By Richard Vedder
I got a great email today from Christian Bateson, a Dartmouth College graduate of the class of 1999 who works as a financial analyst in New York for Bear Stearns and who seems to me to have a remarkably perceptive view of American higher education now and in the future (translation: he agrees with me). Let me, with his permission, quote extensively from his email:
"If cost increases keep up at the rates of recent years, and if my (as yet unborn) children want to go to private institutions, it will cost me millions of dollars....If costs continue to increase at 7-8% per annum, and if people in my economic situation choose to pay full tuition, it will essentially represent a large (and ever increasing) wealth transfer from the most productive (and probably more politically conservative...) element of society, to a part of society whose productivity is, at the least, very hard to measure (and politcally very left leaning...) It would be one thing if that was leading to smaller class sizes and better education, but instead it's going to hire more 'diversity deans' and 'sustainability specialists.'...As for me, I have faith in the markets...My prediction is that for-profit educational institutions will grow in number and acceptance, and will ultimately lose much of the stigma they have now. If parents in 2027 want to pay $700,000 to send their son to Vassar, they can do so, but for a mere $100,000 they will also be able to send him to Time Warner Media School or GE School of Electrical Engingeering. ...'traditional' private schools will lose their advantage."
Amen. I said pretty much the same thing in Going Broke By Degree. His comments on the income distributional effects of current policies with respect to political ideology, however, are pretty original and I think exactly on target. Maybe Lenin was thinking of university giving when he said the capitalists will hang themselves with the rope they manufacture and sell (or something like that). The battle of alums to have great control over affairs at Bateson's alma mater may have had its roots in the fact that left wing academics want to hustle resources from nostalgic right wing alums, but don't want those nasty plutocrats to interfere or constrain their own highly dubious professorial behavior.
Will the Vassars (or Dartmouths or Harvards) disappear? Of course not. Some people want the prestige that likely will continue to be associated with Ivy League education. Others want the country club like amenities that Princeton will provide but the GE School may not --college is a consumption good as much as investment good for many. Life in the new $250,000 a room Whitman College at Princeton will be pretty nice, I suspect. Students will love looking out of their triple glazed leaded glass windows on a bucolic campus scene.
Still, the theory of relative prices explains an awful lot in life, and I think higher education is not immune to the pressures imposed by the existence of scarcity and resource limitations on our planet. And the less prestigious private schools that emulate Harvard might have a rude awakening some day when few if any freshmen show up the first day in the fall. We at CCAP are trying merely to push for more aggressive use of the market mechanism now, to let prices reflect true values, and to increase awareness of alternatives to the status quo.
Three cheers for Christian Bateson!!!!