Intro. [Recording date: July 6th, 2020.]
Russ Roberts: Today is July 6th, 2020. My guest is economist, political theorist, and author Michael Munger of Duke University. I want to thank Plantronics for supplying the Blackwire 5220 headset for today's guest.
Mike was last here on the program in February of 2019 discussing crony capitalism. If I have counted correctly, this is his 37th appearance on EconTalk, which is, of course, the career record for most appearances by a guest. A record like--you can pick a lot of them, but I'm going with Cy Young's--
Michael Munger: Cy Young --
Russ Roberts: career victories.
Michael Munger: It's clearly Cy Young.
Russ Roberts: 511. Record that will never be broken. You could go with Cal Ripken's consecutive game streak. A lot of people think that's, never be broken . But, I think the 511 is safe, as is the Mike Munger 37 appearances. Even if he never appears again, which would be an outrage. He will appear again I hope and suspect.
This is also the 750th episode of EconTalk, which we started back in 2006, which boggles my mind. Mike, welcome back to EconTalk.
Michael Munger: It is a pleasure to be back on EconTalk, and it is an honor to be the 750th show. When you first started this in 2006, well, there's a number of things I wouldn't have predicted, but that's one.
Russ Roberts: That's for sure.
Russ Roberts: Before Mike and I begin, I want to apologize to listeners for failing to share the Top 10 Episodes of 2019, which you voted for in our end-of-year survey, conducted probably I suspect around January and February. But for a variety of reasons, some of which I'll explain, that list got delayed.
But here are the Top 10. The 10th episode,
- Number 10, Chris Arnade on Dignity.
- Number 9, Rory Sutherland on Alchemy.
- Number 8, Alain Bertaud on Cities, Planning, and Order Without Design.
- Number 7, David Epstein on Mastery, Specialization, and Range.
- Number 6, Bjorn Lomborg on the Costs and Benefits of Attacking Climate Change.
- Number 5, Andrew McAfee on More From Less.
- Number 4, Tyler Cowen on Big Business.
- Number 3, Michael Munger on Crony Capitalism.
- Number 2, George Will on the Conservative Sensibility.
The Number 1 Episode, as voted by you, the listeners, for 2019 was
which 40% of you put in your top five, which might be a record.
Honorable mentions: two episodes that made the top 10 for voters who listened to every episode--special category--Stephen Kotkin on Solzhenitsyn, and Gary Greenberg on the Placebo Effect. They would have been in the top 10 if we had limited the voting to those people.
Russ Roberts: Now, why the delay? The simple answer is that while I , too, loved the Keith Smith episode, and there were many, many things about that episode I found fascinating, he made some claims about the impact of government subsidies to hospitals that provide uncompensated care, or what's called 'uncompensated care.' I wanted to verify his claim that hospitals have an incentive to charge a higher list price in order to recoup more government money for that uncompensated care. And, I thought, 'Well, I'll just look into this, find out if it's true or not.' Well, it turned out to be quite complicated. I can't verify the claim, but I'm not saying it's not true. I think there's something there, but I haven't been able to verify that it's true. So, I expect we'll continue to look at this.
Russ Roberts: What I've learned from that attempt to verify the claim is that hospital pricing is even more complicated than I can imagine. People have tried to explain it to me, have struggled to do so. What I think is true is that there is some very funky stuff going on, on how hospitals do their accounting, how Medicare and Medicaid subsidies interact with that pricing. We did an episode with Marty Makary exploring some of the very unattractive, non-transparent, and cartel-like aspects of the pricing problem. And we also did some conversation on that with Vivian Lee in a recent episode. I hope to continue to look at this issue and the issue of hospital pricing more generally. It's going to be very interesting to see the impact of the Executive Order requiring pricing transparency that's supposed to happen at the end of this year.
I'd also like to reflect for a minute on EconTalk's 750th episode. Perhaps because of the death of my father in March, or the pandemic, which I think has caused a lot of us to be reflective in many ways--but, because of those things, a number of you reached out to tell me what EconTalk means to you. It's been a great intellectual journey for me. I'm so grateful to Liberty Fund for the support of this podcast, and to you out there for listening, caring, and sharing what you get out of the program. It's incredibly gratifying. I feel very blessed and very lucky. I thank you from the bottom of my heart.
Russ Roberts: And I want to thank today's guest, Mike Munger, who's been an important part of EconTalk, as a frequent guest, from the very beginning. Mike, I've learned so much from you. And I so appreciate the time, and energy, and knowledge, and preparation that you've given as guest in all 36 of the previous episodes. Today's, who knows? We'll find out.
Michael Munger: Yeah. It could go badly.
Russ Roberts: Yeah, it really--well, it probably will.
Our topic is the present and future of universities. We're in the middle of the COVID pandemic. Mike, what are some of your takeaways? What have we learned as a lot of education has gone online and has become virtual, and it's still unclear what's going to happen at universities this fall?
Michael Munger: I think what's interesting about the current situation is that it does make us think: What is the nature of the university? What are the essential features of the university? And, when we ask, 'Will universities survive?' Then we have to say, 'What is it about the university that should survive, and what might not?'
So, yesterday, I went and listened to two podcasts from EconTalk in 2014 by Daphne Koller and John Cochrane, both of whom, at the time, had been working with Coursera. And, both of them, independently--
Russ Roberts: An online learning platform.
Michael Munger: Yeah. Each of them independently made the analogy to Gutenberg and the printing press, because the claim was playwrights or people who gave lectures wouldn't survive the printed word. I remember a bit when baseball teams were worried about televising games because people would stop coming.
And so, it is interesting to think about. Coursera certainly has not really made inroads against traditional classes.
The question is, and the two questions that I wrote a piece for the American Institute of Economic Research, the two things that motivated me were, first: What is it that is the essential feature of universities?
Professors, I have bad news. It's not classes.
Because it's actually quite true that something like education can be done--I don't know better--but well and cheaper by online, or remote, or some sort of recorded training.
The second thing is that: That may mean that universities are going to shrink in number, and that the way that eduction is delivered is going to change.
But, again, listening to those two podcasts in 2014, I was struck by a point that you made, Russ, to both of your guests. And that was, the comparison that we often make is a really great professor or a video. And a really great professor in person is better than a video. That's not the relevant comparison for way more than half, maybe 75% of students.
