Mises Daily

A
A
Home | Library | Competition and Higher Education

Competition and Higher Education

February 5, 2003

Grove City CollegeEconomists speak of competition as the rivalry in supplying or acquiring an economic good or service.  Sellers compete with other sellers as do buyers with other buyers.  In the area of higher education colleges compete with other colleges and students with other students.  The competition among colleges is especially keen as private colleges must face rivalries and challenges by giant state institutions.  Thriving on financial assistance collected from all taxpayers, they now attract and instruct some 80 percent of all students.

Government education has not always been the dominant form of learning.  Long before there was a single public school there were numerous academies and colleges sponsored and managed by various Christian denominations.  During the 19th century when new  ideals of democracy, nationality, and equality held sway over public thought, American education turned toward a system of common schools that were free, universal, and mandatory for all.  Every state of the Union soon established its own colleges and universities.  Frequently, the states merely assumed control of failing private institutions that were willing or even eager to be rescued by the states.  At the same time a growing population and rising standard of living allowed the number of private and church-affiliated colleges to increase. 

Competition need not lead to antagonism and hostility although it often evokes envy and even malice among competitors.  But we must always be mindful that economic competition differs fundamentally from confrontation and fighting.  Members of a society are united in a common activity to produce economic goods and services for human existence and comfort.  Economic competitors aim at excellence in service, and competition selects the best man for every position and function.  Consumers are the judges; they determine everyone's position in the market.  Buyers of automobiles decide the profitability, growth, and position of the auto manufacturers, as do the consumers in the educational market, that is, students and their families.  Being vitally interested in the best educational service they can afford, they alone determine a college's position in the higher education market.
 
Political rivalry differs radically from economic competition.  Politics deals with the burdens and benefits of government as does political science, the study of the processes, principles, and structure of government.  Modern government is a huge transfer apparatus that collects income and wealth from some of its subjects and hands them to others.  Guided by some popular thought of social welfare and justice, it directs, controls, regulates, and manipulates much economic activity.  But this activity which affects the well-being of every subject is the very source of much bitter conflict.  In many parts of the world it often leads to violent confrontation and much bloodshed.  In Western democracies it usually is limited to political accusations, personal denunciations, and acrimonious debates. 

On college campuses the confrontation may appear in all fields and departments dealing with or merely touching on political and social issues and the economic order.  Instructors in political science, sociology, history, English literature, and economics, espousing different ideologies, love to hate each other, which is their professional distinction.  Even members of the departments of religion and philosophy may "take no prisoners" when they encounter colleagues clinging to a different political, social, and economic ideology.

Ever since World War II and especially since the age of "Sputnik," the first satellite launched by the Soviet Union, governments on all levels have spent vast amounts on education.  President Lyndon Johnson's Great Society programs called for the federal government to participate actively in reshaping primary and secondary education.  President Ronald Reagan's administration provided education money to the states in the form of block-grants, leaving to the states much of the determination of how funds were to be spent.  President George H. Bush favored aid to disadvantaged children and promoted state programs for excellence.  President Bill Clinton gave education the highest priority in his administration; he submitted the highest education funding package in U.S. history.  President George W. Bush made the improvement of education a central goal of his administration. 

In the footsteps of the Presidents, the state governors never tire of calling for better public education to prepare children for a productive life and good citizenship.  With education in the center of political concern, it cannot be surprising that educational expenditures have been rising by leaps and bounds and that education costs have escalated.  In higher education, expenditures and tuition have risen at some ten percent a year at both public and private institutions.

Capital expenditures by both public and private schools have soared as have the outlays for labor. The salaries and working conditions of faculty have improved significantly.  In the early 1950s, when this writer began his teaching career, the standard teaching load of a college instructor was 18 hours a week and his classes were rather large.  During the 1960s the load began to decline to 15 hours and then to 12.  By now the faculty teaching load at many state colleges has declined to ten or even eight hours a week.  Professors may have "sabbatical years," that is, a leave of absence with pay, granted every seventh, sixth, fifth, or even fourth year, for travel, research, or just rest.  Surely, most professors like to travel, but few actually conduct any meaningful research.  Many professors work very little for the state institution that pays their salaries. 

In short, the rising public expenditures not only gave rise to a growth industry but also raised the costs of labor and caused productivity to decline.  At the same time administration costs rose even more rapidly.  There now are vice-presidents of all types with associates, assistants, and secretaries who constitute a powerful pressure lobby in the halls of legislatures, pleading for more public funds.

The 2002–2003 budget of the Commonwealth of Pennsylvania, for instance, anticipates General Fund revenues of some $20.8 billion, providing for education expenditures of some $8.5 billion, or 41 percent of the total.  It allocates some $1.45 billion of this amount to state and state-related higher education.  In dollars and cents, of a population of 12.2 million people, some four million taxpayers are remitting $20.8 billion in personal income taxes, sales taxes, business taxes, and other taxes. The average taxpayer remits some $5,000 to the state, of which $2,000 is for public education and $360 thereof is for state colleges and universities.  Whenever a dollar is spent in Pennsylvania, the state government collects a sales tax of six cents, of which it spends two on primary and secondary education and half a penny on higher education.

