Richard Vedder studies higher education financing, labor economics, immigration, government fiscal policy and income inequality. A distinguished professor of economics at Ohio University, he is the author of several books, including  Going Broke by Degree, and The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers, and the Economy (with Wendell Cox). Dr. Vedder earned his Ph.D. in Economics from the University of Illinois.

The Center for College Affordability and Productivity (CCAP) is an independent, not-for-profit research center based in Washington, DC. The CCAP exists to help facilitate a broader dialogue on the issues and problems facing the institutes of higher education in the United States.

KCH: Let’s start with the CCAP. What is the original mandate of the Centre? And what role do you see the Centre playing in the coming years?

RV: CCAP was founded in 2006 because I felt there was a need to make colleges more productive and affordable, and a big part of that involved substituting the discipline of markets for the highly inefficient process by which colleges operate today. My service on the Spellings Commission on the Future of Higher Education  heightened my sense that colleges will never reform on their own, and that public opinion needed to move in a way conducive to  force major reform and innovation.

KCH: You’ve suggested that less, not more people should be attending college. Is this based on a different view of the needs of the labour market, the role of universities, or both?

RV: Obviously we need college graduates –but how many? Part of my concern here does relate to labour markets —there is evidence in the U.S. that the number of college graduates exceeds the number of jobs available that require the skills associated with a collegiate degree. Part relates to the abilities and determination of students — too many are admitted to college for whom the prospects of success are minimal, and vast resources are wasted on them. Many students are dropping out of college with no degree but large student loan debts –how does that serve either them or society more broadly?

KCH: My personal focus is the use of technology in higher ed. And I’ve suggested in a number of conference papers that we need to pay attention not only to the specific ways in which technology is used in higher ed, but also its broader, longer-term impact on the way in which our entire institutions operate – how we structure our organizations, share information, allocate resources, compete with each other, and so forth. What is your view of the impact of technology on higher ed, to date?

RV: I think the three “I”s of higher education reform are incentives, information, and innovation. We need to incentivize school staff to use technology as a cost saving device, something we have done only to a modest extent to date, although the market driven proprietary schools are becoming very good at it.  We still teach pretty much the same way Socrates taught the youth of Athens 2,400 years ago, with a little PowerPoint or Blackboard thrown in as a supplement. Possibly excepting prostitution, no other profession has had so little productivity advance in 2,400 years as teaching.

KCH: You’ve written extensively about the rising cost of running universities. And you’ve noted that administrative costs are rising faster than instructional. Can you explain the factors behind these developments?

RV: University bureaucracies grow because they can -institutions use their autonomy to take vast portions of new resources to pad their non-academic staffs. The leaders of institutions want more assistants to do their work and make them seem powerful and important. At a typical American university, a 20 percent reduction in administrative staff could occur with no reduction whatsoever in academic quality, reducing costs and leading to more efficient governance. In the for profit private sector, the pursuit of profits and the presence of tough competition leads firms to try to minimize costs, including administrative ones. The incentives for that type of cost-cutting in higher education are dramatically less.

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