HESA

Higher Education Strategy Associates

March 17

Lower Ed

It’s only March, but I’m declaring the Higher Ed book of the year competition closed. No one is going to beat Tressie McMillan Cottom’s book, Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy. It is genius.

Before I start praising this book to the skies, it’s worth noting that this is a very American book. Anyone looking for insights into for-profits outside the United States should look elsewhere: the insights generated here do not translate well to other countries. This isn’t a fault: American authors use a kind of ex-cathedra voice saying “this is how it is” because it doesn’t occur to their publishers that there is a world outside the US worth catering to. So when they say “this is how it is” they mean “this is how it is in the US”. This is not a fault of the author, but something to keep in mind while reading it.

What makes McMillan Cottom’s story different from other good accounts of the private higher education market (see for instance A.J. Angulo’ Diploma Mills) is her experience within the industry. After graduating from her Bachelor’s program, she worked in the industry both in the “mom-and-pop” sector of the industry (that is, colleges that are locally owned small-ish business) and the new breed of national chain schools, owned by NYSE-listed companies whose approach to the industry is to simply, relentlessly, make money. She knows the industry from the inside out. As part of the sales force in these two companies, she has a deep understanding not just of the sales techniques, but of the customer base as well.

As was the case for last year’s One Thought book of the year, Sara Goldrick-Rab’s Paying the Price, it’s the way the author allows students to speak for themselves which is so arresting. But in this case it’s an even more stunning technique because for-profit schools themselves have been so misunderstood. McMillan Cottom pushes back – hard – on the idea that private-college students are simply low-information students, that it is in part through ignorance that they attend such high-risk/low-reward institutions. While agreeing that many students are only dimly aware, if at all, of the prestige ladder of higher education and where these institutions fall within it, she counters by saying that what these students understand above all is a form of education gospel – that education and only education will lead them to success. And what for-profit colleges do, primarily, is find ways to satisfy that need in a way with a level of convenience that public colleges choose not to match.

The ridiculously complicated FAFSA (student aid) process? They take care of that for you. Complicated class schedule? They simplify that too. A need to wait until next September to start classes? Nu-uh: in private colleges, intakes start every month, so you can get started right away. If you’re mid-career and need some education to change your life who wants to hang around waiting for months to get started? So what’s the problem?

The problem of course is that return on investment on these course is usually terrible, with students getting sucked far into debt to get credentials that tend not to qualify them for jobs that would make the expense worthwhile. But if states put licensure requirements on – say – hairdressing, which pays maybe $12-15/hour, then what they are actually doing is allowing the people who provide training to enter that field to extract massive amounts of rent. It’s crazy to pay $20,000 for a hairdressing course to get a job that pays so little. But the alternative is no education and no job. And so the schools continue to attract students.

Eventually, as the scale of the con became apparent to her, McMillan Cottom quit the industry to start a PhD in sociology at Emory (key detail: Emory said yes even though the start of class was only a month away – the speed of the application turnaround was consequential). The result of that PhD was this book. It contains some elements which are very traditionally academic, such as a systemic look at how the industry was transformed when big chains of schools took over the market in the aughts, at right around the same time as the US economy began its long, post-dotcom decline. But it also contains some deeply original and arresting moments, such as overheard snippets of conversation in shopping malls.

McMillan Cottom’s critique goes beyond the predatory recruitment techniques of for-profit colleges. She sees them, in a sense, as a natural outgrowth of the current moment of capitalism (she would use the phrase “neo-liberalism”, which makes my teeth ache a bit, even though she uses the term in a more rigorous way than almost anyone else I’ve ever read). If good jobs are becoming scarce and education is required to get those jobs, and public education is insufficiently funded and public post-secondary institutes don’t do their job in terms of making themselves truly accessible (in terms of making enrolment convenient and easily understandable), then yeah – somebody is going to fill that market niche. So is the problem the niche-fillers or the failure of the political system to prevent that niche from opening in the first place?

Anyways, don’t take my word for it. Read it yourself. You won’t be sorry.

 

March 16

Good Innovation Policy

Yesterday, we looked at what actually constitutes Innovation Policy. Today, I want to talk about what an ideal innovation policy would look like. I apologize in advance for the length of the post.

So, the first ingredient in innovation policy is skills. But this term needs to be understood in some specific ways. It certainly means having a large number of what are called “Highly Qualified Personnel”, which usually but not always means PhDs, across many fields. Part of the deal with innovation is that generating new ideas means having people who are at the cutting edge of science, engineering and social science. In turn, this means spending reasonably big on scientific research because otherwise the good grad students will go elsewhere.