State colleges and universities can relax, although their costs per student may be higher than those of private institutions; about 65 percent of their costs are covered by tax funds and only some 35 percent by student tuition.  In Pennsylvania seventy percent of all students attend public institutions and thirty percent private colleges, which compares with a national distribution of eighty and twenty percent respectively. 

Despite such unequal proportions, private schools continue to play an important role in education. They compete valiantly despite the obvious financial inequity which families  whose sons and daughters attend private schools must sustain. They are forced to pay the taxes that finance state institutions which compete with the private schools their children attend.  But this is hardly surprising because public education is anchored in politics which, as a practice, has become the systematic organization of force and favors.

Many Americans favor some form of relief to private education in such forms as tuition tax credits, charter schools, a voucher system, or other considerations.  The U.S. Congress presently discusses bills offering tax credits and President George W. Bush endorses the idea.  Yet, many observers are concerned because any such government favors to private education will certainly be accompanied by an expansion of government control. 

Surely, the favors are tempting because they would reduce the tax burden not only on private education but also on the American people as private institutions consistently operate at much lower cost than government education.  Even taxpayers who have no school-age children but must pay for public schools and colleges would welcome such tax relief.  The favors are very tempting as a recent nation-wide poll by Newsweek made rather clear: 23 percent of parents with children in public schools would switch to private schools if Congress were to pass a voucher or tax credit bill.  Yet, there cannot be any doubt that private education would lose much of its independence if it were to stand in line for government handouts.

Regardless of official assurances that tuition tax credits would not impinge upon the independence of participating private schools, the nature of government renders such assurances rather empty.  They are contradicted by the old adage that he who pays the piper calls the tune.  A tax credit would necessitate government regulations about the eligibility of the credit.  The Department of Education would have to set minimum standards of eligibility for private schools and require the licensing of non-public school teachers. In short, regulation is an inevitable concomitant of government financial support.

The same is true with the "new system of education," the Charter Schools, which are to replace the traditional public school pattern. They are "private schools" with a charter granted by a local school board or a county or state board.  The charter, which specifies the conditions for operation remains in effect for a specific period of time during which the school is accountable to the authority that issued the charter.  Charter schools receive formula-driven tax funds just like public schools. 

The state of Michigan, which has pioneered the new system even allows public schools to convert to charter schools, provided they meet certain conditions such as approval by the majority of the certified teachers employed at the school.  They must also have an affirmative vote by the majority of the parents of the pupils enrolled in the school.  And finally, a charter school may not charge tuition and shall not discriminate in its pupil admission practices on the basis of intellectual or athletic ability.

The "voucher system" is subject to similar conditions.  It is designed to allow parents to enroll their children in a private school without the burden of paying tuition over and above the taxes they pay to support public education.  Parents of school-age children would be given vouchers which could be redeemed at local public schools or be used as part or full payment of tuition at a private or parochial school. 

The system, its supporters believe, would force public schools to compete for the tax dollars they now receive automatically and thereby improve their services.  It would infuse the vitality of a free market and thus break the state educational monopoly.  In reality, the very premise of the voucher system is identical to that of the present system of state education.  It builds on the coercive powers of the state that raise and dispense the funds according to certain qualifications and conditions.  It is neither a stepping stone to educational freedom nor offers a viable alternative.

It is not surprising that the nationwide disenchantment with public education also has given rise to an active Christian School Movement which clings to the old American curriculum that promoted a common cultural core centered in Judeo-Christian Western history and culture.  It is dismayed by the public school system that is concerned only with human beings, their achievements and interests, utterly ignoring God and His Commandments.  The Movement is appalled and daunted by U. S. Supreme Court decisions that made public education unrelentingly agnostic and atheistic, leaving no room for religion in public education.  According to various Supreme Court decisions:

  • It is unlawful to say an interfaith prayer.         
  • It is unlawful for a teacher to read the Bible to the students.         
  • It is unlawful to post the Ten Commandments.         
  • It is unlawful to release students from class to be instructed in a religious class.         
  • It is unlawful to have a moment of silent prayer in a public school.         
  • It is unlawful to teach Creation instead of the Theory of  Evolution.         
  • It is unlawful to prohibit immoral or sacrilegious films in a public school.

Guided by these decisions, public schools and colleges as well as many private institutions no longer emphasize Judeo-Christian virtue and morality.  Many schools and even some Ivy League universities, which had their beginnings as religious schools and which continue to be funded privately, now avoid any hint at moral values.  They are a sort of cultural bias that needs to be purged for the sake of rationality and objectivity.

Competition is as wholesome in education as it is in manufacture and commerce.  Every school is an economic check on its competitors.  Some private schools and colleges still reject the public school position which consists of accepting the standard of the age and teaching political correctness.  They preach and foster a different morality that seeks social peace, harmonious interaction, and economic cooperation.  It is the same everywhere, free of geographic boundaries or distinctions of race.  It is the very foundation of a free and prosperous society.


Hans F. Sennholz, emeritus professor of economics at Grove City College, is an adjunct scholar of the Mises Institute. Send him MAIL. See also his Mises.org Articles Archive and his Personal Website.


Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Follow Mises Institute