Tuesday, 18 November 2014

Further Cuts in the FE budget and Creating a Learning Society - Does it make any economic sense?

This week has seen concern expressed by the Association of Colleges about the FE sector having to find further budget cuts, with reports that another £48 billion of cuts in public expenditure being planned.  In particular, there are fears that the  FE sector will once again endure more than its' fair share of the cuts, given the past ring-fencing of the schools budget.   However, in this post I will put the forward that a demand for  'fairness' is not the way to win this argument, instead rather 'hard-nosed' economics is what is required.  In making this argument I will drawn upon the implications for the further education sector of Joseph Stiglitz and Bruce Greenwald's new book Creating a Learning Society : A New Approach to Growth.
         In their opening chapter Stiglitz and Greenwald state:
    .... that most of the increases in the standing of living, are as Solow suggests. a result in increases in productivity - learning how to do things better.  And if it is true that productivity is the result of learning and that productivity increases (learning) are endogenous, than a focal point of policy ought to be increasing learning within the economy : that is, increasing the ability and incentives to learn, and learning how to learn, and then closing the knowledge gaps that separate the most productive firms in the economy from the rest.  Therefore creating a learning society should be one of the major objectives of economic policy.  If a learning society is created, a more productive society will emerge and standards of living will increase. (p5).

         Of particular relevance to further education, Stiglitz and Greenwald argue that learning from one firm or sub-sector firm spills over to other firms and sub-sectors within the industrial sector, through labour mobility and changes in the use of technology.  However, knowledge is a public good - with the cost of others benefitting from such knowledge having a zero marginal cost,  Furthermore, it is challenging if not impossible to prevent other firms or individuals gaining from the learning and knowledge which has taken place within a firm.  Stiglitz and Greenwald subsequently demonstrate that markets are neither efficient in the production and dissemination of learning and knowledge.  As a result, if there are spillovers from one firm, sub-sector or industry to another, then there will be underproduction of knowledge and learning.  This occurs because when firms are making decisions about investment in learning capacity and capabilities they will not take into account the benefits accrued by other firms or individuals.

         Furthermore, Stiglitz and Greenwald  recognise the critical importance of cognitive frames in that :Individuals and firms have to adopt a cognitive frame, a mindset which is conducive to learning. That entails the belief change is possible and important - and can be shaped and advance. by deliberative activities. Stiglitz and Greenwald argue such cognitives frames have implications for a number of issues including: whether we learn; being 'stuck' with particular cognitive frames; and, what we learn.

         So what does this mean for the FE sector? My initial thoughts on the matter, would suggest the following. First, from policymakers there needs to be a recognition of the essential role that further education plays in the long-term health of the economy.  Recent reductions in funding for adult education are not consistent with creating the conditions by which a developed economy grows.  Second, an education and training market led by employers is likely to lead to an under-investment in knowledge and learning.   Third, FE colleges have a critical role to play in the local economy in maximising the externalities created by investment in education.  In particular, colleges are incredibly well placed to leverage the spillovers that are generated in local economies through.  These spillovers can be enhanced by ensuring the use of knowledgeable and skilled visiting lecturers who are technical specialists their field or it could be as simple as individual learners sharing their experiences with others.  In doing so, colleges can act as an essential hub of economic growth by making connections between firms and ensuring individuals have access to appropriate education and training.   Finally, individual lecturers have a responsibility to focus on developing learner mindsets which increase learners capacity as life-long learners.

         I hope that I have begun to demonstrate that the compelling argument for no future cuts in expenditure is economic, in that colleges are hub for knowledge and learning bringing about future economic growth.  It's absolutely right to argue for fairness of treatment in relation to schools and universities though in the current political climate we need to be making a compelling and demonstrable economic case for additional investment in further education and training.  I hope this post makes some small contribution to making that case.


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