Matt Nolan

Tertiary funding: What is the rationale?

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It sounds like the tertiary education minister and universities will come into conflict regarding funding, again.  In this specific case, I think both sides are wrong/focusing a bit narrowly.

The tertiary education minister is saying the government should link funding to performance measures – including work placement.  The philosophy guy that was asked disagreed, as they will get less funding (which is weird, as he goes on to say how employers value the skills from philosophy – so this is sort of a contradiction right – Dim Post was on this wave length as well).

In my opinion public funding of education should be based on the “external benefit” associated with said education.

When arguing against the governments suggestion I’d say, if someone can get a well paying job but there is no external benefit, why should the government fund these courses at a high level?

In a similar vein we can argue against the philosophy guy by saying there is nothing intrinsically “good” about having people running around doing a certain degree type in of itself.  We need to sit down and say “what is the external benefit associated with this”.  Once we know this we have the rationale to sort out funding.

I do not believe all courses should be funded equally.  But I also don’t believe that courses should be funded on the basis of work placement.  These conclusions come from my value judgments that:

  1. The external benefits of different courses differ,
  2. External benefits are not perfectly correlated with work placement.

Update:  Eric Crampton discusses the policy here.

Update 2:  Very different take on tertiary policy in the UK.  I can see an argument for lowering the subsidy on education for jobs with a high private benefit and low social benefit (ability to pay and externality arguments).  But what do they mean by a graduate tax?  Do I get an additional tax on me if I head over there just because I’ve been to university?

Matt Nolan

Economists and values

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Another great comic from SMBC:

To (as usual) kill the fun a bit, I would note that the Economist is explicitly placing value on life in order to understand trade-offs.  The “normal person” is still placing an implicit value on life when they discuss the policy – they just don’t want to say it.  This implies that the “normal person” is hiding the trade-off, making any policy recommendation they make less transparent.

Matt Nolan

List of Kiwi’s who think they know better

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Well, they are pretty certain they are better at making your life choices than you are.

The list from the Hearld is:

  • Sir Paul Reeves, former Governor-General (convenor).
  • Dame Silvia Cartwright, former Governor-General.
  • Archbishop John Dew, Catholic primate.
  • Professor Sir Mason Durie, Maori health expert.
  • Georgina Earl (Evers-Swindell), rowing gold medallist.
  • Jeanette Fitzsimons, former Green Party co-leader.
  • Sir Lloyd Geering, theologian.
  • Dame Te Muranga Batley-Jackson, Manukau Urban Maori Authority founder.
  • Michael Jones, ex-All Black.
  • Dr Semisi Maia’i, Pacific Medical Association co-founder.
  • Caroline Meyer (Evers-Swindell), rowing gold medallist.
  • Archbishop David Moxon, Anglican leader.
  • Inga Tuigamala, ex-All Black.
  • Archbishop Brown Turei, Anglican leader.

Hey guys, if you think there is a problem with New Zealand’s culture of drinking, why don’t you try to understand why the problem exists and then come up with solutions to those problems – rather than just saying we should turn around and introduce prohibition.  I’m tempted to say it’s because these “high powered Kiwis” don’t understand how us common people think and feel – but I better not.

On that note, economics transmission will return next week – once I again have hours in the day to do real posting.

Matt Nolan

All Whites

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Sorry I haven’t been posting – been extremely busy, and although I have some ideas I won’t have time to write until next week.

On that note though – New Zealand has managed draws against Slovakia and Italy.  We beat Paraguay we are, regardless of other results, through to the last 16.  Wow – good stuff All Whites 😀

Matt Nolan

RBNZ lifts rates for first time in three years

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So the OCR went up 25 basis points.  Cool, that is nice.

It was almost entirely in line with expectations so there isn’t much to say, except:

  1. They more explicitly discussed Eric’s concerns regarding the impact of ETS increases into inflation expectations.
  2. They put table 5.2 in which talked about “who got what” from tax cuts.  OMG, seriously – this table was unnecessary.
  3. The continued to state that there is no real reason for our TOT to hold up – so a lot of the issues I’ve viewed as “structural” (rising commodity demand from China’s middle classes, Biofuels, falling subsidies on agriculture around the world) are being viewed as temporary by the Bank methinks.  This is why I will always disagree with their medium term forecasts …
Matt Nolan

The taxing issue of burden

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One thing I have noticed of late is that many people want to talk about tax cuts in terms of “who gets what”.  We see someone with an income of $XXX and say they will get $Y a week from the tax cut.  I find this perplexing as I have never seen tax this way.

The reason why I find this way of looking at tax changes strange is that it ignores how prices change in response to the structure of the tax system.  I fear that, to many people, this seems like a benign (possibly even esoteric) issue – when actually it is one of the most essential issues to keep in mind when thinking about the design of a tax system.

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