Sell! Sell! Sell?

Posted: Mar 12, 2006 12:05 AM

Here's how you draw the map of today's political divide: Take a common-sense idea. If it shocks those in charge, but not you, you know where to draw the line.

Say you are in charge of a business with lots of assets, but you just can't make its ends meet. There's an obvious thing to do: sell it. Let some new management take it over and give it a try.

And what do you do with the money? If you have other struggling businesses, well, try to figure a way to keep them going. You've got some extra dough from the other sale, so invest it right.

Common sense, no? Common business sense, anyway.

But now say the "business" is a state university system that's a hair's breadth from going under. Decreasing state support per student has hurt, despite increased numbers of students. Increasing labor costs have really hurt. And management seems ill-equipped at dealing with any of it.

So of course it was just a matter of time before a smarty on the State Board of Higher Education would bite the bullet and broach the issue: sell off a spare university or two, to help the remaining ones carry on.

That's the situation in Oregon. On the first Friday of March, Ms. Kirby Dyess, a retired Intel executive who'd been appointed by Oregon's current governor to the state board, advanced precisely that notion. Sell off one of the most financially troubled universities in the system.

Jaws dropped. Everyone was shocked. Ms. Dyess soon withdrew the idea.

Not, of course, because it was a bad idea, but because it was so good. If good ideas were common in the state's higher education management it wouldn't be in the fix it's in right now.

America's institutions of higher learning are a mixed bag . . . in more than one sense. But the sense I'm referring to now is that colleges and universities are good examples of the "mixed economy" that so many people in the last century bragged about.

Not pure socialism — that's more closely approximated by our elementary schools and high schools, most of which are run by governments and funded entirely from taxes.

But not pure private enterprise, either: there are a great many private institutions of higher learning, but nearly all work with governments that subsidize some of the students' tuition.

The education industry provides us with a lot of object lessons explaining why government institutions are so prone to a number of problems that private businesses have an easier time avoiding.

Governments tend to be pro-union, these days, so unions run roughshod over most government institutions, increasing labor costs without much relationship to niggly issues like productivity. In private industry, those niggly issues really, really matter, and it's no real surprise that union control of private industry has decreased over the years while the segments of the economy that show the highest wage increases are those with the greatest increase in worker productivity. The origin of that increased productivity? Skills acquisition, not union participation.

There's an anti-business sense in much government work, too. People in government tend to think in terms of "what should be" rather than in more everyday terms of "what is" and "what can be achieved" . . . by adaptation, innovation, and adjustment. It's not because they're by nature bad managers. The institutions' incentives themselves tend to steer managers towards folly.

No wonder that state universities around the country are often in dire economic straits. In Oregon, the citizens have gone through repeated revolts, denying to the pro-tax addicts who run Oregon's major governmental institutions every last dime they desire. There have even been cut-backs.

That's just part of the problem with Oregon's state university system. I'm sure there's a lot more to it. But I'm not an Oregonian, so it's not exactly incumbent upon me to figure the way out of the Beaver State's dam' mess.

But I do know a common sense proposal when I hear one.

Ms. Dyess has an impressive resume, including a long, long stint rising through the ranks at Intel. It's interesting to read her background. The first female Bachelor of Science for Physics from the University of Idaho, she moved into the business world in a pretty spectacular way, presiding, her press kit tells us, over 50 mergers and acquisitions at Intel. She knows something about business divisions and plants and the like. So her idea of letting go of a university or two of Oregon's system shouldn't shock at all.

The headline in The Oregonian was about shock, though: "Sell a University? Idea stuns board."

Still, times have changed. Fifty years ago Ms. Dyess would have been dismissed as a kook, or worse. Today, there's mostly silence: no one else on the board spoke up in her defense. And before she withdrew the proposal, she did make her point. "I think we need to alert people we are at the wall."

The other board members disagree, apparently, at least in public. "Too soon" for such radical talk! seems the consensus.

Of course, if you want real radical talk, don't talk to government officials or even appointed board members. Talk to John A. Charles, Jr. of Oregon's Cascade Policy Institute. He regards Dyess's proposal as not going far enough. The other board members, he writes,

like most public officials, continue to think this is just a revenue problem, when in fact it's a spending problem. There is no way public support can keep up with the cost of employee benefits in Oregon. . . . Selling one or several state universities to the private sector would clearly address this problem by moving employees out of the public employee benefits system.

But Charles pushes this idea further. Why not sell them all off?

Privatization would not necessarily mean an end to public support. The state could actually privatize all Oregon universities but still subsidize students by converting public financial aid to a system of vouchers, redeemable at any Oregon school. This would maintain a public collegiate system, while imposing much-needed market discipline on expenditures.

A voucher system would be a far better "mix" of public and private, says Charles. Why? He doesn't elaborate, but I'll hazard an answer: Because there would be more competition in the system, like private enterprises endure (and thrive under) within the free market. And hey: the institutions would no longer be held hostage to the groupthink of government-think.

Well, that's what I think, anyway. It strikes me as pretty obvious. Common sense, even.

That this isn't the "common sense" of the people who run our educational system strikes me as the biggest political divide of all.

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