Friday 1 October 2004

Money out of thin air

The usual suspects are concerned that Scottish graduates are finding it difficult to "get on the property ladder".

(Warning from your friendly neighbourhood blogger: ladders can go down as well as up.)

NEARLY two-thirds of university graduates under the age of 30 cannot afford to get on the property ladder, according to research published yesterday.
Right on cue, the opposition's education honcho has the answer:
Fiona Hyslop, the SNP education spokeswoman, said that unless ministers act, long-term consequences for the Scottish economy were enormous. She said: "Young people saddled with debt suffer individually but are also a drag on the economy. We have to make sure they are not burdened down with debt in the first place, which is why we would replace the student loan system with grants. The Executive says that the economy is their number one priority, but they don’t seem to realise that graduate debt prevents young people from contributing to the economy or wanting to start up their own business. By lifting students out of debt, we will kick-start the economy. Ministers are ignoring this issue at their peril."
Clearly Ms Hyslop hasn't heard of Frederic Bastiat and the fallacy of the broken window. Students with less debt may well go and spend their (ours actually) new found wealth on "kick-starting" the economy but the poor taxpayer who has to fund these students (hopefully not of economics) will of necessity be "kick-stopping" the economy as he will be all the poorer.

3 comments:

David Farrer said...

Comments made on previous template:

Neil Craig
I've said it before & I'll say it again. 
 
The only thing stopping people & graduates getting on "the property ladder" is that we ain't allowed to build the properties.

16 October 2004, 20:00:27 GMT+01:00
– Like – Reply





Stuart Dickson
Err... thanks.... I think, for the kind-of compliment. 
 
Am I the Anti-Spok? 
 
My primary aim is not to entertain, but if I bring a little joy into Andrew's existence then we could view it as a nice consumers' surplus.

7 October 2004, 11:28:43 GMT+01:00
– Like – Reply





Alastair Ross
I fear that nothing in Dr Wood's academic training has adequately prepared him for the tenacious hand of illogic and bombast which so entertains readers of this blog's comments section.

7 October 2004, 10:51:48 GMT+01:00
– Like – Reply





Stuart Dickson
Me again. Cookie problems.

7 October 2004, 05:24:13 GMT+01:00
– Like – Reply





Guest
-"or acknowledged that there was a gap there to be filled." 
 
Andy, I freely admit that I have not undertaken the intensive, expensive process of carrying out a Cost Benefit Analysis on the higher education market. Perhaps, if I could be bothered, I could do a literature search and find some available published academic work. 
 
But who cares? 
 
Your devotion to CBA is really quite quaint. You're like a fresh little puppy, trotting out of college with your shiny PhD, determined to show the world how learned you are. A male Lisa Simpson. 
 
CBA is usually a tool used by the left to justify all kinds of silly subsidies. Its rather sweet that you seem to beleive that it is a scientific process immune to political tampering. 
 
Join a political party. Your canvassing colleagues will have great chortles as they watch eager young Wood trying to talk Mrs McSween at No.42 into voting for you on the basis of your revolutionary Cost Benefit Analysis. 
 
Good luck. 
 
-"Instead I got this snooty dismissal of any efforts to think the matter through." 
 
Yes, I was a bit snooty. But you are a bit arrogant in expecting a co-contributor to a blog to spend hours of their time on a futile econometric excercise. 
 
Go on a US blog and ask some right-wingers to conduct a CBA in justification of their war on Iraq. Their responses should be hilarious, and perhaps slightly stronger than "snooty".

7 October 2004, 05:23:26 GMT+01:00
– Like – Reply





Andy Wood
I care very much whether what I beleive is true, and I constantly question my own beliefs. 
 
That's obviously not true. When I pointed out a gap in your reasoning and invited you to fill it, you simply evaded the point. If you cared whether your beliefs are true, you would either have made some effort to fill the gap, or acknowledged that there was a gap there to be filled. Instead I got this snooty dismissal of any efforts to think the matter through. 
 
If you had made an effort, you would have got a more interesting response from me, but trying to engage you in an argument is clearly a waste of time.

6 October 2004, 23:59:49 GMT+01:00
– Like – Reply


David Farrer said...

Stuart Dickson
The tiny Scottish Socialist Party says that students should pay nothing. The even tinier number of "libertarians" say that students should pay everything. Reasonable people like I say that costs should be shared. 
 
I care very much whether what I beleive is true, and I constantly question my own beliefs. At least I say what I beleive. Get off your academic high-horse and come join the real world. 
 
Mr Wood, stand up and tell the big wide world. What do you believe? Don't be shy? (Please show all workings. Shoddy work will be marked down.)

6 October 2004, 23:20:44 GMT+01:00
– Like – Reply





Andy Wood
Why must I spend time and effort defending existing subsidies, when you have repeatedly refused to advocate a counter-proposal. 
 
Because you were the one who asserted that such subsidies were justified. The obligation is on you to back up your assertions, not on me to defend assertions on which I have yet to make up my mind. 
 
I wish I'd had the balls to adopt your tactit when defending my PhD thesis: "It's not for me, the student, to prove my hypothesis, but for you, the examiner, to disprove it." 
 
You clearly don't care whether what you believe is true or not.

6 October 2004, 23:08:37 GMT+01:00
– Like – Reply





Stuart Dickson
-"I haven't expressed an opinion on the matter one way or another." 
 
