Free Enterprise for Public Universities

Most of us would agree with the statement that our Western-style free enterprise system, when properly refereed to prevent the abuse of employees and consumers, has outperformed the top-down, centrally planned models that have been tried by foreign governments to date.

The starkest example of these two systems working in proximity to one another occurred in Communist China during the fifty years following World War II. In one experiment, Chairman Mao allowed farm workers on communes to plant and harvest their own personal crops, so long as their gardens were limited to one acre. What he learned, to his great disappointment, was that the output from these private farms far exceeded that of the collective communes to which these plots were attached.

Then, to the south of mainland China, businesses operating in the quasi-nation-state of Hong Kong were free to use capitalist economic methods, while those located on the mainland were not. Again, the contrast was striking. Hong Kong, despite its tiny size, was far outperforming mainland China in terms of trade and manufacturing output. Even the most hardened Communist supporters were forced to admit that human beings seemed to perform better when they were allowed to enjoy the fruits of their own labor.

Given all that, why is it that we are so insistent, when it comes to public higher education in the United States, to maintain a governing system that imposes Communist-styled central planning on our nation’s finest universities?

Ah, you say. We have to do that because public universities are agencies of the state. We impose the same bureaucratic measures on them that we do on other state offices for the purpose of protecting taxpayer money.

Maybe so. But what if we could adopt a different philosophy, one that would protect taxpayers while encouraging all the best features of free enterprise? After all, didn’t mainland China come up with its concept of “market socialism,” blending free market economics with political controls in a manner that allowed its economy to explode? If they can find a way to loosen government controls in a positive way, why can’t we?

Here’s how it would work:

Suppose we encouraged public universities within each state, and across states, to compete with each other to the greatest extent possible; not just in athletics, but also in academics. Instead of central boards and system offices, let’s allow governance to occur at the university level, with board members elected by constituent groups, including alumni, faculty, students (and their families), employees, and regional governments (to ensure strong town-gown relations). No need to worry about protecting taxpayer dollars. These constituent groups will want to keep their alma mater strong. And our universities are already subject to annual audits and periodic accreditation reviews.

Then, instead of states appropriating money directly to the universities, let’s redirect that same amount of money to our campuses by way of students in the form of scholarship credits.

Knowing that their revenues now depend on enrollment–just the way it does for private universities–public universities would start acting more like privates. They would be forced to compete, both in terms of price (tuition) and educational quality.

Then, just sit back and watch the action!

Don’t expect current boards and administrations to support this type of approach. The boards were, after all, appointed by their governors, who enjoy the patronage system because it enhances their re-election chances. Board members enjoy the feeling of power they can exert over university leaders. And the presidents and chancellors won’t support this approach either, because they were selected by these same political boards.

I believe we can free the brainpower of our nation to compete, once again, on the forefront of academic research and instruction. We just need to take the shackles off our public institutions of higher education.