That’s the easy bit. The trickier bit is developing an education system that supports diffusion of new ideas. Innovation is not just about developing new products; it’s about making firms (and public bodies, too) more efficient through the adoption of new technologies and processes. The problem is literally no one knows how to do this. Is it about having a strong secondary school system with high standards? Probably. Can’t hurt, anyway. Does it mean very high levels of university participation? Not clear: Switzerland seems to do very well without this; but arguably it works for Korea and Finland. Does it mean high levels of technical education? Possibly: seems to work for Switzerland and Germany. But Canada has pretty much the highest levels of non-university higher education in the world and it doesn’t seem to work as well for us. So is it something about skills mixes? Does more STEM education (or, God forbid, “training coders”) help you become more innovative? Not really. The US, which despite everything is still seen as an innovation leader, has the lowest rates of STEM graduation (as a proportion of total degrees awarded) in the G7; Italy and France do far better.

So is it something in the way people are educated, something in the pedagogy? Maybe. Is it something non-cognitive, something cultural? Probably. But no one really knows how to change this. That doesn’t mean experiments in skills for innovation are doomed to failure, it’s just to acknowledge that there is a substantial amount of groping around in the dark here. A good innovation policy would acknowledge this. So it would have money set aside for real experimentation in education and training, much like the FutureSkills Lab proposal, albeit with the crucial proviso that in a federal state you really need both levels of government working co-operatively and consultatively (not – repeat NOT – unilaterally) to make this work. And if there’s an area where we should start, it’s in our business schools – we need to better understand why we have a dearth of managers with the skills to boost exports and manage growth.

OK, so that’s education. What next? Rules and Incentives. Barriers to market entry need to be dismantled, cartels smashed: anything that increases competition or reduces barriers to new products getting to market should – barring some reasonable measures around product safety – be adopted. If you want to know why serious innovation policy types laugh at the current Liberal government, it’s due to their total lack of interest in doing anything in these areas while simultaneously proclaiming to be “pro-innovation”. A country which cannot dismantle a dairy cartel cannot be considered an Innovation Nation. Also: let companies get big. There is no earthly reason why Canada taxes big businesses more than small ones. It’s a terrible idea. There are others, but those are the big ones.

The third big one is funding: how do we make sure funds get to innovative new companies?  This is a tough one, not just because of the potential for rent-seeking, but also because it’s genuinely hard to pick winning companies and/or get banks to change policies to lend to younger, more speculative ventures.  The consensus in the Innovation policy world is that Israel seems to do this pretty well, but exporting models like this isn’t easy.  I’m absolutely no expert in the area and so won’t comment further, but just know this is a big issue and any effective Innovation Policy needs to address it.

The fourth and final area is what is often called “innovation ecosystems”. Now this is a slightly fraught term because frankly it can be used to justify pretty much any old thing, and a lot of it is junk.  But the basic insight is this: innovation doesn’t happen in isolation. Firms’ ability to create innovative processes and products depends on their access to finance, talent, and knowledge, (sometimes but not always universities), and their interactions with other firms and with customers. To some degree, this is aided by proximity, which is why people get excited about the role of geographical clusters in innovation.  But to reduce it to proximity is overly reductionist, innovation is not simply a matter of co-location. Networks matter, but not all networks are local.

In fact one of the most obvious gaps in Canadian government policy thinking around innovation is the role of transnational networks in innovation. This simply makes sense: not many production/value chains are located within a single country any more. Among mid-sized countries, the ones that have done best in exploiting new technologies have been those that have worked out niches in global value chains. This has practical implications for policy. Canada may be good at Artificial Intelligence (whatever that means these days), but it’s probably never going to develop many companies that are going to be global players. So the goal of policy should really be to figure out how Canada can develop companies that can thrive as partners to other, larger companies or networks located outside Canada. Think about the automotive industry: Canadian attempts to have full-fledged automobile companies have been disastrous (Bricklin!) but we do pretty well in autoparts (Magna).

I’m not saying it is easy to develop government interventions that foster these kind of connection. But it is easy enough to get rid of rules that inhibit collaboration. For instance, there are rules in tri-council funding which impede collaboration with foreign scholars (and I’m not just talking about making foreign scholars fill in the Canadian Common CV). These rules actually get in the way of long-term partnerships and foreign source of income, like the US National Institute of Health (NIH). And in turn, that restricts knowledge generation in Canada – knowledge that might flow into new products or processes.

To summarize: innovation is a fairly diffuse idea, and our knowledge about how to promote it is patchy at best.  But what we do know is that it is a very multi-dimensional process.  It is certainly not just about hi tech industries.  Equally certainly, it is not just about knowledge generation.  Universities may have been conditioned to think that all research = innovation (in retrospect, the name “CFI” probably was not the most felicitous name choice), but that’s not true either.  It only becomes innovation when it leads to tangible change, which requires knowledge to be adopted outside the institution.

