This site is not about the Browne Review ( or Securing a Sustainable Future for Higher Education: an independent review of higher education funding & student finance as we should properly call it) itself, but since that is what sparked this website we thought we should explain why we think it’s rubbish, and dangerous rubbish at that. This rather long I’m afraid.

We can’t afford free university education, right?

Firstly it is necessary to point out that the idea that the UK can no longer afford free university education is nonsense. If we were the kind of people to call politicians liars, we might even call it a lie. In part the politicians have chosen to spend the money on other things. The lie that we ‘can’t afford’ free education has been exposed by the Scottish and Welsh governments, who have chosen to spend the money that the Westminster government refuses to.

So how much would it cost for government to scrap the current tuition fees and provide free education? Two and a half billion pounds a year. That only sounds a lot if you’re not familiar with the size of government budgets. The cost of the NHS has been hovering around the £100bn mark, and the annual cost of the War in Afghanistan was in 2009 reported to have jumped from £2.5bn a year to £4.5bn a year. New estimates of the full cost of a Trident nuclear missile system put it at £76 billion, or 38 years of free education, yet the government is still seriously considering commissioning it. The bank bail-out cost around £850 billion.

But the dishonesty goes further than this. “There’s no money left,” the government are fond of saying (until they want to bail out Ireland, or fight an unwinnable war, or give overpriced contracts to outsourced service providers, but let’s ignore that for a moment). But it isn’t solely a matter of how the money is distributed. A government budget is not like a household budget – it does not come out of a finite pot of money. While there isn’t an infinite amount of money exactly, it is possible to ‘create’ more money by investing in current or future productivity. The government has chosen not to do this, and they have chosen it because of their ideology.

The website false economy is a good resource for looking at why the government’s claim that ‘there isn’t any money’ is nonsense. And the NCAFC website explains more about why it isn’t unreasonable to demand free education.

The ideology

So the government has simply chosen not to spend the money on education, and their reasons for wanting a marketised system, in which students will consume a product – education – offered by institutions competing for their money, are outlined in the Browne Review. Sort of. Here is Lord Browne’s argument in favour of a marketised education system:

The rationale for seeking private contributions to the cost of higher education is strong and widely accepted.

That’s the crux of it really. Well, okay, there’s a little bit more but not a lot:

Students will control a much larger proportion of the investment in higher education. They will decide where the funding should go; and institutions will compete to get it. As students will be paying more than in the current system, they will demand more in return.

That’s it. That’s the argument.  Well, more of an unevidenced statement or declaration than an argument, but why do you need arguments when you have an ideology? As if to underline this, in the ‘other options’ section of the report there is only the option of a graduate tax. The option of free education is never discussed.

An ideological belief in market solutions is quite common among politicians globally. There are arguments to be made for and against markets but we have got to the point where the arguments rarely need to be made. The benefits of market solutions are thought to be ‘obvious’ to all. Yet the Gulf of Mexico oil spill and the dead oilworkers are a product of that market system, as is the constant flow of oil we know is damaging the planet. If those factors appear in business decisions at all they simply appear as a ‘cost’ in the cost/benefit analysis – such as in the analysis for cutting safety procedures. While no one writing for this site is interested in some big centralised socialist state, we can see some of the flaws in markets based on evidence, some of which can be found in the life of Lord Browne.

But maybe this ideology will turn out to work…

One interesting thing about the ideological solution the government has proposed for education is that we can spot it as ideology – rather than the pragmatic solution it is claimed to be – partly because it doesn’t even work on its own terms.

A market works by choice, but actually it only works well where the consumer has the chance to make repeat choices, changing their choices every time in the light of information gained from the previous consumption experience. So it doesn’t work that well if you are only consuming a product once. Guess what? You only do one degree. You only make the choice once. If it turns out to be the wrong choice, sure you can write a bad review of the university, but then future students are dependent on perfectly flowing information, which never happens – and in fact that flow of information will be actively impeded by University PR departments, bogus league tables that are nothing to do with individual experiences, and a host of other factors.

Another problem is that markets work according to what people are prepared to pay. That is, the quality of a product or the viability of a product, changes or becomes more desirable according to what people are prepared to pay for it. But for this process to work properly, the ‘price signal’ from the consumer, or the payments they are willing to make, have to come from the beneficiary of the product. If there is a disconnect between the beneficiary of the product and the decision to make payment (as in public sector procurement, say), the price signal does not do its job and the market does not function.

