Peter J Morgan
Peter J Morgan BE (Mech.), Dip. Teaching – professional forensic engineer, retired economics, mathematics and physics teacher
PART 8 of 18
New Zealand’s universities are responsible for much worse than screwing up the education of a few bank CEOs.
As an illustration of just how poorly our former Minister of Finance (and later Prime Minister) Bill English understood money, a letter in reply that I received from him states that it would be inflationary if the RBNZ created money ex-nihilo to gift to the government, but that it is not inflationary for the government to borrow the same amount from banks. That belief, of course, is nonsensical, as both the RBNZ and the banks create new money ex-nihilo when they make loans. Bill English seemed oblivious to the fact that banks create money ex-nihilo to lend to the central government and local governments, believing instead, falsely, that banks on-lend people’s savings! (The fallacious ‘loanable funds’ model.) Perhaps Bill English did not understand how banks create money ex-nihilo, and perhaps he didn’t actually read his letter because it was written by his minions in the Treasury, who were no doubt educated at a university and therefore didn’t understand.
When I drew the attention of the then Vice Chancellor of The University of Auckland to the fact that the ‘loanable funds’ nonsense was being taught at his university, he referred it to the head of the Business School, who referred it to the Head of Economics. The message that came back to me from the Vice Chancellor was “We’ve got academic freedom, so we can teach whatever we like.” or words to that effect. The Vice Chancellor made it clear to me that The University of Auckland would not be changing what it taught about what banks do.
Undaunted by the intransigence of the Vice Chancellor of The University of Auckland, I looked up the law under which universities operate – then the Education Act 1989. Since then, the Education and Training Act 2020 states much the same as the Education Act 1989. The 2020 Act states:
267 Academic freedom and institutional autonomy of institutions (other than Te Pakenga—New Zealand Institute of Skills and Technology)
(1) It is the intention of Parliament in enacting the provisions of this Act relating to universities and wananga that academic freedom and the autonomy of those institutions are preserved and enhanced.
(2) In exercising their academic freedom and autonomy, institutions must act in a manner that is consistent with—
(a) the need for institutions to maintain the highest ethical standards and the need to permit public scrutiny to ensure the maintenance of those standards; and
(b) the need for institutions to be accountable and make proper use of resources allocated to them.
(3) In performing their functions, the councils and chief executives of institutions, Ministers, and authorities and agencies of the Crown must act in all respects so as to give effect to the intention of Parliament as expressed in this section.
(4) In this section, academic freedom, in relation to an institution, means—
(a) the freedom of academic staff and students, within the law, to question and test received wisdom, to put forward new ideas, and to state controversial or unpopular opinions:
(b) the freedom of academic staff and students to engage in research:
(c) the freedom of the institution and its staff to regulate the subject matter of courses taught at the institution:
(d) the freedom of the institution and its staff to teach and assess students in the manner that they consider best promotes learning:
(e) the freedom of the institution through its chief executive to appoint its own staff.
In an email, I pointed out to the Vice Chancellor that Section 89 (c) the Education Act 1989 states that, in exercising their right to academic freedom, universities must at all times maintain the highest ethical standards. He ignored that, and simply repeated his original message that universities have got academic freedom, and therefore they can teach whatever they like. I for one expect more honourable behaviour from the leader of ‘my’ university. In my humble opinion, he should have been subject to public opprobrium, by both the student body and the public at large, for having such a disgraceful attitude to truth, and for having such scant regard for the law. A law that is supposed to constrain universities to maintaining the highest ethical standards. Yet he stood idly by, refusing to use the power he had to act to ensure that his university abided by the law, while a significant number of his students were deliberately misled academically, thereby bringing The University of Auckland into public disrepute and thereby devaluing the degrees of all of its graduates. The Vice Chancellor, IMHO, should have realised that he had a moral obligation as well as a statutory legal obligation to ensure that his students were taught the truth rather than the nonsensical “loanable funds” so-called ‘model’. I hope that when she reads this, his successor, Prof. Dawn Freshwater, makes amends by promptly doing what Stuart McCutcheon should have done.
Again undaunted, I wrote to the then Secretary for Education, Peter Hughes, who has since been promoted to become the State Services Commissioner. (In 2020 the State Services Commission was renamed the Public Services Commission.) Mr Hughes referred my letter to his deputy, who completely ignored the ethics question I had raised and responded that she did not have a problem with the university’s teaching. I again wrote to Mr Hughes, telling him that his deputy’s answer was unacceptable as it had completely ignored my accusation that the university is in breach of the Education Act 1989, but to this day the Secretary for Education has failed to respond.
Undaunted, I wrote to the then minister of education, Hekia Parata, who referred my letter to Steven Joyce, the then minister for tertiary education, who responded that he did not have a problem with what the university is teaching – ignoring the fact that The University of Auckland is knowingly teaching the fallacious nonsense of the ‘loanable funds’ model of banking, and is therefore in breach of the Education Act 1989. He added that he would not be taking any action. IMHO, Steven Joyce should be ashamed of himself. If the truth about money were taught at all schools and universities, perhaps Steven Joyce and his successors would become aware of it, too!
I can assure readers that the deliberate, unconscionable teaching of fallacious nonsense would not be tolerated in the Faculty of Engineering at The University of Auckland, from which I graduated in the 1960s! Engineering students would not accept such unethical behaviour by The University of Auckland and would revolt en masse!
