Three good and bad arguments for tuition fees


7:21 pm - December 12th 2010

by Chris Dillow    


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The debate about tuition fees corroborates one of my prejudices – that in popular political debate, the arguments that are used are often weaker than the arguments that are not.

What I mean is that three arguments for higher fees are just nonsense:

1. “The nation can’t afford it.” But if taxpayers as a whole cannot afford to fund university tuition, then a subset of taxpayers can’t afford it either, especially as they will be paying higher interest rates than taxpayers generally.

2. “It’s unfair that students are subsidised by worse-off people who don’t go to university.” However, insofar as going to university raises your earnings, you pay back the cost through ordinary taxation. Someone who earns 20% more than median earnings will pay back the £27,000 cost of tuition within around 16 years. And those for whom the graduate premium is larger – very much larger in some cases – in effect subsidize those for whom it is smaller.

3. “Tuition fees will create a stronger market in universities, which will raise standards.” Charlie and Stefan are right – this is “manifest nonsense”. One overlooked reason for this is that where markets do raise standards, they do so not so much by increasing the quality of incumbent organizations, but by killing off inefficient ones and permitting more efficient firms to enter.

But it’s unlikely that this mechanism can work in higher education. There are humungous barriers to entry; would prospective students really want to stake their careers on an institution with no track record? And I suspect that, insofar as colleges or departments would close, the decision would be based upon political rather than academic or even commercial factors.

However, just because these arguments are weak, it does not follow that there are no good arguments for higher fees.
Here are three:

1. They are a backdoor tax on the rich. Insofar as graduates are richer than non-graduates, tuition fees are simply higher taxes on the well-off. Better still, insofar as being a graduate is correlated with having higher ability, tuition fees come close to being an optimal tax – something which raises revenue without reducing labour supply.

2. In deterring people from worse-off backgrounds from going to university, tuition fees will reduce social mobility. I say this is an argument for them because social mobility  is not obviously a good thing. As Michael Young pointed out, it leads to a grasping ambition which undermines social equality and community spirit. And even the tiny handful who are upwardly mobile don’t necessarily benefit. The dirty truth is that, for many working class kids, getting into university is a poisoned chalice. And even if such kids do well at university and become economically successful, they do so at huge cost in terms of isolation.

3. Fees might encourage the (re)creation of demand for trainees straight from school. This would increase youngsters’ options, and reverse the qualifications inflation we’ve had in recent years.
This argument, however, is a little inconsistent with (1) and (2).
I’m not sure if these three arguments are strong enough to overcome the intergenerational injustice of tuition fees. But they are, I suspect, stronger than the more widely-used ones.

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About the author
Chris Dillow is a regular contributor and former City economist, now an economics writer. He is also the author of The End of Politics: New Labour and the Folly of Managerialism. Also at: Stumbling and Mumbling
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Reader comments


I’ve been banging on about 1 (of the good ideas) to anyone who will listen. It is by far the most progressive cut that could have been made.

As for 3 of the bad ideas, you are quite right that the market will have to develop rather a lot more before some of the fat gets cut, but I have a feeling that disruptive technology is going to allow more rapid innovation in the higher education sector pretty soon. For example, I can download lectures from UC Berkley now and get many of the course materials provided for free on teacher websites. Soon someone is going to work out a way of credentialising this sort of activity. A market orientated higher ed sector will allow British universities to take advantage of that.

“The nation can’t afford it.”

But at the drop of a hat we can bail out Irish banks.

“It’s unfair that students are subsidised by worse-off people who don’t go to university.”

Funny that philosophy is just fine for lazy tory farmers who own most of the uk land mass and get subsidised by people living in tower blocks..

it depends on your ideological outlook (if indeed you even have one (looks at Lib Dems))

speaking as a Socialist, I don’t think there are any good arguments for tuiton fees, I think Education at any level is a Right and also a fantastic way to enrich society and boost social mobility, no fees, no graduate tax, fund it like the rest of education via general taxation, as for money, raise taxes on the super rich or big bussiness and stop them cheating the tax system, that would raise you more than enough to plug the defecit and to fund all of education.

Seems to me this tuition fee nonsense is really only about middle and upper classes paying a bit more – sorry, no big deal in my book. Those from my background will still get a fair deal.

