August 31, 2006

Charles Miller's colloquy on CHE: dodging the market debate

Charles Miller appeared for a Chronicle of Higher Ed live chat about the Spellings Commission, and there were three—not just the one asked by me, but three—questions about markets and higher education.  Here are his responses, with my annotations in brackets:

That's a very broad and important question and deserves a better answer than I can offer here. [SJD: This sentence is an attempt to avoid the topic. It utterly fails, as you'll see below.] The Commission had a goal of creating a "National Dialogue." That dialogue must continue in order to resolve the balance. [This sentence is an attempt to assert that the report will address the balance between individual and collective goals without answering the question.] (We do not actually have a market system in higher education, in my opinion. [We'll see later what he defines as a market system.])

Well I think we do have competition among different sets of institutions, however I think competition does not automatically make a market system. [Mr. Miller must not understand the economists' concept of imperfect markets, including those for energy, food, etc.] I think competition can at times be very destructive. [Such as... ? Without talking about specifics, it's hard to know whether this statement is just lip service.] It is possible to argue that among certain sets of institutions we have the equivalent of an oligopoly, where there may be competition within a group of institutions, but that set of institutions has powerful advantages over other sets of institutions. Because higher education is heavily subsidized and regulated, and lacks serious penalties for poorer outcomes, and lacks transparency, it would be difficult to describe this as a market system. Worst of all, pricing information for individual participants is virtually secret. [Ah... the best way to address problems is by information. Very neoclassical in abstract, but there's this small problem that institutions sell credentials as much as an education, giving some students an incentive to want a credential with as little effort (or education) as necessary. The ideal information for such a student would be to look for high value-added credentials—schools with substantial reputations but where the work involved is at a minimum.]

I could agree that the private sector gets some direct and indirect subsidies through tax and other fiscal policies. However, direct subsidies from the federal government to so-called private colleges average 25 percent of revenues. [Why this focus on private institutions, when the vast majority of students attend public institutions?  And when there are dozens of very poor private colleges? The profligate private universities are easy targets.] In addition, substantial state and local subsidies, direct and indirect are made available, and federal tax subsidies as well. Historically, the performance of our colleges and universities has been world class. The question in a period of strong demand for public resources, is how to maintain that competitive advantage. [Here Miller heads away from the point of the question.]

And then, when asked about alleged liberal bias, he responded by referring to ... um, er ... markets:

Personally, I think where institutional biases exist those places will become less relevant. I think today's students will have access to information from many different sources, in many different forms, and if institutions don't adjust to that fact, they will become less valuable.

Clever dodge (though I'm happy that the Spellings Commission avoided the bias charge in its report)—and here comes the market again in a sly fashion. The problem with looking at higher education as an undifferentiated market is not only that there are multiple types of institutions but multiple goals of students. Students who look for the easiest, cheapest credential will love grade inflation at state institutions. Students who look for the easiest elite degree will love grade inflation at prestigious private colleges and universities. Students who want skills will be hard-nosed about the organization and preparation of faculty. Students who want a liberal-arts education want organization and preparation and the perspective of faculty. Most students are dissatisfied with faculty who are clearly biased and unrepentant (fill in the blanks) because they tend to be poorly-organized and fail to bring a broader perspective. But then students with some of the goals mentioned above might also be unhappy with faculty for other reasons unrelated to disciplinary biases. Markets are great for allocating resources in one type of arrangement, but for balancing different goals in a public good?  I'm not so sure.

The nuts and bolts of the regulatory apparatus will be at the heart of the post-report politicking this fall: so-called unit-record databases, accreditation, and student-aid issues. But Miller missed an opportunity to address the individual-vs.-collective-goal balance yesterday. I wish he hadn't. I don't mind and expected a solid response to the concerns I and others have raised. 

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Posted in Academic freedom on August 31, 2006 9:34 AM |