AUTISTIC NUMBER-CRUNCHING.  Cold Spring Shops has long questioned the statistical inference and policy prescriptions of Richard Vedder and his mis-named Center for College Affordability and Productivity.  He's still active, and still offering suggestions, the most recent being an analysis of the cost savings at the University of Texas at Austin if each Texas professor did the work of the average professor.  It is like averaging one horse and one rabbit.  U.S. v. Borden Co., 370 U.S. 460 (1962).

Chris Lawrence at Outside the Beltway recommends a more detailed investigation.

Texas A&M University-College Station political science professor Joseph Daniel Ura takes a look at the numbers underlying Ohio University economics professor Richard Vedder’s WSJ op-ed on faculty productivity at the University of Texas’ flagship campus in Austin (discussed earlier today at OTB by James Joyner here), and finds the analysis to be deeply flawed on a number of dimensions:

The [Center for College Affordability and Productivity] report is technically accurate but substantively misleading. In particular, the CCAP provides a muddled picture of teaching at UT by describing the distribution of teaching duties for the university’s entire faculty together, lumping together data on full-time faculty with data on part-time faculty and data from graduate colleges and programs with data from colleges and programs that mainly serve undergraduates. As a result, the CCAP report creates a false impression of inequity in the assignment of teaching duties at UT and overstates the feasibility of reducing faculty costs without undermining the quality of UT’s academic programs.

That's what generally happens when you average one horse and one rabbit. Perhaps there's a less sympathetic interpretation for what Professor Vedder is doing than the one Professor Lawrence offers.

The sad irony of this whole issue is that Vedder, as a tenured faculty member at a research-oriented university, should know better than to produce a slipshod report, but apparently is so blinded by his animus toward his own university’s redirection away from a teaching-oriented mission over the past decades to that of an emerging research university—the sort of redirection that is necessary to attract and retain world-class faculty in this day and age—that he is willing to undermine his own broader argument about the prioritization of minor, incremental research over teaching (which, like James, I share some sympathy with) by advancing a weak analysis that is an easy target for criticism from within the ivory tower.

Or perhaps Ohio's change in emphasis meant less recognition for autistic number-crunching in archival journals?

IS THIS HOW CONSENSUS EMERGES?

Let's start with research by Dennis Epple, et. al.

We develop a new general equilibrium model of the market for higher education that captures the coexistence of public and private universities, the large degree of quality differentiation among them, and the tuition and admission policies that emerge from their competition for students. We use the model to examine the consequences of federal and state aid policies. We show that private colleges game the federal financial aid system, strategically increasing tuition to increase student aid, and using the proceeds to spend more on educational resources and to compete for high-ability students. Increases in federal aid have modest effects in increasing college attendance, with nearly half of the increased federal aid offset by reduced institutional aid and increased university educational expenditures. A reduction in state subsidies coupled with increases in tuition at public schools substantially reduces attendance at those universities, with mainly poor students exiting, and with only moderate switching into private colleges.

The paper is among the stack of projects to take on during the semester.  It's already being hailed at Phi Beta Cons as support for an assertion William Bennett made three decades ago.  Third party payments make price discovery noisy (what was that P. J. O'Rourke wisecrack about healthcare being even more expensive when it's free?), and it's a proposition usually well-understood by economists.  Hence Richard Vedder, in a guest appearance at The Washington Monthly.

The increased demand for higher education in recent decades partly results from the explosive growth of [government grants and loans]. They were originally intended to help poor people gain access to college, yet they have probably had the opposite effect, pushing up the sticker prices of colleges substantially. The easy money has helped fuel an academic arms race that provides amenities such as climbing walls and luxury student centers that entice kids from higher-income families but scare poor students away. The proportion of recent college graduates from low-income backgrounds has fallen since the federal student-assistance programs became large.

Yes, and a lot of that loan money might have gone into stereos and other amenities, that is, if it didn't get creamed off for debt service on climbing walls and five-star residence halls.

BUSINESS AS USUAL IS INADEQUATE.

I continue to catch up on material racked from years ago.  There's still a lot of work to be done, as in some cases, not much has changed for the better.

Here's a series of posts that I flagged nearly eight years ago about the ways higher education has broken the social contract with normal Americans, and the ways in which the powers that be were insisting on going on with business as usual.  Here's an Inside Higher Ed column from January, 2008, in which higher education's trade association responds to a report by the Spellings Commission (properly the Commission on the Future of Higher Education), an attempt by the Bush administration to understand and perhaps change the ways in which higher education does things.  At best, the trade association concedes, there might be a few things to do differently.

Many faculty members and college leaders have complained that their efforts to do so have been unfairly ignored and that the critics have promoted oversimplified and potentially destructive approaches to measure and report learning outcomes, such as an overemphasis on standardized tests. But many higher education groups have also acknowledged, sometimes grudgingly, that the external pressure has propelled their efforts in useful ways.

Since then, commission chairwoman Margaret Spellings has been named president of the University of North Carolina system.  (That's not sitting well with the usual suspects.)  It's going to take more than standardized tests to fix higher education, as the recent temper tantrums from the cry-bullies is demonstrating.

Also in January of that year, former Secretary of Education and then-Senator Lamar Alexander called out the higher education establishment for not telling their story properly.

Alexander said colleges have themselves to blame, in large part, for what he called the "communications gap" that leads his colleagues to some mistaken assumptions -- and in turn some flawed policy conclusions -- about American higher education.

"Congress simply doesn't understand the importance of autonomy, excellence and choice" in higher education, "and the higher education community hasn't bothered to explain it in plain English to members who need to hear it and understand it," Alexander said.

It is also not well understood, he said, that "a primary reason that tuition has been rising is that state funding has been flat."

College leaders need to do a better job explaining to members of Congress some of the ways they are working to "be more efficient and spend money wisely," andhow they are rewarding innovation and educating students. "You should also talk about the importance of autonomy in higher education. Say, 'Mr. Congressman, we shouldn't have to fill out five boxes of regulations in order to qualify for federal loans.' "

It's not that lawmakers are wrong to impose scrutiny on colleges, the senator said. "When you've got Congress telling colleges how to spend their endowments, and trying to federalize the accreditation system, something's wrong," he said. "What is not wrong is that Congress is asking questions about how they spend tens of billions of dollars.... How would you like to come up here as a member of Congress, appropriate billions and billions [to colleges and universities in financial aid and research grants], and then have the higher education community say, 'Don't ask any questions about it'?"

Particularly when the higher education community has been enabling the cry-bullies, and otherwise sticking its fingers in the eyes of normal Americans.  And longtime critic, if from the inside, and economist Richard Vedder warned the mandarins to stop pretending business as usual was sustainable.

"You've got to pay attention to transparency, or Senator Alexander's admonition will come true -- the government people will get on your backs, and you don't want that," he said. "If you adhere to the spirit of the Spellings Commission's report, you can avoid truly disastrous forms of intervention. I'm on your side -- I'm one of you."

