While I was on vacation up at my cottage in Canada, Tyler Cowen wrote a piece on the Bloomberg site that made a case for not cutting taxpayer subsidies to Alaska’s universities.
The most striking thing about his piece is that he doesn’t really make much of a case. When economists argue for a subsidy, they generally point to some way in which the market has failed. Tyler doesn’t.
Actually, he comes close to doing so at one point. In his last paragraph, he writes:
The University of Alaska in Fairbanks is rated among the world’s top science institutions for studying the Arctic, a region that might well grow considerably in importance, in part due to climate change.
Presumably, Tyler is getting at the idea that research of the Arctic is a public good and that justifies government subsidies. But even if that’s true, that would justify subsidies for research, not for higher education per se. Look around at any university–and I doubt that the University of Alaska is an exception–and you will find a lot of subsidized research that provides no public good and sometimes a public bad.
That’s about it. The rest of his argument for keeping the subsidies sounds more like a “hurray for higher education” case than an actual case.
READER COMMENTS
Thaomas
Jul 30 2019 at 6:53am
The issue was higher education or Alaska’s version of the Guaranteed Income. The argument was that the the former is more likely to be an investment in future income than the latter.
Alan Goldhammer
Jul 30 2019 at 7:46am
Public education institutions from grade school through college are all funded at the state and local level. If one views education as a public good this makes sense. If you look at most localities, the budget for the K-12 schools is the most significant item and funding usually comes from property taxes and/or bond issues. As one reviewer of Professor Caplan’s “The Case Against Education” put it, ‘The US is engaged in a natural experiment to test Caplan’s hypothesis on the folly of educational spending. Anyone who thinks that taxpayer dollars should not go for education should move to a state where taxpayers are not asked to contribute much to education. ‘
Maybe Alaska presents a special case because for many years the state has engaged in a large experiment of distributing wealth to the population of the state. When the payments began to decrease the Governor made the choice to trim other parts of the budget so that the payout was maintained. Is this a good example of public choice theory in action? Potential Alaskan college students may suffer as they may not have access to a low-cost university education in their state and be forced to go to an out of state college where the tuition and living costs will be higher. Of course there are always student loans!
David received his graduate degree in economics at UCLA, an institution that was/is subsidized by the taxpayers of California. I don’t know what he paid in tuition in the early 1970s. When I graduated from UC Santa Barbara in 1970, I think tuition was about $200/quarter. I remember the student outrage when Governor Reagan first implemented tuition in 1966 at a $100/semester.
Mark Z
Jul 31 2019 at 1:30pm
”As one reviewer of Professor Caplan’s “The Case Against Education” put it, ‘The US is engaged in a natural experiment to test Caplan’s hypothesis on the folly of educational spending. Anyone who thinks that taxpayer dollars should not go for education should move to a state where taxpayers are not asked to contribute much to education.””
This is wrong. If the value of education to consumers is in signaling, then since students in states with little education funding have to compete with those in states with much education spending, then people moving to states that provide a government subsidized IQ test to show employees doesn’t suggest that said government subsidized IQ test makes people smarter.
Incidentally though, I wouldn’t be surprised if net migration is toward states with less education spending (and lower taxes); e.g. from New York and Pennsylvania to Texas and Arizona.
Also, I had to laugh at the part about what taxpayers are “asked” to contribute. To think of all the money I could’ve saved if I’d known it was optional.
David Seltzer
Jul 31 2019 at 3:31pm
If a public good is nonexcludable and nonrivalrous, it seems higher education is not a public good. It is excludable as universities can demand students to pay tuition before receiving an education. By contrast, compulsory public education is regarded as a public good.
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