It is not money that is said to be the root of all evil, but the love of money. Cupidity. Greed. The amor sceleratus habendi denounced by John Locke - the shameful lust for possessions. But right now, it is the lack of money that is the problem, and certainly the root of anxiety.

So, breaking with the habits of the past decade, I'd like to say something nice about Lord Mandelson, or rather his wish to undertake a root-and-branch investigation of public funding and higher education. Well, I'd like to say something optimistic about how he might tackle the sector's financing.

An examination of what the public purse funds and how it funds it, starting from first principles and leaving no sacred cow unslaughtered, is long overdue. A bonfire of the quangos would be a good thing, along with a purge of consultants and the criminalisation of "rebranding".

But the question we've failed to ask for too long is the biggest one of all. What should public funding be spent on and how much should be spent on what?

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Lord Mandelson might decently read a new study by the indefatigable William Bowen, former president of the Mellon Foundation; he and several colleagues have explored the completion rates at American public universities in a new book.

Crossing the Finish Line: Completing College at America's Public Universities is frequently depressing. At the best ones - the "flagships" - less than half the cohort graduates within five years; at the lower-tier "state" schools, fewer than 40 per cent. Contrast that with private universities: up to 95 per cent of undergraduates in the Ivy League and its liberal-arts peer group graduate within five years; since these are four-year courses, "within five years" means "on time".

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How is this relevant to the UK? If Lord Mandelson grasps the nettle that his predecessors haven't, he would see how similar the UK reality is to that of the US. There is a stratum that would be a UK Ivy League if it were allowed to be - setting its own fees, taking public money for research as the Ivy League does, but weaning itself off such funding for teaching; there is a middling stratum that resembles the better American state colleges; and there is a great deal of provision that in a more sensible world would be recognised as filling the gap that community colleges do in the US.

Like the lower-tier American institutions, the bottom third of UK higher education is in all sorts of trouble, and money alone isn't going to solve its problems. The issue is the mismatch between student needs and what those universities can deliver.

Public funding covers, of course, a multitude of things, from ?50 million worth of buildings to the few hundred pounds provided by the smallest grants awarded to students. Since we know that just about everywhere, students who face the biggest financial hurdles do worse than their peers at whatever institution they attend, we should help them, no matter what cuts we have to make elsewhere.

One way to help them would be to drive down the cost of their education; the unit of resource should not be the same across every institution.

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The combination of Mrs Thatcher's philistinism and new Labour's sentimentality has been a disaster; it has led to funding formulas according to which "a history course is a history course", and gets identical funding no matter where it is offered and to whom. This means that fees are uniform, no matter their likely pay-off.

Salvation, if it is to be found, requires taking a deep breath and a hard look at outcomes. For students at many universities who will see little return on what they have spent on their degrees, the remedy isn't to hand them for nothing the same education as now; it is to spend less on their education and pay more attention to whether they are improving their earning capacity.

This is not an argument against media studies, but against all provision that has neither an obvious cultural benefit - such as opera for the over-80s at the University of the Third Age - nor an obvious pay-off in employment terms, as a six-month paralegal training course plainly does.

We need to take technical training seriously. There is a host of practical and managerial skills best transmitted on the job by practitioners, supplemented by other sorts of instruction, but only peripherally. Natural instructors in practical skills should not be pressured into becoming unnatural researchers. Much as many excellent teachers in universities of all sorts would rather teach than write, and can be excellent scholars without being cutting-edge researchers, so many practitioners are happy to be thoughtful and conscientious teachers without wishing to be something else.

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If Lord Mandelson wants to behave as a seriously hard-headed utilitarian, good luck to him. And if this seems philistine, it isn't. We have got into a mindset that thinks that anything serious must be the subject of a degree. This is self-evidently crazy. Why spoil the pleasures of reading, writing, listening to good music or looking at great art by turning everything into a degree module? Taking technical education seriously is entirely consistent with spending a lot more than we do now on the arts and libraries.