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Abstract

One hundred and fifty years ago, the 1862 Morrill Land Grant Act was signed into law.Wise people at that time recognized that the private market for education failed to produce an efficient level of education decades before the economic theory was developed to explain that market failures reduce efficiency. The purpose of this paper is to review the history of selected events that resulted in the development of publicly funded U.S. educational institutions and to issue a challenge for our profession to do a better job of educating about the theoretical justification for using tax dollars to support university education and agricultural research and the efficiency enhancing consequences of that use.
Market Failures and Land Grant Universities
Francis M. Epplin
One hundred and fifty years ago, the 1862 Morrill Land Grant Act was signed into law. Wise
people at that time recognized that the private market for education failed to produce an
efficient level of education decades before the economic theory was developed to explain that
market failures reduce efficiency. The purpose of this paper is to review the history of se-
lected events that resulted in the development of publicly funded U.S. educational institutions
and to issue a challenge for our profession to do a better job of educating about the theoretical
justification for using tax dollars to support university education and agricultural research and
the efficiency enhancing consequences of that use.
I realize that I don’t deserve this recognition, but
I acce pt it on behalf of my colleagues at Oklahoma
State and on behalf of my co-authors and grad-
uate students who have been dragging me along
for these many years. I think of myself on a
good day as a singles hitter. Singles hitters
are not worth much unless they are surrounded
by an excellen t team. It has been my goo d
fortune to be part of excellent teams. I do ap-
preciate the recognition and thank my col-
leagues for the nomination and the committee
for the selection and for their service to the
profession.
1
My mother would be proud of this recog-
nition. Neither of my parents attended high
school. Mom graduated from the eighth grade,
which for her contemporaries was considered
to be a terminal degree. She told us that she was
the salutatorian. We asked her what that meant.
She said that it meant that she had to give a
speech. To my sister and brothers and me, it
seemed to be more of a bad thing than a good
thing. We wanted to make sure that we didn’t
make the mistake of becoming a salutatorian
and being required to give a speech.
Our father didn’t talk about his formal ed-
ucation in the one room school located near the
intersection of three rural trails about a mile
from his home. One day my sister found his
report cards and was surprised to learn that he
was marked absent every other day in both the
seventh and eighth grades. Upon learning of
our father’s absenteeism, she asked if she could
skip school every other day. Mom said, ‘No.
The discovery of chronic absenteeism, however ,
required an explanation. So Dad explained that
when he entered the seventh grade, he knew that
the teacher taught sev enth grade material one
day and eighth grade material the next. On the
days she taught eighth grade, the seventh graders
were responsible for maintaining the stove, the
grounds, and keeping the building and out-
houses clean. Dad initially proposed to attend
and participate in academics both days and
complete both grades in one academic year. The
school board members, all neighboring farmers
that he knew, denied the request, probably for
two reasons. First, it would have set a bad pre-
cedent, and second, by law, he was required to
Francis M. Epplin is professor and Jean & Patsy
Neustadt Chair, Department of Agricultural Econom-
ics, Oklahoma State University, Stillwater, Oklahoma.
Helpful comments from Larry D. Sanders and B.
Wade Brorsen are gratefully acknowledged.
1
Appreciationisalsoexpressedtomywife
Maryellen and our sons Alan and Eric who refer to
the annual Southern Agricultural Economics Associa-
tion meetings as the Super Bowl meetings. My atten-
dance at the SAEA meetings often meant that I failed to
attend their ‘Superb Owl’ parties.
Journal of Agricultural and Applied Economics, 44,3(August 2012):281–289
Ó 2012 Southern Agricultural Econo mics Association
attend at least 14 weeks per year until his four-
teenth birthday. The school year was 7.5 months,
so even if he skipped every other day, he could
technically fulfill the 14 weeks requirement.
This enterprising seventh grader negotiated
a deal to do his fair share of the work details
before and after classes on the alternate days that
he attended. He mastered sufficient material with
the alternate day schedule for two academic
years to earn an eighth grade diploma. At the age
of 14, he became fully immersed in a farming
career. Giv en the lack of electricity, the livestock
activities (cows to be milked; hogs to be fed and
ev entually butchered and processed; and eggs to
be gathered and cleaned) and the crop activities
(corn to be harvested by hand; hay to be har-
vested, stored, and fed), ‘full time’ meant seven
days a week, year after year. The organic sub-
sistence farm provided food and sufficient sur-
plus to barter for subsistence goods and services.
