Our Universities: Why They are Failing

The higher education bubble is closer to completing it's burst than ever. Federal subsidization of student loan debt on the backs of taxpayers is far from sustainable, but is just one industry (corn, oil, etc.) that the middle class is floating without a vote. There will come a day when none of these industries can be sustained in this manner by taxpayers...

Anthony Grafton from the NEW YORK REVIEW OF BOOKS of November 24 provides a useful and concise review of 8 books on the problems of higher education.

Our Universities: Why They are Failing

However, he fails to zero in on the key Austrian explanation for the failure of higher education. Can you guess what that is?

Source: Mises: Our Universities: Why They are Failing

The comments section really seems to spell out the problems:

Grafton seems to pretty much spend 2.5 pages to throw his hands into the air. He knows that kids are in college with no clear purpose (ie, they are there and don’t know why). But Grafton never really settles on why that is happening. He even acknowledges the increasing unpayability of student debt, the uselessness of the education, and the increasing worthlessness of the degrees – but at the end says “Perhaps it’s not a crisis” and suggests a journalism project at the end. Ok, Tony.

I’ve read many articles much like this one. They tend to 1.) Assume the equal educability of virtually all students, and for that reason 2.) leave government public schooling blameless for dumping out bewildered kids. And most importantly, 3.) totally miss the fact that if it were not for federally backed student loans, banks would have to take financial risk on students without credit, and not everybody under the sun would be going to school unless they want to pony up some cash themselves, or could prove the academic inclination that might make them a good loan risk.

The author also brings up three groups at American colleges who are a positive force not a negative one on the entire system. The groups are athletes, alumni children and students with cash. If it wasn’t for these groups the system would be charging significantly higher prices, be much worse run and the student populations would be much more indebted.

Athletes especially the ones in major college sports with large audiences actually make money for their schools. What a great deal, they bring in the dough and it goes to facilities. Otherwise these same facilities upkeep would come from tuition, i.e. Federally Guaranteed Student Loans.

And the other two groups are also critical for paying their ability to refuse payment. Alumni donate lots of cash to their colleges if they enjoyed their experiences there. It is in the interest of the colleges to keep these donations coming. Telling someone their kid is too stupid to go to your school is not a very good way to keep up the donation numbers. These folks also regulate prices by telling the administrations via alumni relations that prices are too high and these folks are sending their kids to other places. The last group, the ones with money, are clearly the most important as they use that money in their decisions to attend. This goes a very long way towards keeping tuition prices down.

Mark Thornton is too polite to notice another issue:

Grafton overlooked the Austrian perspective despite:
* having a good education.
* having access to abundant resources and information.
* reading and analysing a lot of books and articles.

Grafton seems to share a common belief of the educated and non-educated: Civilisation is based on “enlightened” government intervention. He and others are going to waste more time and resources on making the impossible possible.

I think that there are a variety of issues in the higher education industry, but as with many big businesses, it's hard to attack the problems directly, especially when such a large portion of the populace believes themselves entitled to the services or products of that industry. Those with try potential will succeed in educating themselves even if the industry fails them.