Obama's "Change" Message on Higher Education Costs Comes to Michigan

The more I hear from Barack Obama the more I understand that his message of "hope and change" is nothing more than the repackaged progressive dogma of big-government socialism along with a healthy dose of free market repression.

Socialism, what a wonderfully new concept!

His solution for the rising costs of higher education was outlined during events that took place yesterday in Michigan, and as its cornerstone, that changeful concept so wonderful that the masses cannot help but yearn for it, is--wait for it--higher taxes on the "rich."

Ha! A little class envy ought to solve all of our higher-education access problems. You don't have the money? No problem, let us give you some! There was no addressing of the infection that plagues the system, just some comforting salve to spread across that nasty patch of redness.

From the Detroit Free Press:

Obama said he hopes to offer a $4,000 annual tax credit for low-income students or their parents in return for community service. He would pay for the tax credits by raising taxes for people who make more than $250,000.

"It just isn't right when you're working so hard and struggling so much just to pay your tuition," Obama told Pace, who is helping care for her disabled father. "I do not accept an America where you can't achieve your potential because you can't afford it."

I am as concerned about the high cost of education as the next guy, probably more so with two children entering college over the next two years. Both intend on pursuing a college level education, I suppose, so that they can leave Michigan for a state that actually values employers for more than what they contribute to the public coffers. That is another rant.

Looking ahead to college costs makes me smile when I remember how expensive I thought diapers used to be.

Just last week Michigan State University announced that it will once again be raising its tuition by a percentage greater than the rate of inflation. This will be about the 4,000th year in a row for such a move, and it will soon be followed by just every other public university in Michigan and the country.

Of course, the university regrets the pain that such an increase will create for its students. They will be doing everything in their power over this upcoming year to make certain that each of their students will be able to beg, borrow and steal enough money from 3rd parties to keep the doors of higher education open.

The problem is that MSU, as well as every other public university, has absolutely no incentive to keep its costs in line. I link to an older article from the Mackinac Center that explains this in detail.

Why are tuition fees going up so much? The main reason is that the universities can get away with it, and have few incentives to cut costs. Third parties such as federal government student assistance programs and private scholarship donors pay most of the bills, making consumers relatively insensitive to the price of tuition. In the 10 years after 1994, federal financial assistance rose at a breathtaking annual rate of 11 percent. With the feds all but dropping dollars out of airplanes over college campuses, universities raised their tuition rates liberally, even in years with good state appropriation increases.

Most colleges and universities, including private ones, have virtually no incentives to reduce costs. There is no added compensation given to key employees if expenses are reduced. Indeed, the opposite is true: university administrators increase staffing levels to ease the burden on existing personnel, thereby lowering productivity. In 1976, there were three non-faculty professional workers per 100 students at the average American university; 25 years later, the number had doubled to six. Unless it can be demonstrated that there were enormous qualitative improvements in the education delivered (which, as a college professor of 40 years, I strongly doubt), labor productivity is actually falling in higher education, even after allowing for research. This contrasts with a continuous productivity rise in the private for-profit sector where stronger incentives exist to manage costs and be efficient.

This brings us to another reason tuition levels are increasing even more than health care prices – the increased compensation of university employees. While in the last two or three years raises have been modest at some cash-starved institutions, over the past generation university employee pay has increased even as the workload has fallen (because of added staffing). I estimate that the typical full professor today makes roughly 50 percent more in inflation-adjusted terms than in 1980. Average teaching loads are far lighter today than when I began teaching. At major research universities like the University of Michigan, the typical full professor teaches no more than five hours per week for 32 weeks a year. At the highest levels, university presidents, football coaches and truly superstar professors are earning salaries approaching the mid-six digits, or even more.

One has to wonder how much of an impact Obama's scheme to transfer millions of additional tax dollars from working Americans into the hallowed halls of academia will have on lowering the cost of education.

How, exactly, is rewarding bad behavior supposed to result in a more hopeful world?