Are universities useless in supporting economic development?

We have previously considered in this blog whether university programmes of teaching and research should be aligned with economic needs, and there is a variety of views on this point. But a lecturer in St Andrews University, Dr Ross Brown, has now claimed to have discovered in his research that regardless of whether universities should do this or not, they are not effective if they do. According to a report of his research on the university’s website, Dr Brown said:

‘The strongly engrained view of universities as some kind of innovation panacea is deeply flawed. As occurred in the past when inward investment was seen as a ‘silver bullet’ for promoting economic development, university research commercialisation has been granted an equally exaggerated role in political and policy making circles. Universities are not quasi economic development agencies.’

In this short quote there are about 20 different highly arguable points, but the one Dr Brown is particularly promoting is that universities don’t materially support economic development, in that research commercialisation doesn’t have a major impact.

For a start, I don’t think I know of anyone who has ever believed that research commercialisation is the key to economic development. It is a long game, which has the capacity, often over an extended period of many years, to create value for the researchers’ institutions and for those who funded the work (often the taxpayer). When that happens – and it only happens in a minority of cases – the economic impact will often be somewhere else, typically in the place where the last major investor runs their business.

The reason why universities prompt economic development has almost nothing to do with the commercialisation of research. Universities create a cluster of intellectual capital in a place which in turn has the capacity to support the economy: skilled graduates, leadership, facilities and infrastructure, a potential for value-adding partnerships in industry R&D projects – these constitute the raw material for economic development in particular areas. Nor is it hard to find the evidence. There are truckloads of studies that show the impact on value added and economic growth contributed to regions by resident universities; indeed one such study was done by Dr Brown’s own university. There are also studies that show how some regions fail to grow economically where they do not have universities.

I must confess I have not read the original study by Dr Brown, and it may of course be that in it he pursues a quite different argument from that presented in the summary report. Even there he is quoted as recognising the impact of universities, but seems to think that this is not a critical element in assessing their capacity to stimulate growth. In reality it is crucial. The recent Aberdeen City Region Deal is almost wholly based on the capacity of the region’s universities to promote innovation. While I must declare an interest here of course, I very much doubt that the assessment is wrong.

Universities are of course not everything in the drive for economic growth. But they are a very big something.

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Creative dissent versus social inclusion?

For anyone interested in universities, it is worth keeping an eye on the speeches and addresses of the President of Ireland, Michael D. Higgins. Right from the start of his presidency he has made regular incursions into higher education policy, and has in particular bemoaned the dominant influence as he sees it of market-oriented economic theory.

Last week he returned to this theme in a speech given at the annual conference in Galway of the European Universities Association. He suggested that policy-makers in Europe and elsewhere have this perspective on higher education:

‘[They] tend to view universities in a rather utilitarian way, as foundations of new knowledge and innovative thinking, within the confines of existing trade, commercial and economic paradigms, paradigms that are fading but not without damage to social cohesion.’

According to the President, this is the ‘language and rhetoric of the speculative market’. He added:

‘Such a view sees the primary objective of the university, and those who study within it, as being in preparation for a specific role within the labour market, often at the cost of the development of life-enhancing skills such as creativity, analytical thinking, and clarity in written and spoken expression.’

University studies, the President suggested, must be accompanied by the ‘capacity to dissent’.

It is not hard to find this vision of the academy to be rather enticing. But there may be a difficult fact that would compromise the vision of universities as institutions with the primary mission of stimulating creative dissent. The whole package of resources and facilities that the state or its taxpayers or indeed education’s consumers make available is provided on a rather different understanding: that a university education, and the resulting degree, will yield a recognised qualification, and through it employment, and that it will sustain economic growth and technological progress. It is fundamentally utilitarian in nature, and it is so because a university degree has become the essential foundation of growth and prosperity. If you wish to see universities as places of counter-establishment dissent and indifferent creativity, then you need to restore universities as places educating only a small minority (and probably an elite) of the population.

Scholars from medieval times to the 19th century were in a very different place, literally and metaphorically. It is most unlikely that we could (or maybe even should) detach higher education from today’s economic and social targets. But we can still ensure that its practitioners have a new and profound integrity within the fields that they address and that its students expand their minds as well as their opportunities.

