When researchers compared the Shanghai Ranking of World Universities to budgetary constraints they found a number of important, but not surprising results.
The Shanghai Ranking includes things like the number of patents and Nobel Prize winners a university generates along with citations to faculty publications.
Among European universities, those that did not require government approval of the university budget had a 50% better ranking that those that did require government approval. European universities that were free to pay faculty as they saw fit also had a ranking 50% better than those required to pay faculty on a union style pay scale based on seniority. Ranking were also much higher when universities were free to select undergraduate student compared to those with government mandates. Rankings also increased with the percentage of research money that was competitively acquired. They found that their results also applied to the United States.
Sounds like the more private and autonomous a university is, the better it performs. The measuring rod (i.e. the Shanghai Index) may be bent, but the evidence clearly indicates government failure in universities.