HESA

Higher Education Strategy Associates

Category Archives: History Lesson

September 22

Twenty Years Ago Sunday

Five years ago I wrote the following blog, under the headline “fifteen years ago today”.  I think it’s worth running again (with a couple of minor alterations).

On September 24th, 1997, Jean Chrétien rose in the House of Commons to present his reply to the Speech from the Throne. About half-way in, he noted casually that there would likely be a financial surplus that year (a miracle, considering where we’d been in 1995). And he was planning to blow it on something called “Millennium Scholarships.”

Until that exact moment, his caucus had been in the dark about the idea. Indeed, cabinet had been in the dark until the day before. So, too, had the Privy Council Office – Chrétien had deliberately kept them out of the loop because he knew they’d hate it on section 93 grounds and try to top him.

The way the project was pursued in the run-up to the 1998 budget didn’t do the Foundation any favours. There were two basic problems. The first was that it wasn’t clear for months whether these were going to be merit scholarships or need-based grants (in French, the word “bourse” covers both). The public servants at HRDC and Paul Martin wanted it to be about need because they saw the political hay people were making about increasing student debt (note: unlike today, this was a time when debt actually was increasing quite rapidly); Pierre Pettigrew and the Finance mandarins wanted it to be about merit, but for different reasons. Pettigrew has his eye on Quebec and its not unreasonable complaint that the feds were duplicating a provincial program and thought a more merit-based program would take the edge off that argument.  Finance, I think, wanted merit because the top folks there wanted a culture shift in Canada to promote merit (they were also pretty much all Queen’s grads, as far as I could tell, which may or may not explain the fixation).

In the end, 95% was distributed “primarily” on the basis of need, while 5% went to merit. This mix was about right; broad fears of rising tuition and debt required a policy response that emphasized need. Conversely, had more been allocated to merit, the Excellence Awards the Foundation eventually developed would have been devalued – part of what made them special was the fact that they weren’t available to the tens of thousands of students originally envisaged.

The second problem was that no one in Ottawa – including HRDC – really understood how student aid worked. The result was a commitment to give the Foundation’s need-based aid to students with “the highest need” – that is, to exactly the students who already received grants from the provinces. The result was that Millennium awards ended up saving provincial aid programs a bucket-load of money. The Foundation did its best to get provinces to re-invest that money in things that would benefit students. Apart from in Nova Scotia it was reasonably successful though it didn’t always seem that way to the students who were bursary recipients. With some justification, those students were sometimes disappointed; Eddie Goldenberg, the Prime Minister’s Senior Political Advisor whose views on fed-prov relations were…well, let’s just say they lacked subtlety…was apoplectic.

This isn’t the place to recount the Foundation’s history (for that, I recommend Silver Donald Cameron’s book A Million Futures). All you really need to know is that for ten years, the Foundation ran a national social program that wasn’t based in Ottawa and wasn’t one-size fits all. It ran a merit program that was much more than just money-for-marks, and was rigorous about using empirical research to improve our understanding of how to improve access to higher education. It was just a different way of doing student aid.

Now, I’m biased, of course.  I worked at the Foundation.  I met my wife there.  Had Chrietien not risen in the House that day, my daughter literally would not exist and the world would be deprived of its smartest and most beautiful 8 year-old ballet dancer/sumo enthusiast.  But even if none of that were true, I’d still stand by my final comment from five years ago:

The Foundation was created on the back of a cocktail napkin, and suffered from a profoundly goofy governance structure. But within the boundaries of that cocktail napkin, a lot of neat stuff happened. And even though some of what was best about the Foundation has been taken up by the federal government since its demise, the country’s still worse off now that the Foundation’s gone.

May 26

Lessons from the Rise of Tax Credits

I’m feeling low on creativity today, so I’m going to go to that old stand-by: telling war stories. And specifically, I’m going to go back and trace the rise of tax credits in the Canadian higher education system and what that tells us about policy-making in Canada.

Tax benefits for education go back to the late 1950s. There was pressure at the time to create a “national system of scholarships”, but this clearly was going to cause problems in Quebec. But Prime Minister Diefenbaker, on the advice of Ted Rogers and with the assistance of Brian Mulroney, found a way around this which was acceptable to Quebec: namely, by making tuition fees tax deductible. Lesson #1: the federal government in part views tax expenditures as a way to get around troublesome provinces.

These tax deductions for tuition and a monthly “education amount” were turned into tax credits in a general tax reform introduced in 1988 by then-Finance Minister Michael Wilson (which is still arguably the greatest thing any Conservative finance minister has done in my lifetime). The tuition credit did not include ancillary fees and the monthly amount was $60/month. And there it stayed until 1996.

