Global Policy Forum

WTO's Attack on Public Education


By Yves Engler *

August 10, 2003
This week student organizations from around the world came together for a conference at the University of Montreal to discuss "globalization's" negative effects on post-secondary education. As a result, organizers are calling for an international student day of action on September 13th against the World Trade Organization's possible inclusion of education in the General Agreement on Trade in Services (GATS) negotiations. Students worry that if GATS negotiations include education, this could seriously imperil public post-secondary institutions.

If the WTO's "non-discriminatory" clause came into effect it could require governments to provide at least equal amounts of funding to private enterprises (universities) as is given to public entities, irrespective of tuition and housing rates that are levied at private institutions. This would seriously undermine public post-secondary education around the world, especially in those countries with decent public systems. While blocking any inclusion of education in WTO or Free Trade Area of the America negotiations is certainly a laudable objective, defenders of public post-secondary education need to broaden our analysis.

Capitalist globalization harms public post-secondary education in a myriad of ways. What is commonly termed "globalization" is actually the process of re-structuring the world economy in the interests of transnational corporations and international investors. It is being orchestrated through the ascendance of neo-liberal ideology. Neo-liberalism can be summarized as free trade and investment, privatizations or commercialization and a reduction in social spending (corporate subsides seem to be okay). Basically, neo-liberalism is an attack against social entitlements through the championing of capitalist entitlements and the capitalist marketplace.

All of which harms public PSE. Central to the process of corporate globalization are "free" trade agreements, which in a more honest world would be known as free investment agreements. Agreements such as the North American Free Trade Agreement (NAFTA), WTO and the proposed FTAA, reduce governments' ability to fund social programs. These agreements give corporations and their wealthy shareholders increased power to demand lower taxes to "compete" with lower-taxed regions. This reduces governments' ability to tax corporations and their wealthy shareholders, thwarting the necessary redirection of this money toward social spending.

According to a Financial Times editorial, "since 1996 the average corporate tax rate across the 15 nations of the European Union has declined from 39 per cent to just under 31.7 per cent. The story is similar among the 30 industrialized countries of the Organization for Economic Co-operation and Development, where the average tax rate has fallen from 37.5 to 30.8 per cent … The reason: Competition (FT May 2, 2003)"

Governments have entered a race to attract businesses by driving down the rates at which they levy tax on companies. Similarly, there has been a reduction in personal income taxes, disproportionately to the benefit of the wealthy. These reductions are sometimes justified with references to ideology but proponents also often claim they attract corporations whose ‘skilled' (high-paid employees) desire lower taxes. While the business friendly FT may praise a reduction in corporate taxation, the benefits to those of us not connected to the corporate world are less evident. In fact, a reduced tax base usually leads to a decline in spending on important social services like university funding.

According to Statistics Canada, between 1990 and 2000, government money as a percentage of the Post-Secondary Education (PSE) budget dropped from 69 per cent to 55 per cent. In the U.S., "state aid to public universities has been falling, now accounting for just 25% of the budget at the University of Wisconsin, 13% at the University of Virginia and a bare 10% at the University of Michigan." (April 18 2003, WSJ) Overall, "state aid accounted for 36% of university budgets nationwide in 2000, down from 46% in 1980." (April 18 2003, WSJ).

The effects of a decline in funding are many, but most importantly, at least from a student's (and probably societal) perspective, is a reduction in accessibility through rising tuition. Between 1992 and 2002 Canadian undergraduate arts tuition increased by 135%, approximately six times inflation. Today, adjusted for inflation, tuition and incidental fees are at their highest recorded level ever, and more than six times what they were in 1914. Families in the bottom quintile of Canadian wealth, for example, would have had to put aside 14% of their after-tax income in 1990/91 to pay the costs of university tuition and fees, but by 1998/99 they would need to devote 23%.

