THE ROBERT W. WHITAKER ARCHIVE

Gary North

Academia is a self-certified guild that is funded mainly by tax money. Each year, something in the range of $350 billion goes into higher education in the United States. This figure keeps rising. So, the stakes are high.

As with any guild, it must limit entry in order to preserve above-market salaries. It does so primarily by academic licensing.

The primary licensing restriction is university accreditation, which is a system run by half a dozen regional agencies. To get degree-granting status, a college or university must be certified by one of these agencies. They certify very few.

The next screening device is the Ph.D. degree. This system was imposed on academia nationally by John D. Rockefeller's General Education Board, beginning in 1903, when Congress chartered it. He gave money to colleges, but only if they put people with Ph.D. degrees on their faculties.

Next comes faculty tenure. After about six or seven years of teaching mainly lower division classes that senior professors refuse to teach, an assistant professor comes up for tenure. If he gets it, he can never be fired except for moral infractions far worse than adultery committed with female students. Very few assistant professors are granted tenure. The Ph.D. glut then consigns the losers to part-time work in community colleges for wages in the range of what apprentice plumbers receive. I have written about this glut elsewhere.

ACADEMIC JOURNALS

To get tenure at a major research university, you must publish in the main academic journals in the field. This is limited to about a dozen journals in each field. They publish quarterly. They run perhaps eight articles per issue. Most of these are written by well-known men in the field who are already tenured. The average Ph.D. holder publishes one article, which summarizes his Ph.D. dissertation. This article is unlikely to make it into one of the top dozen journals.

Almost no one ever wins a Nobel Prize who is not on the faculty of one of these universities. He must also have published repeatedly in the dozen top academic journals. His articles must be cited widely by other authors in these journals. If an article is not widely cited within five years of publication, it is doomed.

In short, journal editors control access into the top rank of academia, who in turn assign manuscripts to be screened by teams of unnamed faculty members. Almost no one knows who these people are.

Robert Nisbet once told me that he had given up reading any professional journal in sociology decades before. A decade before George Stigler won the Nobel Prize in economics, I heard him say in front of a group of academic libertarians and conservatives that he had a question. "I would like to know why there is only one journal article a year worth reading in my field." The answer is clear: the system is funded by the state and ruled by faceless committees.

At schools other than the top three-dozen, tenure is granted for publishing in a lesser-known journal. Also relevant is a book published by a major university press. These are presses that are subsidized indirectly by the government. Their books sell for very high prices, and are then bought mainly by university libraries.

If you do not publish in the top dozen journals, then you do not get tenure at a major university. Very few Ph.D.-holding academics get offered a tenure-track position in these schools. The old-boy network rules. A major professor at Harvard, Princeton, Yale, Stanford, Berkeley, or Chicago calls a buddy at one of the other top schools and recommends his top two or three Ph.D. graduates. A few of these get hired. Of these, maybe 20% ever get tenure. The losers here wind up at second-tier or third-tier universities.

If a person reaches age 35 and has not published in an academic journal, he is relegated to the limbo of academia. He may get tenure at a community college or a third-tier university that grants only the B.A. and a few M.A. students. If by age 40 he has not published several articles and multiple book reviews in one of the top dozen journals, he will never become a major figure in the profession.

THE OLD-BOY NETWORK

If you did not get into one of these schools' Ph.D. programs, you do not get recommended to teach at a major university. If you are granted a Ph.D. by any lower-tier school, then you probably will not get a career job in academia, but if you do, it will be in a community college teaching for low wages, probably part-time. You may get a tenure-track job at a college no one has heard of except its alumni, who do not have much money to donate to the endowment. If a Ph.D. holder is granted tenure at one of these schools, he has lifetime employment in safety but obscurity. No one ever hears about him or her again.

The prospective Ph.D. student is told about none of this. The faculty is paid more for Ph.D.-level students. Faculty members have no incentive to cut the supply of lemmings. They keep these pour souls in the dark. These people work for minimum wages teaching sessions of lower-division students. Or they do the grunt work researching topics that their advisors will use to write articles and books, mentioning these students in a footnote or the Acknowledgments page of a book.

TEXTBOOKS

Then there is the textbook system. There is a lot of money to be made in textbooks for lower-division classes. A textbook may sell for $100 to $150. The market is huge: over half of the 15 million college students enrolled in America's 4,000 community colleges and 4-year colleges. Only a few textbooks make the cut: about a dozen. Textbooks shape the minds of the general academic public. They also set the criteria for those students moving into upper division as majors in a department.

