HESA

Higher Education Strategy Associates

May 18

Canadian B-Schools and Economic Growth

If there is one thing university Presidents desire, it is to be useful to society – and preferably to the government of the day, too.  After all, post-Humboldt, universities exist to strengthen the state.  The better a university does that, the more it will be appreciated and, hopefully, the better funded it will be.  So it has always struck me as a bit odd how little universities (an business schools in particular) have really done in order to help work on the causes of Canada’s perennially sluggish economy.

Canada’s fundamental economic problem is that outside the resource sector, companies struggle to reach scale.  Outside the oligopolistic telecoms and banking sectors, we are a nation of small and medium businesses.  Judging by the party manifestos in last year’s elections, many people like things that way.  Small businesses are good and deserving of lower tax rates, big businesses are bad and deserve to be taxed more heavily. 

The problem with this little story is that it is simply wrong.  Big businesses are crucial to innovation and hence to economic growth.  Big businesses are the ones that have the money to invest in R & D.  They are the ones that can make long-terms commitments to training employees (if you don’t think firm size plays a role in Germany’s ability to sustain its apprenticeship system, you aren’t paying attention). People may be rightly cautious about the power of capital and its influence on the political process; but that doesn’t mean we shouldn’t encourage the formation of large companies in the first place.  Ask the Swedes: their social democracy would never have existed without very large companies like Volvo, Saab and Ikea.

And so the key question is: why don’t we have bigger domestic companies in Canada?  Oh sure, we have the occasional behemoth (i.e., Nortel, RIM) but we don’t seem to do it in a non-ephemeral way, or do it across the board.  And when our companies do start getting big, they often sell out to foreign companies.

We can point fingers in a whole bunch of directions – one favorite is a lack of appropriate venture capital.  But to a considerable degree, it’s a question of management.  Universities like to talk about how they are teaching entrepreneurship but getting people to start businesses and getting those businesses to grow are two very different propositions.  We seem not to have a lot of managers who can take companies from their first million in sales to their first ten million in sales, or to take our businesses out of the Canadian context and into a global one (if you haven’t yet read Andrea Mandel-Campbell’s Why Mexicans Don’t Drink Molson, on this subject, do – it’s revealing).   And for that matter, how is it that our venture capital industry still seems more comfortable with mining projects than life science or biotech?

Can it be – say it softly – a question of education?

We pretend that success in innovation is a function of prowess in tech.  But to a large degree, it’s a function of management prowess: how can staff be better motivated, how can processes be changed to add value, how well can business or investment opportunities be spotted.  Might it be that the education of our business elite doesn’t include the right training to do these things? 

To be clear here, I don’t really have any evidence about this one way or the other.  No one does.  But if I were a university president, or a business dean, it’s a question I’d be asking myself.  Because if there’s an economic conundrum that needs solving its this one, and if there’s any way in which universities can contribute, they should.

May 17

How Rich are China’s Universities?

Last week, Mike Gow at the Daxue blog linked to some interesting data recently published by the Chinese government with respect to the budgets of the country’s top universities.  It only covers those institutions which report to the Ministry of Education (and therefore misses some important institutions like the University of Science and Technology of China (which reports to the Chinese Academy of Sciences) and the Harbin Institute of Technology (which reports to the Ministry of Industry and Information Technology).  It suggests that, at the very top of the Chinese system, there are some jaw-dropping amounts of money being spent.

Let’s focus just on the C9 schools (the Chinese equivalent of the U-15/Russell Group/AAU/G-8, or at least on the seven for which data was provided).  Here is the data for 2015-16:

Table 1: Income & Enrollments of Top Chinese Universities

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*From Wikipedia.  I know, I know, but it’s all I had.

**Using the Big Mac Index to covert from RMB to USD at rate of 3.57 to 1

Now, the jaw-droppingness of these figures depends a lot on whether you think it makes more sense to compare institutional buying power based on market exchange rates or based on purchasing power parity (PPP).  For universities, which pay salaries in local currency but compete for staff and pay for journals and scientific journals in an international market, there are some good arguments either way.  It should also be noted that it’s not 100% clear what is and is not in these figures.  Does Tsinghua’s figure include the holding companies that own shares in all of Tsinghua’s spin-off businesses?  Unclear.  My guess would be that it includes income from those businesses but not the businesses themselves – but it’s hard to know for sure.

