The fight over education

19th or 20th Century dogmas are both wrong.

Michael Gove has a challenge and is enlisting 19th Century ideals to battle the 20th Century ideals that face him in our school system.

 

The Education “Challenge”

 

The challenge seems to be that forces that became dominant in the 20th Century – collectivism amongst school teachers, health and safety concerns, equality issues, access for all, centralised curriculum, centralised examinations, huge access to tertiary education (universities), building programmes, comprehensive education “norms” and belief systems – have, from Gove’s standpoint, gone too far.

 

While he believes that education should be always excellent, always accessible for those that strive, always providing a route to further and higher education, he feels stymied by what is seen as a Labour agenda from the 1960’s: public sector control over public assets and, worse, a public sector mindset.

 

That mindset means that equality risks being the bye-word for dumbing down – as expressed in views that exams are made easier so that everyone passes, that no-one is a failure, that competitive sport is old-fashioned and everyone should be a winner.

 

This simplistic notion of the maintained (government) school system is now rivaled by simplistic notions of what works better.

 

The Government Education Response

 

The Coalition response to the Challenge (or really the Conservative Gove response) is to throw 19th Century attitudes at it. The key to Gove’s rebuttal of mid-20th Century dogma is mid-19th Century dogma.

 

First, it is a market approach to the problem. The assumption is that the market knows best so bring in competition and all will be well. Some years ago, I wrote to Michael Gove when he was in opposition. As a Chair of Governors of a successful secondary school, I proposed, through my MP, that Government treats each of the 3,600 Secondary Schools as independent organisations in a way that business would not. Business would try to work out how such a range of “subsidiaries” would benefit from joint buying, better systems, better management and learning opportunities for critical IT staff and so on. Gove responded that he rejected this as each school should be seen to compete with each other and that it provided parents with “choice”. Only someone with no business sense whatsoever would say such a thing.

 

So, choice (like shelves of cornflakes that no-one can choose between) is the solution and we have old-style Academies, new-style Academies, grammar schools, independent schools, church and other faith schools, new free schools, chains of academies. The range is growing and is beginning to grow out of control.

 

When presented with a business-like way forward (such as above and also through the James Review on school buildings presented last year and which appears to have been dismissed), Government shuts up shop and develops ostrich tendencies.

 

Gove’s other 19th Century demand is to go back to reading our history and learning by rote; through progress via examination (no more modular teaching); through a private school regimen that comes from his background and his history. To this is added the rigour of school uniforms and standing when teacher enters the room. Sir Michael Wilshaw, now Head of Ofsted, is his main supporter in this area. Sir Michael’s approach (vindicated in several tough schools) is forthright and to the point – poor teachers should be expelled, poor schools turned around fast or taken over.

 

Gove is also pulled between business demands that pupils should be armed with the ability to be business fodder and the wider aims of education (which he understands well) and which provide our young people with the abilities to play a full part in the world they live in. Here, maybe there is a link between the 19th Century and the 21st, which Mr. Gove should consider deeply.

 

The Private vs. Public argument – the wrong argument

 

This is all typical of our outmoded politics and the strained linkage between the private sector and the public sector.  The private sector allows those who can pay to be separate from the rest. My previous notes on this: The Brave New World of Education (I and II)  – see https://jeffkaye.wordpress.com/wp-admin/post.php?post=153&action=edit

 

discussed how education was splitting into 3 – the private sector (alphas), good parts of the maintained sector (betas) and the rest (epsilons).

 

The response has been to play off the private sector and private sector attitudes against the public sector responses of the mid-1960’s.

 

Of course, the reality is that there is really hardly any competition between the private and public sector. Private education is for sale, goes to those who can afford it and it is only at the margin that a competition with the maintained sector exists. The vast majority of private sector parents never consider the option of not paying except between different independent schools – i.e. the competition is between private schools. Those that do are part of the “squeezed middle” – often moving to areas with good secondary schools to obtain at least the “beta” education on offer.