Among the Perpetually Aggrieved, the appointment by a Republican governor and legislature in North Carolina of Margaret Spellings is precisely that kind of "disastrous intervention." To my mind, it's a desirable corrective, and probably self-inflicted.

At the time, the overpriced Ivies were dipping into their endowments in a ploy to appear more inclusive. Richard Vedder suggested that was a start, but not a substantive start.

It's clear that the new financial aid plans offered by Harvard and Yale will put even more pressure on similarly ranked schools -- both private, such as Princeton, and public, such as the University of Michigan or the University of Virginia -- to match them. Some of these schools have healthy endowments and are well-positioned to do so, while others might not be able to keep up in the financial aid arms race. But increasing financial aid alone won't deal with the fundamental problems of a costly and relatively inefficient higher education system. In the end, all Harvard and Yale have done is to make some nice, symbolic moves.

Nearly eight years on, the rot continues, with the recent emergence of the crybullies.

RICHARD VEDDER WENT THERE.

The people running higher education often serve as court intellectuals for Democrats, which means they must think in terms of continued quarantines and bailouts with public money, rather than making any sort of public commitment to operating safely in the presence of coronavirus.

Because public moneys are involved, public participation in any such relief includes structuring such bailouts in such a way that there will be public support.  Thus, Ohio University's Richard Vedder, emeritus in economics, offers "Six Ways to Keep American Universities Alive."  Most of it is standard stuff, but there's this.  "Tell faculty: we have lowered research expectations from you—one less annual article in the Journal of Last Resort is acceptable. But you may have more classes on teaching days."  There's also this.  "Many schools should close—they are losing their appeal and often offer mediocre quality."

But he might be the moderate.  "For far too long, American higher education has exploited the hopes of students and their families, as well as the goodwill of legislators and the American public."  Yes, badly.  But it's cathartic to read a proposal that includes, "Remedial courses—that is, pre-college-level courses offered by a college or university—should not count toward an academic degree or for college credit. No college that awards credit for remedial courses should be eligible for bailout funds."  That recommendation might also recognize that there is a new Cold War coming.  "Colleges and universities may only receive bailout funds if they receive no more than 20% of their tuition revenues from international students; if they receive no more than 5% of their tuition revenues from students from any one foreign country; if no more than 5% of their undergraduate students are foreigners; and if 35% of graduate students in each department are American citizens."

I'm not sure whether the proposal is serious, or a Trumpian Art of the Deal opening position.

Colleges and universities that object to these conditions will, of course, be free to go their own way. They will be free to employ superfluous administrators and free to enforce political conformity in the place of real education. They will remain free to suppress intellectual freedom by way of “diversity statements,” and to pose ideological litmus tests for faculty appointments. They will be free to tolerate, as they do now, student mobs that threaten or commit violence to prevent the expression on campus of views they dislike. They will be free to teach students to hate America and free to admit and provide financial aid to illegal aliens. They will be free to call for “sustainability,” by which they mean the government takeover of the American economy in the name of the environment. They will be free to pretend that courses in remedial composition and algebra deserve college credit. They will be free to mold students into social justice activists instead of educating them to become self-reliant, well-educated contributors to a free society. They will be free to facilitate the extension of Chinese influence throughout America. In short, colleges and universities will be free to abuse the freedoms that a free society provides.

Only not on the taxpayers' money?

WHY WE HAVE PEER REVIEW.

Ohio University's Richard Vedder and some of his colleagues have set up something called the Center for College Affordability and Productivity and commenced publishing a weblog. Professor Vedder was a member of the Spellings Commission on Higher Education and the content of the weblog suggests Center members will use the site as an extended minority report on the Commission's statement.

One post caught my eye as it offers me an opportunity to get around to a book review I have been putting off. Professor Vedder has a frank exchange of views with Gary Becker.

Two events over the weekend demonstrated once again something that I already knew -- that the Higher Education Establishment in America is in a state of denial about the reality that America's colleges and universities are increasingly costly and inefficient -- and probably, at the broader social level, not a sector on which we should be devoting huge amounts of new resources without some fundamental changes.

In Boston on Saturday, I got into a bit of a civilized contretemps with a man I greatly admire, Professor Gary Becker of the University of Chicago, a Nobel laureate in economics and truly a great economist. I had suggested that empirical work I had done shows that perhaps new government investments in higher education have low rates of return, since state government appropriations and state economic growth are negatively correlated -- more spending, lower growth. He replied that we as a nation underestimate the true rate of return on higher education. College graduates commit fewer crimes, are less likely to be unemployed, have fewer low birth weight babies, etc. (Some other data from the estimable postsecondary.org even suggests that college educated drunk drivers are more likely to wear seat belts than their less educated drunken colleagues).

Like most good scholars, Becker is usually very fastidious about taking into account other factors that might explain the phenomenon he is investigating. But not here. I would speculate that if the individuals who graduated from college had gone into construction as semi-skilled or unskilled laborers, they likely would have been more responsible citizens than average Americans. College students are, on average, brighter, more motivated, more disciplined, etc., than non-college graduates. College admissions is a screening process, and the truly non-bright, poorly motivated, undisciplined individuals either do not apply for admission or are rejected. Many of the positive virtues attributed to college education may have been largely (or even completely) developed elsewhere -- in the home, through church attendance, etc. Becker seemingly dismisses or ignores some evidence that might suggest higher education's role in determining the quality of our lives may be less unambigously positive.

The negative correlation argument appears in Going Broke by Degree: Why College Costs too Much, which I read long ago and now offer Book Review No. 23. On one hand, I'm likely to sympathize with a man who can note (p. 213)

The corruption of college athletics, the occasional scandals over college admissions, the growing politicalization of the academy, lax standards, the construction of extremely luxurious facilities, and excessive student party-going threaten public trust in our institutions of higher education, along with the immense subsidies that allow universities to operate as they do.

On the other hand, if he's going to write about "undisciplined individuals [who] either do not apply for admission or are rejected" today, has he rethought "Although students are probably no more accomplished academically and arguably less so than their parents" (p. 112) or his case for performance-based scholarships to attenuate the moral hazard of subsidies that he suggests "would lower somewhat the scandalously high attrition rate" (p. 225) or his suggestion that universities outsource their remediation to Sylvan Learning (p. 179?) (He does not suggest that Sylvan send the bill to the high schools that dropped the ball in the first place.) One thesis of Going Broke by Degree is that third-party payments attenuate the incentive for the universities (the state-supported ones thanks to taxpayers, the privates thanks to endowments and student loans) to contain their costs, which is logical enough, but the book also maintains that those third-party payments induce students and parents to make inefficient choices of college. (He leaves unexplored the possibility that the low tuitions (relative to equilibrium) name colleges charge (to boost their selectivity rating, see p. 19) also induce inefficiently many applications and admissions. (Regular readers know where I stand on this point.)

But it is to that asserted negative correlation between college spending and state economic growth rates I must turn. Professor Vedder reports two such regressions. In the first, (p.135)

(Change in?) Personal Income Per Capita (1977 to 2002) = 35.837 (1.172) - 11.933 (Level of?) Higher Education Spending (3.570) - 0.004 1977 Income Per Capita (1.957) + 1.402 Taxes as Percent of Income, 1977 (1.070) + 0.091 Changes in Taxes as Percent of Income, 1977-1999 (0.064) - 0.476 Percentage Workforce in Unions (1.582) + 0.164 Age of State (4.362) + 0.152 Percent Days the Sun Shines (0.831) + 0.912 Percent Population over 65, 1981 (1.177). The adjusted R² is 0.641 and the equation F-statistic (what are the degrees of freedom?) 12.170. The t-statistics are in parentheses and I have bolded the estimates with t-statistics greater than 2.

Going Broke by Degree is a publication of the American Enterprise Institute and as such might be susceptible to editing in such a way as to highlight favorable findings. The editors did not require Professor Vedder to provide much by way of description of his sample (are we looking at 51 observations, showing the average annual growth rate in fifty states and the District of Columbia over a 25 year interval, or are we looking at a panel of 51x25 observations?) That makes a difference for the equation F-statistic as well as for the interpretation of some of the t-statistics close to 2, such as the coefficient on 1977 income per capita. And a referee for Review of Economics and Statistics or Regional Science and Urban Economics would raise a number of questions about potential autocorrelation in the case of a panel. There's also an obligation for a researcher to say something more about specification. We're not looking at estimates of an indirect utility function, which has some basis in theory, or the Becker-Mincer kitchen sink, which is a generally accepted specification. By way of explanation we get, "I included seven variables used in table 7-1 for control purposes (to approximate more closely the usual assumption of 'holding everything else constant')." At least these seven variables occur in levels, preempting the gripe I raise about people using "controlling for" rather than "dummying out," a frequent feature of the kitchen sink regression. But why these seven? Why not the won-lost record of the nearest pro football team or width of temperature range, January to July or square miles of waterfront?

A few pages later comes another regression, which is even more troubling.

(Change in?) Personal Income Per Capita (1977 to 2002) = 44.570 (1.760) - 13.002 Higher Education Spending, 1980 (4.431) - 6.583 Change in Higher Education Spending, 1980 - 2000 (1.533) + 1.186 Percent Population 18-24 Years Old, 1981 (0.561) - 0.004 Income Per Capita, 1977 (2.397) + 2.320 Average Tax Burden (1.875) - 0.705 Average Percentage of Workforce in Unions, 1973, 1984 (2.214) + 0.130 Age of State (4.213) - 0.232 Energy Production, 1977 (2.649). The adjusted R² is 0.690 and the equation F-statistic is 14.925. In this regression Professor Vedder reports that his sample is 48 observations.

This result is autistic number-crunching. (That's my single biggest complaint with the book, as there are other examples in other chapters, most of those, however, not concealed behind the phony precision of a regression estimate.)

We're supposed to believe that 25 years of change in personal income per capita can be captured in a single set of regressors with a different set of control variables "To deal with a possible problem of omitted-variable bias" (p. 139.) Possible problem?? How about a very real problem of specification bias (there is no theoretical framework in the book or in the footnotes leading to the choice of this data base and set of regressors) or an even greater problem of aggregation bias (the college-age population in 1981 will be prime-age workers in 2002, but that workforce is being augmented by subsequent graduates, and where have the retirees gone?) I fear that Going Broke by Degree will convince people who are already convinced, but it won't do much to convince the unconvinced, particularly those with a working knowledge of statistical inference.

THE CASE FOR MCDEGREES. Richard Vedder tries to make it.

McDonald's became the most successful food chain in the world by selling standardized products of high quality in huge quantities. They were successful by keeping the number of items they sell at a small number, by offering goods of the same quality at every location, and by having thousands of restaurants and gaining economies of large scale operation.

The same thing is true about other products, such as automobiles and computers. A small number of companies dominate the market making a few standardized products and selling them in huge quantities. It is even true in retail trade—Wal-Mart became extremely profitable exploiting economies of scale.

But what about higher education? Does bigness increase success? Of course, measuring success is harder in a sector where most providers do not have a clear "bottom line." But most of the successful names—the Harvards, the Stanfords, the Northwesterns, the Dukes—are of moderate size and not growing much over time. They see disadvantages to expanding, such as by growing existing campuses or adding new ones. That is true for many of the great state universities as well. There is only one "University of Virginia" or "University of Georgia," for example. Even those schools with multiple campuses, like the University of California, are located in usually no more than 10 or 20 sites. And there is no indication that multiple campus schools like the University of Texas, State University of New York, the California State University system, etc., are more efficient or produce better outcomes than single campus schools with much smaller total enrollments.

There is one huge exception to this rule: For-profit higher education exhibits enormous economies of scale. The University of Phoenix has hundreds of thousands of students (more than any other school) and makes huge profits. Newer schools (Bridgepoint Education comes to mind) typically lose money in their first years and show ever growing profit margins as enrollments grow. Bigness breeds and augments success.

Somewhere in those paragraphs, Professor Vedder, despite noting that it's difficult to define success, apparently makes volume or profitability stand in for success. Perhaps in another 20 or 30 years the graduates of Phoenix and Bridgepoint will be well-represented in the ranks of the Forbes 400 and heading Fortune 500 companies and holding high elective office. Until I see that evidence, however, I will maintain that emulating the midwestern land grants is the way to go for the state universities. (That lack of evidence of better outcomes in, for example, the California State University system compared with Berkeley or Stanford is likely evidence of access-assessment-remediation-retention at work in the system.)

Why are the traditional universities so different from both the McDonald's/Wal-Mart model, and the model of the large proprietary schools? The for-profit schools have a clearly defined bottom line—profits—that is maximized by doing two things: cutting costs and increasing revenues. Traditional universities often deliberately limit their revenues by turning customers away, and, unlike McDonald's that accepts any customer than can pay, the Harvards of the world increase prestige by rejecting more customers.

I have agreed with Professor Vedder on one point: that the prestige institutions create excess demand by quoting lower sticker prices in order to appear more selective. That strategy, however, can be more profitable, it's a variant on price discrimination by a monopolist. It's also a strategy practiced by trendy restaurants and nightclubs ... I'll show my age by invoking the famous Studio 54 of New York City disco fame. There is a parallel to what's going on in higher education.

To keep costs down, both McDonald's and the University of Phoenix offer a relatively modest number of products and produce them efficiently in a highly standardized way. The traditional universities teach thousands upon thousands of courses, most of them unimportant either to learning skills or understanding and advancing Western civilization, but are taught because the employees want to teach them. They are not standardized because that would be a violation of academic freedom, allegedly.