Budget 1996 was not a happy time in Canadian history. As far as most people were concerned, we were in year 6 of a recession (a real one, where unemployment hit double digits and a third of the island of Montreal was on social assistance/EI, not like the past few years). The stomach-churning Quebec referendum night was less than four months in the past. The country was broke, and the logic of Paul Martin’s epoch-defining 1995 Budget meant that fiscal room for anything new was just about zero. Yet the government wanted to show that the federal government could still be relevant, particularly around youth unemployment, which was a concern at the time. So what did they do?

They upped the education tax credit to $80/month.

I know that sounds meagre. Trust me, in the context of February 1996, this was a moderately big deal. But it was the 1959 logic at work again. Need to show the feds can do something about an issue that matters to Canadians but is mostly in provincial control? Use the tax system!

Then in December 1996, the Finance Department’s pre-budget polling (which in those days was always, always, always done by Earnscliffe) numbers came in and they showed – totally unexpectedly – that education was suddenly the number two issue for Canadian voters. Terrie O’Leary, Paul Martin’s formidable chief of staff, immediately went to the office of Don Drummond (now Chief Economist at TD, then the ADM at Finance in charge of the budget). The conversation, the best I can reconstruct it from a couple of different sources, went like this:

O’Leary: I want something on education in the budget.

Drummond: (Acutely aware that the budget date was only about ten weeks away and it’s desperately late to start screwing around with it at this point): Not unless you want a replay of the Scientific Tax Credits fiasco.

O’Leary:  <A string of choice expletives to the general effect of “don’t talk back to me”>.

Well, of course Drummond needn’t have worried because when it doubt: tax credits!  The vehicle was already there, so they just juiced it. The $80/month education amount jumped in stages to $200/month, a smaller credit was added from part-time students, and the definition of tuition tax credits was expanded to include ancillary fees. Bonus: unlike the changes to Canada Student Loans and the Millennium Scholarships which were announced in the following year’s budget, there was no tedious negotiations with provinces. Lesson #2: tax credits are sometimes a tool of choice because they’re easy and quick to implement.

Then of course, the economy improved and Paul Martin started getting generous. In the fall 2000 mini-budget which preceded that year’s election (the Stockwell Day election, in case you’ve erased that period from your memory), he doubled the value of the education amount to $400/month for full time students and $120/month for part-timers.  Why? Well, in the preceding election, the Liberals had promised that any surplus money (and we started running surpluses in 1998), would go 50% to new programs and 50% to “debt reduction and tax cuts” (relative proportions not specified). It finally occurred to the Liberals that under this regime tax credits were gold, because depending on one’s choice of definition, tax credits could be counted as an expenditure or as a tax cut. And yes, they counted these as both, to suit the occasion. Lesson #3: tax credits are attractive because the communications around them are flexible.

That was more or less the high point of education tax credits in Canada. After that, they started to gradually fall out of favour. Quebec (2012) and Ontario (2016) have both abolished their credits, and Budget 2016 saw the feds abandon them in favour of higher grants. I suspect they will disappear from the provincial level over the coming decade.

But the point I want you to take here is not that government was misguided about tax credits back then and is smarter now. Apart from a couple of zealots in the Finance Department who prattle on about tax treatment of human capital, no one in the 1990s genuinely thought that tax credits were a particularly good tool to get money to students. What they had over other more direct means of support was convenience, simplicity, and the ability to be implemented completely independently of what a bunch of tiresome provinces think. In the late 1990s – the High Era of Competitive Federalism – that stuff mattered a lot more than it does today. If those conditions ever return, it would be easy enough to see how tax credits as a funding mechanism could return, too.

 

April 11

Populists and Universities, Round Two

There is a lot of talk these days about populists and universities.  There are all kinds of thinkpieces about “universities and Trump”, “universities and Brexit”, etc.  Just the other day, Sir Peter Scott delivered a lecture on “Populism and the Academy” at OISE, saying that over the past twelve months it has sometimes felt like universities were “on the wrong side of history”.

Speaking of history, one of the things that I find a bit odd about this whole discussion is how little the present discussion is informed by the last time this happened – namely, the populist wave of the 1890s in the United States.  Though the populists never took power nationally, they did capture statehouses in many southern and western states, most of whom had relatively recently taken advantage of the Morrill Act to establish important state universities.  And so we do have at least some historical record to work from – one that was very ably summarized by Scott Gelber in his book The University and the People.

The turn-of-the-20th-century populists wanted three things from universities. First, they wanted them to be accessible to farmers’ children – by which they meant both laxer admissions standards and “cheap”.  That didn’t necessarily mean they wanted to increase expenditures on university budgets substantially (though in practice universities did OK under populist governors and legislators); what it meant was they wanted tuition to remain low and if that entailed universities having to tighten their belts, so be it.  And the legacy of the populists lives on today: average state tuition in the US still has a remarkable correlation to William Jennings Bryan’s share of the vote in the 1896 Presidential election.

