Have universities gone bureaucrazy?

The new Liberal government will soon hand down its first budget, inevitably involving large cuts to university funding. This is part of a given trend in Australian politics - the Labor Party began making universities and university students “pay their own way” with the Higher Education Contribution Scheme, and one of departing Labor’s last acts in 2013 was to cut over $3 billion from university funding to pay for increased school education funding.

Another cut will contribute to the budget bottom line, and government claims of a more efficient university sector. But it will also strengthen the hands of the real wasters: the “Bureaucrazies” that run universities.

Just how bad these have become was made clear in a recent Quadrant article by James Allan, the Garrick Professor of Law at the University of Queensland. Allan makes a number of highly critical claims about Australian universities, all of which I can corroborate from my own experiences in the sector -- which ended in 2013 after my then employer decided to shut down its economics degree.

Allan critiques three main targets: intense centralisation of decision-making to senior bureaucratic management; counting research grants as a far more important arbiter of academic quality than publishing academic papers; and students working while doing their degrees. I've seen these problems develop over a long timeframe.

Decisions such as what subjects to teach were once made by academics. Now they're increasingly made by bureaucrats in response to movements in student enrolments that might reduce university revenue. That might look customer-focused but implies 17-year-old school-leavers know the skill set society will need in two to three decades. Taken to its logical extreme it could mean universities shutting down maths and physics degrees because they are unpopular with school leavers, and ramping up public relations and finance -- just what our economy needs.

You think I'm joking? The motivation for shutting down economics at my ex-university was precisely a fall in prospective student enrolments in economics.

The research grant fiasco is also a worthy target. Currently the Australian Research Council hands out funds after a rigorous process of academics reviewing the research proposals of other academics. Every application is ranked by at least four others in the same field on exhaustive criteria, and fewer than the top ten per cent get funded.

It sounds like a careful way to make sure public money isn't wasted, but is so flawed in at least two respects that we'd be better off if the funds -- and enormous costs of running the ARC -- were simply sent to academic departments and earmarked to be spent on research.

Firstly, peer reviewing someone's proposal  is an utterly different thing to reviewing its outcome  - because then you're asking one academic whether another academic's as yet unsubstantiated brainwave is worth exploring.

That might work if an area is solidly established, but imagine if Galileo had to apply for research funding in order to drop two lead balls out of the Leaning Tower of Pisa, to see whether the heavier one really did hit the ground first as Aristotle claimed. This research proposal would have been quickly rejected by his ‘peers’: “Of course the heavier one would hit the ground first, Aristotle said so. Proposal rejected.” So Italian research money wouldn't have been wasted -- and your daily commute to work today would be on horseback. It’s a win-win situation, really…

I’ve experienced this type of thinking myself when my nine applications to research debt deflation were all rejected -- by neoclassical economists who thought their models had capitalism nailed, and of course a debt-deflation couldn't happen anyway…

Unlike avoiding waste in production -- a valiant objective -- avoiding waste in this model means you only fund what you believe will succeed. And therefore you don’t really support true research at all.

Secondly, this apparent attempt at efficiency wastes public resources. Apart from the enormous bureaucracy at the ARC and every university vying for ARC funds, academics are employed on full pay while writing their applications.

Each takes about two months -- the ‘summer holidays’ when many people imagine academics are relaxing. Multiply an average academic salary plus overheads for two months by more than ten -- for the more than 90 per cent of proposals that don't get funded -- wastes in the region of half a million dollars a year for every successful grant of generally between $50,000 and $150,000 a year.

But being successful at the ARC lottery is such an important source of funds for universities that academics are required to waste two months every year applying for ARC grants -- otherwise prospects of promotion are dim, no matter how successful you are as an intellectual. The end result is that most Australian academics waste two months of each year producing not research but research proposals, more than 90 per cent of which will be simply thrown away. Now that truly is waste.

Allen’s third lament -- that students spend more time working at part-time and full-time jobs than studying -- is also utterly justified. With HECS liabilities hanging around their necks, they try to earn enough while working to pay their fees upfront, and pay at best second-order attention to their studies.

Where I disagree with Allen is in his suggested remedies -- which amount to promoting more competition between Australian universities by encouraging students to move cities (thus putting Sydney universities into competition with Melbourne ones), publishing the ratio of bureaucrats to academic staff, and publicising the salaries that university fat cats get -- with vice-chancellors now earning in the vicinity of $1 million a year -- to try to shame universities to pay their fat cats less.

I don’t think any of these would work. The first faces the huge barriers of Australian geography and housing: we just don’t have the infrastructure that American universities have. The second and third rely on public outrage to achieve change, and universities just don’t matter enough to most voters to make an impact. The salary publicity too would probably backfire and cause upper management salaries to escalate -- as they did in the corporate sector when top executive salaries were publicised in a vain attempt to rein them in by shaming.

I have a much simpler proposal: let the academics run the universities and set up decent incentives for that to happen. And here my proposal is less radical than Allen’s, which is radical indeed. As he says:

“First off, we pay our vice-chancellors a lot of money here. There have been seven-figure salaries. Of the universities I have worked at and visited, the Australian ones pay their people the most. Our vice-chancellors make three times what the prime minister makes; even deputy vice-chancellors make more than twice as much. And virtually no professors actually in the classroom make as much as whole swathes of mid-level university bureaucrats.

“Think about the incentive signal that sends out. And realise that this all goes hand-in-hand with a pervasive managerialist culture that is heavy-handed, pretends that it is part of some market when it really isn’t, and which is so used to command-and-control operating procedures that I personally would prefer our universities to be run by the unions. And I say that as someone who has never joined a union and who thinks that they are on balance a problem across the whole public sector.”

I’m not proposing handing over the universities to the NTEU. What I instead recommend is designing sensible incentives, in place of the current mercantile ones which, as Allen states, gives enormous incentives for mediocre academics to become bureaucrats, thus swapping a low-level (and low-paying) academic position for a fabulously well-paid position as a bureaucrat.

If you want good academics to become bureaucrats, and to simultaneously drastically reduce the cost of running universities, you pay them in the one currency they really want: time.

Good academics are people obsessed about some intellectual issue, who spend their free time willingly working on their obsession. They get their adrenalin rushes not from wins at the races -- or from drinking fine wines thanks to a fat cat salary -- but from succeeding at solving the intellectual puzzle that has them enthralled. They try hard to maximise the time they spend on this obsession, and minimise the time they spend on other things -- like doing administration.

This is how the mediocre ones that Allen notes tend to become university administrators win out of the current system: they gladly volunteer for the committee work that any genuine academic avoids like the plague, and a couple of years later return as his or her well-paid boss.

But what if university administrators were paid not in money, but time off? Every year spent as an administrator could earn a set amount of time free of other responsibilities -- and come with some research funding support, but no higher a salary.

Then good academics might compete for administrative spots, and sacrifice a few years of bureaucratic endeavour to get a few years to focus on what really interested them. Universities would be better run, and cheaper because it would save a fortune in salaries.

Instead, the funding cuts we’re likely to get yet again will further entrench the power of the bureaucrazies in Australian universities. The squeeze on funding puts power into the hands of those who can impose cutbacks on academic staff, or claim to be great marketers to prospective students. And one day some vice-chancellor with a mediocre research and teaching record will pull in ten times the salary of the prime minister.

Steve Keen is author of Debunking Economics and the blog Debtwatch and developer of the Minsky software program.