-- Posted by Neil H. Buchanan
Yesterday's New York Times included a news article reporting that the American Conservative Union (ACU) has joined forces with defense and transportation contractors to lobby Republicans in Congress, hoping to dampen the anti-spending ferocity of recent years and thus preserve the industries' profits. In addition to cynically adding another log to the fire consuming the supposed principles of the conservative movement -- if such principles ever existed at all (see my recent posts here and here) -- this news provides an opportunity to think about how various government-dependent sectors of the economy fare when budgets become tight.
One rather remarkable sign of the times is that defense contractors even feel the need to engage in this kind of desperate effort. Until only a few weeks ago, the Pentagon's budget was thought to be so dear to Republicans that the sequester-related spending cuts would never take effect. What we saw instead -- and what Democrats learned to their dismay -- was that the current crop of Republicans are actually willing to cut the defense budget, in order to take further hacks at social spending. The defense contractors, who spend large amounts of money buying politicians, must have been quite surprised that they now have to act like just any other "rent seeker" (a term that, like "economic efficiency," lacks actual content), rather than the specially protected beneficiaries of cost overruns that they have always been.
The transportation sector is interesting in a different way. In some ways, it ought to be in an especially enviable position in budget debates, with bipartisan support. The corporations that make their money from infrastructure projects are large, profitable, and politically connected. The work is often performed by union members. The resulting public goods count -- for (most) conservative and liberal economists alike -- as "public investment," of the sort that improves the economic prospects of future generations. When I write about why it is acceptable to run deficits on a continuous basis, this is one of the easiest cases to make: borrowing to invest can reduce the debt-to-income ratio over the long haul. (Most recently, see my Verdict column from two weeks ago.)
Even with all that going for it, the transportation sector has not been spared from the new era of cut, cut, cut. Apparently, the ACU's lobbying campaign tries to wrap the call for defense and transportation spending in legal garb (saying that such spending is required by the Constitution), but even taking that rather fatuous premise seriously says nothing about how much spending the Constitution requires. The new reality is apparently that people who provide goods and services that are arguably quite valuable -- even essential -- to the current and future health of the economy, now find themselves in an uphill fight against the blind ideology that says that all government spending is per se wasteful.
Let us imagine that the defense and transportation lobbyists begin to make a persuasive case for their clients, basing their arguments on the spending-as-investment concept. They would need to marshal economic evidence to justify spending, on a project-by-project basis, to separate the wheat from the chaff. Once they have done so, however, they have opened the way for other government-financed entities to use the same reasoning. As I have described in my writing on public investment (e.g., this law review article from 2011), there is no reason why brick-and-mortar investment should be treated as "more real" than investments in knowledge or human capital. It is just as possible (and much more common) to waste money on bridges to nowhere as to waste money on useless research projects. And it is just as possible (and much more likely) that spending on non-physical investments will pay off in the long term than spending on more highways. (Among other things, we need more research into how to make highways less necessary -- which will, of course, later lead to physical investments in non-highway transportation networks.)
If there is going to be a move toward evidence-based public investment, then the news should be good for the advocates of social spending. As we have long known, the returns on investment in early childhood nutrition and education are stratospheric, yet we barely invest in them. More broadly, the returns on K-12 education and on college and university education are also impressive. The beleaguered schools in this country would surely benefit from a renewed interest in adequate funding of long-term investments that will make "our children and grandchildren" better off.
What is standing in the way of Republicans becoming persuadable regarding education spending, in the way that they might be persuadable on highway spending (to say nothing of weapons spending)? The most obvious answer is Republicans' antipathy toward teachers' unions (an antipathy that is strongly fed by "centrist" Democrats, including activists who fund the production of movies with virulently anti-union themes). There is certainly plenty of evidence that, in the eyes of conservative politicians and activists, schools = teachers' unions = Democrats = enemy.
The problem with that explanation is that the same antipathy is seen from Republicans toward spending on higher education, which has a much smaller presence of unions. In part, the conservative resistance to spending on higher education is little more than old-fashioned anti-intellectualism. Another large part of this is the academy's unfortunate habit of saying things that conservatives do not like to hear. (Evolution? Climate change?)
Even so, there is reason to believe that conservatives would change their tune about spending on education if schools and universities were run for profit. There is already, of course, a large and growing for-profit sector in higher education, which was heavily promoted by White House-connected operatives in the Bush II years -- and which is now being exposed as a crooked industry that provides low-to-no benefit at high cost (to the students and to taxpayers).
The deep conservative belief in the miracle of free markets, however, is likely to be more than enough to overcome the evidence that for-profit education is a poor investment of public funds. If so, then why should educators not simply be willing to get on board with privatization, if that is where the money is, and try to do it a bit better than the current fly-by-night operators? People did, after all, buy into the privatization of prisons, without much caring about the damage to constitutional principles (or the affects on the prisoners and their families). Why would the leaders of higher education not also make a deal with the devil?
The most obvious answer is that the negative effects of profit-driven decision-making are much easier to see in the context of education than elsewhere. With private defense contractors, we see high costs and low quality all the time; but there is nothing about the very nature of defense work that requires it to be carried on by nonprofit institutions. Hiring catering contractors to provide meals is a perfectly plausible alternative to forcing buck privates to peel potatoes, even if there are obvious limits to how much actual fighting should be done by mercenaries.
By contrast, the nature of the educational enterprise is built around what business-oriented managers would think of as gross inefficiencies. People (some of them, anyway) cannot be fired for saying bad things about the boss, or even for saying things that harm the institution. The idea of taking as much as one can from one's customers, and giving them the lowest amount of quality and quantity as one can get away with, is not standard operating procedure. There are even people who, God forbid, question whether the institution should be focused exclusively on training people to be more productive workers.
Consider the case of journalism, a vocation that has become more and more business-like. Although there is still some quality left in modern journalism, the profit-oriented news organization has been the expanding norm for a generation or more. The wall separating the journalists and the suits has all but disappeared in many newsrooms. "Saving" journalism by allowing it to be run like a business has led us to the non-Murdoch world acting very much like their Murdoch-run competitors. In education, especially higher education, this trend has also been evident for years. Teaching is being done more and more by low-paid adjuncts, who have no job security and receive no benefits.
When we allow profit-driven companies to build highways, we still get highways. Sometimes they cost too much, and sometimes they are poorly built, but we still have highways that serve the basic function for which we built them. When we allow profit-driven companies to build missiles, we get (expensive) missiles. But when we allow more and more education to be "produced" by for-profit companies (or nonprofit entities applying business principles), we get a vastly inferior -- and quite different -- product. I wish this country's educational leaders had not made even the deal with the devil that they have already made. At this point, however, we can confidently predict that the kind of deal that higher education would have to make to become an acceptable recipient of government money, in the eyes of conservative politicians, would be immediately and obviously disastrous.