
Will America’s universities go the way of its car companies?  - cwan
http://www.economist.com/node/16941775
======
nanairo
I must admit that I am always a bit prejudicial when I hear an business person
(or a business magazine like this) talking about universities.

They seem to view Universities as a business proposal: "How much do we invest?
How much do we get out of it?", which it shouldn't be. Take this quote: "If
colleges were businesses, they would be ripe for hostile takeovers, complete
with serious cost-cutting and painful reorganisations.”.

My feeling is that the person who said it is thinking of streamlining it,
removing subjects which bring little profit, and increasing those with profit.
So out goes "geography" but also "gender studies", and instead more money is
put into "pharmacy", "genetics", "economics and MBA".

The result would be great from a business perspective, but that's what
companies and business are for. If there's plenty of money many companies will
be investigating in those subjects just as well.

Instead Universities should also help the student become full rounded, more
knowledgable even of things that may not bring money, and should let
professors study subjects despite there being no monetary advantage.

Where has the passion for knowledge gone? Let the student have a place to get
knowledge, and the professor have a place to expand it.

~~~
yequalsx
I teach at a community college. The price is quite low (and my pay). Society
does not want to pay for knowledge. It does not see a benefit in having people
who appreciate art, literature, culture, music, etc. It only sees a benefit
from electrical engineering and other such subjects. It's a problem of society
and it's short sighted goals.

~~~
timwiseman
No, it is that I do not want to be forced to pay directly or indirectly for
someone else to appreciate art, literature, or music, especially not when
there are kids down my block that are barely able to read and pot holes in the
roads I drive on. That truly is not a high priority for a society with other
more pressing problems.

I am however quite willing to pay with my own money so that I and my family
can learn to appreciate literature and culture. I am also quite happy to
support the artists whose work I enjoy. But I am not happy to have tax money
support it until long after ever child learns the basics well and the local
police department is fully funded.

[Edit, fixed typo.]

~~~
JabavuAdams
You seem to think that these are independent issues. I.e. if we just throw
more money at basic literacy, road-maintenance, and policing, then society
will be better. If we throw money at art and cultural education, then we're
losing out on money for the above.

The fact is that a lot of social problems stem from cultural problems. You can
keep throwing money and teachers at those kids down the street, but it won't
get them to read. Instead, you need to change their culture (and their
parents') to one of scholarship.

I find this "don't spend my tax dollars on anything that doesn't directly
benefit me" attitude to be mean-spirited, but more importantly, to be one of
the cultural problems that helps to foster the ills you cite.

~~~
timwiseman
Yummyfajitas said it quite nicely, but permit me to say it on my own behalf.

I am not at all saying do not spend my tax dollars on things that don't
directly benefit me. I said that we should not spend it on things like art and
literature until after we have taken care of things like basic education,
infrastructure, law enforcement, and yes even universal healthcare and
gaurunteed access to sufficient food.

I am a great lover of America and I think (with perhaps some admitted bias)
that it is a truly great country. But I know kids on my own block that can
barely read and I pass by a homeless shelter with large crowds outside it on
my way to work, and there is an active police officer sitting behind me in law
school class because he doesn't make enough to support his family comfortably.
I strongly object to spending tax money on art and literature until long after
those issues are fixed.

And no, throwing money at those issues won't fix them, but it would be a
start. Money is not sufficient for a solution, but I suspect it is necessary
(or at least highly helpful).

~~~
yequalsx
It sounds like you have the attitude of the government just providing the
basics. I've taught you to read to go read what you want. But without access
to a decent library, without training on how to appreciate literature it seems
that your point of view is to utilitarian. The arts enrich us all in ways that
can't be counted merely by monetary utility. I would like to live in a society
that recognizes this and is willing to support it. It's not like it would cost
a great deal or that the money could not come out of the budgets of other
government agencies. It doesn't have to mean an additional expense.

~~~
cageface
Maybe my experience wasn't typical, but my liberal arts classes in college
were a joke. They were crowded, hurried, narrowly focused, and taught by
professors that didn't seem to have the time or the inclination to provoke the
students into new ways of thinking at all.