The comparison is, 'Maybe I can't get to college at all--because it's expensive.' Or, 'I live in the middle of nowhere.' Or, 'If I can, I'm going to a place where the professors are not that motivated and the classes are really large.' And so having a video from a really great professor may be better than the alternative.
So, one of the questions of economics is always, 'Compared to what?' If you're saying, is a video version of a really good course that's well-produced and well thought out--is that better than the alternative that that person has available to them? We might very well want to leave that up to them.
The other thing that I wanted to get out at the beginning was: universities have, in some ways, come a long way and not very far. So, universities started really in Italy in the 13th and 14th centuries, and they were focused on humanism. They were an investment to try to make better members of the Church, better leaders; and they were explicitly humanistic. Then a little bit in the 18th century, mostly in the 19th century, at the end, we see a shift in Germany, the origin of the modern university, to what they called Wissenschaft. And, I was surprised--I taught in Germany in 2009. We actually did one EconTalk from there while I was in--
Russ Roberts: 'Shopping Cart episode,' a lot of people call that.
Michael Munger: Yes. One of my favorite and least favorite. I still wake up screaming, thinking about the Shopping Cart episode. But, the notion of Wissenschaft is something that's still of science, still pervades the German university--and it's not science. It's the same word. If you were to say, 'What is the word science in German?' It's Wissenschaft. But, political science, political theory, they're focused on: it's a scientific undertaking. So, we might call it social theory. And so, the University of Chicago had a committee on Social Theory. That--
Russ Roberts: Social Thought.
Michael Munger: Social Thought. That comes directly from the German conception of what it is that we should be doing.
So, economics, political philosophy, all of those things are part of a larger social theory. So, that's the origin of universities.
The United States takes that and then does something else with it. And we divide into different groups. There's something to be said for division of labor. But the question is: have universities lost sight of the function of--I don't know if we should call it education, or training, or the inculcation of students into the life of the mind, into the sense that--and this is an experience that I had when I first went to Davidson College in 1976. I grew up on a rural farm an orange farm. My high school was terrible. I got to Davidson, and I felt like I was in a different world. I was able to get in, in spite of the fact that I had bad grades in high school and that we were really poor. My father didn't graduate from high school. And in large measure, that doesn't really happen anymore.
Another thing to think about universities is not just what's being offered, but what sort of people are able to take advantage of universities. Angus Deaton has a very recent book about the problem of the BA [Bachelor of Arts] divide--the difference between having a college degree and not having a college degree.
So, all of those are issues that I wanted to put on the table. What are universities? What should they be? What sort of people are going to universities? And, should universities try to preserve and try to get rid of some things that are just not that important?
Russ Roberts: There's a lot there. There's other stuff I hope we can get into. I want to start with a general issue that you allude to, which is: What is the purpose of the university, educationally? It can have more than one purpose, obviously. That humanistic ideal of--I like to think of it as teaching people how to think. Right? And you do that through conversation, lecture, Socratic dialogue, writing. A lot of different aspects of helping people absorb, and process, and learn to connect things they've learned to other things. It's all the process of education writ large, what I would call it learning how to think. That's a very broad, general goal. It's a little bit romanticized in my mind, to be honest.
There's a second goal, which I think has become more common, was more common a few years ago in American universities, which was to prepare people for the job market. And of course, learning how to think is related to being prepared for the job market. But it's, a lot of times, becomes subsidiary to what we would call training, what you alluded to--training. It would be a degree in Business. You learn about what accounting is. Accounting helps you think a little bit too, by the way, but it's not its main purpose. It's to help you acquire a formal skill--it could be computer science, it could be engineering--that you're going to then apply in the labor market. And it involves something that, ideally, we would call mastery.
So, great university in the first example would be a place where you are exposed to extraordinary ideas and you learn how to think. The second would be you're exposed to a set of tools that you acquire and demonstrate mastery of and are certified, and that helps you get a job.
The third aspect of education, I called, in a recent episode--I'm talking about American university, college life--I called it, in a recent episode with Agnes Callard, finishing school. It's a set of years where you explore your identity, what's important to you, what you care about, what you're interested in. Agnes corrected me and said, 'Well, it's more like starting school, not finishing school.' But that's really my first example of, quote, "learning how to think" or being exposed to great ideas.
And I think those three models are, in varying degrees, available on the landscape of American universities. The first one's really only available formally at a handful of places, St. Johns College being the most prominent, where you read the great books, the great ideas in concert with other people, core curriculum in concert with your peers.
The second one, the mastery of skills, is for a small group of people on an American campus, unfortunately, in my view or not, but it is a small group who acquire mastery of a set of tools.
I would say, in America today, it's that third aspect of education, the finishing school--exploring, figuring out thing--that is increasingly important to the people who come to college.
And I say that all in response to your point, because what we've learned in the last few months, in the middle of the pandemic, is that you can deliver some of that virtually pretty well, and some you can't deliver at all.
And, footnote. You made the nice observation that people still want to go to a baseball game rather than watch it on TV. Watching it on TV is cheap, close to free, out-of-pocket. Attending in person is not cheap. Attending college in person, very not cheap.
So, what we're going to be talking about over the course of this hour, I hope, is the potential for unbundling some of the things people that were getting in the university. And you're skeptical about that potential. I want to push back a little bit and try some other things. But, why don't you react to my, those three, that classification?
Michael Munger: I was really struck by you calling it finishing school in reaction to Professor Callard's--because I often think of it in exactly that way. And the joke is that you have to continue to go to college until you learn how to not be a jerk. And, I'm still in college.
Russ Roberts: Ah, well.
Michael Munger: I've been in university since 1976. Some people, an undergraduate degree might be enough. Some have to go to graduate school. But so literally, finishing school in the sense that there's a degree of polish and self-presentation, and obviously--
Russ Roberts: Adulthood--
Michael Munger: if there's some kind of level of maturity and responsibility. I don't know that universities teach that, but it might be something you go to universities to acquire. Which is a different thing.