In many ways in the early 20
th
century, the ac-
tivities of my parents did not differ much from
those of their European ancestors in the 19
th
century. However, the opportunity cost of land
was lo wer and the ability to own land was greater
for my parents.
Nasar reminds us that, ...the eighteenth-
century founders of economics ... assumed that
nine out of ten human beings were sentenced
by God or nature to lives of grinding poverty
and toil... (Nasar, 2011, p. 461). This was a
rephrasing from Burke who wrote that, ...nine
Parts in ten of the whole Race of Mankind
drudge through life... (Burke, 1756, p. 93).
Little opportunity was available for movement
from the industrial class of commoners to the
professional class. My mother would not have
blamed it on God, but she would not have dis-
agreed with the ‘grinding poverty and toil de-
scription. She would have described it simply
as ‘poor, but happy. For her, happiness was
a matter of adjusting her utility function. By
today’s standards, her situation in the early 20
th
century would rate high on a misery index.
However, as the century progressed, rural elec-
trification arrived, internal combustion engines
were adopted, and with research produced and
extended by the land grant university system,
the level of grinding poverty and toil declined.
For my generation, high school education was
expected, and higher education became a
possibility.
In the 18
th
century,childrenborntomembers
of the professional class (ministers, lawyers,
physicians, and nonfarm bu siness owners) h ad
substantially greater access to education. How-
ever, the historical record suggests that many of
the U.S. founding fathers (a) desired to design
a system that would enable all citizens to have
access to education; (b) recognized that edu-
cation for all was important for society at large;
and (c) recognized that it was appropriate for
the government to provide for the use of public
resources to provide education for all. Of course,
not everyone was included in the ‘all set. It did
not include women and it did not include those
of African descent.
This unique forum provides an opportunity
to present a version of the evolutionary process
in the United States that lead to the devel-
opment of education and research institutions,
from the one room school that my father
attended to the land grant university that em-
ploys me. These evolutionary processes include
the use of public resources to fund common
schools and the very unique set of circumstances
(the great mutation) that preceded public in-
vestments in land grant universities. The disci-
pline that we know as agricultural economics
evolved from these investments. The citizens of
the United States, through their representatives,
decided that it would be wise to provide public
resources for elementary and secondary educa-
tion and eventually for university level agricul-
tural education, research, and extension.
My working hypothesis is that the discipline
that we know as agricultural economics in the
United States evolved from the seeds of pub-
licly funded common schools and high schools
that established the precedence for land grant
universities. Wise people recognized that the
private market for education failed to allocate
resources to their best use decades before the
theory of microeconomics was introduced. The
purpose of this paper is to review the history of
selected events that resulted in the development
of publicly funded U.S. educational institutions
and to issue a challenge for our profession to
do a better job of educating about the theoret-
ical justification for using tax dollars to support
Journal of Agricultural and Applied Economics, August 2012282
university education and agricultural research
and the efficiency enhancing consequences of
that use.
Mom told us that most past events include
(a) his story, (b) her story, and (c) what actually
happened. I do not know if this version of the
story is accurate. Some of the events have dif-
ferent versions in the historical record. I hope
that the account is free from substantive errors.
Founding Fathers
In 1776, when the U.S. Declaration of In-
dependence was signed (the year that Adam
Smith published An Inquiry into the Nature and
Causes of the Wealth of Nations), formal eco-
nomic theory was not available to explain
market failure and the justification for gov-
ernment intervention in markets. It had not yet
been ‘discovered’ (Bator, 1958). The case for
publicly funded common schools was more a
matter of common sense, which is the case for
many results derived from the standard theory
of microeconomics.
More than a century after the U.S. Decla-
ration of Independence was signed, Alfred
Marshall, one of the founders of microeco-
nomics theory, wrote in his Principles of Eco-
nomics that, ...
