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Capitalism And Education Are Incompatible Partners

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The news left tens of thousands of students stunned: Just as the fall semester was starting, ITT Technical Institute, one of the nation’s largest chains of for-profit colleges, shut down all its campuses, stranding some would-be graduates a few months shy of a diploma.

As wrenching as the closure is, though, it should have happened sooner. Like Corinthian Colleges, a for-profit chain that collapsed last year, ITT Tech was forced to the brink because the Obama administration has cracked down on an industry that thrived on shady practices. Those colleges have made their money by recruiting desperate and vulnerable students of modest means and charging overly high tuition rates.

For-profit colleges deliver very little of what they promise. You’ve no doubt heard some of their ads pledging lucrative careers in a growing field of endeavor — health care or technology, perhaps. The truth is that workers who attend for-profit colleges often end up earning less than they did before they pursued a degree, according to a study by the National Bureau of Economic Research.

There is a lesson here beyond the fortunes of for-profit schools. For all the worship of capitalism in the American psyche, the simple truth is that the profit motive doesn’t work everywhere. While the drive to make money can spark innovation, spur economic growth and fuel general prosperity, it can also corrupt entire enterprises. Not every sector of the economy ought to be privatized.

Higher education provides as good an example as any of the corrupting potential of capitalism. The United States already operates one of the best systems of higher education in the world; that’s why our colleges and universities attract so many foreign students. And for all the outrage, completely justified, over student debt, the nation also offers a system of affordable community colleges.

But back in the 1990s, liberals joined conservatives in their enthusiasm for privatization, which led to an explosion in the growth of for-profit schools. Investors camped out. Private equity groups swooped in. The industry had to deliver more and more profits.

But teaching — actually teaching students a skill, a craft, a vocation — is hard work that doesn’t promote easy profits since most students can’t afford to pay exorbitant rates for college. Indeed, most public colleges don’t charge enough tuition to cover their costs. State legislatures need to make up the rest.

So how did the Corinthians and ITT Techs of the world deliver the profits they promised? A few years back, now-retired Sen. Tom Harkin, an Iowa Democrat, launched an investigation into the industry. He found that associate-degree and certificate programs at for-profit colleges cost about four times as much as those at community colleges and public universities. He also found a system that was abusive and fraudulent.

For-profit schools send their recruiters into working-class neighborhoods, where they home in on desperate adults yearning for stable jobs with better wages. They inflate their job placement numbers, promising that a degree will pave the road to prosperity. The recruiters use hard-sell techniques that maximize federal grants and loans — that’s where most of their profits come from — and then encourage prospective students to take out more loans if federal aid doesn’t cover their costs. As a result, many of those students end up without degrees but head-over-heels in debt.

The strategies used by for-profit colleges may represent the profit motive run amok, but the demise of ITT Tech still serves as a reminder that capitalism is no cure-all. Some enterprises should be run like a business — appliance stores, technology companies, aircraft manufacturers — with all the risks and rewards that generally apply. But there are other undertakings that merely serve a public good. Trying to wrest a profit from those will result only in exploitation.

(The same applies, by the way, to for-profit operators of charter schools serving grades K-12. While the vast majority of charter schools are run by non-profit organizations, a few states have encouraged for-profit companies to take over schools. The result has been shabbily run classrooms that drain taxpayer dollars.)

Capitalism certainly has its place. But it doesn’t deserve to be worshipped as a god doling out good things to all. The profit motive doesn’t improve every endeavor. Instead, it simply pollutes some enterprises that it should not touch.

(Cynthia Tucker won the Pulitzer Prize for commentary in 2007. She can be reached at cynthia@cynthiatucker.com.)

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Cynthia Tucker Haynes

Cynthia Tucker Haynes, a veteran newspaper journalist and Pulitzer Prize winner, is a Visiting Professor of Journalism and Charlayne Hunter-Gault Distinguished Writer-in-Residence at the University of Georgia. She is also a highly-regarded commentator on TV and radio news shows.

