Academics and the State

0:00It's funny, I happened to see a very famous government economist just this afternoon, probably the most famous government economist of all, Alan Greenspan. Bumped into Alan Greenspan when we went out for lunch. We went to a pizza parlor in town and I saw him. I chatted with him a little bit. And I noticed when he went up to the counter to pick up his pizza, the clerk asked, would you like this to be cut into six slices or eight? And he said, well, I'm feeling very hungry today. And I thought, you're exactly the kind of person I'm going to be talking about today. What my subject is, a particularly important and disturbing aspect of the 20th century, and that is the transformation of the American University from a center of higher learning to an outpost for left-wing politics and culture.

0:59As recently as the early 1950s, the typical American university professor had political and social views of very little different from those of the general population. And today, well, you've all heard the jokes that circulated after the collapse of socialism in Eastern Europe and the former Soviet Union to the effect that the only place you could It's commonplace today that in higher education, what can you say, the inmates are running the asylum, all those students who were radicalized in the 1960s have now risen to positions of power and influence within colleges and universities.

1:45One needs only to observe the aggressive pursuit of diversity in admissions and hiring, the The abandonment of the traditional curriculum in favor of feminist studies, African-American studies, gay studies, environmental studies, you name it. I have to mention some course offerings I noticed in recent catalogs. These days you can take courses ranging from Harvard's popular course on fetishism to a course at Oberlin called Feminist Critique and Reconstruction of the Christian Tradition Stanford's notorious course, Black Hair as Culture and History. As the humorous Dave Barry would say, I'm not making this up. These are real.

2:31And just to provide you with a little local flavor, my own institution, the University of Georgia, just sent me last week a list of the seminars being offered this fall by the university's counseling and testing center. And some of them I thought were quite valuable. This is how the state of Georgia is using its resources. Here's a seminar called Saying Hello. Do you get tongue-tied when you meet people? If you do, come to this program and learn how to start conversations and keep them going. Another favorite, birth order basics. Find out how your birth order, oldest, middle, youngest or only child, may have affected And then here's another one from the relationship series, how your unconscious influences your choice of partners.

3:18Let me read you the description. By looking at the roles your unconscious plays in mate selection, you can discover why you choose the partners you do. In this experiential workshop, you will identify your own patterns and learn ways to make healthier choices. Well, I can imagine a lot of undergraduate males who will be filling that one up really fast. Now, one needn't rely on frivolous course descriptions and the like to establish that most academics lean strongly to the left. Perhaps the most comprehensive survey of academics' political affiliations was published by Carl Ladd Jr. and Seymour Martin Lipset in 1975. In their survey, 80% of the faculty in the social sciences and the humanities said they regularly vote Democratic, while only 5% said they regularly vote Republican.

4:10and I'm not implying that to vote Republican is to favor liberty and so on but you get the idea that something odd is up. A 1989 study for the Carnegie Foundation for the Advancement of Teaching found that 70% of the professors in the major liberal arts colleges and research universities considered themselves liberal or moderately liberal with less than 20% identifying themselves as conservative or moderately conservative and of course I'm using the term liberal here to mean left liberal or socialist and not classical liberal. Now, a bit of a surprise, even in economics departments, 63% of the faculty identify themselves as liberal, compared with 72% in anthropology, political science, and sociology, 76% in ethnic studies, history, and philosophy, and 88% in public affairs.

5:01Now, most academic economists do have some appreciation of How Markets Work, if their enthusiasm tends to be muted. According to one recent survey reported in the Southern Economic Journal, 71 percent of American economists believe the distribution of income in the U.S. should be more equal, and 81 percent feel that the redistribution of income is a legitimate role for government. Now listen to this, support for these positions is even stronger among economists with academic academic affiliations, and stronger still among those with elite academic affiliations. Now why do so many university professors and intellectuals more generally favor socialism and interventionism? F. A. Hayek offered a partial explanation in his very provocative 1949 essay, The Intellectuals and Socialism.

5:49Hayek asked the question why, he asked why the more active, intelligent and original man among intellectuals most frequently inclined towards socialism. His answer is based on the opportunities available to people of varying talents. Now, there's no doubt that academics tend to be very intelligent people. And given their leftward leanings, one might be tempted to conclude from this that more intelligent people tend to favor socialism. But this conclusion would suffer from what empirical researchers call sample selection bias. Let me explain. Intelligent people hold a variety of views. Some are lovers of liberty, defenders of property, supporters of the natural order, i.e. defenders of the market.