So, who benefits from degrees? A lot of people, it turns out. Not just the person who did the degree, but their family, their employer, their community (educated people do more community work according to studies) and in a wide but meaingful sense, society. So we have a broad array of beneficiaries of university degrees, but only one individual – the person doing the degree – making the decision about whether to pay and how much. The price signal does not function correctly, since it does not represent the actual need for the product, and so the market will not function.

And apart from it not working, why shouldn’t we marketise education?

  • It will force people to value what they learn in economic terms. We can all think of many good reasons for learning, for instance, history – so as not repeat the mistakes of the past for example – but it is difficult to think of the economic justification for studying history since it won’t be very helpful for getting a job. High tuition fees will force students to think in economic terms and so downplay the other benefits of education.
  • By focussing solely on economic outputs it ignores the role of academia as critic of society. The changes are actively removing funding from ‘social’ courses because Lord Browne and this government consider them ‘unimportant’ to the economy compared to science and so on. But we all instinctively know that without critics almost anyone can start acting like a mad dictator, and there’s no reason to think that society is an exception. There are other critics of society but deliberately removing funding from humanities and social science courses is going to seriously reduce the pool of critics.
  • Because it will encourage students to see themselves as passive consumers of something the university provides, rather than active players in their own education. Universities do provide lectures and seminars to students, and they should be of a high quality, but the real education comes from students taking the initiative themselves, not demanding that universities lay it all on for them.
  • The differing prices of universities will create a two-tier education system with a set of elite universities that are more likely to be attended by people from well-off backgrounds. If we look at Oxford and Cambridge we know this happens already. With different prices for different universities, it will be worse.
  • The increased fees will put off students from poorer backgrounds from going. While it’s true that they won’t have to pay it back until they are earning, the psychological effect of the idea of £30,000 of debt on families who rarely have more than a few hundred pounds to spend is pretty obvious. Meanwhile there will be many ‘lower middle class’ families squeezed in the middle, not qualifying for the extra assistance the poorest families can get but with parents whose income is already committed.

Conclusion

So if this ideology is so ill-suited to be applied here, why are Lord Browne and the government using it? Well, it will lead to lower taxes for corporations and the rich. That might be a clue. It’s the only clue we can think of in fact. The politicians and business leaders adopt the ideology when it suits them, and abandon it just as quickly when it suits them – think of the banking crisis, when state assistance became suddenly and surprisingly acceptable.  Tuition fees mean lower taxes for the Lord Brownes of this world, and that’s the bottom line.

66 Responses to “So what’s wrong with the Browne Review anyway?”

  1. Mr Danger says:

    “So how much would it cost for government to scrap the current tuition fees and provide free education? Two and a half billion pounds a year.”

    That’s only the fraction that students are paying right now. The total spending on higher education subsidies is far higher, which is precisely the issue. Your argument is “oh look you already subsidise 70% of our education costs, why not subsidise all of it! What’s a few billion more?” Seriously – are you even aware that there is a £160bn deficit?

    “The bank bail-out cost around £850 billion.”

    No it didn’t. The current estimate is that the final cost will be zero.

    “But the dishonesty goes further than this”

    Your dishonesty has already gone pretty far.

  2. tim says:

    Not sure about the term free education. The education is not free, it is just that we do not want to charge the students for it. There are many reasons one could give for this. One of the key one for me is that not all things that we wish people would study directly lead to that person having more income; and turning education into an individual investment decision will provide a disincentive to individual people studying those areas. As some one who did study an area which is very easily monetised I am happy that other people are studying music and philosophy and history and other such things (I feel that I directly benefit from that, although that is by no means the main reason I would want it to happen). I think we should pay people to study (well, I think that given the current system we have anyway).

  3. tim says:

    I don’t buy that the reason is that their is an ideological belief in the market system. I think there is a very practical belief that by turning higher education into a market it will allow the richest people to buy the best education (that is how markets work, the more money you have the more higher quality stuff you can get). You already see the effects of these kind of markets in other levels of education.

    Whilst it might be true that some poorer people (the very highest performing, luckiest ones) will also get access to the same top-level education (as is true somewhat for private secondary education, and can be seen in the US), the primary reason for the existence of this type of privately funded education is to allow the rich to get the best. Up until now, that has happened mostly through the mechanism of private secondary school students getting much higher grades (due to lower class sizes, personal tuition, etc).

    You may say that being allowed to borrow money as an investment will allow the poor to access that education too. But a £40K debt is a big risk to someone with no other wealth. If a very rich student fails the course, or picks something they are no good at or don’t enjoy it is not a disaster. If a very poor student (or even just someone of average wealth) makes the same mistake it is going to have a really big effect on their life (big chunk of any future income lost for little or no gain). It is a way of privatising risk, which the rich are always in a better position to accept.

