Financial Post – June 16, 2021 – Should we tax universities for the damage they do? -by Matthew Lau

Should we tax universities for the damage they do?
– by Matthew Lau

Many people, especially on the left, enthusiastically support carbon taxes. In theory, as English economist Arthur Pigou established a hundred years ago, if carbon emissions impose a material social cost by causing harmful global warming, then a carbon tax might make sense. The words “if” and “might” and “in theory” are doing some heavy lifting there, and good evidence suggests that carbon taxes are more harmful than beneficial; nevertheless, the idea of Pigovian taxes on negative externalities is logically sound. And by the same reasoning, so too is the idea of Pigovian subsidies for activities that generate material social benefits.

Problems arise, however, when governments exaggerate the size of externalities to justify economic meddling or misjudge the direction of the externality and so end up subsidizing something they should actually tax or vice versa. The global warming externality used to justify Pigovian taxes on carbon emissions and Pigovian subsidies for wind and solar is perhaps the best example of such government error. But another, the evidence increasingly suggests, is the massive government subsidization of many university programs.

Post-secondary education subsidies are often justified, at least in part, by claiming that such education improves the culture, increases civic literacy, and cultivates better social and political leaders, thus benefiting the wider society. But contrary evidence continues to pile up. The latest is from Yale University, where a psychiatrist recently gave a lecture on “The Psychopathic Problem of the White Mind,” in which she described in lurid detail her fantasies of killing white people. The lecture was clearly a form of cerebral pollution, not social benefit, and so should not qualify for Pigovian subsidies.

Fortunately, the lunatic fantasies of psychiatrists are not representative of the average university lecture, but still, many of the goings-on at many campuses are more negative externality than positive. Examples include the enforcement of politically correct ideologies, the imposition of woke culture, the frequent censorship of non-conforming ideas, and the shrill declarations of climate emergencies. Schools are “increasingly teaching students to become social justice warriors rather than broadening their intellectual horizons,” as professor Francis H. Buckley recently wrote.

Buckley, once a prof at McGill, teaches at the Antonin Scalia School of Law at George Mason University in Virginia, where, when the law school was re-named after the late conservative Supreme Court Justice five years ago, the university’s faculty senate voted to condemn the re-naming on the grounds that Scalia supposedly “made numerous public offensive comments about various groups — including people of colour, women, and LGBTQ individuals.” No examples of offensive comments were provided, however, an inconvenient fact that, when raised by a law professor at the faculty senate meeting, was followed by interruptions from his colleagues and calls to prevent him from speaking further.

Politically correct nonsense is similarly prevalent on Canadian campuses, as seen in Queen’s University’s law school naming controversy last year. An advisory committee at the university spent two months consulting people, then issued a 65-page report recommending that Sir John A. Macdonald’s name be removed from the law school building. The report cited people saying the building name “perpetuates violence, racism, colonialism, and whiteness.” Indigenous, racialized, and marginalized groups, according to the report, said that it “creates feelings ranging from exclusion to trauma.” The report used the word “trauma” or some variation of it 13 times. You might conclude that if the name of Canada’s first prime minister causes such widespread trauma, Queen’s may not be ready for serious intellectual exploration.

In an essay published last year by James G. Martin Center for Academic Renewal in Raleigh, North Carolina, researchers Joy Pullmann and Sumantra Maitra describe how “the rise of the activist professor in the academy has meant the emergence of a pattern in remaking a department’s goals from a search for truth into an engine for socio-political change.” But even where professors are genuinely good teachers and not ideological propagandists, as Thomas Sowell has argued, “whether in the humanities, sciences, or social sciences, the knowledge that a diploma is supposed to represent may in fact be only isolated fragments of knowledge on whatever narrow subjects the student’s particular professors happened to write about in their doctoral dissertations, books, or academic journal articles.”

Thus the negative externalities of many university programs are often great, and the positive externalities limited, so that Pigovian taxes on universities may well make more sense than Pigovian subsidies. Of course, it may also be the case, as with the carbon tax, that Pigovian taxes on universities would be going too far. But at the very least, let’s cut the subsidies.

Matthew Lau is a Toronto writer.

The National Post article can be seen directly here.