A Theory of (British) University Business Cycles

Put simply, the theory of political business cycles goes like this: in the run up to elections, governments increase public spending or/and lower interest rates (if they can control them) in order to stimulate the economy and reduce unemployment. They supply voters with more goods or cheap credit as a way to make them happy so that they will re-elect them. After the elections, however, governments have to implement drastic austerity to pay for all the goodies they supplied to voters, or increase interest rates to slow down inflation triggered by cheap credit. As a whole, political business cycles can lead to phases of booms and busts, and reduce certainty for investors in a way that is ultimately damageable for the economy. This idea was one of the reasons that led central banks to become independent in most countries. By taking away monetary tools away from governments, one could make sure that they couldn’t use them for electoral purposes.

The evidence for the actual existence of political business cycles is at best mixed. However, the overall reasoning can be useful to understand the cycles that – some – British universities go through in the context of the Research Excellence Framework, the giant bureaucratic exercise set up by the government to assess its universities and allocate funds based on research quality. Essentially, the REF can fulfill the same function as elections in the theory of political business cycles, leading to cycles of boom and bust that are ultimately damageable for research and teaching. Universities in the last REF cycle were assessed based on their research output in the 5 year period before the 31st of December 2013. While universities have spent massively in research in the run-up to the last REF, many of them are now downsizing or refocusing strongly on teaching in the direct aftermath of the period of evaluation. In a very stylized way, the REF business cycle would look a little bit like this:

The Pre-REF spending boom

The motto is “research, research, research”. Universities spend significant resources on research and new hires with established track records of publications, partly by “poaching” star researchers who carried out research funded by other institutions. Part of this expansion, however, consists in fixed-term or precarious contracts that can be disposed of after the REF deadline. This touches both research and teaching. As to research, the Times Higher documents a 63% increase in 0.2 FTE (full time equivalent) contracts in the year that preceded the REF, allowing universities to submit the publications of these short-term hires in their REF submission. Universities may have offered such positions to hitherto retired academics or academics based abroad (who are not submitted to the REF by their university) as “visiting” or “research professors” as a way to buy their publications. But this also concerned increasing spending in teaching staff on irregular contracts (teaching assistants; teaching fellows) in order to free universities’ core workforce from part of their teaching duties (seminars of marking) to increase their research output. As a result, student evaluations that are so central to league tables and student enrollments suffer, as students are taught mostly by casual or junior staff. Casual or junior staff are often better and more dedicated teachers, but students may want to actually interact with the renowned researchers at their universities.

The post-REF austerity

The motto is “teaching teaching teaching”. Once the REF is over, universities re-focus on teaching as their main source of revenue, especially since it seems that there will be much less money to be distributed than anticipated after BIS blew its budget. The fixed-term teaching and research “industrial reserve army” is disposed of and teaching duties are reallocated to the core academic workforce, who is asked to teach more and mark more. Marina Warner, who resigned from the University of Essex in 2014, reports being enthusiastically encouraged to take part in the jury of the Man Booker prize in the pre-REF phase focused on “impact”, and then being told that she’d eventually have to take unpaid leave in the post-REF phase, where the things that were so praised a few months before were being flushed down the drain. However, much of the new focus on teaching does not translate in more teaching staff, but rather in increased investment in facilities and services. My own university, once the REF was over, set about to carry out a vast downsizing of its school of biomedical sciences and medicine to invest in new buildings. Emblematically, what was a cosy senior common room reserved for staff on the second floor of the King’s building has now been converted into an “informal learning space” for students. This is partly related to the format of the student surveys that have become so central as a way to assess and rank the quality of teaching: a large share of the questions in the survey actually deal with the “service” dimension (staff was accessible; timetable worked; IT resources were appropriate) rather than the actual content of courses. In line with the idea that “unleashing the forces of consumerism is the best single way we’ve got of restoring high academic standards”, student surveys are essentially like consumer surveys. What is assessed is the service that is provided rather than the quality of the content. It is a bit like writing a book or movie review where you’d give equal weight to the solidity of the cover or the comfort of the seats in the cinema as to the actual story being told.

What the Piketty-Financial Times Affair says about journalism and academia

Thomas Piketty has issued a response to the FT’s criticism claiming that bad computations and flawed estimates undermined the overall thesis of his book, namely that wealth concentration had increased. I have read the 10-page letter by Piketty and found it extremely convincing. Basically, he doesn’t give an inch, explaining each and every point that the FT raised with references either to the very dataset that the FT used, or to research papers he had published and uploaded. He concedes that a few minor points could have been more transparent in the dataset, but if anything, his response points more to the FT’s sloppiness than his own, as does another piece in the Guardian by Howard Reed. When you write a 600-page book drawing on a humongous mass of disparate data, you are bound to make thousands of judgement calls and adjustments. Keeping track of and documenting them almost takes more time than actually finding and analysing the data.

