The United States' ailing economy could be a boon to Australia's higher education system, but so far there is little indication that our Government is taking advantage of what could be a buyers' market.

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Princeton Professor of Economics and International Affairs, Paul Krugman, entitled a recent Op-Ed column in the New York Times dealing with the US economy, "Twilight Zone Economics".

For about 20 months the U.S. economy has been operating in a twilight zone: growing too fast to meet the classic definition of a recession, but too slowly to meet the usual criteria for economic recovery.

...[W]hen it comes to jobs there has been no recovery at all. Nonfarm payrolls have fallen by, on average, 50,000 per month since the "recovery" began, accounting for 1 million of the 2.7 million jobs lost since March 2001. ...employment is chasing a moving target because the working-age population continues to grow. Just to keep up with population growth, the U.S. needs to add about 110,000 jobs per month. When it falls short of that, jobs become steadily harder to find. At this point conditions in the labor market are probably the worst they have been for almost 20 years.

Previously Louis Uchitelle reporting in the same paper wrote:

The Perils of Cutbacks in Higher Education

    The e-mail message from the chancellor warned David Card that if the California Legislature failed to adopt a budget by Sept. 1, his salary, and those of all the other tenured professors at the University of California at Berkeley, would shrink to the minimum wage.

It didn't happen, the California State Legislature came good at the eleventh hour, at least for tenured academic staff but the National Conference of State Legislatures reporting on the 43 states that have released details of next year's budgets show higher-education outlays have dropped by 2.8 percent, to a total of US$37.7 billion, from US$38.8 billion last year. Uchitelle continues:

"Higher education, it turns out, comes under the rubric of discretionary spending, easier to cut than outlays for kindergarten through 12^th grade or programs like Medicaid."

    [N]early 70 percent of [university students] attend public institutions, which depend on taxpayer money doled out by legislatures for the majority of their funds. The percentages are similar for the 1.8 million graduate students; 60 percent attend public universities.

    The combination makes public higher education a pillar of the nation's competitive advantage. How else can bright young people from lower-income families afford a first-rate education?

But California, in order to deal with the reduction in public funding as well as an increase in students looking toward achieving "knowledge-worker status" is upping the fees to attend its state funded universities by as much as 30%. And the journal Science reports the cuts will, "slash outreach and other programs, and shrink the number of faculty and support-staff positions. 'It's going to start really hurting us,' says Barry Klein, vice chancellor for research at the University of California, Davis, which is expecting to lose 72 faculty slots and 28 staff positions over the next 3 years."

Meanwhile Pierre Papon former director general of the Centre National de la Recherche Scientifique and a professor at the Ecole Supérieure de Physique et de Chimie Industrielles, Paris in his August 1 Science editorial issued A challenge for the EU, "In March 2000, European heads of governments and of states agreed in Lisbon that by 2010, the European Union (EU) should become "the most competitive and dynamic knowledge-based economy in the world...they agreed in Barcelona in 2002 to devote 3% of their gross domestic product (GDP) in 2010 to R&D and to foster common science policies..."

    However, he goes on to point out, "Given the present trend in public budgets in Europe, these targets are very ambitious. ...To facilitate the 8% growth [rate required] and better integrate and coordinate research activities, the EU aims to create a European Research Area, which would increase the efficiency and competitiveness of European research by avoiding dispersion of funding on subcritical programs."

As far back as March this year the European Commission issued a "News Alert" EU research performance: substantial progress but important challenges need to be addressed. Its take on universities and public research centres is:

Europe tops the US and Japan in terms of scientific production, for instance in terms of publications. The evidence shows that European universities are good at creating knowledge, which is their core objective. They are increasingly collaborating with enterprises, which is a positive development.
    While some large universities try and establish a solid presence in all fields of science, others are much more focused and specialised, resulting in a somewhat smaller overall number of publications, but often with higher than world average citation impact scores.

Our EU cohort are not silly. There has never been a better opportunity to reverse the drain of best brains to the United States and it would be surprising if the better placed members of the EU didn't have an eye for the main chance. But Australia's economy is as well placed as the best performing of the EU nations. It would seem foolhardy and short-sighted in the extreme were we not to upgrade our research infrastructure and academic and research environments to make them competitively attractive. The Expat mantra of, "would love to return to the lifestyle were the research and academic environments tenable" would have its reply.

Over half a century ago Stanford University paid remarkably low salaries claiming that the Palo Alto climate and life style was all that was needed to attract top academics and researchers. As the 1950s can in, Stanford found that the argument no longer carried the day when looking to make outstanding appointments. Its administration understood that a change is policy was required, and the rest is history.

 In its recent submission to the Senate Employment, Workplace Relations and Education  References Committee's "Inquiry into higher education funding and regulatory legislation" The Group of Eight opens with a quote from the Minister for Education, Science and Training, Brendan Nelson's forward to the Government's higher education policy paper, Our universities: backing Australia's future.

The aspirations we hold for Australia, the standard of living enjoyed by its citizens and its values, will be largely driven by research, teaching and scholarship undertaken by Australian universities.

But whether or not the Australian Government is as astute as the Stanford administration of the 1950s remains to be seen.

Alex Reisner

The Funneled Web