Is Higher Education the Golden Goose or a Dead Duck?

Dick Ohmann’s provocation on the contradictory messages being put out by politicians, corporations, and the media about the fiscal crisis of American education sent me back to a critique I’ve been drafting of conservative economist Richard Vedder on this issue. In the following, I’ve sketchily pasted together sections of that piece and modifications suggested by Dick’s notes.

Recent public debates on both the financial decline of American universities and the escalating costs and debts incurred by students have increasingly been framed by conservative scholars such as those surveyed by Jacques Steinberg in aNew York Times article, “Plan B: Skip College” (May 15, 2010).  These scholars’ arguments include the following: The economic benefits of public universities to both the public and to their graduates do not repay their costs to taxpayers.  Universities are inefficiently operated, and an excess of government-funded financial aid contributes to their fiscal irresponsibility. Too many Americans go to college who are unqualified, unmotivated, and thus likely to drop out before graduation; more should settle for vocational education. Employers often fetishize college degrees that may not be necessary for the level of work they supposedly certify.  Many students falsely consider college education an entitlement rather than a privilege that must be earned by financial and academic probity.  Arguments like these have an obvious appeal for taxpayers who might not have been able to afford college themselves and cannot understand why they should be subsidizing four years or more of cushy campus life for other people’s children.

A prime source of such arguments is Ohio University economist Richard Vedder, a Chronicle blogger and author of the 2004 book Going Broke by Degree: Why College Costs Too Much (published by American Enterprise Institute) as well as of several papers for conservative think tanks.  One paper summarized his study on higher education in Michigan for the Mackinac Center for Public Policy, which “calls into question a growth strategy based on expansion of higher education.  Indeed, other results included in the econometric estimation suggest that a better growth strategy would be to put the entire Michigan state government on a starvation diet in order to finance a reduction in the overall tax burden.  While higher education expenditures are not growth-inducing, the evidence shows that tax reductions are.”   Another paper published by this center is titled “Privatize the University of Michigan.”  Vedder’s “econometric estimations” are, of course, biased by his allegiance to Reaganomics and his and other conservative educators’ ideological and financial investments in school privatization and vouchers.

There are several points of convergence between views like Vedder’s and those of academic liberals or leftists.  On other points, I see a strange disconnect between the views of those on either the left or right and much widely-circulated information that contradicts them both, beginning with reports like Karin Fischer’s in The Chronicle (September 14, 2007) indicating that the US will “soon face an acute shortage of scientists and engineers, which could undermine the country’s global lead in trade and jeopardize its ability to compete.”  The Obama administration has recently been stressing the need to reverse these trends, as the Bush administration did before it.

I find this situation quite confusing.  Maybe leftists should now defend higher education on the the pragmatic grounds that they have long rejected—to argue that taxes spent in support of public higher education are one of the most profitable investments a society can make.  This was recognized in America for a century before the 1970s when public colleges and even graduate schools were available for little or no tuition.   Ever since the vast expansion of government spending on universities following World War II, they have been an essential motor of America’s economy.  (Indeed, leftists are inclined to deplore universities’ sell-out to the corporate economy, at the expense of education for critical citizenship.)  The return on tax-funded investment in public higher education is beyond measure in the undergraduate and graduate education of both employers and employees in virtually every industry and profession.  Government and the military, as well as private industry, are totally dependent on the research and policy analysis provided by faculties—again, a long-running cause for criticism by leftists against universities’ complicity in the military-industrial complex.

Tax-funded universities provide further profits to the private sector through purchasing equipment, supplies, construction, and utilities, and through campus revenue-producers like spectator sports, dining halls, dorms, stores, and hospitals.  In many communities, universities are the largest source of business profits, employment, and taxes through the money their students and employees spend.   Universities’ endowments and their employees’ pension funds are major sources for Wall-Street investments.   As individuals, most college graduates earn more, pay more taxes, and are healthier, better-informed citizens.  So even though many colleges are open to criticism—from both the right and left–for their shortcomings in educating undergraduates, in general the more college graduates there are, the better off local communities and the entire nation are. To put it another way, public universities in effect subsidize corporate profits, so corporations and wealthy individuals should be happy to pay higher taxes than they have in recent decades as minimal operating expenses that they recoup many times over. Recognition of the myriad benefits to society of public higher education lay behind its long-standing tuition-free status in European and other countries (even at elite universities like Oxford and Cambridge), to the extent of the Scandinavian countries paying university students a salary.

Not only do business, the professions, and government need college grads, but young Americans increasingly need a college degree to get a job at a middle-class level of income and benefits like health insurance and pensions.   Yet the financial burden of university education and research has steadily shifted since the 1960s from tax revenue to individual students faced with skyrocketing tuition and the replacement of financial aid like scholarships with high-interest loans that can take a lifetime to repay.

These lines of argument still seem largely valid to me, but now they have been called into question by both conservatives and leftists like Dick, who suggest that these arguments are no longer viable, if they ever were, and are perpetuated as a kind of lip service to placate all the interest groups in education or, worse yet, as a fraud covering up the grim economic realities that Dick outlines–a fraud particularly on the students who have indebted themselves for life in pursuit of worthless degrees.  Even so, I think it would be disastrous to the economy (even for corporations) for public higher education to be demolished–along with every other part of the public sector now being targeted by the right, including state-employee pensions—although this might just be a rationalization of the vested interest that even lefties have acquired in the subsidizing of universities.

A test case on these questions is the pressure created by the worldwide economic decline since 2008—and the longer-term effects of Reaganomic and Thatcherite policies—on other democracies that have felt obliged to follow the American model with rapid imposition of tuition, on a scale that has provoked student protests unimaginable in contemporary America. Will the United States’ and other countries’ capitulation to economic expediency prove in the long run to be cost-effective (in economic terms, regardless of the damage to a well-educated citizenry) or a case of killing the golden goose that higher education has proved to be worldwide?  This will perhaps be the ultimate test of the opposing ideologies of Keynesian versus Reaganite-Thatcherite economics, though it may also prove both of these models to be defunct—after which, who knows?   A Marxist prognosis, anyone?

By Donald Lazere

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