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The Economics Underneath

Silvana Lakeman talks to UCD lecturer Vincent Hogan in an attempt to pierce the economic veil

With budget cuts, viagra increasing taxes, rising unemployment rates and decreasing access to education, for many in Ireland it is easy to get caught up in the hype generated by our government and other smaller governing bodies, even those such as our Student Union. Often, the more we pay attention, the more we are subjected to political speech and endless numbers. In light of this, an important question for students is how can we look behind this front and make sense of the economic downturn as on a personal level, and how can we make the most of what we are given.
The students coming through university today are not the same as those in previous years. We’re no longer the children of the Celtic Tiger, we’re those who were too young to cash in on the boom at the time, and we are now working our way through college in very uncertain economic circumstances. It is sadly very common these days to know of someone who has been refused a grant, is working ridiculous hours to get by, or has had to drop out of college altogether. It’s all too real these days for many of us, which is why I decided to get the opinion of one of UCD’s very own economists on the matter, Vincent Hogan.
In early October last year, the Irish Examiner printed an article which stated that the ‘recovery’ we hear of from our politicians as regards the downturn is non-existent, and just a story spouted by TD’s to keep the morale of the Irish public high and compliant to demands made by the government such as the continuously increasing taxes we face. According to Hogan, the main idea of the Government when entering into the bailout when it started was that although the domestic economy wouldn’t do well, the rest of Europe would hopefully have rapid growth, which would then lead to growth in Ireland. In terms of any truth to the ‘recovery’ rumors, ‘there are some definite slight improvements in the Irish economy. Firstly it has stopped getting worse and come to a standstill of sorts. Mr Hogan points to exports at home as one of the few bright sparks that hint at recovery, however ‘even though they are doing very well, investments in other areas aren’t doing well enough for exports to offset everything else.’
When we talk about ‘exports’, the sectors that we are talking about include anything to do with international finance and business, pharmaceuticals, engineering and information technology. The activity in these areas means that studying within them at university could lead to a career in an area that is still seeing great growth in Ireland, as opposed to the standstill seen in the civil service sector. However, Hogan also pointed out what we’ve all been told before – that it is still important to pursue a degree in something you enjoy and excel in. ‘Good graduates will always have better luck at getting jobs, I still write plenty of job references for students all the time, so I think the big thing is to study what you like, because if you have a first class honors in a bachelor degree, even in something like Greek and Roman civilization or Hebrew, that is going to look better to employers than mediocre grades in something like economics.’
The important thing as a student is to be positive, and not let your career decisions be influenced by the current state of the economy. Students have never been completely financially independent, as while we can have more control over our money and the direction we choose to go in, we are still dependent on others for a leg up at this point. ‘From straightforward economic prospects, employers are not g

oing to be hiring many people anytime soon,’ said Hogan. ‘There will be jobs, but it’s more a question of will there be enough for those who want them, which is no.’ Hogan highlighted that in regards to the 87 000 people leaving Ireland every year, students need to make their own decisions in relation to study options and what comes after they leave the education system. This, he says, has always been the case, regardless of how the economy is doing. In relation to our job prospects here in Ireland however, ‘there is and will be for a while very high unemployment, you can’t escape that the Irish economy is generating less jobs than there are people seeking jobs. The ECB and its choices will ultimately dictate our opportunities, as well as recovery in the rest of Europe. There are a lot of ifs right now.’
For the average student paying their way through college, at least partially by their own means such as through a part time job (if they are lucky enough to have one) an increase every year of two-hundred and fifty euro in fees is a huge amount of money to have to come up with. Since I started here at UCD, fees have gone up drastically; however in the coming years, new students will pay much more than I to graduate. The big question I had for Professor Hogan was whether he thought increasing fees without either introducing a loan scheme or simultaneously increasing the number of grants issued each year (as opposed to the reduction we’ve seen since the last budget) was the best decision economically for our government, and if our current system is a sustainable one? ‘Yes and no. The budget constraint is very tight, and there’s no vested interest group in Ireland that would choose to put money into third level education as it stands. The big question economically for the government is would it be better to give students the money, or to someone else? Because someone has to lose out, and the truth of it is that no one really cares about students to be honest! Not at a time like this.’
Taking a look at how Ireland currently manages its tertiary system, we seem to hover between a few different methods in place around the world. Many believe the student loan system in place in countries such as Australia is what we should model ours on, whereas other countries such as the United States have very high fees, yet provide enormous grants to allow those who deserve to be in college to keep their place there. Hogan pointed out that ‘comparing a college such as Harvard (where the fees currently stand at $57, 950 for a US citizen) to those we have in Ireland, fees are relatively low here with a high implicit subsidy, whereas many of those students at Harvard would not be able to afford to go there unless the government paid for them. In Ireland, because everyone is subsidized, you then get problems because the poorest still won’t be able to afford the subsidized fees, but those who benefit from the current system aren’t going to object.’
In an ideal world, most would agree that we would have a system in place where those who deserve to be in university are able to attend irregardless of income or socio-economic background. The idea of a loan scheme is that someone who earns a place in university but cannot afford it outright can borrow money, to be paid back post-degree and in installments, at a time when their income is above a certain level. However at a time when there is really no money to be spared, it does not appear likely that such a system will be implemented anytime soon. The topic has been on the table for a while, however, so only time will tell whether we see the introduction of such a system in the future. ‘Ireland might think of starting a loan scheme,’ said Hogan, as ‘there’s always been small-talk of it. It may occur before the end of the downturn but it’s all very up in the air.’

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