Haynes was editorial page editor of The Atlanta Journal-Constitution newspaper for 17 years, where she led the development of opinion policy. More recently, she was that newspaper’s Washington-based political columnist. She maintains a syndicated column through Universal Press Syndicate, which is published in dozens of newspapers around the country. Besides winning the Pulitzer Prize for commentary in 2007, Haynes has also received numerous other awards, including Journalist of the Year from the National Association of Black Journalists.

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17 Comments

  1. Phil Christensen September 10, 2016

    And that Bachelor’s in “Woman’s Studies” is so marketable.

    Reply
    1. Myrabwiggins September 11, 2016

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      1. Phil Christensen September 11, 2016

        I would rather have to deal with an Independent1 having chewed through is restraints or Eleanor or Sandcat than this garbage.

        1. FireBaron September 11, 2016

          Unfortunate that you got grabbed on this one. The above spammer has posts on pretty much everything this weekend under a variety of tags. Join me in flagging these as inappropriate to ban that url from posting.
          I also have to agree with you about the Bachelor in Woman’s Studies. It is unfortunate that our higher education system in America does little to prepare people for the real world. Go to Germany and you have Technical Colleges, usually funded by local manufacturers, that provide training on drafting, manufacturing engineering, inventory control, etc. These are generally coop programs that involve PAID intern periods in those same facilities. People graduate with a 2 year degree and actually have the skills needed for success.
          However, we have every kid in high school convinced that they can be Doctors, Lawyers or Day Traders when many of them are incapable of writing a coherent sentence or balancing a checkbook! At least those who are not convinced by their coaches that a NBA or NFL job is theirs for the taking. This is why so many incoming Freshmen have to take remedial math and English classes so they can understand the work!
          And, yeah, this is the same FireBaron that usually comes off as a screaming Liberal Democrat. Sorry, but the poor state of our entire education system has disturbed me ever since I was a USN Recruiter and often had problems finding kids who could pass the ASVAB with a grade high enough to enter (equivalent to a 5th grade reading level)!

          1. Phil Christensen September 11, 2016

            Thank you for the input, FireBaron. If I had to do it all over, I think I would have insisted that my parents send me to diesel mechanics school. Mission Command/MDMP is a VERY narrow skill set.

          2. Oddworld September 11, 2016

            Liberalism also has a dogma that is sometimes hard to swallow.
            As a lefty I occasionally find myself at odds with some of the articles and comments.

  2. Mama Bear September 11, 2016

    As an Ohio resident I can tell you first hand what capitalism (read:John Kasich and his cronies) have done to education. Charter schools paid with my property tax dollars taken away from my legitimate, accountable school district to pay for his cronies to run bogus schools. They have made a fortune while the rethugs voted not to hold the schools to the same standards. They refuse to produce standardized test results and are protected by this state administration.

    Reply
  3. rednekokie September 11, 2016

    This argument not only applies to “for profit” colleges, but also to “for profit” lower education such as “charter schools” and any other for profit institution of learning.
    As well as for profit prisons, highway systems, or any other item which is best served by being owned and funded by the people.
    Anyone who sends their child to one of these “for profit” education systems, no matter what they are called, is short changing their child, and his/her educational needs.
    And anyone who says differently, simply doesn’t know the facts.

    Reply
    1. Jon September 11, 2016

      That is exactly what I have argued since the privatization craze started. There is no incentive to provide the best possible education or correctional center where maximizing profits is the driving force. The incentive is to cut expenses to unreasonably low levels and maybe provide minimal service. With regard to primary and secondary schools, the charter schools also serve to break the social fabric of communities as well as siphon off funds badly needed by public schools. Everybody loses except those earning the profit.