But besides the substantial points, what i found interesting about the whole FT (a commercial news outlet) vs. Piketty (an economics professor) affair is the still huge differences between the world of journalism and academia precisely at a time when these are getting closer and competing with each other.

Until recently, journalism and academia were clearly distinct. The race towards specialisation has led academics to invest in ever more sophisticated skills and take part in arcane debates that remained obscure to lay people, and journalists occasionally consulted them or reported about their research, but they held a monopoly over the means of communication of science to the public. Hence, academics tended to stay in the ivory tower, and needed journalists to diffuse their knowledge, while journalists needed the expertise of academics – or more often borrow their credibility to support common sense arguments. In many ways, roles were clearly defined. I think that things have changed recently with the development of academic blogging, where academics are increasingly investing the public sphere directly without the mediation of journalists. At the same time, the development of “data journalism” in the recent period can be understood as the diffusion of academic – essentially quantitative – techniques within journalism, and I suppose a more scientific approach to journalism. So what we have is the emergence of an intermediate sphere where both academics and journalists compete for communicating knowledge to the public. However, journalists and academics still have very different habituses – ways of seeing things, professional standards, time horizons – that make this competition a very unequal and often pointless struggle.

One of the major differences is the issue of time. Journalism needs to be fast rather than deep. Since the Pikettymania has started, I think it is fair to say that the overwhelming majority of journalists reporting on “Capital in the 21st century” haven’t read the book, and have relied on second-hand accounts by other journalists instead. Of course, this is a very long book and journalists simply don’t have time to read long books, especially if they have to maintain their twitter account beside writing articles. But this has tended to create what Bourdieu called the “circular circulation of information” where most media outlets have simply tweaked the titles used by other media outlets to report about it, adapting it according to their pre-existing ideological agenda without engaging with its content. The same has happened with the FT/Piketty affair, where most media outlets have reported on the FT criticism by hyping it up and reporting on the FT’s “takedown” without engaging with or evaluating the substance of the criticism. Fraser Nelson jumped on the bandwagon right away, accusing Piketty of “fiddling” data with a somewhat idiotic and hasty Schadenfreude. The FT seems to have given Piketty 24 hours to reply to their piece in the same edition, which is preposterous to give a substantial reply if you need to teach or even do substantial research on the topic. It takes often 2 years or more between the time I write an academic article and when it is published. I write it, revise it, present it at a conference, get feedback, revise it again, submit it to a journal, it is rejected, I revise it again, submit it again, am asked to revise it, until it is accepted. Hopefully, this leads to more serious and reliable scholarship, but journalists have really a hard time understanding that making reliable science takes time.

The second difference is perhaps cohesiveness. In academia, you make a reputation for yourself by criticising what others do or what they miss, and emphasising how what you do is original. Anybody that has gone through a journal peer review process knows that criticising others is much easier than doing research yourself, and this often creates fairly nasty battles. There is surely competition and criticisms among and between media outlets, but what always strikes me is the extreme degree of corporatism of journalists as a whole. While their job is to criticise and hold people to account, journalists are actually very bad at taking criticism and being held to account for their mistakes. Attacks by outsiders on the handling of a particular news event are often dismissed as attacks against journalism or press freedom itself. Journalists are always right, and journalism is what journalists are the most interested in. This applies to every sphere: plumbers certainly consider plumbing to be a cornerstone of modern civilisation, and most academic blogs actually talk about academia rather than subjects that academics study. But the difference is that journalists have a disproportionate visibility for everybody else because, well, they work in news outlets. This has applied in the FT/Piketty case as well. First, the debate would never have been hyped up so much if it had come from an academic. As written above, journalists don’t read academic papers of even academic blogs: they read other newspapers. Hence many news reports had a manifest pro-FT bias, showing how journalists were so good at debunking theses by professional academics. This was propped up by a journalistic norm which requires journalists to give balance to a subject by always including criticism of an argument, or “the other side of the story” even if the criticism is stupid or not credible. When I wrote a piece on dualisation in academia comparing it to a drug gang, I was asked a few questions by an Australian journalist who told me she had found the piece “just brilliant”. The article they published afterwards ended with a quote from a tweet calling my piece “a load of bollocks”. I was told the tweet had been inserted to “add balance”. A good controversy is always better than one plausible argument. When the criticism comes from a fellow journalist, you kill two birds with one stone.