 

In the maintained sector, it is similar. A new building for a comprehensive school will immediately increase the demand for that school – but the demand is mainly drawn from other maintained schools in the catchment area.

 

Overall, competition is irrelevant to the question that is central:

 

What do we want from education for all our people?

 

Education for What?

 

In the 19th Century, we had two systems: one for the wealthy and aristocracy which educated our leaders; one (minimal) for the rest.

 

We retain the systems today and it has been hard to break the duopoly. However, we now have three systems within the two stated: private (alpha, still educating our leaders) and public (split by postcode into beta and epsilon).

 

What is needed is to generate a school system based on what society needs – not what entrenched groups may want. We do need to break the status quo.

 

If we (or at least most of us) agree that education should provide (from nursery to primary and through secondary) an education that provides accessibility to all, opportunity to all, does not shy away from the fact that we are all different, understands that education and opportunity should not be down to where you are born or the wealth of your parents, and persistent excellence in teaching, motivation and discovery, then the varied types of schools we now have should be joined in working to achieve this.

 

Students should not be born to lead or born to stack shelves. We should be opening up the doors to those who may have talent and desire to succeed and that means that those doors must be kept open continuously (not just at 11 and 16).

 

What is the answer?

 

There should be just one type of school – let’s call it an Academy as the Greeks (despite current problems) were intelligent enough to have the first and for many years the most prestigious.

 

All private sector and public sector schools should be converted to Academy status.

 

For the time being, funding will be retained as now – private to independent and public to maintained sector.

 

A team of from the private sector, maintained sector, civil society and government (not a government committee) would work to establish what education is supposed to be for: maybe a two-year review which will, undoubtedly be full of disputes and arguments, but will lay the foundations for the UK’s (if Scotland and Northern Ireland are willing to be involved) future learning – a model for the 21st Century.

 

The move to a common Academy system with two main groups within it (private-funded and public-funded) should be a forum for mutual learning via the needs of civil society, private and the public sector.

 

From this, we need to learn were the private sector (business) can work best – for example, provisioning of facilities and services (where the public sector is normally worse and too bureaucratized).

 

We should be able to build more cross-fertilisation that is happening on occasion now within private sector groups that adopt maintained schools – the smaller accumulation of knowledge across the divide that Haberdashers (for example) is providing.

 

We should also be able to explore how systems work in different environments – how to change the postcode lottery where it isn’t necessarily the teachers or the students, but the low aspiration levels of the communities.

 

Private / Public sectors and Education

 

Coming together in this way – and meaning it – rather than all-out competition in an area which cannot be completely market dominated nor purely public sector would be fit for the 21st Century. More than that, it would begin to frame the dialogue about what education is really about without (a) depriving the private sector of its rights to be different and (b) depriving the maintained sector (the public sector) of its right to improve. Moving the sectors to work together nationally (rather than merely at the local level) and ensuring that it is not just Government that can dictate what education is there to provide is essential in the 21st Century. Politicians are no longer the ones who know what to do. They do not represent public opinion and rarely shape it. Civil society needs to be better represented in the areas that count for the most and education is one area that cries out for change of this type.

 

Additionally, what is likely to emerge from this but a framework for a national education system with the potential to have the best of private and public education – but, for the benefit of those in the middle (the people who are being educated and their families).  A framework where private sector and public plus representatives of those whose education we are discussing (the educatees and parents and guardians) can continuously evaluate the benefits of particular models and judge progress.

 

A new model for the 21st Century is one where all sectors of the population work together rather than compete. The nation’s education is important enough for something really radical to take shape. Education is broken – it needs fixing but not piecemeal and not school by school.

 

 

Banks and Time Travel

So, Mr Stephen Hestor of Royal Bank of Scotland was pressured into giving up his bonus by a Parliament that threatened to vote against it.

So, Mr Fred Goodwin gets be-knighted by a committee advising the Queen.

Ancient institutions – the royal family and the House of Commons – are playing that old game (which the politicians invariably lose) about who is in charge – government (be they democratically elected or through birth) or the banks? Governments (at least the democratically elected bits) change with the whims of the electorate – banks and banking survive because money is the root of all our economic prosperity – banking is the provider of dreams.