Maybe it is time traditional universities learn something from both McDonald's and the University of Phoenix (and Bridgepoint, Kaplan Higher Education, Corinithian Colleges, etc.). Why not do what Vance Fried proposes, and offer an $8,000 or $10,000 full cost per student university, offering a limited but adequate number of courses to give a solid education and even some vocational skills, but cut out all the rest?

Shall we tell Delmonico to cut out the steaks?

IS IT TIME FOR A LEGISLATIVE DEATH SENTENCE?

Richard Vedder, economics emeritus from Ohio University (yes, that's another Mid-American program) welcomes California's legislative mandate that college athletes get paid.

His column, starting with commentary on a survey (recall, dear reader, that economists aren't fond of surveys) likely reflects his experience with #MACtion.  "[Students] are indifferent to college sports, think it shouldn’t have much impact on college admissibility, and that student athletes should be able to make some money over their athletic success."  Around the Mid-American, I have to wonder how many survey respondents are aware of the activity fees that support the intercollegiate sports, meaning students who use food pantries are paying for nutrition coaches for the players who might get a few bucks from their images turning up on a video game.

Substantively, Mr Vedder welcomes legislative action.

Moving from campuses to capitals, California almost certainly is going to tell the NCAA: go to hell. The Governor (Gavin Newsom) is expected to sign a bill passed with broad bipartisan support allowing students to profit off their name, image, and likeness. Mark Emmert, the head of the NCAA, who in an earlier life was president of the University of Washington, has fulminated aggressively, hinting that California schools could be shut out of national championship competition, a threat that I view as both unlikely to be approved even within the NCAA and almost certain would end that sports cartel in its current form, as it would finally lead Congress to act about this national scandal called college sports.

It's not clear how this California law applies to, say, Stanford or the University of Spoiled Children, but do you toss the Bears and the Bruins out of whatever number that Pacific conference trades under these days?

Then, for better or worse, Congress gets involved.

Meanwhile, Congress is starting to stir. Mark Walker, a Republican Congressman from North Carolina, wants to yank the NCAA’s tax-exempt status if it does not change its policy on athletes financially benefiting from their own name. My friend and colleague Dave Ridpath, president of the reformist Drake Group, tells me that there is growing interest on Capitol Hill among such Democratic stalwarts as Connecticut’s Senator Chris Murphy (who has been especially outspoken) and Florida Representative (and former university president) Donna Shalala, as well as such conservative Republicans as Ohio’s Steve Stivers, in federal intervention reducing the sleaze, anti-academic nature, and scandals miring contemporary intercollegiate athletics.

On the one hand, Donna "Queen of Clubs" Shalala is a Democrat, meaning she isn't likely ever to encounter a tax she doesn't like, particularly if it looks like "the rich" are getting soaked.  On the other hand, she earned that high sheepshead ranking by her work at Syracuse (at the time a football factory), Wisconsin (which she managed to turn into a sports factory, whilst demonstrating the value of bringing in out of state students for the parties), and Miami (I'll be polite.)

I hope Mr Vedder is aware of Representative Shalala's possible conflicts of interest.

A National Commission on Intercollegiate Athletics consisting of prestigious Americans almost entirely directly unconnected with collegiate sports is one intriguing proposal. As a former member of a federal commission myself, I am abundantly aware of their limitations, and extreme care is needed in crafting one, not allowing it to be controlled by politicians or those in the collegiate sports industry. But at the worse a piddling amount of money is wasted, and at best some good ideas can come about that preserve the peculiar American institution of intercollegiate athletic competition and its entertainment value, while reducing the excesses and the corruption associated with it. Limits need to be placed on the use of athlete’s time, control needs to reside within academic areas of universities, the NCAA needs to be neutered, team practices, season length, and coaching staffs need trimming, etc. During the Cold War, international treaties were required to control the arms race; so perhaps a “treaty” is needed via the political process to contain the arms race in intercollegiate athletics.

I'm not sure what he means by "prestigious" Americans or what "directly unconnected with collegiate sports" means. Wasn't the original conception of the regulatory commission to assemble Dispassionate Experts, meaning people who understand something about what it is they're regulating, whilst with the probity to resist the subornation that accompanies any such action?

Now, if we're going to have such a treaty, the first thing that has to go is weeknight football.

THE YEARS OF DENYING COHERENT BELIEFS WILL CATCH UP WITH HIGHER EDUCATION.

Here's Richard Vedder with specifics.

Very dramatically many universities seemingly are abandoning reasoned debate over diverse perspectives of human behavior towards promoting ideological perspectives often denigrating and condemning the very development of a great American civilization emanating from the European Renaissance and Enlightenment. Borrowing from Samuel Huntington, we are having a collegiate clash of civilizations within America, most recently exemplified by the University of North Carolina’s brouhaha over a tenure appointment for Nikole Hannah-Jones, the journalist who prompted the New York Times’ 1619 Project, which is to the woke what the Bible is to Christians.

There's a longer post coming on how too much "sophisticated" opinion is regressing to the medieval, as in identifying and denouncing heretics rather than engaging the controversies. The incantations include "the science" and "our democracy."

There's nothing wrong with considering the possibility that a plantation feudalism matters in an important way in the American Founding, or that residual differences in outcomes despite all sorts of official and unofficial attempts to lift people up are system failures.  It's when those new faith traditions resist inquiry that higher education fails.

Academics frightened of being accused of being racist accede to any and all demands, some outrageous, articulated by protesters and the diversity bureaucrats often in very well paid university positions despite sometimes marginal academic credentials by traditional means of assessment. “White privilege” is a term loved by the woke. But another label, “rent-seeking,” may be equally appropriate. People are assuming power and much enhanced incomes and job security in return for appearing to be progressive, woke, and believing in critical race theory and all its dubious assertions.

Perhaps when donor money goes to relocate glacial errata, that will be a wokeness too far.

There were significant racial and gender injustices in American universities, say, 50 0r 60 years ago. Efforts to ameliorate them were needed, and codified in civil rights and other legislation. Using another historical analogy, as justifiable reforms prompted the French Revolution, they eventually led to excesses, a Reign of Terror, to great damage done to a great civilization. That may be happening, albeit on a smaller scale, on many college campuses today. Some polling data suggests it might be contributing to declining college enrollments as what Richard Nixon once called “the Silent Majority” loses confidence and support for our universities.

The rot has been spreading for over thirty years, and I disagree with Professor Vedder in holding higher education harmless for some of the recent unrest.

To be sure, it may be extreme to largely blame universities for much of the increase in rioting and protests. The George Floyd murder, for example, was an outrage not involving colleges. And religious constraints on lawless behavior are waning—around 1950, Gallup told us about three-quarters of Americans had a church affiliation—today, it is less than 50 percent. All that said, public scrutiny of college campus behavior likely will be on the rise, probably for good reason.

