Via a request from Ezra for topic coverage, here are some very good remarks from Ryan Avent. Excerpt:
A sector dominated by the state—state-run in some cases, merely subsidised and regulated in others—is, I think most Americans would agree, both a major contributor to American prosperity and one of America’s most competitive industries on foreign markets, despite its glaring inefficiencies. What ought we to conclude based on this example?
Certainly, one could reasonably argue that the sector would be even better if state control were relaxed, monopolies broken up, subsidies curtailed, and market controls (like those on immigration) eliminated. But one also has to wrestle with how different the American economy would look if the state had never muscled public universities (including a broad network of technology-driven, extension-oriented schools) into existence.
This stuff is harder than we often pretend.
A few observations:
1. Postwar higher education has proven one of America’s most effective subsidies, and it has paid for itself many times over. It is also one of the more significant successes of federalism.
2. We are fortunate that U.S. state universities are more or less autonomous, compared to the Continental model where professors and administrators are treated as part of the state civil service bureaucracy. The latter system does not work well, and those countries have struggled to move closer to American models.
3. To refer back to a distinction from the David Brooks column, we should not be trying to squeeze the entire economy into the shoebox of the dynamic but risky “Economy I.” For public choice reasons, as well understood by Karl Polanyi (an underrated public choice theorist if there ever was one), the polity requires some respite from Economy I, whether we like that or not. Read also this analysis by Interfluidity, which is one of my favorite blog posts of all time.