Thursday, October 30, 2014

Furor over Nevada Margins Tax Shows Peril of Creeping Privatization in Higher Education

Nevada shares many characteristics with California.  Amongst them, its mangled initiative process and undemocratic supermajority rules that create unstable revenue streams that are incapable of addressing the needs of a state population growing in size and demographic complexity.  There are two measures on the November ballot designed to alleviate some of the state’s socioeconomic ills. One is an attempt to address the privileged position of the state’s mining industry that is currently protected by a cap from having to pay higher taxes should residents so desire.  Such a measure seems like a no-brainer.
The second is a “Margins Tax”, designed to raise by two percent taxes on marginal profits of businesses that bring in over $1 million and redirecting those funds to the public school system which is, from all that I’ve heard since arriving here, in a truly abysmal state.  The Californian in me cringes at ad hoc ballot-box budgeting, which often engenders unanticipated consequences, and seems a poor substitute for devising a democratic, integrated relationship between the initiative process and a legislature unshackled by supermajority caps and special protections for certain industries.  On the other hand, funding for an overburdened and underperforming public school system is critical to the functioning of the state’s economy and a moral imperative for its citizens.
The Center for Business and Economics Research at the University of Nevada, Las Vegas got in on the act, conducting and publishing a study designed to evaluate the effects of the Margins Tax for the state.  Their findings were striking, suggesting that the tax could be a boon to the state in terms of job creation.  This comes at a time when state leadership is interested in diversifying an economy overly-centred on select industries, and at a time when UNLV is making a push for “Tier 1” status in an effort to establish the institution as a more prominent public research university.
On 21 August, the University rushed out a press release distancing itself from the report’s findings.  The University’s President, Donald Snyder, wrote that “While CBER is a center within UNLV, it does not form part of the university’s day-to-day operations nor is it functionally aligned with our broader initiatives”, with the Executive Vice-President and Provost John White adding that “other UNLV faculty have expressed different opinions on the margins tax”.
Gary Loveman, of Caesars Entertainment Corporation, wrote to UNLV President Snyder, and suggested that “Before burning what little political capital the university has left on a football stadium, let’s search for an economics professor that understands that growth and taxes are inversely related”.
Keith Smith, of the Boyd Gaming Corporation, followed up with his own threat: “Given how this tax will impact our business, I guess I can put off trying to find ways to support the various “asks” from the University including support/funding for a new Hotel College building, a proposed Medical College, T&M renovations and that Stadium project”. 
The response of UNLV’s administration was also documented in the evidence Ralston acquired.  The Nevada System of Higher Education Chancellor, Dan Klaich, wrote to Snyder, “I fully understand academic freedom but I also like a little common sense”, to which the President replied, “This clearly has me pissed!”
While I could be misreading the exchange, given subsequent events, Snyder does not seem to have been so much “pissed” at efforts by the gaming industry to shut down intellectual inquiry and stifle academic freedom, but instead at the temerity of CBER to issue a report that suggested that taxing some of the University’s benefactors at a higher rate could create positive outcomes for the community the University serves. 
I understand that economists and others will debate the conclusions of CBER’s study, although I would point out that the evidence on the theory of trickle-down economics that Loveman trumpets leans away from his self-interested conclusions.  But the real issue here is the manner in which this chain of events illustrates the fragility of academic integrity in particular sorts of social and political environments. 
One might have hoped that the leaders of the University and the statewide system of higher education—who are attempting to cement a name for their institutions as important contributors to Nevada’s economy as well as to the production and dissemination of knowledge nation- and worldwide—might have had a chat with their would-be blackmailers in the gaming industry, and explained that no institution of research and higher learning can or should function in the face of such open threats to academic integrity. 
Instead, to all appearances, they genuflected to the gaming industry and distanced themselves from the CBER study, sending a signal through their actions and communications that could be read as a warning to faculty across the institution who engage in research that could be controversial.
This is a good—or dreadful—example of what can happen when public institutions are subjected to privatization processes, open or otherwise.  In common with other public universities in the country—including neighbouring California—UNLV saw its funding from the state dramatically reduced during the recession, the precise moment when such institutions serve an important social purpose.  Funding levels have not increased commensurate with the University’s service to the state, and as elsewhere, private donors, alumni, and students are being asked to pick up the state’s slack, the latter through hefty and unconscionable tuition increases.
The immediate institutional consequences of this creeping privatization across the nation is a scramble for resources to keep departments and other units open, to maintain staffing levels and course offerings.  Students feel the pain as the burden for funding public education is transferred from the wider community to these “customers” and their families. 
But as this episode seems to illustrate, there are other potential consequences, less visible, but nearly as insidious.  The University grows to resemble a marketplace, and there are apparently people who believe that in such a marketplace they can dictate the “products” the University is allowed to sell or produce. 
There is the potential for academic integrity to be compromised as the University finds itself dependent on private parties for funding, parties that have their own interests and agendas.  If those parties can indeed influence the University’s priorities, research funding, and institutional support for certain research fields, agendas, or projects—instead of those things being evaluated by professional standards within their disciplines and by relatively more transparent research-funding bodies—then Universities are in dangerous territory. 
As Nevadans consider how to organize their society and support the students and researchers who are critical to economic diversification and social prosperity, they should think carefully about the consequences of failing to fund public institutions.  There is real danger in allowing those institutions to be dictated to or captured by private interests—private interests that might feel threatened by a more diverse economy that would dilute their political clout. 

Privatization of the UC system in California is much further along than in Nevada, and Californians are very quickly losing the ability to influence their institution and ensure that it pursues a public mission.  Nevadans should learn from that experience and work to maintain public control over the universities that do critical research and teaching for the state and its future.  And University administrators who are pushing for “Tier 1” status should understand that such status depends on excellence in research, and that excellence in research depends on the maintenance of a reputation for academic freedom that this episode has threatened to compromise. 

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