Tax Universities to Offset Their Negative Externalities?

(p. A11) What can we do about the corruption of American higher education? Milton Friedman had an idea 20 years ago: Tax the schools rather than subsidize them. That reflected a change of heart. In “Capitalism and Freedom” (1960), he argued that college education had enough “positive externalities” to justify subsidies. But when I was researching a book in 2003, I emailed him (then 91) and asked if he still believed that.

He replied: “I have not changed my view that higher education has some positive externality, but I have become much more aware that it also has negative externalities. I am much more dubious than I was . . . that there is any justification at all for government subsidy of higher education. The spread of PC”—political correctness—“would seem to be a very strong negative externality, and certainly the 1960s student demonstrations were negative externalities. . . . A full analysis along those lines might lead you to conclude that higher education should be taxed to offset its negative externalities.”

For the full commentary, see:

Richard Vedder. “Harvard Should Pay Its Fair Share.” The Wall Street Journal (Saturday, Dec. 23, 2023): A11.

(Note: ellipses in original.)

(Note: the online version of the commentary has the date December 22, 2023, and has the same title as the print version.)

Friedman’s book mentioned above is:

Friedman, Milton. Capitalism and Freedom. Chicago: The University of Chicago Press, 1962.

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