That's what fifty years of loose talk about "social construction" and "power systems" gets you.

HE DOESN'T GET OUT ENOUGH. I'm talking about you, Richard Vedder.

Colleges have viewed restricted admissions as a virtue --a means of raising prestige. Education is the only business I know where success is obtained by turning customers away and snubbing them.

Studio 54 comes to mind. Limited edition collectibles come to mind.

If Yale or Harvard thought like a railroad, it would not apologize for running an all-Pullman, extra-fare, by reservation only Panama Limited (it being no accident that the last such train in the States offered its operator a way to keep the poor and black on the coach-only City of New Orleans, civil rights laws or not.)

I suggest that the administrators of the name colleges are in a no-win situation: raise tuitions to ration spaces, which is what prices are supposed to do, and get mau-maued for adding to their retained earnings, otherwise known as "endowments," or keep tuitions low, and get mau-maued for dashing young people's hopes.

Professor Vedder's suggestion that the name colleges set up branches in other states intrigues, for the likely reaction of the flagship campuses. Imagine Harvard establishing a branch campus in Naperville. Would Northern Illinois or DePaul or Northwestern or Chicago be the first to run to the state board of higher education arguing "the existing service is adequate" and "if additional capacity is required, the existing providers are capable of expanding"?

GETTING THE CASE RIGHT. A lot of higher education isn't, but that by itself won't change minds. It's important that critics, particularly those on the inside, get their criticisms in order. For instance, I wasn't happy with Craig Brandon's The Five Year Party. Neither was Murray Sperber, whose Beer & Circus might have been the opening argument against the college-as-resort business model.

The problem with Brandon’s sloppy writing and referencing is that it allows his enemy—university administrators and apologists--an easy target and a way to avoid confronting the serious and real charges he makes in the book.

Journalism might be the first draft of history, but there's a reason we refer to a first draft.

I have rarely read a more frustrating book. I wanted to agree with many of Brandon’s points but found his method of argumentation and referencing too far from general standards.

If I were grading The Five Year Party as a college paper, I’d write on the first page, “This is a pretty good draft and you have quite a few important ideas, but it needs more work. Above all, you need to carefully reference your claims and sources.”

Richard Vedder, whose What Happens when College is Oversold? figures in yesterday's mini-dissertation about appropriable externalities, also gets referee reports. There's a symposium at Minding The Campus with a long response by Patrick Deneen.

The problem, then, lies not in the ideal of universality of education, but the widespread transformation of the end that education serves. The goal of education toward fostering moral and virtuous members of their communities has been completely displaced by narrow utilitarian ends among students and moral relativism among the teachers.

A society driven by private ambitions of materialistic gain can expect education to become diluted by a utilitarian ethic. The tool will conform to its end, and so education becomes defined by the ethic of the short-cut. Rampant cheating and academic dishonesty are now campus (and societal) norms (students learn ethics from widespread practices in sports and business, not from Aristotle and the Bible), and the professoriate in turn emphasizes that all norms and codes are simply expressions of arbitrary power that limit what should be our thoroughgoing autonomy. As David Brooks has noted, there is an absolute consistency between the moral relativism of postmodern academia and the careerism in the student body.

I agree that colleges bear much of the blame for their current crisis (indeed, that they bear considerable responsibility for educating the class that precipitated the financial crisis that now ironically threatens their existence), and I hope and expect that they will have to change their current practices, including a serious effort to reduce tuition costs.

What disturbs me about arguments such as those found in the Vedder report is the implication that education should be fitted to the narrow vocational needs of airline attendants and cashiers, that an appropriate education will prepare them as efficiently as possible for a life of menial labor. I lament that a major thrust is afoot to dismantle whatever remnant of our older liberal arts tradition persists and to replace it with measurable forms of study that produce narrowly-trained careerists. We need virtuous cashiers and moral airline attendants as much as we need virtuous politicians and moral philosophers. Assuming that a major reassessment of the role of education is in the offing, then it is not the ideal of universal education that should be the whipping-boy, but the belief that a society can flourish without a moral core at the heart of its educational mission.

The academic tradition: a self-inflicted deconstruction? There's a line in Atlas Shrugged about missing philosophers once they've all gone away ... Deconstruct that.

Charles Murray concurs in part.

I want everybody, not just an elite, to acquire as much liberal education as possible, for the reasons that Deneen describes. But we don't have to wait until college to get a great deal of that done. E.D. Hirsch's Core Knowledge curriculum is a wonderful example of how much can be done in K-8, and a lot more can be added in high school. At that point, I think this way of formulating our objective is helpful: "The educational system has succeeded when a child reaches adulthood having discovered something he loves to do, and having learned how to do it well." If that's the objective, then of course we want to say to the young person who has high academic ability "Here's why pursuing a liberal education gives you your best chance of finding your vocation." But if the answer we get is "Thanks but no thanks, what I really want to do is study marketing and go to work," that student needs options other than a four-year residential program that will leave him deep in debt and have wasted a lot of his time.

I read a memoir from a futures trader once that included an observation to the effect that one could learn more by going short a contract in beans than any number of years of business college would do. On the other hand, the liberal education might help some people discover, or revise, their vocations. Jackson Toby, author of another insider's report that's on its way to the Cold Spring Shops library, suggests that people view entry level job reports accordingly.

It is true that some youngsters knew all through college that they wanted to be physicians or lawyers and consequently their first jobs reflected their career objectives. However, many college graduates graduate without a clear notion of what they want to do occupationally or even personally. Some work for a couple of years for Teach for America without planning a lifetime career as teachers. Some take jobs as waiters or waitresses while their career aspirations lie in acting or art, careers notoriously difficult to enter. Therefore I hesitate to interpret several years of low-paid jobs that college graduates as a disconnect between what is learned at college and what college graduates do occupationally in their first jobs. Getting back to teaching, it might be excellent for American education have primary- and secondary-school students taught for four or five years by college graduates who lack teaching experience but have the attractive enthusiasm of youth even though they and their colleagues know that they do not plan to be career teachers. If we keep in mind the difference between "jobs" and "careers," the fact that college graduates take low-level jobs in the years immediately following graduation is not necessarily a failure of college education or of the graduates themselves.

On the other hand, the return on that investment might not be so good, adjusting for psychic income notwithstanding.

WILL HIGHER EDUCATION ENJOY A NEW BIRTH OF FREEDOM?

Richard Vedder draws an interesting inference.

The Supreme Court’s recent Chevron ruling, while rightly focusing on central issues like presidential immunity, also brought a potential boon for American higher education. This decision, which I believe holds promise for the future, has yet to be fully grasped by the higher education establishment.

Read on, though, and note the potential trade-off.