I suppose it's different at schools that can afford to staff these classes at
1:15 student teacher ratios with good teachers but the money that was spent on
making me a "well rounded" student would have gone a lot further if I'd just
been given a pile of books to read and some time at a quiet desk.

------
goodwinb
Can you HNers think of a way to separate the teaching aspect of university
from the research aspect?

They seem to serve two different customers. Teaching is really for students to
educate them and season them up for life. Research is for the government or
business and makes the professor and university money.

I think we can all remember a hard core research professor who could not teach
a class worth a damn. On the other hand having students proximal to research
projects is good for both; students receive early job experience and research
projects have access to cheap educated labor.

What business model in the future should universities follow?

~~~
nanairo
The model already exist: school vs. universities.

It is just---and this is just my opinion---that as human knowledge became
bigger and bigger, what the people at the edge, pushing the envelope do, is
further and further from what a 1st year undergraduate does.

Basically we would need another school in the middle for what is a BA/BSci for
example, and use univeristy (and university professors) for masters and phds.

As for your example of hard core research professor, the problem is that at
one point the number of professors who know a subject become very very small,
and hence it's important to put the student directly in contact with those who
are expert in the field. Alas it doesn't always work. But for very high levels
(masters and phds) that's the only way it can be.

~~~
pigbucket
Right, but the school v. university model is breaking down for more than one
reason. The problem has two edges. Just when you want, because of the
expanding boundaries of knowledge, increasingly well-prepared undergraduates,
you get the opposite. US universities typically have to teach a depressingly
unchallenging hodgepodge of general education courses and remedial courses
because students get fucked by the high-school system and because everyone and
his brother these days simply must to go to college, no matter how dumb the
brother is. A society that depends on universities to teach basic English
composition, to take the most egregious example, is like ... well, I can't
think of anything that's quite that ridiculous, but it's a massive waste of
resources. But it's also a problem that no one wants to solve: It relieves
high schools of the burden of actually teaching anything. It's lucrative for
the universities, which just throw cheap grad students at the problem. And the
four-year continuation of secondary education that the University has become
for many is a nice (if hugely expensive, but who gives a fuck) way to keep
down unemployment. End of Rant.

------
WilliamLP
It is interesting just how much Y-Combinator itself resembles the business
model of a university, except that it really can make a deal for a percent of
a student's future earnings in a socially palatable way. Like a top
university, much of its value seems to come from signaling and the hype
generated just from the _label_ of being a Y-Combinator startup.

This may or not be correlated with the actual advice but it is certainly
correlated with the difficulty of the admission process, and this forms a
positive feedback loop. Top universities also have on their side the fact that
having rich parents very much correlates with future success, which in term
helps perpetuate their prestige and ability to charge more for admissions.

------
carbocation
In contrast to what this surprisingly uninformed piece claims, the top
universities do compete on price. In fact, they offer incredibly good
financial aid packages to people not even remotely poor (families earning over
100k still get discounts). Thus, very few end up paying the sticker price.
There actually is downward pressure on price, but this is because it's coming
from the top schools, not from any disruptive force. Why? Because the top
schools don't make most of their income from tuition, so they can afford to
lose it.

~~~
dragoon
_In fact, they offer incredibly good financial aid packages to people not even
remotely poor (families earning over 100k still get discounts). Thus, very few
end up paying the sticker price._

I wouldn't say it's "incredibly good financial aid", especially in light of
the nightmarishly high tuitions universities now charge and the fact that an
inordinately high percentage of people have to take on _nondischargeable_
debt. It's price discrimination. I'm not saying this is a bad thing; it's
arguably for the better that colleges do this, because if they didn't, poor
students would have no hope of attending, but price discrimination is still
what's happening.

Also, only a token number of low-income students are admitted to the top
schools, due to "extracurricular" admissions criteria that are socioeconomic
by design. This is why these universities can fearlessly offer need-blind
admissions; poor kids rarely pass the extracurricular hurdles.

~~~
carbocation
What I'm getting out of this is that you prefer the term "price
discrimination" to "financial aid." The specific choice of words doesn't
really matter to me if they're describing the same phenomenon.

