Subsidizing Education

[Brad Sallows]

>I think that the growing importance (indeed, necessity) of university for an increasing number of jobs is one reason why it should be cheap.

What percentage of people do you think merit a university education?  Why do you think they should be subsidized by the percentage who are not going to enjoy the lifestyle that higher education and higher incomes tend to promote?

 

[DJ]

What percentage of people do you think merit a university education?  Why do you think they should be subsidized by the percentage who are not going to enjoy the lifestyle that higher education and higher incomes tend to promote?

Who doesn't merit a university education?  Why must people think of it as exclusionary?  If one can put the work into it and be successful, then it should definitely be an option; it's somewhat like a job.  Further, and to answer the second question, university should be subsidized because the economy is evolving.  The education system needs to reflect this.  When agriculture was the dominant industry, a primary education sufficed.  As the manufacturing sector grew the need for a more highly educated workforce was realized and secondary school became subsidized.  Now the economy is heading into a knowledge economy and university education is becoming increasingly necessary.  Some European countries have already realized this.  If Canada doesn't soon we'll be losing any competitive edge we have in information sectors that we may currently possess. 
Also, the people who choose not to go to university also benefit from higher education.  Without higher education there'd be no doctors, nurses, teachers etc. 
And the higher incomes that are in question are also more highly taxed, providing more $$.

 

[dutchie]

University is available to everyone. If you meet the entrance requirements, you can go. You might have to get a loan, borrow from parents, get a job in the summer, or earn a scholarship, but no-one is going to exclude you.

Further, and to answer the second question, university should be subsidized because the economy is evolving.   The education system needs to reflect this.  

So let's syphon off our economy so people can get a degree? The fact is this: subsidies almost without exception are bad economic policy, no matter the sector, no matter the need. The more revenue that goes to subsidies, the less that goes to legitimate expenditures (Defence, Justice, basic ininfrastructureetc.), and the more tax required. There is a direct corelation (duh) between an increase in taxes and a weaker economy. Purely from an economic standpoint, the government should spend as little as possible outside of the core requirements (listed above).

Ever wonder why Canada is the poor cousin economically to the States, Britain, etc? It isn't the size, it's decades of quasi and outright Socialist policies, syphoning a significant amount of wealth out of our economy with little or no return.

University degrees are not a right, you must earn and PAY for them.

 

[Monsoon]

So let's syphon off our economy so people can get a degree? The fact is this: subsidies almost without exception are bad economic policy, no matter the sector, no matter the need.

Could you point me to where that was established as a fact?

The more revenue that goes to subsidies, the less that goes to legitimate expenditures (Defence, Justice, basic ininfrastructureetc.), and the more tax required. There is a direct corelation (duh) between an increase in taxes and a weaker economy. Purely from an economic standpoint, the government should spend as little as possible outside of the core requirements (listed above).

You don't know what you're talking about, I'm afraid.  A subsidy is best regarded as an investment: a certain sector can be subsidized to meet some non-economic goal (such as how the Canadian defence industry is subsidized to maintain a domestic defence infrastructure) or to spur research & development or support an export industry.  Quite often the "cost" of the subsidy is reaped back many times over in tax revenue that would never have been generated if the subsidy hadn't been "spent" - that's what makes it an investment.  Less investment means less money.

Ever wonder why Canada is the poor cousin economically to the States, Britain, etc?

I did wonder at that statement, until I came across these stats:
  U.K. GDP per capita: USD$29,900
  Canadian GDP per capita: USD$31,500
Meaning that Canada isn't a "poor cousin" to Britain.

It isn't the size, it's decades of quasi and outright Socialist policies, syphoning a significant amount of wealth out of our economy with little or no return.

Yeah, no socialist policies in the UK.  No public health care, heavily subsidized industries, ruling Labour parties and massive social development projects over there.  Nosiree-bob.

University degrees are not a right, you must earn and PAY for them.

It may interest you to learn that the overwhelming majority of universities in the US are government-subsidized.  I agree that the primary beneficiary of the education (the student) should be expected to shoulder much of the expense, but the nation as a whole benefits from an educated workforce and consequently subsidized higher education is a good investment.  Now, if it so subsidized that the only recognizable benefit is that graduating students are able to buy houses a couple of years sooner, then money is being wasted.  As it is, studies suggest that cost is not the major impediment to accessible higher education, cultural views of education are.  I say more schools, not lower tuitions.

 

[Kirkhill]

Oh this was just too good.

Hamiltongs - don't go into a career in law, for your own good.