The third is a huge difference in standards. Almost all news reports have lauded the FT’s “very serious work” in “debunking” Piketty and digging in his data. Now this was surely good work by journalistic standards, but it must have taken 3-4 days. By any academic standard, it is a bit light to debunk a 600-page book drawing on 10 years of research. The FT piece was apparently checked by an unnamed “economics expert”, which, as far as the reader could tell, could be the author’s aunt, or a banana. It was quite striking to read journalists denouncing Piketty’s lack of transparency – “he needs to explain himself” – whereas he put all his data online. Such a level of transparency is simply never seen in journalism. In journalism, dodgy data are used every day to support doubtful theses that will sell copies, and plagiarism is common: a Google search with the keywords “Daily Mail plagiarizes” yields 8’630 (!) results, and that’s only with the American spelling. A few months ago, a Greek newspaper asked me if they could quote from a blog post of mine. I said yes, but when I saw the finished product a few weeks later, they had made up an interview with me that never happened, where they had copy-pasted and translated my blog post, inserting questions in between, presenting it, I suppose, as a sort of exclusivity next to a picture they had found online. I am not saying that these practices are generalised, nor that there isn’t bad practice in academic research sometimes, but there are much higher barriers to entry in academia – get a PhD – and this type of malpractice is severely punished. Nowadays, the multiplication of media outlets – competing for falling advertisement revenues – means that anybody can claim to be a journalist – many people are simply ready to work for free – and the standards are often simply dismal. Hence, the critique of Piketty by many newspapers in this case was not only unfair, but was also a disgraceful example of double standards.

“A useless pile of half-truths and sensationalistic linkbait”

Dear Mr. Salustri,

I am the author of the piece “how academia resembles a drug gang” that you describe on your blog with the words above. You also write that it is “mortally flawed”, “laughable” and “a complete mischaracterization”. You call my argument “stupid” in a reply to a comment on your piece which defends mine.

My piece, originally published on my blog in November last year, has now been viewed 267’000 times (not counting the version on the website of the London School of Economics), shared more than 10’000 times on Facebook and more than 2000 times on Twitter. I was the first to be astonished by this success, but I assume that it wouldn’t have been shared so widely if it was only “sensationalistic clickbait” and didn’t contain some real insights about the functioning of academia. The comments about the blog have been overwhelmingly positive (on twitterhere or here). Outlets such as Science, the Times Higher education have reported about it. The title is of course overtly provocative, but the piece tries to make a very serious point by using comparative data. You essentially dismiss all of it with the qualifiers above. I thought I should reply to some of your claims, at least those that I can make sense of.

Firstly, you are right to say this piece is “not what one should expect from the London School of Economics” because I work at King’s College London, as is made clear at the bottom of the article. This just shows how carefully you have read the piece.

Secondly, you criticize my perspective, arguing that academics are “not in it for the money”. Now, this is not the point that I make in the piece. My point is to outline the dynamics of dualisation in academia between a shrinking core of insiders and an expanding core of outsiders in precarious positions. I use drug gangs as the most extreme example of such a situation, by trying to explain why “outsiders” accept to stay in academia in spite of very precarious job situations. I am happy to read that your combined income “allows my wife and I to not be particularly worried about our finances”, because many academics are: precisely because of the dynamics I talk about. The incentives are surely not only money, but also precisely the things that you cite (although if you want to “escape pedantry”, academia is probably not the right place to go). My point is that the difference between what is promised to prospective PhD students and the actual reality of academic prospects is huge, just like in a drug gang. I am not saying that academia is like a drug gang, I argue that its logic is similar. I accept that it is an inconvenient characterization, especially for respectable tenured professors, and others have also dismissed it as stupid *without even reading the piece*, but I still think it is accurate.

Thirdly, you criticize how I use the data and evidence in different countries. It is of course true that Slovakia produces much less PhDs than the United States, but the proportion of PhDs as as share of the population is surely the relevant measure, and not the absolute number because that’s what gives an idea of the capacity of different countries to “absorb” their production of PhDs. Of course Slovakia produces fewer PhDs, but Slovakia also has much fewer potential jobs. I accept the idea that the academic job market is not limited by national boundaries, and is largely transnational. Now even if we would consider the world as a whole, the relation between the “global production” of PhDs and the number of permanent jobs available changed dramatically: the number of jobs available has been massively outpaced by the production of PhDs. Now this precisely supports my point. After that, you write that I do not take into account the Bologna Process, “ the anti-science and anti-education lobbies” in the US, “the effect on academia of the billions of dollars that America spends on defence – more than any other country in the world”, I ignore Germany’s “tumultuous recent history, including reunification and becoming probably the most important country in the EU”, and my analysis of the UK “ignores the impact of the development and growth of the EU on UK, which has been staggering”. Well, I also completely ignore the fact that the weather in the UK is usually bad, that Germany won the World Cup in 1990 and that the United States put a man on the moon in 1969. I simply do not understand how the factors you mention challenge my analysis, and you make no effort to explain how either. Being Portuguese, I am well aware of the context of austerity in Greece and Portugal, but again, this reinforces my point: the discrepancy between the increase in the number of PhDs before the crisis and severe cuts afterwards has created a large mass of “outsiders” left with dire job prospects.