 

Fig 1: 2014-15 In-State Tuition Versus William Jennings Bryan’s Vote Share in 1896

Populism Graph

 

The second thing populists wanted was more “practical” education.  They were not into learning for the sake of learning, they were into learning for the sake of material progress and making life easier for workers and farmers; in many ways, one could argue that their attitude about the purpose of higher education was pretty close to that of Deng/Jiang-era China.  And to some extent they were pushing on an open door because the land-grant universities – particularly the A&Ms – were already supposed to have that mandate.

But there was a tension in the populists’ views on curriculum.  They weren’t crazy about law and humanities programs at state universities (too much useless high culture that divided the masses from the classes), but they did grasp that an awful lot of people who were successful in politics had gone through law and humanities programs and – so to speak – learned the tricks of the trade there (recall that rhetoric was one of the seven Liberal arts which still played a role in 19th century curricula).  And so, there was also concern that if public higher education were made too vocational, its beneficiaries would still be at a disadvantage politically.  There were various solutions to this problem, not all of which were to the benefit of humanities subjects, but the key point was this: universities should remain places where leaders are made.  If that meant reading some Marcus Aurelius, so be it: universities were a ladder into the ruling class, and the populists wanted to make sure their kids were on it.

And here, I think is where times have really changed. The new populists are, in a sense, more Gramscian than their predecessors.  They get that universities are ladders to power for individuals, but they also understand that the cultural function of universities goes well beyond that.  Universities are – perhaps even more so than the entertainment industry – arbiters of acceptable political discourse.  They are where the hegemonic culture is made.  And however much they may want their own kids to get a good education, today’s populists really want to smash those sources of cultural hegemony.

This is, obviously, not good for universities.  We can – as Peter Scott suggested – spend more time trying to make universities “relevant” to the communities that surround them.  Nothing wrong with that.  We can keep plugging away at access: that’s a given no matter who is in power.  But on the core issue of the culture of universities, there is no compromise.  Truth and open debate matter.  A commitment to the scientific method and free inquiry matter.  Sure, universities can exist without these things: see China, or Saudi Arabia.  But not here.  That’s what makes our universities different and, frankly, better.

No compromise, no pasarán.

April 06

Lessons from Mid-Century Soviet Higher Education

I’ve been reading Benjamin Tromly’s excellent book Making the Soviet Intelligentsia: Universities and Intellectual Life under Stalin and Khrushchev. It’s full of fascinating tidbits with surprising relevance to higher education dilemmas of the here and now. To wit:

1) Access is mostly about cultural capital.

There were times and places where communists waged war on the educated, because the educated were by definition bourgeois. In China during the cultural revolution, or in places like Poland and East Germany after WWII, admission to higher education was effectively restricted to the children of “politically reliable classes”, meaning workers and peasants (if you wondered why urban Chinese parents are so OK with the punishing gaokao system, it’s because however insane and sadistic it seems, it’s better than what came before it).

But in the postwar Soviet Union, things were very different. Because of the purges of the 1930s, a whole class of replacement white-collar functionaries had emerged, loyal to Stalin, and he wanted to reward them. This he did by going entirely the opposite direction to his east European satellite regimes and making access to higher education purely about academic “merit” as measured by exams and the like. The result? By 1952, in a regime with free tuition and universal stipends for students, roughly 80% of students had social origin in the professional classes (i.e. party employees, engineers, scientists, teachers and doctors). The children of workers and farmers, who made up the overwhelming majority of the country’s population, had to make do with just the other 20%.

2)  The middle-class will pull whatever strings necessary to maintain their kids’ class position.

Khrushchev was not especially happy about the development of a hereditary intelligentsia, which made itself out to morally superior because of its extra years of education. Basically, he felt students were putting on airs and needed to be reminded that all that training they were receiving was in order to serve the working class, not to stand above it. And so, in 1958, he tried to shake things up by slapping a requirement on university admissions that reserved 80 per cent of places to individuals who has spent two years in gainful employment. This, he felt, would transform the student body and make it more at one with the toiling masses.

This has some predictably disastrous effects on admissions, as making people spend two years out of school before taking entrance exams tends to have fairly calamitous effects on exam results. But while the measure did give a big leg up to the children of workers and peasants (their numbers at universities doubled after the change, though many dropped out soon afterwards due to inadequate preparation), what was interesting was how far the Moscow/Leningrad elites would go to try to rig the system in their children’s favour. Some would try to get their children into two year “mental labor” jobs such as working as a lab assistant; others would find ways to falsify their children’s “production records”. Eventually the policy was reversed because the hard science disciplines argued the new system was undermining their ability to recruit the best and brightest. But in the meantime, the intelligentsia managed to keep their share of enrolments above 50%, which was definitely not what Khrushchev wanted.