It is a very old game. Since well before Nathan Rothschild strode above the travails of mid-19th Century politicians who were desperate for his bank’s money to fund their economies and wars, banks and bankers have formed their own super-economy – one that economists and politicians have progressively failed to explain or manage.

While the Royal Bank of Scotland saga focuses on bankers’ pay and the balance of reward between employees and shareholders (i.e. who should gain most from banks’ profitability), this misses the crucial issue completely.

What is it that makes banks and banking so critical to world economies in a way that no other industry is so that we are willing to allow them monopolistic rewards – the rewards akin to a totalitarian regime? More than this, how is the overall financial services industry – of which banks are just part – changing and how does it need to change to best serve people and real wealth producing companies, people and our governments in the 21st Century?

What are banks for?

At a simple level, banks are there to provide the alchemy to the economic system – they are asset transformers (David Llewellyn – the New Economics of Banking – 1999). Banks and financial institutions transform money received into money loaned. They transform short-term into long-term. They make tomorrow’s needs available today by making money work hard.

This transformation process (the essence of monetisation ever since the ending of barter economies) has been a crucial bedrock on which economic growth is based. The wealth effect of the asset transformers has been to bring forward tomorrow’s growth into today or next year’s into this or the next generations into this one. This time travel – the bringing forward of the future – is seen whether it is Governments spending trillions today to pay back in future generations, companies bringing forward projects on the basis of payback in three to five years all the way to purchases made on credit cards to pay back (or not) in a month or six. Banks and financial institutions have developed ever-more sophisticated ways to drive the transformation.

Sub-prime problems in 2008 showed, like most banking crises, the fault line in the world’s financial system – the cracks that often appear in that bedrock.

Pressure builds up just like the earth’s crust before an earthquake as financial institutions offer more and more high risk promises to transform the future to the present. In this case, promises to those who could never repay to buy properties they could never afford. It could have been corporate over-stretching. It could have been government over-spending – as it has now become: a massive sovereign debt crisis in the western economies.

The short-term bonus culture of the banks was and remains a symptom not the problem. The battle between senior bank employees and their shareholders is not the problem. The essential risk nature of banking (and there never has been a safe period when bankers were just bank managers who would not give loans – this is a myth circulated while banks were providing high risk loans throughout the corporate and national world) is that the asset transformation process (this time travelling capacity to bring forward tomorrow into today) is deemed to be so critical to the world’s economic system that banks (and many other financial institutions) are deemed to be vital and their survival guaranteed by governments. This has led inexorably to the current sovereign debt crisis in Europe and the ability of senior banking staff to act as monopolistic winners over both the banks’ shareholders and the rest of the economy. As David Kynaston wrote about the reasons for more recent banking excesses : “the most important is the arrival of the insidiously tempting one-way bet.”(David Kynaston – City of London – 2011)

So what (if anything) can be done to change this?

The Threat to the Time Travellers

As Llewellyn’s paper in 1999 suggested (and this was before the banking mayhem of 2008), banks are undergoing major changes that technology (for example) is forcing. Banking (for so long run by insider networks who knew each other and government ministers intimately, went to the same schools and spoke the same language) is now more open to other institutions (whether supermarkets or Virgin) and trading companies are better equipped to tackle the markets directly (corporate bond issues being the main way of doing this).

Yet, traditional banking methods and the banks’ place in the economy (especially in London) feels similar to what it has done for 200 years even if the competition is growing from other institutions and from overseas (Chinese banks – owned and dependent on the Chinese State – especially). Defence of our banks by our government against the newly developing nations financial institutions is one impediment to progress.

This could be a tipping point, though. Money and monetary systems will remain the kratogenic blocks on which economies slide and which cause massive earthquakes from time to time, but the banks’ position within these systems will change. Digitisation and the spread of wealth into the developing nations of China, Brazil and elsewhere will fracture the monopoly position of western banks and the West’s financial institutions. This may well be a good thing as monopolies are inherently massive impediments to improvement and sustainable growth.