  4. Mr Danger says:

    If a very poor student (or even just someone of average wealth) makes the same mistake it is going to have a really big effect on their life (big chunk of any future income lost for little or no gain).

    Completely wrong – if your income doesn’t reach a high enough level, you don’t repay the loan. Ever. So in that scenario you would have received a free education after all.

    • tim says:

      But if it does reach a high enough level, (and for most people in the UK it eventually does) you will have to pay back some of the loan. The threshold level is actually not particularly high, although obviously the amount you pay back is a % of your pay above that level). The fact that you went to university and failed or dropped out does not mean that you will not eventually end up in a £21k+ job, it just might not have anything to do with your university education. Many people who have not been to university do eventually pass that income threshold.

      So, lets say you take on a £21k job a couple of years after you graduate. you will start accumulating interest at 3% (probably in real terms 1%).

      If you have a £30k debt, that is £300pa in interest. You pay 9% above £21k (which will go up with inflation), so you will only start paying back the loan in real terms after you hit £24.3k. Which you might not do if you have no relevant qualifications (we need to look at the income distribution graphs to find out how likely this is. But £21k is awfully close to both the mean and the median incomes).

      So you could pay somewhere between £0 and £300 a year indefinitely. If by luck and hard work you do manage to make it to a £40k job (again, in something unrelated to your failed degree). You will be paying £1710 per year, (a little less that one months take home pay for a single person, at current taxation rates). For more than 17 years. (of course, the situation will probably be a little more gradual than that, but the general issue remains the same).

      Those seem like significant costs to me.

      So you go to university. You hate the subject and you fail. You miss out on 3 years pay. And then when you do eventually get the kind of salary you want (maybe 3 years later than you otherwise would have), you have to pay out a months worth of money every year for more than a decade? That would cause me some kind of stress, and I’m pretty rich.

      If you really get in the shit and end up never going above the £21k threshold you don’t pay any interest and the debt goes after 30 years, but in reality how likely is that to actually happen?

      • Mr Danger says:

        But if it does reach a high enough level, (and for most people in the UK it eventually does) you will have to pay back some of the loan. — Yes. which seems fair to me.

        The threshold level is actually not particularly high, although obviously the amount you pay back is a % of your pay above that level). — The threshold is much higher than it was before, and it increases with inflation.

        The fact that you went to university and failed or dropped out does not mean that you will not eventually end up in a £21k+ job, it just might not have anything to do with your university education. Many people who have not been to university do eventually pass that income threshold. — So what’s the problem? If they can afford to pay they pay. Should people be incentivised to drop out and fail by having their tuition waived?

        So you could pay somewhere between £0 and £300 a year indefinitely. If by luck and hard work you do manage to make it to a £40k job (again, in something unrelated to your failed degree). You will be paying £1710 per year, (a little less that one months take home pay for a single person, at current taxation rates). For more than 17 years. (of course, the situation will probably be a little more gradual than that, but the general issue remains the same). — You are assuming that your income stays flat for 17 years.

        Those seem like significant costs to me. — Yet it only kicks in if you get up to a high income. Why do people on high incomes need their education subsidised?

        And plus, imagine that you go to work and the government takes 40% of your income above £37K. Is that a disincentive to earn more than £37K? Is that discouraging? That’s where income tax is right now, and its not even the top rate. How can you have a problem with paying for your own education based on your income buy have no objection to such high income tax rates? And you can’t really oppose both, because otherwise who is paying for all these subsidies?

        So you go to university. You hate the subject and you fail. You miss out on 3 years pay. And then when you do eventually get the kind of salary you want (maybe 3 years later than you otherwise would have), you have to pay out a months worth of money every year for more than a decade? That would cause me some kind of stress, and I’m pretty rich. — So you choose to go to the most expensive school, and only after three years do you suddenly realise you hate the subject and fail. But as luck would have it you turn out to be a high earner anyway. Now tell me why it is more ‘fair’ for someone else to pay for this wasted education.

        If you really get in the shit and end up never going above the £21k threshold you don’t pay any interest and the debt goes after 30 years, but in reality how likely is that to actually happen? — The government estimates that only a quarter of graduates will actually pay off their loans. So it seems like very few will pay the full cost – the government is still subsidising most students.

        Lets go back to the original issue – the point is those that can afford to pay pay, those that can’t afford to pay don’t pay. That’s a fair system.

        • tim says:

          And plus, imagine that you go to work and the government takes 40% of your income above £37K. Is that a disincentive to earn more than £37K? Is that discouraging? That’s where income tax is right now, and its not even the top rate. How can you have a problem with paying for your own education based on your income buy have no objection to such high income tax rates? And you can’t really oppose both, because otherwise who is paying for all these subsidies?

          No, I do not have a problem with both. I pay a shit load of income tax. What I am suggesting is that for society to be a nice place to live (high living standards, interesting things going on, etc). In the current system that means people, lots of people, going to university and getting high levels of good quality education. Everybody in society benefits from this. Much of the art, technology, history, infrastructure around is here more or less directly as a result.

          Making people choose between having that kind of debt or not having that kind of debt privatises the risk (that is, forces the individual to take the risk of a “failed” or not monetarily viable education). Given where we are at the moment I want society to bear that risk through general progressive taxation. So as to remove the counter incentive, particularly to the poorest, to get that kind of higher education. If you insist on looking at it purely in economic terms; I think higher education is such a good investment that we should not just make it available at no cost, we should actually pay people to take part.

          In fact, in terms of the return, from my current evaluation I would put investment in higher education in front of practically any other investment. I give you as evidence programmable computers (amongst a great many other things).

          • Mr Danger says:

            Making people choose between having that kind of debt or not having that kind of debt privatises the risk (that is, forces the individual to take the risk of a “failed” or not monetarily viable education).

            Yes it means asking people to take some responsibility for themselves. This is a good thing.

            So as to remove the counter incentive, particularly to the poorest, to get that kind of higher education.

            But the poorest, under the new system, get the first two years tuition completely free. And grants for poor students have been increased. The poorest are better off. Its the midddle and upper income families that are being asked to pay more.

            If you insist on looking at it purely in economic terms; I think higher education is such a good investment that we should not just make it available at no cost, we should actually pay people to take part.

            That’s silly. £36,000 is not some small sum of money. To say that anybody studying anything at this cost is a great investment is just wishful thinking.

            I give you as evidence programmable computers (amongst a great many other things).

            How does programmable computers prove we should pay people to go to school to study?

          • tim says:

            Yes it means asking people to take some responsibility for themselves. This is a good thing.

            That is just a statement. Are you arguing that ethical people should do that or what? Your opinions on this issue don’t really see relevant?

            Personally I think it pays to take a more practical approach to most things.

            I am all for personal responsibility. But I do not want to cut off my own nose (or anyone else’s) to spite my face. I am arguing (amongst other things) that it will be more pareto efficient to have government allocate funds to education. Everyone will be richer (even taking into account increases in other taxation). Disincentiveising people from going to university has a negative expectation value in very many ways.

          • tim says:

            To say that anybody studying anything at this cost is a great investment is just wishful thinking.

            I am not suggesting that. I never suggested that. I am saying as clearly as I can that you get a more optimal outcome if you to take the decision about what education a society funds at a higher level than that of a single individual acting in some kind of pseudo-market. I very specifically think we do have to make decisions about what education we fund. I am arguing that the proposed system will lead to the wrong decision.

          • tim says:

            How does programmable computers prove we should pay people to go to school to study?

            Sorry, I should have been more clear. Programmable computers has created a very large amount of value in our society (its hard to quantify exactly, but very significant amounts of money and many of the richest people in the world are directly involved in programmable computers). A very large amount of that work was done by graduates funded by government.

            It was a /very/ good investment even just in economic/monetary terms to fund those people.

            It is one of many examples of very high rates of return from these kind of investments.

            Unfortunately not all things are so easy to quantify. e.g. people studying history might help to prevent another “world war”. But we have to find a way of making decisions about this. Simply abdicating our responsibilities to the aggregate decisions of a bunch of 18 years in a pesudo-market doesn’t seem like it is going to cut it.

        • tim says:

          Lets go back to the original issue – the point is those that can afford to pay pay, those that can’t afford to pay don’t pay. That’s a fair system.

          That is not the original point at all. Not in my eyes. I am not looking for the system to simply fair. For example, not letting anyone have higher education would also be fair by some definition.

          What I am trying to do is find a way to get the most out of the current situation that we reasonably can. I think people taking up higher education is an important factor in not only the quality of life of the people that do so, but the quality of life of the whole of society. I am not saying that I think the system is unfair. Fairness is really a very minor thing in comparison to what I think the issue is. I see this new fees system as a tragic missed investment opportunity (amongst many other things).