The textbook must conform to certain standards. Those ideas within the guild that are considered representative touchstones of the guild's positions must not be violated. These ideas are used to screen textbooks.

In economics, the universal screening rule is affirmation of central banking in general and the Federal Reserve System in particular. The editors pay close attention to this chapter. The following rules must not be violated.

1. Only a brief mention of central banking as a government-licensed monopoly - no detailed discussion of the central bank in terms of the textbook's chapter on monopoly.

2. No mention of its structure as a member bank-owned cartel of commercial banks - no discussion at all of the central bank in terms of the textbook's chapter on cartels.

3. No mention of the fact that, under the auspices of the Federal Reserve System, the dollar has depreciated by 95% since 1914, according to the Inflation Calculator on the Website of the Bureau of Labor Statistics.

4. No mention of the well-organized, decades-long plans to create the Federal Reserve, except to dismiss all such accusations (accurate) as "a conspiracy theory." (This dismisses as a crank theory Part 2 of Murray Rothbard's book A History of Money and Banking in the United States.)

5. No mention of fractional reserve banking as inherently inflationary and also immoral: a cartel-enforced wealth transfer, the position of Rothbard's book, The Mystery of Banking.

6. No mention of the Great Depression without invoking Milton Friedman's assertion that the Great Depression was the failure of the Federal Reserve System in not inflating more. No mention of Murray Rothbard's book, America's Great Depression (1963). Instead, it cites Friedman's book, A Monetary History of the United States (1963).

This chapter serves the economics guild in much the same way that the local altar to the emperor's genius served Rome. Every adult resident of the empire had to publicly worship the State by placing a pinch of incense on this altar. To refuse was to risk a death sentence. Similarly, any economics textbook author who does not toss a pinch of incense on the altar of the Federal Reserve System assures himself of publication death. His manuscript will be rejected. In the New Testament's terminology, you either make peace with the Beast, or else you are consigned to outer darkness by the guild.

This is why there has never been an Austrian School economics textbook. Ludwig von Mises and Murray Rothbard rejected all central banking as an illegitimate government intrusion into the economy. No other school of economic opinion takes this hard-line view of all central banking. A prospective textbook author must implicitly announce his rejection of Austrian economics by means of the chapter on banking.

A professor gets no tenure points for a textbook, but he can become a multimillionaire if his textbook sells well. Very few textbooks make it into classes of the top three-dozen universities. He may get an obscure book publisher to publish his textbook, but the book is marketed to academic limbo. It is highly unlikely that it will break through into the big leagues. It will not be assigned to students at the top three-dozen Ph.D.-granting universities or the two-dozen top four-year schools, such as Swarthmore, Pomona, Carleton, and Occidental. It will not be assigned at the 150 second-tier schools. The textbook may make the author some retirement money, but it will not shape the thinking of the future major players in the profession.

TO DE-FUND THE SYSTEM

Take away government funding, and the system dies. Barring this, allow another dozen accredited schools like the University of Phoenix to market programs, as Phoenix does, to 300,000 students a year, and the system will not die, but it will be drastically modified. The middle-tier and lower-tier private schools will go under: hundreds of them. These lower-tier colleges ("universities") sell to students who were not good enough to get into the major universities and state universities.

This system cannot be modified until the funding is cut off by the state. Short of an economic disaster, this is unlikely. Parents are rarely in a position to tell their children to fund their own educations. There is too much peer pressure on the parents. So, the parents pony up their retirement money and send their children off to schools that are designed to undermine the students' faith in what their parents had taught them, unless their parents never changed from their own last years in college.

It is a self-policing, tax-funded system of indoctrination. It has worked for seventy years. This is unlikely to change in our time.

HOPE FOR A FEW

There are alternatives in terms of books. The books on the Mises.org's free Literature section offer an alternative. So do the Website and catalogue of the Liberty Fund. But these books are aimed at independent thinkers. Not one institution of higher education certifies them. On the contrary, the academic establishment is opposed to the outlook of these books and materials.

Because of the Web, it is easier to get these materials into the hands of bright graduate students who see what is being dished out to them in their classrooms. But this remnant is small. Until the tax funding is removed from higher education, the remnant will remain small.

