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November 21st, 2018

Insight

In Place of Public Institutions, Try Entrepreneurship

Laura Hollis

By Laura Hollis

Published August 2,2018

In Place of Public Institutions, Try Entrepreneurship

There's a compelling opinion piece in The Chronicle of Higher Education Review this week titled "The University Run Amok!" Adam Daniel and Chad Wellmon, both employed at the University of Virginia, warn convincingly that modern-day American universities have stretched themselves too thin trying to provide services that the authors argue were once provided elsewhere. "The university is what it is today, in part," they state, "because of the atrophy of other public institutions, which has left universities to fill a widening void."

The authors' purpose is not to explain the disintegration of public institutions. But it's worth asking why so many have collapsed. Among those reasons are profligate spending, diminishment of quality and lack of accountability. Add a political class with an insatiable desire for higher taxes, and a disgruntled public unwilling to pony up any more for increasingly weaker services, and the phenomenon is easier to understand.

Daniel and Wellmon refer to our present state as "the twilight of public life." I don't agree. Nor do I share their opinion that today, "the only widely shared moral language, the only commonly accepted way to talk and think about ideals and purposes, is the rubric of economic utility."

I submit that this complaint reflects a profound lack of understanding of what is taking place when public institutions are compared to private enterprise.

Privately owned enterprises must understand the need to satisfy the public they serve. If they do not, the fact that the public has other options means that they will exercise those options. This is true no matter how brilliant or gifted a company's leadership is. If they cannot persuade the public of the value of their goods or services, they're done. That's the accountability that competition provides.

This "value" is not, the authors' complaint notwithstanding, merely a matter of economics. To the contrary, the public marketplace is filled with moral language and corresponding calculus on a daily basis: Which businesses treat their employees well? Provide employment and other support to our local community? Make environmentally sound decisions? Promote beauty, grace and art by making beautiful, graceful or artistic products? Different people make different moral calculations, but you get the idea. Companies must discern these moral imperatives and meet them — at least for the demographic that is their intended audience — or lose out to another company that does.

Historically, the attitude displayed by our public institutions has too often been, "We are publicly funded, so we don't need to care about you." Or, "We have tenure/union contracts and we can't be fired." Or, "We're better educated than you, and we know better than you what you need." Or the organizations are so bureaucratically hidebound that it takes years to make a decision.

When the demand for accountability in our public institutions is emphasized by comparing them with private enterprises, it is not an argument of pure economic utility; it is a language of last resort — that which becomes necessary when all other pleas have failed. The public begs for higher standards in our public schools, our public hospitals or our public transportation, and understandably asks, "Why won't you listen to us as private organizations do?"

Rebuffed, time and again, the only response left is to "starve the beast." People won't tolerate that indefinitely. Unless, of course, they have no other options. Which is why goods and services are so characteristically abysmal in collectivist nations where everything is a "public institution." (Nicolas Maduro, call your office. Oops, the phones are down... ) The painful irony here is that those who call for private goods and services to be made public, because more people need them, are virtually ensuring that the quality and amount of those goods and services will eventually degrade to the point where no one receives quality, and there's nowhere you can go for an alternative.

So, while it may be true that universities have expanded to provide things that are well beyond their original charters, I would argue that this was an entrepreneurial response to a perceived opportunity.

And that is a good thing.

If some universities decide that it's time to pare down to their core competencies, this in turn creates new opportunities for other entrepreneurially minded individuals and the organizations they create.

But we must have those individuals.

The answer, therefore, is not a return to the days of more publicly funded monopolies with their top-heavy bureaucracies, lifetime sinecures and isolation from the public they are supposed to serve. The answer is a flourishing entrepreneurial culture, and a population encouraged and educated to respond to problems as opportunities.

That is something that all universities can contribute to.

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Laura Hirschfeld Hollis is on the faculty at the University of Notre Dame, where she teaches courses in business law and entrepreneurship. She has received numerous awards for her teaching, research, community service and contributions to entrepreneurship education.

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