  4. The lucky one September 11, 2016

    “the nation also offers a system of affordable community colleges.” That is changing fast

    “most public colleges don’t charge enough tuition to cover their costs. State legislatures need to make up the rest.” In NYS the legislatures have repeatedly reneged on their mandated commitment to fund 40% of CC costs and many are struggling as a result. Gov Cuomo has been an enemy of public education his entire career which is not surprising given the amount of campaign funding he receives from hedge fund managers determined to milk the higher ed cow.

    Reply
    1. Elliot J. Stamler September 29, 2016

      It is absurd to write that Gov. Cuomo is a lifelong enemy of public education. I know otherwise as a New Yorker. You are a liar. First of all, it is the LEGISLATURE AND NOT THE GOVERNOR who makes the final budget decision on funding…the governor can only propose. The legislature is split between the parties.
      The simple fact is the state does not have the money to fund the public colleges and universities higher than the present level and the state’s bonded indebtedness is sky-high as it is. You are therefore both a liar AND also an ignoramus.
      The hedge fund managers who contribute money do so to candidates of both parties and while NY is now a predominantly blue state, plenty of them contribute to the Republicans as they are themselves staunch Republicans.
      The hedge fund managers don’t “milk the higher ed” cow … that’s such a dumb statement—they are acutely aware of the need for good higher education as they themselves are highly educated.
      You, “Lucky One” are probably a graduate of Trump University based on the idiotically inaccurate statement you have written/

      1. The lucky one September 29, 2016

        Given your penchant for emotion and epithets rather than reason I would have pegged you as a Trump fan. If you could read as well as you spew nonsense you would have noticed that I said “IN NYS THE LEGISLATURES HAVE REPEATEDLY RENEGED ON THEIR MANDATED COMMITMENT” . Instead of proposing support for community colleges Cuomo has attacked them despite the fact that he quite obviously has no clue at all about the state of either public school or higher education in NY.

        Likely he’ll be gone soon. NYS politics has long been known as “three men in a room”. Two of the three have been convicted and two of his top aides were recently arrested. He is either as crooked as them or very incompetent.

        It’s a common tactic used by government when they want to shift services to the private sector so that their donors can benefit. Starve the government sector then note how they are not doing the job and shift to private business despite any indication that it ever leads to more efficiency or lower costs to the consumer. The USPS is a federal example and charter schools are an example at the state level. Research shows that they produce results comparable to or inferior to public schools despite having a freer reign to eject “problem” students.

        LOL Hedge funds managers care about maximizing profit, period! I am not the first to notice that hedge funds are looking to tap into higher education because of the money there. Apparently the NYS legislature feels the state is flush enough to give them a 47% raise.
        Of course there is money to bolster higher education. It’s all a question of priorities.

        Next time before you start calling names take a minute to educate yourself. That way you won’t come across as such a pompous know nothing a-hole.

  5. Elliot J. Stamler September 11, 2016

    Cynthia Haynes has hit the nail on the head and I write this as a strong capitalist, a centrist Democrat, and distinctly an ANTI-Bernie Sanders Democrat.
    As President Lincoln declared l l//2 centuries ago..and he would undoubtedly be a Democrat today (his party now being the party of John Wilkes Booth), it’s the government’s job to do for the people that which the public welfare requires and which they either can’t do at all for themselves or do as well as the public welfare requires.

    Reply
    1. Ericakvargas1 September 12, 2016

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  6. Awadhesh Kumar Singh September 12, 2016

    This is not the fault of capitalism. There is nothing wrong with for-profits colleges and schools. The problem is their fraudulent practices which promise students the moon, but delivers nothing. This is a plain criminal cheating which needs to be punished by the legal system. Not all for-profit educational institutions are cheaters — rather they are providing much-better services than run-of-the-mill government/public institutions do.

    Reply
    1. Paul Bass September 12, 2016

      Yea, right.

      Name a SINGLE for-profit university that is any good, or NOT a ripoff?
      Name a single one that is better than the average community college?

      crickets…

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