THE University of Washington has just suffered a $12 million budget cut. Political pressures within the university are to spread the pain by giving each college and program a proportional cut. With each unit suffering, say, a 2.4 percent reduction, no one has a strong incentive to mobilize to protect their special, provincial interest.

Such caving-in minimizes short-run pain but gradually erodes quality. To avoid this erosion, hard choices must be made. It would be ethically and intellectually irresponsible to pretend these choices away and wait for better times, perhaps after the next president is appointed. While there's no unambiguously happy ending, at least we'll have a better reading of people's character as the process unfolds.

Our budgetary shortfall is neither transitory nor local. Universities' golden age has passed, but our expectations lag reality. As David Goodstein, vice provost at Caltech noted, universities are on the threshold of "the permanent era of constraint." Federal and state governments are reducing aid. They have tight budgets and electorates resist further tax increases. After years of tuition growth, some falling enrollments, and the expenses of increasing diversity, many schools cannot maintain current budgets of existing programs. This is most evident in California but these pressures are nationwide.

Like other large complex organizations, units within universities are often run with an eye toward the benefits of those in them, not only for their stated purpose. When tough decisions are being made, we should expect the affected faculty and administrators to carefully weigh the expected impact of those decisions on their own well-being. These considerations of self interest often trump both the social value of their programs and the interests of students in general. Given human nature, it will not be otherwise.

Hence, when universities face cutbacks, an adverse selection process goes to work. And here's the unhappy result: Those with the sorriest prospects on the outside (or at other universities) have the greatest incentive to keep their present positions. University politics often get especially nasty as projected losers attempt to discredit the university's leadership. An important principle of political economy becomes evident - last guys don't finish nice.

A Ph.D. does not grant immunity from the labor market. Unless protected from market forces, by tenure for example, professors are usually paid an amount roughly equal to their value outside. This is why the salaries in medical schools are substantially higher than those in medieval studies, higher in computer science than in classics, higher in economics than in ecology. Some are paid less than their social contribution, and many find this unfair, but this is how the world works.

It doesn't require training in economics to understand this process. Those with poor options elsewhere will fight the hardest to maintain their positions. They argue that the pain should be shared equally and programs spared. They find many arguments why their program should be saved and they mobilize pressures to retain their existing budget share. Given the stakes, it would be naive to expect any other behavior.

But not all resistance is self-serving. We face the classic elements of tragedy when legitimate values collide and people face competing, inconsistent obligations. Some people in programs slated for elimination are no doubt highly dedicated and competent. Most will sincerely believe that their program is more valuable to the university stakeholders than some others being retained. And in these terribly important cases, there is no clear and objective standard of evaluation.

This is not an easy time to be the president of a great university. Cuts cannot be avoided. Because of rigidities and scale requirements, the responsible decision is to cut marginal programs out entirely. The pressures are to share the pain and keep all alive but on short rations. The universities that remain in the top tier will focus their resources on the high-quality programs. The president has the responsibility to take the grand view and maximize quality.

Only in Lake Wobegon are all departments and programs above average. Every large first-rate university has some second- or third-rate departments, schools and programs. When crunch time comes, they should go. This is the most intellectually and ethically responsible policy. Good leaders of great universities must select by quality and contribution to excellence. Since we can't have everything, we should resist political pressures and keep the best and most valuable. It requires great character, intelligence and judgment to do this. The demonstration of such qualities is the positive feature of the classic tragedies.

William Gerberding, president of UW, was courageous when he announced a cut of faculty and departments. For the long-run future of a great university, Gerberding made the right decision. The question is, will he be able to implement it?

When a drought hits and feed gets short, the rancher can choose from two strategies: put all stock on short rations, or as my grandfather would say, "It's time to put wheels under the poor cows and take them to market." He knew that herd quality would suffer if we didn't cull now. University presidents face the same reality.