.W
e may then conclude that the
wisdom of expending public and private funds
on education is not to be measured by its direct
fruits alone. It will be profitable as a mere in-
vestment, to give the masses of the people much
greater opportunities than they can generally
avail themselves of... . The economic value of
one great industrial genius is sufficient to cover
the expenses of the education of a whole town...’’
(Marshall, 1890). Marshall’ s book was published
28 years after the Morrill Land Grant Act was
signed by President Lincoln.
The founding fathers intuitively recognized
that the aggregate net social benefits from
grade school education for all surely exceeds
the aggregate net private benefits. A fully pri-
vate education market would fail to allocate
resources to their best use, and the size of the
economic pie would be less than what it could
otherwise be. At some level, the expected
benefits from market intervention are greater
than the expected cost of intervention.
Benjamin Franklin (1749) wrote ‘The good
education of youth has been esteemed by wise
men in all ages, as the surest foundation of the
happiness of both private families and of
commonwealths. Almost all governments have
therefore made it a principal object of their
attention, to establish and endow with proper
revenues, such seminaries of learning, as might
supply the succeeding age with men qualified
to serve the publick with honour to themselves,
and to their country... . (Isaacson, 2005) (He
didn’t mention women. All didn’t mean ‘all’’.)
John Adams (1785) wrote ‘The whole peo-
ple must take upon themselves the education of
the whole people and be willing to bear the ex-
penses of it. ... (Adams, 1856) The land ordi-
nance passed by the Continental Congress on
May 20, 1785 (two years prior to the adoption of
the U.S. Constitution) granted section 16 (one
square mile) of every 36 square mile township to
be used for public education. The federal gov-
ernment awarded to the states section 16 of each
township from the public domain to be used for
schools to provide education for citizens.
Thomas Jefferson (1787) also recognized the
external benefits of education. Above all things
I hope the education of the common people will
be attended to, convinced that on their good
sense we may rely with the most security for
the preservation of a due degree of liberty...
.
’’
2
(Cornwell, 2011) Use of the adjective ‘com-
mon’ could be i nterpreted as recognition of
the existence of a practical class distinction.
Jefferson also recognized the potential external
cost of not funding education. ‘If the children
are untaught, their ignorance and vices will in
future life cost us much dearer in their conse-
quences than it would have done in their cor-
rection by a good education...’’
3
(Cornwell,
2011).
Justification for government support for
education was also included by the Continental
Congress in the Northwest Ordinance of 1787.
‘Religion, morality, and knowledge, being nec-
essary to good government and the happiness of
2
Quote attributed from Thomas Jefferson to James
Madison, 1787.
3
Quote attributed from Thomas Jefferson to Joseph
C. Cabell, 1818.
Epplin: Market Failures and Land Grant Universities 283
mankind, schools and the means of education
shall fore v er be encouraged.... While it might be
an exaggeration to say no one opposed collecting
taxes or to providing public resources to support
grade schools, I could not find any references in
the literature to arguments from the founding
fathers for not doing so.
In some regions, the support for education
extended to high schools. However, not every
taxpayer thought this was appropriate. In 1873,
a lawsuit was filed in Kalamazoo County,
Michigan courts to bar the use of tax dollars to
fund a high school. Charles E. Stuart, a former
Michigan U.S. Senator, along with two asso-
ciates, evidently resented the tax burden that
the public high school placed on them. Some
argue that their intent was to bring a test case
that would insure the continuation of funding
for high schools. They won their initial case but
lost on appeal to the Michigan Supreme Court.
Judge Thomas Cooley’s 1875 decision included:
‘We supposed it had always been understood ...
that education, not merely in the rudiments, but
in an enlarged sense, was regarded as an im-
portant practical advantage to be supplied at
their option to rich and poor alike, and not as
something ... to be brought ... within the reach
of those whose accumulated wealth enabled
them to pay for it... (Cubberley, 1920). The
distinction between rich (professional class) and
poor (common class) was clear. The Kalamazoo
Case established the legality of collecting taxes
to support Michigan high schools. The case
established a precedent and was cited in other
states to justify collecting taxes to support public
high schools.