> Also, only a token number of low-income students are admitted to the top
> schools, due to "extracurricular" admissions criteria that are socioeconomic
> by design. This is why these universities can fearlessly offer need-blind
> admissions; poor kids rarely pass the extracurricular hurdles.

Since we're talking about top schools, let's focus on Yale. Enough people with
some degree of need are passing the "extracurricular hurdles" that _55% of
Yalies receive financial aid_. Yale spends nearly $100 million annually on
financial aid. And this is up from roughly $32 million in 2001. This is not
just a "token" expenditure, nor is it a token growth in spending.

~~~
dragoon
_Enough people with some degree of need are passing the "extracurricular
hurdles" that 55% of Yalies receive financial aid._

The vast, vast, vast majority of people in that 55% are not even remotely
poor. Most are of upper-middle income and of even higher socioeconomic status
(e.g. progeny of diplomats, famous art gallery owners, and esteemed professors
who make a _merely_ upper-middle income but are higher in social status).

 _Yale spends nearly $100 million annually on financial aid. And this is up
from roughly $32 million in 2001. This is not just a "token" expenditure, nor
is it a token growth in spending._

It "spends" that money by giving aid packages that can only be redeemed by
purchasing their extremely expensive product. Don't get me wrong; I think it's
better for universities to price discriminate in this case than for them not
to do so. However, it's not accurate to claim that they're bending over
backward to provide equal access to the poor, as they're demonstrably not
doing this.

~~~
lg
I can tell you from experience: people making upper-middle income don't get
much aid from the ivies. If you're poor, it's free, and if you're rich, who
cares, but if your family's income is in the low six figures, you're looking
at big loans.

~~~
dragoon
I know that. I was saying that in reference to his claim that 55% of Yale
students receive financial aid, which is a bit of a red herring, because the
vast majority of Americans qualify for some (but often not much) aid.

~~~
carbocation
Why does the fact that most Americans qualify for some aid make the Yale's
55%-on-financial-aid stat a red herring?

(I suspect that, in what I write below below, I must not be responding to your
actual point, but can you clarify what your point is?)

It's not like Yale is giving lip service to aid - it's giving $92,000,000
annually. This means that, on average, each Yale student gets $17,700 per
year.

But since we know that 55% receive financial aid, it means that among those
who do receive aid, the average package is $31,000 per year.

55% of Yale students get almost their entire tuition paid for by the
university. This is not counting outside scholarships, etc. This isn't just
"some" aid - this is a huge amount of aid on an annual per-individual basis.

~~~
sabj
Good parsing of the numbers here.

The stat that is traditionally used to show socioeconomic diversity (or lack
thereof) is the % of students receiving Pell Grants, and in this department
Yale remains weak, but it's not for lack of effort...

While median / average family income at Yale remains fairly high, financial
aid is huge. I'm someone who gets crushed in the fuzzy middle range, but I
still appreciate its generous policies. Wish that they were more generous, or
that the cost of living in the greater Boston area was lower so that my family
income was lower and aid was correspondingly higher. That's one big bummer -
something reasonable in one part of the country might make you rich in
Oklahoma, but that can't be, or isn't, taken into account.

:(

------
SkyMarshal
It appears that the US's top, world-class universities will survive relatively
easily, and the affordable and profitable degree-factories like Phoenix may as
well. State Universities will too in one form or another, depending on the
finances of their state govt.

But the private ones in the middle that charge high tuition & fees, are not
particularly renowned, and have come to rely on easy credit for huge student
loans are going to struggle.

------
whyenot
Go to a state school. In California, the tuition for a California State
University is about $5500 a year. If you can't afford that, you likely qualify
for a CalGrant which is awarded based on need and are around $5400 per school
year.

For example, San Jose State University here in Silicon Valley, doesn't have
the reputation that a top tier school has, but you can still get a very good
education, in some ways better than at a more prestigious school. In
California's CSU system, teaching is emphasized over research. Perhaps due to
practice or self selection, most professors at SJSU seem to be very good
teachers. Professors have few (if any) graduate students so they have more
time for undergraduates and there are more research opportunities for
undergrads.