U.K. GDP per capita: USD$29,900
  Canadian GDP per capita: USD$31,500
Meaning that Canada isn't a "poor cousin" to Britain.

Yeah, no socialist policies in the UK.  No public health care, heavily subsidized industries, ruling Labour parties and massive social development projects over there.  Nosiree-bob.

Assuming my "sarcasm meter" is fully functional I am going to assume that you mean the opposite.

The opposite has resulted in Canada being better off than the UK.  UK subsidized and centralized. UK poorer.

UK would have been poorer yet if Maggie hadn't fought the good fight and Tony hadn't taken up her cause.

Cheers and thanks for the gimme.

 

[dutchie]

Could you point me to where that was established as a fact?

Poor wording on my part. As with anything in Economics, you can find diverging opinions on almost any aspect of economics from equally qualified sources. My statement is based on the principles of economics from my first year Econ class. Unfortunately, that was 9 years ago, so my memory has failed re:reference. I suspect however, that you will be hard pressed to find a highly regarded economist that advocates personal subsidies in favor of a free market. BTW, I was referring to PERSONAL subsidies, not industry. Second, there are times when temporary subsidies (personal) can be justified economically, but these are the exception, not the rule. University tuition freezes and personal 'no strigs' subsidies are not one of them, IMHO.

A subsidy is best regarded as an investment: a certain sector can be subsidized to meet some non-economic goal (such as how the Canadian defence industry is subsidized to maintain a domestic defence infrastructure) or to spur research & development or support an export industry.   Quite often the "cost" of the subsidy is reaped back many times over in tax revenue that would never have been generated if the subsidy hadn't been "spent" - that's what makes it an investment.   Less investment means less money.

As long as that's temporary, okey-dokey, but that wasn't the original argument. Permanent subsidies lose thier impact over time. Once a person, or an indusrty, begins to rely on them as part of their salary/revenue, it stops being an investment, and becomes welfare.

I did wonder at that statement, until I came across these stats:
   U.K. GDP per capita: USD$29,900
   Canadian GDP per capita: USD$31,500
Meaning that Canada isn't a "poor cousin" to Britain.

I don't have the time to verify this info, so I'll concede the point re:UK. BUT, the US has a history of resisting socialist policies, and promoting a free market economy, which was the crux of my point. Is there any reason why you didn't post the US' numbers?

I did wonder at that statement, until I came across these stats:
   U.K. GDP per capita: USD$29,900
   Canadian GDP per capita: USD$31,500
Meaning that Canada isn't a "poor cousin" to Britain.
Yeah, no socialist policies in the UK.   No public health care, heavily subsidized industries, ruling Labour parties and massive social development projects over there.   Nosiree-bob.

Ok, I conceded that the UK is not a great example of a superior economic power to Canada. You posted numbers that indicate that it's economy is similar in strength, albeit using only one indicator, to Canada's. Now, you admit that the UK is just as socialist as Canada, with just as many non-essential expenditures. Take the US, I googled it and found that their GDP per capita is $40,100/capita, or aprox 1/3 stronger than Canada/UK. What is one of the biggest differences, economically between those groups? Canada/UK have may government non-essential expenditures, and the US has few. I'd argue that this disparity in GDP is a direct result of those Socialist policies.

It may interest you to learn that the overwhelming majority of universities in the US are government-subsidized.

Fine, but are the students?

I agree that the primary beneficiary of the education (the student) should be expected to shoulder much of the expense

Why not all? Save a scholarship or private grant, why should I pay for someone elses degree? If there is a need for say, engineers, and the Universities can't produce enough of them, the entrance requirements and/or the tuition will drop, allowing more to enter the program. If you're grades are not up to standard, or you are unwilling to obtain a loan, why should I pick up the slack?

but the nation as a whole benefits from an educated workforce and consequently subsidized higher education is a good investment.  

Of course Canada benefits from an educated work force, but with or without the 'subsidy', we will produce university graduates.

Now, if it so subsidized that the only recognizable benefit is that graduating students are able to buy houses a couple of years sooner, then money is being wasted.  

Then it's being wasted. There is the Canada Student Loan Program (which has it's own problems from an economic standpoint) which is VERY easy to qualify for. Get a loan, get your degree, pay it off. The more you work in the summer, the less you borrow. The better your grades in HS, the more likely a scholarship/private grant is. Not to mention sports scholarships. Why give the money away to students when other means are available? Why freeze university's tuitions, forcing them to deliver an inferior product?

