In his new book, “Going Broke by Degree: Why College Costs Too Much,” Richard Vedder contests a key justification for public investment in higher education: the argument that higher ed spending contributes to the general prosperity. A brief version of Vedder’s argument appears in the current edition of Forbes magazine (requires registration). I haven’t decided if I agree with his arguments or not, but he raises excellent points that should be considered in the context of public funding for Virginia universities.
Vedder, a professor of economics at Ohio State University, compared the 10 states with the highest state funding for universities to the 10 states with the lowest between 1977 and 2000, and found that the low-spending states enjoyed a 46 percent growth in real income per capita while the high-spending states racked up only 32 percent growth. How could this be? Vedder raises a couple of possibilities.
Colleges have devoted relatively little new funding over the past generation to the core mission of instruction (spending only 21 cents of each new inflation-adjusted dollar per student on it), preferring instead to assist research, hire more nonacademic staff, give generous pay increases, support athletics and build luxurious facilities. … In 1976 American education employed three nonfaculty professional workers (administrators, counselors, librarians, computer experts) for every 100 students; by 2001 that number had doubled.
Vedder also notes that educated people are mobile. Many of them leave the high-tax states where they were educated. Where to? To low tax states that don’t invest nearly as much in higher education! “Taxes reduce private-sector activity,” he says. “People who must pay high taxes tend to work and invest less and also tend to migrate to lower-tax areas.”
