Greed

I spoke recently to a senior law professor at an unnamed law school. We discussed the financial problems facing law students and graduates:  the rising tuition, the mounting debt load, and the difficulty finding legal jobs--let alone jobs that will sustain debt repayments.  We also touched upon the pressure that law schools are now facing, as declining enrollments squeeze budgets.  I commented that we were starting to see the consequences of our own greed.  "We haven't been greedy!" he replied indignantly.

This professor earns more than $200,000 per year. His law school falls outside the Tluxe, but it enjoys a healthy endowment.  The school has raised tuition by 130% since 2002--a period during which other prices increased only 25%.  Like most law schools, this school raised tuition during the Great Recession, as job prospects for law graduates plunged, as median starting salaries for those graduates plummeted, and as graduate debtloads soared.  After our talk, I checked the website for this professor's school:  The school will raise tuition and fees by another 6% during the coming year.  Inflation, meanwhile, is just 1.7%--and trending downward.

If this isn't greed, I don't know what is.  This particular school isn't unusual; its figures parallel numbers at schools around the country--including the salary for one of its most senior, valued members. Yet this professor, like so many others, doesn't believe that law schools have been greedy.  Why not?

One reason is the very human tendency to believe that we are worth the money and perks given to us.  If salaries and research support have gone up over the last ten years, while teaching loads have gone down, that must be because we are such terrific scholars.  Or maybe it is because we offer such a wonderful education that students are willing to pay more for our classes.  If we're paid what we're worth, that's not greed.  Self-interest stops faculty from asking whether some other factor could lie behind this shower of tuition money.

The other reason is that, with a slight amendment, the ideology LawProf suggested earlier today is one that a majority (most?) Americans vigorously endorse:  "Grab, within the outer limits of the law, everything that isn't nailed down for as long as you can get away with it." 

That's what Wall Street traders said to one another when they created technically legal deals that would eventually sink the economy:  "Ibg, ybg."  Or, in other words, "when this deal tanks, I'll be gone and you'll be gone.  Someone else will have to clean up the mess."

Politicians embrace the same ideology:  Do whatever we have to do today, and say whatever we have to say tonight, to win the next election.  The long term be damned.

Higher education has enthusiastically joined the chorus.  As long as the federal government will allow us to charge whatever we want, let's do it.  Students will take out the loans, no matter how high we raise tuition, because they need a degree to have a shot at a decent job and standard of living.  There's nothing illegal about what we're doing:  Somebody arranged this gravy train and we'd be pretty stupid to refuse the gravy.  In fact, we'd fall behind all of those other schools eagerly loading up!  And that, of course, would cause our rankings to fall. 

Whether we are traders, politicians, used car dealers, or law faculty, we further justify these positions by drawing upon an even deeper American ideology:  the free market.  In a free market, greed is good.  The desire for more money, power, or fame motivates entrepreneurs to create new products, pare prices, and seek new markets.  The sentiment that people should "grab, within the outer limits of the law, everything that isn't nailed down for as long as they can get away with it" is simply a blunt expression of the free market ethos--complete with the notion of caveat emptor.  Grab as much as you can from the consumer, until the consumer discovers that someone else has a better price or product. That's the free market, and I can personally endorse a fair amount of greed in that context.

But law schools do not operate in a free market.  Neither does any other part of higher education.  We sell our services in a market that is deeply distorted by the availability of federal loans.  (Accreditation standards and professional licensing further distort the market, but those are subjects for other posts.)  

We certainly have the legal right to take advantage of these market distortions; the government itself created the programs.  But when we take those steps, we have to recognize what we are doing to students, their families, the taxpayers, and the future legal profession.  We certainly have to acknowledge that we are being greedy--and not in the good way that feeds a free market.    

Note:  I edited this post to lower the salary named in the "This professor earns more than . . . " sentence. The focus here isn't on the particular professor, but on law professors and schools generally.  The best information we have on law faculty salaries appears in a TaxProf Blog entry. Note that none of the top 27 schools participated in that survey; their median salaries almost surely are higher than the ones reported there. It may also be true that law professors deserve the salaries they currently earn. If we could keep those salaries without raising tuition repeatedly on the back of government loans, I would be the first to endorse our salaries.  If it's a free market, it's not greed.  If it's a government subsidized market with other people (students and taxpayers) paying the price, then it's greed.