Why Have Public Universities at All?

Megan McArdle at the Atlantic:

Noah Millman — blogger for The American Conservative
As long as I’m arguing with Matt Yglesias, he wrote something last week about higher education with which I have a bone to pick. His post was an argument with Mike Konczal over whether we should shift from our current system of subsidizing tuition for poor students to a system where we more heavily subsidize tuition for all students at state schools.
Here’s Konczal:

What vision should we advance in response? . . . [O]ne where college is free and grants and loans cover supplemental expenses for the poor. Higher ed would be broadly accessible, with a variety of options ranging from elite schools to community colleges.
Beyond ensuring equality of opportunity, another advantage of this approach is that it would help stop cost inflation. Free public universities would function like the proposed “public option” of healthcare reform. If increased demand for higher education is causing cost inflation, then spending money to reduce tuition at public universities will reduce tuition at private universities by causing them to hold down tuition to compete. This public option would reduce informational problems by creating a baseline of quality that new institutions have to compete with, allowing for a smoother transition to new competitors. And it allows for democratic control over one of the basic elements of human existence–how we gather information and share it among ourselves.

Here’s Yglesias in response: