Agency Capture and Education

The New York Times has an interesting piece detailing the "intense pressure" by for-profit "schools" on the Obama administration. The Obama administration had vowed to respond to investigations that had given evidence to what should surprise no thinking person: namely, that for-profit schools are a means for taking well-intended federal student aid from students whose prospect of making good use of the educational "product" and repaying back those stunt loans as a result are unrealistically bleak.  What happens next is, of course, a story that would be all too predictable to anyone with an actual education in the social sciences:

Rattled by the administration’s tough talk, the colleges spent more than $16 million on an all-star list of prominent figures, particularly Democrats with close ties to the White House, to plot strategy, mend their battered image and plead their case.

Anita Dunn, a close friend of President Obama and his former White House communications director, worked with Kaplan University, one of the embattled school networks. Jamie Rubin, a major fund-raising bundler for the president’s re-election campaign, met with administration officials about ATI, a college network based in Dallas, in which Mr. Rubin’s private-equity firm has a stake.

A who’s who of Democratic lobbyists — including Richard A. Gephardt, the former House majority leader; John Breaux, the former Louisiana senator; and Tony Podesta, whose brother, John, ran Mr. Obama’s transition team — were hired to buttonhole officials.

And politically well-connected investors, including Donald E. Graham, chief executive of the Washington Post Company, which owns Kaplan, and John Sperling, founder of the University of Phoenix and a longtime friend of the House minority leader, Nancy Pelosi, made impassioned appeals.

This is what one can call a classic case of agency capture. Agency capture tends to be the effect of one of the more pernicious problems in American politics, the unholy alliance of lobbyists, politicians and bureaucratic administrators commonly referred to as iron triangles.

Agency capture is bad because it steers policy implementation away from the most preferred policy preference to less desirable alternatives. It is a means of interfering with the process of rationally choosing the best alternative so that some small group can benefit more at the expense of all others benefitting less.

 The problem with "lobbying efforts" is not the way in which they advocate for interests, but for the way that lobbyists have the ability to dull the mechanisms that are supposed to keep bureaucrats and politicians honest. Lobbyists can offer politicians two things:

1. Lobbyists can reduce the chance of replacement by using PR and fundraising efforts to obfuscate the ways in which their arrangements with political decision-makers have damaged the public interest.
2. Lobbyists can reduce the cost of replacement by offering high-paying employment to politicians and bureaucrats who are replaced by voters if they make public-damaging decisions in lobbyists favor. 

Long ago there was some sense of opposition to agency capture by American conservatives (such as Theodore Lowi) who would have pointed out that this is what happens when the regulatory state is given too much say over policy preferences. Today, the political parties and their messaging infrastructure are also "captured" to that the conservative response, rather than outrage at another instance of agencies hijacking well-intentioned interventionist desires from the political left, ends up nothing but an embarrassing apologist for the system of corruption.

No matter what one thinks about the Department Education and the utility of the student loan system, there is no doubt that many Americans are in effect paying a tax for a lot of federal money moving into the hands of people who are promising to educate others with no intent of doing so whatsoever, pocketing our federal money, and recklessly tossing out those recipients out onto the street with disastrously high risks of default. This means that the tax-payer is bearing the costs of putting the "profit" in "for profit" schools, as is the person who must live the rest of their life with the burden of student loan repayment failure. Are the benefits of the student loan program as a whole worth paying this tax? That's a different argument for a different day. For today, let's not kid ourselves about the fact that we, in fact, pay this tax. And following the capitulation of the Obama administration, it is clear that this strain on our education system is not going to disappear anytime soon.