          (I would also dispute your definition of fair in this situation, as everyone benefits from having university educated people in society, doctors, historians, artists, engineers. So it is not unfair to expect everyone to shoulder some part of the cost of that. But fairness is such a trivial concern in this situation it is hardly worth the bandwidth).

        • tim says:

          You are assuming that your income stays flat for 17 years.

          I am assuming that. And there are a good many examples where roughly flat is a reasonable assumption (inflation is already take care of by discounting the interest rate, the whole calculation is at today’s prices).

          For example, teaching, fire fighting, social work, train driver, cop and a great many other jobs max out around that level (or a little higher or lower) for most people involved. And don’t offer a huge number of ways to advance much further.

          If you do the calculation with a slight income progression, (for instance, you include the time it takes to get from £24.3k to £40k then the numbers look a little different (which is why I said “more than a decade” in my conclusion). But not that much. You do the maths for a few different scenarios and you will see what I mean.

  5. informant says:

    Mr Danger, I was aware which figures I was quoting. Thanks for clarifying for anyone confused. Your line of argument so far has been, it cost nothing to bail out the banks, but we have a *massive* deficit, because of all that terrible spending so we just have to cut things whether you like it or not.

    Let’s look at a respectable publication not known for its raving lefty views, business week:
    http://www.businessweek.com/news/2010-04-13/conservatives-pledge-urgent-action-to-cut-u-k-budget-deficit.html

    The U.K. deficit, which was 2.4 percent of GDP in 2007- 2008, ballooned after the financial crisis plunged Britain into its worst recession since World War II and forced the government to bail out Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

    The slump cut economic output by 6.2 percent over six quarters, ravaging tax revenue and driving up spending on jobless benefits and debt interest. The Treasury forecasts the deficit will reach 163 billion pounds in the fiscal year that began April 1, with net debt rising from 777 billion pounds last month to 1.41 trillion pounds by 2015, or 75 percent of GDP.

    So the deficit is a product of: the bank bailout, and a drop in revenues due to the financial crisis. Spending is not the problem. A government budget is not a matter of balancing income and outgoings like a household budget. That’s ignorant economics. The good way to increase revenues, thus driving down the deficit, would be…to spend money.

    • Mr Danger says:

      Mr Danger, I was aware which figures I was quoting.

      So you were being deliberately misleading?

      we have a *massive* deficit, because of all that terrible spending so we just have to cut things whether you like it or not.

      Its rather obvious that spending was out of control because the UK has been running deficits every year since 2002, i.e. even during the boom years before the banking crisis. Public spending relative to GDP rose 10 percentage points over the last decade – to nearly half the economy. This is out of control spending.

      and a drop in revenues due to the financial crisis. Spending is not the problem.

      That’s delusional. Revenues are not going to go back to the 2007 level unless we recreate a bubble economy. And as I just showed you, even during that bubble we were running a deficit.

      A government budget is not a matter of balancing income and outgoings like a household budget. That’s ignorant economics. The good way to increase revenues, thus driving down the deficit, would be…to spend money.

      Then what happened to Greece? They were running a 15% budget deficit – even larger than the UK – and they had a debt panic which required a rescue. Spending their way out of it turned out to be a catastrophe.

      • tim says:

        Public spending relative to GDP rose 10 percentage points over the last decade – to nearly half the economy. This is out of control spending.

        Actually that is not out of control. If you consider public spending as an investment, and you have a mind for business, you will see that in the current monetary system you can run a deficit indefinitely. All that is required is that the return on your investment is better than the interest rate you are paying on your debt, and that there is sufficient future investment opportunity to sustain that. And the UK government pays a very low rate of interest on its debt.

        Although you do have to factor in risk, it is actually often seen as a good economic strategy for a business to run as much debt as it can maintain (it is usually called leverage, it is common practice in business if you are not aware of that).

        Now, I do have some concerns about that general debt based approach. But I do not thing it holds water to call increasing spending “out of control”. And I do think that given our current debt/growth/inflation based monetary system it is not a completely unreasonable strategy.

        • Mr Danger says:

          Actually that is not out of control. If you consider public spending as an investment, and you have a mind for business, you will see that in the current monetary system you can run a deficit indefinitely.

          That’s what the Greeks said.

          Although you do have to factor in risk, it is actually often seen as a good economic strategy for a business to run as much debt as it can maintain (it is usually called leverage, it is common practice in business if you are not aware of that).

          You realise that a few minutes ago you were telling me how terrible it is for students to have debt? Now running as much debt as possible is a good thing. You can’t have it both ways.

          • tim says:

            That’s what the Greeks said.

