What does a “culture of free speech” look like?

(Was working on a longer post, but Scott’s post below covers most of it, so I’ll keep this short)

What the Rutgers situation represents is this: The leaders of a large, internally complex institution, who are unaccountable in any formal way to the vast majority of the members of that institution, make a decision on their behalf to bestow a high honor (and a sum of money most students from that institution would be lucky to earn in a year) upon one of the primary architects of the greatest political failure of the last generation; one that was immorally pursued and incompetently prosecuted and one that will adversely shape the futures of these people in whose name she is being honored. Her fellow elites have not only failed to sanction her egregious failure in any way, they’ve used the considerable tools at their disposal to shower her with honors and sizable checks.

In the first scenario, some of the largely powerless people near the bottom of this institution’s hierarchy use what little power they do have–the informal power of voice to criticize this gross error in judgment. They are unafraid to publicly disagree with the institutions’ elites, and not cowed into silence out fear of creating discomfort or “controversy.”

In the second scenario, these largely powerless people virtually all self-censor and remain silent about this error in judgment out of fear that the powers that be might find their vocal dissent in some way embarrassing or uncomfortable.

There seem to be a good number of people who think the second scenario is a better indication of a healthy “free speech culture” than the first one. That seems so obviously and completely wrong I can hardly figure out how to rebut it.