A Response to Scott Cowen on Universities and the “Fiscal Cliff”

Scott Cowen

Scott Cowen, the president of my university, has an opinion piece on the “fiscal cliff” issue on the Huffington Post website. Among his other qualities, President Cowen is certainly indefatigable, and I can’t imagine where he finds the time in his breathtaking schedule to write editorials. As I read this one, I found that I agreed with parts of it and disagreed with others.

President Cowen essentially argues that technological innovation has been an essential part of the American economy since the Second World War, that much of this scientific and technological advancement has come out of universities, and that future prosperity depends on federal financial support for institutions and students. The U.S. President and Congress, accordingly, should adopt the bipartisan “collaborative approach” to problem solving recommended at the annual summit of the Bipartisan Policy Center, recently held at Tulane.

I agree that technological innovation has been a big part of American economic growth in recent decades. It should be acknowledged, though, the history of this growth has been a bit more complicated. At least since the 1970s, the growth of our economy has been fueled as much by the expansion of the financial sector as by the contributions of technology. Indeed, the two have been connected, since the emergence of new techniques and knowledge, most obviously in communication but also in areas such as pharmaceuticals, has stimulated the rush of investments into the American marketplace. An investment oriented economy has both concentrated wealth and produced a series of financial bubbles. So, I think part of our historic problem is that we have become too dependent on injecting innovative amphetamines into the national bloodstream rather than maintaining a slower but stable and healthy metabolism based on steady industrial productivity.

President Cowen cites the numerous technological contributions of our university to support the argument that universities are important for advancements in applied science. He is, of course, factually correct on these contributions. Moreover, acting as number one cheerleader for the university is part of his job and I’m happy, but not surprised, to see that he’s doing this. However, I think he may exaggerate the extent to which universities are immediately responsible for discoveries and inventions. It is certainly true that uneducated scientists would not be very effective, and universities are the places where they receive their specialized educations. But it is also true that much of late twentieth and early twenty-first century innovation has been created outside of academia, by industry and by maverick techno-entrepreneurs. It is not clear that technological change requires maintaining the government-academic complex at its current size and expense.

The impact of federal subsidies to higher education institutions and students is also open to question. As institutions have received more federal dollars, they have become dependent on the federal government. This means that government increasingly tends to steer research, to shape what should be done and how it should be done. Subsidies also tend to drive up the cost of higher education and are at least partially responsible for the dramatic rise in tuition costs.

Whether federal subsidies should go to students and, if so, in what form, are issues that cannot be answered simply by asserting, as President Cowen does, that “federal aid for students must remain a top priority for Congress and the president.” If that federal aid does drive up tuition costs, then it is to some extent self-defeating. Federal aid to students at present also comes in two forms: the out-right grant and the loan. The most common type of grant is the Pell Grant, a needs-based form of funding that gives no consideration to academic ability. Pell Grants tend to encourage college attendance by the under-prepared and thus water down the quality of college educations. These grants also usually do not cover all of the cost of education, so both low-income students and others rely heavily on loans. The “aid” then not only drives up tuition costs, it also helps to overproduce under-educated college graduates while creating heavy debt burdens.

On this last point, I agree completely that “educated workers are vital to long-term economic growth.” I don’t agree, though, that this necessarily means college educated workers. We still do need unskilled laborers (we are increasingly importing them), but many of the semi-skilled and skilled laborers required by our economy have the kinds of educations that people do not get in college. From a purely economic perspective, we don’t need to push more people into higher education; we need to enable more people to attend vocational and technical schools. Whether this should be done by federal initiative or by local efforts is a question for consideration and debate.

Finally, it is almost a truism that any efforts to deal with our current economic challenges will require bipartisan collaboration. I’m not sure that anyone has good ideas on exactly how to get to this collaboration.  But it would require returning to many of the practices that Americans have traditionally disliked about politics: compromises, horse-swapping, and backroom deal-making.