I do however approve of their right to protest but that tolerance on my part does not stretch to damage on property or attacks on people. Every UK citizen has a right to travel in public safely. Some of those protesters are lucky the royal close protection officers didn’t open fire.

Full scale water cannon for the next lot who damage property or attack individuals.

“Full scale water cannon for the next lot who damage property or attack individuals.”

The smell of brownshirt in the morning.

Your “good” argument No.2 is a bit condescending, isn’t it? Poor old working class types don’t know what’s good for them, and they’ve got SUCH community spirit!

You don’t have to have grasping ambition to benefit from HE, just an interest and an aptitude. Surely this is another area where debate has been narrowly defined by the tories and hasn’t been countered? People do not go into HE solely for career benefits.

@ 5 Sally. Call it what you like, I call it respect for other people and their property.

8. Chaise Guevara

“In deterring people from worse-off backgrounds from going to university, tuition fees will reduce social mobility. I say this is an argument for them because social mobility is not obviously a good thing. As Michael Young pointed out, it leads to a grasping ambition which undermines social equality and community spirit. And even the tiny handful who are upwardly mobile don’t necessarily benefit. The dirty truth is that, for many working class kids, getting into university is a poisoned chalice. And even if such kids do well at university and become economically successful, they do so at huge cost in terms of isolation.”

I know! Why don’t we just officially separate people into Alphas, Betas and Gammas at birth? The Alphas can go to red-bricks, the Betas can go to former polys and the Gammas can go to McDonalds. That way everyone knows their place and nobody feel left out.

Lovely.

Some pretty good nuanced arguments from both sides by the OP. I think students should pay more because ‘ it is unfair that students are subsidised by worse-off people who don’t go to university. ‘ Just because people in tower blocks subsidise bone-idle Tory farmers does not make it right. Moreover, the most subsidised of the lot are the bone-idle French farmers who with their snoughts in the EU CAP trough put our lot to shame.

The optimal tax argument is a good one. However, we do not have optimal tax or we would have the height tax but also we would tax good looking people more than ugly people. And the ultimate optimal tax would be to tax females at a higher rate than males because they live longer. I think there is another argument that could be made and that is if students feel they are directly paying for their HE, then they will value it more. Only time will tell if students are discouraged from attending university. However, my prediction is that grades will improve because students will work harder through feeling that they are directly buying the degree.

Umm, that should be snouts.

The threat to use water cannon for crowd dispersal is a worrying indication of a deepening political malaise – popular respect for the democratic process is vanishing.

We’ve had recent posts here saying writers don’t believe any of the political parties represent their interests. If so, what options do they now have: to abstain in protest at the next general election or to seek redress by extra-Parliamentary means, including the streets?

The turnout at the May 2010 election was 65.1%. That was an improvement on 2001 and 2005 but it was still the third lowest turnout since 1945:
http://www.ukpolitical.info/Turnout45.htm

The stark evidence is that a significant proportion of the electorate feels alienated by the hitherto accepted means of political process. With the reneging by the two parties in the governing coalition on election pledges made at the May election only 7 months into government, it is likely this sense of alienation will intensify. Without popular consent, government is bound to fall back on repression.

Btw it’s worth reading/hearing Tim Harford on the tuition fee issues:

Why education fails the poor:
http://www.ft.com/cms/s/2/ee2e7014-00d1-11e0-aa29-00144feab49a.html#axzz17vvv6zM3

Podcast on: Degrees of Debt, on 10 December 2010
http://www.bbc.co.uk/podcasts/series/moreorless

And try this for a BBC report of the analysis by the IFS:
http://www.bbc.co.uk/news/education-11483638

“The threat to use water cannon for crowd dispersal is a worrying indication of a deepening political malaise – popular respect for the democratic process is vanishing”.

No. Popular tolerance of yobs and assorted trash being allowed to go on the rampage is vanishing. Try speaking to some ordinary people, not students and lefties.

That (2) in the “good” makes me blink, go a bit purple, and run for some tangerines to calm myself down.

I’m always wary of using personal experience as a way of talking about policy – isolated examples do not a point make (look at that blog post of yours from 2005!)

If everyone is equal in society, then social mobility is unneeded; that much is true. But we’re not living in such a society, and while we might want to change it so that the gap between rich and poor is smaller, perhaps even down to minimal or none, *at the moment* (and for the foreseeable future), social mobility is a good thing.