That’s not to say higher education has no role in innovation; the provision of skills and the generation of knowledge are both an important part of the puzzle: so more money for basic research, doctoral studies are definitely in order, as are fewer barriers to international research collaboration.  But so too is a lot of reflection on what makes individual people – particularly those who end up as business leaders – better problem-solvers and innovators.  If universities really want to be part of the solution, they need to be thinking about how pedagogies need to change, not just how other people can write them bigger cheques.  Some do, of course, but it’s far from central to the discourse.  That needs to change.

March 15

What Is Innovation/Innovation Policy, Anyway?

I write and tweet a lot about innovation policy, mainly with respect to my frustration with our current government’s two-dimensional views on the subject.  I’ve been meaning to write a piece on how to do innovation policy right, but based on a number of conversations I’ve had with folks, I think it’s important first to deal with the question of: “what is innovation” and “what is innovation policy”? Because frankly these terms are getting slung around with such abandon that they appear to have lost all meaning and many people are simply dismissing the policy area as a large waste of time.

Sometimes, it’s hard not to sympathize with this point of view.  This week in a Vancouver Sun op-ed, UBC President Santa Ono described innovation as “a never-ending exchange between the realities of today and the potential of tomorrow.”  To which I think most people would respond with a heathy “you what, mate?”

More helpfully, Ono also included in his article the OECD definition of Innovation: “the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.”  Even apart from any methodological difficulties in tracking this, it is still a bit tricky as a definition.  For instance, not everything which is new is beneficial or adds value. Crystal Pepsi comes to mind here.

But more broadly, the best way to think of innovation as a policy goal is: can a country/province/whatever become a place where people can put new ideas into practice easily and quickly.  It doesn’t have to be a “new product” (although Canadian governments sometimes act like this is what it means); it can also be a new process.  And it need not be strictly in the commercial sphere; innovation in the public sector is important, too.

Or, at a broader level, how can we be more like Estonia and less like Greece?

Now, as you can imagine, this is tricky because no one actually knows how to be more like Estonia (or Denmark, or Finland – pick a Nordic-ish country).  We can sort of describe what makes them the way they are, but there is no road map to getting from here to there.  But basically the critical questions are:

  1. How do we get ideas to generate and circulate faster?  (This goes back to the Paul Romer question I posed back here).
  2. How do we get people to turn ideas into practical ideas to create new/improved products and processes?
  3. How do we ensure that new products and processes do not get stamped down simply for reasons of inertia or protecting vested interests?

Some of these issues lend themselves to direct government spending.  Some of them are about regulations and incentives, which governments can also change.  And finally, some of them are issues of culture (institutional and otherwise) which is an altogether trickier terrain.

Governments can address the skills part of this through education.  Funding more doctoral students, attracting more top profs, etc. leads to more Highly Qualified Personnel and hence generating more ideas at the frontier of science.  Funding of basic science also plays a role here.  Governments can change the nature of secondary and undergraduate of education in ways that might make workers more likely to be problem-solvers, idea generators and early adopters of other people’s new ideas/technology.  It can incentivize entrepreneurialism through tax policy and to some extent through grants and – maybe, the jury’s still out – education as well.  But culture plays a big role here and credible ideas for how to shift this are thin on the ground (though I think we can all probably agree that a strategy of having Ministers go around encouraging people to “take risks” and “think outside the box” has, to put it politely, a low probability of success).

As for the third part, not squashing new products…obviously regulatory and competition policy really plays a role.  But again, part of it is cultural, and takes place inside firms and other institutions, areas where policy does not easily reach.  Take the medical products industry: how do you combine a culture of looking after patient safety with a culture of encouraging innovation (which by definition means making mistakes on the way to success)?  Or how do you get companies to pursue innovations which may make existing profitable product lines less profitable?

Evidently, this is complicated stuff.  In some ways it is easier to step back and say what Innovation Policy is not.  It is not Science Policy, which is about deciding how to invest in basic research – though Science Policy affects Innovation Policy for obvious reasons.  It is not Growth Policy, which is about finding the highest rates of economic growth in the short term, because Innovation Policy is in the end much more concerned with developing ideas which will matter 10-20 years out than what will boost growth right now.  It is definitely not Industrial Policy, because it is about economy-wide pre-conditions for industry, not about picking winning industries because they seem to be “hot”.

(I have recently been informed that the Ministry of Innovation actually includes my daily blog posts in its media monitoring.  If whoever is in charge of this operation could mark up that last section IN HUGE RED INK before slipping a copy to Minister Bains, that’d be awesome.  Thanks.)

So that’s my take on the meaning of innovation and innovation policy.  Tomorrow: what an ideal policy looks like.

March 14

The Free Tuition Impulse

A few weeks ago I presented yet more evidence about why free tuition was mostly a subsidy for the rich and was unlikely, on its own, to do very much with respect to equalizing access (scroll through here and here if you really want to read me on this subject, though I imagine most of you are pretty familiar with my spiel by now). Someone asked me: “why don’t people like the Canadian Center for Policy Alternatives (CCPA), the Canadian Association of University Teachers (CAUT) and the Canadian Federation of Students (CFS) get this?  Surely they can read the evidence, why would they persist in touting a solution which is manifestly regressive”?

