Free trade in minds

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<p style="padding: 0px 0px 0.5em; margin: 0px;"><em>Romesh Vaitilingam interviews Ben Wildavsky for Vox</em></p>
<p style="padding: 0px 0px 0.5em; margin: 0px;"><em>November 2010</em></p>
<p style="padding: 0px 0px 0.5em; margin: 0px;"><em>Transcription of an VoxEU audio interview [http://www.voxeu.org/index.php?q=node/5772]</em></p>
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<p><strong>Romesh Vaitilingam:</strong> Welcome to VoxTalks. My name is Romesh Vaitilingam. Today's interview is with Ben Wildavsky of the Kauffman Foundation. Ben and I met in London in October 2010, where we spoke about his new book The Great Brain Race: How global universities are reshaping the world. The last chapter of Ben's book is called &quot;Free Trade in Minds.&quot; I began by asking him to explain this idea.</p>
<p><strong>Ben Wildavsky:</strong> Free trade in minds is in some ways is trying to take some of the principles of international trade and applying them to higher education. As you say, it really has become globalized. Of course, this has been true in a sense since the first Western universities were created in the Middle Ages, in places like Paris, Bologna, and Oxford, there was a tradition of what they called wandering scholars, students traveling around Europe to these universities. That continued over the centuries.</p>
<p>But really in recent years, it's become an incredible phenomenon. There&rsquo;s three million globally mobile students--that average is up about 57 percent in about a decade. It's projected to increase to about eight million by 2025.</p>
<p>At the same time, you have universities setting up branches in the Middle East and Asia. You have a real desire really everywhere, from China, to South Korea, to Saudi Arabia to try and create great institutions. You have the global college rankings to keep track of all this.</p>
<p>When I say &quot;Free trade in minds&quot; what I'm trying to get across is this notion that really to a degree we've never before seen in history, people have the opportunity, slowly but surely, based on what they know, not on who they are or where they come from.</p>
<p>I wouldn't suggest that we're there yet but, I think we are incrementally moving toward global meritocracy. Just as with other kinds of free trade, there are a number of concerns that have cropped up about this. Sometimes, people worry about brain drain, about losing their best minds. Conversely, people in countries like the United States or the UK, sometimes worry about, at the university level, domestic students being crowded out by foreign students. They simply fret about why aren't more of our students going into some of these important fields. They call them the STEM fields; science, technology, engineering, mathematics.</p>
<p>And you have instances of what I call academic protectionism: Again, drawing on the free trade analogy, sometimes its restrictions, occasionally on students leaving or policies such as visa policies that in some cases make it hard to come in or, work visa polices which, in an indirect sense, also serves as a disincentive for students to come. In the US we have limits on H1B visas for talented foreign workers. Actually in the UK recently, there's been some debate about visa caps, visa quotas on foreign academics coming in.</p>
<p>My fundamental argument is that this free trade in minds is a tremendously good and important thing, not only for individuals and for universities seeking the best talent they can find, but, of course because of the importance of human capital for societies and for governments.</p>
<p>We should do as much as we can to get out of the way. The free movement of people and ideas is extremely important to innovation and to economic growth around the world.</p>
<p>One of the key points I try to make is that fundamentally, we shouldn't be threatened not only by this circulation of talent but by the growth of university systems in places like China and other Asian nations. Sometimes in the West and particularly in the States, we view as a threat.</p>
<p>What are we going to do? They're churning out all of these PhDs in science and engineering, we're not keeping up. We're going to lose out. But I think we have to understand that increasing knowledge is not a zero sum game. It's not a finite resource like silver or gold that we all have to chase after. It's something that can grow.</p>
<p>It's also true that knowledge is a public good. What that means is that it can't be contained within any one country. That's great because it means that new research advances in one country can be used by academics, by innovators around the world, including in the UK and including in the US</p>
<p>When we hear about all the smart people in China who are earning all these PhDs, we need to understand that's good for us, it's not bad for us. We need more well trained people wherever they are working on the big problems in science and technology and health care.</p>