3) Institutional prestige is not a function of neo-liberalism.

We sometimes hear about how rankings and institutional prestige are all a product of induced competition, neo-liberalism, yadda yadda. Take one look at the accounts of Soviet students and you’ll know that’s nonsense. Prestige hierarchies exist everywhere, and in the mid-century Soviet Union, everyone knew that the place to study was Lomonosov Moscow State University, end of story.

Remember Joseph Fiennes’ final monologue in Enemy at the Gates?  “In this world, even a Soviet one, there will always be rich and poor. Rich in gifts, poor in gifts…”. It’s true of universities too. Pecking orders exist regardless of regime type.

4) The graduate labour market is about self-actualization

One of the big selling points of the Soviet higher education system was the claim that “all graduates received a job at the end of their studies”. To the ears of western students from the 1970s onwards, who faced the potential of unemployment or underemployment after graduation, that sounded pretty good.

Except that it didn’t to Soviet students. A lot of those “guaranteed” jobs either took students a long way from their studies they loved (“I trained to be a nuclear scientist and now you want me to teach secondary school?”) or the big cities they loved (“I’m being sent to which Siberian oblast”?) or both. And failure to accept the job that was assigned was – in theory at least – punishable by imprisonment.

Yet despite the threat of punishment, Soviet students found a way to evade the rules. Getting married (preferably to someone from Moscow) was a good way to avoid being sent to the provinces. Many simply deserted their posts and found work elsewhere. And some – get this – enrolled in grad school to avoid a job they didn’t want (would never happen here of course).

The point here being: people have dreams for themselves, and these rarely match up neatly with the labour market, whether that market is free or planned. There’s no system in the world that can satisfy everyone; at some point, all systems have to disappoint at least some people. But that doesn’t mean they will take their disappointment lying down. Dreams are tough to kill.

 

March 24

Representing Universities

Some light reading today, after a heavy week.

There’s a lot of talk these days about the political divide between those with higher education and those without. But I want to take you back to a time, where that political divide was made real. A time when universities actually had their own seats in Parliament, non-physical constituencies where the electors were made up entirely of alumni.

The practice of granting universities representation in Parliament seems to originate in Scotland sometime in the late 15th or early 16th centuries; certainly by the time James VI of Scotland took the Crown of England in 1603, it was well established. Upon James’ accession to the throne in London, he created Parliamentary constituencies for both Oxford and Cambridge, and gave each two seats (i.e. they were multi-member constituencies and the top two vote-getters won seats). Oxford’s church connections meant that it reliably delivered Royalist or Tory MPs, and some of the greatest names of the age represented it in Parliament, including Isaac Newton and Francis Bacon. Cambridge, on the other hand, was a hotbed of revolutionary activity and was represented at various points by two of Oliver Cromwell’s sons. Briefly, this system spread to the colonies: in the late seventeenth century William & Mary had a seat in the Virginia legislature.

As university education expanded in the UK, so too did the number of university seats. The University Dublin received a seat at Westminster in 1801 (having previously had a seat in the Irish Parliament). The Scottish universities were not given Westminster seats after the act of union but did receive seats (2 to split between the four of them) in 1868; the University of London was given a seat at the same time. Belfast and the University of Wales were given seats in 1918 as was – very temporarily as it turned out – the National University of Ireland. More interestingly, also in 1918, graduates of all other universities in England were given a combined 3 seats, meaning that in the election of that year, there were a total of 14 seats out of the 707 up for grabs (2% of the total) which were elected solely by university graduates.

There were echoes of this approach outside the UK as well. In Sweden and Finland, for instance, where “estate”-style Parliaments existed well into the nineteenth century, universities received positions in Parliament by virtue of their membership in the clerical estate. Within the British Empire, an attempt to imitate this system died a quick death in Australia (the University of Sydney had a seat in the New South Wales Parliament in one election in the 1870s), but lasted somewhat longer in India.

Elections to these seats were somewhat odd affairs. All alumni of an institution could vote in these elections, and this vote was in addition to their vote as a resident of a particular constituency (readers from British Columbia may remember something similar in that until 1993 business owners could get a second vote in municipal elections if their business was in a different district that their residence). However, to exercise the franchise, voters actually had to come to the university to vote (at some point – I can’t work out when – a postal vote option was added). To accommodate electors, polls were held over several days – usually after the general election. Campaigning was not really “done” and in fact during the voting period candidates were required to stay at least 10 miles away from the university. Of interest to Canadian electoral nerds: voting in multi-member constituencies was done by Single Transferable Vote. Civilization does not appear to have collapsed as a result.