American students have been subjected to a similar assault. "The American Association of State Colleges and Universities, projects that, on average, tuitions at state schools will increase about 12.5% for in-state undergraduates" in 2003/04 in addition to an already sizable increase of 9.6% in 2002/03 (WSJ June 4 2003). According to the Reno Gazette, "The percentage of family income required nationwide for tuition at public colleges and universities has doubled since 1980. The amount of family income that went to pay for tuition at four-year public institutions increased from an average 13 percent in 1980 to 25 percent in 2000." In addition to increased tuition costs as a percentage of income, loans are dropping. "The average federal Pell Grant award given to financially strapped students going to a public four-year college or university covered 98 percent of tuition in 1986, but only 57 percent in 1999, the report said. State grant aid awards for both low-income and non-need-based students paid 75 percent of tuition in 1986 but only 64 percent in 1999. (Online Reno Gazette Journal 5/1/2002) Basically, poor and working class children in North America are being told that unless they have terrific grades or that they are willing to incur huge debts, university is not for them.

Around the world a similar pattern is developing. It would be wrong to attribute reductions in government spending on public post-secondary education and tuition increases solely to reduced tax bases brought about by government's need to "compete" for investment. Aside from promoting trade and investment agreements that weaken government's ability to tax corporations, neo-liberal ideology opposes social spending (of course military and road spending doesn't seem to count). At its core neo-liberalism is antagonistic to social entitlements, preferring capitalist entitlements.

Neo-liberal ideologues oppose the concept of people's universal right to post-secondary education. Similarly, dominant discourse today is that the individual who benefits from education should pay for it. In this conception of society, post-secondary education has little social value. PSE is only about getting a better corporate job not learning for the sake of it or bettering society. In addition, neo-liberalism claims that the private sector does a better job in providing services, post-secondary education included — privatization is central to neo-liberalism. After tuition increases, the replacement of government funding with private "donations" is one of the most obvious ways by which universities recoup lost public moneys. While some donors are alumni who earnestly care about their alma mater, in the majority of cases this money is coming from corporations and others with their own agenda. In Canada, around 20% of university financing now comes from private sources. U.S., public universities are even more reliant on private dollars. Some states are even considering completely eliminating state funding.

Where this leads is clear. The Wall Street Journal reports that "about one-fourth of university-based medical researchers receive funding from drug companies, ties that sometimes distort study results according to a review done by two researchers with industry connections of their own." (Jan 22 2003) Similarly, a recent report by a team of Canadian professors concluded that "drug firms compromise research." The National Post says "the contracts researchers sign with pharmaceutical companies routinely prevent the scientists from disclosing drug risks to patients and the public." Part of the rise of capitalist entitlement is the ubiquitous ‘privatizing of the commons' which at universities has occurred through a change to patent law and shift of focus towards research for business interests. Since the Reagan administration implemented the Bayh-Dole Act in 1980 the process of privatizing publicly funded university research has expanded multifold. This bill allowed universities to patent and profit from inventions discovered with public money. Prior to 1980 research conducted at universities was owned by the U.S. government and was generally held in the public domain. With the Bayh-Dole Act, however, what had belonged to the public became private.

The effects of this change go beyond simply allowing universities to profit from research. It's part of a process of shaping universities in the interests of the private sector. The commercialization of research pushes universities to focus on private profit instead of the public good. It's also intertwined with an ideology that demands an increase in funding for research at the cost of other aspects of the university. In 2000, universities were granted "3,273 patents; 269 were granted in 1979." Moreover, in 2000, American "universities collected $1.1 billion in royalties from [the] 13,000 patents they hold." (Boston Globe April 28, 2003) This increase in patent holdings is leading universities to spawn private corporations. According to the Wall Street Journal, "roughly two-thirds of the nation's academic institutions hold stock in start-up companies that sponsor research performed at the same institution." (Jan 22, 2003 WSJ) Canadian universities are also rapidly learning how to play the patent game. "In 2001, 27 Canadian universities generated $64.5 million US, an 82-per-cent increase [in patent royalties] over the previous year (Toronto Star May 22, 2003)."

The perceived benefits of "commercializing" universities are such that "the recent federal budget pledged $225 million a year for more staff and services aimed at bringing research to market. (Toronto Star, April 10, 2003)" This, even though commercializing research will realistically only ever add a relatively small portion to university budgets. It does, however, suit capitalist ideology quite nicely: The private market is supreme. The Canadian government's strategy for universities is to direct funding towards what is in the interests of the capitalist market. That is why "the total amount of research funding to universities reached $3.2 billion in 2001 — up one-third from two years earlier (Ottawa Citizen April 10, 2003).

