In this week’s Pope Center Clarion Call, Jane Shaw considers the question whether higher education is a “public good.” In economics parlance, public goods are goods that the free market either would not produce at all or would at best under-produce. Are colleges and universities like that? Clearly they are not pure examples of public goods because we had private colleges and universities before we had any that were funded by government. Some economists argue, however, that higher education has “publicness” characteristics. Sandy Baum and Michael McPherson recently made that contention and Jane links to their piece. Jane’s insight, provoked by a conference organized by Northwestern University professor David Haddock, is that when the government intervenes to provide goods, such as higher education, to supplement the free market and supposedly produce more of the positive externalities said to flow from them, the result won’t be all on the plus side of the ledger. Government provision and subsidization also results in “public bads.” The most obvious bad is the squandering of excessive resources. Once the government undertakes to provide anything, it is apt to overdo it, diverting scarce resources from other uses that would have been more beneficial.
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