6:34Others are reformers, wanting to remake the world according to their own visions of the ideal society. Hayek argues that exceptionally intelligent people who favor the market tend to find opportunities for professional and financial success outside the academy. Those who are highly intelligent but ill-disposed towards markets are more likely to choose an academic career. Now this also leads to the phenomenon that academics typically don't know much about markets because they have so little experience with them. They live in their subsidized ivory towers. They're protected by academic tenure and so forth. As the great economist Joseph Schumpeter explained in his book Capitalism, Socialism and Democracy, It is the absence of direct responsibility for practical affairs that distinguishes the academic intellectual from others who wield the power of the spoken and the written word.

7:31This absence of direct responsibility leads to a corresponding absence of first-hand knowledge of practical affairs. The critical attitude of the intellectual arises, says Schumpeter, quote, no less from the intellectual situation as an onlooker, in most cases also as an outsider, than from from the fact that his main chance of asserting himself lies in his actual or potential nuisance value. Of course, Hayek's account is incomplete because it doesn't explain why academics have become more and more interventionist throughout the 20th century. As I mentioned at the beginning, university faculty members used to hold political views similar to those held by the general population. What caused this change? Well, to answer, we must first realize that academics receive many direct benefits from the welfare state.

8:22Let's begin with the obvious, not including financial aid, student financial aid. Public universities receive about 50% of their funding from federal and state governments, far dwarfing the 18% they receive from tuition and fees. Even the nominally private universities, Harvard, Stanford and so on, receive at least 20% of their funding directly from federal grants. And if you include indirect support from financial aid and the like, that figure is at least 50%. And according to the U.S. Department of Education, about a third of all students at public four-year colleges and universities, and half the students at private colleges and universities, receive direct financial aid from the federal government.

9:07Now, in this sense, the most egregious example of corporate welfare in American history would have to be the GI Bill, which heavily subsidized the academic sector after World War II, bloating at far beyond the level the market would probably have provided. The GI Bill, which was signed in 1944 by Roosevelt to send returning soldiers to colleges and universities, cost taxpayers about $14.5 billion between 1944 and 1956. Federal spending on the latest version, the Montgomery GI Bill, is projected at $1.4 billion in 1998 alone. To see why government aid is so important to the higher education establishment, we need only stop to consider for a moment what academics would do in a purely free society. The fact is, Research really aren't that important. In a free society, there would probably be far fewer of them than there are today. Their public visibility would be quite low. Most would be poorly paid. Perhaps a few would be engaged in genuine scholarly research, but the vast majority would be teachers, whose job it would be to pass on the collective

10:19wisdom of the ages to the next generation. In all likelihood, there would be far fewer were students as well. The brighter students would continue to attend traditional colleges and universities, but many more students would attend technical and vocational schools, where their instructors would be men and women with practical experience. Of course, today, most academics at major research universities do very little teaching. Their primary activity is research, though very little of that could be considered real scholarship. One needs only to browse through the latest specialty journals to see the kinds of scholarly research that goes on today. For example, if you happen to run across the spring 1997 issue of the journal New Literary History published by the University of Virginia Press, you must be sure not to miss the article by Robert Clark and Claire Sponsler titled, Queer Play, The Cultural Work of Crossdressing in Medieval Drama.

11:21Of course much of this research is funded by government agencies such as the National Endowment for the Humanities or the National Science Foundation. The large universities have tens of thousands of students themselves supported by government subsidized loans and grants. Why President Clinton himself has even said on many occasions that four years of college or University Education is an entitlement for every American. Beyond university life, academics also compete for prestigious posts within government agencies. Consider my own field, economics. The federal government directly employs at least 3,000 full-time economists. That's about 15% of all the members of the American Economic Association. The Federal Reserve System itself employs several hundreds of economists, and there are also advisory posts, affiliations with important government agencies, memberships of federally appointed commissions and other resume patterns that are actively sought.

12:23Now we mustn't think that these benefits are strictly financial. They're also psychological. As one of my colleagues Dwight Lee has put it, like every other group, academics like to exert influence and feel important. Few scholars in the social sciences and humanities are content just to observe, describe and explain society. Most want to improve society and are naive enough to believe that they could do so if only they had sufficient influence. The existence of a huge government offers academics the real possibility of living out their reformist fantasies. So it's clear then that there are many benefits for academics to living in a highly interventionist Society. It should be no wonder then that academics tend to support precisely those interventions.