The Fight for Publicly Funded Agricultural
Universities
As with many historical events, the story told
regarding the Morrill (Land Grant) Act of 1862
depends on who is doing the telling (Campbell,
1995; James, 1910; Lee, 1963; Martin, 2001;
Nevins, 1962; Simon, 1963; Williams, 1991;
Wrone, 1998). According to Nevins (1962), the
first public suggestion for U.S. agricultural
colleges originated with Simon DeWitt. DeWitt
wrote in 1819 ‘There are now thousands of
wealthy citizens in this state who do not know
what to do with their sons. In the first place,
without any determinate object in view, they
give them a liberal education, or rather, they
send them for four years to a college to obtain
the reputation of having a graduate’s diploma,
and so much instruction in the dead languages
and the ordinary sciences as they are compelled
or disposed to attend to; after that there are only
three professions from which ordinarily they are
to choose their means of living and rising into
consequence law, physic and divinity; but so
great are the numbers of young gentlemen des-
tined for those professions, that their prospects
are truly dismal... (DeWitt, 1819, pp. 3–4).
DeWitt suggested establishing The Agri-
cultural College of the State of New York. ‘Its
primary object should be to teach the theory
and practice of agriculture, with such branches
of other sciences as may be serviceable to
them... (DeW itt, 1819, p. 26). While DeWitt
argued for an agricultural college, his vision was
of an agricultural college to serve the sons of the
professional class. DeWitt did not envision an
agricultural college for commoners. He did not
challenge what may have been conventional
wisdom among the professional cla ss that
‘‘ ...nine out of ten human beings were sentenced
by God or nature to liv es of grinding poverty and
toil... (Nasar, 2011, p. 461).
Jonathan Baldwin Turner is credited by
some with the original idea for publicly funded
teaching and research agricultural and me-
chanical colleges for all citizens. Turner used
the phrase ‘industrial class. Turner was born
into the professional class. He studied Latin,
Greek, and classical literature at Yale. Yale, as
with most other U.S. colleges at the time, was
a religious school whose mission was to edu-
cate men (not women) to become professionals,
that is, preachers, missionaries, teachers, lawyers,
and physicians. After Turner graduated from
Yale in 1833, he accepted a faculty position at
Illinois College in Jacksonville. Illinois College
was also a private church affiliated liberal arts
institution. Turner became a professor of Belles-
Lettres, Latin, and Greek.
Turner developed a reputation as an effec-
tive instructor. According to one story, two of
Turner’s students tutored Abraham Lincoln
when Lincoln was working as a farm hand for
Journal of Agricultural and Applied Economics, August 2012284
their family. In addition to being effective, he
was controversial. Turner was an outspoken
abolitionist. He was also known to criticize his
denomination; he was a rabble rouser. Even-
tually, he was accused of inappropriately po-
liticizing the classroom and left the college in
1847. Very likely, his choice was to either leave
or be fired. Turner stayed in Illinois. He farmed
and became an evangelist for establishing state
supported university level training for the ‘in-
dustrial class’ (commoners).
Turner sought out opportunities to describe
his plan. The historical record notes major ad-
dresses to the Illinois Teachers Institute (1850),
the Illinois Industrial League (1851), and a Buel
Institute convention of farmers (November 18,
1851). The plan was formally proposed at a
meeting (or convention) organized by the Buel
Institute. The institute was an association orga-
nized in 1846 and was made up of farmers from
six central Illinois counties. They sponsored the
1851 convention that drew farmers from across
the state of Illinois, ...to take steps toward the
establishment of an agricultural university...’’
(Turner, 1851). The convention was designed to
provide a forum for Turner to present his plan
for an ‘Industrial University’ of Illinois. Rather
than the traditional curriculum that included the
study of Latin and Greek, Turner (and others)
advocated for a college that would address the
practical concerns of life and issues that could
benefit farmers and other citizens of the in-
dustrial class. Turner wrote ...we do not really
need over one professional man (religion, law,
medicine, science, art, and literature) for every
hundred leaving ninety-nine in the industrial
class... (Turner, 1851, p. 7).
