Smith on Education and Some Radical Suggestions

Following on praise for Xi Zhang’s correct use of Adam Smith’s legacy, I come across yet another example this morning. Geoffrey Manne post in the Blog: ‘Truth on the Market’, quotes from ‘Wealth of Nations’ (the famous Book V) in a debate about university funding, related to the University of Phoenix (USA):

The New York Times–shocker!–hates the University of Phoenix”

“I don’t know for certain whether UOP students maximize their utility by choosing UOP over Princteton (aka clown college, coincidentally), but there is, at a minimum, some theoretical merit to the form of organization.

Here’s what I (and Adam Smith) said on the topic once before:

Here’s Adam Smith on universities:

The endowments of schools and colleges have necessarily diminished more or less the necessity of application in the teachers. Their subsistence, so far as it arises from their salaries, is evidently derived from a fund altogether independent of their success and reputation in their particular professions.

In some universities the salary makes but a part, and frequently but a small part of the emoluments of the teacher, of which the greater part arises from the honoraries or fees of his pupils. The necessity of application, though always more or less diminished, is not in this case entirely taken away . . . and he still has some dependency upon the affection, gratitude, and favourable report of those who have attended upon his instructions . . . .

In other universities the teacher is prohibited from receiving any honorary or fee from his pupils, and his salary constitutes the whole of the revenue which he derives from his office. His interest is, in this case, set as directly in opposition to his duty as it is possible to set it.

Faculties in today’s universities are substantially insulated from both the reputational and remunerative consequences of offering poor (or exceptional) education. As direct payment by students — and, eventually, the conferring of degrees on “independent” courses of study — becomes more commonplace, this insulation will be seriously weakened, much to the likely benefit of the students.
I have no doubt that UOP isn’t perfect. But it certainly mitigates some of the problems of traditional, nonprofit higher education. Perhaps a comparative institutional analysis would have been in order. The implication that UOP’s shortcomings derive necessarily from its for-profit status is both unsupported and unsupportable.”

Comment
University funding (and school funding, before it) is a topical issue still. Having passed beyond the stage of funding my bequests, endownments, private scholarships, and such like, in the UK the public funded route was selected. The old universities continued with elements of the past charitable funding sources, but also took up the government's gold too, and became dependent on taxpayer's money. The newer universities are too new to have accumulated sources of private funding, and had little incentive to search for other sources of funding, until recently.

With public funding comes what is called, euphemistically, ‘accountability’, otherwise known as political inference to meet the consensus of what ‘educational experts’ consider the ‘safe’ thing to do. What they do not do, or reward, is encourage institutions to experiment. There are about 107 universities in the UK, only one is private (the University of Buckingham), the rest are dependent on government funding (i.e., overall management).

Universities are trying to raise student fees, reluctantly accepted by government politicians, but capped severely to quieten resistance in their own ranks; but they have the resources, and the staff, to experiment with fully funded (no-government money) degree courses, where student demand is high.

Universities are already legal charities, they are legally permitted to form sub-charities within them, and these can be placed outside the public funding sector, given the task of raising their own finance, paying their staff whatever they consider appropriate, charging their own student fees, re-organising their course schedules, move from the regulatory 5-day week, 30 week years, and change over to 50 week years, 7 day weeks, 8 am to 10 pm days.

Not convinced? Of course not. Change everything at once? Of course not. That is the beauty of being able to experiment within the existing system on an individual scale in any of the 107 universities. Trial run the experiment, monitor the progress, allow radical changes under the control of those charged to manage the sub-charity that event show to be necessary.

That approach would be completely within Adam Smith’s legacy.

Oh, and a final point: defend excellence by measuring outputs not inputs. The opposite of who universities in the main practice - they make it difficult to get into their courses, but easier to pass through, with soft, even no, examination regimes. Instead, make it easier to get into the course; difficult to pass through. Examinations, independently invigilated, no choice of questions, and no other non-examination contributions to a pass.

It’s amazing what freedom to innovate, adapt, apply and try does to the people in markets (including surrogate versions).

[Read Geoffrey Manne's article at:
http://www.truthonthemarket.com/2007/02/12/the-new-york-times-shocker-hates-the-university-of-phoenix/]