<p>People sometimes worry about other countries: One British university leader talked about them &ldquo;vacuuming up knowledge&rdquo; from the UK. I think we have to see that it's not vacuuming up knowledge, it's spreading knowledge. That's something that's really good for everyone. It's win win and our living standards in the West are going to grow--a number of economists point this out--as other country's university systems improve.</p>
<p><strong>Romesh:</strong> There are a number of different angles that we can come at this from. One that particularly interests me is thinking in terms of a university or perhaps a national policy maker thinking about their own domestic university system. How do you go about creating a new world class university or a new world class university system? What have we learnt so far?</p>
<p><strong>Ben:</strong> I wish I could give you the recipe. It's certainly something people are trying to understand. I don't think there's a single answer, in fact. A guy named Phil Altbach who's an ex international higher ed expert who's based at Boston College in the States, has suggested it may not be realistic for some nations to really chase after world class universities or to try to create them. They simply may not have the resources financially or in terms of human capital. But there are a number of places that may be able to create good universities that may be enough.</p>
<p>Having said that, what has made great universities? Americans flocked to Germany in the 19th century when the Bismarckian research university was created and this notion of having teaching and research under one roof with academic freedom from government interference.</p>
<p>Americans went to Germany studied, took the model, and copied it in the states by creating institutes like Johns Hopkins University and the University of Chicago. We took that model, we ran with it and we perfected it. After World War II, we became by far the greatest university system in the world. Despite all the competition that's taking place, which I think is shaking up that old order, certainly for the time being, we continue to have the lion's share of great universities.</p>
<p>Everybody wants to follow that model. The UK of course, has also had a good number of great universities. What are people doing to try and create that? Well, they're spending a lot of money. I would say money is necessary but probably not sufficient for a world class university. King Abdullah in Saudi Arabia has put 10 billion dollars into KAUST which is a brand new graduate level institution that stands for the King Abdullah University of Science and Technology. It instantly became the sixth largest university endowment in the world.</p>
<p>In China again, they're spending billions doing two things: They've tried to increase mass access to an extraordinary degree--again, because of understanding the importance of human capital with economic progress. But they've also focused on several dozen elite universities that are getting a lot more funding. The most elite, a group of nine universities, they're calling the Chinese Ivy League, which perhaps reflects more of the aspiration than the reality. But spending money is a big strategy.</p>
<p>Recruiting the best talent you can find is another strategy. Again, it's something businesses do, it's something we know universities do in the UK and in the United States. In China, for example, part of what they're doing is trying to recruit a lot of overseas Chinese to come back. It's much more attractive than it used to be. Of course, there's been an economic boom. The universities have more funds to offer attractive packages.</p>
<p>And the third thing a lot of places are doing is to try to create strategic partnerships. It's true both in Asian countries, for example, and in the West. In Asia, the National University of Singapore is a great example. In fact, the government of Singapore has brought in some Western institutions just to have their own sort of freestanding presence.&nbsp;</p>
<p>National University of Singapore has also partnered with a number of places. So, you have places like the Business School of the University of Chicago going to Singapore. MIT has a presence there, and Carnegie Mellon. It's hard if you're trying to become great to go from 0 to 60 in a short period of time, it's very hard. But, you bring in some of the best places out there and you can, by co branding if you like, you can move more quickly.</p>
<p>Here, we're sitting here at the London School of Economics and LSE has a partnership with Columbia University and with Science Po in Paris. I know from talking to a couple of folks at Science Po, they're a very good institution. They're not so well known outside Europe. What they told me is, well, if we go to India and we're discussing a partnership, we say we're in a partnership with LSE and Columbia, then people sit up and take notice.</p>
