Academic Capitalism is Crony Capitalism
1. It’s not about college, it’s about college-for-all.
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2. How do you calculate a college wage premium?
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3. So, what policies might add marginal students in a productive manner?
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4. By the way, what do basic descriptive data say about college students?
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5. If college is sometimes just “signaling,” what are the policy implications?
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6. Charts!
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There are reasons to think that some people might benefit from more education than they’re getting now. But at the same time, there remain reasons to be highly skeptical of the push to dramatically expand college attendance.
Ai yi yi. And he wants more subsidies and even less of a free market in education. Higher ed is already mostly “non-profit” and free of burdensome taxes, and funded with government money in the form of grants and student loans.
This same industry, despite its legal status as a public charity, is today driven by motives indistinguishable from the profit-maximizing entities traded on the New York Stock Exchange.
The coming of “academic capitalism” has been anticipated and praised for years; today it is here. Colleges and universities clamor greedily these days for pharmaceutical patents and ownership chunks of high-tech startups; they boast of being “entrepreneurial”; they have rationalized and outsourced countless aspects of their operations in the search for cash; they fight their workers nearly as ferociously as a nineteenth-century railroad baron; and the richest among them have turned their endowments into in-house hedge funds.
Now, consider the seventeen-year-old customer against whom this predatory institution squares off. He comes loping to the bargaining table armed with about the same amount of guile that, a few years earlier, he brought to Santa’s lap in the happy holiday shopping center. You can be sure that he knows all about the imperative of achieving his dreams, and the status that will surely flow from the beloved institution. Either he goes to college like the rest of his friends, or he goes to work.
He knows enough about the world to predict the kind of work he’ll get with only a high school diploma in his pocket, but of the ways of the University he knows precious little. He is the opposite of a savvy consumer. And yet here he comes nevertheless, armed with the ability to pay virtually any price his dream school demands that he pay. All he needs to do is sign a student loan application, binding himself forever and inescapably with a financial instrument that he only dimly understands and that, thanks to the optimism of adolescence, he has not yet learned to fear.
The disaster that the university has proceeded to inflict on the youth of America, I submit, is the direct and inescapable outcome of this grim equation. Yes, in certain reaches of the system the variables are different and the yield isn’t quite as dreadful as in others. But by and large, once all the factors I have described were in place, it was a matter of simple math. Grant to an industry control over access to the good things in life; insist that it transform itself into a throat-cutting, market-minded mercenary; get thought leaders to declare it to be the answer to every problem; mute any reservations the nation might have about it—and, lastly, send it your unsuspecting kids, armed with a blank check drawn on their own futures.
“We do see pressure on small private colleges as a group and that’s primarily because they don’t have a lot of different things they can do, so they are primarily dependent on tuition revenue,” said a Moody’s analyst, Edie Behr.
Moody’s has pointed out the fiscal dangers of colleges relying on a small number of revenue streams.
Boo hoo.
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