By the twentieth century, these seats still often elected Tories, but it became the custom to elect established academic celebrities or public intellectuals as independents. But their days were numbered: when Labour finally won a majority government in 1945, it abolished all forms of plural representation, and so the last university members of Parliament exited the chamber in 1950.

Curiously, the practice still exists today in the unlikeliest of places. Ireland, which split from the UK in 1922, retained the concept of university constituencies in its Parliament (Dáil) until 1937. Under the new constitution of that year, the University of Dublin and the National University of Ireland each received 3 seats in a 60-seat Senate, which they retain to this day. This makes more sense if you understand that the Senate of Ireland is one of the world’s most deeply bizarre legislative bodies, where 100% of the membership is indirectly elected through various corporatist bodies.

Bon weekend.

 

March 20

There is no Fourth Industrial Revolution

I am seeing an increasing number of otherwise thoughtful people in Canadian university and research circles going around talking about the “Fourth Industrial Revolution”.  They need to stop.

There is no such thing as the Fourth Industrial Revolution.  It is a catch-phrase made us by Klaus Schwab, head of the World Economic Forum (the Davos folks), which he developed in an eponymous book released in late 2015.  I read it.  It’s dreadful.  Seriously, seriously awful.  No redeeming characteristics whatsoever.

The argument lies in the same kind of shallow “Digital! Clean Tech!  Woo!” analysis that seems to animate Navdeep Bains, our Minister for pro-IT Industrial Policy.  Essentially what it comes down to is that after a long China-driven commodities super-cycle, everyone is interested in more knowledge-intensive industries.  And a bunch of these seem to be (emphasis on seem) to be on the tipping point of some interesting transformations that might have deep economic ramifications: autonomous vehicles, AI, nanotech, quantum computing, materials science, energy storage, etc.  But all of this does not a revolution make.

Generally, economic historians posit that there was one starting in Northern England built around textiles in the eighteenth century, one around mechanical mass production starting in and around Detroit in the early 20th century, and – maybe, this is still disputed – one based around computers and information technology starting in the 1960s/70s/80s (depending on who is telling the story).    The question is really whether all these new technologies that Schwab is so excited about are really new or just extensions of the It revolution of the late twentieth century.  Schwab claims it is because of three factors: “velocity” (change is happening more quickly), “breadth and depth” (some handwaving about “unprecedented paradigm shifts”) and “systems impact” (something about transformation across industries that also looks like a lot of handwaving).  But as several articles noted at the time (see here, here and here), this is fundamentally unconvincing.  All of these new showy technologies are children of the information revolution, and there’s no sign of any radical break in the economy or the pace of technological change that would make us think that there’s been some “revolutionary” break.  Is change occurring?  Of course.  But change has been occurring for decades, even centuries, sometimes at a much faster pace than today.

Now, sure, some might point to the huge amounts of money now being poured into alleged growth industries, like “Clean Tech” (or the “Green Economy” as its sometimes called).  Our Minster for Shaking Hands with Tech Executives, for instance, likes to talk about Clean Tech being a “$3 trillion industry”.  But a lot of that has to do with creative re-labelling of existing economic activities.  So, for instance, one major study which hyped the value of this economy includes in its definition of green tech large swathes of the construction industry (energy efficiency!), the automobile industry (lower emissions!), sewage collection (it’s about waste!)….you get the picture.  Important?  Yes.  But improvements in these areas are mostly about slow transformation of the economy, not some kind of big break with the past. Not, in other words, revolutionary.

And of course, a lot of the hype about these new technologies is just that: hype.  Everyone is talking about driverless automobiles, but there’s no certainty that the legal issues surrounding them will allow them on the road in major numbers for at least a decade (who is at fault if a driverless car gets into an accident?  Who will insure cars if there is ambiguity about this?)  AI sounds like a huge market, but a lot of it has to do with re-classifying what used to be called “software” as AI.  Nanotechnology has been the tech of the future for at least 15 years; biotech for 30.  Etc, etc.  There’s lots of groovy science out there, but turning it into industrial or consumer products at scale is tricky and doesn’t come quickly.  And because modern capitalism isn’t patient, that means a lot of money for product development is going into things which fundamentally don’t raise productivity.  As Peter Thiel once said, “we dreamed of flying cars, we got 140 characters”.

And even if some of these do manage to make it to market, there are some real questions about how much they will change living standards.  If you’re in any way inclined to call yourself a techno-optimist, I really urge you to read Robert Gordon’s The Rise and fall of American Growth, which painstakingly reconstructs the last 150 years of American economic history (it works equally well for Canada, though), and suggests both that a) the high growth rates of the mid-twentieth century were a one-off, never to return and b) that most of the major changes to the workplace due to the It revolution have already happened.