<p>There are a number of things you can try to do to become a great university. As I said, none of these are any guarantees. I think I probably should have said this right off the bat. I think the most important thing is embracing the merit principle. This has not been true, and is still not true in many universities around the world, both in the developing world, where there is a lot cronyism and professors are treated as civil servants in a number of cases. But there you have some good examples: The University of Malaysia has had some difficulties becoming more than a provincial institution. The National University of Singapore has taken a much more market-oriented, outward-focused approach, and they have really risen quite quickly.</p>
<p>Even in Europe, there was an article a couple weeks ago in the Guardian about Italian universities, there's some research showing they're just riddled with nepotism. There are a huge number of family members being hired in the same departments. They are not going to create a great system that way. There&rsquo;s no question about it.</p>
<p><strong>Romesh:</strong> What do we know then about the ideal ownership structure and governance in the university? I mean, in Europe, traditionally, universities have been funded almost entirely by the state. Reasonably successful. There&rsquo;s been some fall back, as you say in the book, trying to reassert their authority, some of the continental European economies. In the US there&rsquo;s a great tradition of private nonprofit universities, some of the greatest universities in the world. And now we are seeing the emergence of private for profit universities. What do we know about this different set of public, private, profit, for profit?</p>
<p><strong>Ben:</strong> I hesitate to say that one is the superior model. One of the strengths of the US system, I think, is that there is a diversity of funding. We have very substantial federal funding. We spend a large chunk of our federal dollars on universities. And many people believe that's part of what made us so great after World War II, and certainly into the Cold War. And certainly out of World War II, there was a lot of real belief that technology had helped us win the war. As we got into the Cold War, there was a concern with keeping up with the Soviets. At the same time, as you say, we have this tremendous amount of philanthropic support that goes to universities, and a lot of it from individual graduates.</p>
<p>And of course, we have industry funding in some cases. So I think the diversity of funding sources can be a great strength. Again, if there's competitive research funding, for example, that's very important, and trying to make sure the best proposals are getting funded.</p>
<p>I think that a government funding model can be done well or it can be done poorly. There are a number of countries. You mentioned continental Europe. I mean, Germany and France, which once had some of the great universities, of course, have really fallen on hard times. I spoke to French group recently. I think they felt I was a bit harsh. And clearly, there are some great institutions in France. We talked about places like Science Po or the grandes &eacute;coles, these elite, very smalluniversities or even colleges.</p>
<p>But, broadly speaking, there's been sort of an egalitarian funding regime, where government resources have been sort of spread somewhat thinly across the board. The same thing in Germany in the last several decades: I think it's not really controversial--at least it shouldn't be controversial--to say they're sort of equal in their mediocrity. A lot of these places aren't very good. Even in a French research institute like CNRS, people who get hired there, they don't go through a tenure process, the sort of thing we would see in a US university, where you have seven years to sort of prove yourself. They essentially get hired and they're civil servants.</p>
<p>One of the things that's now happening in France and Germany is there are big initiatives to try to focus on a very small number of universities that have proven to have great promise as research institutions, and to funnel, just as the Chinese are doing, to funnel funds at those institutions which of course does undermine the egalitarian principle. But that, I think, they've concluded is the way to achieve excellence. Paradoxically, 150 years ago, Americans looked to Germany to create great universities. Now the Germans, they're sort of in a mess. And they're now turning to the US to see how we create a great university model.</p>
<p>Now that doesn't mean that a government funded model, I think is intrinsically problematic. It sort of depends what you do. I also think the reality, and certainly in the UK, and this period of real austerity and budget cuts, is that you are probably going to have to move to a more diverse set of funding.</p>
<p>And you mentioned the for-profits. I'll just finish up on this by saying that we have seen in the United States, the for profit sector has become, and still a small part of the sector, but it sprung very, very quickly to about 10% or 12% of all post secondary education enrollments. It's subject to much controversy right now. There's been concern about recruiting practices not being ethical. Concern about high student indebtedness. And people not getting the jobs they have been promised. On the other hand, this is a sector that's very flexible. It's nimble. It can be innovative. It can respond to employer demands very quickly.</p>
