Tag Archives: universities

A Modest Proposal to Improve Value for Money for Customers of Universities

Students increasingly want “value for money” from their university education. On a number of occasions, I have heard or read students concerned about what they get for the money they pay, especially with respect to the different individual components of their education. I have received emails calculating the price of individual modules saying that for that money, they’d expect a speedy return of marked essays, or heard students voicing concerns about how much they were paying for each hour of lecture or seminar that they attended. A friend of mine at another university told me that one of their students had asked for money back after one seminar session was cancelled. If you think about it, it is fairly normal that the introduction of fees has led students to put a price on each individual component of their education, and assess more closely the value that they get for their money. Arguably, the value of fees has tripled since they were introduced, but it is difficult to argue that the quality of teaching can triple as well.

This movement of pricing is what many people call the “marketisation” of universities, often with a tone of disgust. I do not think that this marketisation has gone far enough. Students pay very high fees to get an education, but they get little choice about the product that they get. If you compare universities to true commercial enterprises, you’ll understand that they actually sell a very small number of products, and choice, which is primarily what a market system should deliver, is actually very limited. Choosing a degree works as if you could choose between different airlines to get from point A to point B, but each airline would only have one class, you wouldn’t be able to choose your seat, there would be no speedy boarding and the price would be the same if you booked 3 months or 1 day in advance. Precisely, airlines could be a good model for universities to pursue their movement of marketisation, with a much greater deal of choice in price and quality of products for their customers. A simple way would be to introduce a clear and transparent price list for all the different services that we provide, allowing students to choose different speeds and quality of service. This could look like this:

Price of seats in lecture halls: 3 pounds standard, 5 pounds to sit in the front, luxury seats with reclinable back and built-in head massage to stimulate thinking: 10 pounds per lecture. Note-taking service by experienced unemployed PhDs available.

Replying to students’ emails: 2 pounds within a week, 5 pounds within 2 days, 10 pounds for a 1-day service. For an additional 3 pounds, correction of eventual spelling mistakes or typos.

Student meetings to discuss dissertations: 20 pounds an hour; 30 for a service with notes taken. Business premier service with gourmet coffee, cookies and shoe-polishing on demand (booking in advance recommended).

Recommendation letters: pricing per length and degree of positiveness of the letter. Extra pricing for the placement of specific words: “outstanding”, “amazing” and “mindblowing”: 30 pounds. Budget option available for 10 pounds, includes “alright” and “not too bad”.

Marking and feedback on essays. Budget service with no feedback and date of return undetermined: 10 pounds. Business premier service for 50 pounds: 5 pages of feedback, 10% top-up on the the grade, returned within 3 days on your doorstep by a drone, with a bottle of champagne. Personalized help in writing essays available on demand.

Credit cards and paypal accepted.

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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].

PPT_EUIMW

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.

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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.

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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.

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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.