Scott Adams: what if plumbers had the business model of private colleges? | Hacker News Reader

Scott Adams: what if plumbers had the business model of private colleges?

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38 pointsandreyf37 comments

Of course, Adams' argument falls down because of one minor point - you get value in return for donating. Here's a few examples: 1) Your children will get priority when it's their turn to go to university. 2) Keeping the school at the top of list means that your own degree has more value - it's much more impressive to be able to say 'I went to Harvard' than to say 'I went to Harvard before it became the run down dump of a school that it is today' 3) Alumni generally retain the ability to access various university resources.

On top of these direct compensations, there are a couple of others to consider: 4) When you go to a school such as Harvard, your experience is being subsidised by the Alumni. Once you too are an alumni, you would have to be a poor person indeed to not feel at least a little obligated to do the same for the next generation, if your circumstances permit it. 5) If you do have money that you want to donate, I for one can think of few rational choices that are better for society than a university. However the university uses that money, it will help them to obtain the best researchers (either directly or indirectly), and help those researchers get access to the funds they need to improve the state of human knowledge.

>I for one can think of few rational choices [for donations] that are better for society than a university

I disagree. Sometimes people analyze the charitable causes that do the most good (by various metrics, such as lives saved) and I've never seen university donations on the list. The Copenhagen Consensus is one example. http://en.wikipedia.org/wiki/Copenhagen_Consensus

Some people, noting that universities are non-profits and enjoy government subsidies, think that Ivy League universities are likely to be wasteful, and that society may be over-investing in them. Some even argue that the value of an Ivy League university is more the signal that it sends than the education it provides. Competition for this signal leads to a lot of wasted or inefficiently allocated effort. For this reason, marginal tertiary education may have negative externalities (because we'd all be better off if everyone signaled 50% less). http://www.gmu.edu/departments/economics/bcaplan/e370/IO7.ht...

So I would hesitate to donate to a university rather than, say, an AIDS prevention charity. If I specifically wanted technological progress, I'd probably consider contributing to the X Prize Foundation, or something like it.

> So I would hesitate to donate to a university rather than, say, an AIDS prevention charity.

You know that most AIDS prevention charities are a giant waste of money? There is almost no metric with which they are measured - so people keep doing the same thing over and over.

With private colleges the metric is fairly clear (publications, degrees awarded, patents, etc...).

To find an example that I considered better than a university, I just referred to the most effective charity that the Copenhagen Consensus came up with, according to Wikipedia: "The highest priority was assigned to implementing certain new measures to prevent the spread of HIV and AIDS. The economists estimated that an investment of $27 billion could avert nearly 30 million new infections by 2010."

That sounds like a pretty good deal, but it turns out the Copenhagen Consensus website says micronutrients are the best investment, so maybe Wikipedia's information is old.

In the hypothetical that I had serious money to donate, I would of course try to evaluate effectiveness of the charities. Hopefully I could find the exception to "most".

27 billion for 30 million infections? That's a very poor return on investment (if we can calculate such things for life).

AIDS is not curable, just preventable. If on the other hard we worked on malaria and TB we would prevent closer to 1 billion infections!

And malaria and TB are curable, and malaria causes anemia which makes people tired and less productive, and the cure is considerably cheaper than AIDS prevention.

I (cynically) think that the reason people are focused on AIDS is that the donor countries are worried about it, but they are not worried about malaria and TB. People donate for causes that are close to them, so it's not so cynical for an individual, but I think governments should be instructed by utility - but they are not.

TB is usually a final stage disease that people with AIDS get. It is one of the most common ones (AIDS only destroys the immunity). When you hear someone who died of AIDS or lung infection in a high-AIDS country (e.g. South Africa) you can be fairly sure that it is AIDS.

TB can almost always be cured in healthy adults. The point being - even if you rescue 10 million people form dying from TB - 10 million would probably die of something else.

The best focus for anti-AIDS programs is probably things such as mother to child prevention (i.e. preventing an unborn baby from contracting AIDS from his mother, and providing formula milk to new mothers). The effects of this is measurable.

Ok, I'm not particularly attached to the idea of AIDS prevention being the greatest charity of all. As mentioned, I just checked Wikipedia to find out what the Copenhagen Consensus came up with because I'm sure they put more thought into it than the few minutes I'd allocated for it.

That said, I'm aware that givewell.org rates charities for their effectiveness. Their top-rated charity is Population Services International, which works on - among other things - preventing AIDS and malaria. "We estimate that it costs PSI $650-$1000 to prevent a case of HIV/AIDS and $500-$2500 to prevent a death from malaria; across the organization, we estimate that it costs PSI about $650-$1000 to save a life." http://www.givewell.net/PSI

If GiveWell's figures are accurate, it seems that $650-$1000 is what it should take to save a life. $27 billion to prevent 30 million infections sounds about right. If you have a cheaper way to save lives, I'd love to hear about it.

  to do the same for the next generation

This is fulfilling the generative drive, see [1]. This is an important and powerful mechanism that insures the community's and species continuity. I am not surprised that universities have learned to tap it.

