Give universities the loot


On a trip to Texas last week (no, that will not relate: I’m just adding color), my coworker and I were discussing higher education, and I tried to argue that federal student loan subsidies. The more we subsidize loans, I claimed, the more schools raise tuition, and those increases just translate into federally leveraged profit solely reaped by big banks. This was actually the second time in the week I had harped on the point (this time it was about college education, earlier about legal education, and the effect there of the hose of federal money encouraging law schools to expand enrollment even though there will never be enough jobs for all those graduates, especially if they went to shittier schools, which get the same amount and quality of subsidies better schools get), so my coworker stopped me to ask what I think we should do instead. I got flustered briefly, because I don’t have to think about solutions to problem as often as I get to complain about them, and said something half-assed about how we should just fund public schools better instead.

I wasn’t totally satisfied with that response, partly because it wasn’t comfortable in the dark depths of my dark anarchist heart, but also because it seemed like a lazy cop out to just suggest we need to give universities more money. I’ll answer both these concerns, starting with the second one.


After I got back home, I read this
excellent Mike Konzcal post this week on the subject. Konzcal explains that the current cost of subsidizing college tuition and financing student debt, largely conducted through the tax code, is roughly what it could cost to fund completely free public higher education. Think about that for a second. He nods to this great Suzanne Mettler article from the summer on the “submerged state,” tax subsidies that have become means for delivering government expenditure to citizens without the political investment other spending requires. It’s one of the best things I read this year, check it out if you haven’t already. The main problem with funding education through the tax code is that the primary beneficiaries are wealthy people who pay more taxes. This isn’t very egalitarian. It also drives up tuition costs, which means that even after increasingly expensive government subsidies, graduates will eventually be saddled with greater risk anyway. It would be more sensible to just fund schools better, and would make education feel public in a more essential sense:

These [tax] subsidies benefit private educational institutions over public ones, as they’ll make private education feel more “natural” while obscuring the role of the government in setting up these markets. They give public college a nudge towards corporatization and privatization.

He also links to this great JW Mason explanation from last year of how, when comparing an equal amount of state tuition grants or university funding, the former spending drives tuition costs up while the latter drives it down.

I’m really excited by all of this because it places the indignation over student loan debt and tuition hikes that we’ve seen at Occupy protests in an intresting context. Protests against high student debt aren’t just the frustration of swaddled, entitled graduates trying to relieve themselves of debt burden; they address an important structural question about the direction of education policy.

Konzcal follow-up the next day to address filthy neoliberal Matt Yglesias’s suggestion that education might be better served if the government just gave cash directly to people and allowed them to “buy higher education services or not according to whether or not they thought vendors of said services were, all things considered, offering a reasonable value proposition.” I agree that’s stupid. I do generally believe direct cash transfers to the poor are a better form of welfare than many of the corrupt, complex programs we have in place today (including student loan subsidies), but I think, for education, what Yglesias suggests ignores a step. The middle men in education are universities, which I think are for the most valuable and important institutions. We need to decide as a society if institutional higher education is worthwhile and fund it accordingly, not just let people decide whether it makes sense as financial investment. If we just give people money and tell them to decide if higher education is worth the cost, the wealthy can make that situation in different circumstances than the poor do.

I also don’t like the idea of encouraging people to think of education primarily as an investment device. This has bad consequences. Will Wilkinson wrote recently about how Americans rarely doubt the need for funding high school curriculum that doesn’t directly produce high-wage workers, yet that’s increasingly becoming the consensus approach to reforming higher education. From a different political corner, this Wendy Brown lecture from 2009 explains well the consequences of that spirit on the form of the university, and ravages the arguments for privatization. Freddie deBoer also argues persuasively about the dangers of thinking of education as investment device, with regards to the dumb idea of higher education “bubbles”.

Anyway, Konzcal devotes his response to broadly setting up some arguments against cash transfers generally, and I’m interested to see where that goes, because I’m convinced direct cash transfers can be a more ideal form of welfare broadly, at least compared to many of the programs we have today. Check out the post by Ashwin Parameswaran I linked earlier (the cartoon at the top of this post comes form it), which begins by discussing a massive program in India that guarantees public work to unskilled rural laborers but delivers alarmingly little of it to its apparent beneficiaries:

When faced with the choice of either tolerating a corrupt program or cancelling the program, the rural poor clearly prefer the status quo.

A rather more sophisticated example of this phenomenon is the endless black hole of losses that are Freddie Mac and Fannie Mae – $175 billion and counting. The press focuses on the comparatively small bonus payments to Freddie and Fannie executives but ignores their much larger role in the back door bailout of the banking sector. Again the reason why this goes relatively uncriticised is simple – despite the significant contribution made by Fannie and Freddie to the rents extracted by the “1%”, their operations also put money into the pockets of a vast cross-section of homeowners. Simply shutting them down would almost certainly constitute an act of political suicide.

The masses become the shield for the very programs that enable a select few to extract significant rents out of the system. The same programs that are supposed to be part of the liberal social agenda like Fannie/Freddie become the weapons through which the cronyist corporate structure perpetuates itself, while the broad-based support for these programs makes them incredibly resilient and hard to reform once they have taken root.

That brings me to my other concern, the anarchist one. During the last year, we’ve seen a lot of protests across that have wed anti-austerity and anarchist impulses. What’s the basis for that? Charles Davis wrote a good post a few months ago, as an anarchist addressing the need for welfare spending, that’s illuminating here.

When we speak of a post-welfare state society, we’re not imagining the status quo minus the social safety net, but rather a world where intellectual property doesn’t exist, the corporation doesn’t exist, and where private property isn’t a sacrosanct right that entitles one person to exploit natural resources for their own personal gain while those around them are mired in poverty…. no anti-state leftists I know are interested in slashing the social safety, at least not until after we’re done smashing corporate privilege.

Likewise, the anarchist impulse is at home here in the fight to end government subsidization of rapacious education debt held by massive banks. To me, compared to forcing the poor into debt if they want access to what we claim is a basic right, the idea that government should pay for better, more accesible education is more anarchist, because it’s more egalitarian. Ideally we wouldn’t need either, but that prospect is too far away to even properly imagine now.

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