Ireland: budgeting in hard times

Whenever the Irish government announces its annual Budget, public and media attention focuses in particular on changes in taxation and benefits; and that is understandable. For higher education the far bigger story, which tends to get buried in the news coverage, is the announcement of the annual expenditures – the sums of money the government proposes to spend on public services and departments. This used to be known as the ‘Book of Estimates’ and, until recently, it was published separately in advance of the Budget.

Yesterday the Irish government produced the Estimates alongside the Budget, and the details can be found here. To see the higher education story, you ned to turn to pages 152-3. During 2014 current expenditure on higher education will be €1.45 billion, or around €62 million less than was allocated for 2013, roughly amounting to a 4 per cent cut. Elsewhere in the Budget documentation some of that is explained by suggesting that universities have surplus cash balances. It is also worth noting that capital expenditure for higher education will be €32 million, which is probably payment for already committed projects and, in practical terms, suggests a zero capital investment in the sector.

Elsewhere in the Estimates there is a cut of 7 per cent to the ‘Innovation’ budget in the Department of Jobs, Enterprise and Innovation; this is likely to mean a drop in spending on research and the promotion of industry R&D.

These are of course still difficult times for Ireland. But there is a marked difference here between the way higher education has been handled in the Irish Budget and the way it has been addressed recently in the expenditure plans of the Scottish government. A small economy relying to a major extent on inwards investment cannot afford to starve higher education. Making Irish higher education competitive with those economies that could also attract high value investment should be a priority. It must be hoped that this goal is not being abandoned.

Mr Attlee’s children in the academy

In the course of a recent conversation on the margins of a public function, a prominent UK businessman suggested to me that British academics are ‘mostly the intellectual disciples of Clement Attlee’. I thought this an interesting comment, made more interesting to me because, in my family, we have recently had lively discussions about the impact of the Attlee government of 1945-51. I suspect that few would disagree that this government represented a watershed in British political history, but was its influence as great in the academy as my friend had suggested? And even if so, does any such influence still persist?

Perhaps the basis for such an assertion lies in the fact that, in the light of the economic convulsions of recent years and in particular of the reckless behaviour by banks that helped unleash the storm, some commentators (including academics) have been calling for policy responses that would not have looked out of place on the agenda of this post-War British government. Or would they?

As many readers will know, Clement Attlee’s Labour Party was elected and secured a large majority in Parliament in 1945, much to the surprise of many political observers who had expected an easy win by Winston Churchill. However this election outcome was heavily trailed by the interest shown in the Beveridge report of 1942 (Social Insurance and Allied Services). That report identified what it called the ‘Five Giants’ that stood in the way of social progress – Want, Disease, Ignorance, Squalor and Idleness – and recommended a system of universal social insurance that would produce universal entitlements to benefits and service, without means testing. The report had been an instant bestseller (most unusual for a paper published by government), and this suggested that there was an appetite in Britain for more radical economic and social reform than was likely to be offered by the Conservatives.

In the event the Attlee government did a number of significant things, the most important of which in domestic policy were probably the large-scale nationalisation of utilities, public transport companies and key industries, and the fundamental reform of health and welfare (including the creation of the National Health Service, and the commitment to universal benefits). Its actions in foreign and defence policy were also significant, though they might look counter-intuitive to a present day audience: the strengthening of Britain’s defence structures, including the development of nuclear weapons, and some contradictory moves affecting the ‘Empire’ – independence for the Indian sub-continent, but the reinforcement of the African colonies. The Attlee government also initiated the programme leading to the development of nuclear power in energy generation.

How much of this is influential today? Wondering about the extent to which today’s academics (and others) are aware in any detail of Attlee’s policies, I conducted some totally unscientific surveys on Twitter and amongst those I have recently met in university life. A good few know nothing at all of Attlee or his government, except perhaps his name. Others express strong support for him, but seem to link him (or his government) solely with the NHS. Others indicate admiration of a wider range of his policies, while stating they were right for their time but perhaps would be less so today. Others are clearly committed followers, and some committed opponents.

It could be argued that today’s Britain is what it is as the complex legacy of both Clement Attlee and Margaret Thatcher, with maybe a little Tony Blair. Indeed Margaret Thatcher herself was known, at a personal level, to be an admirer of Attlee (which she confirmed in her autobiography). It is indeed hard to deny that the actions of the post-War Labour government changed many things, not least in that the number of those living in poverty declined dramatically between the early 1930s and the early 1950s. The government undertook the kind of major structural changes needed in post-War Britain to ensure that it had an emancipated, educated, healthy population.

