On Wednesday Peter, one of my good microeconomics principles students, sent me this very gratifying email:
I don’t know if you have followed the whole fiasco with Towson’s baseball team very much, but they were offered 300,000 … [in] Maryland tax dollars and student fees. I … realized it has some similarities to special interest groups that benefit … at a large group’s cost. I just wanted to let you know your teaching has had an effect on the way I think about things.
(The turmoil over Towson baseball—a Baltimore Sunpapers account is here—concerns the program’s being terminated in order for Towson to comply with Title IX and then being reinstated with the help of Maryland politicians offering other people’s money.)
Peter is referring to what he had learned about the special interest effect, the tendency for special interest groups to get benefits from legislatures at the expense of the general public. Because the benefits of the government action are concentrated on the special interest group, the benefits are relatively large for each member of the group. By contrast the costs of the action, being dispersed over all the many taxpayers, are relatively small for each taxpayer. Hence the special interest group works hard for the program while few taxpayers oppose it, and the politicians respond accordingly.
But in this instance it is not just Towson Baseball that is the special interest group, and it is not just the Maryland politicians’ power to hand out money for sports that is the problem. I wrote back,
Peter, I agree with your analysis. In fact, I think that higher education in general is a coddled special interest group of already fortunate people who benefit at the expense of many taxpayers who never went to college. I think higher education should pay its own way, with no tax money at all. Indeed, I think America would do well with a separation of education and state, in the same way we have a separation of church and state, and for the same reasons.