University fees should not be abolished - Essay Example

? Critically evaluate fees should not be abolished" Contents Introduction 3 Arguments 3 Conclusion 7 References 8 Bibliography 9 Introduction Before getting into the issue itself it is necessary to provide some discussion on the reasons why in some cases universities took on the initiative to abolish fees. The actions of the university are more or less the same in almost all developed countries. In recent times some ideas have become redundant and politically incorrect. Most incoming students in the universities stand in long queue to get admission into the universities for the courses that have been closed for hours before they arrived. In such cases it is discouraging to ask students to pay for wasting time. The universities of the developed nations could not compete with the American economic system as they failed to bridge the gap in actual learning created by the public universities. Arguments There has been a long standing concern that pupils from lower socio economic backgrounds are forced to stay out from attaining higher education especially from attending universities. The social mobility is constraint due to high inter generational correlation in attainment of education. Even if the concerns regarding the equity are left out then also efficiency is lost for the society as a whole. Two sets of actions can be undertaken to analyze the reason for the situation to arise. The first action can be directed towards intensive studies while the second action can be directed towards the policies necessary to address the issue. A resource allocation is regarded to be a Pareto optimal allocation when one cannot improve the welfare of an individual without hurting at least one other individual. This kind of resource allocation is treated to be as efficient. Pareto efficiency is an important determinant in assessing economic systems and for formulation of policies. If the economic system is not Pareto efficient then there is scope for improving the welfare of an individual without reducing the welfare of other participants. The improvement is possible through reallocation, it should be noted that inefficient allocation to an already efficient allocation is not Pareto improvement (Jauculan, 2012, pp. 1-4). Therefore in order to ensure nobody is at disadvantageous position Pareto efficiency may require compensation of one or more participants. If en economic policy aims to eliminate a monopoly while the market becomes competitive as well as efficient the monopolist will be in a worse off situation. A competitive economy will result in Pareto optimal allocation when there is presence of full information in the economy and there is absence of externalities. Increasing returns to scale in technology is absent. The government can intervene into the market to facilitate the flow of information, manage the existing externalities, provide public goods and manage the income distribution within the society. The university or the college staffs can shift the resources effectively for more efficient allocation so as to ensure maximum outputs given inputs. As there inefficiencies in technical and allocation exist a significant portion of available resources go wasted. The state and university college is confronted with the Production Possibility Frontier. A tool can be designed for the purpose which will embody the resource constraints and simplified assumptions on the college and university’s production possibilities. The assumptions as are follows: Two goods are produced while resources are fully utilized and budget is endowed as resources. The feasible and the non feasible mixes of output are depicted in the PPF. A Pareto efficient situation is possible only in cases where there are feasible mixes of output. Technical efficiency reflects the ability of a firm to avoid waste and attain maximum output level from a given set of inputs. The firm can attain such type of situation by mainly two ways. The firm produce as much output as possible by using the technology and inputs or by using just optimal amount of input as required by the technology. A technically inefficient producer can produce the same output with either less or at least one input (University of California, n.d, p. 2). The ability of the firm to utilize the inputs in optimal proportions is regarded as allocative efficiency. Allocative efficiency refers to maximum usefulness of the resources available so as to attain maximum efficiency. Education is one of the basic needs of life. In the developing and the underdeveloped world education is a prime concern for the government as a major proportion of the population are deprived from attaining education. In fact less encouragement towards educating children is one of the causes why developing or the underdeveloped nations are still under the dark circles of poverty. Apart from raising social inequality lack of education sheds serious impact on the society. In order to discuss Pareto efficiency in regards to university fees it is important to take into account the rising levels of competition in the education market. New universities are emerging now