Comparing these numbers to those of top American universities is somewhat fraught, because of the way American universities account for income from their teaching hospitals.  Thus Duke reports about twice as much income per student as Harvard because one includes medical billings and the other does not; if you correct for this, the two institutions are about the same.  Correcting as best I can for teaching-hospital income, and excluding Rockefeller University because it doesn’t really have any students and excluding Caltech (which has about $1 million/student in revenue) because it’s such an outliers and would break my nice graph, the top five in the US and the top seven in China looks like this:

Figure 1: Total Income, Chinese C9 Universities vs. Top 5 US universities, in USD at PPP

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The basic point here is that Peking and Tsinghua are – on a PPP basis at least, and excluding medical income on the US side without being sure that it is excluded on the Chinese side – at least roughly in the same league as Harvard, though not quite in the same league as MIT, Stanford and Johns Hopkins.  The rest of the Chinese universities trail a bit: the poorest of these, Xi’an Jiao Tong, would be at about the level of Berkeley if you use a PPP comparison, and Florida State if you use the exchange rate.

Now let’s move to the UK, where the top five universities in terms of dollars per student are Cambridge, Imperial College, University College London, Oxford and Edinburgh.    The comparison changes quite a bit depending on whether or not one uses PPP or exchange rates.  On a PPP basis, Tsinghua and Peking would lead all UK universities; on an exchange-rate basis, they would be 5th and 6th – that is, behind Cambridge, UCL, ICL and Oxford but still ahead of Edinburgh.  Either way it suggests that, financially at least, the top Chinese universities are on a similar playing field as the top UK ones.

Figure 2: Total Income, Chinese C9 Universities vs. Top 5 UK universities, in USD at Exchange and PPP

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Next, let’s go to Canada.  Here are the top five Canadian schools compared with the top seven Chinese ones.  On a PPP basis, UBC is the only Canadian university which would crack the top seven in China.  But on an exchange-rate basis, all of our top five would come ahead of Nanjing and close to Fudan.

Figure 3: Total Income, Chinese C9 Universities vs. Top 5 Canadian universities, in USD at Exchange and PPP

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Finally, let’s take a look at Australia, where universities are frankly much less well-funded than elsewhere.  On a PPP basis, even the weakest of the C9 – Xi’an Jiao Tong – would come ahead of the best-funded Australian institutions (Australian National University).  On an exchange-rate basis, ANU would rise ahead of Xi’an Jiao Tong and Nanjing, but would still lag behind the other Chinese institutions, by a factor of 2:1 in the case of Peking and Tsunghua.

Figure 4: Total Income, Chinese C9 Universities vs. Top 5 Australian universities, in USD at Exchange & PPP

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The bottom-line is that while most Chinese universities are still a ways away from the top international standards in terms of income, expenditure, research base, etc., at the very top it seems that the C9 institutions are now very much in the global elite as far as funding is concerned.  They are not yet there as far as research output is concerned – only Peking and Tsinghua make the Times Higher Top 100 and none make the Shanghai Academic Rankings of World Universities – but that’s only a matter of time.  Rankings (and prestige) are a result of cumulative effort and financing.  Another decade with these kinds of numbers will make a very big difference indeed.

May 16

The New-Brunswick Step-Function

So there’s a kerfuffle going on in New Brunswick about the government’s new “tuition-free” policy for students from families with under $60K in income which I mentioned in passing a couple of weeks ago.  Basically, the problem is that the government drew up the program hurriedly, on the back of an envelope, and didn’t think through the consequences.

If you just listen to the launch announcements, the new New Brunswick program is similar to the new Ontario program (which you may recall I praised to the skies: Ontario promised “free tuition” (actually, grants equal to or greater than average tuition) for “low and middle income families” while New Brunswick promised grants equal to tuition for anyone with family incomes under $60,000.  Same, right?

Wrong.  The difference is that the Ontario program has a long phase-out.  That is, grants fall as income rises, but gradually.  In New Brunswick, they drop off a cliff at $60,000.  A student from a family with income of $59,999 will get (effectively) $7,000 or so in grants, but at $60,001, you’re only going to get about $1,200.  Figure 1 shows eligibility for federal grants (in blue, for 2015-16 and 2016-17), and the New Brunswick Tuition Access Bursary (TAB) and the Ontario Student Grant (OSG) – the OSG line is a bit messy, and I assume it will actually be a bit smoother than this, but this is a best-estimate based on the Ontario budget papers).