Now, I /don’t/ think that University is the correct vehicle through which to implement social mobility; community investment and early-years schooling is much better at getting children into a state whereby they can rise to a better position on the social ladder than their parents.

And yes, I do use the word ‘better’. Because that’s what it is. To counter your singular-example ‘being working class is great’ rhetoric, I’d like to put on the record that social-mobility-via-university, quite literally, saved this particular nipper’s life. I’m not sure what it’s like in the working class, but down here with the underclass, there is no community spirit. There’s a grasping ambition to destroy anyone different to yourself, widespread abuse, condemned housing and a school system that is uninspiring, to say the least. There is gang violence, knife and gun crime, my former neighbours, drugs everywhere, and no indication that there’s anything better.

I didn’t even know A-levels existed until a year after I was meant to be starting them.

University got me out of that sink-hole (although actually getting that far is more a testament to dumb luck than to my own intellect), but I think that the prospect of the student fees at the other end would have put me off. I didn’t fully realise how bad life as a member of the underclass was until I related some stories to some middle-class friends I gained while at uni, and that extra disincentive of piles of cash to repay, with no expectation of getting a graduate job post-degree (even after graduating in Science(tm) with a 2:1, I spent some time applying for jobs in the 12-5K range), would probably have put me off.

Whoops, rant.

Social mobility is a BAD thing? So are you saying that someone living in a welfare ghetto, who is striving to improve his lot in life, get educated, get a job, support his family and possibly even create some jobs where he came from (by starting a business there, for example) should just not bother, because his grasping ambition undermines community spirit? He should just accept his place in life, rely on the state to support him and generally spend 70+ years of his life being unproductive, never working, never trying?

Seems a strange argument to make…

“Try speaking to some ordinary people, not students and lefties.”

But I do – and I also look at the historically low turnouts of the electorate at the last three general elections.

As I’ve posted elsewhere, I was part of a student crowd in the autumn of 1956, protesting about the then government’s Suez policy, which was charged down by mounted police.

At the time, the crowd was described as “communist” etc by members of the government but it was President Eisenhower who brought a quick stop to the Suez invasion by threatening to withdraw support for Sterling in the foreign exchange markets. Eden, the PM at the time, retired on “health” grounds a few months later.

The documented facts are that the Conservatives have reneged on election promises made in May this year to protect frontline NHS healthcare services and the LibDems reneged on election pledges to oppose any increase in tuition fees. Citations available.

Is it any wonder that the two parties in the governing coalition have lost political credibility and respect? Significant parts of the electorate evidently feel that the traditional processes of democratic politics no longer funtion.

16. organic cheeseboard

Insofar as graduates are richer than non-graduates, tuition fees are simply higher taxes on the well-off.

well – yes – but they’re not at tax on all the well-off. They’re not even a tax on the richest, and most able to pay.

They’re a tax on a new generation who are likely to earn a fairly decent wage, but they save those who are currently fairly well-off from having to pay this ‘tax’.

Also, since the govt is going to have to borrow all the money to provide these loans, they’re not even really a tax that benefits the govt.

17. Luis Enrique

both arguments 2 are questionable imho

the first: if you decide to allocate 16 years of high earners’ taxes against paying for university, in order to say the poor are not subsidising university educations, who then is paying for the rich’s NHS and policing etc.? you merely shift the burden onto something else. It’s quite possible that paying for university education is regressive – and that it isn’t – I don’t think this argument settles is.

the second: well you could say the same in favour of only giving highly paid jobs to people with nice accents, not allowing anybody from a council estate to hold any white-collar job, and banning inter-class marriages. Chris I think your fondness for arguing ‘social mobility is bad’ just because you’ve found a few negative aspects to it, is one of your silliest.

“The dirty truth is that, for many working class kids, getting into university is a poisoned chalice. And even if such kids do well at university and become economically successful, they do so at huge cost in terms of isolation.”

No. This part is patronising and even incoherent, as pitting the ‘cost’ of isolation against economic gain is to indulge in a metaphorical equivalence rather than develop an argument about the measure of social value. Time to also re-read Hoggart’s ‘The Uses of Literacy’ perhaps?

