Tuesday, July 29, 2008

Thinking harder about spending on colleges and prisons

Michael Rosen claims that spending on prisons has crowded out spending on higher education, implying that the latter is now (or perhaps always was) inadequate.

There is no doubt that we spend a lot more on prisons these days and I agree that we ought to take a good hard look at sentencing and parole practices. Rosen argues that the "multiplier" effect is less for spending on prisons than it is for higher education. While I am skeptical about claims of "multiplier effects," I'll concede that point. It sounds right.

But the value of spending on prison is not the invigoration of the local economy in Waupun. It is preventing crime. People in jail don't commit them. To truly assess the economic value of prison spending, you would have to compare it to the economic losses that it prevents. I've seen studies that suggest that, on this basis, increased prison spending has been justified but I am not an expert and don't claim to know. As a limited-government type, I think that all public expenditures should be rigorously scrutinized and prisons are no different.

What about higher education? Let's begin with a statement of self interest. I work for a university. Granted it's private, but I am still rather fond of spending on higher education.

Rosen claims that we have reduced state subsidies to higher education by 6% over the past twenty years. (This is in inflation adjusted dollars; nominal spending is higher.) Is that a problem? It's not self evidently one. There was a time when our state university system was larger than any other outside New York or California. While I don't know if this is still the case, we continue to have one of the largest systems in the country, so this decline was from an already high level of spending. That doesn't prove it was a good idea, but it provides perspective.

What is problematic, Rosen says, is that we have shifted the burden to students and their families, noting that, over the past ten years, tuition for the WTCS has increased by 54.6% and UW-Madison by over 80%, (While these are apparently increases in nominal dollars (Rosen doesn't say), we know that inflation over that period would only account for about a 30% increase.)

We can argue about whether shifting the cost of higher education to those who receive it is a bad thing. There is an increasing earnings premium for higher education (much higher than it was when I went to college - one of the reasons for increasing income disparity) and it may not be unreasonable to ask those who will enjoy that premium to bear more of the cost. This is the rationale for student loans. One borrows against expected future income. While I don't believe that monetary benefits are the sole measure of a college - or even law school - education (there are circumstances in which I think that substantial subsidy, although not necessarily from the government, is a good thing), we should pause a bit over why and under what circumstances the public at large ought to subsidize education that may be very lucrative to the educated.

But these increases, for good or bad, can't be explained by a 6% real reduction in state subsidies. What has happened is that the universities and colleges have substantially increased their spending in real terms and the cost has been, increasingly, recouped by higher tuition.

Rosen suggests that this is the reason that the number of students whose family income is in the bottom quintile has dropped from 14.5% to 11%. That could be, but I can think of a lot of other reasons for that and, given the widespread availability of financial aid and loans, the inference that he wants to draw is not obvious.

5 comments:

joe stalin said...

We have increased spending in Milwaukee Public schools to obscene levels. We have no results for the money spent. The more we have spent, the lower the achievement has been. I doubt there will come a time in my lifetime, that liberals honestly assess what their ideals and programs have wrought. It's like putting a new stereo in a beat up 76 Buick. We're throwing good money after bad. But the only solution a liberal knows is higher taxes. And law suits.

Anonymous said...

Joe Stalin--your name definitely says a lot. So. . .you think "we've" spent far too much money in MPS--what, then, do you propose we do? You sure can complain, but I don't see any suggestions for change coming from you.

Pete Gruett said...

A couple of things, sorry for the rambling comment:

I wrote about this a few years ago (I think it's still in the archives on Fighting Bob) and relatively little has actually changed. The difficulty with trying to adjust the state's higher ed budget for inflation is that the university's expenses aren't that related to the CPI. Most of its expenses are related to employing people and, ours being an efficient consumer economy, the price of labor rises faster than the price of eggs. The common fund publishes the Higher Education Price Index but I chose to just look at what the state was spending. The state budget remained relatively constant as a proportion of Gross State Product from 1985 to 2002 so shifts in percentages within the budget could reasonably be assumed to represent shifts in priority. Long story short, the prison population tripled and most of that cost (about $420 million a year by 2002) was accounted for with a drop in proportional funding to the UW System. Interestingly, Minnesota didn't buy into the lock 'em up mentality. They incarcerate fewer than half as many people as we do and have a similar crime rate to show for it. Prisons have a role in crime prevention but it's a much smaller one than they play here.

As for the size of the UW system, it has many more campuses than most state university systems but that has more to do with the fact that, since the '70s, Wisconsin has only had one university system (lots of states have two or more) and it has a lot of campuses with relatively few students. I haven't seen comparative enrollment numbers but, as the flagship campus actually has a smaller enrollment than it did 20 years ago and the others haven't grown that much, I can't imagine we're that far out of line.

joe stalin said...

Thank you anonymous, my name does say a lot and yours says so very little.
Joseph Steel is the literal English translation or Barack Obama in Kenyan!
You mentioned that I offered no suggestions for change vis a vis the bottomless money pit known as MPS.
I do have a suggestion.
Here it comes.
Drum roll please.

How about we don't increase the budget until there is some accountability for all the failure and dysfunction.
Or...
We fire 75% of the administration on Vliet Street and use the extra millions to change the name of a school or two. Y'know make new signs for the school We could call it Riverside University High School. Or how about Hartford Avenue School for Social Justice.
Ooooooops they've already done that.
How about we get some really neato groovy signs on every school that say....."Excellence starts here"
Maybe we could re-name Madison High School...the Flunkatorium.

John McAdams said...

I've seen studies that suggest that, on this basis, increased prison spending has been justified but I am not an expert and don't claim to know.

I am an expert and do claim to know, and we get huge benefit from locking up criminals.

The findings are highly robust: punishment deters crime, and incapacitation keeps off the street people who would otherwise be harming people.

Why don't liberals like it? In terms of vulgar self-interest, liberals are the sort who do not know cops, prison guards, lawyers who are prosecutors, etc. They do know college professors.

Less direct but more important: liberals have a vested interest in attacking all social problems through social programs administered and staffed by people like them.