of recent interest in the program prioritization process (PPP) ; specifically, a model based on the work of a fellow called Robert Dickeson.  However, Program Prioritization, and Dickeson, have come in for a bit of a beating lately, some of it deserved and some not.

(Caveat lector: I make money from consulting on program prioritization. I’m going to be talking my own book here.  Read on with that in mind.)

Stripped to essentials, Dickeson advocates distributing resources according to how strong each program is, with “strength” determined by a series of indicators that measure how a program performs in a number of different dimensions.  In a nutshell: get comparable data on all programs, score the results, aggregate the scores, and make decisions accordingly.  Top ones get more resources; bottom ones face cuts.

Almost no one disagrees with the idea of making decisions based on better, more comparable data.  There are, however, legitimate disagreements about what are the right indicators to measure program efficiency and quality, about how well indicators can measure the stuff that matters, etc., but that’s par for the course.  The real disagreements start when administrators ask what they should do with all that information.  And, increasingly, there’s a backlash against Dickeson’s approach of aggregating the scores, ranking programs, and yanking funding from the bottom ones.

This has led to a lot of predictable fire from faculty (understandably nervous about the results of such exercises), but also from some senior administrators – Windsor’s Leo Groarke recently wrote quite a thoughtful piece on this for OCUFA’s “Academic Matters”.  Do read his whole piece; but for now, just know that his main critique of the PPP (apart from some of the methodological stuff listed above) is that: i) good administrators should know which programs are weak anyway; ii) the costs of data-gathering are too high; and, iii) the rank-and-yank approach is disastrous.

As I say, it’s a good piece, but there are answers to all three of those objections.  The first is that even if deans know which are the good programs and which are the bad, a little external data validation doesn’t go amiss when making big resource decisions.  The second can be true, but a more discerning approach to indicators (you don’t need the 60-odd ones that Dickeson suggests) can cut costs.  And if you set them up right the first time, you can create a permanent set of indicators, which can be consulted at low-cost in future.

As for the third point, I agree completely with Groarke about rank-and-yank – and I would go further to say that I am a mystified as to why senior administrators would elect to surrender their decision-making to an algorithm.  But while that’s the essence of Dickeson’s approach, PPP need not work that way. If you scrap the aggregation and ranking elements, what PPP leaves you with is a very rich, multidimensional dataset,  which can be used as a basis for complex and fraught decisions.  And in the end, this is what everyone wants, right?

Intelligent strategy isn’t just data, and it isn’t just judgement; it’s a mix of the two.  Program prioritization, done properly, should recognize and achieve that.

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