Coming back to the general discussion about PhDs, I happen to have had a look at another piece published on your blog which discusses a similar argument than the one I make. I was particularly struck by one segment of it:

Getting a doctorate isn’t (or, rather, shouldn’t be) just for specializing in a particular area; it gives one a chance to refine one’s thinking skills, to become a better reasoning agent, to make better decisions generally.  And this gets us back to the success of a society.  The better people can think, the better the decisions they make, and everyone will benefit. Some find this laughable because of the cost, time, and effort required to get a PhD.  What’s the point, they might argue, in getting a doctorate if you’re just going to be a tradesperson, or a shopkeeper, or an office worker What’s the point indeed.  Most people who would ask such questions haven’t got advanced education anyways. Which rather proves my point.

I found this piece problematic and condescending. I find it perfectly legitimate for people “who do not hold advanced degrees” to question how the money is spent in higher education, especially if they are subsidizing rich people to get these “advanced degrees” while themselves or their children are often excluded from them: rich kids are highly overrepresented in college, so that higher education spending if often a transfer from the low-educated poor to the higher-educated rich. Of course I agree with you that education is good for everyone, but dismissing criticism as simply “stupid” – which seems to be your method of analysis in general – simply delegitimizes the critical approach and openness that should characterize academia. Second, it is all good and well to write that getting a doctorate is not about finding a job but becoming a better citizen, but it is is fairly naive to think that PhD students do not build expectations as to a career in academia, and the point I was making is that the structure of the academic job market is bound to disappoint these expectations.

Please note that i have refrained from using the kind of vocabulary that you use in your own post, even if it was fairly tempting.

Yours faithfully,

Alexandre Afonso

Journalism also Works like a Drug Gang

I came across an old but interesting column by Roy Greenslade about “how journalism became a middle class profession“, describing how journalism progressively closed its doors to people from low-income backgrounds in Britain. I found it especially interesting because the logic described there is extremely similar to the “insider-outsider” logic I talked about for the academic job market:

“Then came the phenomenon of working for nothing. Newspapers, magazines and broadcasters discovered a ready supply of young, enthusiastic students willing to take up unpaid short-term work experience places and even long-term internships. Only the wealthiest of budding journalists can afford to work without pay”

What I didn’t mention in the piece on academia as a drug gang is the impact this has on the class setup of the profession, especially when the “outsider” phase involves unpaid work. Another column by David Dennis nicely outlines this mechanism for the US:

“As my classmates and I were finishing up our studies at Northwestern’s graduate school of journalism, we were naturally bombarded with stories and speeches from people who were actually successful in the field. Nine out of 10 had the same story: in order to succeed, you have to take an unpaid internship in New York for months or years; you build your resume and eventually land yourself a job. One senior member of a leading national magazine, when asked how someone could pay the bills to affording life in New York while working a full-time internship, famously told us that if we couldn’t pull an unpaid internship off, then we didn’t want to succeed badly enough. When we asked how he pulled it off, he told us about how he lived in his parents’ spare apartment upstate while working his internship.”

Now, the social background of journalists has an obvious impact on how journalists see the world and how they represent it for the public, and how political problems are framed (I discuss this here about welfare). A profession that is composed exclusively of people from middle or upper class backgrounds will certainly be blind to certain things and emphasize others.

I would assume that the existence of unpaid work as a necessary step to become an “insider” in academia would have similar effects. There was an an article about recent research in Germany that showed that professorships had not become more open to less advantaged social backgrounds in spite of the mass democratisation of higher education. It had in fact become slightly more elitist, which struck me especially in the light of my own experience.

Now, going back to journalism, what amazes me is the amused or ironic tone some newspaper or magazines took while reporting on my piece on drug gangs – The Australian ended its piece on it with “a load of bollocks” – while journalism seems to works exactly along the same lines.

How Margaret Thatcher Made Britain a Soviet State

When I moved to the United Kingdom a year and a half ago, I thought that I was moving to a free market experiment. Margaret Thatcher and her followers – from Blair to Cameron – had crushed the unions, liberalized labour and financial markets, privatized public services, reformed the state following business principles and reduced its interference in the economy. They had freed us from the threat of socialism, its bloated Kafkaesque bureaucracies and its mountains of red tape. I was aware of the massive social inequalities which had emerged as a result, but this was perhaps the price to pay for more freedom and a smaller state, for everything being faster, more fluid, agile and efficient.