Figure 1 – Eligibility for Grants, Ontario Study Grant Vs. New-Brunswick Tuition Access Bursary

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In the business, this is what’s known as a “step-function”, and is generally best avoided because it creates all sorts of weird incentives.  In this case, a New Brunswick family with two parents earning $30,000 each and a kid in university will be way better off rejecting a salary raise than they would be accepting it, as their kid would lose $5800 in grant funding every year. 

But the problem in New Brunswick goes deeper than that.  It’s not just that such parents will lose money in the future, it’s that they are going to be worse off than they are now.  New Brunswick is paying for this move by ditching the provincial tax credits for tuition and education, and this elimination is on top of the federal government ditching its education and textbook tax credits to pay for the upgrade in federal grants.  What this means is that everyone in New Brunswick will lose about $1600 worth of tax credits.  For those at the low-end of the income scale, that’s fine, because this will be offset by the higher grants.  But for a family earning $60,001, they will be losing that $1600, but only gaining $400, thanks to the increase in federal grant.  Something similar happens in Ontario as well, but only once you get past about $110,000 in family income.  In New Brunswick, we’re talking about taking away $1200 per year in aid from people earning $60,000.  That’s a big, nasty hit. 

You may well ask “why didn’t New Brunswick have a more phased-out reduction”?  Well, it’s hard to tell.  The minister, after claiming her program was identical to Ontario’s, later told CBC that she had no idea Ontario had a phase-out and New Brunswick didn’t.  Which is, you know, a bit worrying.  But the bigger reasons are that New Brunswick a) has never spent that much on student aid, and so didn’t have as big a base of money to redistribute as Ontario and b) appears to have only re-invested half the money it saved from axing various tax credits (that’s an estimate – it hasn’t been super-transparent with cost estimates of the program; one wonders if this isn’t the reasons the government didn’t announce this measure as part of the budget where the figures would have been more transparent).  Had it re-invested more fully, New Brunswick probably would have had enough money to do an Ontario-style phase out.

Now, in addition to having announced a flawed policy, the Government of New Brunswick has annoyed the crap out of me personally by claiming that I provided the inspiration for said policy. To that end, it appears to have been handing out partial copies of a paper produced for the previous government in 2011-12.  Since my client has been (selectively) leaking my work, I don’t particularly feel bound by any of the usual confidentiality provisions. So here’s what actually happened:

HESA did do some work for the New Brunswick government – specifically, the Ministry of Advanced Education and Labour – in the fall of 2011.  We were asked two questions.  One, were the back-end subsidies New Brunswick was then using (a timely-completion loan remission program, the usual tuition & education tax credits and a graduate tax benefit) effective?  Two, could we come up with some more interesting ways to use that money? 

To the first question, we answered no, for a variety of reasons which, if you’re a regular reader, you can probably guess.  To the second question we said the money should be used three ways.  One, a new grant program to deal with “unmet need” (that is, need in excess of current aid maximums), which primarily would have benefitted students with dependents.  Second, because student debt and repayment is a much more serious problem in the Maritimes than it is in the rest of the country (because of higher debt & lower graduate incomes), we suggested a hard debt-ceiling of $7,000 per year, with the remainder turned into grants.  Last, we suggested some investment in early-intervention programs.  We did NOT suggest anything like what the provincial government has done.  And frankly I’m more than a bit teed off the present government chose to publicly present our findings that way.

Bottom line: getting rid of tax credits is good.  Re-investing funds in a way that concentrates more spending on lower-income students is good.  Bravo to New Brunswick to getting those two things right.  But details matter.  This government got the details wrong by not fully re-investing and putting too high a burden on middle-income students.  It needs to fix this.

May 06

What Ottawa Spends

The Parliamentary Budget Officer did everyone a solid yesterday by publishing a really helpful compilation of federal government expenditures on higher education. According to the publication, the Government of Canada in 2013-14 spent $12.3 billion on post-secondary education (not including money for apprenticeships, training programs or labour market agreements; that includes $5.1 billion for “human capital measures”, which is mostly Canada Student Loans and Tax Expenditures of various kinds, $3.5 billion for research, three-quarters of which is from the granting councils and the remainder through various departmental programs, and $3.7 billion through the Canada Social Transfer, which is a theoretically earmarked.

