Bad outcomes


I'm beginning to wonder whether any government programme or regulation actually helps the deserving groups that it is advertised as helping. Too often, I think, they help rather well-paid administrators, anti- poverty lobbyists, special interest groups and the friends of politicians.

Take higher education. It is heavily subsidised by taxpayers because it is supposed to help the whole country. But does it? By far the greatest beneficiaries are students themselves. The association of university heads has calculated that, over a lifetime, graduates earn £160,000 more than non-graduates. But graduates leave university with an average debt of just £23,000. That's a pretty spectacular return on investment.

Gordon Brown used to spend much of his available spleen, which was considerable, on chiding the universities for taking too many students from well-off families, and too many with a public school education. Try as he might, with all kinds of financial bullying and incentives, he just couldn't make it any different. So it's a double imbalance; not only do we subsidise universities that raise the incomes of their graduates well beyond the benefit to anyone else, but those students also come from better off backgrounds too. The young person who leaves school to become a bricklayer in Bootle pays higher taxes to send Old Etonians to Oxford to become Prime Minister.

If the universities were privatised, this would change in short order. For a start they would probably introduce, like the private University of Buckingham, snappy two-year degrees that kept down the cost and made student loans less daunting. If they charged those who could afford it realistic fees, and used the money for bursaries to gifted but poorer students, it would do more to open up opportunity, increase access, and spread benefit through the whole country than what we do today.

And what is true of universities is probably true of other government programmes. If you really want to help the people you say you want to help, rather than well-off people and public-sector administrators, the market can probably help you do it far more effectively than some public sector programme.