Specifically, in Loper Bright Enterprises v Raimondo, the Court invalidated the doctrine of Chevron deference prevailing since 1984. In the Chevron case, the Court dramatically curtailed the power of courts to rein in the actions of independent agencies and executive departments to overturn federal administrative diktats, which some think led to the creation of the modern administrative state.

Academicians, such as the economists who developed and refined the Welfare Economics Paradigm, have surely benefitted from the expansion of the administrative state, whether in selling graduate degrees or advising politicians or setting up side hustles as compliance (or creative noncompliance) consultants.  At the same time, the operation of the colleges and universities was subject to the resulting administrative ukases.

The recent Supreme Court decision has had a profound effect on universities. As Jon Fansmith, the chief lobbyist for the American Council of Education, aptly pointed out, “Almost every aspect of running a modern campus is dictated in some way by federal regulations or guidance—whether that’s how you make staffing, compensation, training, or enrollment decisions, all the way down to the level of what you put on your website.”

I contend that the golden age of American higher education came in the generation before the rise in federal higher education activism, which began after obtaining statutory authority with the Higher Education Act of 1965 but most notably after the creation of the U.S. Department of Education in 1978.

America’s role in creating the world’s best universities dates back to before 1965, when both private dollars and state governments helped finance the planet’s best universities. Aside from obtaining resources, these schools benefited from competition and academic diversity—different kinds of schools, some progressive, some conservative, some religious, others militantly agnostic. We did not have stultifying schools teaching a uniform curriculum with little diversity, the model in much of the rest of the world.

Yes, and on occasion a high university official will grumble about "unfunded mandates," which in general political discourse more commonly sounds like a libertarian or Republican gripe.

Whether we will see a flowering of departures from Washington Knows Best that don't look like Hillsdale or Florida New College remains to be seen.

The modern federal administrative state has robbed most universities of much of their individuality, with a few schools of the Hillsdale or Grove City College variety that have completely severed ties with the Feds escaping that fate, generally with great success. The modern-day Department of Education’s sins include the lamentable declaration of war against college men and Anglo-Saxon rules of judicial conduct with the 2011 “Dear Colleague” letter that led most colleges into adopting an almost “guilty until proven innocent” attitude regarding allegations of male student sexual misconduct. The jihad towards men has contributed to a significant decline in male enrollment.

His conclusion is a call for future research.

To be sure, the fate of America’s universities depends on many things, and not all their ails are federally inflicted. To cite just one example, the rise in debilitating grade inflation roughly coincides with the growth in federal involvement, and while there may be links between those two things, they are not obvious or strong. Still, my tentative assessment is that the Supreme Court’s recent action improved the environment where higher learning occurs in America.

Or not, higher education being a safe space for pusillanimous administrators and castrated men who still fear the bicycle bar.  I'd be happy to report, five years or so from now, that Professor Vedder's tentative assessment holds up.

SELF-SELECTION. Thomas Sowell points out the error of access-assessment-remediation-retention.

There are, of course, many students and professors who are in the academic world for the very serious purpose of acquiring knowledge and deepening one’s understanding of the world and oneself.

Most of my own academic career was spent in places like Cornell and UCLA, where there were scholars with distinguished reputations in their respective fields and where the student body was significantly above the national average.

Even so, there were still quite a few students, especially at UCLA, whose interest in the life of the mind was, to put it charitably, limited.

More important, the negative effect of students who are not serious can be detrimental to the education of those who are. I found this to be true in each of the five colleges and universities where I taught, as well as in each of the three universities from which I received degrees.

George Leef revises and extends.

The students who interested in academic work after high school are already going to college. Most of those who now don’t go to college aren’t well prepared for it and want to do other things. Consequently, [Richard] Vedder concludes, “If incremental state funding encourages relatively unqualified students to pursue college, the marginal attrition rate amongst those students is likely to be extremely high.” (Here, Vedder could have strengthened his argument with evidence that substantial numbers of college graduates now wind up doing jobs that don’t really require any advanced education.)

I'd add, extending some earlier posts, "the tenure-track faculty will only rarely see the rotten fruit of that harvest."

Professor Sowell raises a second point that ought to give pause to the advocates of mindless productivity measurement.

The sizes of the classes and the campuses can also have an impact. Too many people do not think through the consequences of admitting a larger number of students, including some who may not be as well qualified as the others.

When I taught an honors class in introductory economics at Cornell — a seminar with 15 students, compared to a couple of hundred students in the regular class — my department chairman urged me to expand the honors class to 30 students, “so that more students can get the advantage of the small class.”

It never seemed to occur to him that expanding the class would destroy the advantages of the small seminar.

The chairman will get a bonus for increasing the student-credit-hours-per-faculty-member.

Professor Sowell also points to a possible improvement in total factor productivity.

At both Douglass College and Howard University, where I taught the full year course in introductory economics, the second semester classes were a sheer delight because the less serious students dropped out after their experience with my grading standards in the first semester.

It was not just that the remaining students were better than the ones who left, they were better than they themselves had been in a class atmosphere that was different when influenced by less serious students.

At Amherst College, one of the classes that I taught as a visiting professor was made compulsory for graduating seniors, against my wishes, and just a couple of students with bad attitudes managed to dampen some of the other students, who were outstanding in themselves.

Retention, when it matters: up. Working conditions and faculty morale: improved. Potential for a compensating differential for faculty: there.

He, however, would not make a good famer, and perhaps he lacks the teaching vocation.

A graduate seminar that I taught at UCLA was a great experience the first year I taught it, largely because of one outstanding student who raised the level of discussion for the others. But, when I taught it the next year without that student, the results were so meager that I never taught that seminar again.

At the end of one class session I told the members of the seminar: “I have a decision to make and you gentlemen have helped me to make it.”

With that, I went on leave for two years to run a research project in Washington.

Professoring is a lot like farming, in that you're not always sure ex ante what the learning environment will be, and sometimes the sun shines and sometimes the grasshoppers flock, but you don't quit the first time you have a below-average year.

AVERAGING ONE HORSE AND ONE RABBIT.  Charlotte Allen of Minding the Campus attempts to make sense of Texas's faculty productivity measures, already crunched rather imprecisely by Richard Vedder.  (Tellingly, Professor Vedder is seeking funding to crunch the somewhat more precise figures the state is now releasing more precisely).  The Minding the Campus column focuses on interpreting the numbers, but the market tests probably matter more.

According to UT-Austin’s own website, UT-Austin’s annual budget has increased nearly fivefold during the past 25 years, from $503 million in 1985 to $2.26 billion in 2010, far outstripping the effects of inflation. It has also become more tuition-dependent. In 1985 tuition and student fees ($27 million) accounted for only 5 percent of UT-Austin’s total revenues, but by 2010 that number had jumped to 24 percent, or $544 million. It is common to blame UT-Austin’s increased tuition-dependency on a stingy legislature that has gradually withdrawn state support — except that state allocations to support the Austin campus have actually increased by about 40 percent over the years, from $237 million in 1985 to $318 million in 2010 — and it may be unfair to ask Texas taxpayers to cover every new budget-boosting expense that the university chooses to incur.

