The Bubble Must Burst
Despite the systemic redirection of wealth from its most productive uses to the fantasies of academics and central planners, cracks are appearing on the surface of higher education. The bubble is not sustainable. Too many students attend school without good reason; too many jobs are held by too many highly paid teachers; too many programs are wasting money and time. Sorting out which are economically viable and which need to be liquidated is something that only a system of prices, established through voluntary exchange, can establish.
Even if universities are immune from having to please consumers, their customers (students) are not. In many cases – especially in the liberal arts, Mr. Leiter's field – earning a degree no longer pays off for the average graduate, and the increasing average rate of student-loan debt puts liberal-arts majors at a big disadvantage early in their careers. Many with bachelor's or even master's degrees are taking jobs that require no more than a high-school education. States themselves are increasingly unable to afford the cost of their patronage of higher learning.
At some point, institutions will need to reckon with reality and plan their own budgets accordingly. Along the way, private institutions that excel in education – not to mention taxpayers – will suffer, as state institutions continue to receive special consideration at the public trough.
What are colleges and universities to do? They will have to assess their current standing and find ways of consolidating their losses, in order to ensure that the most urgent needs of the institution are met and (if possible) provide for the survival of the school. But they face a dilemma: much of their payroll expenses are in the form of guaranteed jobs for life. They have been living beyond their means for years, relying on increasingly leveraged investments and public subsidies to keep the party going.
Their unrealistic promises and financial habits have put them in a bind: they must remove the dead weight, but they cannot simply eliminate their least-valued positions (as every other nongovernmental institution has been forced to do by the recession). Because of the public status of most schools, there are few market signals they can rely on to make their decision, and whatever they decide will spark further outrage. It seems as though everyone loses on the deal.
How Long Can the Façade Last?
Mr. Leiter might be right, for now: the first schools that begin to face reality and cut back on staff will indeed face the scorn of the entirety of academia. There is no fair way to cut back on jobs when you have promised everyone a tenured position. Some qualified people who have dedicated themselves to your school will lose out.
There remains among many scholars an air of entitlement and invincibility. Many professors believe themselves to be among the least appreciated members of white-collar society and above "capitalist" concerns of profit and loss. But King's College, London and the state schools in California are merely the first fruits of a collapsing system – and notably one that has made us all poorer in the meantime. In recent weeks there have been an increasing number of schools who are considering or taking KCL-like action. Because of the problems created by the tenure system, the restructuring of these schools is guaranteed to be much more painful than it would otherwise have been.
The inevitable collapse – and the moral outrage of those it hurts – will continue for as long as the public buys into the myth that higher education (and its professors) are too important to have to keep their costs and production in line with consumer demand.
Reprinted from Mises.org.