A problem is that western economies that are dependent (or believe they are) on their banking system (London and New York especially but Paris and Frankfurt and elsewhere hate the prospect of losing their monopolies) will fight tooth and nail to prevent or at least slow the pace of change.

The other impediment to change is that those who are in charge of the change process – governments – don’t really understand the nature of banking. Tinkering at the edges (whether bonuses or knighthoods) is a waste of effort. Enlarging capital bases and splitting the casino elements of banking (which would be allowed to fail) from the more traditional lending elements of banks is moving to the right lines if (and this is the critical issue) there is an understanding of how this addresses the massive risks that banks are engaged in (and always have been). Many have argued that this splitting (providing only banks which are less susceptible to macroeconomic shocks should be given last resort assistance) is a cornerstone requirement.(Rochet, J-C Macroeconomic Shocks and Banking Supervision – 2008)

The enlarged capital bases and splitting of key activities into Chinese wall separated entities are hints of the crucial risk factors but not the answer in themselves. For risk and uncertainty are two entirely different features. Risk can be assessed, uncertainty cannot – a set of unknown unknowns. Individual bank risk at the micro-economic level may be manageable through higher capital ratios but take all the banks together and does an amalgam of micro-economic management techniques bulk up to a macro-economic solution?

As digitisation and competition (from other corporations and from newly developing countries) grow, it will lead to more opportunities to time travel. Yuan-based promises are no different from $ or € or £. The risks just get higher.

The critical issue is to manage the degree of tomorrow’s future wealth that we are willing to risk having now. Just like burning oil and gas today has a direct impact on our future generations, so monetary time travel can suck in tomorrow’s wealth. Just ask the Greeks (and Portuguese and the 50% of young Spanish without jobs) whether they agree with monetary time travelling – taking too much of the future for consumption now.

This is a hard call. Growth (at least that measured in the altogether faulty way that we measure GDP – quantity not quality) is at the core of our being. Banking has fuelled that core essence. Reducing the scope of banks and other financial institutions to bring tomorrow into today is a huge macro-economic decision that national banks (like the Bank of England) have to take on responsibility for.

National Banks – their role in macro-economic management of the Banking System

This is not just about bank regulation – it is about the how (at a macro-economic level) the risks and uncertainties are managed on a national and on a world-wide basis. Systemic and earth-shattering breaks in the system can only be better managed when international macro-economic indicators are understood and somehow controlled.

Transaction taxes, capital ratios, splitting bank operations are, I repeat, micro-economic devices. Macro-economic devices now need to be devised and international mechanisms established that regularly evaluate the banks’ individual exposure to macroeconomic factors. (Buch, Eickmeier, Prieto – Macroeconomic Factors and Micro-level Bank Risk – 2010). Building a model of this exposure using 21st Century macro-economic modeling techniques and used within an international banking framework, could be the starting point to better management of extreme banking risk.

But, it will take a transformation of international mindsets and international agreements to take 19th Century economic and political models into the 21st Century. Technology has moved on and presented individual banks and financial institutions with the ability to further manipulate economies and left governments in their wake. This needs some rebalancing and governmental management institutions need to be set up to oversee the critical part banks play in our world and to establish the macro-economic monitoring systems that are needed to avoid economic collapse.

The Big Society – Calculatingly Political

The Big Society is this government’s big idea and is yet another sign that we are not progressing, but, as a nation, de-evolving back into the 19th Century.

It is not because the Big Society is inherently evil – asking serious questions about the role of the individual and society in working together to help each other and balancing one properly against and with the other – but the language and the rationale are two hundred years-old.

