Everything palls, everything passes, everything perishes

If higher education’s claims about economic impact are just puffery, they do little harm. But, suppose policymakers started taking them seriously? They might notice that, despite their name, economic impact studies have nothing to do with economics. They omit an essential ingredient—what economists call “opportunity costs.” That is, they do not compare the economic impact of an investment in universities with other potential investments such as a bigger airport, a new factory, or simply giving the billions spent on higher education back to citizens through tax cuts. Because they do not require long languid summer holidays, field sporting teams, or send their staff on extended sabbaticals, airports, factories and tax refunds generate jobs and wealth more efficiently than universities. If economic growth is the goal, why filter money through expensive universities? Why not invest directly in profit-generating infrastructure and businesses? 

If universities are not an efficient way to grow the economy, what is their purpose? Many people have tried to answer this question. For example, the European Union’s Magna Charta Universitatum states that a university “is the trustee of the European humanist tradition.” Not a bad start, but, like many similar declarations, it is rather vague. What is the “European humanist tradition?”

Clark Kerr was a bit clearer. He believed that universities have a moral purpose. Universities should not only create knowledge but should also articulate “the values that our knowledge should enable us to serve.” 

The former Minister of National Education of Romania and distinguished academic, Andrei Marga, also sees universities as moral institutions. He says, “The human life meaningfully lived implies solid values, and their cultivation, including ethically, [and this] requires the action of universities.” 

American academic David Kirp says that, since the 1970s, universities have opened their doors to a far greater diversity of students and faculty. Still, he asks, “into what kind of place, with what values, are these newcomers gaining membership?”

Former Stanford University President Donald Kennedy also believed that there is a “deep relationship between knowledge and values” and that universities play a “decisive role in the formation of a vision about society among its graduates.” 

What do Kerr, Marga, Kirp, and Kennedy have in common? They all fear universities will lose public support without a clear moral purpose. This was not always a concern. Consider the story of Jonas Salk. In 1955, he launched a human trial of a polio vaccine he had developed over years of research. (As a child, I was a subject in that trial.) The vaccine was hugely successful; Salk became famous but he did not become rich. He never tried to gain monopoly profits by licensing his discovery to a single drug company, nor did the University of Pittsburgh, where he worked. Instead, they licensed the vaccine to any company competent to manufacture it. Salk and his university wanted to disseminate the vaccine as widely as possible; making money was never their goal.  

No one working in higher education could imagine this happening at any university today. In Salk’s day, universities had well-understood moral purposes, and people trusted them. Today, universities are just another set of commercial players. Of course, universities must be competitive and commercially oriented. They cannot afford to be (nor should they be) against making money. There is nothing improper in universities trying to exploit the commercial value of their intellectual property. But commercial transactions carry their own ethical imperatives, which may not be compatible with traditional academic values or the best interests of the larger society.

Let me illustrate some of the problems. In a survey of 2200 medical scientists, 410 admitted to holding back the publication of their research results. They wanted to ensure that they, and their commercial sponsors, had time to safeguard their property rights. Holding back research results is not illegal, but when it happens, bedrock academic values - openness and the free expression of ideas - collide with the commercial necessity to protect profits. And profits almost always win. 

Commercial considerations not only influence when results get published but also which results get published. For example, a Stanford University study found that 98% of pharmaceutical research papers sponsored by drug companies report that the drugs are effective. In contrast, only 79% of non-company-sponsored research papers report positive results. 

If universities were just businesses, then no one would worry about profits coming first. But profit-making institutions do not have a claim to public subsidies. After all, why should taxpayers subsidise an institution that benefits from monopoly profits? By stressing their utilitarian nature, universities have neglected the opportunity to promote their vital social benefits.

What are the social benefits of universities?