STUDENT leaders are demanding free education. Not a bad idea at all. That is where economic growth and jobs spring from. On the other hand, the question to ask is: “What education?”
Long ago, a friend of mine was part of a movement to get the main universities to create courses which led to jobs. He gave me a list of around 30 delaying tactics which were used to block this idea. The result is that many, perhaps most, graduates are not qualified to be well employed. Employers are complaining; they cannot find the skills needed.
I spoke to Treasury about this and was told it is a matter for the Department of Education. I responded that Treasury has a responsibility to ensure that taxpayers get value for money. If free education is to be given, let it go to creating the skills where the jobs are. Give taxpayers a return on their money. It is a social investment in the economy.
I was promised this would be referred to those at Treasury working with the Ministry of Education.
Germany has a powerhouse of an economy. What they are doing is just what the UK was doing when I started work: students who were employed got college education in the subjects which they were working on - in my case, engineering. Employers gave time off and some paid the fees.
Robots set to take over the workplace
Over in China, robots are all the rage. Wages have been rising by 20% p.a. That is what should have been happening in Africa – we also have mass unemployment, just like they had not long ago. Workers were not complaining about poor pay. They got jobs on whatever terms were offered. The economy boomed on exports. Pay rates leapt skywards when labour became scarce.
South Africa may have missed that opportunity. The world is changing - in future robots will be worldwide and will cut production costs, so that it pays every nation to manufacture its own output robotically and not import.
How will South Africa compete? Only by teaching students how to make and maintain robots. But for now, there are still plenty of other trades and skills. The alternative is to import robots and the skills needed to maintain them. Where will the jobs come from? The robots are coming; we need to get moving.
French economist Thomas Piketty rightly says that if the masses do not have spending money, even those in the top wealth bracket who own the means of production, the robots, the farms and factories, will have no customers. The way forward is to redistribute the income, not the factories and the wealth that these people own.
Leave those things with the owners. They are the people who stand to lose that wealth if they get it wrong and make the wrong things. Tax exceptional income and then use it to let everyone have a basic income, whether they work or not. This will make the cost of hiring them so low that if they want work they can have it. If they don’t, or can't, work they can survive. With robots making everything, the future may actually be fun: full of art and theatre and people enjoying each other.
The mistake to avoid is taking the wealth from the owners of the means of production and giving it to the poor. The poor will destroy that wealth and the means of production. They don’t have the skills to employ those assets. Those rich people do not buy 10 000 cars and beds and holiday homes. They don’t have time to use them; they love using their wealth to make things happen so let them do that.
Let South Africa leap forward on the educational front, bringing all this expertise and cheap goods and services to the masses so that we as a nation can thrive despite the very real threats from robots. Start with free education which leads to jobs of all kinds. Whether the money goes to universities, to schools, or to employers who hire and educate people, free education of the right kind is a great idea and a much-needed investment in the South African nation.
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* Edward Ingram is a leading thinker on the world stage of macro-economic design and has written a series of essays for Fin24.