Ironically, perhaps the least successful Attlee project, but the one that still has the greatest resonance in Britain, was the NHS – which perhaps produced better levels of public health, but over time left Britain with an over-bureaucratised health service offering visibly lower quality of care than in almost any comparable country; but that would be strongly denied by a large proportion of the population, making health reform very difficult, no matter what ideological direction it comes from.

The other major project – nationalisation – has not had such a lasting impact, and was fairly successfully reversed by Margaret Thatcher. The idea expressed in 1945 in a phrase borrowed from Lenin, that the state should own ‘the commanding heights of the economy’, would not now be endorsed by any major political party. But something of the spirit may have survived in the view that still finds significant resonance, that the state and its agencies should regulate a good deal of economic activity; the suggestion being that much more regulation would have avoided the recent recession, an assertion that may have a good bit of popular support but actually not a whole lot of real evidence to back it.

But back to the academy: is it full of Attlee’s disciples? It’s not perhaps a question that can be answered in any useful way. There is no shortage of articles by key academics suggesting there was something heroic about the Attlee government. But that doesn’t make the universities ideological reservations for 1945-style socialists. What might be more interesting would be to ask whether analysts of British society today believe that the issues facing the United Kingdom are structurally similar to those that obtained in 1945. Clearly they are not. The UK, and its constituent parts, has problems it needs to address, but they are not the same as those that prompted the Beveridge report. Attlee, and his ministers, remain important figures in the history of change after the Second World War, and they undoubtedly still attract academic interest, as indeed they should. But are we all Attlee’s children? No, not really – the academy is more diverse than that, and in the end also more modern. I doubt we are together and in uniformity the disciples of any particular person or movement; and that is how it should be.

Rolling in money

The scene: Heathrow airport on Saturday, where I was waiting (with countless others) for a flight out of London, after a little snow closed most of it down; some bemused American travellers couldn’t believe that this really major airport was so easily overwhelmed by what they thought was a really minor amount of snow, but more of that another time.

Anyway, back to the scene. Four children were amusing themselves by rolling two-Euro coins along the floor, with the target of hitting a house of cards constructed some five or six feet away. When their flight was called unexpectedly, the parents called them away urgently. The children asked to pick up the coins first. ‘No time’, the father shouted. ‘Anyway, they’re only Euros.’

This is what they left behind (subsequently placed in a charity box).

lost euros

A vision of Ireland at the crossroads?

I have now lived outside Ireland for the best part of two years. However, I am a frequent visitor and I keep up with things as best I can; and as I do so I am becoming increasingly intrigued by the direction of the national conversation. There appears to be a near consensus, in some circles at least, that the ‘Celtic Tiger’ years were all one big mistake and that the country should never have left the spirit of a previous era; though I am not always sure which previous era might be held up as a model.

Among those leading the discussion is Ireland’s President, Michael D. Higgins. The President has been forthright in rejecting the assumptions of the Celtic Tiger era, and in particular in rejecting the primacy of markets in economic affairs. His analysis has been interesting. In his lecture at the London School of Economics in February this year the President suggested that Ireland’s recent economic boom was a failure because ‘leaders and people had all but lost connection with the cultural and political elements of national revival’. What they pursued was the intellectual brainchild, he felt, of writers such as Friedrich von Hayek who promoted a ‘single hegemonic version of the connection between markets, economic policy, and life itself.’ This led to ‘extreme individualism’ supported by ‘unregulated markets’. A little later, in April of this year, the President spoke about ‘the folly of overweening material ambition’.

Pursuing this particular reference, I was a little struck that nobody appeared to have picked up the similarity of tone to that of a previous Irish President. In 1943 Eamon de Valera (admittedly when he was Taoiseach and therefore before he became President), made a speech mainly remembered for a reference he did not actually make (his alleged but never expressed yearning for ‘comely maidens dancing at the crossroads’). However he did say:

‘The Ireland which we would desire of would be the home of a people who valued material wealth only as the basis of a right living, of a people who were satisfied with frugal comfort and devoted their leisure to the things of the soul.’