So in any case, if you’re tempted to try to join the Davos buzzword crowd and throw the term “Fourth Industrial Revolution” into a conversation, just don’t.  In a few years, when that term has been properly consigned to the dustbin of history, you’ll thank me

January 27

A Slice of Canadian Higher Education History

There are a few gems scattered through Statistics Canada’s archives. Digging around their site the other day, I came across a fantastic trove of documents published by the Dominion Bureau of Statistics (as StatsCan used to be called) called Higher Education in Canada. The earliest number in this series dates from 1938, and is available here. I urge you to read the whole thing, because it’s a hoot. But let me just focus in on a couple of points in this document worth pondering.

The first point of interest is the enrolment statistics (see page 65 of the PDF, 63 of the document). It won’t of course surprise anyone to know that enrolment at universities was a lot smaller in 1937-38 than it is today (33,600 undergraduates then, 970,000 or so now), or that colleges were non-existent back then. What is a bit striking is the large number of students being taught in universities who were “pre-matriculation” (i.e. high school students). Nearly one-third of all students in universities in 1937-38 had this “pre-matric” status. Now, two-thirds of these were in Quebec, where the “colleges classiques” tended to blur the line between secondary and post-secondary (and, in their new guise as CEGEPs, still kind of do). But outside of British Columbia, all universities had at least some pre-matric, which would have made these institutions quite different from modern ones.

The second point of interest is the section on entrance requirements at various universities (page 12-13 of the PDF, p. 10-11 of the document). With the exception of UNB, every Canadian university east of the Ottawa River required Latin or Greek in order to enter university, as did Queens, Western and McMaster. Elsewhere, Latin was an alternative to Mathematics (U of T), or an alternative to a modern language (usually French or German). What’s interesting here is not so much the decline in salience of classical languages, but the decline in salience of any foreign language. In 1938, it was impossible to gain admission to a Canadian university without first matriculating in a second language, and at a majority of them a third language was required as well. I hear a lot of blah blah about internationalization on Canadian campuses, but 80 years on there are no Canadian universities which require graduates to learn a second language, let alone set this as a condition of entry. An area, clearly, where we have gone backwards.

The third and final bit to enjoy is the section on tuition fees (page 13), which I reproduce here:

ottsyd-20170126

*$1 in 1937-38 = $13.95 in 2016
**$1 in 1928-29 = $16.26 in 2016

Be a bit careful in comparing across years here: because of deflation, $100 in 1928 was worth $85 in 1937 and so institutions which kept prices stable in fact saw a rise in income in real terms. There are a bunch of interesting stories here, including the fact that institutions had very different pricing strategies in the depression. Some (e.g. McGill, Saskatchewan, Acadia) increased tuition while others (mostly Catholic institutions like the Quebec seminaries and St. Dunstan’s) either held the line or reduced costs. Also mildly amusing is the fact that McGill’s tuition for in-province students is almost unchanged since 1937-38 (one can imagine the slogan: “McGill – we’ve been this cheap since the Rape of Nanking!”).

The more interesting point here is that if you go back to the 1920s, not all Canadian universities were receiving stable and recurrent operating grants from provincial governments (of note: nowhere in this digest of university statistics is government funding even mentioned). Nationally, in 1935, all universities combined received $5.4 million from provincial governments – and U of T accounted for about a quarter of that. For every dollar in fees universities received from students, they received $1.22 from government. So when you see that universities were for the most part charging around $125 per students in 1937-38, what that means is that total operating funding per student was maybe $275, or a shade under $4500 per student in today’s dollars. That’s about one-fifth of today’s operating income per student.

While most of that extra per-student income has gone towards making institutions more capital-intensive (scientific facilities in general were pretty scarce in the 1930s), there’s no question that the financial position of academics had improved. If you take a quick gander at page 15, which shows the distribution of professorial salaries, you’ll see that average annual salaries for associate profs was just below $3500, while those for full professors was probably in the $4200 range. Even after for inflation, that means academic salaries were less than half what they are today. Indeed, one of the reasons tenure was so valued back then was that job security made up for the not-stellar pay. Times change.

In any case, explore this document on your own: many hours (well, minutes anyway) of fun to be had here.

November 08

Why I Do This Stuff

It’s Election Day in the America.  It’s a day that always make me think about how I got into this business.

Back in 1992, I was trying to stay out of a godawful job market by doing a Q-year in Economics at McGill (ended disastrously: don’t ask).  On November 2nd, I was sitting with some friends in the Shatner Building reading a New York Times story about the celebrations being planned in Little Rock for the next evening.  It was clearly going to be the biggest party in North America that week.  So we decided to go.

