Wednesday, February 26, 2014

Markets and Rules

It took me a few attempts to read this piece in the New York Times, about for-profit colleges, to figure out why it bothered me as much as it did.  It’s not the subject matter, exactly.  It’s the inattention to basic detail, based, I think, on a fundamental theoretical mistake.  

The piece starts with a reference to Monroe College, in New York City.  It suggests -- through a sympathetic interview with the executive vice president and grandson of the founder -- that for-profits have come under greater regulation than non-profits, and that the tragedy of such regulation is that it’s choking off access to vocational higher education at a time when it’s being ignored by the public sector.  “Gainful employment” rules, the article suggests, hold for-profits up to unique scrutiny.  The piece concludes:

In any event, advocates for stricter regulation of private, for-profit colleges should recognize there is a trade-off. The United States must satisfy a growing demand for higher education, particularly from low-income students. If for-profit colleges are discouraged from fulfilling it, somebody else has to.

It’s a remarkable piece, really, in that it manages to be wrong in almost every important way.

For example, the assertion that “gainful employment” rules apply only to for-profits is simply false.  They apply for vocational degrees and certificates, whether provided by for-profits or by, say, community colleges.  Now, one could quibble about which degrees are intended for transfer and which are terminal -- in fields like social work, the goalposts have moved over time -- but our medical billing certificate program is judged by the same metrics as a medical billing certificate offered by a for-profit.  And we charge a lot less.

The assertion that for-profits tend to the segments of the market that non-profits ignore is getting harder to sustain.  Ten years ago, that may have been a tenable argument; now, not really.  Community colleges in particular have moved aggressively into both workforce-driven programming and online delivery.  SNHU’s College for America -- a nonprofit -- has gone even farther, embedding online education at worksites to reach workforces directly.  (Most community colleges have done onsite contract training for years; CfA’s breakthrough is to take the model national, and to do it with a competency-based model that grants academic credit.)  

The article goes on to bemoan the unfairness of requiring for-profits to offer general education courses (what it calls “liberal arts credits”) as parts of degrees.  Non-profits also have to do that.  And a good thing, too -- any veteran of employer advisory boards can tell you that employers consistently report that the soft skills are the area of the largest gap between what they want and what new employees offer.  As I used to tell my students at DeVry who couldn’t figure out why they had to take a poli sci class, the tech skills will get you in the door, but the soft skills will get you promoted.  Neglecting the latter isn’t rigor; it’s myopia.  

Having bemoaned gen eds, though, the article turns back on itself.  It suggests that “An alternative would be to require for-profit schools to meet the same accreditation and quality standards as any other institution of higher education. “  You know, the standards that set requirements for gen ed courses within degree programs.  Oh, wait...

From reading the piece, you wouldn’t know that some of the largest for-profits, such as the University of Phoenix and DeVry, are regionally accredited.  They’re accredited by the Higher Learning Commission of the North Central Association, which is the same regional accreditor that covers, say, the University of Chicago, or Northwestern.  Regional accreditation has not prevented serious issues, nor has it apparently impeded growth.  

In other words, the central assumption of the piece -- that regulation and growth are, in the words of the article, a “trade-off” -- is mistaken.  Regulation as a form of quality control prevents certain kinds of exploitation, and inspires the confidence that motivates wary people to step in.  Setting ground rules allows the game to be played.  

The public concern here is not profit or the lack thereof.  It’s quality of education, predatory practices, and fraud.  The way to get good outcomes in each of those areas is to set, and enforce, ground rules.  If somebody figures out how to make a buck while doing a better job at something worth doing, great.  Bring it on.  I don’t think it’s a coincidence that some of the more interesting folks in non-profit higher education have consciously learned from for-profits, whether it’s Tressie McMillan Cottom or Paul LeBlanc.  

But to fall back on 1980’s categories of “gray-Soviet-public-bad” and “shiny-American-private-good,” at this point, is just embarrassing.  That’s not how it works.  Markets and rules aren’t opposed to each other.  Markets need rules.  John Locke knew that, which is why he quickly dropped the labor theory of property in favor of ownership by “positive constitutions.”  Friedrich von Hayek -- no fan of statism generally -- understood that markets are, and must be, legally constituted.  This is neither a new idea nor a necessarily leftish one; it’s basic.  

Reducing the thorny and difficult issues of American higher education to yet another morality play about heroic markets and dour statists is simply to get it wrong.  And it gets it wrong in a direction that will continue to do real harm.   As a public, we deserve better than that.