Neoliberalism, Tuition Hikes, and the “Coupon State”

The never-quite-quiescent debate between neoliberals and the traditional left is active again. I know it irks Matt Yglesias to no end, but I don’t find these discussions gratuitous. Easy to dismiss as inside baseball, they also delineate real differences that have real consequences for the viability and efficacy of a left project.

The latest skirmish was prompted by the release of a paper authored by Mike Konczal, an exceptional wonk at the Roosevelt Institute who cares about more than just crunching numbers. Konczal’s latest is about the “coupon state” versus public provisioning—or, if you like, neoliberal versus liberal/ social democratic approaches to the welfare state.

Predictably, the report is fantastic, and it includes this chart, which nicely encapsulates Konczal’s arguments:

One gap in the chart, in my view: Public provisioning of social goods should be employed when possible because it avoids commodifying those goods. This isn’t feasible in some cases—food stamps come to mind—but decommodification should be the left’s default position. For instance: Even if we allow that charter schools can under certain (often unmet) conditions be desirable, profit-making operators should be verboten.

As the case of higher education shows, providing social goods up front is often better than subsidizing on the back end:

Since the 1970s the government has created several voucher mechanisms to fund access to private colleges and universities, including Pell Grants, government-subsidized student loans and tax-subsidized savings vehicles. Meanwhile, public funding is being lowered and tuition raised at the equivalent public option, state public colleges and universities.10

There’s a set of arguments stating that private institutions of higher education largely capture these vouchers by raising tuition in order to compensate for the extra demand vouchers produce.11 If this logic is flipped, directly reducing the price of a college degree through public education will also reduce the tuition costs at the private institutions, as they are forced to reduce margins in order to compete. So in these instances, money spent on providing cheaper public options will amplify their effect throughout the market, while money spent through vouchers is simply captured by incumbent institutions and prices rise across the board.

I agree entirely with Konczal. The conservatives and libertarians response to ballooning tuition has been their go-to—deregulate and further privatize. The neoliberal response has been increasing Pell Grants and making student loans more favorable to debtors. More effective would be directly attacking tuition hikes via increased appropriations. And if states aren’t willing to adequately support their public universities, the federal government should. (This is another instance in which Bhaskar Sunkara and Peter Frase’s solution of federalization is a wise idea.)

I would say it’s perplexing that more liberals don’t advocate this kind of approach, but the lacuna mirrors others in the higher education conversation. When national Democrats talk about making college more affordable, they’re talking about more federal grants and loans. This approach doesn’t engender affordability, however, but higher tuition and more student debt.

For their part, conservatives and libertarians are given to justifying tuition hikes with jeremiads against bloated administration. Cut the fat, and tuition wouldn’t have to jump. And they’re right: bureaucratic largesse is a problem. It’s just a problem of little importance compared to the widescale privatization of our public universities. More federal grants and loans to pay for ever-escalating tuition won’t solve this. The remedy is simple: send federal money to states to depress tuition costs, and prevent the continued erosion of the universal right to education.