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The Higher Education Bubble Must Burst, The Mentality of Entitlement in Academia

Politics / Social Issues Mar 26, 2010 - 02:38 PM GMT

By: Daniel_Coleman


Best Financial Markets Analysis ArticleBrian Leiter is incensed.

Mr. Leiter — famous primarily for his website containing comparative rankings of philosophy programs, as well as his blog, which covers job-related news in academic philosophy — has recently learned that King's College, London (KCL) is facing budget problems and must cut back on staff. In order to assess the extent of layoffs, the school will require every faculty member to interview for their current position. Leiter has kept his readers updated on the situation through his blog, and linked to The Times Higher Education's coverage of the event — which, in an article titled "'Draconian' measure: King's to cut 205 jobs," emphasizes how the cutbacks will affect the humanities and focuses on the reaction this has set off among academics:

A proposal on "restructuring" in the School of Arts and Humanities, where 22 jobs are at risk, tells staff that "all academic roles … will be declared at risk of redundancy."

Selection of the redundancies "will be done through an assessment based on the performance of each role holder," it adds.

A group of 26 academics from nearby University College London have written to the head of the school, Jan Palmowski, warning that such a "savage reduction of staff numbers" would mean that the best candidates in the humanities will "shun the institution."

Only in academia — or in government — could the reduction of just over two hundred jobs from among thousands (and in this economic climate!) be considered "draconian" and "savage" in an unqualified sense. The reaction of these academics betrays the degree to which an entitlement mentality has permeated institutions of higher education.

"Draconian Measures" and the Entitlement Mentality

No one enjoys it when resources are mismanaged, time and money are wasted, and an organization must face tough decisions on how to clean up after its past mistakes. Sometimes these corrections include firing staff members, some of whom may have been hard-working and dedicated employees. However, while personnel changes caused by financial problems are often tragic, the alternatives — pretending that no such problems exist, for example — are much worse.

Unsustainable activities cannot continue forever, for the simple reason that they are wasteful by definition and must eventually either collapse or become a drag on the rest of society (e.g., through tax- or inflation-funded transfers of wealth). Those companies and institutions not on the public dole do not have the second option: profit and loss mechanisms ensure that all organizations which weigh down the rest of society are dissolved, reformed, sold to more capable owners, reorganized, etc.

However, this is not the case with universities and colleges, most of which are entirely state owned and the majority of which receive sizeable benefits supplied by the public. Administrators at these institutions enjoy the privilege of negotiating political solutions for their financial problems, which amounts to bypassing the need to please consumers first and foremost. Yet this comes at a cost: if you earn your living not by voluntary exchange but through entitlement, it is impossible to run an organization on sound financial principles.

During the good times, few notice the tension between economic reality and university policy. There is enough money to go around, and schools routinely enlarge their scope of activity by hiring promising young scholars and expanding the number of programs they offer. But when recessions hit and everyone is forced to rein in his spending, academics desire to retain their right not to be affected by the rest of the world's concerns. They ride the boom but refuse to feel the bust.

Leiter on KCL: A Moral Argument

Even the reorganization of one school such as KCL — in this case, the reduction of a small percentage of its faculty — can send academics across the world into a fury. Brian Leiter comments on the situation:

KCL Philosophy is a remarkably consistent unit in terms of strength, so it is an insult that any member of staff should have to re-apply for his or her job. Indeed, we can go much further: it is an insult and an outrage that any professional hired with an expectation of permanent employment absent gross dereliction of duties should have to re-apply for his or her job.

Terms like "insult" and "outrage" imply that the morality of a matter is clear and needs little or no explanation. Yet it is not apparent why KCL's reorganization is such a case.

Granted, KCL has broken promises it made to its professors, who were "hired with an expectation of permanent employment." However, there are many situations in which breaking a promise — while undesirable — is nevertheless necessary in order to avoid an even worse state of affairs. When an institution makes grand promises of a prosperous future, it should be obvious that the fulfillment of such claims is simply not within its control. Who is KCL to decide that it will remain prosperous regardless of a change in the economic climate?

It's not outrageous to fall short of a promise you never should have made; on the contrary, to make questionable commitments is unwise and blameworthy in itself. Consider an industry that has experienced its own crisis in recent years: real-estate–management firms boasted record high profits in 2005, with promises of ever-greater expansion in the future. During 2007 I worked in a massive, new complex with offices, retail space, and residential areas that had been planned at the height of real-estate mania. It was built on the expectation of steady increases in real-estate prices, but to this day only a fraction of its condos and offices have been sold or leased. The project remains a massive failure.

