Good and Bad Spending


One major problem with a long-running recession is that budgeting becomes particularly tough. There’s no money and it doesn’t look like there’s going to be any money soon. This situation is problematic for progressive writers (ok, admittedly not as hard as it might be for, say, a state governor).

Consider the problem with of colleges and universities. State spending for such programs, for a variety of reasons, has been in decline most places for the last 20 years. But then, it’s hard to argue that states should spend more money on colleges when at least one of them is skittering along just inches away from bankruptcy.

Everyone knows it’s time to cut spending in tough times. Can states really afford to keep propping up public universities at all? Is spending on higher education, well, irresponsible?

The Pope Center for Higher Education Policy’s Jay Schalin argues that spending generously on public universities is reckless. According to Schalin:

The year began with a stagnant international economy, with European-style socialism in vogue. But the Greek economic collapse in February sounded like a clarion call far beyond the shores of the small Balkan nation. After decades of excessive government spending, high debt levels, and a benefits system that permitted many workers to retire with full pay in their early fifties, Greece narrowly avoided a catastrophe only because other countries bailed it out. Many nations took note and began pulling back on government spending, trimming social benefits, and reducing debt to stave off similar breakdowns.

Here in North Carolina, legislators working on the 2010-11 budget again faced declining revenues. The University of North Carolina system was an obvious target; it is still rife with dubious expenditures, even after last year’s round of cuts. There is still a “Center for Creative Retirement” at UNC-Asheville, and still a course in “Time Travel” at N.C State, and many more wastes of taxpayers’ money. One hope was that the budget crunch would impose the need to eliminate the most questionable programs, but that did not happen.

Instead, the University of North Carolina’s officials and lobbyists managed to augment the system’s budget by $10 million. Schalin complains that the “continued high level of spending on public higher education highlights the difference between the way the state’s political establishment and the rest of the world perceive the current economy.” Oh, why ever isn’t North Carolina learning the lessons of Greece?

There is, no doubt, some degree of waste in North Carolina’s public higher education system, but the comparison is imperfect. It’s apples to oranges. Or olive oil to tobacco.

The idea that an, admittedly a little silly, honors course in “Time Travel” at North Carolina State University is in any way comparable to Greece’s vastly more expensive policy of letting the population retire in their early 50s is just flat out wrong. Time travel is a three-credit course offered only in the spring semester. It likely costs NC State virtually nothing to administer.

In contrast, the Greek retirement policy would have eating up about a quarter a quarter of gross domestic product by 2050 if not reformed. Due to policies like this the debt held by the Greek government is, according to one estimate, equal to something like 875 percent of its GDP. Greece’s economic system wasn’t, strictly speaking, funded at all. It was mostly based on debt.

In contrast, the UNC system is paid for by taxpayers. The money North Carolina appropriates to its public universities is only 13 percent of the state’s budget.

The difference between Greece’s total budget and North Carolina’s higher education budget is like the difference between buying a $500 pair of shoes when you’ve got $200 in your checking account and buying $100 worth of groceries when you’ve got that same $200. Sure, you’d have more money if you didn’t buy any vegetables, but would you be better off? [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer