What's wrong with private universities?

A.C. Grayling’s plan for a New College of the Humanities has provoked some stupid protests. But it raises a question: what exactly is wrong with private universities?
Many critics of the NCH have focused on the fact that the £18,000pa fees will exclude all but the very wealthy. But if the NCH is to succeed, this cannot remain the case.
I say so for a simple reason. When you buy a university education you are, to a very large extent, buying a signal. But the signal sent by an NCH degree is that you weren’t good enough to get into Oxford. No-one will pay £18,000 for this when they could buy the same signal for £9000 at the LSE or Exeter - especially as the quality of teaching at the NCH might be dubious. To overcome this problem, NCH will have to try to attract students away from Oxbridge by offering the brightest ones better subsidies than Oxbridge would.
It’s unlikely, therefore, that the NCH will greatly increase our already terrible inequalities of educational opportunities.
Hence my question. If we leave equality aside, what’s wrong with private universities?
Two objections at least seem misplaced.
“The profit motive will drive out the vocational dedication to learning that characterizes true universities - just as it has driven the care motive out of care homes.”
This objection fails in two ways.
First, state control does not guarantee the protection of high vocational standards either: for every Winterbourne View there is a mid-Staffordshire NHS Trust. And our state-controlled universities have failed to observe basic equality and has warped educational priorities through the RAE.
Secondly, it ignores the fact that, as Terence Kealey says in the Times, there are countless successful privately-owned universities around the world - many run for profit, many not.
I suspect the Left's instinctive hostility to private universities reflects an excessively rosy view of state ownership and an excessively pessimistic one of private ownership.
“For-profit organizations tend to die quickly” - a point correctly made by Kealey.
But so what? The death of organizations is a necessary part of any healthy ecosystem - not just because we learn from failure, but also because such deaths release resources which can be better employed elsewhere.
Which brings me to a paradox. To see it, consider the objections to privately-owned banks:
- they have high capital requirements, and government can raise capital more cheaply than the private sector.
- they expose society to the risk of a massive negative externality, namely the danger of financial crisis leading to recession.
- private ownership has failed to exercise proper discipline over banks’ bosses and senior employees.
- problems of asymmetric information and regulatory capture mean it is not obvious that regulation alone can successfully mitigate these problems.
However, it’s not at all clear whether analogous problems would apply to private universities. Hence the paradox - it could be that our traditional thinking is 100% wrong. State ownership of banks is a much better idea that state ownership of universities.
Whether you agree with this or not, there is an issue here. Shouldn’t we - and especially the left - think more clearly about the criteria that determine whether an organization should be owned by the state or private sector?

Comments

[Tom]

Private universities have been traditionally considered better than public ones. If today they do not deliver as good education as before it is perhaps because they need more money to pay better professors and they cannot afford them.

[JSM]

"Shouldn’t we - and especially the left - think more clearly about the criteria that determine whether an organization should be owned by the state or private sector?"

And after succeeding in that little task, maybe perhaps tackle the belief that the one true litmus test of governmental virtuousness/viciousness is just the quantity of money it spends.

[Martin]

Private universities cannot compete with state ones as they find it difficult to hire excellent professors as they used to be.

[Peter]

Establishing private universities creates polarised educational system with not necessarily healthy competition. In allows for creation of institutions that, often with no regard to educational standards, grant diplomas and degrees. Great article by Howard Hotson in LRB proves the point: http://www.lrb.co.uk/v33/n10/howard-hotson/dont-look-to-the-ivy-league

[guthrie]

I have done so. I reckon that for starters, natural monopolies such as the water, sewarage, electricity distribution (But not generating), should be government run for and on behalf of the people. Public goods such as a national health service and schools, ditto, because they are good things.
Universities, not quite being a natural monopoly and only partly a public good (depending on how and why the university is run and what research it does) are obviously a more open case where there is room for both public and private suppliers.
At the same time it appears that taxpayer funding for graduates seems the easiest, cheapest way to go and it avoids massive inflation in price of university and salaries after university.

[Mark Wadsworth]

I don't see any problem, a lot of professional training is provided privately and paid for privately (i.e. by employers, but sometimes by trainees), it all works fine.

[Al]

I agree with Mark.

Professor Grayling has offered to provide a service for a fee; if there are people able and willing to pay that fee, why shouldn't they receive the service?

[Richard]

Was such a fuss kicked up when the private University of Buckingham was created?

[Tog22]

As you imply, people's criterion for whether something should be public is generally just that it's been public in the past. I don't think that if a left winger were sitting down to allocate scarce taxpayer pounds from scratch he'd come up with spending tens of thousands on university education for the 'top' 30-50% of 18 year olds as the optimal spending program, at the expense of other underfunded. But the left now regards it as sacred because it's the status quo (never mind that the status quo was hardly designed with left-wing and/or welfarist ends in mind).

[Miguel Madeira]

"Private universities have been traditionally considered better than public ones."

In Portugal, public unoversities are traditionally considered better than private (with the exception of the Catholic University).

And the reason is the same that Chris talks - if you are paying high tuitions instead of taking a degree almost for free in a public university, this probably mean that you were not good student enough to enter in a public university

[bg]

On a different note, I'm note quite convinced that the last 3 points in favour of publicly owned banks would hold for a very long time... Or perhaps out of the hope that such banks would not provide incentives for employees to engage in exotic dealings, but then neither Northern Rock, nor Freddie / Fannie really were...

[Hal]

Britain's universities have always been private and non-profit-making. They are self-governing and accountable to no-one. The influence of the state is limited to conditions attached to the funding. However this funding is being severely reduced and so the role of the state in British universities will become correspondingly small. It is misleading to think there is a significant difference between NCH and Oxford in this regard.

[Agog]

I think the revulsion in some quarters over this has little to do with the general point of public vs private. Perhaps the more relevant distinction would be between seeking to profit and seeking to profiteer.

If we're discussing privatisation more broadly, I wish economists and politicos would blather rather less about 'efficiency' and 'choice' and think a bit more about ownership and effects on distribution. Surely it's obvious that capitalists and their apologists are in favour of transferring public assets into the private sphere because it allows them to control and draw income from a larger proportion of the economy? It's unsettling to see so many promote these policies whilst resisting any attempt to redistribute in the opposite direction and then act puzzled when wealth inequality rises.

[fugstar]

I dont find it objectionable because of its privateness.

Moreso because its an epistemicidal reproduction of whiteness that the future is not made of.

I imagine 4-5 thousand pound offerings for more radical futuristic world ready educations, and then get depressed that so many of the 1992 universities dont really walk with a socio-epistemological mission, and are led by bland yes men.

[Churm Rincewind]

"The signal sent by an NCH degree is that you weren’t good enough to get into Oxford. No-one will pay £18,000 for this when they could buy the same signal for £9000 at the LSE or Exeter". How does that work? Where, how, and why does Oxford come into it? If this analysis were true I could buy the same signal by attending the Mrs Raffia School for Needlework for a lot less than £9000.

[botogol]

I think there are two separate issues, which are commonly conflated together

1) is it a good thing for the state to provide universities (ans - I think there is a good case for spending state money on education, inc universities)

2) should the private sector be prevented from providing universities (answer - of course not)

It's not an either/or situation, unviersities must be either public or private. There is room for both.