A Professor of Education challenges universities about their purpose.

What are universities really for? was the topic of a recent lecture by Hugh Lauder, professor of Education and Political Economy at the University of Bath (previously on the Canterbury and VUW faculties). His answer may not be what you think; this is an economist’s response.

New Zealand universities, like many elsewhere, are increasingly seen as a part of the mechanism for stimulating economic growth. So much so, that students are encouraged to attend to increase their future incomes; they even take out loans as an investment in the course which, they are promised, will give them a high return.

Lauder warns that high returns may not occur in the future. The indications are that for many graduates the days of sufficiently high incomes to justify the investment commercially are over or may soon be over.

If he is right, we are entering a new era in technological evolution. Historically the jobs that were undermined were those at the bottom of the skills ladder. By climbing a bit higher, you got a decent income. That seems to be changing.

To give an illustration, there is a claim that there are computer programs (‘algorithms’) that are better at diagnosing you than your GP. Maybe it is not true – developers of new technologies are always making excessive claims for their babies – but I don’t see why in principle such programs may not be possible one day. Before then, there may be computer assisted diagnosis programs which a GP uses to assist her or him. Since they would also be online, an individual could use them before going to a doctor, which would change the GP's role in medical management. The point here is that we are envisaging a change a long way up the skills ladder. Instructively, it does not threaten practice nurses as much although they are further down the skills ladder; it may even empower them.

Other professions are also experiencing similar revolutionary changes. A lot of routine work done by lawyers may be outsourced to computers. Lauder, who has been working closely with corporates, says that business practices are changing so that their career structures give fewer opportunities to new entrants.

Even more tellingly, Lauder asks what is the evidence that universities enhance economic growth. He points out there is not a single German university in the top 25 of the Times Higher Educational Supplement’s world ranking of universities – the only one on the European continent is Swiss – while there are five British ones. Yet the German economy far outstrips the British economy. Looking at the whole of the rankings, after adjusting for population, you would get a similar inconsistency across the board. (Germany does well, it is generally thought, because of its strong middle-level technical education which enables workers to contribute to the high-productivity, expensive, technologically-advanced exports.)

Universities are very expensive to the public purse, so a growth generating university system is a convenient bit of rhetoric to justify public subsidies, just as universities claim you will get much higher lifetime incomes earnings with a degree in order to encourages students to pay fees. Lauder is challenging these assumptions.

Suppose they are not true – or insufficiently true to justify the rhetoric. That does not mean you should not get a tertiary education after school or that you should discourage your younger friends and relations from attending tertiary institutions. I suppose a certificate proves to a future employer that you have stickability so that the credential becomes a filter for identifying an underlying ability.

(Some of the postgraduate university courses I know about are of very poor quality in terms of content and teaching, but I still might hire a graduate based on the evidence that they survived. Some employers can be very sophisticated. I recall when I was hiring we gave weight to graduates from departments which did not have high research profiles but which we knew gave a sound training.)

Some go to university because they are interested in the subjects they study rather than to generate a career path. Their education may not add much directly to GDP but may enhance the nation’s (and personal) wellbeing. Crucially, who can tell? Certainly not big brother in Wellington. That is why we give students choice.

How much of the tertiary system should central government fund? We have not really had a serious discussion on that, especially as it might require a careful analysis of the role of the tertiary institutions in economic growth.  An alternative is that some tertiary education – say three years – is an entitlement of every New Zealander. Costs matter though. While the changes to tertiary education of the early 1990s, which are the foundation for today’s system was shaped by neoliberalism, it was driven by the rising costs to the exchequer as we increased the proportion of each generation going to universities and polytechs.

While there may well be a case for tertiary institutions screwing as much out of the exchequer as they can, using not very robust arguments of their value to commerce, I am uneasy about the same argument being used to attract students, especially if Lauder is correct and the commercial demand for graduates is changing.

But even so, the commercial case for public funding has its limitations. It tends to be very short term, a means of subsidising business taking on new entrants at the cost of the long-term contributions that a good university can make. Business does not give a lot of credit to the enquiring mind, to thinking critically and outside the square, to the willingness to challenge the status quo, to being civic minded, all of which create the resilience necessary to cope with economic, political social and technological change over a lifetime; attributes vital for sustainable survival and which – apparently – do not come naturally to New Zealanders (nor, probably, to everyone).

Perhaps the most important attribute is to engender in maturing adults a commitment to lifelong learning.