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Tuesday, May 1, 2018

AN HYPOTHESIS


OK, here is a little experiment.  First, I Google “CPI Deflator” [or Consumer Price Index Deflator] and get taken to an app that allows me calculate how much x dollars in y year is in dollars of z year.  Got that?  Then I go online and look for current Harvard tuition, which is $46,340 a year [much less than Columbia, mysteriously.]

Now, I recall that when I went to Harvard as a Freshman in 1950, tuition was $600.  My CPI Deflator tells me that this is $6,136 in 2018 dollars.  So Harvard today, in constant dollars, costs between seven and eight times as much as it did in 1950.

Why is this?  One possible answer is that Harvard offers an education today that is many times as good as the education it offered then.  Trust me, that is not the correct explanation.  I mean, Plato is Plato, Tolstoy is Tolstoy, Weber is Weber, and I couldn’t study Marx’s economics at Harvard then but I can’t get now either.  A second possible answer is that the salary of the professors has soared, but alas, that is also not true.  When I started at Harvard as an Instructor in 1958, after getting my doctorate and doing six months on active duty as part of my military service, I was paid $6,500.  That would be roughly $56,000 in 2018 dollars, and although young Instructors at Harvard [if there are any nowadays] will make more than that, they won’t make seven times as much, which would be almost $400,000.

So what’s up?

Herewith, an hypothesis.  It was the Viet Nam War.  The war was a disaster for the powers that be in American society.  It damned near ruined the Army, which was torn apart by fragging and drugs and a loss of command and control.  And it tore up the campuses, disrupting the hitherto smooth processing of the elite young into the upper reaches of the pyramidal structure of jobs and salaries that defined then, and defines now, American society.

The response?  The military went to an all-volunteer army, with better pay, career opportunities, and no draft.  And the Academy responded by saddling students with a load of debt that virtually compelled the college fragment of the age cohort to move docilely, obediently into high paid jobs in the corporate and professional worlds.  It is not for nothing that 30% of Columbia’s graduating class goes into investment banking.

When I was young, it was literally possible, with great effort, to work one’s way through college.  Not now.

Just an hypothesis.

19 comments:

Carl said...

A hypothesis. Not "an."

Matt said...

No doubt there are many reasons for increased tuition, but a significant one is almost certainly the increase in administration at all universities. Some of this is pure bloat and waste. But, some of it is almost certainly a necessary feature of laws put in place over the last 30+ years. If Title VII and IX are going to be effective, there must be people who take steps to ensure they are followed, that complaints are followed up on, that rules are known, and so on. Similarly, if there is going to be affirmative action, this will require people to put it in place. If there are going to be services for disabled students and students with mental illness (both groups attend, and remain in, university at much higher rates than in the past), this will require people to provide services to them, to make sure they are not discriminated against, and so on. We might dispute how many administrators these services require, and some might dispute that all of the services are desirable, but it's impossible to argue that these services could be provided without hiring a non-trivial number of people to provide them. Does this account for all of the very large increase in tuition over the last 30-40 years? Of course not. But, it's an important part, and has to be considered when thinking about these matters.
(Of course, there's no law of nature that says that, especially at public universities, paying for these services _must_ be done with tuition, but given the general large decrease in the percentage of operating budget that essentially all public universities get from state and federal budgets, rather than from tuition, providing these services will, in fact, often come from tuition, even if they could, and likely should, come from state and federal governments more generally.)

David Auerbach said...

@Carl maybe RPW is Cockney?
Although faculty salaries haven't gone up to enough to account for the tuition rise, administrative numbers and administrative salaries have gone up at a much faster rate than faculty salaries. Infratructure costs have also risen steeply. But I've always thought that the powers that be "decided" (not as a coordinated conspiracy, just as their individual natural reactions) that the low-cost egalitarian higher ed. ushered in by the GI Bill and a healthier (financially speaking) working class was a mistake. Both a political and economic one.

David Palmeter said...

An additional factor, I suspect, is concern for academic reputation--prestige. Colleges an universities don't compete with each other on price. In fact, they do the opposite--if Harvard leads the way with a tuition increase, others will follow. Those who don't will risk being seen as not as good as those who cost more.

LFC said...

Debt does not actually compel students to take certain kinds of jobs. First, student debt loads vary. A place like Harvard spends tens of millions on financial aid, something you have consistently neglected to mention, and that means that debt loads in some cases are reduced or even eliminated (in some cases, not all of course).

Second, if students were actually compelled to enter high-paying career tracks, none of them would, say, become public-school teachers or union organizers or aspiring poets or artists or actors, etc. Since a certain number in fact do do those things, "compelled" is too strong a word.

I agree with the implication that 'the sixties' were aberrational in various ways. By the late '70s (when I graduated from Harvard), students in general (with some exceptions) were as concerned with getting into professional schools (as an avenue into often lucrative careers) as they had probably been in the '50s. The interest in Wall St. among students probably increased in the '80s and '90s, though.

In terms of debt and tuition trends, as previous commenters suggest it wasn't just the Vietnam War, though doubtless that played a role. Multifaceted developments tend to have multifaceted, not singular, causes, as I suspect (emphasis on "suspect") your friend the late Barrington Moore would remind you if he were alive.

s. wallerstein said...

As LFC points out, in a place like Harvard or Columbia lots of students receive financial aid these days. According to Columbia, 50% of the students receive grants from Columbia itself and the average amount is 52 thousand dollars, Columbia tuition being 57 thousand dollars. 16% of Columbia undergraduates receive Pell grants from the Federal government.
Parents with calculated income below 60 thousand dollars a year are not expected to have to contribute anything towards their children's education at Columbia.

https://cc-seas.financialaid.columbia.edu/eligibility/facts

Anonymous said...