Exactly! 
 
Why must I spend time and effort defending existing subsidies, when you have repeatedly refused to advocate a counter-proposal. 
 
The status quo is fine by me. It is not I that has the problem. 
 
Speak up man. What is your problem with subsidies to higher education?

6 October 2004, 19:50:31 GMT+01:00
– Like – Reply





Andy Wood
Four evasions. 
 
I re-assert that my assertion is true. I assert, again, that subsidies are justified by the benefits that the general population receives. Not by an arithmetical analysis of Marginal Benefit, but through common sense. 
 
Your alleged "common sense" isn't much use if you can't follow an argument. Just because the rest of society benefits from having say, 30% of the people graduate, it does not imply that increasing the number to 31% will bring even more benefits. 
 
Therefore it is encumbent on you, not I, to make a sound case for abolition of subsidies. 
 
Nonsense. If you re-read what I've said, you'll see I haven't expressed an opinion on the matter one way or another. I was interested in whether you could substantiate your opinions. It looks like you can't. 
 
There are many, many benefits to the economy/society of having a good number of highly-educated individuals. I should have thought that with a teensy-weensy bit of imagination even a "libertarian" could have come up with one or two. 
 
But, as I said, pointing to any benefits does not justify a subsidy. You have to show that there are benefits from the marginal graduate, ie that the subsidy will increase benefits over and above those that we would get anyway without a subsidy. 
 
A proper Cost Benefit Anaysis takes a lot of time and money. You would hardly expect me to take hours out of my day to even start a rudimentary calculation, would you? 
 
I didn't ask you to. I asked you to identify benefits from the marginal graduate, which would be only one input into the cost-benefit analysis. 
 
Glaringly obvious benefits may include the fact that graduates earn far higher wages than average and therefore inject savings and thus investment funds into the economy. 
 
Those are not net external benefits from the marginal graduate. They are almost entirely paid back to the graduate in the form of his higher wages and so cannot be used to justify a subsidy. 
 
You have to identify benefits for which the graduate is unable to receive benefits in return.

6 October 2004, 18:21:13 GMT+01:00
– Like – Reply

David Farrer said...





Stuart Dickson
Do you acknowledge that there is a "correct" level of subsidy, or are you trying to say that zero subsidy is justified? Where are your sums? 
 
I re-assert that my assertion is true. I assert, again, that subsidies are justified by the benefits that the general population receives. Not by an arithmetical analysis of Marginal Benefit, but through common sense. Even the general population thinks that they benefit from subsidy, evidenced by their total support for candidates who support subsidies. I am not aware of a single elected politician who would abolish subsidies to higher education. Are you? 
 
It is "libertarians" that are challenging the established wisdom, not I. Therefore it is encumbent on you, not I, to make a sound case for abolition of subsidies. 
 
There are many, many benefits to the economy/society of having a good number of highly-educated individuals. I should have thought that with a teensy-weensy bit of imagination even a "libertarian" could have come up with one or two. 
 
Perhaps you are so interested in sums that you lack the political instincts required.  
 
A proper Cost Benefit Anaysis takes a lot of time and money. You would hardly expect me to take hours out of my day to even start a rudimentary calculation, would you? As previously stated: you do the sums. 
 
Glaringly obvious benefits may include the fact that graduates earn far higher wages than average and therefore inject savings and thus investment funds into the economy.

6 October 2004, 07:08:53 GMT+01:00
– Like – Reply





Andy Wood
That makes three evasions. 
 
Since you're not making the slightest effort to defend your assertion that subsidies to higher education are justified by the benefits to the rest of society, can I take it that you are conceding that you have no idea whether your assertion is true?

5 October 2004, 23:18:07 GMT+01:00
– Like – Reply





Stuart Dickson
What I find interesting about your approach is that you are not taking the usual attitude of contributors to this site. You are not saying that we should not provide some subsidy, but instead impling that there is a "correct" level. Quite refreshing: you do not appear to be on the fundamentalist wing. 
 
Since you are more interested in CBA than I, please do the sums yourself.

5 October 2004, 18:56:02 GMT+01:00
– Like – Reply





Andy Wood
Whether or not you trust the instincts of European over US politicians tells us nothing about whether subsidies for higher education are justified. 
 
Your suggestion that the "criterion of marginal benefit was more suited to academia than the real world" seems to be more of an observation that most voters do not understand cost-benefit analysis. This implies that voters are unlikely to understand the consequences of the policies they vote for. It tells us nothing about whether those policies can be justified. 
 
You asserted that subsidies for higher education could be justified by the benefits provided to the rest of society. When I pointed out that this was insufficient and explained what a correct cost-benefit analysis would involve, you evaded the point. Twice.

5 October 2004, 14:07:31 GMT+01:00
– Like – Reply





Stuart Dickson
No, I said that I trust the instincts of Ms Hyslop and other European politicians when they seek to subsidise higher education, and I suggested that your criterion of marginal benefit was more suited to academia than the real world. 
 
Her heart is in the right place. 
 
All politicians, from left and right seek to subsidise their own pet projects. Traditionally Scots have been fond of the concept of universal education, hence politicians try to support that cause. 
 
Right-wingers in the USA have more dubious preferences, but they seek to support their favourite projects with unjustifiable subsidies.

5 October 2004, 13:45:12 GMT+01:00