Should government withdraw from an active role in promoting and subsidizing higher education?  I recently debated Pulitzer Prize winner Steve Pearlstein on this very question.  Here’s the debate resource page, including full audio

I’ve also published a correction: total government spending on higher education is about a third of a trillion dollars a year, not half a trillion dollars a year as I repeatedly said in the debate.

My opening statement:



Higher Education: Why
Government Should Cut the Cord

I’m currently in the 36th grade.  After high school graduation, I spent four
years at UC Berkeley to get my bachelor’s degree, and four years at Princeton
to get my Ph.D.  In 1997, George Mason
hired me as a professor – and I’m still here. 
I have a dream job for life: GMU essentially pays me to do whatever I
want, and I never have to retire.  But
while higher education has been very good for me, it has been a lousy deal for

Taxpayers heavily
subsidize higher education – about $500 billion dollars per year.  What does our society get in exchange?  Conventional wisdom says that these billions
lead to a massive increase in what economists call “human capital.”  The nation’s colleges teach promising young
people the skills they need to contribute to the modern economy, enriching us
all.  If you actually pay attention to
the subjects that most students study, however, this story is does not fit the

Think about the classes you’re taking right now.  How many are teaching you skills you’re ever
likely to use on the job?  There are very
few jobs that use history, literature, psychology, social science, foreign
languages, and the like.  Think about
your major: Does it even pretend to be vocational?  There may be a few engineers in the audience,
but most of us study subjects that simply aren’t very practical.  And if you talk to engineers, even they spend
a lot of time proving theorems – a skill you rarely use outside of academia.

I’m not saying that college teaches zero real-world skills.  My
claim, rather, is that at least half of what colleges teach is not useful in
the real world.  And while many
professors insist that their subjects are more useful than they seem on the
surface, this is wishful thinking.  If
you actually measure learning, students usually learn little, quickly forget
most of what they learn, and fail to apply what they still know even when their
education is actually relevant. 

If all this is true, why is going to college so
lucrative?  Because completing a degree –
even a useless degree – signals to employers that you’re smart, hard-working,
and conformist.  Most people never finish
college.  If you do finish, you show the
labor market that you’ve got the right stuff – and many doors open.

If you’re not convinced, let me point out that the best
education in the world is already free. 
If you want to learn at Princeton, just go there and start attending
classes.  No one will stop you.  Professors will be flattered by your attendance.  At the end of four years, you’ll have a great
education but no diploma.  Interested?  Just take I-95 North and turn right at

Key point: Since college is, to a large extent, jumping
through hoops to show off, government subsidies are counter-productive.  When education gets cheaper, you just have to
jump through more hoops to convince employers that you’re in the top third of
the distribution.  Subsidizing college so
we can all get better jobs is like urging us to stand up at a concert so we can
all see better.  In technical terms,
education has at least one big negative

Steve is probably going to give you a long list of positive
externalities of education.  I’m
skeptical of most of them; in fact, he often misapplies the concept.  But suppose Steve’s totally right.  All he’s shown is that education has some
positive externalities that at least partly offset
the negative externalities of signaling. 
To make an economic case for government support, however, Steve would need
to show that the net externality of
education – all his positives minus all my signaling waste – is positive.  I’m not asking for precision down to the
penny; I’d gladly settle for some ballpark numbers.

Isn’t there more to college than just the economic
benefits?  What about transforming
students into enlightened human beings who love ideas and savor culture?  Many economists scoff at such notions, but I
don’t.  I’m a huge fan of ideas and
culture.  But the harsh reality is the
most college students find ideas and culture boring – and professors rarely
change their minds.  In any case, the
Internet now provides free unlimited intellectual enrichment for everyone.  Spending half a trillion dollars a year to
force feed ideas and culture to students who won’t consume them for free is
just silly.

What about students who genuinely want to acquire useful
skills or broaden their horizons? 
Government spending on their education is certainly less wasteful than
usual.  Even there, though, there’s no
reason why – given the labor market’s rewards for education – students couldn’t
pay for their education with unsubsidized
student loans.  If the extra cost deters
a lot of students from going, that tells us something: Though students rarely say
it out loud, many silently realize that the full cost of a college degree
exceeds all the expected benefits put together.

One last question: Even if a free market in education is
efficient, is it fair?  I say it is. 
Suppose your parents had the money to pay for your college, but refused
to do so.  Would it be fair to legally force them to cough up
the money?  Probably not: You’re an adult
and it’s their money.  I say we should
extend taxpayers the same courtesy.  If
your parents don’t owe you an education, neither do millions of total