Dubious ideas submitted to the base funding review, part 4

For some people at universities, their public funding level isn’t just about the money. It is sending a coded message.

The Council of Australian Law Deans submission to the base funding review seems to take this view. Along with business students, law students get the lowest subsidy levels – just $1,800 a year, while student contributions are more than $9,000. And that $1,800 is saying something.

First, it is apparently saying something to legal academics.

It dampens the aspirations of law schools to harness the natural idealism of many beginning law students and to educate them not only for their own career but also for altruistic ends.

Why this might be so remains mysterious. And in what may be an unfortunate consequence of cut-and-paste submission writing, it is contradicted in the next paragraph:

To enhance a broader perspective, law schools today are consciously embracing a more critical perspective and a more deliberate ethos of law reform, rather than merely teaching the law as it is.

Whether this makes for better legal education is another matter, but for this post sufficient to say that it disposes of the first argument.

But even if academics aren’t picking up the message, perhaps students are:

A low government contribution and a high student contribution sends a message, and perhaps is premised on the assumption, that becoming a lawyer is all about having a successful and materially rewarding personal career, and not at all about making a contribution to the public good. …

The gross imbalance between the government and student contributions, almost a complete privatisation of legal education, encourages a mindset amongst law students of the selfish pursuit of personal goals and obscures the contribution of law and lawyers to civil society, the rule of law, and the public good.

The deans offer no evidence beyond unsubstantiated claimed about the United States on the orientation of law students to their future activities. I started a law degree in the free education era, and I don’t think the cohorts of that time were more oriented to ‘public good’ activities than law students of today (law students have always been more likely than others in professional degrees to be involved in political and other public causes).

Indeed, with the large increase in legal do-goodery options since the 1970s and 1980s, via ‘human rights’ law, it is likely that more law students and lawyers than ever are involved in ‘public good’ activities.

The mundane reality is that there are no big messages given or likely to be heard in the relatively low funding rate for law (or business, but they don’t complain as much). It is just a by-product of law being classified as having a low-cost talk and chalk teaching method, combined with a pragmatic judgment that on average law graduates can easily repay their student debts.

The overall teaching rate should be (and is being) reviewed. There is little reason to believe that a number set without reference to costs or standards is right. But I don’t think there is much need for concern about the subsidy rate.

Though the Deans point out that not all law graduates go into high-paying jobs, the overwhelming majority go into well-remunerated occupations. As I noted a few years ago about my work with census data, my attempts to calculate the average earnings of people with law degrees was thwarted by the fact that by their mid-30s most male law graduates were ticking the maximum $2,000 a week or above census box (and this includes people not working as lawyers).

Though $27,000 for a degree may seem like a lot to someone getting $200 a week from a casual job, it is a small percentage of their lifetime earnings premium. And it makes little sense to give additional handouts to a group that will mostly be very affluent by Australian standards, just because a few devote themselves to low-paid ‘public good’ work.

10 Responses to “Dubious ideas submitted to the base funding review, part 4

  • 1
    Rajat Sood
    June 23rd, 2011 04:56

    The low subsidy rate for law and business implies that the social spin-offs from studying these courses is lower than for other courses. That may or may not be true. While charging students based on willingness to pay makes sense if course numbers are fixed, in a deregulated system, it would make more sense for government to set a subsidy based at least in part on an explicit decision regarding the externalities offered by different courses. That may encourage more people to study law and business (and less to study arts and science) as preparation for lower-income careers such as teaching, bureaucracy or self-employment. After all, if the ‘market failure’ in higher education is positive externalities, why shouldn’t the role of the subsidy be to correct for those and then leave course numbers and choices to the market?

  • 2
    Andrew Norton
    June 23rd, 2011 07:40

    Rajat – The difficulty here is that all the theoretical justifications for higher education subsidy are after-the-fact rationalisations. The actual history of this rate is:

    (Rough average expenditure on law in late 1980s + 7.5% Howard era increase in then Cth component + 2005 25% increase in then HECS component) = total funding rate.

    (Flat 1997 student contribution for courses leading to high income professions + 2005 25% increase) = student contribution

    Public subsidy = total funding rate – student contribution.

    Because medicine had high original costs, it ends up with a very high subsidy using the same formula. The idea of social spin-offs isn’t relevant to calculating subsidies, and there has never been any formal analysis of whether there is under or over-supply (the system is if employers scream loudly enough, that’s how we tell there is under-supply).

    It could be argued that direct tuition subsidies are just an expensive way of fixing the main ‘market failure’, which is in the capital markets.

