It’s usually in a class on economics that people hear about The Law of Diminishing Returns. The law can be put like this: If you add more and more of some factor of production, eventually you’ll get less and less benefit from the additional increments of it. An example will help to clarify that.
Suppose a farmer adds some fertilizer to his field in spring. A little fertilizer will help his crop yield— say 100 pounds per acre. Perhaps doubling it would increase his yield further and be worth the extra cost. At some point, however, the farmer would reach the point where adding more fertilizer starts to do less and less good. It begins to cost more to buy more fertilizer than the extra crops are worth. When that’s the case, the farmer has gone beyond the point of diminishing returns and is wasting money and a scarce commodity.
That’s the law of diminishing returns. You don’t even have to have studied economics to understand it. People intuitively know to look for the point where the costs of more of something outweigh its benefits.
They do so, anyway, if they bear the costs. Where people can get the benefits of something but stick others with the costs, however, they often go past the point of diminishing returns. Politicians fit that description. They spend other people’s money and often subsidize things that are politically popular even if it means putting resources to uses with minimal utility. Higher education is a good example.
Our higher education establishment has convinced many people that the key to the state’s success lies with the UNC system. UNC-Chapel Hill’s Chancellor James Moeser recently said, “If knowledge is the capital of our new economy, research universities are the sources of that capital and will be at the center of thriving economies.” He’d have us believe that our economy would be running short of its fuel — knowledge — if it weren’t for UNC and similar institutions.
Moeser wants people to equate “knowledge” and “learning” with the kind of formal education he represents. But in his book The Joy of Freedom, economist David Henderson calls this “one of the biggest snow jobs.” He writes that “Schools don’t have a monopoly on learning: They don’t even have a large market share.” His point is that people have a strong incentive to learn what they really need to, and often do most effectively outside of formal education.
In the past, a much smaller percentage of Americans enrolled in colleges than now, prior to the proliferation of government subsidies following World War II. Nevertheless, there was rapid economic and technological progress throughout the 19th and early 20th centuries. Most people found that they reached the point of diminishing returns on formal education before college. This doesn’t mean that they stopped learning after their years of formal schooling ended. They learned what they needed or wanted to on the job, at home, in libraries, etc. Formal courses leading to degrees made sense for some, but most people took other approaches.
Thanks to state and federal subsidies, tremendous numbers of students now go to college, but many have little or no real interest in academic pursuits. What benefit they might get from post-high school studies comes packaged along with lots of dubious courses to constitute a “degree.” The cost of all that is enormous, but it isn’t buying more learning, just more “education.” For many students, college is a high-priced substitute for learning they would have done anyway.
In higher education, we’re well past the point of diminishing returns.