The firm that executed the project, their investors, their clients, and their employees were all deceived: in reality, the real-estate boom was a sham, and the project, which seemed like a sure bet, never had a chance. And so the consequences for their foolishness had to be met. Promises could not be kept; painful cutbacks and reorganization were needed to survive. Many were disappointed.

Strangely enough, I have never seen any outraged letters to the editor about asset managers losing their jobs. Everyone recognizes that there was simply too much real-estate–related activity at the time, pushing too many, often ill-conceived projects. Most also realize that to continue the illusion can only delay the recovery and readjustment to normality. If there are too many workers in real estate, some of them need to find productive work in other fields.

The same principles must apply to higher education no less than they do to real estate, whether we choose to recognize this or not. The only difference — and the reason busts appear to go easy on universities — lies in the political connectedness of most schools. When times are tough, the taxpayers are expected to eat the lion's share of costs (since university professors after all are "hired with an expectation of permanent employment").

Perhaps one might object that KCL has done more than merely break a promise. One could take the position that tenure is a contractual obligation or close to it. On this view, revoking tenure would be like slashing pay in violation of an express and binding agreement.

To this I would respond that tenure is a privilege given to professors to solidify their academic freedom — the agreement is that a professor will not, for example, be fired one day only to be replaced by someone else the next. Schools nevertheless are free in times of financial difficulty to cut back on staff — including tenured professors — or even to eliminate an entire department. The objection we are considering takes the spirit of tenure to entail a near-contractual promise of lifetime employment. Yet such a contract would be foolish to the point of being untenable from the word go.

In business, promises and contracts made in a distorted market are often broken. While this phenomenon is unfortunate, it is often necessary. To be sure, there remain penalties to be paid and justice to be served; yet few would assert that the original, irrational promises and contracts must be maintained at all costs. Why should the situation in academia be any different?

Universities, no less than other industries, expanded during the good years. They undertook projects on the assumption that the money would continue to pour in. They promised life-long, paid positions that (were the boom revealed to be the sham it was) they were in no position to promise. The real moral outrage in this situation is the hubris with which academics and administrators themselves have acted — often assuming that their budget ought to rise continually without interruption or at most remain stable during difficult economic times.

Leiter on KCL: An Economic Argument

Leiter's moral contempt is not the only argument he advances. He also makes an economic case against KCL's actions:

Besides the ugliness and cruelty of this whole business, it is clear the KCL administrators didn't consult any economists, for they might have learned that this whole maneuver will end up costing KCL much more money over the longterm. Here's why: if academics are not going to receive compensation in the form of job security, they are going to have receive [sic] it in the form of money. This effect won't be immediate, and, of course, KCL can dodge the consequence altogether if it decides that it doesn't want to compete at all in the major academic disciplines, or it decides it doesn't care who it appoints. But if KCL imagines it can remain part of the Russell Group, and get RAE results more to its liking, then it will have to appoint serious academics, and no serious academic will go near King's without either guarantees of job security (which won't be credible after this fiasco) or much higher compensation. [emphasis original]

Leiter's argument relies on the idea that academics today enjoy such advantages in their current or prospective employment that they can be picky in deciding where to work — and also that these privileges will continue well into the future. But is this really the case? Perhaps for a tiny minority of those considered elite in their respective fields of scholarship. However, ask any recent graduate with a PhD whether jobs are easy to come by, and you will receive a much different view on the state of finding work in academia.

Certainly, in a world where teachers and scholars are in short supply, colleges and universities must compete for competent workers with promises of high pay or other benefits (such as assurances of long-term job security). We do not, however, live in such a world: instead, recent PhDs search long and hard to find employment, often without any luck. In many cases they scrape together teaching "jobs" that consist of ad hoc assignments or adjunct positions rather than full-time, paid positions. This is especially true in the humanities, where the supply of teachers and scholars has long overpowered demand for them.

Leiter nevertheless seems confident that, from an economic standpoint, KCL is making a poor choice. Even though there are many capable-but-unemployed scholars in the world, professional pride, he believes, will keep worthy scholars and teachers from ever considering a teaching position at the school — absent costly incentives.

Again, while this may be true for a small handful of the elite in academic philosophy, the facts on the ground contradict his theory. All over the country, schools that advertise an open position receive hundreds of qualified applications for a single spot. Prospective professors often accept heavy teaching loads at low pay or accept non-tenure-track positions. Those who have teaching jobs, whatever their circumstances, consider themselves lucky to have them. Why should we think KCL, in this environment, couldn't find competent workers? (Which is worse: accepting a job with a potentially shaky future or remaining unemployed?)