[1] http://en.wikipedia.org/wiki/Psychosocial_development

It's interesting to note that much of the success of large US universities, compared to their European counterparts, has been driven by the fact that American alumni are far more generous than European alumni. Only about 10% of Oxford alumni make donations to the university, while most US universities have donation rates exceeding 50% -- and Oxford and Cambridge are doing considerably better than their continental counterparts.

Whether this is due to US universities being more aggressive in soliciting donations (they are), more willing to allow admissions decisions to be influenced by donations (they are), or simply due to US alumni having more money to throw around (the US has a higher income gap between degree and non-degree holders than Europe) isn't clear; but whatever is causing this difference in donations, it has huge consequences.

My university education was free (to me) aside from a trivially small yearly fee. It's this way for all students in my small Western European nation. The universities I attended received money from the state for each student. So why should I donate to them (not that I have ever been asked to)? The more students, the better, and their economic background doesn't matter.

Without actually knowing anything about it, I would venture to guess that European universities get a lot more funding from the state than American universities do.

It depends how you measure it. European universities get far more money from governments as fixed operating grants; but US universities slice money out of research grants (they call it "overhead") and redirect it to their operating budgets.

Quite right. Remember, when a politician proposes $N for science, remember that he actually means 50% of $N as subsidies for universities, and 50% of $N for science.

(Assuming of course that the science is done by university professors. )

Govt funding doesn't explain why even public universities in the US get more private support.

The US has a stronger voluntary private civic culture. I seem to recall that the US has the highest charitable giving rate in the world.

However, with the government raising taxes on charitable donations and expanding social services to match the European model, we may see our civic culture whither to match theirs, too (the argument of Albert Jay Nock).

May as well link to the original source:

http://dilbert.com/blog/entry/brainwashing/

Yeah, something about that design rubs me the wrong way... but thanks :)

The scholarship that allowed me to attend my Alma Mater was entirely funded by the donations of other Alumni, some of whom I've met. I know most students in the US get federal support as well, but being an foreign national, this wasn't true for me.

I've been awarded time and again in my professional life due to the quality of my education. I feel I have good reason to feel indebted to my Alma Mater, and will donate to it when I have sufficient means to do so.

Honestly, supporting motivated students get a great education seems as worth a cause as any.

Makes sense to me. It's akin to a charitable donation. Would you rather donate money to a guy to fix his plumbing (who, by the way, could already afford a house)? Or to someone to get an education so they can drastically improve their financial status?

So then, to be honest it's really not supporting motivated students get a great education, is it? It's supporting motivated students get an education at the same place I did

I certainly understand it, and even commend it, but I don't think its as charitable as thing as perhaps you are making it out to be. Your concern seems to be more with the institution and less with helping motivated students get educated.

Sorry for the sharpness of that analysis, but I think it must be pointed out.

Fair point. But I'm sure you'll concede that the more abstract goal of "supporting motivated students" cannot be supported so straight-forwardly. Should I be donating to an inner city Charter school? Or to a public school run by the school district? The whole public education reform discussion is very complex, and even knowing several teachers (working in public and private institutions) I am having difficulty making up my mind.

My first hand experience in college gives me direct and clear insight into the benefits of that particular institution. So yes, it is not by coincidence that I'm donating to that institution in particular. Still, I would claim that this is also a good faith effort to "support motivated students" applied concretely.

Sigh. Now change university (or plumber) to comic strip writer. Why does he still get money every time his comic strip is sold? Shouldn't he get money just once? The publisher pays him a flat fee, and done.

The university donation is charity. But I don't see him asking, why do people give to charity.

Now change plumber to doctor - the rich support the doctor and the poor give what they can. Sound reasonable? It should - it was the typical model for a good part of history. So why is doctor different from plumber?

Now substitute me for doctor. Shouldn't people give me money when they can for the good that I do for society? Why am I any different than the doctor? Is the guy who prescribes medicine that much better than the guy who writes code to manage the prescription? From each according to his ability, to each according to his needs, right?

</friendly sarcasm>

Why be sarcastic? You are not different.

Except that these days we don't fund many things that way.

But it wasn't always so, in the past if you were not a patron of the arts (which also meant science), you were nobody. http://en.wikipedia.org/wiki/Patronage

Effectively that was a way of funding exactly the type of thing you describe - you just had to explain how what you did helped society. For example look up the Balmis Expedition, which was funded by the King of Spain.

I'm trying to say, it's not really so strange to fund things that way, it's just that today it's limited to certain types of institutions/programs.

The main reason it's not as common these days is the flattening of the income curve. You don't have such extremes of wealth and poverty. People can usually afford the things they need. But when they can't, this type of funding does come into play.

This explains why expensive universities get donations, but cheaper ones don't.