The agricultural colleges envisioned by Turner
were to include sufficient land to enable agricul-
tural experiments. He wrote that, ...there should
be connected with each institution...a sufficient
quantity of land of variable soil ... for annual
experiments...’’ ‘‘ ...(P)rofessors should conduct,
each in his own department, a continued series of
annual experiment s...’. The plan also called for
experiments on all modes of ...crossing, rear -
ing and fattening domestic animals... (T urner ,
1851, p. 9). In other words, the proposal included
a plan for establishing and managing agricultural
experiment stations.
Turner’s plan was printed and widely dis-
tributed. Versions were printed in farm maga-
zines and newspapers across the country. The
New York Tribune, the nation’s most widely
circulated newspaper at the time, included a
version. A Tribune editorial advocated in sup-
port of using public lands to provide higher
education, ...for the sons and daughters of
farmers, mechanics and laborers...’’ ( S e p t e m b e r
4, 1852) (James, 1910).
Along with the support was also strong
opposition to the plan (Wrone, 1998). Some
newspapers editorialized against what they
viewed as a waste of public lands and public
money. Many farmers were also against Turner’s
plan. They knew that they did not have to attend
college to learn how to farm and thought it
would be foolish to do so. College would en-
able sons to avoid the practical work that they
should be doing on the farm. Some local citi-
zens expressed their ‘thanks’ to Turner for his
innovative idea by burning his barn and out-
buildings (Wrone, 1998).
Turner was undeterred and continued to
lobby. He lobbied both Abraham Lincoln and
Stephen Douglas while they were competing
for a seat in Congress. While how much in-
fluence Turner’s lobbying had on Vermont
Congressman Justin Smith Morrill, who drafted
and introduced the legislation, is not clear,
Turner did provide the writings that included
the plan to Morrill (Williams, 1991, p. 204). In
1857, Morrill submitted a bill to Congress. The
bill did not make it out of committee. In 1858,
Morrill resubmitted the bill. It failed to gain
sufficient votes in the House. In 1859, Morrill
again resubmitted the bill. It narrowly passed
both houses but President Buchanan vetoed the
bill.
Opposition to the bill was from groups that
objected to the funding mechanism. Use of land
grants to support public projects can be traced
back to Roman times. The net effect of granting
federal lands would be to increase the quantity
of land in private hands. In the aggregate, this
increase in quantity was expected to reduce
land values across the country. In addition,
making more land available to the private sec-
tor would provide opportunities for would-be
factory workers to migrate west and become
Epplin: Market Failures and Land Grant Universities 285
farmers. Some representatives objected to los-
ing potential factory workers. Representatives
from the South objected to increasing the pop-
ulation of regions of the country that might
support non-slave states. As with many pieces of
potential legislation in the decades prior to the
Civil War , the real issue was slavery. The slave
states feared that the land grants would benefit
proponents of abolition relatively more than
proponents of slavery. Buchanan’s stated reason
for vetoing the bill was that he thought it was
unconstitutional. However, Buchanan did not
want to upset the very tenuous balance that
might lead to a Civil War. Because his position
could have been anticipated, some who voted
for the bill may have done so even though they
did not support it.
The Great Mutation
Lincoln was elected President on November 6,
1860 and inaugurated on March 4, 1861. Be-
tween December 20, 1860 and June 8, 1861, 11
states seceded from the Union and relinquished
their votes in the U.S. Congress. On April 12,
1861, the Civil War began. The crisis and
change in the relative makeup of Congress
opened the door to the passage of legislation
that had been debated for years. Legislation
passed and signed during the next three months
forever changed the face of U.S. agriculture.
On May 15, Lincoln established the U.S. De-
partment of Agriculture; on May 20, Lincoln
signed the Homestead Act; on July 1, Lincoln
signed the Pacific Railway Act; and on July 2,
1862, Lincoln signed the Morrill (Land Grant
College) Act.
Even with the change in the makeup of
Congress, Morrill did not have an easy time
channeling his bill through the system. The
phrase, ‘including military tactics, was added
to the 1862 version of the bill. The House
version of the bill was sent to a committee
chaired by a representative who did not support
the legislation, and the committee recommended
that the bill not be approved. Supporters tried to
override the committee report on the House
floor, but they were defeated.
An identical version of Morrill’s bill was
introduced in the Senate by Franklin Wade of
Ohio. It was sent to the Senate Committee on
Public Land. The Committee supported the bill.
