Research and Deflation
Adjusting to a new research environment
1/ Over the past several weeks I’ve been monitoring the fallout from Australia’s National Tertiary Education Union, the collapse of their Jobs Protection Framework, and job cuts at RMIT University, La Trobe University, Deakin University and other universities. I’ve also been reading a mix of books on MBA economics and the background debates to the Alt-Right’s emergence.
2/ In my PhD, I also considered as a backdrop the end of the 1986-91 speculative boom in Japan’s economy and the onset of the ‘lost decades’ of financial austerity and deflation. The latter seems to be occurring again in a COVID-19 pandemic context and means that conventional economic thinking is being up-ended. Previously fringe ideas such as Modern Monetary Theory are now coming to the fore in economic debates. Alt-Right ideas concerning the eugenics of intelligence and social stratification are starting to diffuse from a fringe political subculture into mainstream thinking. The result is a very different environment in which to conduct my emerging research program.
3/ One significant driver of the unfolding job cuts at Australian universities is the loss of international student income due to COVID-19 travel restrictions and the closure of Australia’s border to international travellers. This international student income has cross-subsidised Australian researchers along with competitive grant income. The loss of both of these income types means that much of the current research is both difficult to do (such as data collection in a COVID-19 economy) and is a challenge to fund. Whilst research consulting and philanthropic donations are other potential income sources the volatility of the COVID-19 economy means that they are also uncertain.
4/ What researchers now face is a perfect storm of cultural, economic, and political influences that challenges their ability to fund and to undertake research. Alt-Right proponents following Mencius Moldbug have labelled universities as part of the Cathedral technostructure that to them is ideological and needs to be destroyed. Conservative and neoreactionary thinkers in United States and Australian political parties have lobbied for cuts to university funding. For example, the governing Liberal and National Party coalition in Australia has changed its JobSeeker package three times in order to ensure that Australian university staff are ineligible for wage subsidies.
5/ Another significant factor in this perfect storm is the failure of many researchers to understand their research in terms of its intellectual property strategy. For example, researchers (including myself) have routinely signed over the intellectual property rights of their journal articles to international publishers, who on-sell the resulting publications to universities and to the general public. This means that Australian researchers do not get the same revenue generation opportunities as in commercial book and music publishing, where royalty income is collected. This is a systemic failure of the international university system to effectively bargain for its value creation rights.
6/ The result of this perfect storm and its confluence factors is that significant parts of research activity are not economically viable to do. That is, they are ‘negative sum’: you lose money, time, and opportunity cost by carrying them out. This is why in Australia international student income has been needed in the absence of declining government income and the non-existence of commercial value capture to cross-subsidise research activity. This is also a deeper and more systemic problem than the Alt-Right’s attacks on arts degrees, and gender-based research in particular. What is urgently needed are new valuation models and value capture processes for university research.
7/ The emergence over the past decade of a ‘lost decades’'-like deflationary environment has several implications for university research. One example of this is the popularity in the COVID-19 pandemic economy of the video-conferencing software Zoom. In various forms this technology has been around for a decade but it has not been used as much until the COVID-19 pandemic challenged the institutional norms and practices around how university research (and administration services) are conducted. Zoom does not solve everything and leads to secondary problems, from fatigue to security breaches. It is however an example of how the future environment is already in part with us if we are willing to challenge and to rethink the institutional norms and practices under which we work.
8/ A significant aspect of the deflationary environment is the dramatic fall in the cost structure of research. Previously, this was funded in universities either by competitive grants for individual and small, collaborative research teams, or by the institutional infrastructure of Centres and Institutes where the majority of intensive research activity was conducted. Innovations like Zoom video-conferencing, working from home, and cloud storage now means that it is possible to set-up the virtual infrastructure for a research Centre or Institute without the prohibitive cost structure of traditional infrastructures. A ‘weak signal’ of this is the use of Substack newsletters, WordPress blogs, and Twitter social media accounts by independent researchers to document and to promote their research activity outside the far more expensive infrastructure and hierarchical power structures of some universities.
9/ The deflationary environment is leading to a dramatic re-pricing of the cost structure of research activity. In the short-term the loss of international student income and other income sources could mean job losses for some university researchers. The COVID-19 pandemic has also halted some government sponsored research and commercial research contracts due to the economic and political uncertainties that are involved. In a recent Twitter debate the Australian National University’s Associate Professor Inger Mewburn forecasted that COVID-19 is likely to impact the Australian job market for Early Career Researchers (the first 5 years after PhD conferral) for the next three years. The ‘spill and fill’' job cuts at Australian universities above will also affect a generation of researchers. This will lead to a freeze in Australia’s innovation potential and its macroeconomic growth.
10/ The consequences of this will be further economic and social stratification for Australian researcher careers. Some researchers will adapt to the COVID-19 pandemic environment with a focused research program that still enables data collection ‘'at a distance’' via Zoom interviews instead of international travel. They may write-up research that was conducted prior to the COVID-19 pandemic that will position them well for a post-COVID-19 world. The institutional infrastructure of university-based research Centres and Institutes may provide such researchers with a buffer against COVID-19 uncertainties. Other researchers may face career breaks due to COVID-19 employment and may need to rely on funders to take this into account about their track record relative to opportunity. The result of this will be a bifurcation of Australian researchers that will have long-term economic impacts.