The Kafka Bank

I kept this illusion for about three days after moving here, until I tried to open a British bank account. I chose a bank because of its declared “ethical” and responsible approach – it turned out that it was in fact severely mismanaged and its chairman was an avid user of Crystal meth and male prostitutes, but this is irrelevant here. To open a bank account, you need to prove that you live at a particular address. However, there is no government authority where you can go to register and prove that you live somewhere. Because of its concern for the freedom of individuals, Britain also doesn’t have ID cards. A plan to introduce them was axed by the current government in 2010. You have to pay council tax where you live, but it can be in the name of your flatmates or your landlord. The bank in question would not accept a private tenancy agreement as a proof of address, because the private tenancy market is a dodgy business full of rapacious landlords and greedy estate agents. What they accept to prove your address are letters from a bank, but this implies that you already have a bank. The only option for me to prove my address were utility bills, for which of course I needed to wait until the end of the month. As I didn’t have a British bank account and my employer wouldn’t pay my salary on a foreign bank account, I received my first salary in the form of a cheque that I could not cash (or only at these dodgy pawnbroker shops where they charge you a 15% fee).

After a month, I received my energy bill, or more precisely an internet link to an online energy bill. Energy companies strongly encourage or force you to opt for e-billing and direct debit, and they are unwilling to send you actual paper bills, in order to save costs. The friendly Scottish person from the call centre made it clear that it was much better for trees and my wallet to go paperless. I brought the prints to the bank. They didn’t accept them as a valid proof of address because they hadn’t been sent to my physical address. I also tried with a TV license, which I had also bought paperless after I had arrived. I called the TV licensing authority asking them to send me an actual paper license. After a number of requests, what they sent me was a certificate certifying that my TV license existed online. The bank said no again because it wasn’t the actual TV license. Eventually, I managed to have utility bills sent to my address (energy companies charge you a fee for that). Once again, the bank refused because the street number on the bill was “22C”, while the address that had been entered in their “processing facility” was “22”. The lady at the bank said that the computer system in their division in charge of regulatory compliance with money laundering regulations probably wouldn’t accept it if it wasn’t exactly identical. Since the financial crisis, banks had become very careful. If I wanted the “22” to be changed into “22C”, I needed to reapply.

I gave up and went to another bank that had an agreement with my university. Supposedly, you could open a bank account with them easily online. Again because of money laundering regulations, you have to indicate where you’ve lived for the last three years. For some reason, it wasn’t possible to enter a foreign postcode, so online didn’t work. I had an employee sent to my office, who didn’t know either why foreign postcodes couldn’t be introduced online. “It’s out of the ordinary” he said. Of course, nobody that has lived abroad ever moves to London, except perhaps for a few millions a year. In total, it took 7 weeks to open a bank account, right on time to receive my second salary. I am told that it would be tricky to get a British credit card because I have no “credit history” in Britain, so I didn’t even try.

Before moving to the UK, I lived for a year in Germany, the country of rules everywhere and rigid old-style bureaucracies. To open my German account, I took my tenancy agreement to the local authority (Bezirksamt), they stamped a certificate that I brought to the bank, and my account was open within a few days. Now I assume that one of the reasons why British banks are so absurdly picky, it’s because you can apparently do a lot more with a British bank account than with a German bank account: fee-free overdraft, special conditions for loans, etc. Actually, you have access to a lot of things that can go wrong, and with which you can get yourself and the bank in trouble if you default. In Germany, as everybody knows, you are not supposed to spend more than what you have, so you simply can’t go in the red. For British banks willing to take advantage of deregulated financial markets, having customers is almost a liability, which is why they need a lot more guarantees to make sure that they are reliable. However, banks cannot obtain these guarantees from the state because the state doesn’t want to interfere in your freedom, and they don’t want them from other private companies because they know that they are as greedy and untrustworthy as they are themselves, notably because they have all engaged in never-ending chains of subcontracting which dilute responsibility. The only way they found to get this insurance is by requiring endless piles of paperwork from you. More economic freedom, more paperwork, more soul-sucking bureaucracy.

Freer Markets, More Rules

Think of the following analogy: one day, you decide to no longer accompany your small son or daughter to school to leave them more freedom. However, to make sure that they won’t talk to strangers (which they might do) you make them fill in a 50-page questionnaire every day asking them if they understand all the different kinds of risks they may be exposed to, you call them every 30 seconds to check that they’re alright, you hire a private eye to check on them along the way, and another to monitor the first private eye. My understanding is that the British political economy works a bit along these lines. Governments have privatized, liberalized and outsourced, but every time they’ve done so, they’ve had to set up giant bureaucracies to monitor, control and repair the blunders of the market, and so do private companies to enforce and take advantage of competition. When you have freer markets, you need more rules. Britain and the United States have the most liberal labour and financial markets in advanced countries. Since there is so much freedom, why is there one CCTV for every eleven people living in Britain, and the United States have the largest rates of incarceration in the world? Since the UK doesn’t have ID cards and nobody is required to carry a document of identification to preserve individual freedom, it is actually easier for the police to take you to the policy station to identify who you are. While you seek to free market and individuals, you eventually end up establishing systems of control that are even more intrusive and alienating.

