Universities and the threat of bankruptcy within fake markets

Universities offer the opportunity to gain new knowledge, learn new skills, and to build the foundations for future careers.  But these opportunities come at a cost  – universities, perhaps often seeming like unflappable, unwavering institutions, require a constant influx of finances to keep the wheels of education turning.  While tuition fees, particularly those extracted from international students, might be thought to offer a surefire income alongside other sources such as research funding, within the competitive marketplace that universities operate, this may not be enough to guarantee success and longevity.

So what happens when the unthinkable happens, when a university ends up on the “brink of bankruptcy?  This was the question being posed in media headlines recently when news broke that three anonymous UK universities were listed as at risk of bankruptcy.

Sean Coughlan’s recent BBC article exploring this issue raises important questions about whether or not public funds will be used, or should be used, by the government to bail out the failing universities.  This highlights a major contradiction: universities are forced to operate like businesses but, as is often the case when free-market dogma comes up against the realities of public goods, it is unlikely that the government will allow the universities to collapse. Imagine the outcry from students and staff, not to mention the fallout from reduced confidence in the UK higher education market internationally and domestically.  The answer is to stop trying to force public services from behaving like private companies – and instead to return to more basic questions of what universities should be for. And one of the reasons they exist is to provide excellent research and the highly-skilled workers of tomorrow – two things upon real businesses so heavily depend. And real businesses, and other taxpayers, have to properly fund universities and support students so that we all benefit!