At a recent gathering of psychologists Ireland’s current dissatisfaction with itself was attributed by one speaker to a ‘narcissistic system’ based on its colonial past, and which caused people to have a negative view of themselves and of the nation. What she was referring to was the country’s sense of flawed nationhood as it accepted responsibility for what went wrong in the national finances, including the problems caused by reckless banking behaviour. The implication was that this acceptance of responsibility, by political leaders at least, was part of a distorted self-analysis and an obsessive desire to please others (the ‘others’ here being the IMF and the European Union).

What picture of an ideal Ireland can we discern from all this? An insecure country that wants to reject its recent past? A country that is keen to renounce material possessions and return to a rural frugality? A country that thinks that what happened to the Irish economy was part of some aberration in the national destiny?

No country and no society can turn the clock back. For those who may remember, say, the 1950s and 1960s, and for those who have just read about those decades, there should be some hesitation before concluding that those were better days. Does Ireland want women back into the home, could it accept now the lack of social and physical mobility, or large-scale emigration? Not to mention child abuse.

Nobody can doubt that the recent past was not all that it should have been. But the way forward is forward. The last two decades brought Ireland a much greater liberal acceptance of human rights, greater access to scientific and technological progress, much better national infrastructure, a better awareness of the potential for global communication and interaction. There was much more good than there was bad. Those who believe that Ireland needs to reject all of its recent history should, really, think again.

No exchange

It’s probably a good thing that the UK did not join the Euro, given what has happened to the latter currency and its uncertain future. For all that, it is the currency of Britain’s key trading partners, and must be what any bureau de change trades in most. Or so you’d think.

Today I needed to give €60 to someone who is about to travel from Scotland to a country in the Euro zone. Easy, I thought. I’d go into the nearest bank and hand over some £50 or so and get the necessary banknotes. Job done.

Not a bit! In the first bank, a very nice lady at the counter looked simply stunned when I asked her for the currency. This was a request that had clearly never crossed her desk before. She was most solicitous, but this didn’t extend to having any solution. She absolutely couldn’t imagine how a bank would change Pounds for Euros. The whole concept was new to her. She would definitely look into this, totally, but only when her manager returned. I started to ask when that would be, but realised this was a waste of time and moved on.

Into the second bank, just across the road. Yes, the nice man behind the counter had definitely heard of Euros, and was absolutely willing to believe the transaction could be done. He had no idea how, but there was a supervisor somewhere who, he assured me, understood even the most obscure banking transactions and would help me, no doubt about it at all. So off he went looking for the supervisor. He returned, some ten minutes later, with the very keen supervisor, who was clearly willing to expand his horizons. Yes absolutely, Euros could be provided. First, was I a customer? Of course, I said, I’m here and am ready to do business, in other words a customer. I wasn’t a regulator, if that’s what he meant. No, no – did I have an account in this branch? No; in this bank, yes, but not this branch. Pursed lips, whistling noises, furrowed brows. Could I prove I was an account holder in that other branch? I could. OK then, he was willing to take on the Euro adventure, just this once.

So how much did I want? €60. More pursed lips and quiet whistling noises. No can do €60. €100, probably; €200, definitely. But alas, no €60. Well, I’ll be in Ireland again before long, so I can accept the €100. Off he goes on a search for this bit of currency. Another 10 minutes of my life lost. Triumphant return, clasping a sealed envelope said to contain the elusive currency; though for some reason, I mustn’t open the envelope there and then, which I was about to do, feeling the need to check it out.

Well, half an afternoon later I am able to give my friend the €60. But for goodness sake, does this really have to be so difficult? Do we really never change currency any more? It is true that I don’t, normally; I just use an ATM at my destination. But there must be others who, occasionally, need to get some foreign exchange before they travel, or to give or send to someone. Was I really making such an exotic request?