13:12Now, I'd like to take just a moment or two to speak about my own profession, economics. As I suggested earlier, even in this field, there's a surprising degree of sympathy for government intervention in the economy. Further, many professional economists play active roles as government bureaucrats, creating and sustaining the oppressive welfare state that now surrounds us. Murray Rothbard devotes an interesting chapter of his 1970 book Power and Market to the proper and traditional role of the economist in public life. Rothbard notes that the functions of the economist on the free market differ strongly from those of the economist on the hampered market. What can the economist do on the purely free market, Rothbard asks. He can explain the workings of the market economy, vital tasks, especially since the The untutored person tends to regard the market economy as sheer chaos, but he can do little else. Rothbard continues, contrary to the pretensions of many economists, he is of little use to the businessman. He cannot forecast future consumer demands and future costs as well

14:18as the businessman. If he could, then he would be the businessman. This is of course a variant of the popular question, if you're so smart, why aren't you rich? Furthermore, economists are not traditionally very popular as policy advisors. Why is this? Well, economics teaches that resources are limited, that choices made imply opportunities foregone, that our actions can have unintended consequences. These are not the kinds of things that government officials When they propose an import tariff, for example, to help domestic manufacturers, we economists explain that this protection will come only at the expense of domestic consumers. When the politician suggests a minimum wage law to raise the incomes of low-income workers, we show that such a law would hurt the very people it's intended to help by throwing them out of work.

15:13And on and on it goes, to every utopian reformer who says, yes, we can create a better society for you. The economist replies, no, no, no. This is why people say we're not fun at parties. Public officials for sure do not like the fact that we live in a world of limited resources, that this thwarts their many creative schemes. This is particularly true for public officials in a democracy who must make promises to win public support. More guns and more butter. A chicken in every pot. By the way, I was reminded how universal this truth is just this past June when the new president of the University of Georgia, fellow named Michael Adams, made his first public appearance on campus.

16:02Adams is himself a seasoned politician, a former top aide to Howard Baker and Lamar Alexander. And I remember his opening speech to the university community where Adams outlined his priorities as incoming president. What kinds of things does he favor? Well, as it turns out, he favors more resources for teaching, more resources for research, more resources for outreach and public service, more resources for facilities, and so on and so on. you get the idea. I remember thinking to myself, hmm, something's got to give here. I hope it's not football.

16:46Unfortunately, over the last several decades, the role of the economist has changed dramatically. Partly for the reasons we discussed earlier, the welfare state has largely co-opted the profession of economics. Why is that? Well, just as a higher murder rate increases the demand for criminologists, so the crippling of a market economy by government intervention increases the demand for policy analysts, antitrust consultants, tax and regulatory experts, and various forecasters. As Rothbard explains in Power and Market, quote, when government intervenes in the economy, The usefulness of the economist expands. In the realm of the free market, the economist must give way to the entrepreneurial forecaster. But government actions are very different because the problem now is precisely what the consequences of government actions will be. Here the economist, with his knowledge of various alternative consequences, comes into his own. Rothbard continues, in a hampered market economy, indeed, the economist often becomes useful to the businessman, where change of economic reasoning become important, for example, in analyzing the effects of credit expansion or an income tax, and in many cases

18:02in spreading this knowledge to the outside world. And I'm sad to say, however, that economists do much more than advise businessmen on the effects of regulation. In many cases, they themselves are the regulators. Herbert Stein, who was chair of the Council of Economic Advisers in the Nixon administration, Hans remarked that he and his cronies knew that price and wage controls, when they imposed them in 1971, would have a crippling effect on the economy, but they did so anyway because drafting those rules was a lot of fun. Here's a quote from Harvard University's Lawrence Sommers, former chief economist at the World Bank and also U.S. Undersecretary of the Treasury. Sommers says, quote, market Development itself requires government action. The socialist economies in transition from Eastern Europe to East Asia are finding out that the establishment of the rules of the game by the government is crucial to the success of market reforms. And by the way, by rules of the game, he doesn't mean the rule of law, establishing property rights and so on.

19:10He means infrastructure, so-called public goods and so on. And by the way, some economists I remember a classmate in graduate school telling me that her goal after graduation was to work for the International Monetary Fund because you get to travel all across the world first class and you get to keep all the frequent flyer points. That is an absolutely true story. Now how did we get to this state of affairs? Well, to some degree, the increasing professionalization of the economics business must take some of the blame. The Economist's premier professional society, the American Economic Association, was itself created as an explicitly progressive organization.

