Private vs public (again)

I got a little riled this morning by a comment at the bottom of Zoe Williams’s article about privatisation of public sector services. I thought the article
was excellent and asked some insightful questions. It seems that a significant fraction of the new private sector jobs are simply jobs created by the outsourcing of public sector jobs, in which case we’ve essentially saved nothing (or more correctly, these new private sectors jobs don’t indicate any real private sector growth).

The comment that annoyed me was this one which is essentially the fallacious argument that the private sector creates wealth and public sector soaks up wealth. It’s complete nonsense and I’ve blogged about this before. Essentially, as far as I’m concerned, the primary difference between the private and public sector is that the main goal of the private sector is to make a profit while the main goal of the public sector is to provide public sevices at a cost that fits within a preset budget. Many people assume that making a profit equates with wealth creation, but it does not. Wealth creation can lead to increased profits, but increased profits does not necessarily lead to wealth creation.

If we were to provide healthcare in a manner similar to that in the US, the total cost of healthcare would increase from about £100 billion to somewhere between £200 and £300 billion (this is assuming that we didn’t simply decide to not provide healthcare for the lower half of the income distribution and to simply let poor people die when they become ill). In this scenario there would be many companies making substantial profits. If this increased spending on healthcare resulted in the UK population becoming incredibly healthy and so able to work without taking days off and allowed everyone to be more productive, the increased spending could potentially generate wealth. Judging by the typical health of an American, this seems unlikely. This increased spending would, essentially, destroy wealth. Hundreds of billions of pounds that could have been spent on food, holidays, cars, or any kind of luxury would now be spent on healthcare.

Sure, there’ll be plenty of healthcare companies making substantial profits but essentially they will be providing a healthcare system similar to what we have today for 2 to 3 times the cost. Essentially my argument is that wealth creation requires efficiencies and it needs to be relative to previous costs. We need to work out how to provide services at the lowest cost that doesn’t damage quality. The public sector is a crucial part of this process as it provides education, healthcare and infrastructure that allows the private sector to then go and make their profits. Wealth creation is about more than simply making a profit and it’s time that people started to realise how important the public sector is in providing a foundation for wealth creation.

University inclusion policies

I hate to admit it, but I actually agree with something Peter Mandelson has said. He is suggesting that we should use “contextual data” when evaluating students’s university applications. There is quite a lot of what he is proposing that I disagree with, but I agree that we need to make universities more inclusive and that the way to do it is to consider information about an applicant’s background and circumstances.

It’s almost certainly the case that there are academically capable people from all backgrounds and from all walks of life. It’s also probably true that using school leaving grades as the prime factor in determining whether to accept a student or not will mean some potentially very capable people will miss out on university places.  I also believe that it is in everyone’s interest to try and get the “best” students into universities.  By this I mean the ones most likely to excel at their chosen subject irrespective of what kind of grades they have achieved at school.

The difficult thing is working out how to identify those potentially good students who have been disadvantaged in some way and who – consequently – don’t necessarily satisfy a simple grade requirement.  Some kind of analysis of contextual data seems like a reasonable thing to consider.  My personal view would be that determining how well they have done relative to their peers would be a decent place to start.  It seems reasonable to assume that the top students in schools who traditionally do not have many students who satisfy university entry requirements, may well have more potential than those who do satisfy the entry requirements but who are not the top students – or even near the top – in their school.

Whatever method is tried, what I do feel strongly is that we have to start trying something.  At the moment we don’t have much data to work with, so don’t really know what works and what doesn’t.  If we make some educated guesses as to which students from disadvantaged backgrounds may have the potential to do well at university, in a few years time we will be able to analyse how well these students have actually done and adapt the process accordingly.

Interestingly, having started writing this, I have found an article by Zoe Williams suggesting that Peter Mandelson’s comments are typical new labour spin.  A “diversionary row between universities and the government”.  If there is a big row about universities now, the review into students fees will not be complete before the election and the opposition will have nothing concrete to complain about.  Although I do agree with what Peter Mandelson has said about inclusion, I suspect that his real reason for saying this is more along the lines of what Zoe Williams is suggesting than because he truly cares about universities being inclusive.