Since we’re talking tuition this week, I thought I’d take an opportunity to tee off on one of the weakest arguments out there on this subject. You know, the one that goes like this:
- Higher Education is a Public Good
- Public Goods should be free
- Yay, free tuition.
There are actually two responses to this argument, one narrow and one broad.
The narrow argument is that in economic terms the first premise is wrong and hence the second and third are incorrect as well. Yes, economists believe that public goods – that is, goods which are both non-rivalrous and non-excludable, should be free. But higher education is neither of these things (see this earlier blog post here for a longer explanation) so the second and third points are false. QED.
Now this is an unsatisfactory answer to most people, because when non-economists use the term “public good” they actually mean “a good which has a lot of positive externalities”, not “a good which is non-rivalrous and non-excludable”. This drives some economists a bit batty, but such is life. And, so the argument goes, since it has lots of positive externalities, we should subsidize it.
Economically, that’s a solid argument. Having positive externalities means that those who pay for the good don’t reap all the benefits. Everybody gains from having more doctors, for instance, or more teachers (more lawyers…well, that may have negative externalities). They gain from having a more educated populace which tends to be healthier, less prone to crime, more likely to engage civically, etc. Typically, where buyers don’t capture all the beneficiaries, less of a good gets consumed than it should. This is a type of market failure, and an argument for government intervention and subsidy (this is the argument for public funding of research, for instance).
BUT. But, but, but. Notice the difference here. With public goods, the argument is that government should be the sole payer because the non-excludability thing literally means that no one can capture the benefits of the investments (lighthouses are the classic if not entirely satisfactory example here). But with goods with positive externalities, while there is a case for subsidies, there’s not a case for complete subsidization. To the extent that there are private benefits, the beneficiaries should pay for them.
But that’s not the way the free tuition folks tend to argue things. It often seems sufficient, as evidenced by this recent Christopher Newfield piece in the Guardian, to say “public good!” – by which he presumably means “goods with positive externalities”- and that’s a good enough reason to ask for a 100% subsidy. Often, this is then contrasted with some “evil” alternative where asking for students to pay fees implies a “neoliberal agenda” in which education is entirely conceived of as a “private good”.
This is nonsense. A good can have both public AND private aspects. We can subsidize a good AND ask private beneficiaries to contribute at the same time. In fact, we can even devise policies which subsidize degrees differentially based on the extent to which the benefits of the degree are public (e.g. undergraduate programs in nursing or ECE) or private (MBAs). We won’t always get those divisions between public and private exactly right, but I can guarantee you that the split we come up with will be more accurate than “100% public”.
This idea that a good must be either public or private and either completely subsidized or completely marketized should be beneath us. The world is neither that neat nor that Manichaean. But just as most of us can walk and chew gum simultaneously, most of us can conceive of a world where goods can be both public and private without blowing a head valve. And we can design policies accordingly.
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Alex – all true. The “free for all” arguments are remarkably ill-thought out. It is also remarkable how little guarantee the funding taxpayers have that their jurisdiction will capture the positive externalities. Think in particular of the ease with which expensively trained professionals (especially in engineering, computing, medicine …) can simply depart the jurisdiction (province or country) that funded their education. The usual example is doctors, but personally, I think that Waterloo grads flooding to San Fran is probably more significant economically.
It is so crucial to get the balance right. Tuition too low is a massive wealth transfer from taxpayers to educated folks. Too high (or more accurately, without sufficient well-structured subsidy) and it is a massive barrier to access. Often, today, the barrier is highest for the meritorious ‘lower middle class’ who qualify for less support than the truly poor. And that is why good policy in this area demands hard work and constant monitoring, not sloganeering.
Indeed. Thanks.
You’re missing an “L” in the “BUT. But, but, but. paragraph.” See the 10th word. You may want to correct it.
Maybe more of the left could be enticed to recognize this if they saw the close similarity with “job creator” arguments by the 1%. I for one believe they reflect basically the same shell game. Agree that bringing people up short with the definition of “public good” doesn’t tend to persuade them. Perhaps regularly using the term “quasi-public good” could help people have a term to latch onto. Maybe a hot take in Jacobin or somewhere called “Stop Calling Everything a Public Good” could make a difference?
Neil makes the really critical point, “sufficient well-structured subsidy” ; while most reasonable people will, after a little thought.accept the economics of mixed public/private goods, there will always be grumbling as to sufficiency & structure of subsidy.
Yes, education is a private as well as a public good: it builds a more educated populace, but also helps increase individual earnings.
What high tuition tends to do is to make people cling to the private good. Faced with high tuition (hence, high student loans to reimburse) we may reasonably assume that fewer medical students will volunteer for Médecins sans Frontières upon graduation, or to work in remote communities here in Canada, or even to research neglected diseases. Similarly, the best law students are more likely to go into corporate law than into labour law if they see their education as primarily a private investment in future earning potential. And society is poorer as a result.
Did you read that article about parents calling their children at a History Department open house, ordering them to leave the room? That’s the intellectual shallowness that high tuition reinforces.