~~~
oiuygtfrtghyju
> doesn't have the reputation that a top tier school has

Thats the problem: The deal isn't go to university and learn stuff. The deal
is go to university and you will get a better job, the extra salary you make
will pay back the tuition and lost years of income.

As more people go to uni the more the market segments - it becomes go to
Harvard/Yale, you will pay 10x as much in tuition but earn 100x as much in
salary. But go to nowheres ville U and your extra salary is 0.

The problem is that for this (and the previous) generation the extra salary no
longer pays back the costs.

~~~
JoeAltmaier
Actually College is different from Trade School. Its not clear salary is the
goal. Becoming a person better able to function and contribute is the goal.
Sometimes that means, yes, gender study papers.

------
yef
I wonder why the author didn't try to draw an analogy to cheap, high-quality
Japanese imports. Oh, probably because there isn't one. Due to cultural
differences, disruptions in higher education will most likely be homegrown and
hopefully create downward price pressure on traditional higher education.

------
timr
If you're reading this and assuming it means the end of the value of academic
credentials, I have some bad news: the Valley is one of the most credentialed
places I've worked. And with few exceptions, the people you hear about in the
Valley entrepreneurial echo chamber went to _great_ schools, or got advanced
degrees from schools with great research programs.

In my entire life before moving to SF, I knew only a handful of Ivy League
graduates. Here, nearly every other person I meet is an Ivy grad, or a grad
from a top-tier research school, such as MIT, Stanford, etc. It's gotten to
the point that I'm fairly surprised when I meet people here who went to
lesser-known schools. Credentials are still important, even in the so-called
egalitarian world of technology.

Call me cynical, but if you're reading this and hoping that the imminent
collapse of the university system ushers in an egalitarian utopi, you might be
waiting a while. Credentials will continue to matter -- they just won't be
accessible to anyone but the rich.

~~~
patinador
Reading this one could think that university is a good source for
entrepreneurs. Credentials can become a signal that you are a capable people.

------
GBKS
I do agree with this in some points.

My main complaint with US universities (from my experience) is lack of focus
on producing the brightest people possible. It's simply too easy to be
"undecided" for 3 years and end up with a wishy-washy degree that doesn't
prepare you for much.

Once I realized that grades were a low standard, I started setting my own
standards and put in a lot of extra time and effort that ended up getting me a
good job right out of college.

So the comparison of universities (at least undergrad) being lazy, like the
car companies, I can agree with (again, from my experience). Higher standards
and expectations of student performance are needed.

~~~
JoeAltmaier
I set my standards early, quit looking up my test scores, got out of college
what I wanted and skipped the rest. I figured I knew better than my Professors
how well prepared I was, the test score was not adding information, so I
refused to look at it. I was honestly wondering if I would graduate, but I
did.

MSEE Stanford

------
DannoHung
Are there really diminishing returns on STEM research?

~~~
kurtosis
I think so. At any one point in time, at the frontier of human knowledge,
there are many research proposals floating around for what direction we should
next expand the frontier. Some of these proposals will lead to valuable gains
in knowledge, and profitable technologies. Most will amount to nothing, or at
most a footnote in a more important work. It becomes clear after the fact that
the funding money should have been invested elsewhere.

So if you are a funding agency, you rank the proposals from best to worst. If
you continuously added money to the agencies budget, the quality of the
proposals would get lower and lower. I believe that is what one means by
diminishing returns.

~~~
dragoon
"Diminishing returns" also means next to nothing. Technically speaking, it
means that the _second_ derivative of output with respect to input is
negative, when we care about the first. For example, you exhibit "diminishing
returns" for each calorie you eat-- the first 500 is far more important than
the second 500-- but this doesn't mean you eat only 500 calories per day.

What actually matters is not whether returns diminish, because this tends to
happen right away if inputs are allocated to the most efficient projects, but
the point where the marginal value gained is less than the cost of the input.

~~~
philwelch
"For example, you exhibit "diminishing returns" for each calorie you eat-- the
first 500 is far more important than the second 500-- but this doesn't mean
you eat only 500 calories per day."

