Rethinking the Welfare State: The prospects for ... - e-Library

Post-secondary education 185
will allow substandard suppliers to enter the marketplace and that this will have negative
spillover effects that threaten the educational standards of established institutions. 77
However, the precise mechanism through which these negative spillovers would reduce
educational quality is unclear. If many of the same instructors remain with incumbent
institutions and strive to improve their performance in the face of new competition, it is
difficult to see what factors would lead to a decline in educational quality. Competitive
credential inflation might play a role in a diminution of quality, but there is no inherent
necessity behind educational quality worsening even if and when grades do inflate. 78
Nicholas Barr argues that external evaluation mechanisms can guard against a
degradation of education quality in incumbent institutions that may be engendered by
low-quality entrants. 79 Barr suggests that one effective method “to protect standards is to
monitor quality and publish the results.” 80 Douglas Auld prefers the idea of accreditation
through a self-regulatory body or perhaps through an organ of government. 81
Notwithstanding this putative problem and its proposed solutions, the ultimately more
sensible and intuitively satisfying prediction from an economic standpoint is that the
provision of education in the system as a whole will improve with reduced barriers to
entry as institutions are forced to compete directly with each other for student-controlled
resources and research funding. 82
Political economy
The post-secondary education sector is very different in most industrialized democracies
from the United States. In the former, for the most part, universities and colleges are fully
public institutions. Although they have begun to rely more heavily on private support
(e.g. tuition revenue) in the provision of certain limited professional educational services,
they remain largely public institutions with highly subsidized tuition for all students. In
the United States, by contrast, there is much greater diversity. Although there are many
public post-secondary institutions, there are far more that are private. Outside the United
States, the most important challenge is to overcome the institutional culture of the
academy that is antithetical to greater reliance on private support and to entry by private
institutions. Allowing the creation of new universities and colleges, while allowing
existing universities and colleges to determine their own fee schedules, is likely to
engender substantial resistance for several reasons. As in primary and secondary
education, many university and college instructors and administrators who work within
the present system are likely to resist the introduction of a more competitive, more
differentiated post-secondary educational sector for fear of loss of job security and lower
levels of compensation, at least for less-accomplished faculty members. 83 This resistance
to change would be unlikely to be politically decisive if students and their parents were
widely persuaded of the virtues of such a change. However, in many cases, they are likely
to resist the substitution of income-contingent loans and mandatory repayment schemes
as mechanisms for ensuring access for the regressive redistribution entailed in prevailing
low-cost universal access financing arrangements.
In the US, more aggressive movement in this direction is unlikely to encounter the
same resistance, simply because the status quo already exhibits many of these features.
More expansive and widely available income-contingent loan programs, underwritten by
government, are likely to engender resistance from many taxpayers and fiscal