 

[dutchie]

I'm not advocating individualized subsidies, just the maintenance of a low tuition ceiling on the higher education industry through sector-wide subsidy.

Capped tuitions hobble a University's ability to compete for students and top faculty and force them to make cuts. Those cuts diminish the quality of instruction, and thus the quality of the end product - the graduate.

Allow University's to charge what they want, and allow the free market to dictate the going rate for tuition.

 

[Monsoon]

Assuming my "sarcasm meter" is fully functional I am going to assume that you mean the opposite.

The opposite has resulted in Canada being better off than the UK.  UK subsidized and centralized. UK poorer.

UK would have been poorer yet if Maggie hadn't fought the good fight and Tony hadn't taken up her cause.

Cheers and thanks for the gimme.

Hey, no problem.  If you re-read my post you'll see that I was advocating "measured" subsidies for education, not complete subsidization or complete libertarianism.  I highlighted the advantages of subsidies and the dangers of over-subsidization.

 

[Infanteer]

I still think that University is best subsidized by ways that make people work for it; scholarships and what not.  Simply pouring money behind in behind the scenes doesn't cut it; people can (and do) take it for granted.

A "Canada GI Bill" is the perfect example.  I'm sure more can be brainstormed.  Get Canadians (especially youth) to show honest hard work and a nice big university payment plan is the end reward.  As well, with the people holding the ticket to subsidization, it forces Universities to work harder to attract that money.

 

[Monsoon]

As long as that's temporary, okey-dokey, but that wasn't the original argument. Permanent subsidies lose thier impact over time. Once a person, or an indusrty, begins to rely on them as part of their salary/revenue, it stops being an investment, and becomes welfare.

The subsidies don't need to the temporary - what about a $100M annual subsidy to an industry that generates $1B in annual exports and $150M in tax revenue? Would that not be a logical non-temporary investment? Countries with heavily-subsidized shipbuilding industries believe it is, and I'm inclined to agree.  The point is that you have to be aware of exactly what you're getting for a given subsidy - in almost all cases I've seen, government subsidies have rational, hard-math explanations.

Ok, I conceded that the UK is not a great example of a superior economic power to Canada. You posted numbers that indicate that it's economy is similar in strength, albeit using only one indicator, to Canada's. Now, you admit that the UK is just as socialist as Canada, with just as many non-essential expenditures. Take the US, I googled it and found that their GDP per capita is $40,100/capita, or aprox 1/3 stronger than Canada/UK. What is one of the biggest differences, economically between those groups? Canada/UK have may government non-essential expenditures, and the US has few. I'd argue that this disparity in GDP is a direct result of those Socialist policies.

US GDP per capita is USD$40,100, but the US is remarkable not specifically because of "anti-socialist" policies (Roosevelt's socialist New Dealers modernized the US economy after the depression), but because it is a very large, very (relative to other countries of 300 million) educated workforce with an abundance of natural resources.  In fact, the US was a world power long before the word "socialism" even existed.  Canada is in a similar situation with respect to education and natural resources, but we don't enjoy the same economies of scale that the US does, hence the GDP difference.

Fine, but are the students [subsidized in the US]?

Yes, in exactly the same way they are in Canada.  A federal student loan programme makes money available to those who need it, and the tuition of most (non-private) universities is subsidized by the states.

Why not all? Save a scholarship or private grant, why should I pay for someone elses degree? If there is a need for say, engineers, and the Universities can't produce enough of them, the entrance requirements and/or the tuition will drop, allowing more to enter the program.

Why would the tuition drop if there were a shortage of engineers?  The universities provide a service - they don't get paid to produce engineers and they have to cover the costs associated with training them.  Whether there is a shortage or not, the cost will stay the same.  In fact, this example perfectly illustrates why university needs to be subsidized to some extent - if there is a shortage of engineers in the workforce caused by high tuition, then the economy will languish and people (including many people who never went to university) will lose their jobs.  Supply-demand economics don't work in education.  By partially subsidizing the education costs of engineers, the country encourages more industrial development that creates jobs for non-degreed people.

Then it's being wasted. There is the Canada Student Loan Program (which has it's own problems from an economic standpoint) which is VERY easy to qualify for. Get a loan, get your degree, pay it off. The more you work in the summer, the less you borrow. The better your grades in HS, the more likely a scholarship/private grant is. Not to mention sports scholarships. Why give the money away to students when other means are available? Why freeze university's tuitions, forcing them to deliver an inferior product?

