The Failure of Privatization

By Henry Reichman

The Great Mistake: How We Wrecked Public Universities and How We Can Fix Them by Christopher Newfield. Baltimore: Johns Hopkins University Press, 2016.

Christopher Newfield’s The Great Mistake is probably the most important, and certainly one of the best, books published on higher education in this century. It should be essential reading for everyone—faculty members, administrators, trustees, philanthropists, and politicians—looking to rescue our floundering public higher education system from the pitiful morass into which it has descended.

That is high praise, I know, but it is much deserved. The book is both profound and engaging. Newfield has done something quite remarkable: he has mastered an enormous amount of quantitative and qualitative data while simultaneously analyzing and presenting those data in an accessible manner. He is that rare humanist who is at home among numbers but has an uncanny ability to translate data into pithy, almost aphoristic, sentences.

Newfield’s basic argument can therefore easily be presented in his own words. Against the conventional wisdom that, in order to survive, US colleges and universities “must be closer to business and be more like business,” he argues,

Today’s problems do not reflect a failure to introduce market thinking but the effects of its long-term presence. . . . What I call the American Funding Model is indeed broken, but it has not been broken by too much public funding, public service, and public slack. It has been broken by too much private funding and service to private interests. . . .

Submitting public universities to private sector standards hasn’t increased their overall wealth and made their education more efficient. It has increased their costs and shifted resources from the educational core. . . . Private sector “reforms” are not the cure for the college cost disease—they are the college cost disease.

From this starting point the book maps out eight “stages of decline” that are both temporal and conceptual. “The crisis within public universities has been caused not by any one privatization decision,” Newfield argues, “but by their interaction.” Politicians, he notes, want universities to “spend less money on each degree.” But this view is shortsighted, at best, for ultimately you get what you pay for. To be sure, “the country is spending plenty of money on education. It’s just not spending it to improve public colleges.”

The crisis begins, however, not with the politicians but with public universities’ own strategic retreat from the public good, the first of Newfield’s eight stages. That shift has sometimes been blamed on the increasing impatience of voters with unchecked spending. But, writes Newfield, “there was no voter shift away from public goods.” Rather, “there was an abandonment of the political fight for them by academic managers.” This retreat leads to a second stage, in which public universities end up subsidizing their private sponsors, including through research support. “Privatization is subjecting public universities to a permanent redesign,” Newfield argues. “Officials are turning great universities into unfocused private businesses that, among other things, subsidize multiple private parties whose condition of involvement is generally to take more than they give.” As resources are reallocated from educational to noneducational purposes and personnel in order to meet privatization goals, institutional costs are driven higher. This second stage then leads to “large, regular tuition hikes” (stage three) and then to the increasingly draconian cuts in public funding (stage four) that these hikes facilitate. As tuition rises, so, too, does student debt, Newfield’s fifth stage. Then the problems are compounded as private vendors leverage public funds (stage six).

In stage seven funding inequalities affect educational achievement, especially for those outside a shrinking handful of elite institutions. Here Newfield comments perceptively on the widely publicized charges of reduced rigor and grade inflation found in the best-selling study Academically Adrift. That book “identified behaviors like fewer hours of studying for the same or higher overall grades and traced them to moral failures like [student] disengagement.” But, counters Newfield, the authors “should have traced them to teaching and learning conditions that have been degraded by years of underinvestment” and understood them as reasonable “adaptations to resource constraints that have been deliberately imposed by governments.”

This yields Newfield’s final stage, what he calls “postproductivity capitalism,” in which public colleges and universities, once powerful engines for creating the middle class, have become vehicles for creating and sustaining “the increasingly unequal society we have right now” and have hastened the “transition from a large, culturally dominant middle class to a smaller, more insecure one.”

It is impossible in a brief review to capture even close to fully the impressive scope, nuance, and power of Newfield’s arguments. But three points bear greater scrutiny. The first concerns the costs of research. Faculty members at public research universities have long been aware that research projects supposedly subsidized by private funders in fact create quite real burdens on institutional budgets. But to the public this has been our “dirty little secret,” which Newfield now exposes to devastating effect. “The rare public admission,” he writes, is that “around 20 percent of the cost of externally funded research is supported internally by universities themselves.” This, he argues, results in cross-subsidies that support the sciences at the expense of the humanities and undergraduate students, who effectively subsidize research through higher tuition and larger classes. “In short,” Newfield concludes, “privatized research funding is not a way that public universities can cost-share with the private sector. It is a way for the private sector to extract value from the public.”