The graph below shows the evolution in expenditures in nominal dollar. While the growth is therefore somewhat exaggerated because of inflation, it’s interesting to note that overall, expenditures increased by a third, from $9 billion to $12 billion, between 2005-6 and 2013-14. This would have been a very good talking point for the Tories in the last election; it’s a bit of a mystery why they didn’t use it.

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(In case you’re wondering what the bump in human capital formation spending is in 2009-10 and 2010-11, I’m pretty sure it’s the cost of the transitional measures relating to the end of the Millennium Scholarship Foundation).

The report has a nice little projection about what future expenditures in post-secondary are going to be. The PBO seems to think there’s going to be a lot of cost growth because of an upswing in student numbers. I think that’s somewhat unlikely given the demographics; on the other hand, I think there will be cost growth as an increasing number of students figure out that they are eligible for free money under the new student aid arrangements. So it’s probably a wash. In any event, here’s what’s PBO thinks the future looks like:

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The one bit of the report I find a little off is the section on who is using tax credits. The problem with analyzing the use of tax credits is that it combines parental use of tax credits with student use of tax credits. This is a problem because students are concentrated in the bottom income deciles. So if the child of a millionaire uses tax credits, it’s counted as being used by Canadians from the bottom quintile of income, which let’s be honest is a bit misleading. But still, overall, this makes a powerful point: tax expenditures are skewed to the wealthier end of society and it’s an awfully good thing that they are being phased out in order to fund poorer students.

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(Remember though: the reason tax benefits are skewed to upper quintiles isn’t because they are worth more to those individuals. These are credits, not deductions. No, the reason they are skewed is because the children of parents from upper-income quartiles are that much more likely to attend higher education and especially universities. In other words, *all* spending on higher education gets distributed this way. Which is a prime reason why education should not be free – this is the way the benefits of such a move would be skewed).

Anyways, there’s nothing special or complicated about the PBO analysis. It’s just really nice to have all this stuff well documented and presented in a straightforward manner in one place. Kudos.

(Note: I will be taking a break from blogging next week. Back on May 16)

May 05

Massification Causes Stratification

Once upon a time, higher education was small.  Really small.  Only a very few people could enter it, and the value of a degree was enormous.  Not just in terms of skills/knowledge acquired, or the credential, but also social status.  If you’re a fan of Elena Ferrante’s Neapolitan novels, just look at the leap in social status and life chances that Elena experiences when she makes it to the Scuola Normale in Pisa (which, by the way, I’ve not quite figured out – why didn’t her teachers route her to the Università degli Studi di Napoli?).  It alters her life in ways far beyond what university access does today.

Now at some point – the exact timing varies by country – governments decided that higher education needed to “massify”.  Partly, this was to meet the needs of an increasingly knowledge-based economy, and the services that go with it (better health care and education), but in part it was also to “democratize” higher education, and make it less exclusive.

And that’s where things get tricky.  Massification can widen access to knowledge, skills and credentials.  But it cannot widen access to status.  Status is a game of “who are the cool kids” where membership must, by definition, be exclusive.  Government policy cannot make the cool kids let people into to club.  If it tries, the cool kids will change the rules of the game (read Andrew Potter & Joseph Heath’s The Rebel Sell for more on this).  

Two things happens in virtually every country where massification occurs. The first is a concomitant increase in graduate education.  Partly, that can be justified in the same terms as the expansion of undergraduate education – producing more specialists, more people able to teach others, etc.  But often it’s simply an arms race.  You have a degree?  Bully for you – I have two.

The second is stratification within higher education.  As governments (or non-profit private institutions in some countries) expanded the number of institutions to meet rising demand, institutions didn’t all obtain the same level of prestige.  So another way the “cool kids” game plays out is that you start to see an increasing concentration of prestige at a very few schools: Todai & Kyoto in Japan; Peking, Tsinghua and Fudan in China; Harvard, MIT and Stanford in the US.  It’s now no longer if you go, it’s where you go  (if you want any nauseating details on that from the US, I highly recommend Lauren Rivera’s Pedigree). You’d better believe that rich parents then do what they can to make sure it’s their kid and not someone else’s who makes into those institutions.

In Canada, we don’t see this quite as much as in other countries because of a peculiarity of our higher ed system.  We don’t have national exams, and we don’t use SATs, which reduces some of the push towards exclusivity.  We also are peculiar in the sense that our top institutions are simply gargantuan.  The top three institutions in the US accept maybe 0.1% of the incoming undergraduate class; the top three institutions in Canada accept about 10% of the incoming undergraduate population (thanks to Joe Heath and his In Due Course blog for this observation).  It simply isn’t as special to be at a top institution.  But it’s worth remembering what an outlier that makes us on the international field.

