Markets and universities


A recent headline in The Australian that caught my eye said, "Free market no place for unis". Apparently, a lobby group called Innovative Research Universities is worried about the role of public sector institutions and has demanded protection for public institutions because it claims private competition will be harmful to education.

Competition is a key aspect to providing quality, low-cost services to consumers. It makes the providers more efficient, forcing them to provide what is demanded and keeping costs down. But IRU says that competition will cause student fees to rise. And that just doesn’t make any sense.
The IRU also fears "greater homogenisation" because all institutions will focus on courses that are in high demand. But there isn't really a problem with institutions focusing on what is in demand, because what is in demand in terms of education is a reflection of what the economy demands in terms of its labour needs. After the introduction of computers to the workplace, the market demanded workers with knowledge about programming, development, design, etc and those courses became demanded in university and so universities provided them.

Finally the IRU is worried of "market failure". Well, yes, there are market failures, but they're usually better than the government failures that replace them. Too often government steps in 'to help' and distorts the messages about supply and demand, leading to false pricing and inefficiency. Education will always be a highly demanded good and if allowed to operate without excessive regulations should be just fine.

If IRU believes, as they say, that universities "are critically important" then they should start lobbying for goals that aren’t detrimental to the quality of education.