Some local car rental company had unwisely signed a deal with the student’s union offering any club a 3-day rental for $150, so seven of us (mostly from The Tribune) jumped into a Chevy Astrovan at 5 o’clock Monday afternoon and drove 23 hours straight from Montreal to Little Rock.  We had a good time while there (I managed to blag my way into a temporary press pass which – with a little help from a local laminating shop – became my ticket to hang out in the basement of the Excelsior Hotel following Wolf Blitzer around listening to him bullshit with other reporters).  But for me, the real event of that trip happened the next morning.

We left Little Rock at midnight, needing to get home so some of us could take midterms on Thursday. At about 7AM, we pulled into a McDonald’s near Champaign, Illinois.  By this time, none of us had really bathed or slept properly in about 48 hours and six of the seven of us were smokers (a fairly representative percentage in Montreal in the early 90s), so there was a kind of blue haze that followed us out of the van as we trudged into a nearly-empty restaurant for some coffee and McMuffins.

“You all look like crap,” said the woman behind the counter (note: she did not say “crap”, she used a different word).  We gave her the back story on our trek, and told her that we were coming back from Little Rock.

Somewhat to our bemusement, the woman began to cry.  “You saw the President?”  At first I thought this was just an exaggerated expression of royal-like deference American sometimes display towards the Commander-in-Chief.  But no.  She recovered slightly and said “Mr. Clinton is our President and my boy is going to go to college”.

So that was it.  Amidst all the back and forth of the campaign: Gennifer Flowers, The Comeback Kid, Ross Perot jumping in, Sister Souljah, Double Bubba, Ross Perot leaving, Murphy Brown, Dan Quayle’s spelling ability, Ross Perot coming back in again, “it’s the economy, stupid”….the main thing this woman had keyed in on was that Clinton was determined to expand access through a “Domestic G.I. Bill” higher education by letting all students either a) borrow via an income-contingent loan or b) do national service  (that never quite happened, though Clinton did manage to introduce both an income-contingent loan repayment option and Americorps).

The fact that we’d been near the man who was going to make this happen was just a bit overwhelming for her.  And that made a big impression on me.  Among those who have degrees, there’s often a world-weary cynical pose about higher education “not being worth it” – devalued degrees, crippling student debt, etc.  But to a family who’s never had someone attend post-secondary, and that moment when they realise they can go is something magical.  They’re not foolish enough to think that going to university or college means but they do know for sure – rightly – that going to higher education is by far the best way to get step up to the middle class.  And if you aren’t already in the middle class, that’s a Big Deal.  Something worth devoting a career to, anyway.

And that – in part – is how a visit to an Illinois McDonald’s 24 years ago got me studying student aid and from there, higher education generally.  And why every four years I think about that morning, and that woman, and wonder whether her son succeeded in college or not.  I really wonder.

October 19

The Yale Tuition Postponement Option

If you pay attention to student assistance, you know about income-contingent loans.  And if you’ve heard about income-contingent loans, you probably know that the first national scheme debuted in Australia back in the late 1980s.  You might even know that the first theoretical exploration of income-contingent loans was made by Milton Friedman back in the 1950s (actually, he was talking more about human-capital contracts, but close enough.  And you might occasionally wonder: why did it take 30 years to go from idea to implementation?  Well, the answer is that it didn’t: there was an intermediate stage in which a couple of universities tried to run their own income-contingent loan programs.

The year is 1971. Private 4-year universities were probably at their lowest-ever ebb relative to the big public flagships: massive amounts of public money had been pouring into public universities while privates had yet to really perfect their practice of extracting mega-millions from loaded donors.  But Inflation is starting to rise in America as a result of a decade worth of a guns AND butter fiscal policy.  And so schools like Yale began to think about raising tuition to meet higher costs and regain their place at the top of the academic dog-heap.

Enter economist James Tobin – a man who within a decade would win a Nobel Prize and is today mostly known for his advocacy of a beloved-of-the-left tax on financial transactions (the eponymous “Tobin Tax”).  Room and board at Yale College at the time was $3,900 (yes, I know, I know).  The university wanted to raise fees by about $1500 over the next five years, and so President Kingman Brewster (the model for Walden University’s President King in the comic strip Doonesbury) asked Tobin to come up with a scheme that would allow the institution raise said money without putting too much stress on students.

The result was something called the Yale Tuition Postponement Option.  Students could choose to defer part of their tuition (the part that came on top of the pre-1971 $3,900) until after graduation.  Repayment was a function of both loan balance and income: borrowers were required to repay 0.4% of their income for every $1,000 of tuition postponed (a minimum payment of $29/month was set).  Repayments could take as long as 35 years although it was expected to take less time than that.

There was a catch, though.  Loan programs lose money through defaults.  These either have to be made up through subsidy (which is what happens in most government student loan programs) or mutual insurance among borrowers.  Yale had no intention of subsidizing these loans, and so went the latter route.  These were therefore in effect group loans – you kept paying until your entire borrowing cohort had repaid.  You could escape this only by paying 150% of your initial loan and accrued interest.

