Tuesday, April 28, 2009

Rent-Seekers vs. Truth-Seekers

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?

16 comments:

capeman said...

People who (supposedly) agree with Doc = Truth Seekers.

People who disagree with Doc = Rent Seekers.

Me good guy -- you bad guy!

RWW said...

Not so. If you agree with Doc, you see things in the same way he sees things, with little to quibble over.

If you disagree with Doc with a principled argument couched as civil discourse with evidence to support your opinion, then you are a respected dissenter with an alternative theory, idea, etc.

But to attack the blogger on a personal level rather than on the content of the message, the dissenter's disagreement is rendered irrelevant.

Since you use most of your comments to smear Doc personally (and have also attacked others - such as Daniel Bennet) with your deep seated invective, you can’t be taken seriously because it looks like you are trying to settle an old score rather than provide a coherent and substantiated alternative point of view.

Over time, I have read your comments and you have convinced me that you are just plain dumb. Your latest comment is consistent with my conclusion.

If I disagree with Doc, I withhold comment because I do not have the time to research the issue. And sometimes I just don’t post a comment. But I will tell you this: Doc is the smartest man in economics I know of, and he is on a mission from God. :) He is not a right-winger, he is a civil libertarian.

All one needs to do is read the Blog and read your comments and I think the conclusion is self evident – you do not hold a candle to any of the members and researchers of CCAP.

You may indeed be a good guy, but not a very smart guy. The good news is that there is a place in the world for dummies - like the Obama administration.

davidjhemmer said...

Goolsbee and Doc are correct, I would do my mathematics research whether I got my research grant or not. In fact there is more incentive to do it without the grant, hoping to get a future grant. The main benefit of the grant is getting paid salary in the summer. However if my funding dries up I'm not going to just go on vacation all summer, I'm going to keep working on my research "for free".

capeman said...

Cowboy, thanks again for the tip. I'm sure the dummies in the Obama administration feel bad about your characterization. Especially the people like Summers, Volcker, Geithner, Bernanke (he's sort of a member of the administration). I'm sure they envy the Doc's brains. And yours.

capeman said...

right wing prof -- Try doing science research without a grant to buy equipment, pay assistants, finance the facilities through overhead. You won't last for very long.

As for math research -- do you use the math library? Do you travel? Is not the prospect of summer salary an incentive to go into academia?

davidjhemmer said...

Of course I use the math library, but that is there regardless of whether I have a grant. And you are right, having the flexibility to travel is a huge benefit of having a grant. However by far the largest item in my grant (and that of most mathematicians) is the summer salary.

Of course things are different in sciences that require very expensive labs and equipment.

capeman said...

You really think the math library is there regardless of the grants? Very likely part of the overhead from the grant helps pay for the library, especially the research journals and books. Also, part of your office. You shouldn't take these things for "granted", you might find them disappearing or diminished someday. (Perhaps you would like to shre your office with another professor? I've seen places where that is done.)

In the case of the math journals, it's actually happening all over the country, cutbacks in acquisitions -- due to the rapaciousness of the private journal publishers. But without the grants, you might be surprised how small a math library budget your university could get along with.

As far as the summer salary goes -- I don't know about math, but in the sciences, it's seen as a way to make the salaries somewhat more competitive with industry and even government. After all, in those settings, people get paid for doing research year-round. Why should scientists settle for working for free in academia all summer, especially after an academic year of teaching?

davidjhemmer said...

Capeman,
I don't think you understand the summer salary model. Most academics do NOT get paid over the summer, they work on 9 or 10 month contracts and do not get paid in the summer. If they want summer salary, some places have teaching available. Otherwise grants are the only way to get paid over the summer. But here is where Doc's comments are relevant, I must work on my research over the summer whether I have a grant or not. So all that summer salary money isn't actually adding to the amount of research that gets done, it's jus tputting money in my pocket.

capeman said...

I understand the summer salary system very well, and you make my point very well. Academic scientists generally don't get paid for research in the summer, unless they have grants. Non-academic scientists do. Ergo the summer salary is a way (partially) to make academic work competitive. (I say partially because the salaries are generally a lot higher in industry for comparable levels of work, ask my colleagues who have split for industry.)

