February 27, 2005
University Governance
The Summers Controversy and University Governance
We return this week to the Larry Summers controversy, not to rehash the points in the earlier postings and comments, but to consider the larger issues of university governance that the controversy raises. On these larger issues, Becker and I have some significant disagreements.
The "case" against Summers made by his faculty critics is a four-legged stool: he had the temerity to challenge the absenteeism of a prominent faculty member, Cornel West, who as a result resigned in a huff; he is peremptory, perhaps even rude and boorish, in his dealings with faculty; he refuses to consult faculty on administrative matters, such as the expansion of the campus into Alston, across the Charles River from the traditional campus; and, most notoriously, he challenged the conventional left-liberal view that any underrepresentation of a group in a prestigious activity (e.g., women on the science faculties of Harvard) must be due to discrimination rather than to preferences or capabilities.
For these actions, Summers'the most exciting and dynamic president that Harvard has had since James Conant'has been (or at least has felt) compelled to undergo a humiliating course of communist-style "reeducation," involving repeated and increasingly abject confessions, self-criticism, and promises to reform. He has been paraded in a metaphoric dunce cap.
Why has he consented to participate in this ritual of self-abasement? Why has he refused to face down his critics? To appreciate the sheer strangeness of his situation, imagine the reaction of the CEO of a business firm, and his board of directors, if after the CEO criticized one of the firm's executives for absenteeism, ascribed the underrepresentation of women in the firm's executive ranks to preferences rather than discrimination, dealt in peremptory fashion with the firm's employees, and refused to share decision-making powers with them, was threatened with a vote of no confidence by the employees. He and his board would tell them to go jump in the lake. But of course there would be no danger that the employees would stage a vote of no confidence, because every employee would take for granted that a CEO can be brusque, can chew out underperforming employees, can delegate as much or as little authority to his subordinates as he deems good for the firm, and can deny accusations of discrimination.
If, however, for employees we substitute shareholders, the situation changes drastically. The shareholders are the owners, the principals; the CEO is their agent. He is deferential to them. Evidently the Harvard faculty considers itself the owners of the institution; Summers appears to agree, as does Becker.
I disagree. The economic literature on worker cooperatives identifies objections to that form of organization that are pertinent to university governance. The workers have a shorter horizon than the institution. Their interest is to get as much from the institution as they can before they retire; what happens afterwards has no direct effect on them unless their pensions are dependent on the institution's continued prosperity. That consideration aside (it has no application to most professors' pensions), their incentive is to play a short-run game, to the disadvantage of the institution'and for the further reason that while the faculty as a group might be able to destroy the institution and if so hurt themselves, an individual professor who slacks off or otherwise acts against the best interests of the institution is unlikely to have much effect.
All this is true of Harvard. The faculty are interested primarily in their own careers, and what is good for their careers and what is good for Harvard are only tenuously connected. The individual faculty member who denounces Summers knows that his denunciation is unlikely to bring about Summers's departure, and even if it was decisive, and even if Summers is the best president that Harvard could find, an inferior replacement would be unlikely to do so much harm to Harvard as to have a discernible impact on the career of the denunciator. What is more, that replacement might be more inclined to kow-tow to faculty, enhancing their careers at the expense of the long-run health of the institution.
Apart from the misalignment of faculty and university interests, faculty at research universities, like intellectuals generally, tend not to be responsible participants in collective action, such as university governance. The academy does not select for people who have interpersonal skills, because most academic research is either solitary or conducted in groups of two or three, though there are exceptions, primarily in the hard sciences. In addition, faculty are highly specialized, many in fields wholly unrelated to the financial and other practical questions that loom large in a university as large and affluent as Harvard.
Universities are increasingly complex enterprises. Harvard has a multibillion-dollar annual budget. It is ludicrous for English professors to think they have a useful contribution to make to decisions involving budgetary allocations, building programs, government relations, patent policy, investment decisions, and other key dimensions of modern university governance. They are in no position to balance Summers's strengths in these areas with what they consider his weaknesses in relations with faculties, or his ideological views that they find offensive.
Because universities are organized as nonprofit entities, there are no shareholders, and hence no owners in the conventional sense. As a practical matter, the university's trustees are the owners; they control the endowment and the other assets of the university and they appoint the president, who in turn appoints the administrative staff of the university. The trustees" interests are better aligned with the university's interests than the faculty's are. The trustees do not have a personal financial stake in the university's success, but the position of a trustee of a major university is prestigious and even visible, and trustees who botch their job will experience embarrassment and loss of reputation.
Of course, as part timers and outsiders to academia, the trustees cannot actually manage the university. Nor do they try. Their principal function, besides general supervision and assistance in fund raising, is to hire a president, and to fire him if he performs badly. (So they are much like the board of directors of a business firm.) That is a limited function which a board of trustees should be able to discharge competently. The president is the CEO and he has both a reputational and a financial stake in the success of the institution. The president and his administrative staff, not the trustees'and not the faculty'should manage the university. The role of the faculty should be teaching, research, and appointments (subject to override by the president or provost) within their field of academic specialization.
So I would like to see faculty think of themselves as employees and leave governance to the university's president. (Another reason for this conclusion is that preoccupation with governance is a distraction from teaching and scholarship, and so reduces faculty output. In doing so it compounds the bad effects of academic tenure, an institution that reduces the productivity of many academics.) Isaac Rabi, whom Becker quotes in his comment, not only was far above the mean of academics, but was also a person of great practical sense. If our universities were composed of Rabis, I would be happy with faculty goverance. They are not.
