Should States Subsidize Universities?

By RICHARD K. VEDDER

Politicians have historically favored funding state universities, arguing they are investments in human capital, sources of innovation, and engines for promoting economic opportunity by equalizing educational qualifications that help explain income differentials. We tax used car dealers but subsidize universities because they allegedly have what economists call “positive externalities”—good spillover effects.

Big state appropriations for colleges should lead to a high proportion of the population attaining degrees. Yet the evidence seemingly does not support that. I think it curious that the two states with the highest proportion of college graduates (bachelor’s degrees or more) among their population, Massachusetts and Colorado, are among the bottom half dozen states in terms of the proportion of personal income generated going for state university appropriations.

I decided to take the 10 states devoting the highest proportion of personal income to public higher education according to the Illinois State University Grapevine annual survey of appropriations for 2018-19, and compare them to the 10 states devoting the smallest proportion. Do states spending more of their income funding schools have a large proportion of college graduates? No. Au contraire, the 10 states spending the largest proportion of personal income on state university appropriations averaged slightly over 27% of their adult population with bachelor degrees or more, compared with nearly 34% for the 10 states spending the lowest proportion of incomes.

It could be, of course, that causation runs the other direction. States spending a lot on colleges are trying to catch up with respect to college attainment, but, if so, they are not proving very successful. Low spending, highly educated states like Massachusetts and New Hampshire have a tradition of heavy emphasis on private schools, suggesting that governmental support of schools is not critical to having an educated population.

I have earlier noted that the empirical evidence suggests that, controlling for other factors, higher spending on state universities has no positive association with economic growth, and indeed may have a negative one. When resources are confiscated by taxation from highly efficient private enterprises disciplined by markets and competition and given via a monopolistic political process to an inefficient non-profit higher education sector, output sometimes falls.

University officials rhapsodize that high quality colleges and universities promote a higher quality of life, attracting more human and capital resources. But is that true? I compared the three states with the largest amount of domestic in-migration of population in 2017-18, Florida, Arizona and Texas, with the three states with the largest amount of domestic out-migration, New York, California and Illinois. Looking at the top 20 schools on the most recent Forbes Best Colleges list, none of them were located in the high in-migration states, while eight came from the three high out-migration states (four from California, two each from New York and Illinois).

This selective evidence does not control adequately for non-educational determinants of such things as migration. Nonetheless, it helps me understand why popular support, and thus political approval, of appropriations is waning for higher education. The rhetoric of educrats is not supported by results. Instead of promoting better, more prosperous lives, perhaps public higher education is justifiably viewed as more an exercise in rent-seeking, providing income to university staff whose zeitgeist seems increasingly out of sync with the electorate.

This saddens me. I am in my 55th year of teaching at a state university, earned two degrees from another state school, and have been visiting professor or guest lecturer at many more. I think they do many good things, and a world with no college-educated individuals I think would be rather bleak. That said, two laws apply: the Law of Diminishing Returns and the Law of Unintended Consequences. We may have pushed college too hard for some students. And some well-intended government programs, notably the federal student loan program, have made colleges more costly and overpopulated with high priced bureaucrats with little interest in educating students at an affordable price. An email Milton Friedman sent me in 2003 seems prescient: “A full analysis...might lead you to conclude that higher education should be taxed to offset its negative externalities.”

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Will the Courts Rein In Collegiate Race/Gender Pandering?

By Richard Vedder

Heather Mac Donald last year created a brouhaha with her fabulous book The Diversity Delusion. She shows—correctly, in my view—“how race and gender pandering corrupt the university and undermine our culture.” If anything, things have gotten worse in the year-plus since that book appeared.

Take American University in Washington. In 2018 and 2019, it spent $121 million on “diversity” initiatives. That is a very substantial sum of money, about 17% the size of AU’s endowment and $16,000 (!!) for every undergraduate student—who probably at least indirectly paid for much of that. But what does “diversity” mean? It is measured by group characteristics of individuals—their race, gender, sexual orientation, religious preferences, birthplace (immigrant vs. native-born) on which American University is spending money to “improve” the diversity of its student body.

“Improving” diversity implies that some group characteristics are given preference over others. It implies that traditional criteria for student admission based on academic potential should receive less attention and racial or other nonacademic group characteristics considerations more. High school performance and academic promise as demonstrated by, say, high SAT scores should determine admission only if they fit into the politically correct perception of the optimal mix of students with respect to skin color, sexual proclivities and gender. If 60% of Americans are non-Hispanic whites, 12% black and another 17% Hispanic, than if a school like AU has 80% whites, 6% blacks and 8% Hispanics based on standard admission criteria, it needs to reduce the white proportion in order to sharply expand the black and Hispanic proportion. One way of doing that is by giving more financial aid to blacks and Hispanics and less to whites. A second way is to have materially differential academic standards for admission based on race. If differences already exist, those differentials should increase.

Many troubling questions arise. A vast majority of educated Americans believe that African Americans should not be denied admission to a school based on the color of their skin. They generally subscribe to the magisterial words of Martin Luther King: “I have a dream that my . . . children will . . . live in a nation where they will not be judged by the color of their skin, but by the content of their character.” Yet as color of skin has been gradually declining as a decisive consideration in American life (witness rising interracial marriages), universities want to reemphasize it, as well as other group identities, such as sexual orientation. I think this is a shame.

It is noteworthy that the efforts by a university to promote diversity has been rather lucrative for some who collect large amounts of what economists call “economic rent” (payments in excess of that necessary for them to provide labor services). For example, the Vice Provost for Equity and Inclusion and Chief Diversity Officer at the University of Michigan (same person) makes a princely $407,653 annually. Additionally, his wife hauls in another $181,404 as “Program Director of the LSA National Center for Institutional Diversity.” The diversity police make a lot of money.

These positions did not exist 50 years ago. Michigan professor Mark Perry notes that the salaries of the diversity bureaucracy of the university would fund over 700 full-tuition scholarships.

The American people, while over time becoming far more tolerant of others based on gender, race and other personal characteristics, generally are skeptical of affirmative action programs, as voters have indicated in several populous states (e.g., California and Michigan). The political environment on campuses is far different from the real world that supports universities. Courts appear to share the diversity/affirmative action skepticism to some extent as well. Harvard appears to under-admit Asian American students in order to provide places in its fixed-size entering class for students rejected under standard admissions criteria, especially members of other racial minorities. As indicated here previously, despite Harvard’s victory at the district court level, it is far from certain it will ultimately prevail at the Supreme Court, and meanwhile there is another suit winding its way through the courts involving the University of North Carolina. Will the courts rein in Excessive Diversity Syndrome? Stay tuned.

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Australian Education Minister will tell universities to stop adjudicating rape

Bettina Arndt

Red letter day! Our Education Minister Dan Tehan will today tell TEQSA, the university regulator, that universities need to stop adjudicating rape on campuses.

He’s set to speak at  the Tertiary Education Quality and Standards Agency annual conference in Melbourne where he will announce that the criminal justice system, not a university discipline process, is the right place to deal with ­alleged crimes that take place on campus or in the student commun­ity.

“Universities have a duty of care to their students and that ­includes ensuring processes around the enforcement of any codes of conduct are legal, fair and transparent," he will tell the conference.

“If a student alleges they are the victim of a crime then our criminal justice system is the ­appropriate authority to deal with it," Mr Tehan says.

Tim Dodd, the Higher Education editor for The Australian who has been given access to Tehan’s planned TEQSA speech, writes today that Tehan’s speech follows a decision by a Queensland Supreme Court judge last week that barred the University of Queensland from holding a discip­linary hearing into allegations that a final-year male ­medical student sexually ­assault­ed a female student last year.

Dodd summarised that ruling as follows: “Justice Ann Lyons ruled last week that the university was ­restrained from going ahead with the hearing on the basis that the allegations against the ­student “were in fact allegations of crim­inal offences of a sexual nature". “This is not just an action by the university about breaches of its rules, policies and procedures," Justice Lyons said. “It would indeed­ be a startling result if a committee comprised of academics and students who are not required to have any legal training could decide allegations of a most serious kind without any of the protections of the criminal law."

Dan Tehan will announce that education providers “need to take great care when considering disciplinary action in relation to allegations of criminal conduct, to ensure that the protections afforded to indiv­iduals responding to those allegations are not infringed. These are complex matters and there is substantia­l legislation, case law and legal precedent available to anyone accused of a crime."

Isn’t this wonderful? Finally we have an education minister willing to take on the small but noisy group of activists who managed to bully the entire higher education sector into pursuing this path, which has had such disastrous consequences for colleges in America, with over 200 successful legal cases of young men suing over the universities' failure to protect their legal rights, and thousands of accused young men being thrown out of colleges after biased, “believe-the victim" judgements by college tribunals.

Let's see if university administrators will now come to their senses. Not much sign  of that from USyd’s Vice Chancellor Michael Spence. His letter on the matter below. How does this man, who received a salary package of 1.53 million last year, get away with being so blinkered and inept?  Why are the University's academic lawyers silent about this dangerous nonsense?

We need to put pressure on universities to get real and realise feminist activists need to relinquish control of the sector and allow universities to get on with providing education rather than controlling people’s private lives. Please talk to any academics and administrators you know, or write letters to your local university. The activists are bound to be fighting fiercely against this advice from Tehan. Universities need to know the silent majority demands they get their act together. And Tehan needs your support. 

That’s  it for now. I’m off on two weeks’ holiday so I would be grateful if you saved up any correspondence until I return mid-December. I’ll check emails occasionally but will only deal with urgent matters.

Email from Bettina Arndt: Bettina@bettinaarndt.com.au





Police take the lead in investigating campus allegations

Weaselly letter from Michael Spence, vice-chancellor, University of Sydney, NSW. He apologises for nothing and gives no undertakings

Attending university is not a right, it’s a privilege that can be forfeited (“It’s time we culled kangaroo courts", 27/11). Some behaviour appropriately deprives people of this privilege.

Universities do not try to determine criminal culpability in sexual assault cases.

The University of Sydney reports information about serious indictable offences to the NSW Police, and co-ordinates with them before commencing our own processes or investigations. A police investigation always takes precedence.

Our investigations seek to determine breaches of our own codes of conduct or policies, and we apply the “balance of probabilities" test, which is the standard of proof to be satisfied in civil proceedings.

We always take into account the nature and seriousness of the allegations when deciding whether the standard of proof is met. Always, our priority is to ensure the safety and wellbeing of our students, staff and broader community, and we take great care to ensure a fair process for all involved.

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