And so, I think that it is interesting to talk about unbundling, but the thesis of my essay is precisely that the reduced transactions cost of the bundle are the reasons why some bricks-and-mortar universities will survive, although I think most will not. The fact that we observe in New York City in an area of a few blocks--you don't have to walk very far to go from a movie theater to live performances on Broadway. And I probably won't do both of those in the same day, but I might do both of them in the same week.
Russ Roberts: For sure.
Michael Munger: So, those two things exist side-by-side, in equilibrium. The problem with universities is that it's hard to do it a la carte. So, not just unbundling, but I can't say, 'Well, I'm going to go to a university and take just one class.' And that may change, that universities may offer things--the bundle, offer the bundle--more a la carte, where I can get this experience of being at the university and participating in a number of these things.
So, the problem of finishing school is that it is exclusive; but the benefit of the finishing school is that it's exclusive. One of the reasons people are willing to pay for it--and this is Bryan Caplan's thesis about signaling. I think Bryan is a little skeptical about the value of the signaling because he's saying, 'Classes are not that great.' Well, that's right but there's other aspects to the finishing school that are in addition to classes.
In some ways, classes are the easiest think to replicate. This, again, is bad news for professors.
Starting in March, when I had to do all of my classes remotely, it happened that I had some things that I was already able to do. I've always used videos; I had a lot of video equipment; I could edit videos. So this wasn't very hard for me.
For many of my colleagues, they had absolutely no idea how even to get started. Their classes mostly were, they would say, 'Well, do a group assignment and turn it in the end of the semester, and I'll meet you for office hours.' Unsurprisingly, some people--I don't mean to single out Duke--but some students said, 'I'd like a refund of tuition, please. Because I am not on campus. I don't have access to the other students, and this is not the class that I signed up for.'
Russ Roberts: It's a reasonable point.
Michael Munger: Well, even if you can say, 'We can't give a refund because in the Spring, we weren't planning for this,' the question is: What's going to happen in the Fall? And the longer-term question is, are people going to continue to, what in effect, has become close to a rent-seeking contest, where they're willing, some in many cases, eager, as we saw with the recent scandals, people are willing to pay far more than it costs, just in terms of tuition. And the tuitions are outrageous. The tuitions are gigantic, $60, $70, $80,000--
Russ Roberts: That wasn't high enough for you?
Michael Munger: Yes, well, there are people willing to pay three times that. So, there's something about the bricks-and-mortar university, which at least until recently, was worth three times the already very high--so, in terms of consumer surplus, universities are producing something, or a lot of parents think they are.
Russ Roberts: Yeah--I want to talk about this issue, though, of in-person versus virtual substitutes. It's funny, you mention Broadway. You say people will go to a movie, they'll also go to Broadway, which is a live thing. They'll go home and watch a movie on Netflix, or a piece of a movie, or film clips on YouTube. So, we've got this whole menu right now of visual entertainment.
Michael Munger: We actually watched Hamilton last night on Disney+, and I know you went in person.
Russ Roberts: Yeah. I've seen it twice. I haven't seen it yet on Disney+. But your point about movies versus face-to-face Broadway--obviously, I thought about Hamilton immediately while you were talking about it. You could argue it's better in video, especially when it's filmed to be put on video as they did for this performance. A lot of times, your seat might be not be as good as the one that the camera can give you.
But, I want to make a case for face-to-face, now, and get your reaction. I made the point before that most film versions of musicals are not very good relative to live. Something happens live that's different.
And when I think back to the college course classes that were transformative for me, or what I was trying to do in my classes when I was teaching in a classroom--and I'm sure what you try to do in the classroom--it's so much more than just accumulating information. It's so much more than reading a book. It's a different thing.
Just to take a version of this. If I give a lecture online--I can give a lecture in person, I can give a lecture online where you watch a video of me, I can write out the text of the lecture and you can read it, which seems to be the most efficient, but we know that's not always true. Part of the reason is people hear information and absorb it differently than when they read it. But the other thing that happens is there's something magical about attention that I think is underappreciated.
And I think what I've had trouble with as an attendee of Zoom online lectures is paying attention in a way that I don't have a problem when I'm in the presence of someone.
Now, you and I have had 37-plus hours of conversation over the last 14 years, and that conversation took place with, effectively, my eyes closed. Those were all audio only until today. Today is our first video conversation. We've had conversations face-to-face, of course. Not so many. We don't live in the same place, we're not in the same faculty. But something powerful happened, what I learned from you over those 36-plus hours and now 37 hours, is something that happens in the brain we don't fully understand.
And it's not obvious to me--in fact, it's the opposite. It's obvious to me that that isn't going to be very well substituted all the time in Zoom. And in particular, that face-to-face thing has an alchemy to it, a real chemistry. I started to say, when I think back on the great classes I had as an undergraduate, the handful that stuck with me, that I still recognize as changing my way of looking at the world, I can't--
Michael Munger: Is it creepy that I know one of those is Faulkner and Conrad?
Russ Roberts: It's a little creepy. It is, yeah. You can talk about that if you want.
But the point is, is that--it was Professor Patterson, I think, at UNC [University of North Carolina]--the point is, is that I don't think I would have had those experiences if I just watched lectures online, even with breakout rooms and all that.
I think there's fundamental here. Now, whether it's worth paying $50,000 a year, that's a different question. It might be that that value-add is not worth it. But, react to that general point.
Michael Munger: You're absolutely right. At its best, there is something about a professor who is working hard to engage a relatively small group of highly motivated students. Because it doesn't change what you think. It changes how you think. It teaches you how to think. Partly because you can model what's been done, but also a person's mind, once stretched by an idea, never shrinks back to its original dimension. It makes a difference that you have thought in those ways.
So, I would say two things in response. One is, that's still going to be worth something. I had one son go to Duke, and one son go to UNC. I've taught at both places. You, of course, went to University of North Carolina at Chapel Hill, and--
Russ Roberts: And I wouldn't be caught dead at Duke, just for the record. It's a fine place. Go ahead.