There are two possible answers to this question.  One is that in fact they have not read the evidence.  It exists, and they know it exists, but just haven’t read it.  As long as they don’t read the work which falsifies their notions, they can continue to hold these notions. To  paraphrase Upton Sinclair “It is difficult to get a man to read something, when his salary depends upon his not reading it”.

I actually got confirmation of this the other day on Twitter.  I was trying to get CCPA’s chief economist David MacDonald to explain why CCPA holds diametrically opposed positions on universal electricity subsidies (bad because they go disproportionately to the rich) and PSE subsidies (awesome, because they benefit the poor – which actually they don’t always, but that’s their story and they are sticking to it).  Basically, his two lines of defense were “it’s a public good” and “it doesn’t matter if most benefits go to rich because if we make education cheaper more poor students will go”.  The first, even if you assume he meant “there are positive externalities to higher education spending” (which is true) rather than “it fits economists’ description of a public good” (utterly false), is not a 100% sensible rationale as it arguably also applies to electricity to some degree (i.e. “there are positive externalities to people not freezing to death in their homes”).  But the second is ridiculous.  We know for a fact that tuition levels have almost nothing to do with access rates in part because targeted student aid actually works.  So I pushed him on it.  “Have you really read nothing about access problems in zero-tuition jurisdictions?  I asked.  Have you never looked at the rather substantive literature on finances and access”?  No reply.  Which, I think, tells you what you need to know.  People like David MacDonald and the CCPA simply do not want to know.  But that’s only half an answer: why don’t they want to know?  If they know that free tuition is ineffective as a remedy and regressive in distributional outcomes, why support it?  What other agenda is at play?

Well, a few years ago, when I was at a small event on Chile looking at the issue of tuition, I finally came to understand this problem.  A colleague and I were asking our Chilean counterparts: why do you want to make tuition free?  You must know it will make very little difference in access to higher education.  To which one of our counterparts replied:  the point is to get rid of the market.  The market must not decide in higher education.”

And so it is in Canada, I think.  The anti-tuition people are not fundamentally pro-access (though that is how they rationalize their position), so much as they are pro-state.  I suspect it’s partly due to a left-ideological stance which generally favours greater state involvement across the economy, but also partly to a naïve view about what would happen inside universities if the need to satisfy the market ever disappeared.  Such as: that public money would magically replace private money and continue to grow at a pace vastly outstripping inflation forever after.  Such as: nasty private sector Board member would be replaced by bureaucrats or more sympathetic public appointments or – better yet – make academics a majority on governing boards.   And magically, contrary to every bit of evidence from continental Europe, government running 100% publicly-funded universities would be less intrusive and meddling in institutional affairs than they currently are.

Once you realize that the free tuition argument is really a government vs. market argument and not a “how do we best equalize opportunities argument”, it becomes perfectly clear why evidence on the efficacy of tuition in promoting access doesn’t faze the usual suspects.  They don’t actually care about access.  They care about resisting the market.   The access stuff is just sheep’s clothing.

March 13

Tea Leaves on the Rideau

Last Tuesday, federal Finance Minister Bill Morneau set the date for the federal budget for next Wednesday (March 22) and naturally people are wondering: what goodies are in store?  Without being privy to any inside information, here’s my take on where we are going.

At the press conference announcing the budget date, Minister Morneau dropped some important hints.  The biggest one is that, contrary to what had been heavily promoted for the past year, this budget will not be an “Innovation Budget”, but will represent a “downpayment” on an Innovation Budget.  From this we should probably deduce two things.  One: the feds are broke.  Well, maybe not broke, but certainly unwilling to increase borrowing in the face of a $30 billion deficit, slow growth and adverse demographic trends.  Two: the government has – THANK GOD – attained enough self-awareness to discern that does not really know what it’s doing on this file.  I noted back here that the Finance Minister’s Economic Council was flatly in opposition to the Innovation Ministry’s ideas about innovation clusters, and it probably came to the conclusion that making big budget commitments in the face of such disagreement was untenable.

To be clear: I am thrilled with this outcome.  Yes, it’s too bad the feds seem to have wasted a year on this file.  But far better to take a sober second look at the issue and make smart policy rather than to charge forward in order to meet an artificial deadline.  I also take it as a favourable sign that the government has brought Ivey Professor Mike Moffatt – co-author of a large recent piece on Innovation Policy by Canada 2020 – into the ministry on a temporary basis. For one thing, he actually understands what innovation policy means outside the tech sector, a concept which has been missing from ministry discourse since the minute Minister Bains was appointed.

(Many of you have been asking to me on twitter to explain what the hell the terms “Innovation” and “Innovation Policy” actually mean.  Sit tight: we’ll work on that one this week.)