THE ECONOMICS OF THE PROFESSORATE

No one ever sits down and tells a newly minted college graduate about the economics of the professorate. No one tells the student about the crucial and neglected work of the person who first blew the whistle on the economics of the Ph.D., David W. Breneman. He is the Dean of the Curry School of Education at the University of Virginia. He wrote his Ph.D. dissertation on the economics of the Ph.D. It was accepted in 1970 by the University of California, Berkeley. It was based on research completed in 1968, the year prior to the beginning of the Ph.D. glut. Its title: "The Ph.D. Production Process: A Study of Departmental Behavior." Of all Ph.D. dissertations ever written, this is the only one that one that should be read by every college student who is contemplating graduate school. Of course, no one tells him. Few people have ever heard of it.

I read it in 1970. I do not recall how I came across it. I was completing my Ph.D., so I was facing the Ph.D. glut personally, which had begun in the fall of 1969. It had been predicted for the sciences by Allan Cartter of New York University in 1964. Sometime around 1966, Clark Kerr, President of the University of California, had mentioned this looming problem to a group of us in an elite student organization called the California Club. But I was naïve. I figured, "It won't happen to me." Ha!

As they say in those late-night Ronco ads, "Here's how it works!" Academic departments grow in terms of the number of students enrolled. We know from Parkinson's Law that growth is an institutional imperative. Administrators advance their careers by expanding the number of subordinates in their department. So, every academic department wants more students - students of a special kind.

Students are not of equal value to a department. The lower-division student (freshman or sophomore) does not rate highly in the currency of academic resource allocation: the full-time enrollment, or FTE. The FTE figure is what justifies the hiring of a full-time faculty member. The lower the ratio, the better. It may take 15 lower-division students to generate one FTE. It may take only eight Ph.D.-level graduate students to generate an FTE.

The more Ph.D. students a department can attract, the faster the growth of that department. This is the iron law of academia. All other economic laws are sacrificed for it, as the economist says, other things being equal.

This fact of academic economic life creates an incentive for departments to enroll lots of graduate students. It also rewards those departments that persuade M.A. students to go into the Ph.D. program.

Also, the brightest graduate students may be asked to do unpaid or grant-paid research for senior professors. The professors then publish the results of this research under their own names, thereby advancing their careers. It's the division of labor at work.

"GLUT? WHAT GLUT?"

The Ph.D. glut has existed ever since the fall of 1969. The number of entry-level full-time professorial positions has remained stagnant. Few new universities have been constructed. Legislatures have resisted additional funding.

This has led to a reduction of the number of tenure-level positions. Universities and community colleges have been able to staff their entry-level positions with inexpensive instructors.

Those few Ph.D.s who receive a full-time position at a university find that they are paid much less than tenured members of the department. They are assigned the lower-division classes, which are large - sometimes 200 to 1,000 students. These mega-classes require lecturing skills that most professors do not possess. Those untenured faculty members who perform well in mega-classes are kept on until the day of reckoning: the decision to grant them tenure, usually eight years after they go on the payroll. They are usually not re-hired unless they have published narrowly focused articles in professional journals. But mega-class professors do not have much time to do the required research.

The assistant professor is now 35 years old or older. He has not made the cut. He is now relegated to the academic underworld: the community colleges. But here there is fierce competition. Community colleges hire part-time instructors at $10 to $15 an hour. These people seek a full-time position at the community college. They need that initial foot in the door: night school courses for worn-out adults who are trying to earn an A.A. degree. Their natural enemies are the newly dismissed assistant professors from universities.

Who gets an entry-level position at Boonsdocksville State University, which in 1960 was a public schools teacher training college? New graduates with Ph.D.s from the two-dozen major universities.

Then what happens to graduates with Ph.D.s issued by Boonsdocksville State? They go straight into the community college circuit.

This has been going on ever since the fall of 1969. It is great for community college administrators, who have a never-ending supply of optimistic Ph.D.-holding graduates of all but the top two-dozen universities, plus a never-ending supply of burned-out, terrified assistant professors from top universities who did not receive tenure.

If you want to understand this process, watch Ghostbusters: the scene after the parapsychology team has been dismissed from the university. Dan Ackroyd speaks for tens of thousands of Ph.D.-holding rejects who did not make the cut.