days while government are proposing plans so as to bring more people under the umbrella of education. The authorities are of the opinion that such a policy will contribute in raising the welfare of the economy. In order to attain funds to educate the poor the government is making allocation of budget for the education sector (Southern Methodist University, n.d., p. 1). The policy is having effects on the other courses of the budget as if the allocated money for the education as subsidy would have been used for improvement of roads or some sort of social work ore people would have been catered. Therefore in this case in order to provide social security to one part of the population the government is depriving the other part which is not at all a Pareto efficient situation. If university grants or the tuition fees are abolished it would not be possible for the university to run the daily operations effectively. A freeze of the tuition fees will lead to lower quality of higher education and this may even lead to closure of some course where the university fails to pick up minimum students. So it can be said that abolition of tuition fees for the university students are of two folds. On one hand it affects to bring more people under education boundary while on the other loss of revenue will lead to closure of courses. So an optimum situation is most possible to attain. It is not a Pareto optimal situation and is a justification on why university fees should not be abolished. Higher education may not be regarded as the universal public well as the medical facilities. It can be made that the first and the second year in the stream of arts or science is necessary for the citizens and adds to the education level of the citizens apart from high school. There is an element of private cost and benefit beyond the junior level (Denny, 2010, p. 2-4). The concept of cost and benefit is more obvious for post graduate degrees and professional qualifications as the private and social returns are varying. The abolition of tuition fees will heavily subsidize many people especially those from the affluent families who can enjoy the luxury of living with parents and attend the university at the same time at the cost of ordinary families. It is advisable to lend more focus on resources where it can be optimally used and eliminate the error prone cases of student debt. The fact of scarcity is associated with the above arguments. The provincial government are feeling the heat of rise n the health costs which is on the rise more than that of the revenues. The response of the government towards the shocking ascend in student debt has not been encouraging. The government eradicated the Millennium scholarship and used the money saved in order to increase the grants. It can be said that the government just used the same pool of money and used it in spreading it among the wider population. The other action which the government took was to delimit the ceiling on the amount a student can borrow and then allowed the students to get trapped under the vicious circle of debt. In order to increase the grant size as well as increase the number of recipients it is important to raise the total allotment. The inter-generational transfer of wealth may not be too helpful for the seniors as they are the future tax payers and the grater allotment of support will act as the burden to them. The case of asymmetric information can be discussed in this issue. It may be the case that information on abolishment of tuition fees in some universities remains constraint within some students and therefore the idea with which the policy was introduced would remain under darkness. Conclusion Conclusively from the above arguments it can be stated that abolishment of university fees is not an optimal solution and therefore policies should be directed towards optimal allocation of the resources rather than forceful or inefficient allocation. References Jauculan, J. 2012. Technical and Allocative Efficiencies of State Universities and Colleges using Data Envelopment Analysis and Pareto Optimality. [pdf]. Available at: https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&ved=0CEMQFjAD&url=http%3A%2F%2Fiamure.com%2Fpublication%2Findex.php%2Fijbm%2Farticle%2Fdownload%2F152%2F141&ei=Z6vnUN3ZHYmjkQXy_ID4CQ&usg=AFQjCNGsE4FKYYnS2dMWJhteugbcwJ7mpg&bvm=bv.1355534169,d.bmk. [Accessed: 5th January, 2013]. Southern Methodist University, n.d. Market power. [pdf]. Available at: http://faculty.smu.edu/sroy/micth06noteset5.pdf. [Accessed: 5th January, 2013]. Denny, K. 2010. What did abolishing university fees in Ireland do?. [pdf]. Available at: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201026.pdf. [Accessed: 5th January, 2013]. University of California, n.d. When is a Market Socially Optimal?. [pdf]. Available at: http://are.berkeley.edu/courses/EEP101/Lecture-Summary-PDF/lec02-Market-Socially-Optimal%20.pdf. [Accessed: 5th January, 2013]. Bibliography Brownstein, B. 1980. Pareto Optimality, External Benefits and Public Goods: A Subjectivist Approach. [pdf]. Available at: https://itunesu.mises.org/journals/jls/4_1/4_1_6.pdf. [Accessed: 5th January, 2013]. Read More