There were also hints from the Minister that this would be a “skills” budget, a sentiment which has left many puzzled.  A year ago, the big issue for the near term was supposed to be the renegotiation of Ottawa’s Labour Market Development Agreements with the provinces, which mostly hasn’t happened. Since then there have been no major policy initiative apart from that.  There has been – via the consultations on Innovation policy – something of an understanding that skills are a big part of the innovation problem, but government thinking doesn’t appear to have progressed much beyond “more coders”! as a result.  (At a rough approximation, this government’s skills policy is more or less the same as the last ones, only if you just take out all the references to welding and insert the coding instead).

The worry here is that the “big initiative” will in fact be the implementation of the horrifically-named “FutureSkills Lab” promoted by Dominic Barton, chair of Morneau’s Economic Advisory committee (which I described back here).  If that’s the case, we may be about to view the first really big policy disaster of the Trudeau era.  First of all, no one is going to buy FutureSkills – essentially a kind of policy laboratory – as something which will help Canadians in anything other than the long term.  Second of all, the feds have yet to discuss the idea meaningfully with the provinces and without their buy-in, this initiative will be Dead on Arrival, just as the Canadian Council on Learning was.

To be clear: I don’t think this is going to be the “big initiative”.  I don’t think the Liberals are that stupid.  But I guess we’ll see.

What about Science?  Here, the news is not good.  You may recall that the Government of Canada commissioned a Fundamental Science Review, and asked by the inimitable David Naylor to run it.  Naylor, as requested, submitted the report to the Minister of Science in December.  The Government of Canada has yet to publish it and refuses to answer questions about when it might be published.  Why?  It seems transparently obvious that the government found some of the findings inconvenient, and would prefer to bury it until after the budget.  Maybe the report suggested the system needed more money (which would have been beyond the committee’s remit since it was only asked to comment on the management of the system, not the size).  Maybe the report suggested that certain science bodies which the government has already decided to fund were redundant.  Either way, the government seems to have decided the budget will be easier to spin if we haven’t all first read Naylor’s report.  I have a hard time imagining how this could a harbinger of good news.

In sum: don’t bank on anything big in this budget.  In fact, brace yourself for at least one major piece of goofiness.  Fingers crossed it doesn’t happen, but best to be prepared.

March 03

Mega-Trends in International Higher Education – A Summary

Over the past few weeks, we’ve looked at some of the big changes going on in higher education globally.  To wit:

  • Higher education student numbers are continuing to rise around the world. This massification in many countries is being accompanied by stratification.  Getting a “distinctive” degree at a prestige university remains hard; going abroad remains a good way of getting it.  So increases in international student numbers are likely to continue, ceteris paribus.
  • Institutions in developing countries are unlikely to increase their global prestige level any time soon. Climbing the ladder costs money most developing-world governments don’t have, and in any case, the definition of prestige is changing in ways that make it difficult for universities in developing countries to follow.
  • Demographic forces have been a significant part of the rise in global student numbers; however, for the next decade or so, these trends will not be quite so favourable (though by 2030 they should be trending positive again).
  • Similarly, the end of the commodity super-cycle means a lot of countries that were getting rich off the rise of countries like China are no longer getting richer, in developed-country currency terms, anyway (and even India is not doing well by this measure). This means at least some potential international students are looking for cheaper alternatives.

So what does all this mean?  How do we sum up these trends?

First of all, we need to stop all this nonsense talk about international higher education being a “bubble”.  It’s not.  The fundamentals of demand – rising numbers of students wanting a prestige degree – are strong, as are developed universities’ market position as a purveyors of prestige degrees.

There are two things which could undermine this.  Demographic headwinds might mean that universities would need to do more to increase the percentage of students studying abroad in order to keep up the trends (rather than simply relying on the overall trends in increased participation).  Clearly, recent economic setbacks and currency slides in a number of countries make it more difficult to do this, at least if you’re an institution in one of the countries where the currency remains strong.  If, like Canada, you’re not, then this is a chance to steal a march on countries who either have strong currencies (the US) or who through some sort of policy lobotomy have decided they don’t want international students (the UK).  In any case, international student numbers have held up for the last few years in the face of these headwinds: the real test is what happens if economic growth starts to stall in China.

The other potential game-changer is one I alluded to a couple of times last year (see here and here); which is whether or not sending-country governments start to deliberately shut off the taps, deny students exit visas, and begin discriminating against graduates of foreign universities in the labour market.  A year ago, that might have sounded crazy; today, such moves are by no means unthinkable in Xi’s China, Putin’s Russia or Erdogan’s Turkey.  Others may follow.

In short, there is risk today in the world of international student mobility.  But it is political rather than economic.  All we can do is keep plugging away and hope that the global situation does not get worse.

In the meantime, the OTTSYD be taking a break for reading week, and will return to our regular schedule on March 13.