That's the tension between private benefits and appropriable externalities at the heart of state funding for higher education: done properly, it equips graduates to live more productive lives and get richer, but that's a regressive transfer.  Read on, though, and contemplate the various market tests.

In Texas’s sprawling system of public universities and community colleges, only UT-Austin and Texas A&M possess the prestigious "R1" ("Research University 1") classification conferred by the Carnegie Foundation for the Advancement of Teaching (the Carnegie Foundation has recently revised its classification system, but the "R1" nomenclature persists). And both belong to the 111-year-old Association of American Universities (AAU), whose 60-odd members include the crème de la crème of elite, massively endowed private universities, such as Harvard and Stanford, and also such highly regarded, academically selective public institutions as the University of Michigan and the University of California-Berkeley. The AAU, whose criteria for membership include an emphasis on scholarly research and a large number of doctoral degrees awarded annually, operates as the unofficial keeper of R1 status, and it appears willing to eject members who no longer meet its standards, one of which is the attraction of a certain level of federal research dollars, which usually fund scientific projects. (Syracuse University voluntarily withdrew from the AAU in May in the face of certain ejection because its federal research funding had fallen off.)

Virtually all R1 universities afford tenured and tenure-track professors relatively light teaching loads — two classes per semester (one of which may be a small graduate seminar) is the norm to allow them ample time for scholarly pursuits. That means, however, that someone must pay those professors not to teach. The maintenance of R1 status (and AAU membership) is highly competitive. R1 status is roughly coterminous with the "Tier One" designation in the U.S. News annual ranking of national universities. A Tier One classification virtually guarantees an institution’s "selectivity’ (the ratio of number of acceptances to number of applicants), which in turn helps secure its Tier One ranking in the future.

Perhaps even more significantly, university administrators insist that offering a light teaching load of one or two classes per semester is a non-negotiable precondition for wooing accomplished scholars away from other prestigious universities that also offer light teaching loads. Many scholars with distinguished reputations in their fields are also skilled teachers who love to teach--but it is safe to say that most of them would rather not have to demonstrate their love by presiding over four packed undergraduate classrooms per semester as their colleagues at lower-ranked public universities often do. "We view ourselves as competing for the top talent, the top Ph.D.s that Harvard and Berkeley are also competing for," said Randy Diehl, dean of UT-Austin’s College of Liberal Arts, in a telephone interview. Diehl added that the top academic names also tend to attract the best students, who in turn become prominent scholars: "Nobel laureates, for example, tend to form chains. They produce faculty who are also Nobel laureates." Although the 2,500 or so tenured and tenure-track professors at UT-Austin are theoretically supposed to have "3-3" teaching loads (three classes per semester), the standard load at smaller colleges where research is not such a high priority, tenure-line professors who are "engaged in research" at UT-Austin — which effectively means nearly all of them — get a release from that third course, Diehl explained. A small number of faculty members at UT-Austin are designated as "research professors" and do no teaching at all, but their research is funded by outside grants, so they essentially pay for themselves.

Let me see if I understand this. Good students pay attention to the academic standing of the institutions they apply to.  Good students follow good professors.  Good professors can prepare the next cohort of researchers.  And good universities compete for good professors.

Sounds to me like a game any university could play, if it wanted to be good.

HARD TO MAINTAIN THEIR LOFTY ACADEMIC AIRS.

University Diaries has been calling out the perversities going on in big time college sports, most recently with an assist from Richard Vedder.

Whenever the heads of public universities condemn the stinginess of their legislatures, they loftily remind everyone that a mind is a terrible thing to waste. Yet as Vedder suggests, when your school looks like a money-hemhorrhaging joke run by idiots ... you make it awfully easy for politicians to shrug you off.

I await the day when the diversity weenies and the sports establishment emerge as the last defenders of business as usual in higher education.  That will be the day for celebratory toasts.

Until then, I won't lack for stuff to post.

MONEY-HEMORRHAGING JOKES RUN BY IDIOTS.

That's Margaret "University Diaries" Soltan referring to Ohio University's Richard Vedder calling attention to the money-suck that College Sports has become.  Some of those links might now be gone to the Happy Linking Grounds, but the self-destruction and self-beclowning of higher education, and the money-hemorrhaging, goes on and on.

Professor Vedder has continued to call attention, most recently in Let Colleges Fail: The Power of Creative Destruction in Higher Education, which is a follow-on-if-only-you-had-listened to his Going Broke by Degree: Why College Costs too Much of two decades ago.

I'm able to keep Book Review N^o. 7 brief as the "Ten Cardinal Sins" he enumerates to open Let Colleges Fail are the kind of thing regular readers of Cold Spring Shops have been hearing from me for years.  It's much easier sometimes to simply agree, and then sigh as we have been fighting it out along these lines for years and the craziness goes on and on and on.

LEFT UNSAID. I had occasion to watch the Fox News special, "Why Does College Cost So Much and Is It Worth It?" As with most news specials, it's long on anecdote and short on analysis, although the producers manufactured a bit of a debate between Chicago's James Heckman, who noted that the private benefits of a degree were large and borrowing against future earnings rational, and Ohio's Richard Vedder, who suggested that the availability of loans likely induces bursars to raise their rates. Left unexplored was the role of positional arms races in raising the value of Professor Heckman's university and others like it.

Professor Vedder takes a first cut at a related problem.

On the one hand, we as a nation have a tradition of wanting to provide opportunities for all Americans to improve their lot in life --call it the egalitarian or equal opportunity ideal. At the same time, we want efficiency in our colleges and high performance per dollar spent. Therefore we want kids to go to college who will work hard,and will learn. By inference, we, appropriately, do not want to spend resources on kids who drop out and fail to succeed much academically.

Our goal of "equal access" leads us to massive student aid programs, such as Pell Grants and some of the student loan schemes. Our goal of improved productivity and efficiency leads us to anti-access policies, such as restricting enrollment of less qualified students. The plain fact is that many low income, disadvantaged students are poorly qualified for colleges. If we let these students have easy access to relatively expensive four year institutions, we squander a lot of resources and get the current 50 percent or so drop out rates. If we insist on high admission standards, however, we deny access to many low income students, and restrict access disproportionately to some minority groups, such as African-Americans and Hispanics.

Insufficient alternatives? So what we may have is a separating equilibrium in which high prices and perceived selectivity signal a challenging curriculum and fewer "retention" problems, and low prices and a large student support corps signal a less challenging curriculum as a way of bolstering "retention." Read more closely, however: the problem is not higher education's, it is a failure of the common schools properly to prepare their graduates.

