When we are all lawyers

Despite a large increase in the number of university graduates, economic productivity has barely budged. Expanding universities even further will not automatically grow the economy.

Here’s the way to make the nation more productive—send everyone to law school. Sounds strange, I know, but hear me out. 

The average university graduate is paid more than someone with only a high school qualification. According to economists, graduates are paid more because they are more productive. With increased funding, universities say they could produce more graduates, further increasing productivity and making all of us more prosperous. 

Here is where lawyers come in. Lawyers are among the highest-paid of all graduates. Following the accepted logic, lawyers must be more productive than lower-paid graduates. It follows that producing more lawyers would make Australia richer than graduating more biologists, welfare officers, or poets. In fact, if we were all lawyers, Australia would probably be the most productive country in the world.  

Sceptical? You should be.

First, if everyone in Australia worked as lawyers, who would pour our champagne, drive us to gallery openings, and unplug our drains? Second, if Australia were a nation of lawyers, there would be no one left to be a client. (Lawyers could keep busy suing one another, but this would not constitute what most non-lawyers consider productive work.) 

The absurdity should be obvious—we cannot make our country wealthier by sending everyone to law school because we also need other types of workers. There will never be enough valuable work for a nation of lawyers. What may be less obvious is the futility of producing endless numbers of lawyers also applies to graduates more broadly. It is impossible to create high-productivity jobs for every new university graduate without limits.

Practically all high-performing students already attend university, so expanding the number of students means admitting those who are less well-prepared academically. The Australian Productivity Commission notes that poorly-prepared students are likely to be less productive than better-prepared ones. Perhaps this is why productivity has barely budged over the past decade or more, even though the number of university graduates has skyrocketed.

Evidence from other countries confirms the lack of any simple relationship between the number of graduates and economic productivity. For example, Switzerland is a high-growth country, yet it invests less of its national wealth in higher education than Poland.  France, a developed country, invests less than Chile, a developing one. Hong Kong grew rich with a tiny university sector whereas Russia, a country with many excellent universities, has stagnated for years. The UK is home to some of the world’s leading universities, yet its economy is in wretched condition.

Perhaps the reason that increasing the number of graduates has not improved national productivity is that wages are a poor proxy for productivity.  In her book, Does Education Matter? Alison Wolf uses the example of bus drivers. According to Wolf, “…a bus driver—[is] a job found the world over and involving highly uniform skills. Yet … a bus driver in Germany is paid thirteen times as much as one in Kenya….”

If somehow, a group of Kenyan bus drivers manage to transfer to bus driving jobs in Germany, their wages would skyrocket. Does this mean that they would have suddenly become much more productive? Wolf asks, “Did something magical occur as they stepped across the border, endowing them with a whole new set of skills”? Or, as Wolf asks, are wages “a highly imperfect measure of an individual’s ‘productivity’?” 

Proponents of expanding higher education hold a simplistic view of the relationship between higher education and the economy—money put into universities is automatically transformed into increased economic productivity and greater prosperity. Universities will never be able to live up to this expectation because economic productivity depends on more than higher education. Productivity requires an entrepreneurial spirit, efficient transport links, capital accumulation, flexible work practices, business-friendly government policies and (probably) a temperate climate.  

A fulfilling career is part of a good life, and universities should certainly prepare students for the world of work. But higher education is—or should be—about a set of technical job skills. A higher education worthy of the name should prepare students to tackle the eternal dilemmas of human existence. What do we mean by fairness and justice? What do we value, and what can we live without? What are the duties of citizenship? 

If they are lucky, graduates will learn to discriminate doggerel from a poem, a jingle from a symphony, and science from mere superstition. And, if the higher education system is really working well, graduates will leave university with the ability to tell when an over-simplified and facile theory needs a lot more thought—such as the relationship between the number of university graduates and economic productivity, for example.   

Note. An earlier version of this article appeared in the Australian Financial Review.