Otherwise, there are some interesting points about whether the fee system could become a working alternative to a graduate tax, and which may yet become the least worst option for HE if the electorate will not accept increased central funding. But eliminating the block grant while tripling fees still amounts to vandalism.

These are all pretty bad as well.

An optimal way of taxing the wealthy is to tax wealth. If there’s a political problem with that, because the wealthy have disproportionate political power, then this is what needs to be overcome.

Why on earth would you want to tax ability in the first place? How would you measure it? You seem to be committing the same epistemological fallacy that puts university degrees at the top of a (quite unnecessary) hierarchy of attainments and contributes to the very phenomenon that seems to worry you (that everyone thinks they need a degree to get on).

No. 2 is as @18 said, patronising and incoherent. Furthermore, it appears to be an argument for the active maintenance of the UK’s class structure, rather than its erosion.

There’s nothing stopping a government getting cracking on No. 3, except political will. They could introduce a job guarantee scheme as well.

Couldn’t agree more with 18 & 19 ref. the deeply flawed reasoning behind parts of this analysis.

Too many people are still making the mistake of accepting the specious arguments “for”, but it isn’t going to help if we replace them with alternatives which are equally specious.

” “The nation can’t afford it.” But if taxpayers as a whole cannot afford to fund university tuition, then a subset of taxpayers can’t afford it either, especially as they will be paying higher interest rates than taxpayers generally.”

The only country in europe that spends a smaller percentage of GDP on higher education than we do is Hungary. If Greece and Ireland can afford it then so can we.

22. Luis Enrique

(Owen – read the link under optimal. it doesn’t mean what you think).

note there is a difference between confiscating existing wealth and introducing a rule that says “whatever wealth you accumulate in the future, we will tax it” – the latter clearly has an effect on the incentives to create wealth, hence sub-optimal. Optimal here means “doesn’t interfere with behaviour in an undesirable fashion”

I think every person who has graduated in the last, say, 40 years should be sent a letter inviting them to pay £27000 to cover the cost of their own tuition fees. If they think that is not acceptable, why should it be acceptable for future generations?

“I think every person who has graduated in the last, say, 40 years should be sent a letter inviting them to pay £27000 . . ”

Whew, that lets me out.

When I was a student at uni in the 1950s, less than 5 pc of young people went into higher education. Now, it’s over 40 pc.

25. Ken McKenzie

Chris,

A good summary, but I’m afraid pro-fees argument 3 is wishful thinking.

We need more jobs for people at that level, and *new* jobs, not downgrading current ones through some ill-defined method.

Employers have not chosen to employ graduates because of some nebulous, but politically-convenient coercion by Them Lefties. They employ graduates, when there are plenty of Level 3 educated people out of work, because they want graduates, and in a globalised workplace a minor inconvenience like the UK labour market committing suicide by not fulfilling express employer demand will only mean that they go to other EU countries to get *their* under-employed graduates instead.

It’s an irony that this country has probably just done more to help French graduates (currently the employees of choice for science businesses who can’t get UK grads to the right spec) than anything Sarkozy has managed in his tenure. And we all thought the Tories didn’t like Europe much.

It will do essentially nothing for underemployed level 3-educated UK citizens as it doesn’t create new jobs.

26. Luis Enrique

here are some pro-fees arguments. I’m not saying I believe them:

1. The tax payer currently pays for far too many students to do far too many useless degrees. There’s an argument for some level of arts and similar university education, but whatever the right level is, we’re way past it.
2. The standard of teaching at UK universities is dire and some pressure from paying customer might shake things up a bit.

I have some sympathy with both of these. To believe 1. you don’t have to believe arts degrees are actually useless, or take a too-narrow view of what counts as useful, you just have to believe that there are far better ways of spending 3 years and, perhaps, that an arts education mostly plays a signaling role with few benefits to society.

Here is an interesting idea about education – half way between the idea that it actually teaches you things, and that it’s about mere signaling. It’s about identity-formation.

n.b. just because I’ve written the above, doesn’t mean I’ve forgotten the anti-fees arguments.

27. organic cheeseboard

The tax payer currently pays for far too many students to do far too many useless degrees.

i still fail to see how a student doing a ‘useless’ arts/humanities degree who goes on to teach that subject at school is somehow less worth funding than a student who takes a science degree purely to get a job in the city.