<p>And what we've seen globally is that many of the for-profits that have done well in the States, places like Kaplan and the University of--well it's called the Apollo Group, which is the parent of the University of Phoenix--a place that has a lot of professional oriented classes.</p>
<p>There's a company called Laureate, which owned a big tutoring chain called Sylvan learning, and is now, primarily focused on global higher education. They buy for-profits in places like Latin America and Europe. And again, they're serving, a lot of people, say in, Latin America, where there's government funded universities that are free or close to free, which sounds very egalitarian, but in a number of cases you have to go to an elite secondary school to get in, so they are not places that a lot of middle class and working class kids can go to. And some of the for-profit institutions try to cater to people with an interest in careers in business or accounting, tourism degrees, things like that, health professions. Those places have grown very quickly. There's regulatory issues. There's questions about quality control, frankly, as there is in the traditional sector. But I think that those places, in a diverse system, certainly have a legitimate role.</p>
<p><strong>Romesh:</strong> Can we talk a little bit about the returns to higher education, perhaps particularly for students and the implications of that? We know, I think everyone knows that the returns to higher education can be very, very high. But it also can be very, very, variable. And I wonder about when this globalized, increasingly globalized market for higher education you're talking about, of some of the subjects that are going to lose out are going to be the humanities subjects. You mentioned STEM, when we know the very high returns being law, economics, management. How do the humanities fair in this globalized world do you think?</p>
<p><strong>Ben:</strong> I'm a recovering comparative literature major. So I have a soft spot for the humanities. And I do think that they are important. I don't think it's really a surprise that government policy makers are going to look to sectors like STEM fields. In countries like, India and China, engineering is still king. There's just no question about it in this. It may have something to do about their state of development. But of course in the US too, people are very concerned with maintaining preeminence in these kinds of fields which perhaps have some more direct technology transfer to industry.</p>
<p>But I think that sort of as broad proposition, I mean, I'll speak about the United States. We know that people who go beyond a high school degree have vastly greater lifetime earnings. And I think that's true for all sorts of education. There maybe some differences. I don't know whether we have really good data on differences across fields.</p>
<p>But we know that even one year of university puts you ahead of a high school graduate, Bachelors degree, all the more so, masters degree, more still. So I think there's a very strong case for investing in human capital both for individuals and also for governments as a public good.</p>
<p>I do think though that in terms of interest in the humanities, one interesting phenomena, and actually Rick Levin, who is the president of Yale, has talked about this, there's a real interest now in Asian nations in the Western, what we call in the states, liberal arts, tradition of studying the great books, all the best that's been said and written about the great questions of life, and the sorts of, what you might call the habits of mind that are developed in our universities and in the best cases--not everybody is reading Thucydides or sitting around a seminar table.</p>
<p>But, in a variety of ways, I think in the sciences as well, we learn to think and be analytical, to think critically, to be willing to question authority, not to learn solely by rote. So whereas I think we in the West sometimes admire Asian nations as their universities are improving through their tremendous focus and diligence and really great accomplishments in some subjects, I think, in some of those nations they look to us and try and figure out for the United States, what's the secret sauce? Why is that country so innovative? So entrepreneurial? And some of that has to do with the way that our universities, in the best cases, are run, and the sort of habits that they inculcate.</p>
<p>So, going to where you began, with the humanities, this can take place in all subjects. but I think the humanities are a place where, there's a particular interest in trying to ask the hard questions and not to always go with received wisdom. And just recently, Yale University actually announced the possible partnership with the National University of Singapore where Yale will set up an undergraduate liberal arts college within the National University of Singapore. They are sort of splitting the baby because Yale is worried about diluting quality. They are not granting a Yale degree. But they are going to call it the Yale/NUS college. That's just one concrete example if this interest in humanities, even in countries that are somewhat obsessed with science and technology.</p>