Michael Munger: Yeah, for what it is. I, because of the fact that I am a Duke professor, was insulated from the cost difference between--because I live in North Carolina. The in-state tuition at UNC was $6,000 a year. Tuition and fees at Duke would normally be $70,000 a year, so I'm willing to say that a Jaguar is an excellent car, but it happens that I don't own one. I'm pretty sure that students can have a transformative experience in a sort of class--the sort of class that you had at UNC, and that people are still going to have at UNC. The way that--
Russ Roberts: Of course, it's subsidized. $6,000 is not quite the--
Michael Munger: Right. The way we ration that now is something that is actually pretty upsetting. So, in-state at UNC is $6,000, even for very wealthy people. And if you look, UNC now is something that it didn't used to be. UNC, the student body now is relatively wealthy, upper-class people from North Carolina and extremely upper class people from out-of-state because the out-of-state tuition is still relatively low.
So, I wanted to make a point, at the outset, that you have often made: You have to look at the shadow costs of this. So, one of the effects of a high minimum wage is that other things are going to be extracted out of workers because the boss abuses them, it's harder to get the job--
Russ Roberts: Less training.
Michael Munger: you can't afford to quit. Universities, if we talk about cost: the cost is not tuition. The cost is what is required in order to get admission. And, if you have a university that has the sort of classes that you're talking about, most people are not going to be able to afford it, even if tuition is free.
Russ Roberts: You're saying, because they won't be able to do the kind of things that get you into the queue.
Michael Munger: Absolutely. It's an elite performance--
Russ Roberts: Ahead of the queue. At the head of the queue.
Michael Munger: Yes. You have to be the very top 5%. Even if tuition is free, wealthy people are going to be able to target the things that proxy for that. And so, one of the reasons that I was able to go to Davidson College, which is a relatively elite place--it made a big difference for me. People only know it because of Stephen Curry.
Russ Roberts: And, Mike Munger, yeah.
Michael Munger: I went from a high school that was not very good, to studying the classics of humanities, and within two years, I was a different person.
One reason I was able to do that was because of standardized tests. Because, I didn't do very well in high school; I didn't have any AP [Advanced Placement] classes, but standardized tests allowed me to compete. Right now, standardized tests are necessary but not sufficient. You have to have a bunch of other things, and part of the reason is universities are not charging too much: they're charging too little.
Michael Munger: So, there's something about the value of bricks-and-mortar universities that, at least in terms of perception of consumer surplus, has gone up dramatically. And I wonder if maybe we have misperceived that--that it has become a kind of bubble. People have asked whether university tuitions have become a kind of bubble. And, I wonder if this is going to break that, and the unbundling you mentioned earlier on, if we could--soerhaps we should talk about the actual functions that are bundled in universities.
What is it that makes that package of a bricks and mortar elite university? And I would include both UNC and Duke in that. One of them charges a lot for it and the other charges implicitly in rent-seeking, but both of them charge a lot to be at the top of the queue. What is it that makes those things so valuable? And is some of that value artificial, or is it something that we can share? Because one of the advantages of having a movie or a video or something where many people can take advantage is that zero marginal cost condition, so the--
Russ Roberts: That's a fantastic example.
Michael Munger: It may be artificial.
Russ Roberts: Well, that's the Hamilton--the Hamilton thing makes you see that. Every--I guess, it's five, six times a week on Broadway, when Broadway was open, 2,000 people sat in the dark together and had this incredible shared experience. And you point out in your essay the value of the shared experience. It's special. It's not just the same as watching it on TV or on a screen. But, millions of people were able to see it Friday night, Saturday and Sunday, which is glorious. And instead of costing $300, $200, $600, which is out of reach for most people, even if the theater was bigger--if the theater's bigger, it might be a little cheaper--but now the theater called 'Online' allows millions of people to watch it for, I think, $7.99 for that first month on Disney+, so it's a totally, totally, totally different thing.
Russ Roberts: You said your life changed in those first two years at Davidson. You are an unusual person--in many ways, Mike, as we know--but I meant in particular--
Michael Munger: Not all of it good, I understand.
Russ Roberts: Not all of it good. Absolutely not. One of the ways you're unusual is that I would say you're in the top half a percent of economists who have read John Locke, who have read Aristotle. So, you actually are what might be called--I can't fully verify this--but it would be tempting to call you an educated person. And some of that, presumably, came from Davidson, where you said those two years reading classics--I've become increasingly interested in this, the power of very old books that have stood the test of time and that people still talk about. That's not in fashion anymore. Forget the political aspects of who wrote those books, but in general, it's like, 'Why would you waste your time reading all those old people who--that's all been superseded. Why would you read those things?' Could you reflect on how you think that's affected your--we're talking in this grandiose way, how to think. How do you think that affected your ability to think?
Michael Munger: Well, I also majored in math, and so it made a big difference that I was able both to work in math and on classics. And, being at a place like Davidson with such small classes, and frankly, with professors--because I wasn't very good at math--with professors who took some responsibility for making sure that I didn't fail and got me up to the point where I actually could accomplish something, that made a big difference. That sort of hand-holding is not something you're going to get if you take the first calculus class, even at UNC or Michigan. [crosstalk 00:33:03]
Russ Roberts: No. 300 people, if you're lucky.
Michael Munger: And, not all of them are going to go to the next course, and so they've got to get rid of a whole bunch of those. And so the fact that I was able to have professors that took responsibility, that perceived my failure as their failure rather than just being, 'We keep track of who's good enough and who is not.' It wasn't just certification. This was an attempt to educate.
But, yes, it's true that I'm interested in studying the classics. And I think that even in economics we can do that. But I should point out that I never successfully got a job in an economics department, so in many ways I'm a failed economist. I tried for a long time to get a job in an economics department. My first tenure track job was at the University of Texas in political science. And so, I'm really glad that that worked out that way. In some ways, economics may be changing but it may just be that I talked to the wrong economists when I picked[?] that.
Russ Roberts: Yeah, I don't know. Go ahead.
Michael Munger: It's obviously, it's sour grapes for me, as a failed economist, to talk about this, but--
Russ Roberts: It's the world's smallest violin. For those of you listening at home and not watching the YouTube video version of this, I am playing the world's smallest violin between my index and thumb, index finger.
Michael Munger: Or making a really obscene Italian gesture.
Russ Roberts: It could be, yeah. Yeah. Who knows what I've said? Yeah.
Michael Munger: Thanks for that.