For over three decades, all it has taken to generate 1,000 applicants was this ad in a professional journal in the humanities:

Tenure-track position

Ph.D. required

Teach 12 hours of the freshman course.

The salary has been almost irrelevant: not more than the average salary of the average American worker with a high school diploma.

If the ad said "Ph.D. or ABD required," it would generate 2,000 applicants. ABD stands for "all but dissertation."

Graduate students do not learn about supply and demand, and it does not pay senior professors to teach them. Here is evidence. In response to the ever-growing glut of Ph.D.'s, the American university system turned out about 30,000 Ph.D. graduates per year, 1969 to about 1975. Since then, it has increased the output. In 1980, it was 33,615. In 1990, it was 38,371. In 2000, it was 44,808. In 2003, it was 46,024. (Statistical Abstract of the United States, 2006, Table 290.) Despite this, we read on a website devoted to selling "how to get higher learning degrees" materials.

The Bureau of Labor Statistics currently predicts that the job outlook for postsecondary teachers (a job commonly sought by Ph.D. graduates) should be much brighter than it has been in recent years. Employment in that area is expected to grow by almost 40 percent by 2012, whereas overall employment is expected to grow by only 15 percent! So, if you're just starting down the track to a Ph.D. and hope to take root in the world of academia, your timing may be just right!

There's one born every minute . . . and two who will relieve him of his funds.

STATE SUBSIDIES

Most degree-granting universities are funded by taxpayers. A university used to be an institution of higher learning that was authorized by a college-accrediting agency to grant the Ph.D. Employees of all but the most prestigious four-year colleges want to be called a university. So, title inflation has matched degree inflation and grade inflation over the last 35 years.

The supply of college graduates with ever-lower academic abilities is funded by money coerced from taxpayers. The American higher education system is structured by the professorate to reward those professors who teach small classes of graduate students. So, year after year, decade after decade, the supply of Ph.D.-holding students increases, despite an academic market that does not hire most of them, and hires a minority at wages that do not compensate them for the money and time invested in earning their degrees.

They cannot teach at the high school level because their advanced degrees force the school districts to pay them too much. A teacher with a B.A. is paid a fraction of what a Ph.D. or Ed.D. is paid. The teacher unions have negotiated payment so that existing employees who attend night school and summer school at Boonsdocksville State can work their way up within the system. Being tenured, they cannot be fired. Earning a graduate degree is a guaranteed way to earn a larger salary. But no district goes looking for Ph.D.s to hire. That financial affliction is entirely generated from inside the union-dominated, tax-funded public schools.

HOPE SPRINGS ETERNAL

Ph.D. students are a lot like gamblers. They expect to beat the odds. The gambler personifies odds-beating as Lady Luck. The Ph.D. student instead looks within. "I am really smart. These other people in the program aren't as smart as I am. I will get that tenure-track job. I will make the cut. I will be a beneficiary of the system."

If wishes were horses, beggars would ride. Also, if ego were marketable, all Ph.D. graduates would get tenure.

Why does any Ph.D. student at any but the top graduate schools believe that he will get tenure at any university? The odds are so far against him, and have been for a generation, than he ought to realize that he is about to waste his most precious resource - time - on a long-shot. Investing five or more years beyond the B.A. degree, except in a field where industry hires people with advanced degrees, is economic stupidity that boggles the imagination. Yet at least 200,000 graduate students are doing this at any time. Of the 46,000 who earned a Ph.D. in 2003, an equal number (or more) got to ABD status and quit. Probably more than half of the others quit before they got to ABD status.

At $20,000 or more per year in tuition and living expenses, plus the $35,000+ not earned in the job market, trying to earn a Ph.D. is a losing proposition.

In some departments, the years invested are horrendous. Breneman's dissertation went into the grim details, department by department. Anyone seeking a degree in philosophy was almost doomed to failure, yet the Ph.D. degree took on average over a decade beyond the B.A. to earn. There were almost no college teaching jobs when they finished. That was before the glut.

CONCLUSION

Earning a Ph.D. may pay off if your goal is status, although I don't understand why anyone regards a Ph.D. as a status symbol that is worth giving up five to ten years of your earning power in your youth, when every dime saved can multiply because of compounding. If the public understood the economics of earning a Ph.D., people would think "naïve economic loser" whenever they hear "Ph.D."

A word to the wise is sufficient.