Thursday, February 09, 2006

BASIC PROBLEMS WITH CURRENT UNIVERSITIES -- AND ALTERNATIVES TO THEM

Go ahead and sneer; cringe and shudder — get it out of your system. Oh the horror, running a profitable business that includes many of the facets of a traditional higher education. Perhaps this is one of the reasons that a disproportionate amount of the Ivory Tower is socialistically inclined; subconsciously they may fear that the market value of their research, teaching and professional existence subsists among relatively strange bedfellows, those whose productivity fluctuates along the poverty line.

Will distance education and online courses replace the intimacy of round table discussions with high-caliber teachers? David Gelernter, a professor of computer science at Yale, does not think so. Based upon my own experiences I would have to agree. However we both believe a free market in degree granting. One liberated from political regulation and business myopia, is just around the corner. The proliferation and enthusiasm of such degrees is due in part to the fact that they can often times be earned in a more convenient medium, for a fraction of the cost and in a time-efficient manner. Say goodbye to commuting, as well as student fees you never took advantage of. Nor will you have to rearrange your life so you can attend a class whose instructor instills information that could have just as easily been gleaned from a $50 textbook. As the late Peter Drucker succinctly put it, "Universities won't survive. The future is outside the traditional campus, outside the traditional classroom. Distance learning is coming on fast."

Out with the old, in with the new, right? How will the traditional educational model, built for agricultural and industrialized economies, based on residential living, survive an ever-expanding mouse-accessible information age? Is the cultivation of inquisitiveness only available for four interest-bearing payments of $19,999 at State U.? Are there drawbacks? Like any other undertaking there are always opportunity costs; activities you forfeit in order to pursue alternatives. By enrolling into an online program, Utopia will not spring forth from earth's bosom nor will you sleep on cloud nine. You will still get flat tires and computer viruses, maybe even a headache or two.

Is college as an institution of higher learning going to survive? The top-tier, the Ivies (both public and private), the flagships, those with enough political and economic pull will all perhaps survive into the future. Perhaps various departments such as those comprising STEM (e.g. science, technology, engineering, math), Law or Medical school — perhaps any and all, but as Peter Drucker succinctly put it, residential life will, sooner rather than later, go the way of the Dodo.

The point of all this is that many universities and colleges are simply not organized to run like a profit-making business. Rather than focusing on revenue generating specialties, they overextend and misallocate resources — ultimately beyond their fiduciary capacity thus find themselves asking for handouts (e.g. donations). This is not to say that the modern institution as a whole will be done away with, but rather they will inevitably be forced to confront the subsidy bubbles that insulate assorted pursuits. How they deal with the reality of market forces will ultimately determine whether each institution lasts.

Why go to college in the first place? For some individuals, attending college is viewed simply as a quick and easy way to hit a monetary jackpot. Like many other illusions of grandeur, it is reminiscent to the unscrupulous business plan of South Park's Underpants Gnomes:

Feeding this spurious dream are State subsidized loans which encourage and create distortions in the labor market, not to mention the reallocation of productive capital. Arguably it may be difficult to compare today's Van Wilder University with the "classical" schools of Oxford or Cambridge. Nevertheless, for the academic school year 2005-2006, the average tuition, fees, room and board of attending a four-year public institution: $12,127. For a four-year private institution: $29,026.

One of the justifications for the price tag is that, in the long run, a college-educated individual would make more money than someone without said education. And since being wealthier "benefits society at large," efforts promoting this lifestyle should be undertaken. However, as Neal Zupancic points out, this is a non sequitur as the causal relationship is not directly connected. This fallacious logic however, did not prevent State intervention from Senator Claiborne Pell who in 1972 pushed legislation which subsidized student loans - under the inauspicious name, a Pell Grant.

Relatively cheap financing (due to these subsidies) coupled with lower admission standards has led a surge in student populations at State universities across the board. Despite alternate financial sources (such as federal grants and private donations), per capita spending has significantly decreased over the past five years. While the demographics may shift, the attendance trend is not decreasing for the foreseeable future.