Of course, I'm going to say economics should be different and it should be more like what I want. I just got back from three weeks at the beach. Every year we spend three weeks at the beach on vacation. And one of the highlights of that is me re-listening to you and Dan Klein talk about, in six episodes, talking about The Theory of Moral Sentiments.
And Dan makes a really great point there, that there was an article a few years ago in one of the AER [American Economics Review] journals saying, 'Isn't it interesting that Adam Smith discovered all this stuff about behavioral economics?' And Dan says, 'Yes, it's interesting. We made a start and then we switched off into doing something else. Let's get back on the main road.' So, at least Dan and I both think that--
Russ Roberts: There's three of us.
Michael Munger: There's a hundred of us. But, we shouldn't all go to the AEA [American Economics Association] meetings at the same time because that's really all the--most people in economics think of economics as being a largely positive, scientific approach to studying--
Russ Roberts: 'Positive' meaning how the world works, not how it should work.
Michael Munger: More than that: It is a set of questions that have answers. And they have answers in the optimization sense. And so, it could be Robin son Crusoe, or it could be an individual in a society, but these are well-defined problems.
And, one of the things that I admire James Buchanan for saying was that he mimicked Böhm-Bawerk's claim that the way to judge an economics textbook was how many pages before it first talked about horse trading and exchange and the indeterminacy of markets.
Because, notice that for you and I to agree on a price, we have to disagree about value. The only way you and I can agree on a price is if we disagree about the value--because the price we agree on is above the one where I'm willing to sell and below the one where you're willing to buy. So we have to disagree about that. Whereas, if you're just using calculus, we're all agreeing on everything.
And so, the social problem is how to choose a set of institutions that allow us to reconcile the conflicting plans and purposes of all these myriad people in society. And that's what Adam Smith was constructing a system of. A system of propriety that does that, not just in the market, but in the larger setting.
And so, that's a long answer to your question. I'm interested in social systems that reconcile the conflicting plans and purposes. And I want to say, as a classical liberal, we have to start from the point where all these conflicting plans and purposes--because I'm a subjectivist--they're allowed to have those. We can't solve it by saying, 'Well, no, no. You all have to want the same thing.'
So, this is, in many ways, the same problem that Aristotle was working on. We have systems of institutions. And so, the reason why I'm interested in institutions and constitutions, and why I was drawn to public choice is precisely that discovery of the importance of these timeless questions. I have heard people say--because we did the PPE [Philosophy, Politics, and Economics] program that I direct, and I would say--
Russ Roberts: Politics, philosophy and--
Michael Munger: Philosophy, politics, and economics. There's 50 new PPE programs around the United States. So, there is a move for this. Students want it, if faculty would just offer it. So, if it is possible, students want it. But the difficulty that we have is that many classes are designed around what faculty want to teach, not what students want to take. So, 'if you put the hay out there, the goats will eat it.' PPE is a way of returning classical liberalism and these sort of great questions to the academy, and it's growing very quickly. The thing is, it's hard to get people who actually want to teach it because it requires a lot of extra preparation.
But, when it comes to this difficulty of how to think about the way societies work, the fact that these great questions that have been with us for a very long time are a way of thinking about what many of the wrong answers are. And I'm not sure that if you take the view that these are a set of skills that we're teaching people, that that's what we can accomplish with online courses.
Russ Roberts: Yeah. That's a nice bring-back to the topic at hand. I've become increasingly interested in this question of whether the faux precision, the fake precision of economic theory and predicting, say, what prices should be or in measuring social welfare or individual wellbeing--I think it distorts how we see the human enterprise. I don't know how badly it distorts outside people's perception. I think it distorts our perception as economists. But it's just something I'm thinking about. I think it's a really interesting question of how the mathematization, this fake precision of away from Adam Smith and towards Paul Samuelson--to take the 1948 version where it really started to grow in a particular direction--what that's done to the way we conceive of wellbeing.
Russ Roberts: I want to now return to your essay, actually. That's all fascinating. You break down the universe--I want to get to this unbundling question because I have some ideas I want to bounce off you. You allow us to think about the unbundling by suggesting there are really four buildings on campus that capture different aspects of college life. Talk about those, and then we'll talk about how, whether they can be unbundled or not.
Michael Munger: Well, I'm partly trying to have fun in the essay, so I use a metonymy, and where you--
Russ Roberts: It's a really fancy word. I had to look it up: 'metonymy.' Raise your hand--raise your hand out there if you know 'metonymy.'
Michael Munger: Let us provide this--
Russ Roberts: That's part of that liberal arts education you got.
Michael Munger: We will provide this service to--because all of you are used to metonymies because you've watched the news or read something where it said, 'Today, the Kremlin said.' Well, the Kremlin's a building. It didn't say anything. Or, 'According to the White House.' Well, actually, the White House is just a bricks and mortar structure.
So, universities have four bricks and mortar structures that are representative of the thing that goes on inside them, and it's a useful device--
Russ Roberts: Yeah, it's cool.
Michael Munger: Well, there's probably five because you could say, 'classrooms.' I'm actually, I'm trolling--
Russ Roberts: I have a sixth one for you. Keep going.
Michael Munger: I'm trolling, because I'm not including classrooms. I'm conceding that it is possible to offer classes online.
Even if you believe that that's true, and it obviously is as an existence proof, then what are the other things?
The first one and the one that online education is most likely to subvert is the clock tower. And, the clock tower or the bell tower--but usually, the bells ring on an hour at UNC, for example--the clock tower is a kind of tyranny, because it says, 'We are going to dictate to you that learning can take place on Tuesdays and Thursdays between 11:00 and 12:15.' And, otherwise--I mean, there's homework. Maybe you do that, maybe you don't. You do some reading the night before. You stay up all night the night before a test. All of these things are scheduled, and there's just nothing reasonable about that.
If you look at the great works from the past, work that actually matters, people didn't say, 'All right. I'm going to work at this one brief time.' They think about it all the time. They're obsessed with it.
So, education should mean that this is something that occupies your mind, not something that occupies your time. Nonetheless, the clock tower is a really important device for reducing the transactions cost of accomplishing these other things.