Against this Becker argues, first, that competition among universities will assure good performance regardless of the governance structure and, second, that a comparison of American with foreign universities shows that our universities must be doing something, or rather a lot of things, right, because our universities are the world's best. Competition is indeed a powerful force for efficiency, but interuniversity competition is blunted by a variety of factors, including the lack of a profit incentive and the difficulty of evaluating a university's output.
I agree that our universities are the best in the world, but comparisons of this sort are invitations to complacency. (If the Harvard trustees were complacent, they wouldn't have appointed Summers president!) When the United States had monopolistic regulation of the telephone industry, as it did until the breakup of AT&T, we had the best telephone system in the world. When we lost the war in Vietnam, we had the best armed forces in the world. When the Civil Aeronautics Board administered an airline cartel, we had the best airlines in the world. We have the best universities, but I believe that they would be even better if they were governed differently. My belief is supported by the fact that American universities are evolving in the direction of greater conformity to the principles on which private businesses are run. The time has come to retire the faculty slogan "we are the university."
Comment on University Governance-BECKER
I discussed earlier the factors determining why far fewer women than men are highly successful in science and other fields. At that time, Larry Summers" controversial statement on this topic was not yet publicly available. It is now, and it is an excellent and balanced statement that should not cause offense to any thinking person, even though some might legitimately disagree. As in my blog discussion, he gives greatest priority to the time commitments necessary to be highly successful. Since women with children have much less time available to concentrate intensely and for prolonged stretches on their work, a disproportionate number of highly successful women do not have children. He also notes that universities and companies have a competitive advantage if they do not discriminate against able women.
As Harvard's president, Summers has shown vision, enormous ability, and strength, qualities typically lacking in university presidents, with the exceptions of Edward Levi at Chicago, Gerhard Casper at Stanford, and a few others. If allowed to persist in his endeavors, he will go down as one of the great university presidents of recent decades.
Although I wanted to get these comments off my chest, they are also relevant to university governance, our topic this week. Posner argues against the view that faculties should be running universities. He points out several problems with such a system, including that professors pursue their own narrow interests instead of the universities long-term goals, that professors are not selected for interpersonal skills, and that universities have become too complex to be run by a faculty collective. Strangely, he comes down in favor of university trustees as having interests that are better aligned with those of universities. Yet my experience is that trustees typically know little about, and generally do not have much interest in, the universities they oversee, they are intimidated by professors, are not very brave in their trustees" role, generally go along with whatever is presented to them by university administrations, and very seldom force a university president to quit.
Still, I believe the only satisfactory way to evaluate how universities (or businesses) are run is by their success or lack of it in the long run. Although there is no simple way, like profitability, to judge universities, there is an effective way to judge a university system. The American college and university system is widely accepted as the strongest in the world. This is why American universities are filled with students from abroad, including those from rich nations with a long history of higher education, like Germany and France.
I conclude from this that the American university system must be doing many things right, at least relative to the other systems. And what is right about this system is rather obvious: several thousand public and private colleges and universities compete hard for faculty, students, and funds. That the American system of higher education is the most competitive anywhere is the crucial ingredient in its success.
Competition tends to weed out the inefficient and the ineffective, regardless of whether competing enterprises are private profit "maximizers, as are most business firms, private non-profits, as are many American universities, or public non-profits, as are the majority of universities. In any industry, including the education industry, many different approaches are tried, as in the Robert Hutchins great books approach to undergraduate education at the University of Chicago. Many of these approaches fail, as the great books approach failed because it turned out to be a poor way to teach science, economics, and many other subjects.
The basic effect of competition is that only the successes tend to survive in the long run. What survives in a competitive environment is not perfect evidence, but it is much better evidence on what is effective than attempts to evaluate the internal structure of organizations. This is true whether the competition applies to steel, education, or even the market for ideas. In particular, this is the main reason why I favor education vouchers, for it is one significant way to bring greater competition into the k-12 education system.
Posner rightly notes that professors typically run American universities. I may have told the story in an earlier comment about Dwight Eisenhower, then the newly installed president of Columbia University, who gathered its faculty together. He indicated that he wanted to meet the employees of Columbia. Isaac Rabi, the great Columbia University physicist, is said to have corrected Eisenhower: "Mr. President, we are not the employees of this university, we are Columbia University".
Given the effectiveness of the American higher education system, its governance, including the role of faculty, is probably on the whole along the right lines. Some literature has even shown that an industry composed of workers cooperatives, Posner's analogy to faculty-run universities, in a competitive environment tends toward efficiency because these cooperatives have to bid against each other, and against other industries, for labor and capital. Much of that literature would apply to universities run by professors, and to other aspects of the structure of American universities.
Yet enterprises in even the most competitive industry often appear to be inefficient when looked at under a microscope. This is why the many best sellers every year on how to improve the management of American companies before long pass into the market for shredded paper. Similarly, the reaction of some faculty at Harvard to Summers" remarks at the labor conference on women is foolish, but that should not be used to judge the efficiency of the system of American higher education.
I am dubious about proposals to improve a competitive system that is working. The American university system is competitive and it is working well, at least judged by its ability to continue to attract the best students from abroad, that few Americans go abroad for advanced degrees, and by the current efforts to imitate the American system of higher education in many other countries. We should not be complacent, but that is pretty effective evidence in its favor, including the approach to governance.