Is Privatized Education a Good Idea? An e-Debate

FROM: JORDAN SHAW-YOUNG

TO: BEN ROTH

Ben,

I believe that the debate over how higher education is funded, whether by private or public funds, is often unfairly characterized as one between 'left' and 'right'. Although I consider myself an economic liberal, I also argue that an education system that lacks generous government funding is not only contrary to our long-term interests, but is also morally unjust in the short-term. I should note that these arguments are specifically aimed at college and university education, but we can certainly open up discussion to primary education as well. I will begin by explaining why I believe a poorly funded public higher education system is contrary to our long-term interests.

There are a number of arguments for a privatized higher education system. One of the most common is that the students who choose to attend university or college should be the ones footing the bill, since it seems unfair to require all of society to pay for the education of a few. Second, by severing the funding connection between colleges and politics, schools are free to function more or less autonomously, especially in areas of faculty hiring and student admissions. Both of these arguments, however, do not stand up to scrutiny.

In the first situation, it is often not the case that some simply 'choose' to forgo college or university, but rather they do not have the marks or cannot afford the cost. For those who do not have the marks, they often have not had access to quality primary education because they attended under-funded public schools. However, I will reserve my criticism for under-funded primary schools for another time. In the case of those who cannot afford college education, we are wasting an extremely valuable resource by denying them a college education. As you know, an educated work force promotes economic productivity and diversity, and therefore significant public funds should be directed towards loans and bursaries for those who cannot otherwise afford a college education.

All too often, students are eager to campaign for reduced tuition fees. This is often misguided. I am not arguing for using public funds to reduce tuition fees for all students; rather, these funds should only pay for the education of under-privileged students. The only way upward social mobility can be achieved in highly stratified, capitalist societies is by investing significantly in higher education. By doing so, we not only reduce disparities in income, we also create a labour force that is dynamic and diverse. This is in society's interest, and therefore substantial tax dollars should be invested.

Inadequate public investment in education is not only ill-considered in the long-term-it's also morally unjust in the short-term. An example helps to demonstrate this. Currently, both the United States and Canada are facing a shortage of trained physicians and nurses, a problem that will only get worse as our populations continue to age. We will require more doctors and nurses to care for our elderly, yet many of these healthcare workers themselves will be retiring in the coming years. Rather than training more physicians and nurses, however, healthcare providers in countries like the U.S. and Canada are turning to recruiting workers from developing nations. A recent article in Foreign Affairs reported that Kenya has lost 1,670 doctors and 3,900 nurses over the past 10 years to emigration. The problem is not that rich countries do not have enough people willing to enter the healthcare profession, but rather that there are not enough spaces in colleges and universities for training the required number of healthcare workers. Instead of training more doctors and nurses at home, the U.S. and Canada are bolstering their inadequate healthcare workforces with highly skilled workers from developing nations-nations that can scarcely afford to lose their medical professionals. This example shows that significant public investment in higher education is not only pragmatically desirable in the long run, but also a moral obligation we must address in the short run. As much as we demand these healthcare workers, recruiting them at the expense of developing nations should not be an option. It is, however, the direct consequence of inadequate public investment in higher education. What are your thoughts on levels of public investment in higher education?

Looking forward to hearing from you,

Jordan

SUBJ: COMPETITION IS KEY

FROM: BEN ROTH

TO: JORDAN SHAW-YOUNG

Jordan,

I won't disagree that investing significantly in higher education is central to the success of a liberal society. I won't argue that an educated and dynamic workforce is not in society's interest. And I certainly won't imply that cheap public higher education is a bad thing. What I will say is that the current system of public higher education is in a state of decline and needs change, and greater privatization of our colleges and universities can put us on a path to solving the problems at hand.

The quality of the public education system is falling as the demand for access to higher education is rising. This relationship is by no means coincidental. The current trend of budget and tax cuts means that fewer funds are being allocated to education, and U.S. students are taking a hit for their government's inadequacies. For example, the fact that not a single public university is listed in the top 20 schools of U.S. News and World Report's 2007 ranking of America's best universities is a troubling sign. By privatizing higher education, universities can have greater autonomy from the government and be free to choose their own missions and goals. But by also having the freedom to make their own financial decisions, schools can assume higher educational standards and provide our nations with graduates who are even more dynamic and well educated than before.

You say that it is morally unjust to make students pay higher tuition when government subsidized tuition prices can provide more students with better access to a college education. On the contrary, I feel that it is morally questionable to subject students to a weaker educational system in which the government simply cannot provide adequate resources. If we allow the market to rule and force currently public colleges and universities to compete with each other, the result can only be a better educational experience for all. We would not be denying any one group educational opportunities more than we are now. New markets will emerge to provide every type and level of education demanded. Subsequently, colleges, freed of governmental restraints, will adapt and tailor themselves to meet the need of every student. If anything, your example about the immigrant healthcare workers shows the need for a market-managed system in which medical schools are not at the mercy of their government's budgets and can expand to meet the demand for domestic students seeking a degree in medicine.