In much of the developed world what we worry about is not so much access to college or undergraduate studies; we’ve more or less got that under control though obviously there’s room for improvement.  Now we’re starting to fixate on where people go: are we creating one group of (mainly rich) students going to elite, prestigious universities and another group of (mainly poorer) students going to less elite schools?

Ensuring every student goes to an equally prestigious school is an impossible task.  Government can increase access to education, skills and knowledge; it cannot increase access to prestige.  Prestige, like “cool,” is a fixed-sum thing: you have it in part to the extent that I do not.  If that weren’t true, then your mom could be cool, for God’s sake.  And as long as access to these top schools is “merit-based” and “merit” is defined as good grades, it’s difficult to imagine ways to stop wealthier families from monopolizing positions in these schools because they are better able to pass on various academic advantages to their children.  As John Rawls said, it’s only ever possible to deal with inequality imperfectly, as long as families exist.

(There actually was one government that tried to deal with this head on. The military government of Chun-Doo Hwan in South Korea  shut down the Hagwons (cram schools) in order to try to make the university entrance system fairer to poorer students.  This tactic did not survive the country’s transition to democracy.)

There is a partial answer to this problem, and that is lotteries.  Instead of allowing the minimum admissions criteria to be bid up in a competitive manner (e.g only the top 30 applicants get a place), set a minimum threshold which maybe 200 students could meet, and distribute the places by lottery.  The Dutch do this for limited-enrolment programs and it seems to work out alright. It’s difficult to imagine Harvard doing it, but one can dream.  Because it’s hard to imagine making a serious dent in stratification without more radical measures than the ones we’re currently using.

May 04

Diverse Sacrifices, Diverse Rewards, Diverse Policies

One of the trickiest things about developing smart higher education policy is that its clients are unbelievably diverse: privileged private-school educated 18 year-olds, first-generation students, working adults, etc.  And the returns to education are equally diverse: strong for Bachelors’ and Master’s Degrees but less so for Doctorates, often strong in professionally-oriented fields and less so in Arts (at least in the first few years).  Coming up with reasonable pricing and student aid policies that can be generally accepted as fair across in the face of all this diversity is a very tricky job indeed.

The first part of this was brought home to me recently when we saw the results of some research  conducted by British Columbia on mature students across Canada.  One of the questions asked was “what’s the biggest sacrifice you have had to make to go back to school”?  The sheer range of answers we got was astonishing.  At one end, there were answers like “I had to give up my gym/yoga membership”, or “I had to give up quinoa” (a high proportion of these, it should be said, came from British Columbia).  The most common response was that people’s social lives were negatively affected because they could no longer afford to eat out with friends.

But at the other end of the spectrum there were some pretty horrific responses.  People who had to pull their kids out of sports teams.  People choosing between rent and food, or rent and medicine.  People who had had spells of homelessness.   All told, the results showed that the several thousand student-aid receiving mature students surveyed, just short of ten percent had experienced a significant form of food or housing precariousness while being a student.

Simply put, there are students who really have very little need of extra help, and there are students who need a lot more help than they currently receive.  This is precisely why the kind of system towards which Canada’s student aid programs are evolving is a good thing: we are withdrawing support from better-off students and concentrating it among worse-off students.  Could we do better?   Sure.  In particular we could do more for the people I call “involuntary students” – people in their 30s or 40s who have cars and houses but who suddenly lose their job and need to re-train.  But the point is, we need more targeted aid, not less.  One-size fits all policies are unhelpful.

It is the same with respect to returns to education.  It is a simple slogan to say that education must be free, that education must not be commoditized.  But it is also a simplistic one.  Low prices (net or sticker) can make a difference in terms of attracting low-income students.  But they also provide huge windfall benefits to students in fields with above-average returns, and it’s really hard to argue that there is any kind of public policy rationale for pricing a public service in such a way that some students (say, in ECE programs) see a very low private return and other students (say, in Dentistry programs) see a very high private return.  There is a way to square this circle: it’s to charge different amounts based on the field of study, and deal with the negative effects of higher fees through income-targeted grants.  Although not all of Canada looks like this, it is more or less the way the system currently works in Ontario. 