The problem is that when you don’t set up bureaucracies to monitor and control private markets, things usually go wrong, and the state has to step in to repair the damages with new bureaucracies, new commissions of enquiry and new regulatory authorities. Recently, Britain has privatized its probation services, or the monitoring of offenders on parole. It turned out that the company in charge of this had massively overcharged for this service, leading its chairman to step down. Now, you need more bureaucrats to check that the private service providers actually do their job, and more judges to sue them when they commit abuses, sometime dramatic ones. Security services are outsourced, but the army and police had to step in when G4S totally mismanaged the security of the 2012 London Olympics. Railways were privatized, but the company which managed the British Railway tracks had to be partly re-nationalised after a major crash. The British minimum wage is low not to outprice low-skilled workers, but the Treasury pays 3.2 billion a year in tax credits for low wages. It seems to be the same story time and again. The more market you have, the more state and bureaucracy you need after all.

Bureaucratization in British Universities

British universities are a particularly dramatic example of market-induced bureaucratisation. Since I have arrived, I discover the existence of a new rule, a new subcommittee or a new fancy job title (usually with word “strategic” in it) more or less everyday. If I go to a conference, I should fill in a risk assessment form listing 68 types of risks that I may face abroad, including whether I could be bitten by venomous snakes. I should also indicate the address of the closest hospital to the conference venue. The interesting thing about a large part of this bureaucracy is that it seems to have been created to respond to the needs of competition, while competition was supposed to make everything more efficient. Universities are in competition in the domain of teaching to attract students – and therefore income from fees – and in the domain of research, as government money is attributed on the basis of their research performance. As to teaching, as universities are desperate to attract as many students as they can, they have invested massively in marketing, recruitment and advertising services. In the US, for-profit universities are already spending more on marketing than in teaching (20% vs 17%, a report showed). Estimates for the UK are about 4 to 5% in marketing, but most experts predict a massive increase in future years. The consequence, in a context where resources do not increase because the total number of students is capped, is less money for what students actually want, teaching, and more to hire administrators and consultants in-house or – more often – hire private marketing firms. In short, the cost of selling the product to customers has gone up, and there is less money to actually produce it; then you need to rely on low pay to produce it with casual labour.

As for research, the major instrument to allocate funding is the Research Excellence Framework, whose goal is to rank and assess the research output of universities. My understanding of the achievements of the REF is that it has primarily created a giant time-consuming bureaucratic machine. Here’s how it works: departments are asked to select the “best” research outputs of their staff, and for that they set up reading committees who read all the publications to rank them. These rankings are then transmitted to higher levels within the university where the ranking is assessed, and decides whether it is reliable (Universities want to predict their REF score, perhaps for future budgeting). If it is not considered reliable, it is sent to external experts who can re-rank and re-assess the publications. At my university, heads of department have had to attend workshops to explain them how to tell their staff if they had been submitted for the ref or not. So what you have is thousands of people spending thousands of hours ranking and marking their colleagues’ work instead of doing more and better research, which was the first goal of the REF. And I don’t even mention the requirement of writing “impact case studies”: University College London advertised three “editorial consultant”  positions to write them. Salaries were roughly equivalent to those of a lecturer.

In all these examples, the logic is similar. You try to enforce economic freedom, competition and free markets, but you end up creating exactly what you oppose because, as Polanyi argued, self-regulating markets simply cannot exist. Margaret Thatcher is often credited for the downfall of Communism, but she may have paved the way for a system that displays disturbing similarities.

How Academia Resembles a Drug Gang

In 2000, economist Steven Levitt and sociologist Sudhir Venkatesh published an article in the Quarterly Journal of Economics about the internal wage structure of a Chicago drug gang. This piece would later serve as a basis for a chapter in Levitt’s (and Dubner’s) best seller Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (P.S.) The title of the chapter, “Why drug dealers still live with their moms”, was based on the finding that the income distribution within gangs was extremely skewed in favor  of those at the top, while the rank-and-file street sellers earned even less than employees in legitimate low-skilled activities, let’s say at McDonald’s. They calculated 3.30 dollars as the hourly rate, that is, well below a living wage (that’s why they still live with their moms). [2]

If you take into account the risk of being shot by rival gangs, ending up in jail or being beaten up by your own hierarchy, you might wonder why anybody would work for such a low wage and at such dreadful working conditions instead of seeking employment at Mc Donalds. Yet, gangs have no real difficulty in recruiting new members. The reason for this is that the prospect of future wealth, rather than current income and working conditions, is the main driver for people to stay in the business: low-level drug sellers forgo current income for (uncertain) future wealth. Rank-and file members are ready to face this risk to try to make it to the top, where life is good and money is flowing. It is very unlikely that they will make it (their mortality rate is insanely high, by the way) but they’re ready to “get rich or die trying”.

