Are Colleges Causing National Decline? Should we tax them?


Most believe that the huge growth in college enrollment over the last half of the 20th century and the first decade of the 21st has contributed to our prosperity and high quality of life. Yet during this period one could argue that America’s exceptionalism and primacy in world affairs began to decline more and more rapidly, so we are now entering a Chinese or, more broadly, Asian century. . And universities have arguably played a role in several indicators of decline, suggesting Milton Friedman was far-sighted by suggesting to me in a 2003 email that perhaps we should tax universities for their negative spillover effects rather than subsidize them for so-called “positive externalities”.

Let me show just six of the many indicators of decline.

  • In the 1950s and 1960s, when less than 10% of American adults had a college degree, annual economic growth was about 4% per year; in the 2010s, when more than 30% had degrees, this figure had fallen sharply to around 2.3%;
  • Around 1950 or 1960, about 25 babies were born for every 1,000 people in the United States; today, birth rates have dropped by over 50%, to about 12 per 1,000, and some states (for example, my Ohio) report more deaths than births;
  • In 1960, less than 10 in every 100 births took place outside marriage; today, around 40 are, with a devastating impact on learning, income, respect for authority and the necessary discipline instilled by traditional two-parent families;
  • Before an unwritten fiscal constitution was destroyed at the end of the 20th century, national debt was typically less than 50% of a year’s size of GDP; today it exceeds 100% and no major political force is pushing for fiscal responsibility; our national government’s total unfunded liabilities can now exceed $ 100,000 billion – over four years of GDP;
  • While the proportion of college graduates has more than tripled over the past half-century, measured income inequality has sharply increased and the realization of the American dream through upward income mobility is increasingly rare.
  • We are becoming a nation of atheists and agnostics; the proportion of Americans who report being affiliated with a church has fallen as the proportion of college graduates increases. The decline in respect for the Ten Commandments and other religious restrictions may contribute to the decline in respect for the rule of law.

It may well be that college education is partly responsible for many of these trends. These are university professors who preached the Keynesian doctrine that federal budget deficits can be a powerful force for national good, providing cover for the irresponsible fiscal behavior of national politicians.

Zealous climate change and environmental advocates within academia argue that human actions are causing fatal damage to the planet and its life. Although strictly anecdotal, I suspect that American higher education institutions buy more condoms than any other nonprofit. Humans are often seen as bad guys who need to be digitally controlled. Humans pollute.

Perhaps more controversially, academics have widely conceived and championed the modern welfare state, and I don’t think it’s a coincidence that the sharp rise in the number of babies born out of wedlock from the 1960s came as public assistance programs have grown extremely rapidly; the Great Society was the product of the ideas of college educated individuals, often professors working temporarily for the federal government.

The ingredients for rapid economic growth have been chipped away by academics who denigrated the virtues of capitalism and individual initiative advocated by Adam Smith and other Enlightenment philosophers and economists: high savings, free trade, low interference in human decision-making, modest taxation, etc. Inefficient government allocation of resources has crowded out more efficient allocations made by markets.

Partly because of the unintended consequences of government student financial assistance policies (federal loans in particular), we may have made higher education less accessible to the poor and raised barriers to income mobility. While professors overwhelmingly support progressive policies ostensibly promoting income equality, they can actually strengthen academic aristocracies, increasing the barriers for young people, the poor, but also smart and ambitious individuals to succeed in our society.

It is telling that in debates over scaling back Biden’s “social infrastructure” package, most provisions relating to higher education, including “free community college,” were removed. Public support for universities is vital, but increasingly threatened. Are we going to stop subsidizing public universities and start taxing tuition fees? Probably not, but don’t rule it out.

My latest book is Restoring the Promise: Higher Education in America.


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