August 23, 2012

Investing in Higher Education Will Not Bring Democratic Equality

old-fashioned-school-room.jpgBy Robert Weissberg

America's huge investment in higher education has always had a democratic justification: everyone should be able to attend college because this opportunity would flatten the social pyramid. Yes, a North Dakota State and Harvard degree differ in prestige, but at least the North Dakota State graduate can join the game. Put ideologically, investing in higher education--more schools for more kids--is egalitarian.

Reality, it seems, has refused to cooperate. The billions poured into higher education have not flattened the social pyramid. If anything, income gaps have widened as graduates from the top schools often earn "obscene" salaries while those from lesser schools struggle to find decent jobs to pay down student loan debt. Charles Murray's Coming Apart depicts an America where the rich and poor increasingly live in diverging worlds. Clearly, something is wrong with the traditional narrative that insists that a well- funded, open access higher education for all can ameliorate the evils of hierarchy.    

Truth be told, investing in higher education undoubtedly exacerbates inequality, not the opposite. If equality were our most cherished value, better to cut public financial support for education or offer just a bare-bones college to a few.

To understand this politically unsavory paradox, let's start with something called the Matthew Effect, named after the Biblical Evangelist. Said Matthew (25:29 King James Version): "For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken even that which he hath." In contemporary parlance: those possessing an edge will gain yet more over those with less or, as commonly summarized, the rich get richer. It is a well-documented phenomenon. Here's the education version.

Begin with a single room schoolhouse, a poorly trained teacher, a three month school year and one or two books. At graduation the smartest and dumbest scarcely differ in academic accomplishment. Now add a longer school year, a better teacher, more books and the gap at graduation grows. It's simple--the smarter kid just gets more out of the lesson and the better the lessons, the more he or she extracts. This ability to extract is the very definition of "smart."

The Matthew Effect scales up. Start with rotten universities and every graduate is poorly educated. Add improvements and the smart begin to excel. Add an MIT or Cal Tech and the gap becomes a chasm. As billions are spent on higher education the most able leave their less bright compatriots light years behind.

Curtailing the Matthew Effect is nearly impossible save in totalitarian regimes. Yes, Washington can shift funds from Stanford to Okefenokee Tech in the name of "fairness" but savvy firms and alumni will probably make up the difference. Only the most rabid egalitarian could resist the benefits that well-funded geniuses produce. Nor can relentless remediation close the widening gap--while the less talented yet again struggle with Algebra I, the smart kids quickly move through the Calculus sequence. 

Moreover, the larger the admission pool, the greater the Matthew Effect. So, when Harvard largely focused on the WASPy children of the rich, a tiny recruitment pool, few geniuses arrived. Now, expand the pool to everyone and admit exclusively by merit, and, guaranteed, the average SAT will be in the stratosphere. But, as we all know but are reluctant to admit in public, this approach is unlikely to create a student body that resembles America.

And keep on filtering for merit--Ph.D. programs that admit only the very smartest Harvard graduates and you will create a class of Alpha Pluses to use Brave New World terminology.  Now for the final step: build an economy that rewards extraordinary brain power, and those with off-the-chart brains will become very, very rich. In a math-type formula: ample resources plus meritocracy equals economic inequality. This is an Iron Law. If you want equality of education results, elites that closely resembles those below, just return to the Stone Age where nobody attended school.  

Today's global economy further exacerbates the Matthew Effect. Thanks to applications from overseas, top school can pick from huge talent pools, and rest assured, one in a hundred becomes one in a thousand and the gulf widens. The sequences of this shift are perhaps most visible in the stock market. Until recently, any person of above average ability could be a serious player; today, by contrast, its highly mathematical nature favors those in the top 1% of the IQ distribution and if they are really, really clever, they can make billions in a few trades. No wonder the SEC is often paralyzed--the math may be beyond their comprehension.

Cure this burgeoning inequality by "investing" yet more in higher education is like fighting fire with gasoline. Putting millions into community colleges may yield some benefits but the identical sums given to MIT will be better spent. Actually, if we want to out-perform foreign rivals, better to give all the money to MIT and let the community colleges survive on table crumbs.

Most public officials are mesmerized by the egalitarian fantasy. They insist that investing more in higher education will even out inequalities by helping those at the bottom get an Associate's Degree to compete with Ivy League graduates. No Virginia, Santa Claus cannot help those baffled by Algebra I to earn millions doing mind-boggling Wall Street swaps and derivatives. And take heed, Occupy Wall Streeters: next year's 1% will be even smarter and richer than today's 1% as the pool of applicants to top colleges expands as a resul tof growing worldwide wealth. In fact, thanks to this relentless upward pressure from an ever larger pool of applicants, today's 1% may eventually be displaced by those with even higher IQ's.

Those who wave the bloody flag of "fairness" in the income distribution are doomed. Exceptional talent, as any sports fan can tell you, does not come cheap. Bill Gates was once asked to identify his greatest competitor. He said Goldman Sachs. A puzzled interviewer asked why, and Gates responded that both Goldman and Microsoft competed for the same prime intellectual talent at the very edge of the bell curve's right side. Finding and rewarding top intellectual ability in today's global economy is incompatible with economic leveling though, ironically, this "unfair" meritocracy that looks nothing like those below will bring greater prosperity to everyone. 

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Published by the Manhattan Institute
The Manhattan Insitute's Center for the American University.