March 02

Bravo, New Brunswick

Readers may remember that about this time last year, I was giving the Government of New Brunswick a bit of stick for a botched student aid roll-out. Today I am pleased to give credit where it is due, and congratulate the folks in Fredericton for fixing the problem and developing a much better student aid system.

Let’s go back 12 months to pick up the story.  In February 2016, the Ontario government had come up with a fabulous new system which basically made a promise of grants equal to or greater than average tuition for students from low to mid-family incomes.  At family incomes above that, students received a declining amount of money out to about $110,000 at which point the grant flattens to a little under $2,000 (a remnant of the government’s ludicrous “30% tuition rebate” from 2011) and then falls to zero a little over $160,000.  With a bit of clumsiness this eventually, sort of, got branded as “free tuition for low- and middle-income students, which it isn’t, quite, but close enough for advertising.  Cue what is seen to be a major policy success.

It was such a success that New Brunswick decided to copy it later last spring.  Like Ontario, they built on the change to Canada Student Grants and eliminated some of their own tax credits (including the egregiously wasteful graduate tax rebate) to fund a “Tuition Access Bursary”, which guaranteed a grant equal to tuition (up to a maximum of $10,000, which was more generous than Ontario) for students from families making under $60,000. Which is great, right?  Well, yes, except the problem is, there was no phase-out for the grant.  At $59,999 in family income, there you were raking in $6500 or so in grants and at $60,001 you got $1200 in grants (the federal middle-income grant) and that’s not great social policy.  Making it worse was the fact that families in that $60K to $70K would also be losing a lot of money in tax credits that both the federal and provincial governments were ending in order to pay for this new benefit; my back-of-the envelope calculation was that in this range, parents were going to be about $1,200 worse off as a result of the change.

In any case, because I and others pointed out this flaw, the government after a brief period of defensive blustering decided it was best to go back to the drawing board and revisit the formula.  They did so and last week came up with a new “Tuition Relief for the Middle Class”, which basically involved taking a sliding declining scale of grants for families earning between $60-100,000 onto the existing Tuition Access Bursary (which has been renamed the “Free Tuition Program”).  Arguably, the New Brunswick program is now somewhat better than the Ontario program because 1) it’s not just “grants up to “average” tuition”, a caveat which I suspect is going to leave a lot of people slightly cheesed off when the program starts and 2) It still manages not to subsidize people up to that absurdly high $160K + threshold that Ontario insists on maintaining.  Ontario gets points for making its aid portable, though – New Brunswick’s program is only available to students who study in-province, which I think is a shame.

The announcement – which you know, hey guys, it’s a good news story! – was marred somewhat by some media sniping about how the number of beneficiaries is about 30% short of what was estimated last year.  To me this is neither here nor there: government cost estimates on year 1 of a new program are often a matter of throwing numbers at a dartboard.  The good news is that there is still money to either raise the entry threshold for the Free Tuition Program or (better still) expand the debt relief program or top up the amount of money available to high-need mature students and parents through the New Brunswick Bursary Program.

Now, all we need for this to be perfect is for New Brunswick to come up with a smart, credible monitoring program to examine the effects of these changes on participation over the next few years.

(New Brunswick folk: that’s on the way, right guys?  Right?  Well, you know where to find me if you need a hand…)

Anyways, as I say, credit where it is due.  Well done, New Brunswick.

March 01

Under-managed universities

I have been having some interesting conversations with folks recently about “overwork” in academia.  It is clear to me that a lot of professors are absolutely frazzled.  It is also clear to me that on average professors work hard – not necessarily because The Man is standing over them with a whip but because as a rule academics are professional and driven, and hey, status within academia is competitive and lots of people want to keep up with the Joneses.

But sometimes when I talk to profs – and for context here the ones I speak to most often are ones roughly my own age (mid-career) or younger – what I hear a lot of is about work imbalance (i.e. some professors are doing more work than others) or, to put it more bluntly, how much “deadwood” there is in universities (the consensus answer is somewhere between 20-30%).  And therefore, I think it is reasonable to ask the question: to what extent do some people’s “overwork” stem from the fact that some professors aren’t pulling their weight?

This is obviously something of a sticky question, and I had an interesting time discussing it with a number of interlocutors of twitter last week.  My impression is that opinion roughly divides up into three camps:

1)      The self-righteous Camp.  “This is ridiculous I’ve never heard professors talking like this about each other, we all work hard and anyway if anyone is unproductive it’s because they’re dealing with kids or depressed due to the uncaring, neoliberal administration smashing its boot into the face of academia forever…”

2)      The Hard Science Camp. “Well, you know there are huge differences in workload expectation across the institution – do you know how much work it is to run a lab? Those humanities profs get away with murder…”

3)       The “We’ve earned it” Camp “Hey look at all the professions where you put in the hours at the start and get to relax later on. We’re just like that. Would you want to work hours like a junior your whole life? And by the way older profs just demonstrate productivity on a broader basis than just teaching and research….”

