A slightly mischievous piece by one Tim Brighouse makes a suggestion to members of the Browne commission which, I am sure, as members of the big society they will want to take up by making large donations, and to the government which, again, I’m sure they’ll be delighted to adopt as policy: a graduate tax on those of us who got our college education for free at a time when it produced a significant wage premium (oddly enough an age span that begins with my dad and ends with my sister). Here’s a taste:
When I first read the Browne report I was puzzled, as I am sure we all were, by the false logic. The cuts are governed by a general desire not to pass on our current debts to future generations, yet this report is apparently happy to load some of it on prospective young graduates. How can we explain that to our teenagers?
My second response when reading the report was to feel unusually guilty and ashamed. It should have the same effect on anybody aged between 45 and 70, for we are the “charmed generations”, as we often privately admit to one another.
We were showered with all manner of blessings: we missed the Second World War; we didn’t give up two years of our lives to national service; and we enjoyed the benefits of the newly created welfare state. If we own a house, for many years we enjoyed tax relief on mortgage interest payments. And to cap it all we either have or can expect reasonable, and in some cases generous, occupational pensions, which succeeding generations will not.
Most important of all – and this is where the Browne report comes in – the fortunate few in our charmed generations who attended college or university, unlike our successors, enjoyed free tuition and were given grants to live on as undergraduates.
In my case, in 1958 it was £300, which is equivalent to £12,000 today – more than half the starting salary of a teacher. In today’s money that is about £50,000 over the four years it took me to complete my degree and PGCE, and the state paid for the tuition at about the same cost, amounting to £100,000 in all. No wonder some of us felt we owed the state – and future generations – something in return.
Disclosure: in the traditional role of more tech-savvy offspring I found the online calculators that enabled him to do the inflation adjustment. (That I am more tech-savvy than him tells you a lot about how tech-unsavvy he is).
{ 12 comments }
Tim Worstall 11.06.10 at 2:18 pm
“Disclosure: in the traditional role of more tech-savvy offspring I found the online calculators that enabled him to do the inflation adjustment. (That I am more tech-savvy than him tells you a lot about how tech-unsavvy he is).”
Well, yes, but you might have wanted to use a different calculator.
£300 then is £12,000 now only if you’re using average earnings (and then only around and about). If you’re using RPI it’s more like £5,000.
That’s assuming that I’m using the right one.
http://www.measuringworth.com/ukcompare/
Which of the two “should” be used is another whole ball game of such wonderful complexity that I’ll let JQ deal with that one.
Chris Bertram 11.06.10 at 3:29 pm
See also a letter in today’s FT
http://bit.ly/cSnUQp
Harry 11.06.10 at 3:38 pm
There were a lot of them. I think its fair enough to use earnings for the tuition, no? But it seems fairer to use rpi for expenses. Except that rent (which when I was a student took about half the allotted maintenance grant) has (I presume) gone up much faster than rpi? I doubt that the members of the Browne commission would have much difficulty paying the higher sum, though…
derrida derider 11.08.10 at 12:54 am
Progressive income tax means you’ve more than paid for your education. If that education enabled you to earn extra money, part of that extra was given to the government in income tax (remember its the marginal dollars were focusing on, so ALL of it is taxed at your marginal tax rate). Based on realistic rates of return to education and realistic tax rates, you can generally quickly show that the taxpayer of the day got an astoundingly good bargain from those grants even if it meant that the government of the day had to borrow to pay them. In effect you were lent the money and have repaid it with more than adequate interest.
Which comes back to your point about the confused logic around government versus private borrowing.
Guy 11.08.10 at 9:37 am
Certainly it sounds as though the Browne Report takes things a bridge too far; charging interest on student loans over £21,000 in addition to inflation adjustments is a bit rich. Surely there is a good case for making the debt interest-free. It’s a fine line between forcing students to make a reasonable contribution towards covering the costs of their education and discouraging students from undertaking education, or saddling the less lucky of them with a working lifetime of debt.
I also agree with DD that any retrospective free education “guilt” is a bit misplaced; much like any such retrospective guilt. Every generation is entitled to some luck – as we might argue the current generation has with regards to information access.
Zamfir 11.08.10 at 11:04 am
Derrida, not sure if that works. Some part, perhaps a large part, of the personal financial returns to education are purely a relative affair: the educated push the less educated out of jobs, even if the less educated could have done a reasonable job themselves.
So the government now gets more tax returns from the educated, but less from the uneducated. To know how much gains to the government there really are, you have to estimate how much of the personal returns to education are also social gains to education.
SJ 11.08.10 at 11:18 am
Derrida is from Australia, and it works there. It works in any place where there is real median income growth. So it doesn’t work in the U.S. or Japan, and probably won’t work in the U.K any more.
Zamfir 11.08.10 at 12:17 pm
But income growth is not a 100% result of sending more people to universities. It is probably related to it, and might even be a critical component, but it is not the only component.
Subsidizing higher ed is presumably a good thing for the country. It might even be a net good thing for the state, moneywise. But you can’t prove that by simply claiming that large swathes of income are the direct result of subsidizing higher ed in the past.
jon livesey 11.08.10 at 9:22 pm
“The cuts are governed by a general desire not to pass on our current debts to future generations, yet this report is apparently happy to load some of it on prospective young graduates. How can we explain that to our teenagers?”
Well, that’s one question. But how about asking a different question. How exactly do you explain to a taxpayer on a moderate income, perhaps working in a factory or in retail, that they should pay taxes to send the child of a middle class family to University to study Peace Studies, Post-Modernism, or Media Communications? Personally, I would be happy to stump up for students to study Science and Engineering, but I am a lot less eager to fund Philosophy or Social Sciences.
The whole piece by Brighouse is predicated on the notion that the “we” he refers to, is an entire generation of privilege which should be honoured to pay higher taxes in return for the benefits they received. But that is a slanted picture. Many people in Brighouse’s generation received few benefits but made careers for themselves anyway, while others received few benefits and now just get by.
There is a theme that infects this blog, which is that “we” are all BBC executives, or academics and that what “we” have was given to us by a benevolent society. But that’s not true. Plenty of people who pay taxes made their own success, while others experienced few benefits and little success.
engels 11.08.10 at 9:50 pm
How exactly do you explain to a taxpayer on a moderate income, perhaps working in a factory or in retail, that they should pay taxes to send the child of a middle class family to University to study Peace Studies, Post-Modernism, or Media Communications? ersonally, I would be happy to stump up for students to study Science and Engineering, but I am a lot less eager to fund Philosophy or Social Sciences.
Just out of interest, Livsey, how many social scientists and engineers v. philosophers and post-modernists do you think you have personally bankrolled?
Harry 11.09.10 at 4:10 pm
Jon
He says the tax should be applied to graduates of those generation who earn enough to pay the top rate of tax. In particular all members of the Browne committee and him. People who made careers for themselves without degrees, and people who despite having degrees “work in a factory or in retail” on a moderate income wouldn’t pay it. It’s pretty clear if you bothered reading it.
engels 11.09.10 at 5:05 pm
Speaking for myself, as somebody who has dutifully paid VAT on every Mars Bar I have bought since the age of 6, I would be happy for this money to be spent on somebody studying Kling-on. But only if they are a Zoroastian with family connections to the town of Watchet. Fortunately for the state of British education and research, though, such decisions are generally not made according to my personal whims.
Comments on this entry are closed.