We partially agree on this point, at least.  But many people will be unwilling to assume a $100K debt to get an undergraduate degree, no matter how easy it is to qualify for the loans.  Some (but not all) of the cost needs to be undertaken by the government to encourage labour force development.

 

[Glorified Ape]

Capped tuitions hobble a University's ability to compete for students and top faculty and force them to make cuts. Those cuts diminish the quality of instruction, and thus the quality of the end product - the graduate.

Allow University's to charge what they want, and allow the free market to dictate the going rate for tuition.

Universities aren't hobbled by tuition ceilings if the ceiling is realised through proper subsidies. If sufficient funding is provided, the university's tuition cap isn't a hindrance since they're receiving the funds they would have made through tuition hikes from subsidies.

If the market decided tuition prices and there was no government subsidisation, the cost of tuition would be astronomical. Just look at the cost of private universities in the US - 15 000/year (US dollars - 17 200 in Canadian dollars) is a LOW cost and that's tuition only - no books, no food, no rent, etc. Take the middle ground between low/high tuition costs and you're looking at 23 000 CAD/year for tuition. Add a low-ball estimate of around $250/semester for books, instruments, etc. and it's 23 500/year. You can see price comparisons here:
http://www.infozee.com/usa/expenses.htm

 

[dutchie]

The subsidies don't need to the temporary - what about a $100M annual subsidy to an industry that generates $1B in annual exports and $150M in tax revenue? Would that not be a logical non-temporary investment?

Are you sugesting that the industry would colapse without the subsidy? If an industry cannot compete without welfare, then the causes of this lack of competitiveness need to be addressed, don't just throw money at it. If say, Canada's shipbuilding industry could not compete due to high labour costs vs. say, China's, then you address that. If the Canadian unionized worker produces a superior product, for higher cost, and that added cost is proportional to the added value of the end product, then the free market has set the going rate for that job. Industry has to adapt. If Canada's shipbuilding indistry cannot produce bargain priced ships, build for a different market. If the industry needs an influx of cash due to a disaster (like beef farmers) or a temporary subsidy to kick start it, fine, but I am not interested in subsidizing industries that should flourish on their own.

US GDP per capita is USD$40,100, but the US is remarkable not specifically because of "anti-socialist" policies (Roosevelt's socialist New Dealers modernized the US economy after the depression), but because it is a very large, very (relative to other countries of 300 million) educated workforce with an abundance of natural resources.  

Ok, according to the CIA http://www.cia.gov/cia/publications/factbook/rankorder/2119rank.html
the European Union has a population of 456 million and change. The US has a population of 295 million and change. Your argument is that the US' large size has more to do with their strong economy than their lack of socialist economics. Yet, the EU, with a higher population, has a GDP of $26,900/capita. In this case, based on the criteria that you have set out, the US (free market) has a much higher GDP than semi-socialist states, and further, there was no corel;ation between higher population and GDP.

"Fine, but are the students [subsidized in the US]?"Yes, in exactly the same way they are in Canada.   A federal student loan programme makes money available to those who need it, and the tuition of most (non-private) universities is subsidized by the states.

A loan is not a subsidy.

"If there is a need for say, engineers, and the Universities can't produce enough of them, the entrance requirements and/or the tuition will drop, allowing more to enter the program."

Why would the tuition drop if there were a shortage of engineers?   The universities provide a service - they don't get paid to produce engineers and they have to cover the costs associated with training them.   Whether there is a shortage or not, the cost will stay the same.  

If the the President of say, UBC, knew that cost was prohibiting a significant number of students form enrolling in Engineering, and that that by lowering tuition by 10% would attract 25% more students, resulting in a net profit, then he would be a fool not to explore the idea.
The Universities are still driven by the free market. If they produce too many Engineers, the graduates will stop getting jobs, and HS students won't enrole in that program. If the opposite happens, and the output is less than the demand, then the Universities are losing out on increased revenue. Lower the cost or entrance requirements slightly and you allow more students, more revenue, and the industry gets more graduates.

We partially agree on this point, at least.   But many people will be unwilling to assume a $100K debt to get an undergraduate degree, no matter how easy it is to qualify for the loans.   Some (but not all) of the cost needs to be undertaken by the government to encourage labour force development.

Work in the summers, get good enough grades for a scholarship, and ask mommy and daddy. If you still can't cover the cost, get a loan and pay it off.

But it's a moot point. The economy does not benefit from the Government giving you money for your degree when there are loans available. You still obtain the same degree, you still get the same job. Yes, you aren't spending like you would with a grant/subsidy, but we're also not out the 100k from the start either.

