March 19th 2020 - Alex Usher
Morning all. Coronavirus again today, but I think my coverage of it is going to slow down. The situation is settling down a bit and it doesn’t look like we are going to have avalanches of new decisions or anything to analyse. If you want to follow the various states of institutional closure (who still has cafeteria service, which ones have travel restrictions, etc.,  keep checking in with Ken Steele , who seems to have this covered reasonably comprehensively. But I suspect that at this point, variation between schools is largely just a matter of timing caused by different initial levels of institutional disaster planning. For any given issue, find the institution with the most extreme, comprehensive response and everyone will be there in a week or sooner. I’ll probably still do one piece a week on it, and if something big happens I’ll return to the subject, but I think we’re pretty close to the new normal and we might as well try to get on with our jobs/lives. 

Anyways, today I want to talk about what a postcorona world looks like for Canadian higher education. And I don’t mean “immediate postcorona”, as in what happens when everyone re-opens because that depends on the specific timing of the re-opening (the difference between August and October is a pretty big one and I don’t think we can rule out January as a re-opening date). But look at the big picture, one-to-five years after Coronavirus, and what do we see?

To some extent the answer depends on how long the state of emergency lasts. Obviously, we don’t have any real-time economic data but it’s almost certain that we tipped into recession last week, and that the economic contraction about to hit us might be bigger than anything since the 1930s. If it’s short and we can avoid a wave of bankruptcies, we’ll bounce back reasonably quickly. If it’s long, then it’s hard to predict what happens because no one has any idea how long a government can prop up businesses (and hence wages) in the face of a supply shock that lasts months. But let’s assume for the moment that we are looking at a double-digit contraction of the economy (say 15%) from March to June, followed by a rebound that brings GDP up to previous levels within about a year. 
First, I suspect international student mobility may not snap back to where it was this year. In the short term, there may be measures restricting international travel, which will remain in effect even as the domestic lockdown unwinds. In the medium term, it really depends how quickly Canada’s economy rebounds. Remember: part of the appeal of Canada as a study destination is that it is a great potential immigration destination as well. If North America sinks while Asia rebounds sharply, my guess is our appeal diminishes. Put it this way: I wouldn’t count on international student income bouncing back to current levels for several years.

Second, I think it is safe to assume that provincial governments will be cutting back on public spending for several years after the crisis. Right now, federal debt stands equivalent to about 35% of GDP. Based on what we are seeing in Europe and the US in terms of packages, my guess is that federal debt will eventually double (yesterday’s $25B was a band-aid, the package will get bigger over time). Provincially, the effect will be similar, I think (though it’s not yet clear how much federal spending will act to reduce pressure on provincial budgets). Now on its own this is not a big deal: governments are borrowing at as close to zero interest as makes no odds. But the underlying logic of our long-term economic position remains the same:  we have some long-term demographic issues which are manageable in and of themselves but which are leading provinces into a very bad long-term position  (especially Manitoba and Newfoundland). The current crisis will exacerbate this problem enormously and it will lead provinces to be parsimonious. Now, maybe it speeds up a major fiscal re-balancing between feds and provinces which will obviate the problem, but my guess is that will take time. In the 2-5 year horizon, you have to think governments will be trying to minimize deficits and run surpluses to the furthest extent possible, and our very well-financed higher education systems are going to look like juicy targets, much as they have the last few months in Alberta. 

Now, wait a minute, you say.   Surely  after a moment like this, when the fragility of advanced capitalism is shown to all, isn’t that a moment when governments would spend more? Pull higher education back from the evils of marketization, back to the New Deal/postwar consensus, yay public sector, etc.? Well, sort of. Without delving too far into the realm of speculation, I think what this episode teaches us is that advanced capitalism may be good at a lot of things, but you need governments to deal with fragility and resilience. That might well mean a larger role for government, and probably a larger share of GDP staying in government hands, but there’s absolutely nothing to say they are going to sink any of that money into higher education. They may have other priorities (if you thought higher education was fighting a losing battle against health care for scarce dollars before….let’s just say I don’t envy the job my colleagues in government relations are going to have over the next few years.)

Third, at the same time as institutions face lower incomes, the likelihood is that they are going to see higher costs in some areas, particularly information technology and the ability to deliver education remotely. Partly that will be out of an abundance of caution re: a reoccurrence of the virus and the need to provide remote teaching again on short notice, but partly, I think, because people will realize that some forms of online education –  when done properly  – is flexible, valuable and practical and will want to more of it. That’s not to say that there will necessary be a lot of demand for online education, at least at the undergraduate level (after months of being cooped up, one suspects that the very last thing most will want to do will be to spend more time in their rooms in front of a screen), but a lot more graduate/professional education might move in this direction, if for no other reason than profs actually find it more convenient. All of which would leave less money for other priorities.

How might institutions react to these income shocks? Well, I sincerely doubt they’re going to be able to take the classic route of trying to raise revenue to compensate. Domestic students and their families are going to be tapped out and international students might not be coming back (they too, may be tapped out). My guess is that we are talking about leaner institutions – which means lower pay, lower headcounts or some combination of the two. It’s interesting that pre-crisis, Alberta institutions in financial distress were heading pretty much entirely for the lower headcount strategy. But I wonder if post-crisis, there might not be a spirit of making collective sacrifices to keep employment levels high.
If that’s too much doom and gloom for you, there is one potentially quite interesting positive outcome. For as long as it as least a possibility that institutions may not re-open for September in-person classes, there will have to be a lot of planning for remote instruction and – to put it mildly – students are going to expect a higher-caliber experience that what they are currently getting in the whole scramble-to-finish the semester thing going on right now. And at the very least that means the entire professoriate, not just here in Canada but worldwide, is going to have to take the notion of pedagogy seriously. We’re going to have hundreds of thousands of professors simultaneously noodling over how the delivery of content affects learning. After several decades where research has taken absolute primacy over teaching, this will be a novel and I hope a positive experience, one that might just have us re-thinking professional and institutional priorities in a very profound way (albeit probably not in biosciences).

That’s all I’ve got for now. Next week, I’ll try to revert to my usual role of being the entertainment wing of Canada’s higher education sector and write about less relentlessly awful topics (suggestions welcome). 

Stay safe, everyone.