IT'S CALLED THE BENEFIT PRINCIPLE, AND MARKET TESTS ARE USEFUL.

A contributor to the house organ for business as usual in higher education inadvertently steps on his own argument.  Higher Ed Is a Public Good. Let’s Fund It Like One.  Seriously?

Bad economics. A public good has two properties, nonexclusive use and nonrivalrous consumption. [Former Northern Illinois president John] Peters's own arguments will contradict both of those properties. A more accurate argument might be that there are unpriced spillover benefits, or non-pecuniary externalities, to a university degree. That's for another day: are the marginal social benefits of a state-aided university worth the costs, or has Robert Fulghum (details or compare prices) correctly identified the sole source of a positive benefit-cost ratio?

That's not where James N. H. Spencer goes wrong, in fact he goes even further astray.

If we are serious in arguing that higher education is a public good, then we should finance it like one; we should take some lessons from my own field, infrastructure planning.

Financing an equitable higher education can be done: The U.S. has near-universal water supplies, transportation, and electricity for even its poorest residents. What would happen if we applied the same principles to the public goods that universities provide?

Public infrastructure is rarely funded fully by upfront subsidies in the way that advocates for “free college” suggest. Instead, infrastructure projects rely on floating debt that is tied to long-term user fees through the life of the infrastructure. Think of your water bill, which over 30 years helps pay down the debt associated with building your local water system. According to the National Association of Counties, government investments in transportation infrastructure, for example, total substantially less than half of the actual costs, with bond-market investors covering the bulk of the upfront costs. Over time, individual users collectively pay back that debt through costs like gas taxes, transit fares, or tolls. Whatever the repayment mechanism, end users never take on that personal debt the way we now expect college students to do.

So many things wrong there. I can only envision the caterwauling from the "water is a fundamental right" crowd in higher education, for whom the very notion of water as a commodity causes anguish.  I mean, didn't Milwaukee's sewer socialists install water meters and sell the dried activated sewage sludge as fertilizer?  There's no reason a water utility can't be a private company; indeed, doesn't the popularity of bottled spring water of various types suggest the public water works deals in hot and cold running crud?  There's no reason an electric utility can't be a private company, and it's only environmental extremists that impede the upgrading and repair of the transmission lines, and New Deal brains trusters that preclude power companies owning electric railways.

Put another way, there are all sorts of trade-tested betterments by which water or power companies are able to split gains from trade with householders or commercial or industrial consumers of the water or power.  If local or state revenue bonds finance the construction, end users are on the hook for some of that debt, if at one or two removes.

It gets more challenging when we think about the roads.  Yes, there still might be revenue bonds, but residents only contribute to covering the costs of provision in the form of gas taxes or local assessments, and perhaps not even that, given the periodic passage of federal porkulus infrastructure bills that bring sugar highs in the form of ribbon cuttings, but only after construction delays, and as prelude to future liabilities for the lucky municipality, as there are previous sugar highs from the bill two or three porkulus cycles back that have now worn off.  And I haven't even gotten to the marginal external costs in the form of congestion and pollution, which, somehow, cannot be corrected for even incompletely with tolls or carbon taxes.

On the other hand, many of the benefits of additional education adhere to the student. perhaps in the form of a less disorderly life, or in the raw form of more earnings.  Many of those are exclusive and rivalrous, and perhaps the current attempt of the president to means-test student loan forgiveness pays some respect to the benefit principle.  Or perhaps, as the cynics note, it's buying the underemployed gender studies' majors votes.  (But why: how sympathetic would such students be to libertarian, let alone Republican principles, and is there that much latent communist vote out there?)

It's all too much for Glenn "Insta Pundit" Reynolds.  "I’m not even convinced that modern higher education is a net positive for society, much less that it possesses the characteristics of an economic 'public good' like national defense or highways."  Commenters to the post correctly clarify his thinking.  Let's break it down.

First, the marginal social benefits from much of higher education might well be negative.  Higher education has many of the properties of a club good, but with managers who are reluctant to build more tennis courts or enlarge the pool.

Second, the marginal social benefits from much highway construction might also be negative.  There's a lot of economic research starting from the premise that a highway is a club good with congestion.

Third, once the rockets are up, who cares who paid for them?  That's not my department.  Yet another apology to Tom Lehrer.