Variable subsidies should not dictate university fees

Maurice Williamson wants to fund universities by using "variable subsidies".

Maurice Williamson wants to fund universities by using "variable subsidies".

OPINION: Maurice Williamson is an outgoing National Party MP.

He has a reputation for being on the libertarian right of the party. Despite the reputation, Williamson is advocating for more communism in tertiary education.

You may need to bear with me here.

According to Stuff, Williamson wants to fund university courses using "variable subsidies".

These would reduce the costs paid by some students for some courses and increase them for others. The aim would be to ensure that taxpayers are not wasting money on courses we didn't need.

The variables would be set to meet the perceived need for certain qualifications. There would be regular updates to the forecasts and production quotas. Corresponding variations to the subsidies would follow these reviews.

It would, presumably, fall to Wellington bureaucrats to administer and co-ordinate this scheme.

Williamson thinks this will help taxpayers get the best return on its investment. To illustrate, he says 10,000 people have studied art history at Auckland University. This, presumably, is more expertise in the history of art than he thinks the taxpayer needs.

Now in fairness, variable subsidies are a long way from full communism. Williamson is not proposing that the state force students into certain fields. He is suggesting that we pick and choose what to fund with public dollars based on central planning.

But full communism was never achieved in the Soviet Union either. Its rulers directed production using a similar mechanism. As economist Thomas Sowell explains, the allocation of resources was not directed "by central planners who sent resources to their various uses by direct commands, supplemented by prices that the planners raised or lowered as they saw fit".

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The Soviet planners included some the best and brightest their country had to offer. They were also on the cutting edge of using data and computers to generate their forecasts.

Nevertheless, their efforts were better at producing drab misery than efficient resource allocation.

The point of central planning is to prevent wasteful surpluses and damaging shortages. But when implemented, the result is usually more of both. "Unplanned" systems are not perfect – but they usually produce less waste.

It all boils down to the limited capacity of individual minds. Even the most educated among us hold much less than a thousandth of the sum total of human knowledge. The aspects of humanity are too many and the fields of human expertise are too narrow. No panel of experts and their computers can plan and regulate society.

This being so, the only way to harness our dispersed, collective knowledge is not to try.

Where possible, decisions should remain with those most affected by them. That decentralisation is at the very heart of what makes the free market work.

This should have particular resonance for those who have studied the humanities. It is no surprise that Williamson reached for art history to explain his point. For those of a certain mind-set, the study of human culture has less utilitarian value than the study of commerce or the physical sciences.

This a mistake. The humanities are part of the liberal arts. As used here, "liberal" does not relate to partisan politics, but to "liberty". Study in the liberal arts enables free men and women to contribute to civic life. In the original Latin, the phrase means "the works befitting a free man".

I cannot deny that, in the state of nature, practical skills have a much higher premium than abstract ones. If you break your leg in a frontier society, an MD is more essential than a PhD.

No question about it.

But we do not live in frontier times. We live in a complex civilisation. It is a society that allows all adults to participate in public life and, to some extent, they are expected to do so. In such a world, culture counts.

How do you quantify the ideal amount of cultural knowledge the citizenry should have? It is impossible to do it with a spreadsheet from some office in Wellington. So it is something best regulated by individuals and markets rather than planners.

Some fields of study confer more marketable skills than others. This is something of which almost everybody is aware. Nobody starts a philosophy degree expecting to have the earning potential of a finance graduate. So the fact that they still choose to do so shows they perceive philosophy to have some value.

And it does – even if the benefits are a bit less tangible and a lot harder to measure.

According to the news report, tertiary education minister Paul Goldsmith expressed scepticism about variable subsidies. He said that, in light of past failures of central planning, "we've tended to go with the demand for students". Nevertheless, the was unwilling to rule out the idea of variable subsidies altogether.

He really should.

 - Stuff


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