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May 22, 2011

Why University Presidents Are Clueless About the Real World

By Richard Vedder

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New Pew Research Center data show that a large majority of Americans think U.S. colleges and universities offer only fair or poor value for the financial cost -but college presidents strikingly disagree, with a majority of them thinking college offers at least a good value (though college presidents are overwhelmingly pessimistic about the quality of American higher education compared to the world ten years from now). Similarly, a majority of Americans question whether college is truly affordable any more, a view that most college presidents do not share. More generally, people in the academy have views widely divergent from the mainstream of the American population.

Turning to college presidents, I think a lot of this attitudinal divide relates to the non-market environment in which colleges operate. How do you become a successful college president? You raise lots of money, which you then use to bribe the various constituents in the university community to keep them happy. The faculty you bribe with low teaching loads, good fringe benefits, and perhaps a nearby parking place. Your fellow top administrators whose support is vital you bribe with not only good salaries, but also lots of assistants who do much of the heavy lifting associated with the job. You bribe the students by giving them nice recreational and dorm facilities, and reach an implicit bargain with them to not demand much academically (hence grade inflation) and to largely ignore their hedonistic bouts of alcoholic and sexual excesses. You bribe the alumni with decent football and basketball teams and a nice campus facility where they can hang out. You bribe the trustees with whatever idiosyncratic whim they want. In short, you spend money to keep a narrow group of people associated with the Ivory Tower happy.

Contrast that with business leaders. They are motivated by profits, maximizing the gap between revenue and costs. To increase revenues, they must please vast numbers of persons with new or improved products. They also enhance profits by reducing costs, raising productivity so they can do more with less. They reward subordinates who further these goals with bonuses, stock options, etc.

In higher education, success for leaders comes from spending money and pleasing a narrow local constituency; in “the real world” business success comes by conserving money and understanding the desires and tastes of the broader public. Hence, over time, productivity has risen in business (by about two percent a year going all the way back to 1870), whereas it has stagnated or declined in higher education.

While they spend a good deal of time with affluent alumni, occasionally with politicians and rarely with irate parents, the zeitgeist of the university president is heavily influenced by a community of persons largely isolated from economic realities. Moreover, that community is decidedly far more leftish progressive than the public as a whole. Klein and Stern and other scholars have noted the 30 to 1 ratio of Democrats to Republicans among academic anthropologists, or the roughly 10 to 1 advantage than Obama had over McCain in fundraising in the last presidential campaign. Americans are decidedly more individualistic than academics, less trusting of governmental authority and more wary of vast extensions of the welfare state (as the backlash over Obama Care has shown).

One advantage of getting old (there are several disadvantages) is that you develop some sense of historical perspective. I think that over the half century that I have been in American higher education the disconnect between the academy and the real world has grown, and certainly it has grown from what it was in, say, 1850 or even 1900 if accounts of earlier American academic life are even approximately correct.

There may be something in the DNA of intellectuals that predispose them to greater collectivist, as opposed to individualist, action. Intellectuals are supremely confident in their understanding of the human condition, and often contemptuous of the thinking of lesser mortals. This makes them susceptible to policy moves that involve substituting centralized decision-making (which they disproportionately influence) for that of individuals. It is no accident that some think the modern welfare state emanated out of policies of our first purely academic American president, Woodrow Wilson.

But I think the bigger reason for this divergence of views is that academics have simply been bribed into being more left-wing by the welfare state. Universities used to be more dependent on private money –money either paid in tuition fees by individuals or by private donors. They were dependent, in short, on income generated directly by individuals in the market economy. Today, however, universities are more financially dependent on government, and the income and prosperity of university folks depends on large amount of government largesse. This has contributed to the widening of the divide between town and gown, the Ivory Tower and the Real World.

As the gap widens, I suspect the academy becomes more vulnerable. It will become politically more difficult for university leaders to convince politicians to support a sector that is becoming more alien to the thinking of the American people. The indifference of university presidents over the growing concerns of the public about the cost of college is the most obvious manifestation of this, even more so than earlier more symbolic acts that the public intensely disliked, like kicking ROTC programs off campus. A political day of reckoning for American higher education may be closer than you think.

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Richard Vedder directs the Center for College Affordability and Productivity, is Distinguished Professor of Economics at Ohio University, and is an Adjunct Scholar at the American Enterprise Institute.     



Comments (2)

Heimwerker:

Hey, your story above really have me interested up to the very last word, so I just had to comment on it. Incidentally I located it via Yahoo and I must confess to you I usually never read the whole article of a blog since I always get bored of the "chit-chat" that is presented to me on a regular basis. In contrast your column got me hooked from the beginning to the end. Really remarkable nowadays in the blogging world (in my opinion). As consequence: thanks a lot and please please go on with your good work. I'll surely come back and check for new articles! See yah

C. Price:

Of course "It is no accident that some think the modern welfare state emanated out of policies of our first purely academic American president, Woodrow Wilson." It fits their world view to make that acausal association. The impetus for the modern welfare state was the unmoderated excesses of the business practices of the 40 years preceding Wilson's term. Theodore Roosevelt had just as much "responsibility" for the establishment of restraints on business practices. The message of history remains the same: the abuse of liberties, freedoms, and advantage eventually brings restraints and curbs. Small business owners, individualistic or not, do not understand how derivatives increase productivity, and nor why are banks "too big to fail". They do understand that without the advantages of higher education, their businesses will not continue to derive efficiencies. There has always been a lack of agreement between the academy and mainstream opinion, as there is between any group forging the future and those with narrower views. Should the academy sell their long-valued independent voice and become restructured to join the choir of apologists for present-day excesses, that will hasten any day of reckoning for American higher education.

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