Luis @22.

Ok, I checked the link. It didn’t persuade me to change my mind about the usage of ‘optimal’ I’m afraid. The author’s assumption that the wealthy are more productive by dint of being wealthy seems shaky to me (never mind whether taxes really do deter ‘effort’ etc.).

w/r/t to your comments @26

1. Prior to (slightly snide) value judgements about particular disciplines, there’s the question of whether one buys the argument that taxes fund any government expenditure at all, or whether tax revenue is money the government has /already spent/.

Of course, if we’re happy that the proposition that austerity plans have nothing whatsoever to do with ‘affordability’ – i.e. that governments are not like households and businesses in terms of their capacity to finance spending – then, yes, we left with the fact that choices about what to spend on are political and, as such, subject to value judgements. You’d need to actually present an argument as to why you think particular things are *useless* though.

2. “The standard of teaching at UK universities is dire”

Thanks.

“and some pressure from paying customer might shake things up a bit”

There are already fee paying students in many forms (postgraduates, international students, e.g.). This theory that they might magically make everything wonderful by being customers is not borne out, AFAICS. MAs didn’t suddenly get better, significant intakes of international postgrads doesn’t seem to have solved whatever problems there are. Maybe the problems, whatever they are, are something different; on which note…

You may be appalled to hear this, but the distinction you make between education and ‘signalling’ (how very mediated) reads like a right wing paraphrase of a distinction made by Ivan Illich between education and schooling. The difference being, of course, where the focus of critique is.

Best,
O

Argument 2 of the (allegedly) good arguments is spurious.

“And even the tiny handful who are upwardly mobile don’t necessarily benefit. The dirty truth is that, for many working class kids, getting into university is a poisoned chalice. And even if such kids do well at university and become economically successful, they do so at huge cost in terms of isolation.”

No right-minded person is suggesting that young people from working class backgrounds should go to University irrespecitve of their abilities. Rather, a bright young person from a working class background should have no less chance of a place at University than a bright young person from a middle or upper class background. If this were the case, then there is no reason to suppose that social isolation would loom large. And the causes of any such social isolation are to be challenged, not used to justify an entrenchment of inequality.

The discrepancies in qualities of schools make it hard enough for Universities to select students who have great potential and talent (rather than those who have had the fortune of excellent schooling, preparation, and advice on Ucas applications). It is already manifestly the case that a very bright young person who goes to a poorly performing school is less likely to get a place at a decent University than their peer at an Independent school (few Universities operate the kind of access schemes which take into account different grade averages at school). Massive financial disincentives will only make it more difficult.

@26.
” 2. The standard of teaching at UK universities is dire and some pressure from paying customer might shake things up a bit. ”

Two ways of shaking up teaching:
i. more staff, better staff-student ratios.
ii. training.

Both cost money. With major cuts to the teaching deficit, that money isn’t going to be forthcoming. And things being as they are, many dynamic and innovative university lecturers may well be thinking of leaving the UK – to some place in which HE is valued (I write as a lecturer in a Russell Group University myself).

21. George W. Potter

” The only country in europe that spends a smaller percentage of GDP on higher education than we do is Hungary. If Greece and Ireland can afford it then so can we.”

This is nonsense, George. I don’t know what figures you are using but the last couple of years GDP measures will not give an accurate picture because of falls in output and recession. For example, if GDP declines and tertiary education spending remains constant then it will look like that country are spending more on education even though they are in deep trouble.

In Europe only Norway, Sweden and Switzerland spend more in expenditure per student ( 2006 figures). Moreover, the UK was joint fastest growing in terms of expenditure with Austria in the OECD 2000-2006. Whatever problems there were in HE the notion that they were starved of funding is not borne out by the data.

http://www.oecd-ilibrary.org/docserver/download/fulltext/3010061ec071.pdf?expires=1292280888&id=0000&accname=freeContent&checksum=CAB34DEC36430E66D62B5F710658E8D5

Quote: “The countries with the highest proportion of GDP spent on higher education from public sources (taxes, primarily) are Canada, Denmark, Finland and Sweden (around 1.5%). Countries with the lowest proportion of GDP from public sources are Chile (0.25%), Korea (0.5%), Britain and Italy (0.6%). These figures are from 2007, and Britain since then has announced a massive reduction in public spending in higher education, which will depress further its placing in the OECD rankings for public expenditure on higher education.”
http://www.tonybates.ca/2010/09/09/international-comparisons-in-higher-education/

“The closer one reads the report, the more cautious one needs to be in drawing conclusions. There are wide variations in the organization and structure of higher education across these countries, data on some key indicators are missing for some countries, and we all know how reliable government statistics can be. Thus comparisons are invidious.”

