Mises Wire

Bureaucracy: The Death Knell of Higher Education

college graduates

Many small colleges are shutting their doors, and it is largely the fault of overexpansion, government protectionism, and bureaucratic infiltration.

If you are following any news in higher education, you are probably aware of the continued closures of many small colleges and universities. This has picked up as of late—almost to one small college a week—and comes as covid-19 relief money dries up, along with rising costs that are no longer covered by federal money, declining enrollment rates, and overall pessimism with higher education. However, all these problems can be traced back to one core issue: bureaucracy.

What is called “administrative bloat” by corporate media is a staggering trend that has continued since the 1970s. A study by independent researchers for the Review of Social Economy found that “between 1976 and 2018, the number of full-time faculty employed at colleges and universities in the US increased by 92 percent, during which time total student enrollment increased by 78 percent. During this same period, however, full-time administrators and other professionals employed by those institutions increased by 164 percent and 452 percent, respectively” (emphasis added).

Some administration is to be expected for universities, who of course need to handle tuition, records, and the like. However, the rate at which administrative employment is growing far outpaces the growth of the student body. Some growth might be attributed to the expansion of campuses, as larger facilities require more administration, but that cant possibly account for such staggering growth. The origin is, as stated before, bureaucracy. Bureaucracies are like cockroaches: they spread quickly once they get in.

Ludwig von Mises identifies a “bureaucracy” as the method applied in the conduct of administrative affairs the result of which has no cash value on the market. Bureaucracy is the conduct of affairs with scarce resources that does not seek profit (even nonprofits seeks profit; they simply donate their excesses or use them for a charitable cause). By pursuing those ends of which cannot be engaged in economic calculation, bureaucracies have no means for gauging efficiency. They become wasteful and inefficient rather quickly.

However, the most interesting aspect of Mises’s analysis is that of the “bureaucratization” of private industry. What Mises may call the “German style” of socialism, bureaucracy can enter those businesses through mass regulation and legislation that affects businesses. Businesses make use of resources (land, labor, and capital) in anticipation of making a profit at some point in the future, and the value of the resources they employ are determined by their value in the service of creating consumer (or higher-ordered) goods.

When legislative edicts are forced upon businesses, whether that is social edicts being forced upon businesses or a limitation of profits, they deviate into bureaucratic management. Human resources may serve some function for profit management, but many of their job responsibilities only exist because of government edict. There is no gauge within profit management of its adherence to arbitrary government edict. This causes a deviation from profit management that ensures efficiency.

Once this deviation occurs, it becomes easier and easier to justify deviations from profit management. It is especially easier when you have a guaranteed funding stream from governments in the form of research grants, student loans, and covid-19 relief money. This leads to mass inefficiency.

The government’s entrance into universities has condemned them to death. Many predict that economic troubles from the 2008 recession will lead to a 15 percent decline in enrollment over the next five years. This is not accounting for conservative America largely abandoning higher education. Progressive orthodoxy has seeped into universities and created a toxic culture that nobody right-of-center wants to associate with. Conservative parents no longer want to send their children to universities if there is a chance that they become Marxists with “gender studies” degrees.

Progressive orthodoxy is also the fault of the government. This subject is worthy of its own future article but can be summarized here. Universities serve customers—their students. However, is it their customer base whom the universities are catering to? Not at all. If that were the case, those conservative students would not face the level of discrimination they have. Discrimination of any kind against potential customers is costly to the bottom line. However, universities are not funded only by those they provide services to. They also cater to governments that fund a significant portion of their budgets.

plurality or even a majority of federal and state bureaucrats and employees in the United States are Democrats, even if their explicit political activity is restricted. Bureaucrats are the ones who issue research grants and control access to funds. Universities must cater to their own pocketbook, which ends up being those progressive bureaucrats. Even if they are not ideological progressives, they are incentivized to push for policies and research that justify their own existence. Universities want to cater to their funding sources, and thus the research and governance of universities must become aligned with those who fund them. Again, this is just a summary and is worthy of its own article, but it hits the core of this side of the issue.

Government has set universities and colleges up for failure. By mandating unprofitable missions for universities and allowing progressive federal employees to dictate the conduct of campuses, universities have become inefficient and have scared away their real customer base. The support given to many of these universities—propping them up from failure—has run out, and the bottom is falling out from under them. Perhaps one should celebrate the demise of these ideological boot camps for our youth. However, either way, your tax dollars go to fund it. Higher education deserves better than government.

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