You say you "must" work on your research whether you have a grant or not. Are you a slave or something? But aside from that -- your university gets a cut of that, probably 50% or so of what you get in salary. And that 50% goes to pay for your library, office, etc.

I understand what you mean about some stuff getting done regardless of summer salary. But realistically, at least in the sciences, without the grants, the research would basically come to a halt, especially after a few years. I look around me, the people who no longer have grants are essentially finished with research. It might be different in a very abstract field where people can get things done working alone with pencil and paper. Like math, to some extent. But that's a pretty small part of the whole science research pie. In the grand scheme of things, it's probably less than 5%, maybe much less.

RWW said...

RW DOC - "Goolsbee and Doc are correct, I would do my mathematics research whether I got my research grant or not. In fact there is more incentive to do it without the grant, hoping to get a future grant. The main benefit of the grant is getting paid salary in the summer. However if my funding dries up I'm not going to just go on vacation all summer, I'm going to keep working on my research 'for free'.That is an excellent attitude!

davidjhemmer said...

Thanks Cowboy, but it's a practical attitude too. With no teaching in the summer it is the best time to get research done.

Of course I'm already tenured, if I had no pride and no desire to be promoted to full I suppose I could spend the summer fishing. There's always some jealousy of my colleagues who have long ago thrown in the proverbial research towel, and spend their summers relaxing.

RWW said...

Caveman poses an interesting question: "Why should scientists settle for working for free in academia all summer, especially after an academic year of teaching?"

Uh... Because they love what they are doing and want to contribute to society rather than feel entitled to money from taxpayers.

"Cowboy, thanks again for the tip. I'm sure the dummies in the Obama administration feel bad about your characterization."

I doubt it, they have shown the only thing they care about is what moveon.org thinks and have, along with congress, ignored what people think.

"Especially the people like Summers, Volcker, Geithner, Bernanke (he's sort of a member of the administration). I'm sure they envy the Doc's brains. And yours."

I would have to agree.

Thanks for the shallow rebuttal!

Have a nice day!

capeman said...

rwp -- I'll tell you what, if you really feel that strongly about it, you could use your grant to support research students, and forego the summer salary -- I have actually done this for a number of years. But it's my choice -- I certainly don't feel obligated to work for free.

You could also do this: recommend to the National Science Foundation and other sources that fund math (like the military) that they use the money for something else, like funding natural science.

Cowboy -- your comments are not worth a response. Except -- you misquoted me -- I never said I was "entitled" to taxpayer money. In fact, I get it because I've earned it. But I do expect to be paid if I'm expected to work.

RWW said...

Caperman - My comment is not worth a response because it is made on the same intellectual level as yours.

I have no problem with you saying if you work you expect to get paid for it. I think that is proper. However, there are a lot of people out there working a lot of hours and not getting paid for anything over 40 hours.

Are you on company time when you are commenting on blogs?

capeman said...

Cowboy -- no, fool, I comment on my own time. How about you? And why don't you ask your friend rwp the same question?

RWW said...

"Cowboy -- no, fool, I comment on my own time. How about you? And why don't you ask your friend rwp the same question?"So I'm a fool 'ey? You just cannot help yourself - you cannot post a comment without attacking a person.

I retired in early 2000. I came out of retirement to engage in a project.

I then went back into retirement.

Now I am planning another project. Since I contract my services, I choose my own hours. And after some fairly extensive traveling for over 2 months, I have chosen to relax, enjoy being with my family, and plan my next project.

Now I notice that your comments are made during regular business hours and surely within the hours that classes take place at colleges and universities. You claim to work at a higher ed institution, and sometimes claim you teach at a higher ed institution. So you are either a liar, concealing your purpose, or you spend your time on the internet during working hours - or as I said, on company time.

rwp doesn't make many comments on this blog. But when he does, they are relevant - unlike your rabid personal smear campaign against Dr. Vedder, and by extension, the young men and women that work for him.

You need to learn not to personalize everything and somehow figure out a way to let go of your insidious anger. It will destroy you young man.

Don't you think it is about time for you to grow up?

I look forward to your reply.