There is probably something to each of these points of view.  People do have to juggle external priorities with academic ones at some points in their lives; that said, since most of the people who made the remarks about deadwood have young kids themselves, I doubt that explains the phenomenon. There probably are different work expectations across faculties; that said, in the examples I was using, my interlocutors were talking about people in their own units, so that’s doesn’t affect my observation, much.  Perhaps there are expectations of taking it easier as careers progress, but I never made the argument that deadwood is related to seniority so the assumption that this was what caused deadwood was… interesting).  So while acknowledging that all of these points may be worthwhile, I still tend to believe that at least part of the solution to overwork is dealing with the problem of work imbalances.

Now, at some universities – mainly ones which have significantly upped their research profile in the last couple of decades – this might genuinely be tough because the expectations of staff who were hired in the 1970s or 1980s might be very, very different than the expectations of ones hired today.  Places like Ryerson or MacEwan are obvious examples, but can also be true at places like Waterloo, which thought of itself as a mostly undergraduate institution even into the early 1990s.  Simply put, there is a huge generational gap at some universities in how people understand “the job” because they were hired in totally different contexts.

What strikes me about all of this is that neither management nor – interestingly – labour seem to have much interest in measuring workload for the purpose of equalizing it.  Sure, there’s lots of bean counting, especially in the sciences, especially when it comes to research contracts and publications and stuff like that.  But what’s missing is the desire to use to adjust individuals’ work loads in order to reach common goals more efficiently.

My impression is that in many departments, “workload management” means, at most, equalizing undergraduate teaching requirements.  Grad supervisions?  Those are all over the place.  “Service”?  Let’s not even pretend that’s well-measured.  Research effort?  Once tenure has been given, it’s largely up to individuals how much they want to do.  The fiercely competitive may take on 40 or 50 hours a week on top of their other duties, others much less.  Department heads – usually elected by professors in the department themselves – have limited incentive and means to get the overachievers to maybe cool it sometimes and the underachievers to up their game.

In short, while it’s fashionable to say that professors are being “micro-managed” by universities, I would argue that on the rather basic task of regulating workload for common good, academics are woefully under-managed.  I’d probably go even further and say most people know they are undermanaged and many wish it could change.  But at the end of the day, academics as a voting mass on Senates and faculty unions consistently seem to prefer undermanagement and “freedom” to management and (perhaps) more work fairness.

I wonder why this is. I also wonder if there is not a gender component to the issue.

What do you think?  Comments welcome.

February 28

The “Not Enough Engineers” Canard

Yesterday I suggested that Ottawa might be as much of the problem in innovation policy as it is the solution.  Today I want to make a much stronger policy claim: that Canada has a uniquely stupid policy discourse on innovation.   And as Exhibit A in this argument I want to present a piece posted over at Policy Options last week.

The article was written by Kat Nejatian, a former staffer to Jason Kenney and now CEO of a payment technology company (OVERCONFIDENT TECH DUDE KLAXON ALERT).  Basically the piece suggests that the whole innovation problem is a function of inputs: not enough venture capital and not enough engineers.  Let me take those two pieces separately.

First comes a claim that Canada’s Venture Capital funding is following further and further behind the United States.  He quotes a blog post from Wellington Financial saying: American venture-capital-backed companies raised US$93.37 per capita in 2006, while in Canada we raised US$45.76 per capita. Nearly a decade later, in 2015, US companies had doubled their performance, raising an average of US$186.23 per capita, while Canadian companies had only inched up to US$49.42.

There are two problems here.  First, these figures are in USD at current exchange rates.  You may remember that 2006 was an extraordinarily good year for the Canadian dollar, and 2015 less so, so this isn’t the best comparison in the world.  Second, they in no way match up with other published data on venture capital as a percentage of GDP.  The reference years are different, but the Conference Board noted that the VC funding as a percentage of GDP grew in Canada from .06 to .1% of GDP between 2009 and 2013, and now stands second in the world only to the US (the US grew from .13% to .18% while all of Europe fell back sharply).  And Richard Florida noted in The Atlantic that in terms of VC funding per capita, Toronto is the only non-American city which cracks the world’s top 20.  I am not sure what to make of these differences; I expect some of it has to do with definitions of venture capital (early-stage vs. late-stage for example).  But looking at more than one data point throws Nejatian’s hypothesis into doubt.