With a constant supply of new low-level drug sellers entering the market and ready to be exploited, drug lords can become increasingly rich without needing to distribute their wealth towards the bottom. You have an expanding mass of rank-and-file “outsiders” ready to forgo income for future wealth, and a small core of “insiders”  securing incomes largely at the expense of the mass. We can call it a winner-take-all market.

Academia as a Dual Labour Market

The academic job market is structured in many respects like a drug gang, with an expanding mass of outsiders and a shrinking core  of insiders. Even if the probability that you might get shot in academia is relatively small (unless you mark student papers very harshly), one can observe similar dynamics. Academia is only a somewhat extreme example of this trend, but it affects labour markets virtually everywhere. One of the hot topics in labour market research at the moment is what we call “dualisation”[3]. Dualisation is the strengthening of this divide between insiders in secure, stable employment and outsiders in fixed-term, precarious employment. Academic systems more or less everywhere rely at least to some extent on the existence of a supply of “outsiders” ready to forgo wages and employment security in exchange for the prospect of uncertain security, prestige, freedom and reasonably high salaries that tenured positions entail[4].


How can we explain this trend? One of the underlying structural factors has been the massive expansion in the number of PhDs all across the OECD. Figure 1 shows the proportion of PhD holders as a proportion of the corresponding age cohort in a  number of OECD countries at two points in time, in 2000 and 2009. As you can see, this share has increased by about 50% in 9 years, and this increase has been particularly pronounced in countries such as Portugal, Greece or Slovakia, where it nearly tripled, however from a low starting level. Even in countries with an already high share, the increase has been substantial: 60% in the UK, or nearly 30% in Germany. Since 2000 the number of OECD-area doctorates has increased at an average of 5% a year. [5a]

So what you have is an increasing number of brilliant PhD graduates arriving every year into the market hoping to secure a permanent position as a professor and enjoying freedom and high salaries, a bit like the rank-and-file drug dealer  hoping to become a drug lord. To achieve that, they are ready to forgo the income and security that they could have in other areas of employment by accepting insecure working conditions in the hope of securing jobs that are not expanding at the same rate. Because of the increasing inflow of potential outsiders ready to accept this kind of working conditions, this allows insiders to outsource a number of their tasks onto them, especially teaching, in a  context where there are increasing pressures for research and publishing. The result is that the core is shrinking, the periphery is expanding, and the core is increasingly dependent on the periphery. In many countries, universities rely to an increasing extent on an “industrial reserve army” of academics working on casual contracts because of this system of incentives.

Varieties of Dualisation

What I mention above is the broad dynamic that spans across a number of countries. However, the boundary of the insider and outsider group varies across countries. I can give a number of examples from different countries.

In the United States, numbers from the department of education reported in The Atlantic (Figure 2) show that more than 40% of teaching staff at universities are now part-time faculty without tenure, or adjunct lecturers paid per course given, with no health insurance or the kind of other things associated with a standard employment relationship.[5b] As you can see from the graph, the share of permanent tenured faculty has shrunk dramatically. This doesn’t mean that the absolute number of faculty has diminished, it has actually increased substantially, but it has been massively outpaced by the expansion of teaching staff with precarious jobs and on low incomes. The Chronicle of Higher Education recently reported about adjunct lecturers relying on food stamps.[6] The person mentioned in the article declares a take-home pay of 900$ per month, which is sadly not that far away from the 3$ hourly rate of the drug dealer, but for a much more skilled job.


Germany is another case where there has traditionally been a strong insider-outsider divide, essentially because of the hourglass structure of the academic job market. On the one hand, there are relatively good conditions at the bottom at the PhD level, and opportunities have expanded recently because of massive investments in research programs and doctoral schools generating a mass of new very competitive PhDs. On the other hand, there are good jobs at the top, where full professors are comparatively well paid and have a great deal of autonomy. The problem is that there is nothing in the middle: for people who just received their PhD, there is just a big hole, in which they have to face a period of limbo in fixed-term contracts (wissenschaftliche Mitarbeiter) or substitute professor (Vertretungsprofessur) for a number of years, after which they can hope to get their first permanent job in their mid-40s, while this could happen ion their mid-30s in the 1970s.[7] Figure 3 shows the average age of the PhD, for the habilitation and the first professorship in political science between the 1970s and 1990s. The age of the PhD hasn’t changed that much but the age of the first professorship has increased substantially. Also, you have to take into account that there is a selection effect because the people in the sample are only those who have made it to the professorship, and doesn’t take into account all of those that have dropped out during the academic limbo. What is interesting is that the insiders (professors) who control the market have often been hired at a time when no such competition existed, and you may wonder if they themselves would have been hired if similar market conditions had been in place. A number or new types or positions in the middle, such as the Juniorprofessuren have ben created, but these are also limited in time and are not the equivalent of tenure-track positions. Germany is the country of financial prudence, and both regional and federal governments have been reluctant to commit themselves to fund programs and positions on a permanent basis.


