By Richard Vedder
Higher education is about the pursuit of truth and the creation of more truth. We teach a new generation the verities learned over time, and we explore new verities --new truths. But higher education, as it operates, is also about collecting rents --payments beyond those necessary to produce a good or service. Thus university presidents are earning huge salary increases, rivaling those of the kings of the university pyramid, the football coaches themselves.
Truth-seekers are also rent-seekers. And that is where problems arise. Too often, I have seen generally first rate researchers become, as Margaret Thatcher once put it, wobbly, over issues relating to higher education. Nobel laureates see positive spillover effects justifying massive public subsidies --the same scholars who generally are skeptical of externality arguments when it comes to other endeavors.
For example, I have heard very, very serious scholars claim that higher education has all sorts of positive externalities --college graduates smoke less, commit fewer crimes, engage more in volunteer activities, and burden the social welfare system less since they have higher incomes and are less often unemployed. All of these things are true. But are they true BECAUSE of college? Do kids say "Mom --I got accepted to Harvard --I am going to stop smoking?"
As I have said hundreds of times, college kids are brighter, more dependable, less crime prone, etc., than high school graduates -- and would be even if they did not go to college. Perhaps college contributes something to their having positive character traits, but certainly not everything. The average IQ of a college graduate is, I suspect, 15 or more points higher (a lot) than the typical high school graduate. Smarter people do fewer dumb things, on average.
A top aide to President Obama, Austin Goolsbee, a member of the Council of Economic Advisers, has found in his research that the positive externalities of university spending on research are over-stated, because some of the spending on research gets dissipated in economic rents (unnecessary payments) to researchers. Most researchers, including myself, would do a lot of the research that we get funded for even if the grant did not come through. Thus Goolsbee's findings strike me intuitively as a reasonable, and I suspect, highly accurate conclusion --but one that academics HATE to see published, because it discredits a favorite hustle --the quest for research grants. Andy Gillen (who told me about the Goolsbee research) also tells me that an esteemed colleague of Goolsbee at the University of Chicago is already trying to discredit Goolsbee's research. Is this the beginning of War Between the Rent-Seekers and Truth-Seekers?