Sunday, August 09, 2015


Public, Private, and In-Between

Greetings from New Jersey!  Now, back to our regularly scheduled blog...

Is a college degree a public good or a private good?  I’m starting to think the terms of the question are wrong.

Most academics would argue that it’s a public good, which is why it’s deserving of public support.  They use the term differently than economists do -- economists like to use non-excludability, as in the textbook example of a lighthouse -- but that’s okay; the economists’ definition has long struck me as myopic. It’s possible for an excludable good to still have positive spillover effects (or “externalities”) of sufficient magnitude as to justify a public interest in its growth. That’s the argument for tax credits for businesses moving into an area, but it applies equally to public higher education.  In both cases, the positive externalities generated by excludable goods can be -- sometimes are, sometimes aren’t, but conceptually can be -- large enough to justify the use of public resources.

It’s an article of faith among academics tired of budget cuts -- which is to say, academics -- that college degrees have come to be seen and defined as private goods. (A particularly thoughtful example can be found here.) The shift in understanding of who benefits from higher education, the argument goes, has justified the last few decades of cost-shifting from states to students.  After all, why should a struggling high school grad’s taxes pay to train the next financier who will lay him off?

As easy as that binary division is, though, I think it’s missing something.  

As an erstwhile political theorist who works in the community college sector, I’m seeing two angles on the same question.  In Western political thought, it was a commonplace to divide society into three sectors, rather than two: the state, civil society, and the home.  “Civil society” correlated broadly to what we would now call “the economy.”  It isn’t as tightly organized as the state, but it isn’t just private, either.  It’s defined by the interactions among private interests, following rules set and enforced by the state.  It’s intersubjective, by definition.  It partakes of both public and private, and can’t really be reduced to either.  It’s neither purely public nor purely private.

As its own realm, civil society has its own character.  Reducing it to the state, as in the old Soviet model, concentrates too much power in one place.  Reducing it to isolated monads, as in Margaret Thatcher’s assertion that “there is no such thing as society,” leads to immiseration and catastrophe.  It is its own thing, and reducing it entirely to one pole or the other is fanaticism.

In the context of my day job, I see accidental recognition of civil society whenever programs are developed in the name of “workforce development.”  This might be below the radar of folks in the four-year sector, but in the community college world, terms like “middle skills jobs,” “educated workforce,” and “skills gap” are common.  Fittingly, many of the programs built to address those issues are “public-private partnerships.” The idea is that yes, credentials in certain areas lead to higher income for the people who have them, but that there is also a broader social interest served by making it easier for more people to get those credentials and make that income.  

That broader social interest is comprised of many things.  An educated workforce is more fertile ground for startups.  A better-paid population is likelier to take better care of its kids.  It’s likelier to vote and volunteer at higher rates.  A city with a better-paid citizenry will be better able to balance its budget.  Businesses outside of the specific partnerships benefit, too, because those workers buy groceries, and clothes, and services.  And a really basic level, the existence of a plausible, identifiable route for upward social mobility actually brings some stability to the system.  People who have nothing to lose have nothing to lose.  Shut out too many for too long, and bad things happen.  If people feel like the game is winnable, they’re more likely to play by the rules.  Community college training programs are far cheaper than mass incarceration, and far more humane.  Second chances “work” when they pay off, yes, but they also “work” just by existing.

The specifics of all of this may be obvious, but I don’t know that as a sector, we’ve really connected the dots.  Community colleges have the concept embedded in their very names, but many of them are changing their names to obscure their roots.  (For the record, I say community colleges should own what they are.)  “Community,” like “civil society,” may be a hard term to nail down, but that doesn’t make it chimerical.  It matters.  It matters quite a bit.  Without it, we’re left debating terms that don’t fit, and devising solutions that don’t work.  

If anything, we may be better off doubling down on “community.”  It’s not entirely public or private, as those terms are typically used, but that’s okay.  It’s where most of us spend much of our adult lives.  Let’s acknowledge it, and discuss seriously why and how it works better when people have access to good, affordable higher education.

Mathematically, there's little difference in the optimal tax treatment of a positive spillover and a collective consumption good (to use yet more econ-speak for respectively positive externality and public good) and I suspect the reason economists burden their students with the extra terminology is to distinguish government funding of collective consumption goods such as nuclear weapons or positive spillover benefits such as transparent institution from government provision of explicitly private goods, and then we can get into murky waters about whether there are any explicitly private goods, or whether some spillover is present in, e.g., state liquor stores or New Jersey's ban on self-service gasoline pumping.

The harder question, matters of terminology aside, is whether the state-tolerated (to use a John Peters quip about the shrinking state support for Northern Illinois U) universities are indeed producing positive spillovers at the margin, or whether the socialization is accomplished in kindergarten and the primary grades, and the universities simply polish that which the students already have. Worst case scenario for the community colleges and the state universities, status hierarchy irrelevant: marginal positive spillovers zero. Then you get into tougher territory about subsidizing the development of already favored people.

Good luck with the new gig.
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