The central underlying element to Senator Pell's reasoning was skewed: those with college educations earned more money not because of the framed stamped and signed parchments hanging on the living room wall, but because they had some kind of intellectual training that gave them a competitive and productive edge over their non-educated brethren. And for the better part of 30 years, this "go to college and become rich" mentality has been successfully drummed into the minds of several generations of not only boobus Americanus, but much of the developing and industrialized world too.

Arguments regarding sub-standard educations aside, the fiscal outlook of those involved in following the accredited institution route has been documented and demonstrated to be a Pyrrich victory, as noted by Christopher Westley. Not that these individuals are unsuccessful upon graduation, but that they become broke, indebted and even bankrupt — all in the pursuit of a hyped Potemkin lifestyle.

Much like health care or even voting (e.g. what is the market value for a single vote, close to zero?), the industry of higher education has been sheltered from market pressures. Campuses across the country, especially those run at large State institutions are inefficient planned economies — microcosms of socialism in action. As Rothbard's law predicts, the University is not specializing in what it does best. Like an octopus, its tentacles end up in many unrelated pies in which scarce resources are diverted to enterprises and endeavors that stray from what its human capital does best: research and scholarship. The administration involves itself in a smorgasbord of activities that range from acting as surrogate parents and landlords to maintaining campus hospitals and transportation services. Monopolizing food services, dorm-room cleaning (which now apparently involves class-warfare) and even landscaping - no enterprise is too small to be left alone nor too big to be undertaken.

For instance, cell phones have dramatically altered one traditional revenue stream of many universities -- that of long-distance phone calls. As a result, some colleges have raised other student fees to compensate for the budget shortfalls. Or, as Rothbard's adage literally rings true, several universities are now offering their own cell phone plans to counter this trend.

Despite the sizable endowments, grants and discretionary donations that many research universities have, the return on investment from licensing internal innovations is next to nil. This coupled with increased annuities wrought by tenure systems has potentially delivered a crippling blow to an entrenched order. The tenure-system was originally created to secure academic freedom for professors — offering flexibility and openness to speak and research freely without fear of repercussion. (See the Hoppe debate.) However from a financial perspective Stephen Kerr notes that, "raising an employee's salary creates an annuity for his or her organizational lifetime. Furthermore, since future increases are normally calculated as a percentage of salary, erroneously increasing someone's pay will tend to become geometrically expensive over time." In other words, a firm should reward productivity, not tradition or longevity. Therefore performance-based contracts can be used in place of a tenure system, an idea now-embraced by numerous college presidents as well.

Many colleges, particularly those that are State-managed, must change their business models with the times. This is not some pie-in-the-sky ultimatum; according to a recent survey of college presidents by The Chronicle of Higher Education, many "are more preoccupied with financial issues than educational ones." One plausible solution to these monetary quagmires has an irksome kick to it, "53 percent of the respondents said they believed that tenure for faculty members should be abolished in favor of long-term contracts, but those who had been professors with tenure supported it more than those who had not."

Over the past decade, many state universities have learned that they must locate alternate sources of funding as they can no longer solely live off the State dole. In fact, whether they like it or not, many of the flagship State-funded institutions are marginally becoming privatized. For instance, through a charter initiative adopted last year, the University of Virginia (along with Virginia Tech and William & Mary) now has the freedom to modify tuition rates and operate free of numerous state regulations such as those pertaining to procurement, capital outlay, finance and personnel. This quasi-privatization is a step in the right direction, as it should provide better accountability to those who actually finance educations. And it should be noted that these budget shortfalls are not regionally isolated instances on the East Coast.

