Daniel Lemire's blog

, 2 min read

Governments should stop funding higher education?

Everyone knows that publicly funded education is good. Right? Wait! Why?


  • “Schools have substantial non-financial benefits.” This argument assumes that people who forgo schooling are uneducated. It is weaker in the Wikipedia era. Kids are naturally curious, and they now have access to unlimited and inexpensive information. And this same argument could be used to justify free Internet for all, which would be considerably cheaper than free schools.
  • “If it costed hundreds of thousands of dollars to complete a Ph.D., nobody would do it.” Assuming that there is any demand at all for Ph.D.s, people with a Ph.D. would receive much higher salaries if fewer people have them. These higher salaries would entice more students to complete a Ph.D.
  • “Poor people are unable to get an education without government funding.” Students who can borrow the money, ought to be willing to do so if the expected return on their education investment far exceeds the interest rates charged by the bank or a private investor. True: Some students who show little promise, and have few ressources, would be unable to get an college degrees. Is that fair? Is it fair that only the most promising engineers get a job with Google? Is it fair that my wife is more beautiful than yours? Is it fair that kids go hungry in the richest country in the world?
  • “To make our corporations more competitive.” By funding schools, governments entice more students to study which artificially boosts the supply of graduates. In turn, this lowers the salaries of these same graduates. Corporations benefit from these lower wages while they only contribute a small fraction of the cost. Therefore, public schools are equivalent to subsidizing corporations. Any country that would stop funding higher education without a corresponding immigration policy, would see a rise in the wages of college graduates. This would be unfavorable to corporations which rely on college degrees to select employees. But corporations do not have to hire college graduates. Most corporate jobs are a form of paper pushing. They could easily replace college degrees with less expensive certifications.

So, why should the public fund schools?

Further reading: How and Why Government, Universities, and Industry Create Domestic Labor Shortages of Scientists and High-Tech Workers, A World Without Public School, What If Public Schools Were Abolished? and Self-interest and public funding of education.

Disclosure: I work for a public university. My kids attend a public school.