And, in the paper, I do also give the example, and you already mentioned it, that there's a shared experience even of something that's prerecorded. So, many people--my wife and I like to go to movies. Now, we watch things on Netflix, and like I said, we watched Hamilton, but we'll go to a movie, pay quite a bit of money for the shared experience of watching something with a bunch of other people, feeling them around us, hearing their gasps of horror or their laughter. So, the fact that it's shared, even if we're watching something that's canned and prerecorded, still requires time. And we don't think of that as being tyrannical. If the movie were to start whenever you get there that's television. I'm able just to--
Russ Roberts: Or EconTalk. EconTalk.
Michael Munger: One of the great things about EconTalk is that it does overcome that tyranny of the clock. You can--
Russ Roberts: Listen whenever you want.
Michael Munger: Slow it down, go back, start over. All of those things are--so, the question is, can we get rid of some of the tyranny of the clock tower while preserving the scheduled shared experience that I think is actually indispensable?
Russ Roberts: That's Number one. Number two?
Michael Munger: Building Number Two is pretty easily said. It happens that I'm a UNC basketball fan, but at Duke, there's this little, crappy high school gym called Cameron Indoor Stadium, where Duke clearly cheats. I can't stand the fact that Duke cheats so badly by having this tiny stadium that gives them such a big home court advantage. That little temple, and maybe it's a football stadium, maybe it's Cameron Indoor Stadium, is a sense of shared experience that touches something very deep in the human psyche.
And many people are UNC fans that didn't go to UNC. Many people are Michigan or Ohio State fans that didn't go there.
So, the sense of tribalism that we have, particularly if it's connected with the shared experience of also going to class or eating in the same eating hall. So, we're part of big tribes, and having athletics--and it's not clear that this is going to happen, although maybe it'll happen on television--but the big 100,000 people that are watching an Ohio State game, that may change.
But, one of the things that universities offer is the sports stadium, where we're able to serve people's sense of tribalism.
Russ Roberts: You call it the stadium, just to make it clearer. You said some of the fans didn't even go there. I was going to add, 'And some of the players didn't go there either, in any effective sense.' But, in some other institutions, perhaps. I do think--
Michael Munger: That's exploitative.
Russ Roberts: Of course. It's horrible.
Michael Munger: In Chile, as you know, the universities have soccer teams--they have football teams--
Russ Roberts: Yep. Talked about it many times, yeah.
Michael Munger: But they're not students. They abandoned the pretext--
Russ Roberts: Just the name of it, yep. I love it.
Michael Munger: But, it's still an important part of a bricks and mortar university. So, they unbundled it. They said, 'We can do better and not exploit students. We'll just hire a football team.'
Russ Roberts: You call it a tribalism. I think of it as something of a shrine. You could think of it as a cathedral really. As a place for that shared transcendent feeling, that my sports team that I'm enjoying in the presence of 100,000 other people is a special experience.
So, that's two. Three?
Michael Munger: I have to object. Dick Vitale sometimes calls Cameron Indoor Stadium a cathedral of basketball, and it makes me want to vomit. So, I'm going to stick with 'stadium.'
Russ Roberts: Okay. Number Three, Munger.
Michael Munger: The Third is, maybe it's the fraternity house, the sorority house, maybe it's the Student Union, but universities provide a really great assortative mating service of the sort that Charles Murray talks about, because all of you have pretty similar interests, education level, expected income level, and so you've gotten rid of a bunch of problems of assortative mating you don't even really notice.
And, in addition to assortative mating, you make connections with other people that may very well later serve you in business or for the rest of your life--those sorts of connections.
Finally, small groups give you leadership opportunities. That's not to say that the person who is the president of their fraternity or president of some social club is good at it. They're terrible, but you get the experience of having to deal with people who are not like you, who you benefit from working with.
And then the Fourth building is the one that's closest in some ways to Bryan Caplan's claim, and that's the Admissions Office.
The Admissions Office--it is useful to have a signal that someone else went to great lengths to investigate in a very difficult rent-seeking process, and you [?]. So, if all I know is that you were admitted to Harvard, then it might be that you made baskets--you wove baskets for four years. But, 'You got admitted to Harvard; you must have something special.' And so, as a result, the Admissions Office is giving this triple-A certification that you're better than other people, along the dimensions that we use to decide these things.
Russ Roberts: The other part--go ahead.
Michael Munger: The difficulty is that you can game those things; and, unsurprisingly, as the things become more valuable, the ability of wealthy people to game them has increased, and the disparities have gotten larger. The BA gap has gotten larger, and the wealthy people are going to get wealthier, because it's hard to imagine a system, based essentially on power, is going to protect the weak.
Russ Roberts: Yeah. The problem I've always I've had with--I'm more sympathetic to the signaling argument today than I was 40, 30, 20 years ago. But, the problem is, it's a very expensive signal, and you alluded to that earlier. You'd think that we could develop a better--you said, it proves that someone has been able to do x, y, z. Well, x, y, z is: take standardized tests, do extracurricular activities, pretend to volunteer to help the poor in this poor country, whatever it is, or look like they care. Be the nth Vice President of the Chess Club, so they can put 'Vice President of the Chess Club' on their resume. A lot of those things are empty or just pure signals.
You'd think there'd be some ways that would be cheaper, easier maybe? I know part of the value of signaling is that they're hard. But a lot of what they're measuring is zeal rather than--or your parents' zeal.
But, let's put that to the side. You can react to that if want, but I want to talk about the unbundling thing. You'd think this would be a time, especially in the aftermath of the pandemic when a lot of people are wondering about whether the tuition is worth it, where people could offer some institutional alternatives to university life that would capture some of these.
Not all of them. I agree that it's hard to do it a la carte. That's really the point of your essay, is if you say, 'Well, I want to take one of these and create a substitute.' To create four is quite difficult; but again, the current bundle option is very expensive. There's a lot of social pressure. I thought about my kids not going to college because I think a lot of the measured benefits of college are because different types of people go, and so it's not obvious to me that if you don't go, you're not going to do well. I think you could do very well in life having some other experiences. But, the uncertainty about that and the social pressure to just do the normal thing that everybody else is doing is quite high.
And, I'd see this moment as a chance to reduce those costs, and maybe create some options that are more attractive that could do other things.