19:58Its founder, the religious and social reformer Richard T. Ely, planned an association, as he reported to a colleague, of economists who repudiate laissez-faire as a scientific doctrine. The other founding members of the AEA, all of whom had been trained in Germany under Gustav Schmoller and the other members of the so-called Younger German Historical School, were similarly possessed with reformist zeal. The Constitution of the American Economic Association still contains references to quote, the positive role of the church, the state and science in the solution of social problems by the development of legislative policy. However, if I had to select a single event that most encouraged the transformation of the average economist from a critic of intervention to a defender of the welfare state, it would have to be the Second World War.

20:52Now, to be sure, it was the progressive era that saw the permanent introduction of the income tax, establishment of the Federal Reserve System. It was during the Great Depression that Washington DC first began to employ a substantial number of economists to join central planning agencies such as the National Resources Planning Board. But still, even in those days, the average economist favored free trade, low taxes and sound money. World War II, however, was a watershed event for the profession. For the first time, economists joined the ranks of government employees in mass. Why did they do so? Well, one activity was to control prices. And this was done with the Office of Price Administration, led by Leon Henderson and later led by John Kenneth Galbraith.

21:41And this group included even such free market economists, quote-unquote, as Herbert Stein and George Stigler of the Chicago School. Economists also went to Washington to study military procurement, what later became known as operations research, with groups such as Columbia University's Statistical Research Group, and that included Stigler, Milton Friedman, Harold Hotelling, Abraham Wald, Leonard Savage, and a number of other well-known economists and statisticians. Also with the Army's Statistical Control Group, which was led by Tex Thornton, later president of Litton Industries, and the so-called Whiz Kids, And the most famous of the Whiz Kids was Robert McNamara, who would later apply these same statistical control techniques to the management of the Vietnam War.

22:30Rothbard points out in Power and Market that whatever the usefulness of operations research and related statistical techniques for business or military planning, these techniques are not economics, but they're increasing popularity, made possible by the arrival of high-speed computing, sharply diverted economists' attention away from genuine economic problems. Before World War II, the primary language of economics in the English-speaking world was English. Since then, economic theory has come to be expressed in obscure mathematical jargon, while economic history has become a branch of applied statistics. It's common to attribute this change to the publication in 1947 of Paul Samuelson's A Mathematical Treatise, Foundations of Economic Analysis and this is no doubt very important, but I claim that it was the taste of central planning that economists, even nominally free market economists, got during World War II that forever changed the direction of the discipline.

23:37Now, what does the future hold for academics and for economists? Well, it's very unlikely from the evidence that's available to us today that the traditional university will ever regain its place as a center of genuine scholarship and higher learning. The very future of the traditional university is in doubt. Of course, the main problem is cost. Private universities now cost up to $30,000 per year. Public universities are facing increasing budget scrutiny. Cutbacks, downsizing and reorganization loom on the horizon for all major institutions. At the same time, the quality of higher education is is perceived to be declining. Students are increasingly dissatisfied with large classes, indifferent instructors, poor facilities, and safety, and so on.

24:25In all likeliness, the university of the future will be radically decentralized. Already, much of the intellectual activity in the United States has been farmed out to private organizations, think tanks, like the Mises Institute, for example. If I could quote from Paul Vitz, a psychologist at New York University, who's written extensively about the future of the university, quote, when universities fail to provide a decent environment for their original major functions, i.e. research and teaching, other institutions come along to replace them. The result is the development of a large intellectual community which no longer has any vested interest in the universities. Furthermore, increasing numbers of students are uninterested in pursuing a higher education at a traditional college or university.

25:15For example, if you think about homeschooling, the popularity of which is at an all-time high, just imagine what kind of educational environment those students expect. They expect personal attention, a serious curriculum, etc., precisely the things the modern university lacks. These students will be looking, in all likelihood, at alternative forms of higher education. Community colleges, specialized programs, video classes, classes on the internet, who knows? But to serve this cohort of students, radical decentralization of the traditional university will be necessary. Perhaps in this new environment, genuine scholarship will flourish again. Economists can return to their traditional and proper role of explaining how markets work and why interventions in the marketplace have various unavoidable consequences.

26:07Then, maybe academics can go back to being real scholars, not simply apologists for Leviathan.