Apropos the GI Bill post, here's Gary North on Joseph Schumpeter on universities and socialism:

In 1942, America’s most distinguished academic economist, Joseph Schumpeter, offered a theory. He argued that America’s business elite had lost its will to resist the socialists. The key to this surrender was higher education. The anti-business socialists had been hired by America’s elite universities, he said, yet the business elite continued to send their children to these universities.

[…]

It is not socialists who control America’s prestige universities. It never was, because they never did. Socialists gained secure employment in American universities, but never control. Those in control today are socialism’s illegitimate ideological offspring, born out of wedlock by way of socialism’s Darwinist soulmates. Those in control of the universities today are the post-1965 moral drifters known as the hippies. They cut their hair and bought tweed jackets, but they remain hippies.

It is not capitalism that enrages them most, although they despise it. Rather, it is middle-class morality, which gives rise to the free market because the free market rests on the concept of inescapable personal responsibility in a world governed by the inescapable fact of scarcity. The hippies have always rejected any such morality. They also resent scarcity, except insofar as it can be used to justify increased state control over other people’s lives — a state controlled at the top by the elite universities’ graduates.

On this point, the professors share a deeply religious commitment with America’s business elite.

Schumpeter was entirely wrong. He completely misunderstood what the arrangement was in 1942 … and still is. It was not that the business elite had surrendered to socialism in 1942. It was that they hired socialists and others to educate their children in the joys of regulated markets — regulated so as to hamper the social enemies of both groups: consumers, who were mostly middle class in 1942, or else the parents of those who would be by 1950, the year of Schumpeter’s death.

The business elite wanted government regulation of the free market to protect them from the shifting and ruthless authority of consumers, who have money to spend as they please. This commitment to regulated markets increased exponentially, beginning in 1942: the wartime planning boards.

The socialists and their academic colleagues also wanted protection from the free market: government-accredited colleges and academic tenure. They received both, as well as the money to fund this insulated system — insulated from the free market’s open entry and price competition.

Both sides worked out a deal. They imported the system of higher education that had been working in Prussia since about 1820. Expensive universities would train the children of the elite to administer the regulatory agencies and the corporations protected by these agencies. Low-tuition, tax-funded state universities would train future mid-level administrators and corporate employees, as well as a few bright graduates who could be recruited by the elite. The high-tuition elite private universities would train future senior officials, corporate executives, and the senior lawyers who would work out the terms of the alliance. This arrangement is still working just fine. It is business — and anti-business — as usual.

"What I Learned From Duke University"

North's article is about Duke University. It's a great read. I love North the most when he's writing about education. Second best: history. I used to love his stuff on gold and banking and money in general, but since I deal with Austrian economics all day every day, I don't learn as much from his economic writings as I used to. On education and history, I still learn plenty.

His slogan — "Moses and Mises" — is so good I almost wish I were religious.