Whether it evokes a Samuel Smiles self-help or Quaker bankers like the Gurney family, government Whig or even Tory rhetoric reminds us of the way it was when the state did not get involved and left it to wealthy individuals to “do good”. Ian Hislop’s recent “When Bankers Were Good” on BBC2 was a healthy reminder of how society once relied on the rich to be good. Hislop proposed that the welfare state (begun by Lloyd George and accelerated by Atlee) had changed the rules so that taxation would be used instead of the rich – releasing bankers and the like to spend their money on themselves rather than anyone else. From the USA, individuals like Bill Gates and Warren Buffett show that where Government is smaller, the rich are expected to enlist their wealth to a greater cause. That may now be international rather than just national, and it seems like the banking community has exempted itself from that enlistment, but the theory holds.

David Cameron believes that society can play a larger role in putting together the broken society and that Government should play a lesser one – instead of financing, the state should guide and help. Nick Hurd’s job as Minister for Civil Society becomes more a challenge to the “do good” society to pitch up at a time when national and local government is cutting back furiously on social spending.

But, this challenge requires a complete change in the way society works. Politics and economics in the 20th Century have directed all our attention on to economic growth that has itself been aimed at maximising how we make and buy things (or develop and use services). Economics (based on 19th Century principles around what we can count and how rational people think – a simulation which has been shown to be miserably false) measures goods and services that we (or others from outside the UK) make. As our brains are progressively wired as calculators, so we drive ourselves to buying more because that is how we now work. Now, the newly developed nations such as China, Brazil, India and the rest are rushing in the same direction.

A key question is “how can society redirect itself away from spending all our time and money on things that are measured by GDP towards societal benefits that are not” – as this is what is needed to make the Big Society work. We have to work out what counts – not spend our time buying because we have been conditioned to count.

Abraham Maslow suggested as far back as 1934 that humans operate within a “Hierarchy of Needs” and that we rise up that hierarchy as we become wealthier. At the bottom end we strive for food and shelter; we obtain the things that add to our health and the health of those closest to us; as group animals, we work within groups (first, close and then wider); we develop self-esteem requirements and then what Maslow terms “self-actualisation” – the achievement of our potential.

Maslow’s work was focused on marketing, but we have marketed ourselves into a corner and stunted the “growth” that Maslow identified. The problem is that we have translated this growth into the buying of things that has simulated the provision of self-esteem and esteem from others. The recent riots in London and many other cities in the UK aguably showed that it was not poverty that drove the rioting but a desire for some form of self-esteem derived from the urge to “acquire” things such as designer trainers and other self-esteem “goods”. We have fallen for both the marketing (the spin) which dictates to us that what we count (like shoes or cars) is all there is. Economics has conspired in this – a reliance on 19th Century simulations of the economy where food, shelter and health were still basic needs for most of the economy. Economics has not progressed since that time.

Economic measurement as we know it panders to our desire for things that are easy to count. Governments (short-term thinkers at best – “it’s the economy, stupid”) have not helped to shape thinking away from its judgement that to get elected, it has to show that we are getting richer. But, “richer” means calculatingly richer – the way GDP shows we are richer – not that which really makes us all “richer”, healthier, richer in mind and spirit as well as in monetary terms. We calculate our wealth and governments calculate how to get re-elected. It leaves the concept of a Big Society – where society and the individuals in it is / are required to work to re-shape and repair society – out of our understanding as we can’t calculate its benefits (just as we have difficulty in calculating climate change – part of the same problem) and most of us focus on what we believe are more important – buying stuff.

To respond to the new paradigm, towards a society that will be driven by more than what we can calculate today, is a massive stretch. It means that we will need to measure quality more than quantity (a massive economic problem that econometricians appear unwilling to solve – maybe because they are one of the causes of the problem) and that Governments will need to consider the risks it is willing to take with quality of life rather than something we can count (GDP growth). That willingness requires long-term thinking and changing the minds of the electorate.

Developing a society with real self-esteem and one that generates that sense of belonging and belief in a society rather than just the individual– the Big Society that also takes the burden away from a cash-strapped public sector – is a tough calculation. It requires a major political and economic transformation – throughout society. It won’t be done just by cajoling people to do more. It requires culture change on a massive scale – and a change to our politics and economics and social systems and structures.