Matt Yglesias Is Not A Left-Winger
Because if he were, he’d argue that the proper response to overpaid college professors is to drop tuition costs at public universities.
Here’s the argument in a nutshell:
- Competition in the higher education market is not driving down costs. Rather, elite schools compete to capture the most valuable segment of the market – the highest potential future donors – and do not compete on price but on quality of services. Prices escalate inexorably, and a big chunk of this is captured by employees – especially professors. Lower-tier institutions must raise their salaries to compete for talent, and so must raise their tuitions. All of this is what you would expect in a market with relatively inelastic supply and rising – indeed, subsidized, through Pell grants and such – demand.
- In such a market, a slashing of tuitions at public institutions of higher education, combined with a public subsidy of said institutions to offset the lost revenue, would change the price dynamic. Similar-quality private institutions would need to figure out how to compete at the lower price point. This could involve eliminating frills or cutting salaries or pushing for higher productivity from existing employees. However they got there, they’d have to drive costs down somehow. And this pressure to control costs would ripple through the system more generally, eventually reaching the elite institutions.
- Ergo, the solution to “overpaid” university employees is not to reduce public subsidies of universities, but to increase such subsidies, while demanding offsetting reductions in tuition (and, as well, to reduce or eliminate subsidies that go directly to students – if demand is outstripping inelastic supply, then subsidies to consumers only drive prices up).
That’s the argument, anyway. It’s premised, of course, on the notion that such cost-reductions are indeed available – particularly, that there are ways to increase productivity in the higher education sector. I don’t know if that’s the case. If it isn’t, then the result of lowering tuition at public universities would be to reduce supply, as marginal providers of higher education went out of business, unable to compete at the lower price point with public universities, and unable to compete on “quality” with higher-tier private academic institutions.
Although I’m sympathetic to the argument that, inasmuch as we are interested in making college affordable for the indigent, we should shift from subsidizing demand to subsidizing supply, I’m not really trying to argue that point. Rather, I just wanted to highlight that this position – provide the services directly if you want them to be cheaper – is an old-school left-wing position to take. Indeed, it’s the rationale behind the NHS, which, lo and behold, has lower costs than pretty much any other industrialized country’s health-care sector, and more supply bottlenecks – more queuing for tests and procedures – than its Dutch, French or American competitors as well.
UPDATE: I should have posted this link, a very good rundown of the above argument, tackling education subsidies but also wage subsidies, a topic of interest to various TAS alumni.
“Although I’m sympathetic to the argument that, inasmuch as we are interested in making college affordable for the indigent, we should shift from subsidizing demand to subsidizing supply…”
The two options are generally equivalent; e.g. just as employer and employee FICA tax have the same effects, welfare effects of subsidies do not depend on the statutory recipient.
— Rowz · Jun 2, 06:52 PM · #
Yeah, I agree with this analysis. I’m not sure why you think I disagree.
— Matthew Yglesias · Jun 2, 06:53 PM · #
Rowz: check out the link at the end; it’s an argument that your claim implicitly assumes infinite elasticity.
Matt: huh. Well, all I can say is I don’t remember you making the argument yourself, and you write a lot about education. And, within the education space, you usually come out on the “subsidize choice” side of the argument. But then again, you write a lot, so I may just have missed it.
— Noah Millman · Jun 2, 07:31 PM · #
I follow Yglesias on Twitter. I’m sure he’s said something very like what you say in your post title, but I can’t be bothered to go and find the tweet.
— ovaut · Jun 3, 06:34 PM · #
I can’t imagine any regular reader of Yglesias would ever call him a “left winger”. He’s a 30 year old, Ivy League, socially liberal urbanite who, apparently, has never really had to work for a living. If you think about what flows from the characteristics, which is not really what many conservatives would assume, you can get a pretty good handle on his political and policy preferences.
Mike
— MBunge · Jun 3, 08:22 PM · #
Sorry, but what’s the evidence that college professors are overpaid? Maybe if you discount adjuncts, but I don’t see why you should. I would think it would be fairly easy to calculate any particular school’s total expenditures on instructors and divide it by the total number of credit hours taught, to see just what the trend is in personnel costs per educational unit. Or, to take into account class size, multiply by the number of students to get instructor cost per student-credit hour.
And yes, I know not every professor teaches, but since the issue here is related to the cost of education for students, I think that’s really the calculation that matters.
— Ethan C. · Jun 3, 10:43 PM · #