Since we’re talking tuition this week, I thought I’d take an opportunity to tee off on one of the weakest arguments out there on this subject.  You know, the one that goes like this:

There are actually two responses to this argument, one narrow and one broad.

The narrow argument is that in economic terms the first premise is wrong and hence the second and third are incorrect as well.  Yes, economists believe that public goods – that is, goods which are both non-rivalrous and non-excludable, should be free.  But higher education is neither of these things (see this earlier blog post here for a longer explanation) so the second and third points are false.  QED.

Now this is an unsatisfactory answer to most people, because when non-economists use the term “public good” they actually mean “a good which has a lot of positive externalities“, not “a good which is non-rivalrous and non-excludable”.  This drives some economists a bit batty, but such is life.   And, so the argument goes, since it has lots of positive externalities, we should subsidize it.

Economically, that’s a solid argument.  Having positive externalities means that those who pay for the good don’t reap all the benefits.  Everybody gains from having more doctors, for instance, or more teachers (more lawyers…well, that may have negative externalities).  They gain from having a more educated populace which tends to be healthier, less prone to crime, more likely to engage civically, etc.  Typically, where buyers don’t capture all the beneficiaries, less of a good gets consumed than it should.  This is a type of market failure, and an argument for government intervention and subsidy (this is the argument for public funding of research, for instance).

BUT.  But, but, but.  Notice the difference here.  With pubic goods, the argument is that government should be the sole payer because the non-excludability thing literally means that no one can capture the benefits of the investments (lighthouses are the classic if not entirely satisfactory example here).  But with goods with positive externalities, while there is a case for subsidies, there’s not a case for complete subsidization.  To the extent that there are private benefits, the beneficiaries should pay for them.

But that’s not the way the free tuition folks tend to argue things.  It often seems sufficient, as evidenced by this recent Christopher Newfield piece in the Guardian, to say “public good!” – by which he presumably means “goods with positive externalities”- and that’s a good enough reason to ask for a 100% subsidy.   Often, this is then contrasted with some “evil” alternative where asking for students to pay fees implies a “neoliberal agenda” in which education is entirely conceived of as a “private good”.

This is nonsense.  A good can have both public AND private aspects.  We can subsidize a good AND ask private beneficiaries to contribute at the same time.  In fact, we can even devise policies which subsidize degrees differentially based on the extent to which the benefits of the degree are public (e.g. undergraduate programs in nursing or ECE) or private (MBAs).  We won’t always get those divisions between public and private exactly right, but I can guarantee you that the split we come up with will be more accurate than “100% public”.

This idea that a good must be either public or private and either completely subsidized or completely marketized should be beneath us.  The world is neither that neat nor that Manichaean.  But just as most of us can walk and chew gum simultaneously, most of us can conceive of a world where goods can be both public and private without blowing a head valve.  And we can design policies accordingly.