<p><strong>Romesh:</strong> Can we talk about the funding of higher education? Perhaps with particular reference with to the UK. Because we're here in a week where big spending cuts are likely to be announced to funding of research and the funding of student teaching. At the same time as which there's a proposal on the table which are very likely to be taken up, which are going to chip the whole funding of students away from the state to themselves or in terms of we paying very less and moving much more to a US kind of system. What's your perspective on that?</p>
<p><strong>Ben:</strong> Look, I think there's no question these cuts are going to be very jarring to universities as are the cuts in all sorts of other sectors, in defense and public service, public sector jobs. On the research side, I would, as I think I've indicated, I would never suggest that research spending doesn't matter. We know that it does. That said, I don't know that we know exactly what the optimal level is. I don't know if we can say this level is OK and that level is subpar. I do think given the budget environment here, I think some of these cuts are inevitable.</p>
<p>And at universities, really the challenge will be to make a virtue of necessity. I think that these kinds of cuts might force a reassessment of research priorities. There might have to be a focus on the most productive institutions or certain fields that are deemed most strategically important. We may see more mission differentiation where universities can't be all things to all people. I read in the New York Times that the University of Southampton, before these cuts, had closed its department of sports science. I have nothing against that subject. But I do think, it's not clear to me that that's an outrage.</p>
<p>And some institutions may become research oriented to a greater degree than now. I think some may really become more distinctly teaching institutions. I don't know if that's a terrible thing. We have the same issue in the States where there's a certain amount of mission creep. Where a number of second and third rate universities want to be research universities because that's what the big players do. But in fact they would be better off really focusing on doing a better job teaching undergraduates.</p>
<p>It is a problem, one hears certainly of academics in UK leaving to go elsewhere, where there are greener pastures and more money. And I think, yeah, if you're losing talent, that is a problem. That maybe sort of market signal that you have to target your funding strategically.</p>
<p>Again, going back to the British...excuse me, the French and German examples. I think that it's probably inevitable there will be a move away, even a further move, from sort of an egalitarian funding regime. I also think, by the way, there are things you can do, beyond funding that can help you have a really thriving university sector. And in terms for being a magnet for talent we talked about this notion about free trade in minds and the phenomenon of academic protectionism, which I think is a big problem.</p>
<p>These visa barriers I mentioned in the UK, these quotas on visas for certain academics. Well, if you were to lower those, you would have a bigger source of talent which is not a function to having to spend money.</p>
<p>As for the student fees, well this is a tricky issue. Again, I wouldn't be cavalier about this. It's certainly a problem for many students. But I think the Lord Brown's report last week which talked about a shift to greater, students showing a greater proportion, a far greater proportion of the cost of their education. I think that philosophy makes some sense. We know education is a public good but it also is a private good. It brings significant benefits to individuals.</p>
<p>In the UK you have an income-contingent loan repayment system which is actually very progressive--it compares in some ways quite favorably to what we do in the States--where students aren't paying money up front. They are only having to repay loans once they reach a certain income level. We have that in perhaps in certain very targeted fields and some programmes: public interest law, or certain kinds of teaching in hardship areas. But we don't have that as sort of a default policy. I think that that makes it much more palatable for students to take on debt.</p>
<p>Also, the fees are not really going to rise to market levels. There are disincentives for universities to raise fees above a certain level because of these taxes, these levies that will be, again, under the Brown proposal (we'll see how it does in Parliament) that will be levied on those universities.</p>
<p>We have some evidence in the states, and we certainly have plenty of problems. I'm not holding us up as a perfect model by any means. But in 1970 about half of high school graduates went on to post secondary education in the states.</p>
