The Rise of China and Higher Education

By Richard Vedder

Anyone watching the Olympic Opening Ceremony from Beijing could not help but be awed by the extraordinary spectacle, a significant achievement in combining modern technology with ancient artistic skills. It is easy to believe that many will say this symbolizes China's rise in the world to a position of leadership if not preeminence.

It is extremely important to realize that this Olympic ceremony would never have happened except for the silent but profoundly important economic revolution that happened in China that was entirely caused by the opening up of the economy to private property rights, competitive markets,international competition, and the creation of a rule of law and government stability (more needs to be done in these last two areas, to be sure). People were empowered economically, and government retreated somewhat in people's economic lives and allowed a thousand flowers to bloom and with that, let the good times roll. That gave China the resources and international respect that allowed this magnificent artistic/technological achievement to occur.

In the process of having government retreat to something closer to its optimum (smaller) relative size and role in the economy, China's economic capacity grew so fast that it allowed the nation to greatly improve its system of higher education, its research capabilities, etc. A byproduct of the triumph of competitive free market capitalism is a major strengthening of China's colleges and universities.

I suspect some higher education types will start saying something like this: "Just as Sputnik was a 'wake-up call' to end America's complacency in science and engineering a half a century ago, so the Olympic ceremony should point out our need to make a greater public commitment to our higher education system, to prevent us from being taken over academically and economically by the Chinese."

In other words, people will say, China is getting rich, so lets us spend more taxpayer money on education as a tool for economic growth. The Chinese triumph was one of competitive capitalism, not of monopoly governments. Our reaction should be to make our system leaner, meaner, more efficient and more competitive. The lesson should be: let our free enterprise system compete by minimizing taxes, regulations, tariffs, and other impediments to growth. The opening ceremony is not a lesson in the need for more government, but in the need to learn from the lessons of free market capitallism.

Indeed, higher education in America has many attributes of the pre-modern Chinese economic model --pre-1978, the Age of Mao. That model gave primacy to one producer --government --muted competitive forces, and provided few incentives for managers and leaders to seek efficiency and innovation. It was a not-for-profit economy. That comes close to describing American higher education today. We can learn far more about revitalizing American higher education by looking at the dynamics of capitalism --either in the U.S. or China --then by increasing resource uses to support a medieval institution --the University --that has changed little in its basics for generations, if not centuries.