King Banaian considers additional tradeoffs.

COMPETING IN THE PROFESSION? Richard Vedder, an emeritus professor of Economics at Ohio University, reports that his colleagues voted to go from a 2+2+2 course per quarter teaching schedule to a 2+2+1 schedule, ostensibly to obtain more research visibility. He's skeptical.

My prediction is the departmental output of articles may rise from 15 to 16 or 17 a year - roughly 10 percent. Is it worth $100,000, bigger classes, and more closing out of students in classes to publish perhaps two more papers per year, each one of which will probably be read by a best a few dozen readers? Is anyone doing a cost-benefit analysis of the advantages of this move? The answer, of course, is no. Universities simply do what they want, namely the things they like (writing papers which help get faculty promoted and tenured), rather than the things the public that is paying the bills thinks is most important, teaching students. No one is accountable, the decisions are hidden from the public, and the returns on many of those decisions are very low in relation to the costs.

His analysis, like that in his book, is incomplete. Is it the number of articles, or the quality of the articles? Will the Economics faculty use the reassigned time to polish their work so as to make it more attractive to Journal of Political Economy or Economic Inquiry or Economics Letters, or will they simply be ensuring that Rivista Internazionale Numere Due di Bovini will be able to meet its production schedules? If the latter, perhaps the decision will inefficiently allocate resources. But what's special about the former journals? Publish in the former journals and your department moves up in the disciplinary league tables. Why does that matter? Because the league tables color the impression observers have of the prestige of a university. So what? People engage in positional arms races to get into universities with a lot of prestige.

Ultimately, then, the responsibility is on the public to quit spending money on getting their kids into "prestige" universities with brilliant research faculties that spend no time with undergraduates, particularly not with freshmen, and on the public to quit recruiting their entry-level employees from those universities. But until there are changes in those behaviors, it is not an error on the part of the Ohio faculty of Economics to offer working conditions more like those prevailing at the "prestige" campuses. Ohio might secure a recruiting advantage thereby, and some Ohio faculty might publish work that attracts the attention of a department higher up the academic food chain.

It might well be the case that a student will do just as well out of Ohio as out of Harvard, and the research mania is nothing more than expense-preference behavior on the part of university employees. Professor Vedder, however, does not suggest how his colleagues might act to exploit that reality rather than becoming more like Harvard.

He will be appearing on a Fox News special report on college costs, currently scheduled to air Sunday at 7 pm (Central; 8 pm on the east coast, that's some clout preempting Col. North.) We'll see how precise his reasoning is.

WHO WILL RID US OF THOSE ANNOYING ECONOMISTS? Via Newmark's Door, an essay by Ohio's Richard Vedder.

Colleges have devoted relatively little new funding over the past generation to the core mission of instruction (spending only 21 cents of each new inflation-adjusted dollar per student on it), preferring instead to assist research, hire more nonacademic staff, give generous pay increases, support athletics and build luxurious facilities. And while in the private sector companies have learned to get more work out of fewer employees, the opposite appears to have happened in higher education. In 1976 American education employed three nonfaculty professional workers (administrators, counselors, librarians, computer experts) for every 100 students; by 2001 that number had doubled.

I haven't seen much evidence of choices 1 or 3 in my department. On the other hand, the class lists get longer year by year.

College is still a decent individual investment, certifying that the graduate meets minimum standards (often missing in high school) for competence, intelligence, maturity and literacy. But we should rethink the nature and magnitude of public support for universities. State governments, facing rising Medicaid bills and demands for primary and secondary education funding, are already slashing their support. I hope and expect this trend to continue. Big changes are coming to higher education. They are overdue.

What's funny is that Professor Vedder is author of a book called Going Broke by Degree: Why College Costs Too Much. Does that refer to the out-of-pocket costs positional arms-racing parents face, or the opportunity costs of the 40% defect rate he refers to elsewhere in his article, something that might be ameliorated by changing the financial calculus facing marginal students?

THE CESSPOOL OF THE WEST. Yes, Michigan has a Lake Erie coastline, but this Rich Lowry column in National Review suggests that "perfect petri dish of failed policies" (an Ann Coulter line) might best describe Michigan.

Liberals dissatisfied with the Bush economy have, through the wonders of federalism, an alternative. They can move to Michigan. The state represents a rough approximation of ideal liberal economic policy. It is heavily unionized, taxed, and regulated in a failed attempt to close its eyes to the dynamic forces of the market and globalization all around it.

Pile on:

Michael LaFaive of the Mackinac Center calls Michigan “the France of North America.” Economically competitive states might have a personal income tax, or corporate income tax, or sales tax — Michigan has all three. It has long been the only state with a European-style, value-added tax — the Single Business Tax. A company can be in bankruptcy and still have a tax liability, making Michigan a bad state even to lose money in. In a 2002 filing for relief from the tax, General Motors explained that it would operate at a loss, but one of its projects would still create a $7 million-a-year tax liability.

Michigan recently repealed the Single Business Tax effective at the end of 2007, but has punted the decision about how to replace it. A relative moderate, Gov. Granholm has resisted general tax increases, but levied new fees, sin taxes and other “revenue enhancers.” The state still insists on trying to target tax incentives and other special breaks to favored businesses, in a doomed replay of 1970s-era industrial policy.

Ouch. But again, Michigan's problems are a legacy of the Old Industrial State.

It used to be that unions could force unnaturally high wages and benefits on U.S. manufacturers, and the costs would be passed along to consumers. Those were the days prior to globalization when the U.S. auto industry had a lock on the domestic market and experienced little international competition. It was inevitable that Michigan would find the new competition disruptive, but not that it would react to it so poorly.

Consider an economy with a monopoly productive sector and a competitive productive sector, and one input supplied by a monopoly and another supplied competitively. Identify the allocative inefficiencies. Now turn the monopolies competitive. Evaluate. (This question is probably a bit much even for the advanced theory class, but stay tuned.)

CONFIRMING THE EXCESS DEMAND HYPOTHESIS. I've made use of Richard Vedder's argument that the top colleges price their services in such a way as to generate excess demand. I only insist that people apply the argument consistently.

That last sentence, however, suggests that tuitions at the top schools are inefficiently low, not "jacked up."

Now comes Mark Schneider of the American Enterprise Institute offering what might be confirmation.

His purpose is to deconstruct the argument that a university degree is worth a million dollars to its holder, on average.

After subtracting tuition and discounting at 4.8 percent, the earnings increase, stratified by university type, looks like this.

Graphic by Richard Schneider

The returns to the land-grants and mid-majors ("public most selective" and "public very selective") are comparable. The returns to "nonprofit most selective" are substantially higher than the returns to "nonprofit very selective", suggesting that the "nonprofit most selective" are leaving some rents unextracted. That the returns to "nonprofit very selective" are on average less than the returns to attending a land-grant or a mid-major clearly call for further research.