 

[dutchie]

Universities aren't hobbled by tuition ceilings if the ceiling is realised through proper subsidies. If sufficient funding is provided, the university's tuition cap isn't a hindrance since they're receiving the funds they would have made through tuition hikes from subsidies.

Right, but that means those are tax dollars, let's not forget that. That isn't magic money, that costs nothing. There is a real cost to subsidies, and they should only be used on a temporary basis, under very specific circumstances.

Universities aren't hobbled by tuition ceilings if the ceiling is realised through proper subsidies. If sufficient funding is provided, the university's tuition cap isn't a hindrance since they're receiving the funds they would have made through tuition hikes from subsidies.

If the market decided tuition prices and there was no government subsidisation, the cost of tuition would be astronomical. Just look at the cost of private universities in the US - 15 000/year (US dollars - 17 200 in Canadian dollars) is a LOW cost and that's tuition only - no books, no food, no rent, etc. Take the middle ground between low/high tuition costs and you're looking at 23 000 CAD/year for tuition. Add a low-ball estimate of around $250/semester for books, instruments, etc. and it's 23 500/year. You can see price comparisons here:
http://www.infozee.com/usa/expenses.htm

I noticed you didn't post the other numbers off that site:
University Type Average Tuition Fees
(annual in U.S. Dollars)
Private Institutions (High Cost) $ 25,000
Private Institutions (Low Cost) $ 15,000
State Institutions (High Cost) $ 20,000
State Institutions (Low Cost) $ 10,000

Canadian numbers are closer to those of State institutions. Further, funny how those high priced Universities still have high enrollment, and high demand. Could it be they have a stronger (read:free market) economy? A higher standard of living?

 

[Monsoon]

Are you sugesting that the industry would colapse without the subsidy? If an industry cannot compete without welfare, then the causes of this lack of competitiveness need to be addressed, don't just throw money at it. If say, Canada's shipbuilding industry could not compete due to high labour costs vs. say, China's, then you address that. If the Canadian unionized worker produces a superior product, for higher cost, and that added cost is proportional to the added value of the end product, then the free market has set the going rate for that job. Industry has to adapt. If Canada's shipbuilding indistry cannot produce bargain priced ships, build for a different market. If the industry needs an influx of cash due to a disaster (like beef farmers) or a temporary subsidy to kick start it, fine, but I am not interested in subsidizing industries that should flourish on their own.

Employees aren't slaves - you can't just decide to pay them less and expect that they won't go elsewhere better paying (like the subsidized shipyards in the US, Europe and - that's right - China).  If the only alternative is to not have a $1B shipbuilding industry, then a $100M annual investment makes a lot of sense.

Ok, according to the CIA http://www.cia.gov/cia/publications/factbook/rankorder/2119rank.html
the European Union has a population of 456 million and change. The US has a population of 295 million and change. Your argument is that the US' large size has more to do with their strong economy than their lack of socialist economics. Yet, the EU, with a higher population, has a GDP of $26,900/capita. In this case, based on the criteria that you have set out, the US (free market) has a much higher GDP than semi-socialist states, and further, there was no corel;ation between higher population and GDP.

The economy of the EU is not yet as fully integrated as the economy of the US.  Give it 50 years.

A loan is not a subsidy.

No, but a subsidy is a subsidy, and that's exactly what most US universities receive from their respective state governments.

If the the President of say, UBC, knew that cost was prohibiting a significant number of students form enrolling in Engineering, and that that by lowering tuition by 10% would attract 25% more students, resulting in a net profit, then he would be a fool not to explore the idea.

Universities already operate with such a large economy of scale and at such small margins that reducing tuition by 10% is going to mean having 25% more engineering students all paying 10% less than it costs to educate them.  That doesn't generate a profit for the university, it generates a deficit which then needs to be covered by the government.

The Universities are still driven by the free market. If they produce too many Engineers, the graduates will stop getting jobs, and HS students won't enrole in that program. If the opposite happens, and the output is less than the demand, then the Universities are losing out on increased revenue. Lower the cost or entrance requirements slightly and you allow more students, more revenue, and the industry gets more graduates.

I see what you're getting at, but while the labour force is driven by demand-side economics, the cost of educating an engineer doesn't flucuate with demand - it stays constant.

Work in the summers, get good enough grades for a scholarship, and ask mommy and daddy. If you still can't cover the cost, get a loan and pay it off.

Everyone can't get scholarships, there just isn't a big enough endowment.  And not everyone can tap mommy and daddy for $100k or earn that much in four summers, and obliging the banks to extend $100k loans to each of 250k new students a year would tie up $25B in private money needed for investment in industry.

