Quote Of The Day

“In higher education, no well-known university or college has gone out of business in my memory. Over this same period, countless corporate giants have bitten the dust. To me, this says that the incumbent protection racket in higher education works really well. There is hardly any entry, and hardly any exit. No surprise, then, that dousing this sector with subsidies leads primarily to inflation”. —Arnold Kling, Ph.D. in economics from the Massachusetts Institute of Technology

7 Responses to “Quote Of The Day”

  1. cindylu says:

    Poor Arnold Kling. If only he had looked into any standard article on the history of American higher education, he would see that there are dozens of colleges and universities struggling to survive. If he digged into it, he’d find that there have been institutions that have closed in recent years. They tend to close for different reasons, such as losing accreditation or finanical difficulty. Most of the time, these are institutions we don’t hear about, but it does happen. Just check the Chronicle of Higher Education.

    In addition, there is a lot of entry into higher education. Since the 1960s when there was a boom in the college-going age, hundreds of institutions have opened up doors.

    Quit tempting me, yo.

  2. I think you missed his point, he writes, “no well-known university or college has gone out of business in my memory”. What well known university or college has gone out of business in recent memory?

    He than compares this to corporate America and sees several well-known and long established companies that have gone out of business.

    Why is there so much movement in corporate America and not in the educational industry? The clear difference between the two is that the educational industry is swamped with government subsidies, thereby inflating their costs and artificially giving them a competitive edge over other would be entrants, AND giving them the ability to escape their errors. Corporate America has no such ‘benefit’, and therefore, will have much more movement.

  3. cindylu says:

    Well-known is relative. D-Q University is well-known to my friends and I, but you have probably never heard of it.

    Also, you say there is no movement in American higher education, and I would aruge otherwise. Since Arnold Kling is at MIT, I wonder if he has any research grants, or what you might call subsidies. I wonder if some of the research he’s doing is federally funded. Just a thought.

  4. Well-known is relative, but it still has some overall meaning. Can you give me any tier 1 schools that have went under? Even if you can, the number of those is still considerably less than the number of companies that went under in corporate America.

    As far as federally funded research, we are talking about two different things here (apples vs mangos). I doubt that he would have a problem with federally funded research, he is addressing subsidies in general.

  5. cindylu says:

    I like mangos and apples. What’s your point?

    Seriously, maybe when I have more time and am not worried about finals, we can have a real discussion about these subsidies for higher education that you speak of. I know it would have been a lot more difficult for me to get through my undergrad years without federal and state grants, workstudy and even some loans to cover the costs. I’m definitly against rising costs for higher education, but as I read more and more about the field and higher education finance I get a better understanding about why tuition fees go up.

  6. I know what you mean about the need for those loans, but you are under the impression that if the government doesn’t do it, somehow they will suddenly disappear. This is not the case. The governement doesn’t subisides car loans, yet car loans are abundent. I have blogged on here before about how to get the government out of the subsidy business while keeping the level of loans relatively the same. When you have time, you should check that out.

    So to summarize, the loans are not the problem, it is the government doing it below market demand for such loans, that is the problem.

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