Adam Smith Free Enterprise Award Presentation

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Adam Smith Free Enterprise Award Presentation

• Thursday, July 31, 2008

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Adam Smith (1723-1790)

• Wrote An Inquiry into the Nature and Causes of
  the Wealth of Nations in 1776.

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Richard Armey, 1940-?????
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A

• No Society Without a Government Has Ever Had
  Economic Prosperity

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A
B

• However, no society with government dominating
  society has been rich either with government
  taking everything ---why bother to work, save, or
  invest?

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C
A
B

• There is some size of government that will
  maximizes output we might call it the optimal
  size of government

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C
D
A
B

• We are now roughly at point D reductions in
  government size would increase economic growth

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Source Digest of Education Statistics, CCAP
Calculations
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Should we focus on tuition?
5,836 Per Student
2,186 Per Student
617 Per Student
Source College Board Trends in Higher
Education Series 2006 Trends in College Pricing
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Source Digest of Education Statistics, CCAP
Calculations
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Is the real problem runaway costs?
Tuition
Gifts, Endowmentand Other
State Appropriations
Real Revenue Per Student, 2006 Dollars
Source Texas Flagship Website
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Source Digest of Education Statistics, CCAP
Calculations
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How do For-Profit costs compare?
31,882 Per Student/Per Year
10,818 Per Student/Per Year
Public Universities
For-Profit Universities
Cost Per Year/Per Student 200405
Source National Center for Education Statistics
2004-2005
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Why have higher education costs increased?
Source National Center for Education Statistics
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Why have administrative costs increased?
Non-Instructional Staff to Instructional Staff
1976
1995
2005
Vedder, Richard Center for College Affordability
and Productivity
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Who is teaching the students?
Percent of Faculty
68.1
56.8
43.2
31.9
Source U.S. Department of Education, AAUP
Website
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Where do tenured faculty spend time?
Research Activities Research, Training
Researchers, Faculty Committees
Undergraduate Teaching Activities Teaching,
Grading, Preparing and Advising Students
Source U.S. Department of Education, NCES 1998
Fall Survey
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Faculty teaching productivity is falling.
Percentage of Full-Time Faculty at 4 Year Public
Research Institutions Who Teach Less than 4 Hours
Per Week
2003
1998
Source U.S. Department of Education, NCES
Digest of Education Statistics
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What does it cost per student, per class?
Fully Allocated Cost per Student at Texas Flagship
2,815
2,434
2,374
625
381
Full Professor
AssociateProfessor
AssistantProfessor
Instructor
Lecturer
Source Texas Higher Education Coordinating
Board FY 2004 Statistical Report
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Where is U.S. RD performed?
2006 U.S. RD Spending 342.9 Billion
56.8 Billion
286.1 Billion
Source National Science Foundation 2006 U.S.
RD Expenditures
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What does academic research produce?

• Over 2 million refereed academic journal articles
  each year
• 5,500 articles a day
• 228 articles an hour
• 4 articles per minute

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How do For-Profit costs compare?
31,882 Per Student/Per Year
10,818 Per Student/Per Year
For-Profit Universities
Public Universities
Cost Per Year Per Student 200405
Source National Center for Education Statistics
2004-2005
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Who delivers better jobs?
For-Profit Universities
Public Universities
Percent of Students Reporting Higher Salary Upon
Graduation
Source Imagine America Fact Book 2007
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Who is more efficient?
64
38
For-Profit University
Public University
Completion Rate Within 3 Years for 2-Year Colleges
Source Imagine America Foundation 2007 Fact
Book
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Who better serves disadvantaged students?
Percent of Degrees Conferred to Minorities
Public
For-Profit
Private, Not-For-Profit
Source Imagine America Foundation 2007 Fact Book
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College Graduates within 10 Years of Beginning
High School
Source Digest of Education Statistics, IPEDS,
CCAP Calculations
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How much do students learn?
American History, Government, International
Relations and Economics
54.2
F
50.4
F
Senior Mean
Freshmen Mean
Source 2006 Results of American Civic Literacy
Test, Intercollegiate Studies Institute
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Do elite schools deliver a better education?
Change from Freshman to Senior Year
East Conn. State
MarianCollege
MurrayState
Miss.State
Princeton
Duke
Yale
Cornell
Source 2006 Results of American Civic Literacy
Test, Intercollegiate Studies Institute
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Do colleges deliver a basic education?
The National Assessment of Adult Literacy
2003
1992
Source U.S. Department of Education, NCES
National Assessment of Adult Literacy
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Why are costs rising?

• Third party payments
• Non Profit
• Bottom Line
• Resource Rigidities
• Barriers to Entry and Restraints on Competition
• Public Support and Control
• Price Discrimination
• Rent-Seeking
• Cross Subsidization
• Ownership
• Governance
• Information