The Big Read: A thousand cuts, and then death

30 October 2015 - 02:06 By Jonathan Jansen

In the movie Next Nicolas Cage plays a Los Angeles magician, Cris Johnson, who can see the future; in one scene he faces a bad guy who threatens to fight and warns him: "I've seen every possible ending. None of them are good for you." Following the historic victory of students driving the #FeesMustFall movement, the after-party headache is this - how will we pay for all of this?Education is never free. Somebody always pays. The poorest student with a full scholarship covering everything still pays, even if only in deferred income over three or four years of a first degree.So far there are few imaginative proposals on the table, such as adding education funding to BEE requirements. The immediate resort of those who do not have to pay is usually "tax them", as if ordinary citizens are not already taxed quite heavily well beyond income tax.We already have a progressive tax system, and rightly so, and at some point overtaxing makes the small percentage of super-rich move themselves or their money elsewhere. Then there is the other nastiness - education is a recurring cost; in other words, covering the shortfall among universities for the 2016 fee increment is the least of your problems. How do you do this year after year with the massive loss of revenue that goes hand in hand with this historic decision?Government funding to universities has declined every year in real terms, which means that as demands on higher education institutions to "do more" increased they received less funding for what they were doing in the first place.Yes, the government can draw on the skills levy or the SETAs for a year or two, and then what? Where is the money going to come from to sustain the no fee increase into the future?What we have here is a political demand (the unstoppable force) in direct confrontation with an economic reality (the immovable object) and the clash is going to be ugly.The instruction from some quarters that institutions should use their reserves is short-sighted. Most institutions do not have reserves - those dissipated years ago when similar demands were being made, and those institutions now have difficulty meeting their payroll.And those universities that have battled to build up some reserves do so to enable them to weather unexpected storms, such as the decline in state subsidy, the collapse of a local power station or the sudden growth in the number of poor students requiring assistance.When you whittle away that slim layer of reserves you expose the last of the financially stable universities to crisis.Propaganda does not help in this financial crisis, like saying, "Oh, they can simply divert money from military spending to education spending". First of all, in the real world, governments do not simply shift money from one component of the budget to the other the way you do with your personal accounts. Every sector has its critical imperatives, social demands and vested interests, so forget about such simplistic trade-offs; it's not going to happen.So, the government does not have the money and students do not wish to pay. The big losers are the universities, caught in the pincer grip of too little money from the government and just demands from students.There will be less money to pay staff or keep libraries open or upgrade computers or attract world-class academics.Most universities have already cut their core business to a minimum; ask any head of department and they will tell you how central funds have declined in recent times for some of the most basic academic operations.Slowly but surely, I predict that eventually all of our universities will become ugly skeletal structures, with drooping muscles, drained of their intellectual lifeblood and struggling to keep the old bones together.And what do governments do when demands cannot be met? They threaten institutional autonomy. In other words, if the government itself ran universities - in the same way it runs Eskom and SAA - and regulated their policies and plans, the problems would miraculously disappear. Right.In the meantime, the costs of goods and services continue to increase, even as revenue streams into universities are further curtailed. As a university economist aptly expressed the problem this week, "inflation does not take a sabbatical".None of the possible endings look good...

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