  • 3
    Rajat Sood
    June 23rd, 2011 08:15

    I understand that the actual way in which subsidies have been calculated in the past has been haphazard. But if there are no social spin-offs of note for any course – which is the opposite of what many advocates argue and people assume – then there is no case for any subsidy at all. It would be possible to address at least some of the capital markets issue without providing a subsidy by charging positive real interest rates that differ by course and possibly student, or through the shares in people idea.
    If there are spillovers, then any subsidies should be based on an assessment of them and subsidy levels not justified by relative externalities would send a distorted signal to prospective students.

  • 4
    June 23rd, 2011 22:04

    Andrew, ‘do goodery’ is now called ‘the big society’ in the UK … Great term of yours. I must say as someone who annoying ran in student elections as a law student, then pursued politics as a ‘vocation’ – perhaps ‘a side project’ if you will – guilty as charged

    I think it is reasonable that taken from another point of view, the ‘spillover’ of ‘another lawyer’ may not be as large as say ‘another engineer’ or ‘math teacher’ … perhaps that is a way of justifying why we don’t publicly fund law students more.

    Having a current mortgage also puts in perspective teh HECS-HELP debts and given that inflation is low, those debts erode in value compared to other debt I’d have thought, vis-a-vis property (so, when you study they seem big but a few years out they aren’t). I’m amazed that anybody wouldn’t study law because of the cost as the benefits are big, even if you don’t practice, people become senior public servants and business people etc etc. It is still one of teh better degrees for getting roles ina whole range of fields, especially as it is often a double degree discipline.

  • 5
    Andrew Norton
    June 24th, 2011 04:44

    Spillovers – both positive and negative – are pervasive through the economy and life. But I can’t see any plausible argument that says a) we have too few lawyers; and b) their production would be increased by any of the fiscally feasible tweakings of student contributions.

    The law deans would be better off arguing that the subsidy has nothing to do with the students and in fact subsidises their own non-teaching work.

  • 6
    Son of the Ratpack
    June 24th, 2011 08:35

    “It is just a by-product of law being classified as having a low-cost talk and chalk teaching method”

    Being low cost has nothing to do with what proportion of that cost should be met by the individual.

    “the subsidy has nothing to do with the students and in fact subsidises their own non-teaching work.”

    How so? The law deans get x dollars per student. If more (or less) of that x comes from the students themselves, that doesn’t change the dollars that pay for teaching and the remaining dollars that pay for research.

    “the benefits are big, even if you don’t practice, people become senior public servants and business people etc etc.”

    Maybe. If they go to a crappy law school, they end up working for Dennis Denuto doing drink driving cases in the outer suburbs.

  • 7
    Andrew Norton
    June 25th, 2011 13:01

    Law deans cannot credibly commit their students to future good deeds, but they can say that their faculties will do more good deeds themselves. I don’t buy this either, but it strains credibility less than the claim about students. And it is easier to say that students should not pay for research than to say they should not pay for their own direct private benefits in acquiring a path to a practising certificate (though as was noted earlier in this thread, there may be indirect benefits to students from research if this can be converted into prestige).

  • 8
    Tom N.
    June 26th, 2011 09:38

    Corin, what is the “spillover” from another maths teacher. As far as I can see, the benefits are all pretty well internalised, and I can’t think of any great altruistic works done by maths teachers as maths teachers.

  • 9
    June 27th, 2011 16:43

    Tom N, perhaps more that there aren’t enough, so teachers who probably can’t add very well, have to teach it …

    Perhaps I have read to many Rudd policies from the 2007 period … it can be have long term effects working in campaign HQ …

  • 10
    July 15th, 2011 18:09

    Great pick up Andrew. The law deans will basically say anything to keep their ridiculous gravy train running.

    On the one hand, making people pay too much for law degrees is making those students have a more mercenary approach, but, wait! at the same time law faculties are moving away from teaching commercial law to a more social market focus.

    In other words at the same time a bad thing is happening, its actually not happening.

    The ridiculous oversupplied bubble that is law education in this country is bursting, I only hope these academics bear the full brunt of it.

    Also, this ridiculous, deluded nonsense peddled by the law faculties that somehow having a law degree empowers the individual to make a difference in society is wrong on two points:
    (a) it overstates dramatically the actual power a law degree gives you, these days anyone who can read, use the internet and type is pretty much as empowered as any lawyer to change the law
    (b) Most law students who profess a desire for ‘social interest law’ are either (1) lying or (2) couldn’t get in to the big firms so they are pretending they never wanted to practice in commercial law anyway.