Alumni donations subsidize the cost of research (which has obvious benefits) and also serves to keep tuition levels "low". I know low is a difficult word to associate with tuition but without development money coming in, the money would need to be raised elsewhere.

It's almost like when investing in startups. Not every graduate is going to strike it rich but the more graduates there are, the more likely that more of them will (assuming your standards remain the same). So you can keep your tuition low enough to attract enough people and hope that the lost tuition revenue will be made up for by alumni donations by those who do well with their degree.

Trying to apply "business model A" to "business B", seeing that it doesn't work, and then saying "business model A" is a dumb idea isn't a worthwhile approach to looking at something. It's actually a pretty stupid way to look at things. I generally hate when people try to take something relatively complicated and try to dumb it down. The wrinkles and complications are what makes the problem. If every problem was summed up into one digestible solution, there wouldn't be any unsolved problems.

I give money to a school I attended. They don't demand tuition, so they need donations to help others like me. If a plumber had done work for me when I couldn't afford it at the time, but still helped me out of goodwill.. then they'd reaping my goodwill now too.

Why are we linked to a copied version instead of the original, which is directly linkable also? I like the plaintext, but it says (C) on the bottom of the page.

His degree clearly wasn't worth it. Doesn't he realize that part of his education was subsidized by other donors? It would be more like insurance paying part of the plumbing bill and giving to insurance your entire life.

I graduated about 4 years ago from Northeastern University and I've never been asked for money. Maybe they can see I still have student loans to pay off?

If they ever do call me, I plan to tell them I'll donate some money if they fire one of the 2 staff members I absolutely despised. When I was a student there I would think to myself how much money/influence it would take to get them canned.

This is simple. Giving is voluntary. Some people Went to such-and-such a school. They needn't give. Others are Members of the Alumni for such-and-such a school. They should give generously. It's entirely up to you to decide whether you simply paid for a certain education, or whether you entered into a life-long association with your school's institutions.

So do we earn degrees, or do we rent degrees?

edit: I know it sounds snarky, but I mean it in a curious way, inspired by your 'life-long relationship' phrase. Is the school vetting you for life, or is it a one-shot irrevocable deal? Can a school revoke a degree for incompetence (...where it was obviously a mistake to award the degree in the first place)? What about discontinued financial support?

The tuition is purchased, the degree is earned, membership in a social group of Alumni requires participating in its support.

I see that I was remarkably unclear, even for me. What I mean is that if you go get your degree from Harvard, you are always entitled to it, without paying another cent. But if you are the type to fraternize with the administration, attend games and other events, and describe yourself as a "Harvard (Wo)Man" in the present tense, you probably ought to support it just as you would support any other type of club that has ongoing expenses.

I have never completely understood this.

My wife went to a prestigious ivy-league school. I went to college here and there at the cheapest places I could find. Now she gets hit up for money all of the time, and I never hear from the three colleges I attended.

Assuming we studied the same thing with the same perceived value (we didn't, but this is a thought experiment), why should she feel obligated to support her experience and I not feel obligated to support mine?

I guess the rub here is "perceived value." Can a case be made that the perceived value in the same education from a different institution be worth supporting all of your life? If so, don't we already do that with federal research grants and tuition support for students?

I have the same confusion when school kids come by raising money for a new gym or something. So I pay taxes to the local government that then allocates money to the school, but that's not enough, so then the schools use my kindness towards kids to raise even more money for their pet projects?

It's not enough that colleges are now big businesses, that most professors don't spend their time in the classroom, that tuition costs have risen far faster than inflation -- now we're expected to hold some special place in our wallets for them as well?

I guess. I guess if you're really that sentimental about your college.

I am not.

It's because ivy-league schools are too expensive for the average student, so they get donations, but the cheaper schools are not, so they don't.

See also my other comment, elsewhere in this thread.

I believe you are saying that because certain places overcharge for the same experience, they should be more worthy of charity.

If this were the case, then the more they charge, the more worthy they would be, no?

Not exactly.

First, people have an innate "feel" for exactly how much these experiences are worth, and thus should charge. They don't charge more than this. This makes sense of course from a capitalistic point of view.

Second remember that is the very same people who went there who are sending the donations - it's not the random public.

The people who went there are uniquely qualified to judge if it's worth the money - and they are the ones who decide to donate and allow others the experience.

It's is basically a finely tuned system that makes the fee exactly what it should be - they can not just raise it and be worth more.

Many people would consider those schools a waste of money - but they are not the ones who go there. The people who go there are exactly those who consider them a good value, and it's those same people who feel that others should be given the opportunity to have that experience. And since the amount is high, and they know not everyone can afford it, they donate.

"If this were the case, then the more they charge, the more worthy they would be, no?"

This seems to be the psychology behind it, yes.

This is hardly limited to private schools. I went to a state university and they do the same thing while simultaneously taking money without my direct authorization (taxes; still in the state).

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