Phi Beta Cons

Henry Manne, R.I.P.

Henry Manne—economist, legal scholar, and pioneer in the field now called “law and economics”—died  January 17 at the age of 86.

His death from cancer came less than two weeks before he was scheduled to attend a conference on higher education that I will direct for Liberty Fund, Inc. Dr. Manne was in the midst of writing a book (with Todd Zywicki) on the history of for-profit education in the nineteenth century. The Liberty Fund conference he was to attend will feature his recent paper arguing that land-grant universities came about in an effort to squelch that educational “industry.”

Henry Manne was astute about incentives and had the intellectual understanding and fortitude to look beyond platitudes and blandishments.

My husband, Richard Stroup, attended the first law institute for economists that Manne organized (in 1976, we think). As for me, I only got to know Dr. Manne in the past few years while attending conferences on higher education. The readings for several conferences included his wonderful essay about the role of trustees and universities published in the 1973 Liberty Fund bookEducation in a Free Society.” It revealed his skepticism about avowed sentiments and his insights into the operation of universities.

Manne wrote that early American private colleges, which were almost all religious and designed to train ministers (or Christian gentlemen), were “consumption goods” for the trustees. Trustees subsidized the education of young people in order to achieve their goals of religious instruction. Because tuition was subsidized, students were unlikely to have “consumer sovereignty” and demand what they wanted rather than what the trustees wanted.

That “consumption” element helped to determine the governance of universities that we have today. As Manne wrote in his recent paper, “Only the not-for-profit form of enterprise will serve this purpose [“’purchasing’ a strengthening of their religious interests”] and that mainly because the property rights are non-transferable.”

Once most schools became secular, the trustees no longer had an intense interest in directing the schools—while the faculty did. Because ownership was non-transferable, the highly committed trustees were gradually replaced by business men and women who were interested in building loyalty to their school or attaining prestige. They offered no check on the power of faculty.

This insight into university governance  (which I have sketched rather feebly) is only one of many ideas that Manne originated (plenty of them can be found in his latest essay alone!). He is best known for his writing about corporate control and insider trading, but I’m pleased that he also put some of his thinking into higher education. I’m very sorry that he did not live long enough to complete his book on the subject.

Jane S. ShawJane S. Shaw retired as president of the John W. Pope Center for Higher Education Policy in 2015. Before joining the Pope Center in 2006, Shaw spent 22 years in ...

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