But the bigger whopper in this article has to do with the claim that Canada does not educate enough engineers.  Now forget the fact that the number of engineering graduates has very little to do with success in innovation, even if you define innovation a narrowly as Nejatian does (i.e. as tech and nothing else).  His numbers are simply and outrageously wrong.  He claims Canada produced only 12,000 new Engineering grads; in fact, the number of undergraduate degrees awarded in Architecture & Engineering in 2014 was 18,000, and that’s excluding math and computer science (another 5,400), not to mention new graduate degrees in both those areas (another 11,700).  He claims the UK produces 3.5 times the number of engineers per capita that Canada does.  It doesn’t; there is a gap, but it’s not very big – 9% of their degrees go to engineers compared to 8% of ours (see figure below).  He repeats the scare claim – demolished long ago by Vivek Wadhwa among others – that India is going to eat our lunch because it graduates 1.5 million engineers per year.  This argument needs to go back to 2006 where it belongs: only a tiny percentage of these engineers are of the calibre of North American E-schools, and one recent Times of India  piece suggested that 93% of them were not actually employable (which sounds like an exaggeration but still points to a significant underlying problem).

Figure 1: Science & Engineering Degrees as % of Total Degrees Awarded, Selected OECD Countries

OTTSYD 2017-02-27-1

(See what I mean?  The US has the smallest percentage of undergraduate degrees in engineering and yet it leads everyone else in tech…yet apparently that doesn’t matter to Nejatian – all that matters is MOAR ENGINEERS.  I mean, if we increase our proportion of degrees in engineering by about 60% we could be as innovative as…Italy?)

I could go on, but you get the picture.  This is a terrible argument using catastrophically inaccurate data and yet it gets a place in what is supposed to be our country’s premier publication on public policy.  It’s appalling.  But it fits with the way we talk about innovation in this country.  We focus on inputs rather than processes and relationships.  We see a lack of inputs and immediately try to work out how to increase them rather than asking i) do these inputs actually matter or ii) why are they low in the first place (actually, the only redeeming feature about this article is that it doesn’t make any recommendations, which given the quality of the analysis is really a blessing for all concerned).

Could Canada do with a few more engineers?  Probably.  It’s the one field of study where incomes of new graduates are still rising in real terms, which suggests the demand could support a greater supply.  But the causal link between Engineers and innovation is a vast oversimplification.  If we want better policy in this country, we need to start by improving the quality of the discourse and analysis.  Policy Options has done us all a disservice by letting this piece go out under their name.

February 27

Can Ottawa Do Innovation?

The National Post’s David Akin had a useful article last week entitled Canada Has Failed at Innovation for 100 years: Can The Trudeau Government Change That?  Read it, it’s good.  It’s based around a new-ish Peter Nicholson article in Canadian Public Policy which is unfortunately not available without a subscription.  But Nicholson’s argument appears to be: we’ve done pretty well our entire history as a country copying or importing technology from Americans: what exactly is it that Ottawa is going to do to “shock” us into becoming a massive innovator?

Good question.  But I have a better question: does it make any sense that the federal government is leading on these kinds of policies?  Wouldn’t provinces bet better suited to the job?  Knee-jerk centralists (my guess: probably half my subscribers) probably find that suggestion pretty horrific.  But hear me out.  There are a number of really good reasons why Ottawa probably isn’t best placed to lead on this file.

First: innovation policy is to a large extent is about people and skills.  And skills policy has been fully in the hands of provincial governments for over twenty years now.  We accept that provincial governments are closer to local labour markets and local business for skills purposes.  Surely the same is also true for innovation?

Second: Canada is huge.  We’re not like Singapore or Israel or Taiwan, where industries are essentially homogenous across the entire country.  We are more like China or the US, where a single industry might look completely different in one part of the country than another.  If you haven’t already read Run of the Red Queen: Government, Innovation, Globalization and Economic Growth in China by Dan Breznitz and Michael Murphree, I recommend it.  Besides showing how innovation can be profitable even when it is not of the “new product”/”blue sky” (a truth to which our current government seems utterly oblivious), it shows how the structure of a single industry (in this case, IT) can be utterly different in different parts of a single country.  That’s also true in Canada.  And it’s why it’s tough to draw up decent national policies on a sectoral level.

(A corollary to that second point, which I made back here: because the country is so big, any government attempt to play the “cluster” game in the name of improved innovation is bound to get wrapped up in regional politics pretty quickly.  Anyone who’s watched Montreal and Toronto’s unseemly jockeying for a single big federal investment in Artificial Intelligence will know what I mean.)

Over the course of the past twenty years, of course, many provinces have set up their own innovation ministries or agencies.  But apart from the partial exceptions of Ontario and Quebec, they tend to be poor cousins of the federal ministry: understaffed and not especially well-resourced.  As a result, they’re not at present any more effective than Ottawa in driving innovation.  But that could change with more effective investment.  And of course, Ottawa would always have a role to play: if nothing else, its authority over competition policy means it will always have levers which it can and should use to promote innovation (even if at present it seems extremely reluctant to use this particular lever).

In short, it’s worth considering the hypothesis that it’s not “Canada” which has failed at innovation, but Ottawa.

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