You can imagine how this went.  A lot of students borrowed, but there was a fair bit of adverse selection (people who worried about their incomes opted-in, people who thought they would earn a lot opted-out).   And as time went on, a lot of graduates groused about subsidizing their less-successful classmates.  The program was phased out in 1977-78 because federal student aid was becoming more generous and because the university was starting to twig to both the problem of adverse-selection program and the problem of keeping in contact with graduates and getting them to voluntarily disclose their incomes.  Eventually, amidst rising alumni discontent, the program was wound up in 2001 and outstanding debts assumed by the University (which by this time could easily afford to do so).

The failure of the Yale Plan was certainly one reason why people were scared off income-contingency for another decade or so, until a reformist Australian government picked up the idea again in the late 1980s.  But from a policy perspective it was not a total loss.  One Yale student who enrolled in the program – fellow by the name of Clinton – thought it was a great idea.    He made it a center-piece of his 1992 election campaign, and an income-contingent tuition option was in place by 1994.  That specific policy never took off, but most of the income-based repayment plans (which are now used by 40% of all borrowers) owe their start to this program.

So, a failure for Yale perhaps.  But a long-term win for American students.

October 05

A Brief History of Exams

Written exams are such a major part of our schools and universities that we forget sometimes that they are not actually native to the western system of education.  How did they become so ubiquitous?  Well here’s the story:

Originally, the Western tradition eschewed exams.  Universities offered places based on recommendations.  If one could impress one’s teachers for a few years, one might be invited to audition for right to be granted a degree. In medieval universities, for instance, one obtained a degree once one was capable of giving lectures or credibly argue a particular position in a debate format (the disputatio).  This was more or less the case right through until the 17th century.  This was completely different from how it was done in China.  There, ferociously difficult examinations for entry into the Imperial Civil Service had been the norm since the first century AD (give or take a couple of centuries of inter-dynastic interregnums due to societal collapse, civil wars, etc).  To help students through these exams, “academies” were created, which, with a bit of squinting, can be seen as forerunners of today’s universities (for more on early Chinese higher education see here).

In the late 16th century, a Jesuit priest named Matteo Ricci was sent to China and eventually rose to a very senior position within the order.  He was very impressed by the competitive and meritocratic nature of the Chinese examination system, and described it in glowing terms to his superiors in Rome.  Being a pedagogically-minded order, the Jesuits themselves adopted written examinations in order to make their own system tougher and more competitive.  In the 18th century, absolutist reformers trying to create meritocratic civil services (as opposed to ones run by aristocratic place-holders) decided to put the Jesuits’ “Chinese” system to work.  Starting in Prussia, then spreading around Europe over the following century, bureaucrats now had to pass examinations.  As more and more people tried to apply to the civil service, the universities – which were mainly prep schools for the civil service – became more crowded and gradually introduced their own entrance examinations as well.  The first of these was the German Abitur, which is still the qualification required to enter university.

The question of who set these exams – the education ministries in charge of secondary education?  the universities themselves? – was answered different ways in different countries.  In the United States, the Ivies maintained their own exams well into the twentieth century.  To keep out the riff-raff they would do things like test for ability in Greek – a subject not taught at public schools.  As universities began to expand the range of their intakes, they started to see problems with exams based on curricula and started looking for something that would measure potential regardless of which state or school they came from.  This led them to consider psychometric examinations instead, and hence the SAT was born.

Psychometric testing never really caught on outside the US (thought Sweden uses a variant of it).  Generally speaking, the dominant form of testing around the world remains a high-stakes test at the end of secondary school: the gaokao in China, the Korean suneung and the Japanese center are the most famous of these, but most of Europe and Africa operate on some variant of this (albeit without causing the same level of commotion and stress because European university systems are less hierarchically stratified than East Asian ones).  In many of the post-Soviet countries, university entrance exams were a source of lucre.  A prestige institution could set its own exam, and rake off money from students either through preparatory classes or by requesting bribes to pass.  The establishment of national university entrance exams in these countries were thus as much as an anti-graft measure as a pro-merit measure.

Many parts of the world – but particularly Asian countries – are seeing the downsides of basing so much on a single set of exams, and are trying in various ways to try to de-emphasize testing as a means of distinguishing between students, both because they are seen as overly stressful to youth and because the results have been time and again to reinforce class privilege.  The problem with the latter is that no one has yet come up with alternative measures of academic prowess or potential which are significantly less correlated with privilege; and exam results, whatever their faults, do provide transparency in results, and hence a greater appearance of fairness.

In short: there’s lots wrong with high-stakes exams, but they aren’t going anywhere soon.

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