We Need More Universities
Lyman Stone

Why assume a college education should be evaluated in market terms? If college, why not kindergarten? Why not have babies mortgage their diapers?

Universities are not work-placement training centers. Universities are centers of research where human knowledge is expanded. Nor is an undergraduate degree a certification of skill in a trade. It equips the student with mental capacity to assess and evaluate the world. It makes more learning possible.

In a world that changes ever faster, in which careers outlive the specialties they’re based on, higher education is obviously the best preparation. Why obviously? For three decades running, all wage growth has gone to the college-educated. Isn’t that evidence enough?

Some readers have been duped into thinking the rising cost of college is due to fancy facilities and government loans on easy terms. False. Consider the cost of day care or private high schools. They have also outpaced inflation for 30 years, and have no government support. The notion that loans and subsidies are driving college costs is a trope invented by the right to diminish support for public investment in college education.

So, why do college costs seem to rise inexorably?

First, because states have reduced their subsidies. As California for instance has spent more and more on prisons, it’s spent less and less on its universities, which have raised tuition commensurately. That story is repeated across the country.

Bear in mind that education is a service, not a factory. As such, it is not subject to economies of scale, outsourcing, or automation. Ceteris Paribus, as economists like to say, its costs rise with the price of labor. We should expect eductation costs to rise faster than inflation unless we expect professors’ salaries lose value in real terms. In a society of growing wealth, we should expect the share of that wealth devoted to education to increase over time.

Federal spending has been miserly, too. Pell grants for example once covered most of the cost of attending college, and now at $5000 or so are practically a joke. Federal support for research has been stingy. That has had more of a (negative) qualitative effect on who pursues academia than on tuitions per se. It has also led to a hollowing-out at state schools that compete with prestigious private schools for a diminishing pot of research money.

Less state and federal spending, by raising tuition at state schools and diminishing their research capacity, only make private colleges relatively more attractive. There’s less price competition (to the extent it exists), causing many students to swallow the “prestige pill” and opt for the fancier degree, with its cachet and social network.

The author assumes — contrary to the above evidence and absent any other — that merely increasing the number of institutions will drive down the cost of education. He does not correlate tuitions with wages, or subsidies, or even the number of institutions. He neglects real-world effects and known economic forces. He would wedge everything into a textbook economics 101 supply-and-demand model while ignoring the many caveats that render it irrelevant to the purpose. Except for that, it’s a pretty good piece of analysis.

Nations around the world are copying the higher education system the United States invented, reaping the benefits while we fritter away ours. Ideologues trapped in a market perspective adopt willing blindness to the documented advantages and potential of universal higher education. They ignore the intellectual returns, the benefits of social mobility and cohesion, the simple gain in human capital and capacity.

The path to making college cheaper is neither mysterious nor novel: taxation. Taxes pay for public amenities, and education is such an amenity. We can pay for it, or not. That choice will determine what kind of a country the future has in store for us.

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