Of course, Leiter isn't ruling out just any academic; he has in mind specifically the top talent in philosophy. Surely none of these will accept employment from a struggling institution. Yet the sheer abundance of workers, including many from top programs, eagerly seeking a job is a clear signal that good help will not be too hard to find. These young academics may not be well established in their field right now, but they are looking for an opportunity to do good work. A job to which someone of Leiter's stature might turn up his nose could very well be filled by a future star.

And even well-established scholars may not require extraordinary measures from KCL to consider employment there. KCL is experiencing a budget crisis now, but several years down the road — thanks, perhaps, to their current restructuring — they may be in much better financial shape than, for example, many state schools in the United States. This would put them in a position to make competitive offers to scholars working in struggling institutions. By that time (as we will see below), many schools will have since undertaken a KCL-like restructuring. It is difficult to imagine an unorganized, pride-induced embargo lasting through such circumstances.

Thus run Leiter's moral and economic arguments. It seems to me that in both cases he is confused. But there is a deeper issue at stake here. After all, Leiter is speaking in a manner consistent with general academic attitudes and practices: his opinions on the matter reflect those of most in the profession. Any time there is sustained, industry-wide support of an intrinsically unsupportable system, there is a good chance that interventionism is feeding ideas and practices which otherwise could not be sustained. The determination of academics to secure a lifetime guarantee, for all of their colleagues, on jobs that ought not to have been created is surely evidence that interventionism is involved.

The Bubble Must Burst

Despite the systemic redirection of wealth from its most productive uses to the fantasies of academics and central planners, cracks are appearing on the surface of higher education. The bubble is not sustainable. Too many students attend school without good reason; too many jobs are held by too many highly paid teachers; too many programs are wasting money and time. Sorting out which are economically viable and which need to be liquidated is something that only a system of prices, established through voluntary exchange, can establish.

Even if universities are immune from having to please consumers, their customers (students) are not. In many cases — especially in the liberal arts, Mr. Leiter's field — earning a degree no longer pays off for the average graduate, and the increasing average rate of student-loan debt puts liberal-arts majors at a big disadvantage early in their careers. Many with bachelor's or even master's degrees are taking jobs that require no more than a high-school education. States themselves are increasingly unable to afford the cost of their patronage of higher learning.

At some point, institutions will need to reckon with reality and plan their own budgets accordingly. Along the way, private institutions that excel in education — not to mention taxpayers — will suffer, as state institutions continue to receive special consideration at the public trough.

What are colleges and universities to do? They will have to assess their current standing and find ways of consolidating their losses, in order to ensure that the most urgent needs of the institution are met and (if possible) provide for the survival of the school. But they face a dilemma: much of their payroll expenses are in the form of guaranteed jobs for life. They have been living beyond their means for years, relying on increasingly leveraged investments and public subsidies to keep the party going.

Their unrealistic promises and financial habits have put them in a bind: they must remove the dead weight, but they cannot simply eliminate their least-valued positions (as every other nongovernmental institution has been forced to do by the recession). Because of the public status of most schools, there are few market signals they can rely on to make their decision, and whatever they decide will spark further outrage. It seems as though everyone loses on the deal.

How Long Can the Facade Last?

Mr. Leiter might be right, for now: the first schools that begin to face reality and cut back on staff will indeed face the scorn of the entirety of academia. There is no fair way to cut back on jobs when you have promised everyone a tenured position. Some qualified people who have dedicated themselves to your school will lose out.

There remains among many scholars an air of entitlement and invincibility. Many professors believe themselves to be among the least appreciated members of white-collar society and above "capitalist" concerns of profit and loss. But King's College, London and the state schools in California are merely the first fruits of a collapsing system — and notably one that has made us all poorer in the meantime. In recent weeks there have been an increasing number of schools who are considering or taking KCL-like action. Because of the problems created by the tenure system, the restructuring of these schools is guaranteed to be much more painful than it would otherwise have been.

The inevitable collapse — and the moral outrage of those it hurts — will continue for as long as the public buys into the myth that higher education (and its professors) are too important to have to keep their costs and production in line with consumer demand.

Daniel Coleman is a graduate student in the School of Philosophy at The Catholic University of America and a freelance editor. He lives with his wife and son in Annapolis, Maryland. See his website. Send him mail. See Daniel Coleman's article archives.

© 2010 Copyright Daniel Coleman - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


David Ganz
01 Jun 10, 09:13

I am very sorry that Mr Leiter is so indifferent to research that he simply reproduces the lies told by Jan Palmowski, and then justifies them with the kind of vulgar popularist argument which shows a complete indifference to scholarship. I am glad that people like him enjoy firing other people and creazting spurious economic arguments to justify this.

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