OCPA's Small: Higher Ed Delusions

Jonathan Small, OCPA President

Free Market Friday: Higher delusions

When Oklahoma voters trounced University of Oklahoma President David Boren’s tax increase at the polls on Nov. 8, a major reason many voters gave for voting no was the fact that a large chunk of the revenue would have gone to a higher education system they view as wasteful and inefficient.

Less than a month later, what do we hear?

“As a system of higher education we generate $9.5 billion a year for Oklahoma,” higher ed Chancellor Glen Johnson boasted. “For every dollar the Legislature appropriates, higher ed generates $4.72 back to the Oklahoma economy.”

Seriously?

“Government spending does not come out of thin air,” economist Joshua Hall of the Center for College Affordability and Productivity said of that $4.72 number. “Every dollar spent by state government comes out of the private sector at some point. A dollar of public spending is estimated to cost anywhere from $1.25 to $1.50 to raise.”

When asked what would have happened if some of that money had been left in the private sector, the analyst who came up with the multiplier that Johnson cites told CapitolBeatOK: “We don’t look at that for the projects we do. We were trying to find the economic impact of those dollars spent in public institutions of higher education and play that out. We did not look at the fiscal stream, as such.”

Indeed. So it’s no surprise that economist Richard Vedder, who helps compile the annual college rankings for Forbes, had this to say: “Econometric analysis I have done suggests that the relationship between state appropriations for higher education and economic growth is actually negative – resources are taken from competitive private enterprise driven by market discipline and given to an inefficient sector sheltered from such discipline.”

But hey, if Johnson is correct, then by all means policymakers should appropriate every single dime to higher ed – and we’ll all be rich.

With an annual compensation exceeding $411,000, Chancellor Johnson may make more money than the president of the United States – but he makes about as much sense. Remember President Obama’s claim about his “stimulus package” – that money extracted from taxpayers and crunched through a vast government bureaucracy magically generates more money?

If the higher education system is not willing to reduce administrative bloat, consolidate campuses, increase professor workloads, and rein in the out-of-control political correctness, appropriators should respond accordingly.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs (www.ocpathink.org).