Outside of Canada and the U.S. a similar process is being pursued. In 1999, France passed the Allegre law, which, like the Bayh-Dole Act, will increase the patenting of university-based research. It seeks to "create innovative technology companies and transfer public sector-funded research to industry." (Boston Globe) In other words, it emanates from the ideology that claims universities should operate as much as possible in the interests of capitalist enterprise. In addition to the shift of academic focus towards research that is profitable and away from other socially useful venues, some "say patents stifle innovation by fostering secrecy among academic peers, instead of promoting an exchange of ideas." (Boston Globe April 28, 2003) The Canadian Association of University Teachers explains that, "the commercialization of a product depends on patenting it. Patentability, in turn, depends on secrecy. Any public disclosure of a discovery derails the patent process and the new product's ultimate commercialization. From the market perspective, therefore, the tradition of open communication among scholars is a major threat." (September 30, 1999)

Research done collaboratively is usually more efficient. After all, two or a hundred heads are better than one. The research accomplished in the aftermath of the SARS (Severe Acute Respiratory Syndrome) scare, exemplifies the effectiveness of open research. According to Dr. David Heymann, Executive Director, World Health Organization Communicable Diseases programs, "the pace of SARS research has been astounding. … Because of an extraordinary collaboration among laboratories from countries around the world, we now know with certainty what causes SARS (16 April 2003)." In fact, it took less than two weeks to find the virus responsible for SARS. As a result of the scare, research norms were pushed aside and scientists around the world collaborated openly. The World Health Organization in March of 2003 asked 11 laboratories from around the world to participate in a collaborative research project on SARS diagnosis. Canadian researchers who knew each other only on a first name basis from a number of different institutes across the country worked at it together while in Singapore they created a SARS Clinical Consortium, comprised of 15 research institutes. Seth Shulman writing in Technology Review explains; "the success of a global research network in identifying the [SARS] pathogen is an example of the huge payoff that can result when researchers put aside visions of patents and glory for their individual laboratories and let their work behave more like, well, a virus. (August 2003)"

Another result of money being moved to areas that are more conducive to innovation (i.e. private profit) is that students become increasingly neglected. Economically and ideologically, universities are increasingly becoming institutions of research directed towards endeavors beneficial to private interests. David Robinson of the Canadian Association of University Teachers claims that, "in the current climate, research is weighted far more highly than teaching is, and it creates a culture where professors are rewarded for bringing in research and corporate funding." (Globe and Mail October 23, 2002) Students' ability to bring in "corporate funding" is limited. Thus, so is their value to both the academic community and governments. The numbers corroborate David Robinson's fear. "In the decade ending in the 2000/2001 school year, the operating grants collected by universities for every full-time student dropped from $8,607 to $6,991 in constant year-2000 dollars. Over the same stretch of time, federal research grants rose by $455 million a year, to $1.51-billion." (Globe and Mail October 23, 2002) Governments are choosing research funding over accessibility. American universities have pumped even greater sums into research simultaneous to increasing student costs. For example, while tuition costs are expected to increase by over 12% in 2003 the Dayton Business Journal reports that "universities and other non-profit organizations will increase R&D spending by about seven per cent to $18 billion." (January 3, 2003)

So, to sum up, there are three major components to neo-liberal globalization's assault on public post-secondary education: (1) A reduction in government tax bases due to trade and investment agreements that increase the power of corporations and investors to demand lower taxes thereby reducing public spending on education; (2) Neo-liberal ideology's antagonism towards social entitlements, PSE included, and its advocacy of capitalist entitlements and marketplace; (3) The institutionalization of the process of privatization through making post-secondary education a commodity in WTO or FTAA agreements. When we take to the streets in support of public post-secondary education on September 13 or in November while the FTAA ministers meet we should keep this in mind.

About the Author: Yves Engler is a member of the Concordia Student Union council and is currently working on a book about student activism at Concordia. This article was adapted from a chapter in the book.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.