A Bit Off-Topic, but...

by Joe Miller

Over at Catallarchy, Patri Friedman has argued in favor of what David Friedman has dubbed Adam Smith University (see here and here). ASU is a university that is run on anarcho-capitalist principles. Thus, it is not really a university as such, but rather a collection of various independent services. So at ASU, there will be a number of different companies providing meal plans, others that specialize in providing housing, still others that provide books, and some that will provide entertainment (sports, recreational facilities, etc.). So far, this doesn’t sound so radical. The interesting part, though, is that classes will be offered on that same open market. As will degrees. So you will decide which classes you would like to take and then sign up for those classes by directly contracting with the professor. That means that if you wanted to take my class, you would pay me directly whatever my going rate was. When you get ready to graduate, you would have a number of different degree-granting services from which to choose. Theoretically, some of these services would grant degrees to anyone with enough hours regardless of the difficulty of the courses taken. Others would grant degrees only to those who had taken really rigorous courses. So rather than receiving a degree from Princeton University, you would receive a degree from Princeton Degree Services. PDS would determine what sorts of classes merited a degree. If you meet the qualifications, then you pay PDS for your degree.

Patri suggests that ASU will be far more efficient at producing the various things that colleges are supposed to produce. Some will specialize in producing people who are well-educated while others will service those who view college as entertainment or as certification. In the meantime, he thinks, professors will be better teachers (because they have to compete for students) and the whole enterprise will be much cheaper (since competition naturally lowers costs). Moreover, things like tenure for professors would be unnecessary since all the professors are self-employed. Professors would rent space from the company that provides university buildings. With no university to look over their shoulders, professors wouldn’t have to worry about things like academic freedom.

I have raised several objections to ASU in the comments at Catallarchy, several of which have been addressed there already. Still outstanding, though, is my biggest objection, which is that there is something of a collective action problem at ASU. Specifically, the problem is that while all students will claim to want a good education, it’s not clear that any particular individual will ever have any incentive to try to get one. Sure there are some students who genuinely want a good education and who are willing to do a lot of work (and possibly get worse grades) in exchange for a rigorous education. But most students would really prefer to take easy classes from fun, entertaining professors who give very high grades. So despite the fact that everyone claims to want a good education, and despite the fact that a highly-educated workforce is better than a less-highly-educated workforce, it’s not clear that the market will actually provide good education.

Now Patri claims that this problem will take care of itself. There will, after all, be some students who do want a good education and who will thus take rigorous classes. And since there will be a market for very well educated people, there will also be some degree-granting service that will certify only well-educated people. Since well-educated people are likely to do better in the world, more people will want to follow their example, and thus there will still continue to be highly-educated students.

I’m not so sure that this explanation works, though. Consider: one of Patri’s main objections to the current university system is that there is no incentive for professors to be better teachers since they aren’t accountable directly to their “clients”. Universities, moreover, have little incentive to fully evaluate the competence of their faculty’s teaching skills because universities derive most of their money not from tuition but from endowments. Donations, however, have little to do with teaching quality, and a lot more to do with reputation. And reputation comes from faculty research, not from faculty teaching. (Note for the record that while this might be an accurate description of Patri’s own colleges—Harvey Mudd College and Stanford—I’m not so sure that it describes the full spectrum of college options.)

My worry here is that, if it’s difficult now for universities to evaluate the teaching of its professors, how much harder will that task be under the ASU system. After all, Princeton Degree Services doesn’t have to award degrees to people who took classes only from professors who happen to live in a certain part of New Jersey. All that PDS looks for is for those students who have taken a certain number of very rigorous classes. I could take my classes at UNCP and get a degree from PDS if I choose only the really rigorous courses. Similarly, someone taking classes at Princeton might get a degree from UNCP if he/she spends all his time in gut courses. Notice that means that now a degree-granting service has to figure out how to evaluate faculty. But it’s not just local faculty that PDS has to evaluate now. It’s every professor in the entire country. And not just every professor, but every course. After all, my intro class might count as rigorous by PDS standards while my logic class might not. So the ASU system creates a gigantic logistical nightmare.

Without some reasonable way to assess the merits of every college course taught in the entire country, a degree-granting service will have to instead rely on proxy measures. What are some possible proxies? Well, reputation might be one. But reputation with whom? If one looks only at, say, student evaluations, then we’re back to our earlier problem: popular teachers are (often, not always) easy, funny, entertaining teachers and not necessarily rigorous teachers. The most prestigious degrees, then, will be awarded to people who took the ‘best’ teachers, but here ‘best’ will mean ‘easy’. If, on the other hand, one looks at, say, peer evaluation, then we’re back to a different problem. I know other professors only via their reputation as researchers not as teachers. So now the incentive for professors would be to teach easy classes and spend their time writing good books.

Thus, I’ve claimed that ASU demonstrates a limitation of markets, or rather, that this particular market-based strategy will fail to produce the good we are aiming at producing. Now I don’t mean to suggest that I think that markets will _commonly_ fail to produce what we all regard as a genuine good, only that they will sometimes do so. I don't think that what we're talking about is really so much a matter of paying lip-service to something that we don't really want. Rather, I think that the issue is that there are some long-term goods that people sometimes irrationally discount in favor of short-term goods. Thus, I want clean air, but not if I have to pay more for my car. I want not to fund islamo-fascism, but not if it means that gas for my car will be more expensive. I want a place to dump my trash, but I don't want it to be near my house nor do I want to have to pay to build the new dump.

This point does remind me, though, why I'm a hedonistic- and not a preference-satisfaction or a desire-satisfaction utilitarian: people are sometimes mistaken about what their preferences really are. Or rather, people are sometimes mistaken about how happy their preferences will actually make them. So satisfying preferences or desires is not always going to generate the greatest overall utility.

Now before anyone starts accusing me of wanting a nanny state to decide what's best for people, let me be clear that that's not what I'm endorsing at all. While an individual is sometimes an imperfect judge of what’s best for her, she is usually better at it than someone else would be. Mill makes this point pretty forcefully in On Liberty. So I’m not arguing for paternalism to replace markets. Rather, I’m just pointing out that we are talking about college students here. There is a good case to be made that part of the point of college is that it affords people the chance to learn what their preferences really are. I, for example, didn’t head off to college planning on being a philosophy major, and I’m pretty sure that’s true of everyone in my class this semester. Most of you decided to be philosophy majors after being forced to take intro to fill a distribution requirement. At ASU, that would never, or at least, the odds of it happening would have been a lot worse.

In other words, ASU will fail because people have the wrong preferences when it comes to college. And since the purpose of college just is to help people get clear on what their preferences really are, maybe a market-based college like Adam Smith University is a bad idea.