            That may be true. But the fact that they said it and were wrong about Greece does not mean I am wrong about the UK.

            It matters very much what you do with that money once you have borrowed it.

            You realise that a few minutes ago you were telling me how terrible it is for students to have debt? Now running as much debt as possible is a good thing. You can’t have it both ways.

            I did neither of those things. I said specifically that student debt acted to privatise risk so as to be a counter-incentive to students going into higher education. I made no general point about about the terribleness of debt for students. My argument is much more subtle than you seem to be recognising.

            I did not say we should run as much debt as possible. I defined clear criteria for how much debt we should run.

            I am not having it both ways, public debt and personal debt are not the same things. There are different pros and cons to each in different situations.

      • tim says:

        Then what happened to Greece? They were running a 15% budget deficit – even larger than the UK – and they had a debt panic which required a rescue. Spending their way out of it turned out to be a catastrophe.

        The UK is not Greece, the UK economy is something like 8 times bigger. You cannot generalise in this way. Economics is far to complex with far to many variables to make such a simplistic analysis. Companies go bust due to bank debt all the time. Does that mean that no company should borrow money? Of course not, you have to look at each company individually.

        • Mr Danger says:

          The UK is not Greece, the UK economy is something like 8 times bigger.

          Absolute size is irrelevant. Its the size of the debt relative to the economy that matters.

          You cannot generalise in this way. Economics is far to complex with far to many variables to make such a simplistic analysis.

          You mean except when you do it.

          Companies go bust due to bank debt all the time. Does that mean that no company should borrow money? Of course not, you have to look at each company individually.

          It means you should be careful about the level of debt. But you are arguing just the opposite – that we can have deficits forever, and the more we borrow and spend the better off we will be. Its incredible to me that after the Greek and Irish crises, and fears for several other countries, you can tell me that there is nothing to worry about and we can just go on piling up debt.

          • tim says:

            Its the size of the debt relative to the economy that matters.

            Not it is not. Its the size of the debt, the rate of interest, the size of the economy and the rate of growth. (and actually many other things, like the currency and how the currency is controlled).

            You mean except when you do it.

            No, I am generalising in several other different ways. I specifically mean you cannot generalise about economics in the exact way that you are generalising. It is perfectly possible to create general theories about economics. That is in fact what the study of economics is about. What I am saying is that you are generalising incorrectly. Not that generalisation is not possible.

            that we can have deficits forever

            First of all, you can indeed have deficits forever. There is absolutely no problem with that. You can easily never pay off your a mortgage on a house, as long as you can always pay the interest. The same is true of any debt. This is basic maths. It is well established and common practice that a company or person or country can make profit while being in debt, you just have to grow the economy faster that the debt.

            and the more we borrow and spend the better off we will be

            Again, that is not what I am doing. Quit with the straw man arguments already!

            You cannot simply borrow as much as you want. I very carefully defined the limits on how much you could borrow and spend and still be better off. To quote myself: “all that is required is that the return on your investment is better than the interest rate you are paying on your debt, and that there is sufficient future investment opportunity to sustain that.”

            If those two things are not true, then you cannot borrow any more. Of course answering those questions in practice is hard, but the basic mathematical principals are straight forward.

            If these things are true, that the investment opportunities are available and the ROI is high enough (higher than the interest), you can indeed borrow as much as you can get up to that limit. In fact, if you want to maximise growth there is a string argument for doing that. There are other things to do with risk, and inflation and currency stability and all sorts of other complex things. But the general point is that being in debt is not (in market economics) a fundamentally bad thing for a country or company, person, as long as it is the right kind of debt and it is invested to get a higher return than the debt costs. Being in debt can be very bad, for example in Greece where some of these criteria were not satisfied. For example a large increase in the cost of debt, and the poor investment decisions they made.

            I am saying that higher education has a very high ROI (return) for a country (the UK in particular) so you can withstand a lot of debt to pay for it (even relatively expensive debt). This is a very concrete and specific economic argument. I am not saying, at all, we should just borrow and spend on anything.

  6. Mr Danger says:

    Not it is not. Its the size of the debt, the rate of interest, the size of the economy and the rate of growth. (and actually many other things, like the currency and how the currency is controlled).

    So its not about the size of the economy relative to the debt, its about the size of the economy and the size of the debt. Except, of course, that’s saying exactly the same thing.

    No, I am generalising in several other different ways. I specifically mean you cannot generalise about economics in the exact way that you are generalising.

    Hilarious.

