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Archive for July 9th, 2010

Maxine Udall had an excellent post yesterday on liberty. Here’s a lengthy excerpt from the end:

Liberty (or consumer sovereignty, which seems often to be the sole embodiment of liberty in some discourse) is not so straightforward. Am I free and sovereign if I’m acting on manipulated, distorted information provided by the manufacturer of a (harmful) good?  Am I free and sovereign to impose costs on my neighbors, my community, and my nation by failing to purchase health insurance or by repealing health reform, and then expecting to be treated, at the expense of taxpayers or individuals who did purchase health insurance, when I show up at the emergency department? To what extent do ethical constraints restrict liberty and do such restrictions represent a loss of freedom or a gain? If individuals and corporations have a right to free political speech, do they also have ethical obligations or may they simply pursue single-minded, self-interested ends with little regard for the long-term consequences to the rest of us? What does profit represent? Is it a return to the ability to dupe amateurs or is it a return to the ability to provide expert information about a product and to help amateurs to identify the product that best fits their preferences, their budget constraint, and their long-term goals?

The last is the commercial exchange that I grew up with. It did not require regulation. We understood that we were the experts and that our expertise was why our customers were paying us a mark up above costs: not to dupe them, but to help them achieve that maximum of utility our economics textbooks extol.

The above are all questions that we as a society, as a nation, and as a discipline must start to ask and to answer (in more than the 25 word sound bites that play well at MSNBC and Fox news). Economics and economists understand better than most the impossibility of a Paretian liberal. We as a discipline must advance this dialogue in ways that move us ahead in resolving the necessary conflicts of a society that values individual freedom and choice, the social benefits of efficient allocations and prices, and some necessary, yet to be determined, level of collective well-being that enhances those same freedoms, choices, and efficiencies.

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NYT has a story about a new study on US higher education that may explain its dramatic cost increases in recent decades. It’s the amenities, stupid.

Tuition, on average, rose more rapidly over the decade at public institutions than it did at private ones. Average tuition rose 45 percent at public research universities and 36 percent at community colleges from 1998 to 2008, compared with about 21 percent at private research universities.

But the trend toward increased spending on nonacademic areas prevailed across the higher education spectrum, with public and private, elite and community colleges increasing expenditures more for student services than for instruction, the report said.

The student services category can include spending on career counseling and financial aid offices, but also on intramural athletics and student centers.

“This is the country-clubization of the American university,” said Richard Vedder, a professor at Ohio University who studies the economics of higher education. “A lot of it is for great athletic centers and spectacular student union buildings. In the zeal to get students, they are going after them on the basis of recreational amenities.”

On average, spending on instruction increased 22 percent over the decade at private research universities, about the same as tuition, but 36 percent for student services and 36 percent for institutional support, a category that includes general administration, legal services and public relations, the study said.

At public research universities, spending for student services rose 20 percent over the decade, compared with 10 percent for instruction.

Universities say that funding the liberal arts is a continuing challenge. The idea is that prospective US students are too stupid to realize the value of a variety of majors to choose from, but will flock to the place with the nicest swimming pool. There’s plenty of money to go around in higher ed, but because universities are becoming corporatized, they’re marketing themselves in perverse ways and thus their social value.

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