But it's a moot point. The economy does not benefit from the Government giving you money for your degree when there are loans available. You still obtain the same degree, you still get the same job. Yes, you aren't spending like you would with a grant/subsidy, but we're also not out the 100k from the start either.

There's not much point arguing the point with you if you're going to remain obstinately unaware of the fact that a highly-educated labour force creates industrial opportunities that benefit even less-educated workers.  It's not about "getting jobs", it's about inventing jobs.

 

[dutchie]

Employees aren't slaves - you can't just decide to pay them less and expect that they won't go elsewhere better paying (like the subsidized shipyards in the US, Europe and - that's right - China).  

Of course they're not slaves, that's why they're paid. If they don't like the wage, they are free to go elsewhere. The market, not the employer, and certainly not the employee, should dictate wages.

If the only alternative is to not have a $1B shipbuilding industry, then a $100M annual investment makes a lot of sense.

That is completely flawed logic, and you didn't answer my question: If it weren't for the permanant subsidy, would the industry colapse?

The economy of the EU is not yet as fully integrated as the economy of the US.   Give it 50 years.

Oh, so when the numbers work in your favor, that's fine, but when you're shown to be completely off your gourd, the economies are not integrated, and I gotta wait 50 years to prove it? Nice.

A refesher form my previous post:

"Fine, but are the students [subsidized in the US]?"Yes, in exactly the same way they are in Canada.   A federal student loan programme makes money available to those who need it, and the tuition of most (non-private) universities is subsidized by the states.

A loan is not a subsidy.

your reply:

No, but a subsidy is a subsidy, and that's exactly what most US universities receive from their respective state governments.

The US does not subsidize students. Quit refering to state subsidies for Universities or Government loans to students. Neither is a subsidy of for students. Keep in mind that Universities are not merely learning institutions, evidenced by the fact that Profs are generally graded on how much they publish and the quality of their research, not the quality of their teaching. Those subsidies are not all used to subsidize student tuitions, they also go to research.

Universities already operate with such a large economy of scale and at such small margins that reducing tuition by 10% is going to mean having 25% more engineering students all paying 10% less than it costs to educate them.   That doesn't generate a profit for the university, it generates a deficit which then needs to be covered by the government.

I'm not going to get into it. If you can't understand this principle, you're lost. Sometimes reducing costs generates so much more volume of sales, that it overcomes the loss of profit per unit.

I see what you're getting at, but while the labour force is driven by demand-side economics, the cost of educating an engineer doesn't flucuate with demand - it stays constant.

Really? So increasing the number of students per class (for instance), while not increasing the overhead, cost of labour, etc, doesn't increase profit? How do you figure?

Everyone can't get scholarships, there just isn't a big enough endowment.   And not everyone can tap mommy and daddy for $100k or earn that much in four summers, and obliging the banks to extend $100k loans to each of 250k new students a year would tie up $25B in private money needed for investment in industry.

First, I would like to know how you are spending 100k in 4 years at say U of T or UBC. Second, I don't care that your parents can't pay. And third, if it really is 100k for 4 years, I definately don't want anything to do with paying that bill. It's your choice to go, you pay.

There's not much point arguing the point with you if you're going to remain obstinately unaware of the fact that a highly-educated labour force creates industrial opportunities that benefit even less-educated workers.   It's not about "getting jobs", it's about inventing jobs.

And there's not much point in discussing this with you if you fail to realize that people will go to University with or without a subsidy.

 

[Glorified Ape]

Right, but that means those are tax dollars, let's not forget that. That isn't magic money, that costs nothing. There is a real cost to subsidies, and they should only be used on a temporary basis, under very specific circumstances.

Of course the subsidies come from tax dollars but them's the breaks. We can invest in universities and have a well-educated workforce that will better enable Canada to compete economically.

I noticed you didn't post the other numbers off that site:
University Type Average Tuition Fees
(annual in U.S. Dollars)
Private Institutions (High Cost) $ 25,000
Private Institutions (Low Cost) $ 15,000
State Institutions (High Cost) $ 20,000
State Institutions (Low Cost) $ 10,000

Canadian numbers are closer to those of State institutions.

Yes, but since we were discussing PRIVATE (read: non-subsidised) universities vis a vis a laissez-faire approach to the university sector, publicly subsidised schools aren't really pertinent.

Further, funny how those high priced Universities still have high enrollment, and high demand.