While some commentators suggest that specialization is for insects, a large portion of school rank and reputation is weighted in research, which directly correlates to publishing in peer-reviewed journals (i.e. impact factor). For example, numerous departmental performance appraisals require that tenured or tenure-track professors spend the majority of their time on original research and publishing -- and the residual is spent teaching (i.e. publish or perish). In many cases this creates a negatively dichotomous relationship between meticulous research and supportive instruction. Unfortunately, many bright researchers lack the personality or training needed to be effective instructors and vice-versa (thus one of the main differences between research universities and teaching). Because of this, many universities hire individuals who have longer curriculum vitae's than they do vibrant personalities. However, this bittersweet yin-yang has its own sense of irony, as specialization and the division of labor are the most promising solutions to an otherwise ruinous situation.....

While pedagogy (the formal discipline of teaching) has been around for several hundred years, humankind has spent the better part of its existence training and otherwise instilling values, beliefs and information into its brethren and progeny. Throughout its storied evolution and development, theoretical frameworks ranging from blank slates to statistical models have been constructed to explain and prescribe the best way to school and educate one another.

Although the Catholic Church and Jesuit Order are historically credited for organizing the first universities to train their priests, Prussia, architect of the modern Welfare state, unsurprisingly had its hand in the creation of the modern education system, including that of Higher Education. John Taylor Gatto, among others, has noted that it was Prussia that first enacted compulsory attendance at the primary school level, in a concerted effort to erect a martially disciplined and compliant populace. Rigid hierarchies of authority (teacher vs. student) were established in an effort to bridge obedience to both military commanders and technocratic civil servants. Some of these positivist methods and theories trickled into higher education and are extensively chronicled by proponents of the deschooling movement and Montessori approach.

And while some professors lament the latest bugaboo known as the Internet, to be historically consistent they should throw sticks and stones at descendants of Johannes Gutenberg, for inventing a more efficient and systematic process of printing texts — thus eliminating a traditional role of scholastic scribes (though, arguably creating in return a plethora of professions, industries and markets in the process — i.e. creative destruction). Perhaps these same instructors could venture into the terra incognita and partner with startups such as Digital Universe, or hawk their expert knowledge to the highest bidder.......

Much more here





The Myth of the Math and Science Shortage

Why do we keep falling for this? Once in every second-term presidency, the chief executive lectures the country about the impending disaster of a shortage of mathematicians and scientists. People think: oh no, we'd better get on the stick and create some in a hurry! Thus does the President want to spend $50 billion over 10 years — a figure these people made up out of whole cloth — and we are all supposed to submit, cough up, and turn our sons and daughters into natural-science brainiacs. And the President is just sure that his great job-training mission is not limited to Silicon Valley but extends to all cities, rural areas, and ghettos in America.

He is not only raising false hopes, diverting career paths, and wasting money, he is raising a non-problem and purporting to solve it with a non-solution. The central-planning approach to boosting science was tried and failed in every totalitarian country, and the same will be true in nominally free ones as well. Still, it seems that megalomaniacs just can't resist the urge to push the idea, which is why mathematicians and scientists leftover from Soviet days are driving cabs and tending bars in today's Russia.

Let's say the president made a huge stink about the shortage of teeth cleaners, web designers, dancers, or piano tuners. We might more clearly recognize the error. Professions are things chosen by individuals as they follow market signals. If there is a shortage, the wages of the people with these specializations would go up, thereby drawing more people into the profession. People would rush to study teeth cleaning and the like. This influx of new labor would push wages down again. When the wages get too low, people leave these professions and find others.

Thus does the market for labor specializations work rather well, here, there, and everywhere. Wages aren't the only consideration for why people go into some fields and not others, but it is a major factor. The market provides a helpful signaling mechanism to assist people in the development of certain skills. Shortages and surpluses resolve themselves.

No presidential speeches are necessary. No commission needs to be established. No taxpayer dollars need to be expended to make it all happen. We need only pay attention to the signals of the market and follow our own self-interest. The shortages and surpluses are systematically driven toward equilibrium, provided there is no government intervention to spoil the process.

