Reaping where they have not sown

This piece caught my eye in the AFR:

Bruce [Chapman] and I [John Dawkins] have often shaiacked about the true father of HECS – was it Bruce who developed the scheme or me who had it supported by a divided Labor Party and passed through a disagreeable Senate?

But then great ideas have many fathers; terrible ideas are soon orphans.

This is a did Al Gore invent the internet question?

Bruce Chapman did wonderful work operationalising the idea and Dawkins did great work driving political acceptance of the idea. At best, however, they were midwives to the idea itself that was actually fathered by Milton Friedman.

A governmental body could offer to finance or help finance the training of any individual who could meet minimum quality standards by making available not more than a limited sum per year for not more than a specified number of years, provided it was spent on securing training at a recognized institution. The individual would agree in return to pay to the government in each future year x per cent of his earnings in excess of y dollars for each $1,000 that he gets in this way. This payment could easily be combined with payment of income tax and so involve a minimum of additional administrative expense. 

That is from 1955.

Later in Free to Choose (1980), Friedman provided an update to the idea.

More recently (1967), a panel appointed by President Johnson and headed by Professor Jerrold R. Zacharias of MIT recommended the adoption of a specific version of this plan under the appealing title “Educational Opportunity Bank” and made an extensive and detailed study of its feasibility and of the terms that would be required in order for it to be self-supporting. No reader of this book will be surprised to learn that the proposal was met by a blast from the Association of State Universities and Land Grant Colleges—a fine example of what Adam Smith referred to as “the passionate confidence of interested falsehood.” In 1970, as recommendation 13 out of thirteen recommendations for the financing of higher education, the Carnegie Commission proposed the establishment of a National Student Loan Bank that would make long-term loans with repayment partly contingent upon current earnings. “Unlike the Educational Opportunity Bank,” says the commission, “. . . we see the National Student Loan Bank as a means of providing supplementary funding for students, not as a way of financing total educational costs.”

More recently still, some universities, including Yale University, have considered or adopted contingent-repayment plans administered by the university itself. So a spark of life remains.

As Dawkins confesses great ideas have many, many fathers and I don’t want to detract from what has turned out to be a very good reform and application of one of Friedman’s better ideas (the withholding tax being the worst, of course).

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3 Responses to Reaping where they have not sown

  1. Bruce of Newcastle

    I don’t have a problem with HECS. It telegraphs to the students that education has a cost, but it doesn’t penurize those who can’t afford to pay.

    I do have a problem with how it was implemented. At present there are several tiers of costs. Here is a list of the lowest cost degrees:

    Humanities, behavioural science, social studies, education, clinical psychology, foreign languages, visual and performing arts, nursing

    Aside from nursing and languages, is there anything in common with these degree subjects?
    Well done! Give that person of no-identifiable-sex-or-ethnicity a prize!
    Not only are they festering holes of leftism but they also are easier degrees than the hard stuff like STEM.

    And there is the mistake – to introduce ‘bands’ of payments. All the student contributions should have been exactly equal. That they aren’t is very Fabian. The young are subtly influenced towards the cheap, easy and subjective and away from the analytical and objective.

    So who the father is may be debatable, but Marx definitely passed on a few genes to the current mix.

  2. max

    The voucher solution is understandable coming from conservatives, since they generally have no problem with using the state to further their political and social agendas. However, for libertarians to embrace a government program such as vouchers is indeed troubling.

    I argued that it would be a disaster for the independence of private schools that joined the voucher-redemption program. They would have to accept government regulation for their curriculum programs and even teaching methods. After all, as Friedman taught, there are no free lunches in life. The government cannot legally hand out money willy-nilly. Recipients of government money must meet government standards. This means control.

  3. David

    Universities should set the cost of each degree. All HECS payments should go directly to the university. So that there is a direct correlation between what unis teach and how employable their students are. High cost basket weaving and interpretive dance theory will do well /sarc

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