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If Universities Aren’t Producing The Workers Business Wants Then There’s No Economic Argument For Universities

There’s a standard Stalinist mistake made in the education sector these days. It is to assume that more capital makes us all richer, without considering what sort of capital it is which makes us richer. That some half or so of university graduates end up not using their degrees in their job – while business complains bitterly about not being able to find the skills it desires – is that real world unpleasantness which tells us this.

To start from the beginning. Capital added to labour makes that labour more productive. We’ve increased the inputs into the system and thus we get more product out the other end, we’re all richer in aggregate. The spade is capital, the potato farmer produces more potatoes with one than with only his hands, we get more chips by the addition of that capital. Great.

Human capital is vastly more important in a technological civilisation than physical. Reasonable valuations of global capital have the human type – knowledge, skills – dwarfing that machines ‘n’money stuff.

Thus, goes the thinking, if we send more people to university then we’ve more human capital and thus we’re all richer. Well, up to a point Lord Copper. For this is to think that capital is homogeneous. Which, in a technological society it isn’t, any more than labour itself is. A trained plumber isn’t the same as a trained financier (yes we can make lovely jokes about which is more useful) even as grunt labour is grunt labour. The chip laddies provided with a pogo stick doesn’t produce more potatoes. This is where the logic fails:

Universities are failing to deliver the workers businesses need

Think on it. If we’re going to get richer through that production of human capital then it has to be true that people then use the human capital we’ve created. If they don’t then we’ve just burdened ourselves with a cost which produces no gain – we’ve made ourselves poorer.

It felt like a make-or-break moment for millions of 18-year-olds last week, as they collected grades that determined whether or not they had obtained a university place. Over the next few weeks, thousands will be shuffled through the clearing process, matching up students without a place to universities with slots to spare.

For the students going through it, the process feels as if it will determine the course of their whole careers. The truth is rather different. Based on current data, only half of them will be in professional jobs in three or four years’ time.

This is a national scandal. The amount of money ploughed into universities has soared over the last decade.

One possible explanation here is that the universities are simply teaching the wrong stuff. Grievance studies is a great way to get that job at Starbucks as we all know. The teaching of the Senior Lecturer at Islington Technical College is unlikely to produce economists anyone wants to employ. Despite the excellent training in spotting logical fallacies on offer to those who pay attention. That therefore argues for a Viktor Orban approach, stop the universities pissing the nations’ wealth away on such silliness.

However, that deeper problem with the logic still remains. Stalin really did think that using more capital would make the nation richer. So much so that he deliberately held down Soviet wages in order to generate more profit that could then be used by the State to invest in capital projects. This didn’t make that nation notably richer. Because he’d missed the useful definition of capital. Marx told us all that something is worth the labour that went into it’s making. He was wrong. But a useful thought still arose – that if the thing made was of no value then so also was the labour that went into its production. This actually is true of capital. If we’re not gaining value from it then that capital doesn’t have value itself – at least deployed as it is. Building a railway across the northern wastelands consumes capital and labour but if no one uses BAM then it’s all a waste.

We’re not gaining value from much of this human capital being unused – thus the human capital itself is of no value and the resources we’ve employed to create are wasted.

The university sector should therefore be much smaller and also concentrate upon those things which add value. Which brings us back to Viktor and the evisceration of the Grievance Studies departments at the very least. Possibly even with the staff being so treated.

Note something important here, this is an economic argument. It’s entirely true that many people enjoy going to university to whine about their oppression by The Man. People enjoy teaching it all as well. Fine Arts and English Literature are amusing and interesting things to study. Those are not economic arguments. They’re arguments that people should be allowed, even enabled, to deploy their own resources in their own lives as they damn well see fit. Which is to be properly liberal, as we are around here. The economic argument though is that for it to be justified that our resources get spent upon them then the spending of our resources upon them has to lead to us benefiting from the expenditure of our resources. Which, if the human capital value produced has no value isn’t so.

Universities turn out people who don’t have the skills employers desire. That’s absolutely fine, no problem at all, we do not live solely in order to work after all. Study whatever it is that you want. But if we’ve got to pay for it then it has to add value to us, not you.

At which point, a nicely cheeky proposal. We’ll go back to that idea of technical colleges, Polys even. Plus the universities. All the grievance stuff, the arts, politics etc, that will be in the universities which have to fund themselves from their students. The vocational stuff goes to the techs and Polys which are all tax funded.

The only problem with this is that all the useless stuff will then migrate to the techs and Polys, won’t it? Because no one’s going to spend their own money on that s**t, are they? But that will take us back to the Good Old Days where no one took any notice of what a Poly or the graduate or teacher thought on any subject at all. Which is as it should be.

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Rhoda Klapp
Rhoda Klapp
5 years ago

Withdraw any funding for education at universities. Abandon government control over higher education. Change school curricula to produce all-round education not just university prep.

Encourage iconoclastic learning methods suitable for today’s world.

5 years ago
Reply to  Rhoda Klapp

Of course, the methodology improves immediately once we implement your initial recommendation. No coursework offered except that on which someone would spend his own money.

Unfortunately, our legislators are mesmerized by “studies” of “how much we value education” compared to other states. (And the desire to massage all that loot on its way into the institutions.)

5 years ago

Call me old fashioned but my understanding of what universities are for, is as academic institution where original research is performed. It is clearly bonkers to think that 50% of school leavers are suited to academic research. Those people who are both have the chance of producing something useful that benefits society, or at least learning how to manage their time, do research and come up with creative ideas – all of which should be useful to businesses in a general sense. Most other people should probably be trained in apprenticeships, or other more vocational focused environments where the clue… Read more »

Bloke on M4
Bloke on M4
5 years ago

The other thing no-one grasps is that degrees in the arts etc was a signal. You’d gone to uni, got a degree, therefore you’re smarter. You’d get into degree trainee programmes in large companies. But those only have limited places. The irony to me is that we’ve got this thing now called The World Wide Web that allows the rapid distribution of information. You want to learn about filmmaking or programming, it’s all there for the taking, often for free or certainly very cheaply. OK, some people like drug researchers want the accreditation, but no-one cares if a photographer has… Read more »

Quentin Vole
Quentin Vole
5 years ago
Reply to  Bloke on M4

And it was a useful signal when only 5-10% got a degree. Today it’s closer to 50% and that signal is mostly noise.

5 years ago

Tim’s conceptual error is that the university education of no use in the workplace is not capital at all. Capital (spare change that the individual does not need for immediate sustenance) is withdrawn by taxation, given out as higher education subsidy, and funds coursework in Minority and Women’s Studies which, if anything, make us less able to produce those potato chips than before, because it is what the student feels he would like to “study.” Capital is converted to consumption and current and future wealth is eliminated.

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