Think of how jobs have changed. We have fewer people around today who know how to farm because fewer people are necessary to do the job. More kids than ever are going into computer sciences because of the perception that these fields will be lucrative in the future. In neither case was a government program necessary. People entering the job market find out quickly what is in demand and what isn't and compare that to their own capacity for doing the job.

The reason the whole math and science racket bamboozles us again and again has to do with our own limitations and our perceptions of foreign countries. We think: heck I know nothing of these subjects, so I can believe that there is a shortage! And surely math and science are the keys to just about everything. And look at those Japanese kids in school that we see on television. They can run circles around the tattooed bums that populate American public schools. We are surely "falling behind!"

In the first place, it wouldn't actually matter if it were true. The whole point of the international division of labor is that we benefit from the skills of everyone around the world. If there were one country in the world where everyone knew math and science — call it Nerdistan — and one other country in the world where everyone specialized in art and literature — call it Poetistan — both countries would enjoy the benefits of both talents provided they were engaged in trade. The Nerds could enjoy poetry and the Poets would have lots of hand-held contraptions. And since the professions in both countries were presumably chosen by market means and voluntary choice, that configuration of talent yields the best of all possible worlds.

Apart from that, however, there is another consideration: none of the past predictions of a math-and-science shortage have ever come true. In fact, when Al Gore raised the same frenzy some years ago, some commentators noted that it is actually easier to make a case that we face a shortage of less skilled workers: people to drive trucks, work in warehouses, clean kitchens and hotels, take care of kids, and work on docks. Here is probably where we are going to see the wage growth in the future.

In any case, people who have studied this in detail have reached an inconclusive verdict, except to observe that current unemployment rates among math and science people with PhDs are higher than the general population. Also, as Daniel Greenberg writes, "Average salary scales for professors show the marketplace value of different disciplines: law, $109,478; business, $79,931; biological and biomedical sciences, $63,988; mathematics, $61,761." He points out that the editor of Science Magazine even noted the absurdity: "Why do we keep wishing to expand the supply of scientists, even though there is no evidence of imminent shortages?"

Actually, Donald Kennedy's entire article is worth a read. He points out that the worst thing that could happen is for government to attract people into a technical field that they really can't handle. They only end up working outside the area in which they are trained, or adding to the ranks of the unemployed. The scientists themselves know how hard the job market is, and of course they don't want more people in their field driving down wages. But the point stands: if wages were high enough, good people would be attracted to these fields without subsidies, badgering, and lecturing.

And what pretense does government have for purporting to know better than the market what jobs are necessary in the future? Somehow it seems especially egregious for the political class to get into this act, for this group is probably the least well educated in technical fields. Their specializations are in duplicity, glad handing, and handing out other people's money to those who are willing to participate in the racket of the redistributivist state. What do they know about the market for mathematicians?

So why does government continually badger us about the impending shortage of mathematicians and scientists? Maybe it is just a big excuse for getting and spending our money, and one excuse is as good as another. But maybe there is something more sinister at work. Perhaps government would like to create a glut of mathematicians and scientists who cannot find work in the private sector, and so these people would have no alternative but to go to work for the Pentagon and other warfare state agencies. Here, politicians imagine, they would create great gizmos to spy on people, centrally plan, and create smart bombs and other toys for politicians to play with.

Sound crazy? I'm open to any explanation, and perhaps this "conspiracy" view supposes the political class to be smarter than it really is. Regardless of the real reason, let us not suppose that the real reason is the one they give: that we face an imminent shortage. We don't. And if we did, the political class would be the last to know about it. To the extent they succeed, they will end up wasting people's time and money, and the person repainting your house might just have a PhD in mathematics.

Source

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For greatest efficiency, lowest cost and maximum choice, ALL schools should be privately owned and run -- with government-paid vouchers for the poor and minimal regulation.

The NEA and similar unions worldwide believe that children should be thoroughly indoctrinated with Green/Left, feminist/homosexual ideology but the "3 R's" are something that kids should just be allowed to "discover"


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