So, first, explain why you think the unbundling is not going to happen, and then maybe we'll talk about why maybe it will anyway.
Michael Munger: There was--you did an EconTalk not long ago in which the guest made a distinction that I thought was really interesting. Part of it depends on the primary mode of production.
If the primary mode of production is knowing how to do things helps you, then it's as if you're producing forklifts. And so, knowing how to use a forklift means that as many people as we can train to make a forklift, that produces value.
But, there are some circumstances where what's valuable is what you can produce over a microphone. And producing it over a microphone means that the two or three best people at using that microphone take all of it--so you have a kind of winner-take-all game.
And so, the difficulty with universities is the conflict between that forklift and the microphone. So, the reason why we have these signals--in some ways, I'm more skeptical even than you. The reason we have these signals is that we're testing for people's willingness and capacity to misrepresent their own abilities. We're actually rewarding that: so this is an extremely pathological kind of system. We're not admitting people for accomplishments. We're admitting people for being able to fabricate accomplishments. And that's actually going to benefit them in the pathological Twitter-, Facebook-world of social media.
So, I worry that this system now is in a very unvirtuous kind of spiral, and breaking out of that to some extent--you said, 'Well, why can't we come up with a better system?' Most systems are really finely calibrated to produce the conditions that gave rise to them. There's no 'we,' as you know very well. So the reason why the system does what it does is that this serves people who are trying to enter the current system, and it means that universities are able to collect a lot of revenue from it. I'm hoping, I actually have some hope that this is going to be like Mancur Olson's idea in The Rise and Decline of Nations, where this is going to be so catastrophic that universities will break and then rise from the ashes and form something better.
Russ Roberts: That's very well said. I think the question is: a lot of the four buildings that you talked about--a lot of them: there's only four of them--so let's see, let's take them; I'll pick one of them. Let's take, you call it the Student Union, but I was going to call it the fraternity or the sorority, but you beat me to it.
Michael Munger: Well, it was suggested to me that I not call it that, so I was trying to be more general.
Russ Roberts: I get it, I get it, I get it. We'll call it 'social life on campus.' There are other things we could call it that would be less attractive, but let's call it social life on campus. This would include partying; it would include networking. Let me just point out--I just saw a really nice chart from Benedict Evans, a past EconTalk guest. I think it was--in 2005, 20% of people met their partner, their significant other--I don't know if this, what's in the denominator, whether it's marriages; I don't know what it includes--but 20%, whatever the definition, assuming it stayed the same, 20% had met them online.
That number today--I think the latest data in that chart was 2017--it's 40%. So software is eating the world. Software is performing that assortive mating function that you talked about, the ability to help people find each other. College campuses are an incredibly expensive way to find somebody who is like you. Online dating works a lot better, meaning at a much lower cost. It might not work better, but--
Michael Munger: You're comparing the average and the margin. So, if I want someone who's really, really like me, if I can do it at Harvard or Princeton, yes, that's expensive; but at the very top echelon of society, it's worth it to find someone who has a similar background. Now, the average of 40%, yes that's true--for the hoi polloi--for me, sure, that's great. But for the top echelons, they're looking for something better than online dating.
Russ Roberts: I'm not sure. I think that's changing. And I think, quote, "online dating," whatever we call it, has gotten--it's going to get, already is, and is going to get more sophisticated.
So, let's pretend for a moment we can unbundle that part of it, because there's more than dating. There's also just social connections, and so on. Obviously, that's very important as well.
The Clock Tower--the synchronization of the shared experience--you could do that online. It's not as good. Parts of it are pretty good, by the way. Parts of it are not. I've been impressed by the ability of Zoom and we're, of course, in a very primitive stage right now. But, Zoom's ability to have breakout rooms and to have smaller conversations works, and the teacher can sit in on those, if you haven't been part of that, listeners. It's really quite impressive.
The Stadium--could you find a place where you and other 20-somethings--well, the concert does that now to some extent. Obviously, it doesn't do it for your socioeconomic group exclusively, although it kind of can.
Russ Roberts: And that leaves us with--
Michael Munger: The Admissions Office.
Russ Roberts: The Admissions Office, which is kind of, maybe, the whole thing, if we're Bryan Caplan, for sure. So, if we back off from this way of thinking about it one at a time and say, 'Well, I'm going to create a different thing. I'm going to--' We're going to call it--give me a name. You'll tell me the name. Here's what this experience is. 'You're 18 years old; you're not coming to a campus. You're going to move to a city. You're going to move to New York, move to Chicago, move to LA [Los Angeles], move to New Orleans, move to Charlotte, Atlanta, wherever; and you're going to have a job. And that job--we'll help you find it, by the way, because we're going be selective about who gets to be in our, quote, "college"--alternative college. We're going to help you find that job, and it might go 9:00-1:00, 8:00-12:00. In the afternoon, you're going to do online learning. And at night, you're going to attend Hamilton live; you're going to go to the symphony; you're going to go to the beach with 18 to 20, maybe 30 of your buddies for the Student Union. There's going to be no campus, so we're going to save all that cost. The actual classes are going to be cheaper because they're going to be delivered by the best online professors.' Isn't this a moment where that model could thrive? Isn't this an entrepreneurial opportunity? Not for me, maybe not for you, but for someone out there listening, to create a signaling, rent-seeking, assortative mating experience where the classroom is part of it, but we don't pretend it's the central part--because it's not the central part anymore, anyway.
Michael Munger: In talking to John Cochrane in 2014, you actually raised a question where you said, there seems like an entrepreneurial--almost verbatim, the question you just asked, except not going to places. But: Don't we expect some entrepreneur to create a degree program where you have these really excellent, lecturers, and there's someone in the room to curate this discussion?
So, 'We have this video,' and then we have someone who helps you work through the problems. Because I don't need John Cochrane to help me work through some calculus problems. I have John Cochrane to teach me the principles, and then you have someone to work through the problem with you in a group of 8 or 10.
Russ Roberts: And John might not be very good at that, by the way. I'm not saying anything about him personally; but in general, a person who can deliver a dazzling, coherent lecture about a sophisticated subject is not necessarily the best discussion leader, and that person could specialize--probably less expensive.
