The Backwards Economics Of Education

Matt Yglesias skewers universities and their presidents:

The way a lot of industries are structured, the best way to get rich is to think up a way to produce whatever it is you’re producing cheaper. That way you can cut prices, increase sales volume and market share, all while increasing per unit profit margins. Not everything in the business world works like that, of course, but some of it doesespecially the parts where you don’t see endlessly increasing prices.

Higher education in America just doesn’t work like that. The precise mechanisms through which you get to be one of the highest-paid university presidents are a bit opaque to me (and it’s worth keeping in mind that there’s more to compensation than salary), but they don’t have anything to do with the idea of offering a good value to students. So it’s natural that the key institutions don’t really focus on value.