Saturday, May 03, 2008

More on the end of PCU*

One sign of the impending fall of PCU is the aggressive sniffing of state legislatures around college endowments and other academic assets and income streams. States don't have much leeway here, because of federal charitable tax rules. Yet the trend is striking, for example, right here in Massachusetts and Beantown. See also this, about the explosion of non-educational costs in academia. Might this not be like the dissolution of the monasteries and economic assets of the Catholic Church during the Reformation? The comparison is neither new nor unique to me.

The rise of PCU was never enough to provoke a large, direct revolt by alumni, taxpayers, and students, although it has greatly diminished the prestige and influence of academia in the larger society, compared to 30 or 40 years ago.** Rather, it's costs that will stimulate the revolt, and more generally the perception of academia as an island of bloated privilege. It's not a completely correct perception, but there's enough truth in it that political hay can and will be made.

The right solution is not to revoke universities' charitable status (unless the whole concept is changed across the tax code), but to take a hard look at public and private subsidies to universities and their unwillingness or inability to control costs. Profit-making activity by schools should be spun off into taxable regular commercial enterprises that universities own, but which are legally separate. That's what some schools do already, and it's a common approach in other countries. In any case, the financial problem is not for-profit activity, but "cost-plus" activity.

Such academic blogs as those mentioned last time (Althouse, Instapundit, Volokh Conspiracy, as well as so many others: Augean Stables, Cranky Professor, Professor Bainbridge, Daniel Drezner, and ChicagoBoyz) keep a steady track on the bundle of trends that define PCU: costs, endowments and other subsidies, political correctness, censorship, and declining standards. They know the insides as only insiders can.
* Politically Correct University, like the movie!

** One major reason for the rise of think tanks, especially conservative and libertarian ones.

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