Thursday, November 24, 2011

Occupy Cambridge & Richard Werner on tuition fees

Occupy Cambridge students who highjacked David Willetts' address this week at Lady Mitchell Hall might like to look over the following excerpts from Prof Richard Werner's book: New Paradigm in Macroeconomics (Palgrave Macmillan 2005). Werner is Chair of International Banking, Southampton University:

Educational reform, endorsed by neoclassical thinking has saddled students with substantial debt. Psychologists have found that this is a main source of depression among students. (pp14-15)

Werner suggests:
'Every childbearing family could, for instance, be paid $100,000 for each child born,...administered... for specific purposes. Such a policy would not be inflationary: among all inputs into the production function, human resources are by far the most important. Therefore this is the best example of productive credit creation, as long as resources are also spent on a high level of education.'  (pp340-341)

If GDP is to grow, education must be encouraged. If education is to grow, students must not be deterred by tuition fees. These were his views during last year's student protests (see this blog for 27 & 29 November 2010):

Richard Werner is an advocate of debt-free money creation by governments with the money created being allocated to ends that will bring productive non-inflationary and sustainable growth. The current way of the world is that banks create and allocate credit according to their own private commercial aims and these often are not helpful in producing sustainable economic conditions – as we have seen since 2007.

The  choices we have now are: Do we mend the old broken system with inevitable failure repeating ahead? Or make a new system which would build national economies in as sustainable way? One way to encourage this is to invest in freely available education funded so that it does not involve a life time burden of debt. Better to create state money to help students make their own productive way in life, than let banks create credit to blow away in speculation in volatile assets which is no help in promoting true national wealth.

 ‘Interest-free’ loans are a little like what we have now where special rates and terms apply to student loans. Werner is not in favour of these (although better than interest bearing loans), as future governments could easily raise interest rates, leaving us with no lasting improvement. What is needed are debt-free grants not needing repayment. 

Making you as a student personally liable for high tuition fees is not the only way of funding education. Debt free money can be created for your education.  Nothing to pay back and no interest. True.
But the banks won't like it. Also true. 
See also Positive Money and look at YouTube interviews with Werner.
Posted by Charles Bazlinton.

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