Is the American economy really like a university?

In his New York Times column today, David Brooks analogizes the government's proper role in the economy to an administration's actual role in a modern U.S. university:

[G]overnment will be a bit like the administration of a university. A university president is nominally the head of the institutions. He or she lives in the big house. But everybody knows a university president is a powerful stagehand.

The professors, the researchers, the tutors, the coaches and the students are the real guts of a university. They handle the substance of what gets done. The administrators play vital but secondary roles. They build the settings. They raise money. They recruit and do marketing. They help students who are stumbling.

The administrators couldn't possibly understand or control the work in the physics or history departments. They just try to gather talent, set guidelines and create an atmosphere where brilliance can happen.

Mulling it over, this is a better analogy than even Brooks indicates. The administration/everyone else dynamic at a university also captures the feelings that often predominate debates about the role of government in society.

To be specific:

1) Most faculty and students do their damndest to simply ignore the fact that a university administration actually exists.

2) Most faculty and students cultivate an active ignorance about things like budgets, revenues, etc.

3) The only time any university administration is popular is when it has resources to dole out;

4) Any time the administration interferes with what faculty, students, etc. want to do it provokes fierce resentment -- unless the faculty/student is in trouble, in which case the hope is that the administration will make it all better.

5) Trying to change any aspect of university governance is, I suspect, even more difficult than trying to get a law passed through Congress.

6) Paying customers rack up massive debts and inevitably feel like they're not getting close to their money's worth, even though the data suggests that the pecuniary rewards from going to college are pretty significant.

7) Even if administrators lack local knowledge about the research going on in their schools, they're nevertheless sure that they completely understand the research.

8) Even though administrators come from the faculty, approximately 99.8 percent of all faculty are completely ill-suited for administrative responsibilities.

Brooks uses this analogy because of his argument for how the global economy will function in this century:

In this century, economic competition between countries is less like the competition between armies or sports teams (with hermetically sealed units bashing or racing against each other). It's more like the competition between elite universities, who vie for prestige in a networked search for knowledge. It's less: "We will crush you with our efficiency and might." It's more: "We have the best talent and the best values, so if you want to make the most of your own capacities, you'll come join us."

The new sort of competition is all about charisma. It's about gathering talent in one spot (in the information economy, geography matters more than ever because people are most creative when they collaborate face to face). This concentration of talent then attracts more talent, which creates more collaboration, which multiplies everybody's skills, which attracts more talent and so on.

Well.... economic competition among countries has been something of a misnomer since the start of the Industrial Revolution. It's mattered only in the sense that geopolitical competition exists. To put this into concrete terms, from a strictly economic perspective China's massive growth is an unalloyed good for Americans, because it means a future growth market for U.S. goods and services. It good becomes slightly less pure only when people start worrying about a) whether China will convert its growing wealth into power; and b) whether Chinese power will advance interests that conflict with the United States.

More importantly, however, there's a way in which Brooks' model is the great power equivalent of the Dubai model of economic growth -- and as I noted earlier this month, a world in which everyone races after the Dubai model is a world of massive overinvestment and inadequate demand. Like the dollar auction game, a few countries might win, but most will lose in pursuing this strategy.

Readers are warmly encouraged to provide more ways in which the administration/university relationship is akin to the government/economy relationship.


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