> Anything that's free but is limited gets abused. You need look no further than the NHS in the UK were most GPs are employees of the NHS. Office hours of 9-4 (ie no incentive to provide a better service) are typical, the system clogged up with people who either don't need to see a doctor or, in the case with many old age pensioners, they simply go to the doctor for someone to talk to.

Actually, my experience in Brazil seems to provide counter-evidence to that. Higher education here can be either public or private. There are federal and state universities, but also it is reasonably easy to open a private college and get federal certification for it. In the public universities, in general, there is a far higher pressure for excellence at all levels, from admissions to lecturing and research (indeed, it is usual that the more interested undergrads will work on research projects during their course), and research specially is almost lacking in the private universities.

It is generally accepted here that if your objective is to make money the first thing that goes is demands on research (which is expensive and doesn't make much money for the university), closely followed by standards (as the more people you let in and the higher grades you give them the better-oiled the assembly line is and you can effectively print money as long as you don't lose your government certification).

In the public realm the people are kept motivated by: (1) the promise of very early tenure (effectively one year after you're hired by a public university), (2) the not-so-high salary, with availiability of extra funds in the form of productivity grants (for a researcher's personal use, not necessarly to hire students, etc), (3) the decoupling of the adviser's money from the students' funding (which ends up giving the students more freedom).