It passed the Senate and was sent to the House.
Morrill called it up on the floor for debate and
vote, effectively bypassing the House com-
mittee who could then not block it by pro-
cedural methods. Wade’s bill was passed by the
House, was signed by Lincoln on July 2, 1862,
and has since been known as the Morrill Land
Grant Act.
Wade supported the bill because, ...the
thoroughly educated, being most sure to edu-
cate their sons, appeared to be perpetuating
a monopoly of education inconsistent with the
welfare and complete prosperity of American
institutions...
.
(Campbell, 1995) Once again,
the class distinction was very clear as well
as the intuitive understanding of the external
consequences of restricting higher education.
The 1862 Morrill Act offered states too
much to refuse but too little to establish and
operate an agricultural college. It opened the
door. It did not encounter the anticipated con-
stitutional challenge and thereby reinforced
a precedent for public support of higher edu-
cation. However, it did not provide means for
sustainable funding. Legislation that followed,
including the 1887 Hatch Act, the Morrill
(Agricultural College) Act of 1890, and the
1914 Smith-Lever Act were all essential for
the development of the system that evolved.
The 1994 Elementary and Secondary Educa-
tion Reauthorization Act authorized tribal col-
leges as land-grant colleges.
Several decades passed between the time
Turner presented his original proposal and
tangible benefits from the original investments
were forthcoming. Eventually, research find-
ings were extended by land grant institutions to
help reduce the ‘grinding poverty and toil’
encountered by many in my parents’ genera-
tion. Over time, land grant universities became
established sustainable institutions. Departments
and the profession of agricultural economics
evolved from the great mutation of 1862. The
consequences of investing public funds in higher
education and agricultural experiment stations
and in opening higher education opportunities to
the sons and daughters of all citizens have been
enormous.
Journal of Agricultural and Applied Economics, August 2012286
Performance
Huffman (2010) reports that during the 1970–
2004 period, the marginal real rate of return to
U.S. public agricultural research institutions
that evolved in large part from the 1862 great
mutation was approximately 50% (Huffman,
2010; Huffman and Evenson, 2006a,b).
4
Simi-
larly, Alston et al. (2010) report an average
benefit-cost ratio of 32 from investments in
public agricultural research and extension. The
record is impressive, but it does point out a siz-
able level of allocative inefficiency. A benefit-
cost ratio of 32 is not likely to result from
equating marginal social benefits with marginal
social costs. By these measures, far too few
resources have been allocated to agricultural
education, research, and extension activities.
The level of investments in public agricul-
tural education a nd research and exte nsion
institutions was less than the economically ef-
ficient level. The size of the economic pie is
smaller than it could have been. Across the
spectrum of scientific professions associated
with agricultural research, agricultural econo-
mists are best equipped to explain and to pro-
vide the technical information for implementing
public policies to address this issue. To date,
these data suggest that we have done a less than
optimal job. As a profession, we should be
concerned greatly about these allocative in-
efficiencies. How much ...grinding poverty
and toil... persists not only in the United
States, but around the world, as a result of our
collective inability to effectively educate the
public and our elected representatives about the
existence of these market failures and the eco-
nomically efficient fixes that are possible?
Call for Efficiency Seeking Behavior
A reasonable overarching goal of our pro-
fession is to improve the allocation of resources
to increase the size of the economic pie. If all
markets were successful, then all resources
would flow to their best use, and the pie would
be as big as it can be. But if all markets were
successful, then we would have little reason to
study microeconomics. Our challenge is to
produce an educated citizenry that can differ-
entiate between markets that can successfully
allocate resources to their best use and markets
that fail to do so (Doering, 2007). One very
important goal of our curriculum is to teach the
following:
(a) If markets are successful, resources will flow
to their best use, and the economic pie will be as
big as it can be.
(b) Some markets are not successful. They fail
to allocate resources to their best use thus
restricting the size of the pie.
(c) Several factors (market power, externalities,
public goods, asymmetric information) cause
markets to fail to allocate resources to their best
use.
(d) In the case of market failure, if the expected
benefits from government intervention exceed
the expected cost, then appropriate well-designed
intervention can be expected to increase the size
of the economic pie.
