Shameless: “Too Big to Fail” Argument Hauled Out for Higher Ed

You know that something is really in trouble when the defenders of that something have to resort to jaded and intellectually feeble arguments in favor of it. For quite a few years, I have been convinced that higher education is in trouble, because it costs so much and often delivers so little, but a recent Huffington Post piece by the Chancellor of UCLA absolutely clinches it.

In the piece, “Public Higher Education: Too Big – and Far Too Important – to Fail,” UCLA’s Gene Block contends that public institutions of higher education are today “severely threatened by the relentless onslaught of slashed budgets in state capitals.”

Block laments that last year, forty states reduced their higher education budgets. He thinks that fact will scare us, especially when we’re informed that the U.S. now ranks only 16th among developed nations in the percentage of 25-34 year olds who have “some level of college attainment.”

Anyone hear the cries of “Wolf!”?

The trend of reduced state spending on higher education is nothing new. It has been going on for decades. Some major public universities have been largely privatized, such as the University of Michigan and the University of Virginia. Rather than state appropriations providing most of the support, private giving now does. Is that bad? Neither of those famous universities has suffered.

Block tries desperately to carry his argument by adverting to Derek Bok’s saying, “If you think education is expensive, try ignorance.” Block would have you believe that our choice is between “ignorance” and reversing course on state higher education spending, but that is obviously a false dilemma.

A great deal of state spending on higher education has nothing to do with the education of college students—sports, administrative bloat, research just for the sake of filling up pages, and so forth. Moreover, many students simply coast through college without learning much. That has nothing to do with the level of spending, but instead with their lack of motivation, which is incentivized by the low standards that are so prevalent.

In the recent past, we have heard the “too big to fail” argument used with regard to the auto industry. The Big Three were said to be “too big to fail,” and therefore huge amounts of tax money had to be shoveled into them so they could be “saved.” The trouble with that argument was that it too presented a false dilemma. Without government aid, those parts of the Big Three that were sound (i.e., profitable) would have survived and the parts that were not would have folded.

Similarly with higher education, if government money stopped flowing, the parts of it that are worth the cost would keep going (and probably expand), while the parts that are not worth the cost would be trimmed back or eliminated.

There is nothing that works nearly as well as the test of the market to get people (and institutions) to make the best use of scarce resources. Conversely, there is nothing that so encourages waste and inefficiency as a steady and growing stream of government funds. The “too big to fail” argument is an attempt to make people forget that.


George Leef is director of research for the John William Pope Center for Higher Education Policy

Posted by: George Leef

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