Thursday, August 04, 2005

On Darwin and Schumpeter and Higher Education

With President Bush calling for the teaching of “Divine Intervention” presumably under the belief that all the splendor in which we live couldn’t possibly have been caused by a series of accidents, it seems worth noting that in the social world that is Higher Education things at present appear less than splendid and the forces of change that Darwin focused on are often cruel and debilitating. Natural disasters are painful. Species become extinct. The dying out of the once dominant forms is predictable. What replaces them is not.

We in Public Higher Ed are facing twin crises. The first is the crisis in cost. In this Higher Ed has followed Health Care. Within Higher Ed, this is being portrayed as State government walking away from it historic role of funding Higher Ed and there is a certain truth to that. The acceleration in the full tuition that non-needy families are required to pay is partly real cost increase and partly compensation for the decline in state funding. But it is not the total problem.

Another significant factor, commented on substantially at the time but hardly remarked upon nowadays, was the elimination of mandatory retirement while tenure otherwise remained intact. In a world where nominal salaries are unheard of and even zero percentage increases are rare as long as there are some raises given and where inflation has been comparatively benign for the last 15 or 20 years, there have been real increases in the salaries of tenured faculty inclusive of fringe benefits and retirement pay. This effect has been accentuated by the intense quality competition between universities, something fueled by the under supply of elite institutions that I’ve commented on in an earlier post.

Still another factor, one that I have not seen remarked on at all but one that seems quite obvious under even modest reflection is federal funding of research. In the health care arena the effect may be most obvious as the product of the research indirectly produces expensive equipment, procedures, or drugs that undoubtedly enhance quality of life but equally surely raise costs. But also with health care research, as with other sponsored research, the funding is given in a leveraged manner where the institution that is the home of the principal investigator receiving the grant is expected to provide a variety of in kin complementary inputs to support the research. In this way the research competes for general campus funds and thereby raises the cost of operation. This is not to the say anything at all about the benefit that the research creates. There may be great return in terms of new product or services created, a jobs multiplier, and general economic well being. But the beneficiaries are typically other than the families paying tuition to the university. For them, the impact is to increase cost.

There are, of course, yet other cost issues – the hyperinflation in journal pricing, the increased demands to keep our data secure, and the competition for some of our faculty from outside academe, to name just a few. But the one I want con consider here is the Schumpeterian one. We are excellent on the “creative” part of the Schumpeterian ideal. We can readily create new courses and new curricula, new research centers and foci for technology transfer. But we are fairly horrible on the “destruction” part. We don’t kill off areas of our operation easily if at all. Everything has some constituency. And being subsidized is not and indicator that the activity is not prized. So the university is constantly in a state of increase in scope. This is a big cost contributor. And it is what those outside academe probably would focus on in bringing a “business methodology” to higher education. But that isn’t easy. Especially at large public universities which have a commitment to be comprehensive, what does one destroy? We really do need to figure this out or we’ll implode under the weight of all we offer. The Schumpeterian view offers the potential that we’ll control our own destiny. It can be less harsh than the Darwinian approach. But it does require creative destruction.

Let’s turn to the other crises, the crises in commitment. Here I’m focusing on the teaching mission only. On the student side, I’ve written several posts about the source of student alienation and the need to make their experience more one of self-actualization. On the faculty side, certainly the tenure and research pressures are stronger than. And from the administration perspective, the cost issues with the creative destruction force a tepid kind of support.

All of this is creating a negative spiral and at present the world looks quite Darwinian. How do we get out of this loop? In economic principles we talk about comparative advantage as a motivation for trade. To me, that seems like a good starting point. We need to niche and become less comprehensive, because of the cost issues. But we need to simultaneously satisfy our constituency.

Here is a hypothetical to illustrate. Suppose Illinois has a good Math department but only an ok Economics department while at Indiana it is flip flopped. Then a deal is struck between the two universities so that each gets to downsize its weak department, student who reside in state but want to study in the area that their state university is weak in get to go to the neighboring state at in state tuition rates.

Of course that is too simple. Maybe they only want to study a field as a correlate to their main area of interest and the state university is strong in the principal field. What then? If courses were taught online and for the distance students they are treated as if they are taking a local course, then this might be a satisfactory alternative from their point of view. It is a commonplace now to observe that students find it too hard to assemble credits taken at multiple universities. However, if that assembly were part of a university’s own strategy to niche its offerings according to its strengths, then the university and student interests are brought more into line. (And then we are left with the more mundane issue of convincing the skeptics that the online offering offered by that other university is as good or better than the face to face offering provided locally.)

Before we get too pleased with ourselves for coming up with the solution, let’s note that the faculty are also a constituency and even if, for example, the Indiana Economics department were willing to hire some of the better Economics faculty at Illinois, the Economics faculty at Illinois may be none too keen about downsizing their department. (I want to repeat here that this is a hypothetical. I’m using my own department as an example lest I be accused of advocating the down sizing of some other department.) So this will be painful to affect and unless the administration is strong willed and visionary, not very likely to happen.

The alternative is to search for yet more revenue or to reduce costs via innovation in practice or to squeeze all are activities as we have been doing and hope that we can hold on. The first seems unlikely now. The third is what I mean by the Darwinian approach. Eventually as we continue to squeeze things will break in an unplanned way and it’s hard to predict what will happen. The second is where I see the most possibility and where I will focus the next several posts.

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