<p>Since then, we've had a huge run up in tuition, far outpacing inflation both in the private sector or the private nonprofit universities and in the state funded universities. And yet we now have a 70% post secondary enrollment rate out of high schools.</p>
<p>So we've seen very significantly increased access, even in a period of rising fees. At a place like the University of California Los Angeles. UCLA, the UC system had rock bottom fees for years. It was part of the state's commitment. But of course, the state's budget is in total crisis. Fees, which maybe, 15, or 20 years ago, might have been $3, 000, $4, 000 a year, are now up to $10, 000 or $11, 000 a year. UCLA, with living expenses, you could live in a dormitory, all said and done, you're talking about perhaps $30, 000 a year. A very hefty sum. But the elite privates are $55, 000 a year. But at UCLA, this year, there is also a record number of students, low income students, on federal Pell grants, 36%.</p>
<p>So, to me that suggests that it is possible to move to a more sort of market-based fee system. I certainly think one should approach it with caution and you have to have the right system of scholarships and so forth in place. But I don't think that it's incompatible with increasing access.</p>
<p><strong>Romesh:</strong> Final question. But perhaps we could revisit this idea of with the free trade in mind that you put at the heart of the book. You've evidently spoken to dozens of people working in the sector and policy makers concerned with this sector in the course of researching this book. What's your overall perspective on how clearly they see this idea of it being a free market and that being the best way and that we're all going to gain from a globalized market of higher education, a globalized market for new ideas.</p>
<p><strong>Ben:</strong> I guess I would say that probably the glass is three quarters full. I mean, I think we're moving in that direction. I wouldn't claim that it's sort of 50/50 and that we could go either way. Clearly, as I said, mobility has increased enormously. We have things like branch campuses. I think sometimes that they pay too much attention to that. Because, there's a lot of them, 160 or so. It's grown very quickly. But these are often boutique institutions. I think policymakers do recognize that mobility is important. But one has sometimes a populist backlash. In the States we worry about squeezing out domestic students.</p>
<p>Although there's lots of evidence that at times when we've had a real flood of PhDs from overseas, a lot of programs have expanded. So again, not a zero sum game. There's no reason to have a fixed number of places. Certainly, policy makers have some anxiety about competition. And I guess what I would say is beyond some of the specific actions they might take, sort of unwise restrictions on visas, I mentioned H1B visas. Those are very problematic.</p>
<p>But I think, in some ways, the biggest barriers, which we haven't fully overcome, is what you might call psychological protectionism, and that's the term I use in the book. And it's this notion that we have something to be afraid of when other countries advance. I mean, President Obama has used some of this rhetoric. During the campaign he talked about how we can keep up with all these countries in Asia that are producing all these PhDs.</p>
<p>This sort of notion that, you know there's this old joke: &quot;It's not enough to succeed, others must fail.&quot; This notion that if somebody's getting ahead, we must be falling behind. And of course, I think that we should be really energized by this era of global competition.</p>
<p>If you believe--I'm a free trader and I believe that international trade has huge net benefits. And yes, people need to find their comparative advantage. I mean, again, just to use that language.</p>
<p>And there will be winners and losers. I mean there will be some places that perhaps need to find a different specialty or perhaps won't be able to attract so many students. And there will be dislocations. I wouldn't minimize that may cause problems for some individuals. But I think that policy makers in many cases do realize, and I hope will increasingly realize, that this is a force that can't be stopped. It's really inevitable and what we really need to communicate to people I think is the tremendous, as I said, the economic benefits, that it brings, not just for individuals in terms of being able to fulfill their own potential. But fewer barriers than ever to getting ahead based on what you know, not as I said, who you are. I think there are huge benefits for the kind of human capital that we can develop and all these enlightened governments I think understand that. And I think we just need to as I said try and get out of the way as much as possible and let this phenomena continue to unfold.</p>
<p><strong>Romesh:</strong> Ben Wildavsky, thank you very much.</p>
<p><strong>Ben:</strong> My pleasure. Thanks for having me.</p>