No, but it _does_ mean there exists a point where you should stop eating more
calories.

------
kmfrk
But why are American universities placed so highly in the cited ranking if
everything is ashambles as the article author claims?

The university prices are obviously on an inflationary course, but how else do
they compare to the world outside?

~~~
carbocation
This happens because the rankings cited are a function of the academic output
of the faculty. In contrast, this article is largely worrying about
undergraduate-specific issues. In other words, I think you've identified a
_non sequitur_ committed by the author.

~~~
geebee
I agree, these are only vaguely related issues.

An undergraduate gets into Univ A and Univ B. Which one does he choose?

A highly promising young researcher is recruited as a faculty member by univ A
and univ B. Which does he choose?

The difference between these questions also explains why some ratings place
large, public research universities in the top few spots, and why in others
(like us news), none of them crack the top 20.

Of course, top faculty and research can be a draw for undergraduates, so they
aren't totally unrelated, but grad (especially phd) students are far more
influenced by the second question as well.

------
known
American academic system should ideally create employers and not employees

------
binaryfinery
In the UK we said, "We don't need manufacturing, we have our scientists and
R&D".

Then when our Universities and our R&D started to decline, we said "We don't
need our Universities and R&D, we have our Service Economy".

Then when our Service Economy went offshore, we said "We dont need all our
Service Economy, we have our Financial Services Economy".

Everything outside London is a wasteland. The average wage is subsistence
living, if you make one at all. But the Alphas live in a magical city, where
cocaine and girls are all easily affordable on multi-million pound salaries.

The UK once ruled the world. The US couldn't be following us down to ruin
better if we'd given them a map.

~~~
imp
Do you have ideas for a solution? What could "we" do differently, given that
the US is really a collection of individual businesses each acting in their
own best interests.

~~~
binaryfinery
The problem is the prisoners dilemma. It is in businesses own best interests
to manufacture, design, etc, in the USA, but only if their competitors also do
so. Instead they are engaging in destroying the purchasing power of their own
customers (direct or indirect).

As a result, the only way this could be achieved would be by government
intervention, but big business has that in their pocket, and the populace
firmly convinced that globalization is good for them.

------
dragoon
These are completely different markets. The majority of car consumers just
want reliable transportation; the car is essentially a commodity. If Japanese
cars are of higher quality, people will buy them instead of American cars.

With university degrees, quality of education is second and prestige is first
in importance. These are correlated but not always the same, and this is one
of the reasons why academia is not vulnerable to upstarts, unless there's a
radical shift in how to evaluate prestige (and I doubt there will be).

Both are vocational necessities for most professionals in the U.S., but the
"prestige" of the car one takes to work is irrelevant whereas that of the
degree is essential.

~~~
silvestrov
This can change quickly. American cars in the 60'ies were not commodities,
design was much more important back then.

There is nothing intrinsic in education which makes the university's prestige
the most important. Look outside USA, e.g. at northern Europe where the
prestige of the university is not important, but the grades and (esp.) the
person are.

For some professions the university and grades is all that's considered when
employing someone. But for others (e.g. programming) you need to test the
person yourself because the university and grades doesn't tell you (reliably)
how good the candidate is.

~~~
enko
> But for others (e.g. programming) you need to test the person yourself
> because the university and grades doesn't tell you (reliably) how good the
> candidate is.

In many small programming shops I know of, whether or not you even have a
degree is irrelevant for pretty much this exact reason. A healthy GitHub
portfolio & a blog with some reasonably insightful articles > any CS degree
you can name (including MIT).

If a 16-year-old asked you, sincerely, what the best past forward for a
programmer was for them, would you unhesitatingly recommend uni? I have my
doubts.

I have felt for some time that the best education in CS is a macbook pro and a
2 year backpacking holiday and this conviction is only growing over time.

------
patana
If university are a source of education, knowledge, research and innovation
and not a factory for making cars, why should they be managed in the same way?

If people were like a car, you could push the accelerator to make them move
quickly, but there is no accelerator to push to achieve the goals of
universities.