Competition has long been a driving force for innovation and advancement, and its role in the realm of higher education is of no exception. Institutions would have to satisfy the public's educational demands. There would be more accountability for universities, and as each responds to fill its own educational niche, higher academic standards would arise. As this process occurs, universities would actively seek to improve themselves, attract the best students, and retain the top faculty-or they would go out of business.

We face certain realities. We know the current system is not working. Privatization provides a solution, and we ought to embrace it. Why must we wait until it is too late?

Best wishes,

Ben

SUBJ: MORE COMPETITION WOULD SLAY PUBLIC SCHOOLS

FROM: JORDAN SHAW-YOUNG

TO: BEN ROTH

Ben,

Perhaps I could have been clearer in my argument that an under-funded public education system is unjust in a global context. The poor quality of domestic education is not immoral per se-rather, it's our reliance on foreign-trained immigrant labour instead of preparing our own citizens to fill vital professions. The healthcare systems of poor, developing countries already have enough trouble coping, without the constant drain of their most talented professionals immigrating to rich countries where wages are high.

I must disagree with your argument for increasing competition between public and private colleges. Public and private colleges currently do compete in the education market, but only insofar as companies like Hyundai and BMW compete in the automobile market-that is to say, students choose to attend the best colleges they have access to, but that standard varies based on their economic status. The incentive for public schools to be accountable, and provide a quality educational experience would be in place if schools were funded publicly on a per-student basis.

Private schools are able to attract the most talented faculty by offering higher salaries and generous research grants; public colleges cannot match those offers. The market for teaching talent places the brightest minds in the most expensive colleges, and this is certainly a positive thing. I believe that we should have academic institutions that fully cater to the best and the brightest, even if this requires high tuition fees from its students.

However, I disagree with you when you suggest that funding for public colleges should be reduced in order to stimulate competition between public and private colleges. Reduced government funding would force public schools to raise tuition significantly to make up for the shortfall. The market can't create efficiencies that will result in any decrease in the overall price of education, so, as a result, the cost of education in public schools would increase substantially, with no corresponding decrease in the price of education in private schools. Those with the means would still be able to send their children to Yale, but those without could not afford to send their children anywhere. The overall rate of students attending college would drop substantially.

Competition is a driving force for innovation and advancement, as you say; however, higher education certainly is an exception. The only way schools can reduce their costs significantly is by lowering wages for faculty, reducing lab supplies and equipment, decreasing research grants, increasing class sizes, and cutting extracurricular activities. The only way to significantly increase revenues is to increase tuition fees. None of these options are acceptable. The same efficiencies that are usually achieved through markets are simply not achievable in the realm of education.

It is certainly common to talk about markets creating efficiencies in production and consumption, but specifically how do you suggest that these efficiencies are created in the market for education?

Jordan

SUBJ: AVOIDING THE PERILS OF GOVERNMENT CONTROL

FROM: BEN ROTH

TO: JORDAN SHAW-YOUNG

Jordan,

How to address the challenge of higher tuition fees, as your question suggests?

Your greatest concern seems to be that a privatized system would prevent many from pursuing higher education. Yet the solution to your problem is simple: Instead of the government subsidizing and controlling higher education, the state could provide students with funds for a university-level education at the institution that he or she chooses. Over 50 years ago, the late Nobel-prize winning economist Milton Friedman proposed the idea of using vouchers to promote free-market competition as a solution to America's declining public secondary school system. Why can't we apply this logic to higher education in the U.S., Canada, and even developing nations as well? Government subsidized universities fail to provide the same quality of education that private ones do today. Public institutions will continue to lag behind so long as they are accountable only to the governments that fund them and not to the students who enroll in them.

I really must disagree when you say that market forces do not apply to education. The greatest triumph of the capitalist system has been to put the power of economic decision making in the hands of the people. Just as the capitalist model vanquished the socialist model because it gave people the power to choose how to spend their money, a free-market system of education is superior to the government sponsored one because it gives students the freedom to choose how to "spend" their education-and forces educational institutions to improve themselves to attract students or else face bankruptcy.

Also, heavy subsidizing means that the government has too much power over the way our universities operate. For example, a decision passed by the U.S. Supreme Court last year ruled that the government can withhold funds from universities that oppose the military's anti-gay policies by not allowing army recruiters onto their campuses. But if they severe their financial dependencies on the government, universities can be free to pursue their own academic, economic, and cultural goals. How can your stance justify such direct state involvement when the alternative results in a more freely and liberally educated society?

Why must we make any student drive the Hyundai of education when privatization offers every student the chance to drive a BMW? Granted, temporary inequalities may inevitably grow, but the greater improvement in the educational system would more than make up for any swell in inequality that may arise. Our educational system is too important to have no localized accountability, and if the market model can keep the same number of students in school while increasing educational quality, what's the downside of a market-managed system?

Ben

SUBJ: VOUCHERS PROVIDE A SOLID COMPROMISE

FROM: JORDAN SHAW-YOUNG

TO: BEN ROTH

Ben,

Introducing the idea of vouchers changes the direction of our conversation slightly, but not fundamentally. You're not arguing for replacing government funding with consumer dollars; instead, you're arguing for keeping government funding levels at current levels while introducing consumer choice.