Sure they do - they're the elite of the university system, of course they'll have high demand. The US has a population of 300 million people - it's not hard to generate high demand and high enrollment with a large population and a limited number of elite schools.

Could it be they have a stronger (read:free market) economy? A higher standard of living?

I believe Canada's standard of living was rated higher than the US. And no, the US does not have a free market.

 

[Brad Sallows]

>Who doesn't merit a university education?

Everyone who can't or won't complete one.  Again, what fraction of the population is being favoured here?  Also, I should state up front that I don't buy the argument that the "knowledge economy" requires more general arts and sciences graduates.  The requirements for specific technical endeavours are clear enough.  Canada does benefit from an educated workforce, but I haven't seen university graduates lining up to sign cheques in restitution to the working classes who built the country back in the day when it benefited from a skilled and hard-working workforce before the university graduates took over.

>And the higher incomes that are in question are also more highly taxed, providing more $$.

Deja moo.  The old "we get it back" argument.  Taxes included, have you compared where and how university graduate lives to the average working class person who, even with complete funding, simply hasn't the ability to complete a university education?  Next time you see a taxpaying university graduate in his late-model beamer zip past a taxpaying grocery clerk in her used Acadian, ponder on that "social justice" for a bit.  There are still some well-remunerated blue collar jobs, but they are fewer and fewer.

Subsidies are bad economic policy.  They might be "good" defence policy or "good" social policy ("good" meaning we can sometimes identify what is achieved, but we don't bother to measure what is lost), but they are still bad economic policy.  A subsidy for purely economic reasons is by definition reinforcement of failure.  Suppose I choose to purchase a car manufactured abroad.  Why should I then, through taxes, pay a penalty to support Canadian car manufacturers - why do I have to pay for a cut of someone else's GM or Ford product?  Why should I, through taxes, pay subsidies to Bombardier - let their engineers and management and shareholders take a stiff haircut if they want to keep their rather well-paid jobs, or find something to produce which supports what their desired salaries are worth.  That is what an economic subsidy does: it insulates the shareholders, management, and employees from setting their salaries and benefits at a level which makes their products competitive.  Why the f*ck does a fraction of my life's earnings - and hence my life - have to be turned over to keep them in the style to which they think they are entitled?  Guess what: the same money in my pocket, spent by me, generates GST and PST revenues directly, and income tax indirectly from the salaries of the people providing the goods and services I consume.  It doesn't just vanish into fairy never-neverland - imagine that.

>Quite often the "cost" of the subsidy is reaped back many times over in tax revenue that would never have been generated if the subsidy hadn't been "spent"

You have expressed the most common of socialist fallacies by either forgetting or ignoring the entire picture.  I simply can not imagine why any rational, educated, inquiring adult mind would ignore the possibility that the same money spent elsewhere might possibly generate the same or greater benefit?  What is your excuse?

Supply-demand economics are vital to higher education if we aren't to just piss away money providing framed birdcage liners.  If an educated workforce is important because education is required by employees, you should want the university system to be sensitive and responsive to the demands of employers.  If you believe creating an educated workforce (supply) will encourage employers to develop new opportunities (demand), then congratulations: you are practicing supply-side economics.

Parasite: "something that resembles a biological parasite in dependence on something else for existence or support without making a useful or adequate return"

 

[RangerRay]

I really don't see why university education should be subsidised any more than it is now.  Actually, as a university graduate, I think subsidies should be reduced.

The value of a degree has been grossly overrated.  I have way too many friends with degrees working in Home Depot or Chapters rather than in their professional fields.  We have a glut of overeducated, under-utilised workers in our economy right now.  Part of this is because too many people are going into arts programs rather than science/techonology/engineering, where there is more demand.

Now where government should be focusing on is the trades.  There is a huge demand for skilled trades people, yet trades schools can't produce enough to keep up with demand.  Trades are a very lucrative career to get into. 

Yet high school teachers are still telling their students that they can't get a good job without a uni degree.  :

 

[DJ]

>What fraction of the population is being favoured here?

My whole point is that no fraction of the population is supposed to be favoured.  A full supply-demand education system would not enable the grocery clerk's child to go to school.  If we took all subsidies away, ie: university funding and student loans, many people would not be able to afford it.  Even with accumulating debt, there is a failure in the human capital credit market:  people can not easily borrow against the future acquisition of human capital (Ferrer).  Continuing on that note, "More unequal societies tend to develop larger groups of people who are excluded from opportunities others enjoy-be they a better education, access to loans, or to insurance-and who therefore do not develop their full productive potentials.  Both theory and empirical evidence suggest that these incomplete realizations of economic potential are not of concern only to those who care about equity per se.  They also affect aggregate economic potential, and therefore aggregate output and its rate of growth." (Ferrer). 
There's a large chance that those people zipping past in their beamers were born into money:  you don't need a university degree for mommy or daddy to buy you one.  And chances are most people with university degrees won't be buying a beamer any time soon.  A degree does not automatically enable somebody to high-dive into his/her money bin everyday. 