The point here is simply this: higher education is not a simple field.  It has many purposes, many clients, many outcomes.  To make it work properly, the policies and regulations which govern it need to be sensitive to this diversity.  Any higher education policy which you can put on a button or a bumper-sticker is therefore likely to be either wrong or wasteful.  

May 03

Disturbing Portents for the Liberal Innovation Policy

Allow me to draw everyone’s attention to a piece last week in the Huffington Post called “How the Liberal Party Plans to Innovate the Way We Innovate”.  The piece was written by a Liberal-connected PR/GR flack named Greg MacNeil who works at “public affairs” (read: lobbying) firm Ensight Canada.

MacNeil starts by asserting that “following Budget 2016, it is clear that when it comes to the innovation agenda, the government’s intentions are substantive”, which is nonsense: the budget simply introduced a price-tag ($800 million for some tech clusters) and some placeholders.  He goes on to state: “the challenge in the past has always been that the various funding and program buckets have been siloed across government. The Liberals are changing that. This new one-window approach will make it easier for organizations to navigate the system and access the information and funding they need. The government believes that this approach can help expand the pre-existing innovation sector in Canada and subsequently grow jobs and investment.”

Question: Does anyone actually believe that the problem with innovation in Canada is that there is no one-stop shop for federal funding?  That the reason firms don’t spend their own money to innovate is because it’s not easy enough to suck money out of the federal bureaucracy?

Question: Does the phrase “innovation sector”, and the implication that innovation isn’t something that happens right across the economy, give you the screaming heebie-jeebies?  Could there possibly be a stronger signal that the government thinks of innovation only in terms of new product innovation?

More from MacNeil: “This innovation strategy will also play a major role in Canada’s multilateral and bilateral relations. Until now, Canada has been one of only a few G7 countries without a specific innovation strategy in place. Many other western countries not only have innovation strategies, but are regularly updating them on an annual basis”

Question: “one of only a few”…out of seven.  Doesn’t sound particularly out of the ordinary to me.  And why on earth does this matter to our foreign relations?  If we’d at any point wanted to put more money and effort into international scientific collaborations, we’d have done so by changing rules on council funding, not developing strategic plans.

MacNeil: “By coordinating these efforts, the government hopes that it will be better positioned to take on serious global issues impacting Canada and our allies in areas like climate change, the arctic and cancer research. Further, it could afford us an opportunity to invest in areas where we would be true pioneers, like quantum computing, as opposed to competing in areas that are already dominated by foreign countries.”

Wait – allies?  Are we only collaborating with NATO countries now?  “Invest in areas where we could be true pioneers as opposed to competing in areas already dominated by foreign countries”?  Interesting approach to industrial policy I suppose – but how does collaborating with other countries give us an advantage in blue ocean sectors?  By definition, wouldn’t our partners get a leg up in these areas, too? 

There is so much to question in this little tract: like, why is an external GR flack trial-ballooning innovation policy ideas on behalf of Liberal Ministers?  Why would anyone think a little bureaucratic rationalization would have an effect on innovation levels in the economy?  Do the Liberals really think that Canadians cannot successfully innovate and compete in areas where companies in foreign countries already work – that we can only “win” if no one is competing against us?  Do they have even the slightest sense that innovation is about more than new inventions?  And why – oh dear God why – does anyone think it is acceptable to write an entire article about innovation policy without ever using the words “firm” or “company” once?

If this really is the basis for the new Liberal innovation plan, we all ought to be very worried indeed.

May 02

What’s Going On With College Graduates in Ontario?

I see that Ken Coates and Bill Morrison have just written a new book  called Dream Factories: Why Universities Won’t Solve The Youth Jobs Crisis.  I haven’t read it yet, but judging by the title I’d assume that it makes pretty much the same argument Coates made back in this 2015 paper  for the Canadian Council of Chief Executives, which in effect was “fewer university students, more tradespeople!” (my critique of this paper is here)

With the fall in commodity prices, it’s an odd time to be making claims like this (remember when we had a Skills Gap?  When’s the last time you heard that phrase?).  There’s no evidence based on wages data that trades-related occupations are experiencing greater growth that those in the rest of the economy – since 2007, wages in these occupations have grown at exactly the same rate as the overall economy.  True, occupations in the natural resource sector did experience higher-than-average growth between 2010 and 2014, but unsurprisingly they underperformed the rest of the economy in 2015.  (see figure 1).  More to the point, perhaps, these jobs aren’t a particularly large sector of the economy – if you exclude the mostly seasonal agricultural harvesting category, Canada only has about 265,000 workers in this field.  That’s less than 1.5% of total employment.