Politics and markets and public intellectuals

The President of Ireland, Michael D. Higgins, this week used the occasion of a speech delivered at the London School of Economics to develop a little more his theme of a society that has lost its way, and of an academic profession that should accept the responsibility of restoring it to intellectual health. His starting point, which he had already given an outing a few weeks ago when conferred with an honorary doctorate by the National University of Ireland, is that a political orthodoxy of unfettered markets took hold of public discourse and policy and led to the recent economic disaster. He attributes this movement largely to to the late Austrian economist Friedrich von Hayek, whom he credits with the view that markets are necessarily rational and that they should be ‘unregulated’. The President continued:

‘We have, as a consequence, been living through a period of extreme individualism, a period where the concept of society itself has been questioned. The public space in so many countries of the EU has been commodified, and it is as calculating rational choice maximizers, rather than as citizens, we have been invited to view our neighbours. That is the mark of our times, the hegemonic version, by which it is suggested, we live our lives together. Our existence is assumed to be, is defined as, competing individual actors at times neurotic in our insatiable anxieties for consumption…’

In fact what President Higgins attributes to Hayek could be questioned. In his seminal book The Road to Serfdom, Hayek confirmed his preference for as little state regulation as possible, but also stated that where markets are distorted or abused state intervention is necessary. And in Law, Legislation and Liberty, Hayek argued not that markets are rational, but that people and organisations experiencing fully competitive markets – i.e. with proper levels of competition – will tend to behave rationally. Hayek was indeed the high priest of neoliberalism, but his views were a little more nuanced than suggested in the President’s speech.

As for society, it was indeed questioned, in particular in the famous (or infamous) statement by Margaret Thatcher that there is no such thing; but whether it was forced to give way to a set of purely commodified relationships is much more questionable.

As I have mentioned before, the desire on the part of President Higgins to stimulate debate and encourage academic leadership in this debate is wholly to be welcomed. The issues he raises and the questions he asks are good ones. He is justified in encouraging debate about the nature and purpose of society. And he is right to highlight the role of the public intellectual, and thus of the academic community.

I am less persuaded by his own analysis of these issues. His thesis, that we are all the victims of a fashion for unregulated markets, is perhaps questionable. As neoliberal policies took root from the 1980s, markets were opened up but were then subjected to significant regulation; indeed the levels of regulation increased substantially after the Enron and WorldCom disasters of the last decade. Whether this regulation was appropriate or good is another matter; there is actually one school of thought that there was too much of it, meaning that some of it had become too complex to be effective. Another view is that there was adequate regulation, but that it was inadequately enforced.

All of this is open to debate, and academics should indeed seek to lead it. But that debate will be better if its basic assumptions are not too simplistic. President Higgins has a significant opportunity to prompt a national and even international dialogue. I would hope that his own contribution takes account of the considerable complexities that got us where we are, and from where we want to escape.

Dismissing science

Today’s modern society is built upon science. It uses the discoveries of science to find solutions to problems in areas such as health, transport, product development, nutrition, and so forth. Its industry and hence its employment is clustered around science-driven innovation. So you would expect that respect for the potential of scientific discovery lies at the heart of political strategy? Well, yes and no. Many politicians do understand this, and large-scale funding for science (by bodies such as Science Foundation Ireland) reflects this.

But there are other voices in politics, and some of these are becoming influential. Many of them are in America. In fact, at least two leading candidates vying for the Republic nomination for President – Rick Perry and Michele Bachmann – hold views that are profoundly anti-science, calling key scientific theories into question and suggesting bad motives on the part of scientists. There are touches of something medieval here. If someone with such views were indeed to take over the US presidency, the results could be profound, and could easily lead to the United States becoming a backwater in geopolitical terms.

It is not, or at any rate should not be, the task of politicians to second guess science, or to declare its theses right or wrong based on ideology. That approach is total madness. No country can afford it, not even America.

Overcoming the fear of failure: the entrepreneurship imperative

The Global Entrepreneurship Monitor is a respected consortium that reports on attitudes to entrepreneurship across the world. Apart from offering some global observations it also reports on individual countries. Recently it issued its latest report on Scotland (in association with the University of Strathclyde), and on page 7 we can read the following comment:

‘In 2010, 43% of working age adults in Scotland who thought there were good opportunities for starting a business agreed that fear of failure would prevent them from starting a business, up from a low of 31% in 2007. This compares with 36% in the UK and 35% across all Arc of Prosperity countries.’

As Scotland, by one route or another, takes more direct control of its economic destiny, it will be vital that indigenous enterprise is encouraged and promoted. This in turn means that business failure must be accepted as a possible by-product of innovation and must not be seen as a negative reflection on the person who has experienced it. Scotland’s universities must support the drive to generate enterprise by encouraging students to put risk and failure in perspective, and to see entrepreneurship and creativity as the hallmarks of a self-confident population.