Perhaps Newfield’s most controversial argument can be found in his provocative treatment of the relationship between tuition hikes and cuts in public funding. It is a standard argument among many advocates for increased public funding— indeed, it is an argument that I have made more than a few times myself—that the principal driver of skyrocketing college tuition in the public sector has been the defunding of public higher education by the states. Newfield, however, reverses this argument. “Public funding cuts have indeed done enormous damage to public university finances,” he writes. “But they are not the prior cause of tuition hikes. Tuition hikes preceded and were independent of the most serious cuts.” He adds, “In reality, ongoing cuts are the bitter fruit of two university practices: a long-term willingness to raise tuition, which taught legislatures that universities could replace cuts with the user fee called tuition, and the failure to explain the irreplaceable role of public funding.” Tuition hikes, moreover, do not cover only the costs of state cuts. They also cover the costs of privatization initiatives taken by the universities themselves both prior to and ostensibly in response to the loss of public funding: “Cut our funding and we won’t complain if you let us hike tuition: this is the hidden contract between public university executives and their state officials.”

That privatization has become a significant driver of growing economic and social inequality is another of Newfield’s most powerful arguments. “The purpose of privatization,” he writes, “is to move resources toward those willing to pay for them, which in practice means giving more to those with more, and giving less to those with less.” Newfield quotes a Georgetown University study, which found that “higher spending in the most selective colleges leads to higher graduation rates, greater access to graduate and professional schools, and better economic outcomes in the labor market, when comparing with white, African- American, and Hispanic students who are equally qualified but attend less competitive schools.” “Since 1982,” the report reveals, “80 percent of new white enrollments have gone to the 468 most selective colleges, while 72 percent of new Hispanic enrollment and 68 percent of new African-American enrollment have gone to the twoyear and four-year open-access schools.” These are the institutions, Newfield demonstrates, that spend the least per student and have the fewest resources to respond to cuts. In short, as the students get darker, the funding diminishes.

Newfield teaches at the University of California, Santa Barbara, and previously chaired the UC systemwide Senate Committee for Planning and Budget. Hence many of his examples are taken from California. This context is important because it highlights the bipartisan nature of the mistaken consensus that Newfield demolishes. It is not just “red-state” Republican administrations that engage in the privatization project. In deepest “blue” California, that project is already well advanced. Here, Newfield acidly remarks, “public universities have become what [Democratic governor] Jerry Brown said they are: desires dressed as needs claiming rights, without the guts to become a lawsuit.”

What is to be done? That is the topic of the book’s final forty pages, and once more Newfield pulls no punches: “Nothing less will do than stark opposition to the entire devolutionary cycle.” Can such opposition be built? Newfield answers “yes” and offers some ideas for reversing the painful process he has described. Key here is less policy than confidence and vision. “Our problem isn’t actually lack of money,” he writes. It’s the lack of “confidence and vision to think outside the framework” of the American funding model. We can afford to build a reconstructed public university system, he declares, “but ‘we’ have to want to, and want it with enough conviction to force the political system to deliver it.”

And here I should mention that Newfield has worked with others in California to devise a concrete plan, The $48 Fix, that demonstrates how California’s three-tiered system can return to the no-tuition principle of the state’s visionary 1960 Master Plan and restore funding to year 2000 levels for just a $48 surtax on the median taxpayer. The plan has been endorsed by numerous education and labor groups in the state, including the AAUP’s state conference. It evolved from a study by Stanton Glantz and Eric Hays that Newfield discusses in his concluding section. That plan will, I hope, be used to compel the state’s politicians to endorse its goals or, if they can’t stomach its mechanism (taxation), to come up with workable plans of their own. Clearly, in California as elsewhere, the privatization status quo is unacceptable. (For more, go to http://www.reclaimcahighered.org/48dollars.)

Even among those who accept Newfield’s critique of the current failed system, many readers will see his proposed “recovery cycle” as unrealistic, even utopian. But that would be another self-fulfilling prophecy. To those who cynically assure us that “the funding won’t return,” we need to respond by pointing out that the only guarantee it won’t is to embrace their acquiescent attitude. According to Newfield, “Everything we need to achieve—sustainable economics, racial equality, cross-cultural accommodation, environmental justice, radically reduced warfare— depends in some real measure on ending the scarcity of transformative public higher education. We do have to bite the bullet of paying for it. The good news is that we can.”

Newfield offers “no guarantees” that his solution will work. But he does correctly conclude that “it will work a lot better than what we are doing now.” Read this book and organize.  

Henry Reichman is professor emeritus of history at California State University, East Bay. He is first vice president of the AAUP, chair of Committee A on Academic Freedom and Tenure, and chair of the AAUP Foundation. His e-mail address is henry.reichman@ csueastbay.edu.

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