The professoriate will protect its guild of goodies with all the fierceness of fire ants atop a hive. Much of what academia produces is sheer waste — and that includes woefully underprepared graduating classes with loads of debt. Anyone courageous enough to go after the bloated research budgets or cartel salaries will find a legion of eggheads that is as well-organized and well-funded as the teamsters.
Academia as subsidized cartel
Academia is one big, over-subsidized cartel. Here are five ways this cartel stays propped up:
- Federal and state (taxpayer) subsidies to both public and private institutions allow those institutions to escape market discipline. A lack of transparency allows these schools to hide from political accountability as well.
- Subsidized student loans mean that students can defer the costs of education into the indefinite future. These socially acceptable educational credit cards have no limit. Party now, pay later. The cartel makes out like a bandit.
- Alumni are dazzled by sports teams and school spirit. They don’t look at the rot but look instead at the bread and circuses. Alumni throw money at university boondoggles out of some misguided sense of allegiance, rather than any sound cost-benefit analysis.
- A system of accreditation raises barriers to entry for educational competitors. He who confers the degrees has the cartel power. (Without a degree you won’t be attractive in the job market.) The power to award a degree is restricted, which is naturally anti-competitive.
- Most Americans labor under the notion that a degree is the best way to signal competence. Until we shed the notion that a college degree makes people fit for the labor market, we will continue to prop up the higher-ed cartel with our 529 plans and student loans.
The supplicants in this guild-cartel aren’t about to admit they benefit from it to such a questionable degree. Because none of what they do is subjected to the discipline of the market, they can simply anoint themselves as being important enough, smart enough and valuable enough to receive all they do.
The end of the academy?
But the jig may soon be up. A perfect storm of student loan debt defaults, low-cost competition online and innovations that could help people signal competence without a degree may help bring the academy down — or at least back down to earth.
Max Borders is author of “Superwealth: Why we should stop worrying about the gap between rich and poor” (coming in fall 2012). He is a 2011-12 Robert Novak fellow.