    I am saying that higher education has a very high ROI (return) for a country (the UK in particular) so you can withstand a lot of debt to pay for it (even relatively expensive debt). This is a very concrete and specific economic argument.

    Very concrete and specific, except of course for the total lack of any numbers.

    And by the way your example of ‘programmable computers’ – well where is the world’s most advanced IT industry? Silicon valley, clustered around a number of very expensive private universities. How does that prove education should be free?

    Let me put it another way – all this investing we have been doing has resulted in our debt increasing faster than our economy has been growing since 2002. How does this trend prove our deficits are not a problem?

    • tim says:

      So its not about the size of the economy relative to the debt, its about the size of the economy and the size of the debt. Except, of course, that’s saying exactly the same thing.

      No its not. Because I was saying the rate of growth and rate of interest are important. If you pay more interest on your debt you can have less of it. If you have a higher growth rate you can pay for more debt (because you can pay more the interest). If you just look at the amount of debt vs total GDP you cannot discriminate on if the amount of debt is mathematically sustainable, nor if any increase in debt is mathematically sustainable.

      Unless you can understand this point, and why what I am saying is different to what you said, you will not be able to understand the rest of the argument I am making.

      all this investing we have been doing has resulted in our debt increasing faster than our economy has been growing since 2002

      At no point did I claim that what the previous government were borrowing or spending on was sensible. In fact, I think the way they used PFI to borrow enormous amounts of very expensive money to spend on things of questionable investment value was a big mistake. Why would you assume that I thought the policies since 2002 were sensible? There are more that 2 ways of doing things you know…

  7. informant says:

    < >

    Ah, so the debt increase was due to ‘investing’ or overspending? Not due to a bank bailout and falling revenues due to the financial crisis? What you’re doing is repeating Tory party propaganda. Which is fine if you want to do that, but don’t expect people to not point it out. I hate the Labour Party as much as anyone, but the Tory smear campaign to claim the current deficit is due to their profligate spending is a political manouevre and – not to put too fine a point on it – a lie.

    • Mr Danger says:

      Ah, so the debt increase was due to ‘investing’ or overspending? Not due to a bank bailout and falling revenues due to the financial crisis?

      If it was due to a bank crisis, why have we been running a deficit since 2002?

      And you are missing the obvious – what was ‘normal’ about 2007 tax revenues? They were inflated by a bubble economy with an overheated property and financial sectors providing record tax revenue. We are not going to return to this bubble economy, nor would we want to. This is a meaningless baseline to measure against. People like you think you can punish and restrict the City with one hand and then the other hand is reaching out hoping for 2007 levels of tax revenue. You aren’t going to get both.

      What you’re doing is repeating Tory party propaganda. Which is fine if you want to do that, but don’t expect people to not point it out.

      If you read through the Labour spin, you will see they were promising the same cuts. No serious party was offering anything else. In fact the same cuts are being faced across Europe.

      I hate the Labour Party as much as anyone, but the Tory smear campaign to claim the current deficit is due to their profligate spending is a political manouevre and – not to put too fine a point on it – a lie.

      I’m sure you are far to the left of Labour and proud of it. You’re in the land of pointless, extreme left parties that think public sector spending is the answer to everything and rich people are an ever flowing fountain of money.

      • tim says:

        why have we been running a deficit since 2002

        running a deficit is in principal fine. its a kind of subsidy to the parties lending the money to the government. And as long as the economy grows faster than the debt it can continue indefinitely. This is basic economics. I am repeating myself.

        We are not going to return to this bubble economy, nor would we want to

        I would put money on us returning to some kind of bubble economy (although probably quite a different bubble). As the last 100 years of this type of market economics is the story of one bubble->recession followed by another. I do not see an serious policy ideas that would prevent this. No matter how much every politician that gets into power in the UK claims they will be able to. To me there is a very high chance that it is just a matter of time before the next bubble crash. What exactly do you think has changed to overturn this cyclical process?

        • Mr Danger says:

          running a deficit is in principal fine. its a kind of subsidy to the parties lending the money to the government. And as long as the economy grows faster than the debt it can continue indefinitely. This is basic economics. I am repeating myself.

          But it hasn’t been growing faster than the debt. Debt/GDP has been rising since 2002. This is the reality. I am repeating myself.

          would put money on us returning to some kind of bubble economy (although probably quite a different bubble). As the last 100 years of this type of market economics is the story of one bubble->recession followed by another. I do not see an serious policy ideas that would prevent this. No matter how much every politician that gets into power in the UK claims they will be able to. To me there is a very high chance that it is just a matter of time before the next bubble crash. What exactly do you think has changed to overturn this cyclical process?

