In a recent Center for American Progress report, Robert Shireman argues that the pursuit of accounting profits in the postsecondary education market is a recipe for moral hazard that needs to be heavily regulated by the state. I penned a response to Shireman's paper for the July/August edition of Career College Central magazine, arguing that Shireman's conclusions are based on misconceptions about the profit motive in higher education. Here is a link to the essay.
Minding the Campus recently published my response to an idea proposed by Kevin Carey to subject vocationally-oriented master's degree programs at non-profit colleges. I argue that the policy would be easily avoidable and likely generate unintended consequences. I propose an alternative two-tiered reform: (1) subject all colleges, regardless of profit status, to the same rules; and (2) tax all college enterprises that are regularly taxed in the private sector.
French economist Thomas Piketty's recent book, Capitalism in the Twenty-first Century, has garnered quite a bit of attention. Piketty provides an historical analysis of inequality in the western world since the twentieth century. Piketty argues that the rate of return on capital has historically exceeded the growth rate of the economy, and that this trend has contributed to and will continue to exacerbate economic inequality. Capital is concentrated in the hands of the elite, who are able to use their economic and political power to capture democratic institutions, perpetuating economic inequality. This story is very similar to the one told by economic historians Kenneth Sokoloff and Stanley Engerman. I am somewhat sympathetic to this view and have a working empirical paper on the topic.
While Piketty's analysis appears to be solid, his policy recommendations are off the mark according to economist Tyler Cowen. Piketty calls for a global tax on capital as a means to counter inequality attributable to capital accumulation and associated returns. In an excellent review for Foreign Affairs, Cowen suggests that Piketty's assumption hat capital is homogenous and will continue to reap returns that outpace economic growth is analogous to David Ricardo's indictment of land in the nineteenth century that history has revealed to be incorrect. Cowen also argues that Piketty has a romantic view of politics and ignores both the political and technical feasibility of his proposed mechanism, as well as the perverse incentives that it would create and potential harm those that the policy is intended to benefit.
In an Op-Ed for the Wall Street Journal, Mark Cuban and his lawyer argue that the federal government should be obliged to disclosure all information in its civil trial prosecutions, just like it is required to do so for criminal prosecutions under the Brady Bill. The potential payoff in terms of maximizing federal revenue to maintaining asymmetric information are huge in civil prosecutions, whereas criminal prosecutions likely yield a net loss. Public choice theory seems to provide an explanation as to why the institution of policy disclosure applies in criminal but not civil prosecutions.
Assistant Professor of Economics at Patrick Henry College.