And by induction, since the typical student goes to Harvard or Columbia, student debt isn't a problem. Changing the subject slightly, I can hardly wait for Alex Rosenberg's How History Gets Things Wrong to come out.

LFC said...

@Anonymous

As to your first remark, of course no one was suggesting that.



Anonymous said...

Nor is anyone compelled to do shit work on account of student debt, since to the universal efficiency of market forces ensures that labor demand precisely matches ability and interest, with or without the presence of student debt.

Charles Pigden said...

On the one hand I can't help thinking that David Auerbach is along the right lines. On the other (the invisible hand) you really do need a theory of how the ruling class can decide to do or bring about X even though the individual members of the ruling class have neither individually decided nor collectively agreed to do or bring about X. A vague gesture towards (or with?) an invisible hand isn't enough. You need an account of the invisible hand MECHANISMS actually work.

David Palmeter said...

Catholic University in Washington is now undergoing a cost-cutting operation to the detriment of academics, particularly the humanities. Brian Leiter has noted it. Here’s a link: savecatholic.com

As to what has gone on in the past, according to the faculty, from 2009 to 2016, faculty and staff salaries increased by an average of 12%. During the same period, the president’s salary went up by 70%, the president’s chief of staff’s by 115%; the provost’s by 55%; the VP for finance’s by 135%.

I don't know enough about Catholic to know whether they even have a football or a basketball team, but if they do, I suspect that the salaries of the coaches might have gone up by more that 12% in the same period.

Anonymous said...

One could advance a theory--academic apologists for the state sometimes require their critics to supply theories, when "everyone knows" that their own side has no such requirement--though in this case, as in others, it suffices to cite the policy record and note the effects retrospectively. [As far as mechanisms go, there are mechanisms of cooperative benefit, but economics the lifetime of any strategy is limited (in the long run we are all dead); strategic players are forced to switch strategies continually since payoffs tend to zero over time, the result being that predictive theories and narrative explanation in economics is mostly worthless, except in the very short term.]

Now for the record. In the 70's, the WTO--the authors of the so-called free trade agreements--decided that workers were earning to much. The result was the transfer income from low income earners in high income countries to high income earners in low income countries. Economists who said so at the time were excoriated by the mainstream -- but see a recent article in the LRB, which I may be able to locate.

LFC said...

@David Palmeter

Thank you for the link about Catholic U.
I was not really aware of what is going on there (and happen to be interested).

David Palmeter said...

Anonymous,

The WTO is not the author of any free trade agreements. It is a multilateral organization, and its rules are rules negotiated by its members--which include tariffs. It isn't "free trade."

The various free trade agreements, CUSFTA, NAFTA etc. are actually in derogation of the WTO agreement which enshrines the most-favored-nation principle, i.e., no discrimination, no having one tariff on widgets from country A and another tariff for widgets from country B.

The US departed from a 200 year-old policy of favoring non-discrimination during the Reagan administration with the free trade agreement with Canada. That did not cause any furor. In fact, few people even were aware of it. But before the ink was barely dry, Mexico asked to join, which led to NAFTA. That caused the furor. Those pesky Mexicans, you know--not like those white, English-speaking Canadians.

I think a good case can be made for the proposition that it was the addition of Mexico to the already existing free trade agreement between Canada and the US that planted the seeds of Trump's disparaging remarks and vile policies with regard to Mexico an Mexicans.

Anonymous said...

Does that mean there are no "powers that be"? What about the members of the multilateral organization? Oh dear, we might have to deliberate on the metaphysics of authorship in groups versus members.

David Palmeter said...

Of course there are "powers that be." As in any multilateral organization, large members effectively count for more than smaller members. In the WTO and the GATT before it, for many years the US was the 800 pound gorilla. We essentially wrote the GATT. With the rise of the EU and its predecessors, as well as China, Japan,Korea and large developing countries like Brazil, we don't have the control we once did. But the architecture of the WTO, negotiated in the 80s and early 90s, is pretty much the US plan--particularly the current dispute settlement provision, which the US insisted upon and which many other countries were dragged into kicking and screaming. It's ironic that in the first case to go through the entire dispute settlement process, Brazil and Venezuela prevailed against the US.

Anonymous said...

More seriously, I'll get back to you once I have my facts straight. The issue is whether one "... need[s] a theory of how the ruling class can decide to do or bring about X even though the individual members of the ruling class have neither individually decided nor collectively agreed to do or bring about X."

If the intention of certain economic decision makers [I'll get back to you about whom, but it's fair to say we are in the vicinity of the ruling class] is to reduce the wages of American workers through so-called "free trade" agreements, and they bring this about, then you might very well have "multiplier" effects (meaning an X that the ruling class neither individually or collectively bothered to articulate, but whose occurrence they would find tremendously congenial), such as increased student loan debt. Reduced wages will tend to increase worker insecurity -- which Alan Greenspan, notably asserted was "good for business."

Anonymous said...

Picking up on what others are gesturing towards, I'd add that it's worth analyzing the rising cost of college in terms of the transition from liberal welfare state capitalism to neoliberalism. Devin Fergus of the Demos Institute has done some good work on the Reagan administration's role in particular. Here's one piece he did a few years back:

https://www.washingtonpost.com/posteverything/wp/2014/09/02/my-students-pay-too-much-for-college-blame-reagan/?noredirect=on&utm_term=.2e895c2043e8

Anonymous said...

My last comment was from a different "Anonymous," by the way! Apologies for any confusion.