          Again, pointless argumentativeness. Will we have another bubble again some day? What does that have to do with the question of whether revenues will recover to the 2007 level any time soon? Nothing. They won’t. Therefore we need to look at spending.

          • tim says:

            But it hasn’t been growing faster than the debt. Debt/GDP has been rising since 2002. This is the reality. I am repeating myself.

            That doesn’t matter either. It can rise for a little while with no problem either. As long as it doesn’t rise for ever/too far. If your solution to having a deficit undermines the economy by reducing the investment required for future growth. Then the debt to GDP ratio will really go up. Your kneejerk reaction that all debt is bad could lead to that. We need to carefully evaluate how much debt to carry and how to spend it. Rather than just stating “defict == bad” which seems to be what you are doing.

            What does that have to do with the question of whether revenues will recover to the 2007 level any time soon

            It means that they probably eventually will. You will have to define soon for me to answer more specifically.

  8. Mr Danger says:

    You will have to define soon for me to answer more specifically.

    LOL! How do you come up with this stuff? Hilarious.

    As long as it doesn’t rise for ever/too far.

    Can you please stop pointing out the obvious. I don’t know where you learned this habit but it is tiresome.

    It means that they probably eventually will.

    Probably? With what probability? What degree of error is there in your calculations? What assumptions have you used for your variables? And when is ‘eventually’?

    • Tim says:

      “What matters with public debt, just as with private debt, is what you spend it on, so as this set of noted economists […] have come out and said: ‘We always said you should do constructive public sector investment, you shouldn’t cut public investment, because the point is it’s what you spend it on […] and as long as interest rates are as low as they are in the UK, it doesn’t make any sense to sit on the money.” – Adam Posen

      • GH says:

        This reads a bit strangely, presumably because you’ve cut out so much of the original. I mean “…it doesn’t make any sense to sit on the money.” Of course the problem with government debt is that they don’t have any money!

        I disagree with the notion, also promoted by Martin Wolf (whom I like), that low gilt yields mean the government can safely borrow more, until the yields start to rise. That isn’t the way bond markets work. The yields are low because the investors who have a choice (so not the pension fund ones) believe that the UK government is following policies that will work, as far as keeping the UK’s debt affordable is concerned. As soon as they change their opinion, the yield can shoot up and nothing will stop it.

        Their is danger in the government’s austerity measures pushing us into a vicious circle of economic contraction and their is also danger in trying to spend our way out of economic stagnation. This is a measure of how disastrous Gordon Brown’s economic policies were.

  9. The Voice of Reason says:

    Browne really is an elf….. an evil little bastard.

    He’ll rot in hell.

  10. GH says:

    It’s hard to predict what the effect of implementing the Browne review will be. I think it could work out very well or have bad unintended consequences. For example we might end up with an absurdly expensive university system, more like that in the USA, or good students might be put off by the idea of having a large debt, even though there would be no pressure on them to repay any of it until they could afford to do so.

    On the plus side, it may make prospective university students think more about whether they want to study, what they want to study, how hard they are going to study. This is certainly needed. Even 30 years ago, when I was at university, 3rd year students in some subjects suddenly realised with a shock that no employer wanted their degree. No one had told them at school that geography degrees are useless. They felt cheated.

    It’s now easy for people with very weak academic achievements to get into university. It’s an obvious soft option, for someone who’s managed to scrape through an A level or two, or some easier substitute, as a way of putting off working. Having to take out a loan for the degree may persuade some people to think a bit harder about the decision. I’m shocked to hear people say “I would end up with a debt of £50,000 and no way is a degree worth that much to me. The government should pay for it.” If it’s not worth it for them, why is it worth it for the government? This is an example of the idea many people seem to have that government money is not real money.

    The main beneficiaries of the old scheme of government subsidising university education were educated class parents. Despite mostly having fairly good incomes themselves, the state paid towards educating their children who often went on to highly paid jobs. There is a strange alliance of left wing ideologues and middle class loving Tories against the new system.

    I hope the new system works out well. I think we owe Lord Browne a debt of gratitude for having come up with such a well thought out report. When the idealogical slanging match is over, this method of funding will be judged on how well it works and this will largely be down to how well it’s implemented. I don’t believe there is any absolute right or wrong about it.

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This site is not about the Browne Review ( or Securing a Sustainable Future for Higher Education: an independent review of higher education funding & student finance as we should properly call it) itself, but since that is what sparked this website we thought we should explain why we think it’s rubbish, and dangerous rubbish […]