In my latest book, The Storm Before the Calm, I predicted that the US would experience a massive social crisis in the 2020s. This prediction has obviously come true. I also predict that America would experience its fourth institutional crisis. The previous three all followed existential wars and transformed the institutions of government.
The first came after the War of Independence, which eliminated British imperial rule and introduced a union of states and a republican form of government. The second, some 80 years later, came after the Civil War that established the supremacy of the federal government over the states. Eighty years later, World War II expanded the federal government’s power over American society and installed technocratic government—that is, expert government.
We are now about 80 years from World War II and the nature of this new institutional crisis is becoming clear. It began when the COVID-19 pandemic demonstrated the ineffectiveness of a federal technocracy in enforcing solutions across a vast and diverse continent. As I argued in The Storm Before the Calm, experts are essential but not sufficient when it comes to governance. Their fundamental weakness is that expertise in a field is insensitive or ignorant of the problems their solutions create. Medical institutions did the best they could under the circumstances, but their solutions disrupted the production and distribution of goods and alienated people from one another. Governance is the art of seeing the big picture. Doctors tend to see only their own domain. The federal government responded to expertise in an area without creating systems of competing expertise, often failing to recognize the variability of circumstances that the founders envisioned.
Another important dimension of institutional change is now taking place: the university crisis. Universities have been central to the moral functioning of the United States since Thomas Jefferson required that all new states admitted to the republic fund universities. He saw them as essential to cultivating expertise and creating an educated elite endowed with diverse knowledge essential to the regime. Over time, universities, and elite universities in particular, have tended to exclude prospective students and faculty who were not already part of the elite, and thus tended to suppress ideas that violate elite values.
The GI Act disrupted the system by welcoming soldiers into universities regardless of their background. Many of them already had technical know-how from their military service and knew too much about life not to doubt the self-confidence of their professors. This development helped create a massive professional class with highly specific areas of knowledge. This notion of expertise nurtured the emerging principle of government. She accepted diversity as a principle, except that her proponents were not always aware, let alone concerned, of those that her definition of diversity excluded. So the university was the linchpin of the elite. It always develops cultural peculiarities that overlay its function, but it also remains a basis of the institutional structure. The university has again developed a strange dynamic, but it has also developed in a direction that is deeply connected to the federal system. The problem is that students have to borrow unusual amounts of money to pay the unusually high price of higher education. Given the existence of a federal loan program that linked available credit to the cost of education, universities had little incentive to control costs. There was a cost associated with the lending program, and costs could increase as available credit generally increased at the same time.
When I wrote The Storm Before the Calm, student debt was approximately $1.34 trillion. This was roughly equivalent to the amount subprime homeowners borrowed prior to 2008. A massive student loan default would create problems at least the magnitude of the subprime mortgage crisis. The government control system was used cautiously so as not to anger an unqualified class of borrowers for political reasons or lenders who were making substantial profits before the collapse. The government wanted to be as comprehensive as possible; it could not risk excluding an “unqualified” class of people from borrowing, and it wanted to take advantage of the large constituencies of major universities. The debt burden assumed by students was staggering, and universities increased costs, and thus debt, in hopes of being able to ride the train for as long as possible. So the recent decision to save students is the least of the issues. How the government allowed the situation to get to this point is the question.
Ohio State University charges $23,000 per year for state residents, including room and board. Harvard University charges nearly $100,000 a year. These prices (which do not include non-credit financial assistance) reached this level in 2019 on a tightening curve, a curve made possible by the government acting like a subprime lender. The likelihood of a refund was questionable at best, but it went ahead anyway.
Why is college so expensive in the beginning? First, there’s the spacious campus, crammed with things like tennis courts and other non-educational facilities. I went to the City College of New York many years ago when it was bare bones but had excellent professors. I then went to graduate school at Cornell. I loved it and I still love to come back. The campus is beautiful and it is such a joy to see the Finger Lakes and hear the chimes. But the fact of the matter is that the land Cornell sits on and the buildings are worth a fortune and the joy I got from that didn’t address the fact that professors are essential to a university and the rest is marketing, to get students to spend their money borrowing money there rather than anywhere else. Columbia University is located in Manhattan, one of the most expensive properties in the world. If it sold its facilities there and moved to, say, Queens, with the money in a trust, it could drastically reduce tuition.
The university has become a central part of the social crisis that demands adherence to values rather than inviting a debate about those values. But that’s a discussion for a later date. The student loan crisis is the result of a major institution spiraling out of control with the tacit permission of the government. This was partly political as the borrowers had parents and the parents voted. But there was a deeper problem: The experts running the student loan system focused on the benefits of education without measuring the costs. Those tasked with developing the economy had banks as their constituency, which of course love credit.
The basic argument in my book is that technocracy is built on experts and that experts, while necessary, tend to have a narrow focus. In the absence of generalists, there is a lack of common sense, and a lack of common sense has brought us another train wreck, one that will end up changing the way government works.
It should be noted that the systemic changes of the past required great wars to force change. All were existential in the sense that the Republic was at stake. The war in Ukraine doesn’t carry that much weight for the United States. With only three previous institutional changes, we do not have enough examples to be sure that war is required. Or a bad one will come.