Figure 1: Real Wage Increases by Occupation, Canada, 2007-2015, 2007=100

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Source: CANSIM

More generally, though, the assumption of Coates and those like him is that in the “new” post-crisis  economy college graduates have qualitatively different (and better) outcomes than university graduates, too.  But a quick look at the actual data suggests this isn’t the case.  Figure 2 shows employment rates 6-months out of college graduates in Ontario over the past decade.  Turns out college graduates have experience more or less the same labour market as university students: an almighty fall post-Lehmann brothers and no improvement thereafter.

Figure 2: Employment Rates of College Graduates, Ontario, 2005-2015

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Source: Colleges Ontario Key Performance Indicators

The decline in employment rates can’t really be described as a regional phenomenon, either.  There is not a single college which can boast better employment rates today than it had in 2008: most have seen their rates fall by between 4 and 7 percentage points.  The worst performer is Centennial College, where employment rates have fallen by 13 percentage points; one wonders whether Centennial’s performance has something to do with the very rapid growth in the number of international students it has started accepting in the last decade.

Figure 3: Change in Employment Rates 2008-2015

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Source: Colleges Ontario Key Performance Indicators

So what’s going on here?  Is there something that’s changed in college teaching?  Is it falling behind the times?  Well, not according to employers.  Satisfaction rates among employers stayed rock-solid over the period where employment rates fell; and although there has been a slight decline  in the last couple of years, the percentage saying they are satisfied or very satisfied remains over 90%.  Graduate satisfaction fell a bit during the late 00s when employment rates fell, but they too remain very close to where they were pre-crisis.

Figure 4: Employer & Student Satisfaction Rates for College Graduates, Ontario, 2005-2015

2016-05-01-4

Source: Colleges Ontario Key Performance Indicators

My point here is not that colleges are “bad” or universities are “better”.  Rather, my point is that if you measure the success of any part of the post-secondary system exclusively by employment rates, then you’re basically hostage to economic cycles.  Some parts of the cycle might make you look good and others might look bad; regardless, it’s largely out of your hands. So, maybe we should stop focusing so much on this.  And we should definitely stop pretending colleges and universities are different in this respect.

April 29

Free Harvard Fair Harvard

Harvard has a unique Governance structure.  Basically, it has two boards and no Senate.  One of the two boards – the Board of Overseers – is composed entirely of Harvard alumni.  It has thirty members and the membership turns over a bit each year with annual elections.  This year’s annual election is a bit of a doozy.

Back in January, an alumni and businessman by the name of Ron Unz submitted a slate of candidates – which included consumer activist and former Green Party presidential candidate Ralph Nader – on a “Free Harvard/Fair Harvard” platform.  His double-barreled manifesto, as its name implies, is to get Harvard first use some of its vast endowment to reduce tuition and second to move to a system of race-blind admissions.

What should we make of this?

Well, the first demand is ludicrous.  75% of Harvard graduates end up with no debt, either because they come from wealth and can afford the fees or have income sufficiently low that they received something close to a full ride (technically, Harvard doesn’t give a full-ride in the sense that a student will be expected to work a few hours a week no matter what, but it’s awfully close).   In practice, for a family of 3 with no assets outside of housing and retirement funds, income needs to be about $150,000/year before the aid package drops below the level of tuition (you can play with Harvard’s net price calculator here.  Pretty clearly then, making Harvard “free” genuinely would only benefit those with very high family income.  And frankly why would anyone want to do that?

The second demand is trickier.  The slate is making quite a bit of hay out of data that Asian-American students are being discriminated against in the application process.  Unz himself wrote quite a fierce piece on this in 2012, which suggested that as far as Ivy League admissions are concerned, Asians are the “new Jews” – a reference to the fact that Ivies imposed much higher entrance requirements on Jews than gentiles prior to WWII so that the former did not swamp the latter and drive away all those nice WASPs to whom the Ivies were in fact beholden for fund raising (this story is told in excellent detail in Jerome Karabel’s The Chosen, which is a history of admissions and the concept of merit at Ivy League schools).  Unz in effect argues – and it is difficult to disagree with him, based on the evidence – that increasingly the group that is “paying” for affirmative action (that is, policies which give Black and Hispanic students preferential access to spots at Ivy League schools) is Asian-Americans, not whites.