This academic limbo is accentuated by the fact that in some disciplines it has become common to apply for professorships even if you’re already a tenured professor so that you can negotiate your own working conditions with your home university. The result of this is that it is very difficult for recent PhDs to compete with established professors, and hiring processes tend to last a very long time as many candidates refuse and take time to bargain back and forth. Time, you may have it if you are tenured, but you don’t if you have an insecure position. You cannot wait two years when a university is negotiating with somebody who will eventually refuse if you have fixed-term contracts. This is a really perverse and insider-oriented system.

The United Kingdom is different from Germany in the sense that it does have intermediate permanent positions for people finishing their PhD. Britain is the biggest academic market in Europe and lectureships provide secure employment for relatively young academics even if the starting salary is relatively low if you take into account living costs, especially in London. However, this does not mean that UK higher education does not rely on a large industrial workforce of outsiders as well. Recently, the Guardian reported on the prevalence of so called “zero-hour contracts” at UK universities. [8] These are contracts which do not specify the number of hours one is supposed to give, and basically imply that the workers needs to be available to her employer when there is work. Compared to Continental Europe, what is striking is the pretty dismal situation of PhD students and teaching assistants who provide quite a large part of the teaching and whose employment conditions are much more casual than what one can see elsewhere. When I did my PhD in Switzerland, I was basically a public employee with a corresponding salary, pension contributions, welfare entitlements. A large proportion of PhD students in the UK do not have regular sources of funding, need to apply here and there to get scholarships, and when they teach they are paid per hour taught or a piece rate (exam/essay marked) that can vary across and even within universities.

The number of hours usually taught at UK universities is relatively moderate, at least at Russell-Group universities, because of a heavier focus on essays and independent work from students, but also partly because departments can rely on this flexible workforce. This has been accentuated by the strong constraints set on universities in terms of research and publication through the REF (Research Excellence Framework). This happens through two channels. First, as research is what is most valued, this creates incentives for established professors to retreat from teaching and secure research grants and publications instead, leaving teaching to casual teaching staff. On the other hand, some universities have advertised a number of temporary positions just because of the REF in order to use people’s publications in their submissions. There is no guarantee that universities are going to keep these people once they have “used” them.

Figure 4 summarizes in broad terms the differences outlined above. As I can see it, this form of insider/outsider divide exists everywhere and is probably expanding. The interesting thing is that these divides are largely structural in the sense that the system simply couldn’t work without this large supply of outsiders ready to accept any kind of employment contract. If you are mobile, strategic and concerned with employment conditions, you might want to exploit these differences and avoid the outsider boxes at different stages of your career. This would mean avoiding the UK for your PhD and avoiding Germany after your PhD.


This was presented on November 19 at the European University Institute’s Academic Careers Observatory Conference. For an updated analysis of academic labour markets in Europe, check this this paper.

[1] Levitt, S.D., and S.A. Venkatesh (2000) “An Economic Analysis of a Drug-selling Gang’s Finances”, The Quarterly Journal of Economics 115(3): 755-789; Levitt, S.D., and S.J. Dubner (2006) Freakonomics: a Rogue Economist Explores the Hidden Side of Everything. NY: HarperCollins.

[3] Emmenegger, P., S. Häusermann, B. Palier, and M. Seeleib-Kaiser et al. (2012) The Age of Dualization: the Changing Face of Inequality in Deindustrializing Societies. Oxford: Oxford University Press.

[4] http://www.economist.com/node/17723223

[5a] NB: This paragraph has been amended to reflect more recent data. The data can be found here.

[7] Data for political scientists from Arendes, C., and H. Buchstein (2004) “Politikwissenschaft Als Universitätslaufbahn: Eine Kollektivbiographie Politikwissenschaftlicher Hochschullehrer/-innen in Deutschland 1949–1999”, Politische Vierteljahresschrift 45(1): 9-31; Armingeon, K. (1997) “Karrierewege Der Professoren Und Professorinnen Der Politikwissenschaft in Der Schweiz, Österreich Und Deutschland”, Swiss Political Science Review 3(2): 1-15.

Universities are Full of Bullshit Jobs

David Graeber writes:

“Once, when contemplating the apparently endless growth of administrative responsibilities in British academic departments, I came up with one possible vision of hell. Hell is a collection of individuals who are spending the bulk of their time working on a task they don’t like and are not especially good at. Say they were hired because they were excellent cabinet-makers, and then discover they are expected to spend a great deal of their time frying fish. Neither does the task really need to be done – at least, there’s only a very limited number of fish that need to be fried. Yet somehow, they all become so obsessed with resentment at the thought that some of their co-workers might be spending more time making cabinets, and not doing their fair share of the fish-frying responsibilities, that before long there’s endless piles of useless badly cooked fish piling up all over the workshop and it’s all that anyone really does”

From here.