Why Education Opportunities Will Fade

They've Faded In America, And We Want To Be Like Them!

I got asked why I was so pessimistic about the future of education in this country. People keep on saying that education makes for better people and better people make for a better society.  While I agree with that principle, I've been having difficulty telling 18year olds and 19year olds why this might be the case. The truth is, the value of education itself is going to be eclipsed by the value of the HELP debt. It's increasingly hard to say it's financially viable to go study arcane or obscure or interesting things.

Christopher Pyne's thing is telling us that our tertiary sector should be allowed to charge what it likes, and the competition would make them better courses. His model for this line of thinking is the American Tertiary sector which to date has two trends; one is increasing fees and the other is the increased indebtedness of the students. When you analyse this rationally, you understand that the competition that Christopher Pyne talks about only exists in a way to burnish the reputations of the various schools, which they then turn around and turn into higher fees because that would be more profitable. So the universities can give scholarships to students who they think will make them proud but they pass that cost on to other students who want to be brand-consumers of the school's prestige. The students who cannot get a scholarship in turn have to borrow from their futures to purchase the prestige value of the tertiary institution together with their education.

More closely, you only have to witness the skyrocketing private secondary schools' fees in Australia to see how such a market would play out. And while Christopher Pyne insists that students should pay because 60% of their fees are funded by 60% of the population who do not get tertiary education, it seems rather obtuse to insist that the students transfer their future earnings to present day bottom lines of tertiary institutions. The problem is twofold - going to a prestigious tertiary institution is no guarantee you will get a better education than at a lesser school, and the workplaces the graduates will be applying for will more often than not be looking at the school's prestige as much as the marks. The asymmetry is such that the tertiary institution is far more assured of receiving money than the student receiving a good education, and then a career based on that education.

This is made worse by a statistic that came out some time ago that pointed out that 90% of university graduates end up doing something unrelated to their courses in their careers. While I would not argue that this is a bad thing, it sort of shows that the eduction being offered actually has no correlation to the imagined earnings of the graduate. If it's not 'working' now, how on earth does Christopher Pyne think the sector is going to do better than it has to date to justify the money it is charging?

Anyway, I want to point something else from the American experience that doesn't seem to get discussed all too much. Two of the areas where costs have skyrocketed in the USA are health and education. This is not totaly unrelated to the fact that they are untransferable services. So while exporting jobs that can be transferred to places like Chindia has resulted in cheaper imports, the jobs that can't be sent overseas have seen their costs rise. If you average it out, you can claim the inflation has been 3% (or whatever central banks want it to be) but taken individually, health and education have increased at a much higher rate.  The question is, is this unique to America?

Australia is fast losing its manufacturing sector (with great assistance from the Abbott government). We keep counting inflation lower to encourage investment, but this investment has ended up in housing as a bubble. Tertiary institutions will opt to charge more for courses that lead to lucrative careers. The private debt carried by the Australian public is putting a huge brake on future growth. Chances are you won't be able to find a job in the area of your choice. You can just see the opportunities for education fading rather than widening. And if they fade, we won't be doing much good with it before long. The outlook is pretty bleak - and I don't even work in that sector.