There’s no doubt that Unz’s narrative is troubling (though it should be noted not all his claims appear to be factually correct).  That said, his solution here is effectively to end affirmative action.  Given the extent to which Harvard graduates dominate public life in the United States, ending affirmative action would have an enormous effect on the ability of Blacks and Hispanics to access some of the upper corridors of American society.  Add that to the fact that Unz has in the past funded groups with some fairly unpleasant white supremacist associations, as well as sponsoring ballot initiatives against bilingual education, and you can see why some people think that behind Unz’ pre-occupation with fairness for Asian-Americans lie some much nastier anti-Black and anti-Hispanic prejudices.

The presence of the Unz slate has prompted the formation of an opposing “Coalition for a Diverse Harvard” slate, which is vigorously defending the current admissions system.   The balloting is by mail, and results will be announced on May 26th.  The results will be closely watched, particularly in a Presidential election year.  If Harvard’s own alumni – a group which you’d think would be in the tank for the Democrats – votes against affirmative action and for spending more endowment money on the richest of the rich, it will cause some interesting ripples in the campaign.  For that reason, I think it’s quite unlikely to come about, but then again I wouldn’t have guessed Ralph Nader would ally himself with this set of ideas, either.

April 28

Two Theories About University Governance

I recently had a chat with a colleague about a piece I wrote a few years ago called “Time for a New Duff-Berdahl”.  And over the course of the conversation we came up with two theories about university governance in Canada (and elsewhere I suppose).

Theory #1 is that we have a governance problem because we have lost the culture of informal engagement within universities.  Back when universities were smaller, and when faculty spent a whole heck of a lot more time on campus, they would sit and talk together in coffee lounges.  There were also faculty clubs where Deans, and vice-presidents were easily accessible.  Basically, there were a lot of places you could have low-stakes discussions about the direction of the university outside of formal bodies like Senate and Board, and that was to the good for four reasons.  One, people knew each other better and that reduced the tendency towards demonization of opponents; two, low-stakes discussions (as opposed to formal ones in decision-making bodies) tend to lead to a more open exchange of ideas and hopefully coming to a little bit more common ground; three, in practice a whole lot more people got to participate in these discussions and as a result; four, institutional culture was more cohesive and so there was a lot less petulant foot-stamping all around.

What follows from theory #1 is that somehow, we have to find ways to re-create that kind of engagement.  It’s a tricky one because you can’t just re-open all those faculty clubs that were shut in the 90s, and you can’t force people to spend more time on campus because God only knows the fuss that would create and you can’t go out directly and do something like an “engagement exercise” because faculty would smell a rat and you can’t hold town halls because “OMG More Meetings”?  But presumably some creative types could imagine ways to create a little more common culture in the name of creating a better shared campus culture.

Theory #2 accepts the basic premise of Theory #1 – not enough shared culture – but basically says any attempt to try and reform it is doomed to failure.  As research has taken on a prominent role in our universities, the culture of academia has made academics care a whole lot more about their discipline than their university.  More to the point, profs are much more likely to be collaborating with colleagues at other universities than inside their own.  So, frankly, why should they care about better institutional governance?

It’s a collective action problem, really.  Pretty much everyone cares about shared, collegial governance, but almost no one cares enough to put in the hours necessary to make it work.  So profs in effect outsource the tough work to administrators, who they find irritating in many ways, but not quite irritating enough to make profs do the work on their own.  For good measure they unionize, which is arguably a way of outsourcing the task of sticking it to administrators when something goes wrong.  Hedging, you see.  And so, effectively in the name of professorial convenience, you get an administration/union dynamic which dominates what used to be a Board/Senate dynamic.

Yet what I found interesting about what has happened at UBC over the last four months is that when faculty decided to start engaging with university governance (which I wrote about back here), they didn’t do so primarily through their faculty union (not that UBCFA was indifferent, just that it was not always taking the lead).  Come crisis time, faculty sometimes still have the old collective-governance instinct.  The question is: is there a way to make that ethos come through even in the absence of a crisis?  Theory #1 says there is, theory #2 says Good Luck With That.

Curious what you readers think: have a go in the comments section, I’d be interested to hear your views.

 

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