Does Privatizing Higher Education Undermine the Public Good?

The higher education establishment is growing worried about privatization. Should the rest of us do the same?

First, how much “privatization” have we actually had in higher education? In one sense, none, because no state-owned college or university has been sold off to private investors. 

But on the other hand, there has been quite a bit, since to a considerable extent, governmental funding for higher education has been replaced by private funding. 

In Privatization and the Public Good, Matthew Lambert, vice president for university advancement at William & Mary, gives us an approved “establishment” view of the privatization phenomenon in which it is perceived as a great threat.

The establishment’s seal of approval is confirmed by glowing jacket blurbs by insiders such as former University of Michigan president James Duderstadt and the endorsing foreword by Patrick Callan (president of the Higher Education Policy Institute).

Callan, speaking of what he regards as the great “national success” of higher education following World War II, sniffs that “The epoch of public purpose that spawned this achievement has given way to a period of privatism that [Harvard philosophy professor] Michael Sandel has characterized as ‘market triumphalism.’” 

Sandel’s phrase “market triumphalism” has an ominous ring to it.

Early in the book, Lambert declares that privatization “is not a dirty word.” It can, he observes, lead to more avenues for gaining revenue and increased autonomy for schools. 

But most of the book is a lamentation over the erosion of support for public higher education. “If the return on an investment in higher education is so high, not only for the individual but also for the society, why is the burden of cost shifting from the state to the student?” he plaintively asks. 

Lambert is especially worried that we are suffering from “market failure” because the public doesn’t understand how great the social benefits of college education are. His book’s big task is to clear up the “misinformation about the potential benefits of higher education” so that Americans will once again correctly value it. 

Many pages are devoted to human capital theory, which Lambert sums up this way: an educated population is a productive population. Of course, education can make an individual more productive, but it does not follow that more education will make everyone more productive. Unfortunately, he doesn’t grasp that like nearly everything under the sun, higher education is subject to the law of diminishing returns.

At least, Lambert acknowledges the existence of critics who argue that the U.S. has gone too far in pushing college. He cites the work of Professor Richard Vedder who has showed that large numbers of college graduates now can only find work in jobs that don’t call for anything more than basic education. But Lambert’s response to that argument is laughable:

There is hope, though, in Val Burris’s 1983 study of the various effects of overeducation’s impact on job satisfaction, political leftism, and alienation. The study concluded that the effects of overeducation on these worker attitudes were minor.

What possible relevance does a 1983 study on these attitudes of “overeducated” workers have to Vedder’s argument that we have oversold higher education and consequently have large numbers of underemployed college grads today? None at all, but Lambert treats the matter as settled.

Then Lambert goes into his “social benefits” from higher education argument. College, he claims, is not just a private good that leads to increased earnings, but it also confers a host of benefits on society that we don’t sufficiently appreciate.  

Those benefits include: improved effectiveness of government; improved human rights; greater political stability; a better environment; healthier lifestyles; reduced economic inequality; lower crime rates; better child care; and reduced welfare costs.

Furthermore, Lambert claims that we know the large magnitude of those benefits. He cites Professor Walter McMahon’s book Higher Learning, Greater Good where McMahon calculated the total non-market benefits of college at over $38,000 per person per year. 

But because the public is ill-informed about those huge benefits from college, it is “tremendously undervalued.” We don’t invest enough in it, which Lambert claims is a great “market failure.”

Lambert and McMahon are following in a long line of specious research purporting to prove that college is a great “social” investment. Every few years, the higher education establishment releases a study like “The Investment Payoff” claiming that we obtain an array of great social benefits when we put people through college.

The problem with such research is that it glides from showing that various good results correlate with college degrees into assuming that college causes those results.

Consider, for example, Lambert’s claim that college leads to a high yearly benefit in health because “individuals with higher education have a greater capacity to choose healthier lifestyles and value the future more highly.”  

Undoubtedly, there is a correlation between college attendance and healthier living.  Those who are more future oriented and apt to favor choices that enhance longevity are largely in the class of people who are drawn to college, while the class of people who like to smoke, eat poor diets, and live day-to-day are generally not drawn to college (or any education). 

What we should not assume is that going to college causes the “good” choices or would change people who are prone to “bad” ones. The question isn’t whether not smoking correlates with college, but what effect, if any, college has on causing people who already smoke to quit.

We would also want to find out how often non-smokers start smoking in college and if existing smokers increase smoking in college. When we ask those “marginal” questions about college and smoking, its social health benefit starts to look very questionable.

Smoking has been increasing among college students according to this study by the Hutchinson Cancer Research Center, which finds that 11 percent of college smokers began during college and 29 percent of those increase their use in college. Also, this Reuters article notes that the smoking of marijuana among college students has been significantly increasing in recent years.

Thus, while non-smoking correlates with college graduation, it is not the case that going to college is an effective smoking prevention measure. Spending more tax dollars to put people through college who otherwise wouldn’t have gone isn’t apt to cause any measurable health and longevity benefits.

Exactly the same reasoning applies to all the other purported social benefits. They correlate with college graduates but there is no reason to believe that going to college produces good changes in people.  

An analogy might help make the point here. There are strong correlations between home ownership and good outcomes (health, civic participation, employment and income, etc.) and correlations between non-ownership and bad outcomes. If we gave all renters enough money to buy a house, would that cause great social benefits? Of course not. 

Summing up, privatization—that is, less government subsidization of higher education—does not lead to market failure. It has not caused “lost benefits” in health, crime, welfare, human rights, political stability or anything else. 

If we did what the higher education establishment wants and went back to increasing government subsidies to attract people into college, that wouldn’t bring about a healthier, more honest, environmentally protective, and civic-minded populace. Doing so would merely accelerate the rising cost of college and perhaps lure in a few more poorly prepared and weakly motivated students. 

That would be the opposite of a “public good.”