I think vouchers are an excellent way to introduce a market mechanism into some centralized institutions, if managed properly. I would personally welcome a well-considered voucher system for our publicly funded healthcare system here in Canada, since it could reduce many of our current inefficiencies.

As to the broader question of whether markets are a prudent way to organize economic activity, I always find the same answer, regardless of context: it depends. In the case of healthcare, the benefit of a market mechanism is that it discourages patients from displacing their own healthcare costs onto other taxpayers. However, simply because a market works in one institutional framework does not mean it works universally. As usual, the devil is in the details. Unlike in healthcare, over-consumption of education is not a significant problem, and therefore introducing a market won't yield the same kind of cost savings.

What exactly would providing vouchers and introducing consumer choice to education accomplish? Allow me to consider this question. I assume that you are advocating giving each student a voucher that is the value of a significant portion of a public college education rather than tuition at, say, Yale, because such a public investment would certainly be impossible. If the current tuition at a public college is $5,000 per year, and unsubsidized tuition would be $20,000, if I understand correctly you are advocating giving each student a voucher of $15,000. This would not reduce the cost of education, but would introduce the element of competition in which schools would have to compete to attract students who can now vote with $20,000 of their money, rather than $5,000.

How then would schools attract students? Competing over price would mean reducing tuition fees. If this is the case, then we are back to the problem I discussed in my previous response. Unlike manufacturers who can actively seek cheaper labour, more efficient production, and new products, higher education does not have these options. In order to make significant cuts in costs, colleges would have to make cuts in research grants, increase class sizes, and fund fewer extra curricular activities. The benefits of competition are usually efficiency and innovation; however, the possibility of cost-saving innovation in education is limited. Until we can effectively learn in a way other than attending lectures and reading books, many of the costs of providing education will remain fixed. As I discussed before, while markets are remarkably effective engines for innovation in many facets of economic life, higher education is a fundamentally different animal.

Regarding your point of educational autonomy, my stance is easily defensible by pointing out that there is no necessary connection between government funding and government meddling. Irresponsible governments may try, but we voters can make it at the cost of their seat in Parliament or Congress. I agree with you that universities should be allowed to make decisions autonomously, and not be swayed by the winds of political change. In this situation, I would strongly urge Americans to hold their politicians accountable and oppose the legislation. If similar legislation were passed in Ontario, I know I would.

Best,

Jordan

SUBJ: EFFICIENCY: THE EDUCATION ELIXIR

FROM: JORDAN SHAW-YOUNG

TO: BEN ROTH

Jordan,

If you look back at our conversation to this point, I didn't mention anything about levels of government funding. I didn't even mention anything about cost savings. What I care about, and what a market system provides, is cost efficiency-and that translates directly into educational quality. I'm not trying to discourage students from "consuming" education. I'm trying to put the power of choice into their hands so that universities will be compelled to improve their quality in order to attract the students they desire.

The point of the voucher example was to mitigate the importance of tuition fees in a university's cost-benefit calculation. Your dismissive argument against it did not concede that such a system would relieve students of the burden for paying for their education out of their own pockets. It empowers even more students to pursue the education they choose. Moreover, why do you assume that competing for students means reducing tuition fees? Quality is unquestionably important as well, and students will compromise price concerns if they know they'll get a great education.

The amount of resources a society chooses to spend on education is a completely different discussion than the mechanism whereby those resources are allocated. Given the failure of socialist-leaning economies to keep pace with more market-oriented economies, we should learn from the last 50 years of empirical data and design our educational system to compete for quality. You offer no proof whatsoever that "higher education is fundamentally a different animal."

It is certainly convenient to pretend that education can be excluded from benefits the market provides, but I simply can't let you make that claim. The market-a term that has come to carry very polarizing connotations-is concerned with one thing and one thing only: efficiency. And the realm of higher education refers to more than simply academia and the accumulation of knowledge. It refers to entire institutions and networks that are in no way immune to the shortcomings of a socialist system. While we sometimes cannot place qualitative measures on particular academic pursuits, we certainly can do so on the educational infrastructure and administrative organization that supports such pursuits. It is in these areas that inefficiencies exist in the current model, and it is these areas that would benefit from universities being allowed to make their own financial decisions free from government influence.

How can education not benefit from greater efficiency? Universities may have to specialize in specific subjects or characteristics in the process of efficient restructuring, but other educational institutions that seek to fill any gaps will meet demand for the remaining areas. For example, we may see colleges focus more on their strong fields and cut their weak ones. Perhaps this may mean exclusively large class sizes for one school, but that will only imply that another school will cater to the students who demand a small, intimate learning environment.

In the end, I want a highly educated and skilled society as much as you do. But the current model is failing because educational institutions are not paying attention to what people demand due to a lack of local accountability. The privatization of our higher educational system can remedy the inadequacies of our current situation-and ensure a better educated, better informed, and better equipped society for all.

Thanks for the debate,

Ben