Michael Munger: The opportunity cost of having him work with 8 or 10 people, even if he were really good at it--
Russ Roberts: Yeah, not worth it.
Michael Munger: the problem is comparative advantage.
Russ Roberts: Correct.
Michael Munger: One of the reasons that universities are expensive is that we don't have the economies of scale that come from a dazzling lecture, where you've really thought about how to present this, and you really get the sense--the camera angles, the way the thing's edited, it keeps your interest; the graphics teach you a lot. You have embedded mid-course questions that help you remember it, so you're getting constant feedback. And then you work on the problems in a classroom setting with a different person who is specialized in that. Why is it that we don't see that?
And, the--one possibility is that the difficulty of setting that up and getting people to recognize that it actually is a substitute. Because we're pretty conservative when it comes to--it never occurred to me--
Russ Roberts: Our children.
Michael Munger: Our children's future.
Russ Roberts: Yeah. Small thing.
Michael Munger: This is something--you know, they're 10 or 12 years old, you're already saying, 'Well, what college would you like to go to?' You go around and visit so that they get an idea of the physical--it's unlikely that people are going to say, 'We're going to take a flier. That sounds like it might work because some of those videos were really good.' But, you have a more hybrid form now, where you're sending people--in some ways, I guess, I would say that St. Johns has some elements of that because you're in a small setting but it's in Annapolis or in Santa Fe. Santa Fe has a bunch of opera, and so a bunch of the students at the St. Johns that's in Santa Fe, they'll go and get cultural experiences also.
Russ Roberts: Yeah. I think I'm imagining this writ much larger than that. Of course, there's going to be work experience; there's social interaction that would be guided. It's not just a frat party or a sorority party. It would also be, you know, things beyond a great seminar. I'm not sure what they are: you'd have to think of them.
Russ Roberts: But I think your point about the risk involved for parents is real. I think somebody with a very good brand name would have to start that. I'm not sure what the nature of that brand name would be. You know--is it--I don't know.
Michael Munger: Again, the difference between average and marginal. Peter Thiel and some others have said, 'Just drop out when you're a sophomore.' And, they have a point: that, when you think of the opportunity cost of tuition and years in school compared to--because if you say, 'Oh, you don't go to college'--yes, but what are you going to do with those years instead? What are you gong to do with that money instead?
Russ Roberts: Right. That's the challenge, yeah.
Michael Munger: If you had a better way of investing that time and money, it might very well produce something else.
So, the--all I wanted to argue in my essay is I think that there is some kernel of value to bundling these things together.
I also think that some universities do a pretty poor job of bundling them already, and it's likely that the system of universities is going to shrink. Or at least offer things in a different way.
And when you say, 'Work part-time,' European universities, even European high schools have apprenticeship relationships where people get a lot of experience. After two or three years of college, they're working most of the time. Some American universities try to put that together, but mostly, we want people on campus.
Russ Roberts: Yeah, I want--go ahead.
Michael Munger: We're in rural places. We're not set up to do this. So your example would have to be in New York, or Chicago, or San Francisco. It would have to be in a large city. So, the bucolic setting that I was in, in Davidson, where I would walk around--it's far from any kind of city--that was an important part of Liberal Arts for me. That may be a luxury that many people can no longer afford, and we're making a mistake by telling them that they should try.
There's a bunch of small liberal arts colleges that I expect are going to disappear. The tuition is just too much for the amount of value that it creates. And, you can object, 'Well, wait. It's not about creating value.' Sure it is, if the alternatives get better.
Russ Roberts: Yeah. I agree with that. This week's EconTalk [July 6, 2020--Econlib Ed.], coincidentally or not, is Robert Lerman talking about apprenticeships. One of the stranger things about so-called professional training in the American university system is that you're taught in the theory of the activity, not the actual act of it.
So, an education degree doesn't teach you how to be a teacher. It teaches you theories of education. Accounting professors want to teach about theories of accounting. They're not so concerned with you being a great accountant.
And one of the advantages of that more practical side--if that's what you are looking for--is you could actually figure out if you're going to like it or not. Those other--the way we do it now, the way we teach academic disciplines--you don't have any idea what it's like to practice the act. The only thing you're learning about is what it's like to teach it. Which is really weird.
Michael Munger: I'm in a Political Science department and as far as I know, I am the only person in my Political Science department that has run for office. I ran for Governor in 2008. I'm actually running for--
Russ Roberts: Did you win?
Michael Munger: I came in third. I got almost --
Russ Roberts: Okay. That's good, that's good. That's a bronze medal.
Michael Munger: Yeah. If there had many candidates, yes that would be more of an accomplishment. I came in last on merit, but I was in four televised debates. I have some idea what it's like to do radio interviews, where they're not that interesting. You get callers. So, that is considered to be a sort of strange curiosity. Why would a political science professor ever have run for office? That's just weird.
Russ Roberts: Yeah. That must have been a-- did it change your research in any way?
Michael Munger: It certainly changed my teaching. The way that I think about--because usually, the theory is when you teach spatial theory, you talk about people's positions on issues and their proximities to different candidates, and their uncertainty that comes about as a result of campaign messages. [*phwww* Michael Munger makes a sound effect--Econlib Ed.] That has nothing to do--so, maybe that's a possibility: Is there--we have created a set of guilds, and the way that access to the guild is controlled is by publishing largely meaningless articles in largely unread journals.
Russ Roberts: Yeah.
Michael Munger: And, that is a way--it's true, of showing commitment because there's no other self-interested reason to do this. This is really boring. You are capable of hard work and compliance in a completely pointless exercise.
Which reminds me, actually, of the origins of the Civil Service in China. The Civil Service exam in 1500 B.C. in China was to be able to reproduce from memory, in beautiful calligraphy, classical Chinese poems, which had nothing to do with the job. But since you were going to be far from the Emperor, that meant that you were compliant and willing to do a pointless task at great length. And so the competition for these jobs was really high; but it's in your self-interest to be able to get high-paying job with no oversight, so you had to be able to do calligraphy. I worry that an article in Economic Inquiry is not so different.
Russ Roberts: My guest today has been Mike Munger. Mike, thanks for being part of EconTalk.
Michael Munger: It was a pleasure. Thanks, Russ.