>There are still some well-remunerated blue collar jobs, but they are fewer and fewer.

That's my point exactly about the 'knowledge economy" (actually, not my point, it's the point of a Canadian economist that I read a few years ago...apologies for forgetting her name).  If Canada is going to compete at all in the globalized market, we need an educated workforce.  The number one industry is no longer agriculture in developing economies, it's manufacturing, where the traditional Canadian blue collar jobs are.  Canada can not compete without innovation.  That requires an increase in the human capital stock of its workers ie: education. 

>Guess what: the same money in my pocket, spent by me, generates GST and PST revenues directly, and income tax indirectly from the salaries of the people providing the goods and services I consume.  It doesn't just vanish into fairy never-neverland - imagine that.

What goods are people going to be providing without innovation?  Imports are becoming cheaper and cheaper as trade barriers come-down.  Like I wrote above, it won't be Canadian goods that you'll be buying.  It's a fairy never-neverland in which we can pretend that Canada will maintain the same level of competitiveness and lifestyle we now enjoy if more emphasis is not put into the education system.  Right now people are not realizing their potential because the barriers to entry are too great: the opportunity cost of becoming burdened with debt=less people even attempting to go to school=a less competitive economy=a lower standard of living for everybody. 

>I haven't seen university graduates lining up to sign cheques in restitution to the working classes who built the country back in the day when it benefited from a skilled and hard-working workforce before the university graduates took over.

K.  I'm still trying to wrap my head around this.  First, it's a fallacy if you think that all university graduates aren't hard-working.  There are lazy people in every segment of society just as there are hard-working people in every segment.  I'm also not comfortable with the dichotomy you've created:  the 'university graduate' vs. 'workforce'.  It's not like that.  One is leading into the other.  And if you want to complain about investing your tax dollars into others' futures can I protest about the accumulated national debt that my generation is stuck with?  That's where my restitution check is going. 

I understand that people simply do not want to see their tax dollars go into education.  The best investment of tax money will be argued by everybody but it's my opinion that an investment in education (not just university) is needed investment into the economy. 

Needless to say, education is just one of many things that should be discussed in this thread... 

 

[a_majoor]

Universities want our money, Farmers want our money (clogging the 401 today to protest agricultural policies and asking for [GASP] more subsidies), Hospitals want our money, soldiers want our money [hey, wait!], the list goes on.

Trying to get that horse to sing: All subsidies are a bad thing. The amount of a subsidy to one person, group, industry etc. is properly measured in "Opportunity costs"; i.e. how much did you or I have to give up (forgone opportunities) to subsidize x. If the person, institution, industry etc. cannot make a go of things without a subsidy, then properly speaking, they should not be there in the first place.

The market has an amazing way of correcting things, if it is allowed to work. If Universities charge too much for their product, then there will be an alternative market developing to supply the product. Take the shortage of Engineers. Since Canadian universities do not produce enough engineers, and inflexible government regulations prevent new universities from springing up like mushrooms (if you could get aboard that gravy train, wouldn't you?), Canadian industry hires them out of foreign countries. Canadian universities could try other measures to fill the demand, or industry could hire people on with completion bonus packages (i.e. work with us for five years and your loan will be paid. Not too amazingly, the CF uses this approach).

Almost any field has examples of the market correcting problems. Canada's health care system is developing another tier, if you need "elective" surgery like a hip replacement and can't abide the idea of waiting years in pain, you can fly to the United States or now India, where the doctors are good and the waiting time is very short. In Canada, the government doesn't subsidize dentistry, and yet we hear of no dental crisis, do we?

In every sector of the Canadian economy where there is a crisis, you will find the invisible hand of the market is arm wrestling with the grasping hand of the government. We are facing a triple whammy in each area; resources are being poorly allocated due to subsidies, market forces cause "unitended consequences" and the forgone opportunity cost of missed investments and opportunities because we, the taxpayer, have had our resources taxed away. Do away with subsidies, reduce taxes to reflect the reduction in spending and people will find creative and adaptive ways and means of achieving their goals.