This endeavor is not an easy task. Even
though government intervention may result in
everyone being better off, if a possibility exists
that the relative position of one group may
change, that group can be expected to fight the
intervention (Frank, 2007).
For most college students, the only oppor-
tunity to explain the economic way of thinking
and the pie-constraining consequences of in-
efficiency and of not collectively correcting
market failures is in a principles class. Hansen,
Salemi, and Siegfried (2002) found that the first
course in economics has little impact on stu-
dents. After six months, students who completed
the principles class scored no better on eco-
nomic literacy exams than cohorts who did not
take the class. Arum and Roksa (2010) argue
that the majority of college students learn very
little during their first two college years, which
evidently is not a new problem. According to
Nevins (1962), in the early 1800s ‘the [Harvard]
law and medical faculties gave their degrees to
any man who had paid three term bills covering
eighteen months and had not been irregular in
4
Attavanich and McCarl (2011) suggest that these
returns are overstated since the studies failed to
account for the value of carbon fertilization of the
atmosphere.
Epplin: Market Failures and Land Grant Universities 287
attending lectures... (Nevins, 1962, p. 11).
Nevins also reported that in 1870 ...written
examinations are impossible in the [Harv ard]
Medical School. A majority of the students can-
not write well enough... (Nevins, 1962, p. 11).
Frank (2006) suggests that the reason stu-
dents retain little from the traditional principles
of economics course is because too many ideas
and concepts are presented. Frank and Bernanke
(2008) propose that the principles course be used
to introduce and reinforce a limited number of
core principles: scarcity; cost-benef it analysis;
incentiv es matter; comparativ e advantage; in-
creasing opportunity cost; equilibrium; and effi-
ciency. It is difficult to limit the number of topics
but ‘efficienc y’ is included on their short list.
Much of the tough work, the institution
building, has been done by individuals that did
not have an established body of theory to guide
them. The task should be easier now than at any
time in human history. Institutions have been
established. Scientific professions exist. Our
challenge is to develop and implement a system
to educate not only our students, but the citi-
zens at large.
Franklin, Jefferson, Adams, Jonathan Turner,
Justin Morrill, and Franklin Wade were not aware
of the economic theory that explains market
failure and that government intervention is
warranted to address the failure and increase
the size of the economic pie for all. But, they
had the common sense to recognize that in
many cases markets fail to allocate resources to
their best use. They intuitively understood that
the private market did not allocate sufficient
resources to education and research. They un-
derstood that it was efficient to tax ourselves to
produce higher education and agricultural re-
search. They had the courage to try to address
the market failure, and in part, as a result of
the great mutation of 1862, were successful in
opening the doors of higher education to the
masses. Why is it so dif f icu lt for us to teach what
for them was intuitively obvious? Our profession
is not immune from extinction. If we fail to
actively engage in efficiency-seeking behavior,
we may well become extinct. Rather than blame
God or nature, the blame will more nearly lie with
our inability to educate when we were pro vided
the opportunity.
A reasonable goal for an economics prin-
ciples class taught at a public university is
that six months after completion, the students
would be able to explain the economic theory
that explains that taxing citizens to help pay for
the class (a) was in the best interest of those
who paid the tax, (b) was in the best interest of
the students who completed the class, and (c)
was expected to increase the size of the eco-
nomic pie for society. If students leaving a
principles class have learned only about suc-
cessful markets, we have not only failed to
solve the problem, we have created additional
problems.
Epilogue
My mother, the salutatorian, and my father, the
organic farmer, lived during a period of in-
credible change. For most U.S. citizens at the
time, public-supported education was limited
to grade schools. My parents benefited im-
menselyfromlivinginasystemthatper-
mitted successful markets to flourish. They also
benefited from actions taken decades earlier by
Jonathan Turner, Justin Morrill, and Franklin
Wade. These men and many of their colleagues
intuitively understood that the private market
did not allocate sufficient resources to higher
education and agricultural research. They un-
derstood that it was efficient to tax ourselves to
produce higher education and agricultural re-
search. I am grateful that their actions opened
the doors to higher education and rescued me
and millions of others from lives of ‘grinding
poverty and toil.
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Article
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