You forgot to quote this bit, Bob. Using GDP is not a good measure and could lead to scenarios where it looked like Burkina Faso was a high spender on HE. The best measure is expenditure per student US dollars, 2006 constant prices and PPPs. Your post implies we are spending similar to Chile, Italy and Korea.

The reality in expenditure per student:

Britain $15,447
Italy $8,725
Korea $8,564
Chile $6,292

From your high spenders Finland was spending $12,845 and Denmark was spending $15,391 which were both below your apparent low spending UK.

That earlier link is not working so if you want to look at the data you will have to click through the OECD library.
http://www.oecd-ilibrary.org/content/serial/18147364

34. James from Durham

I don’t see how it is possible to argue that social mobility is a bad thing from any perspective other than a deeply conservative one. You can acknowledge that the path from one class to another will not be easy (in any direction!), but the idea that working class young people should “know their place” is just hackneyed.

In fact, even a moderate conservative could argue that a degree of mobility helps to ginger things up and encourage some (organic and gradualist) innovation.

“You don’t have to have grasping ambition to benefit from HE, just an interest and an aptitude. Surely this is another area where debate has been narrowly defined by the tories and hasn’t been countered? People do not go into HE solely for career benefits.”

I think this is completely right – there seems to be a consistent obscuring of what higher education is for. Of the benefits to young people outside of gaining specific knowledge towards a future job. This dimension of the debate cannot be quantified in regards to how university provides some future economic contribution, or a more skilled work force. It is a question about how people develop socially or psychologically and how this may benefit cohesion within society.

It is constantly posited as an unproblematic or even noble path for young people to take on ‘vocational’ courses, apprenticeships etc if they are not ‘conventionally’ academic. This shows a complete disregard for what the experience of university can be – not just careerism and boozing for 3 years but a politicization, a space to think one’s position in the world and society, the understanding of others and the prominence of charitable organization etc.

Im not saying that a mechanic doesn’t think all these things or is ignorant by not going to university. Also it doesn’t apply that all students become enlightened or politically awakened – this polemic is too stereotypical. It is just that going straight into a vocation or career is to go straight into a structure and a system without having a crucial time to figure out how you want to be involved in it. There are countless ways this awareness can become effective, seep out into the social fabric and perhaps improve our society, as opposed to maintaining this state of mediocrity.

(If i was a conspiracy theorist i would say that the political and business classes have no interest in university education outside of creating the next generation career ‘work’ force – the more people reflect and critically assess society and their position in it the more difficult it becomes to administer and regulate their lives, and the more this threatens their extremely comfortable positions at the top)


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Three good and bad arguments for tuition fees http://bit.ly/hJwTJV

  2. Jonathan Davis

    @b_utton Three good and bad arguments for tuition fees: http://bit.ly/hJwTJV (via @libcon, you should follow them if you aren't already!)

  3. Naadir Jeewa

    Reading: Three good and bad arguments for tuition fees: The debate about tuition fees corroborates one of my pre… http://bit.ly/e9hxIl

  4. sunny hundal

    @ssap9rulesok here you go: http://liberalconspiracy.org/2010/12/12/three-good-and-bad-arguments-for-tuition-fees/

  5. Left unity and the bid to oust Aaron Porter | Liberal Conspiracy

    […] embraces the violence on the streets, and not everyone supports ‘free’ education (as Chris Dillow points out, a graduate tax may be more […]

  6. Graham Reid

    Social mobility maybe not good thing? Potential increase in trainee vocational options? Yes to fee increase http://t.co/TYuTxmQ #studentfees

  7. shodan

    @stupidcooper Fees explained: http://bit.ly/g502Nk

  8. Separatist Street

    @Lisa_22 that is a common fallacy http://t.co/LB0oPrMo





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