The structural problem he mentioned at the end is this: students are not customers. Had they been customers, who could instantly stop paying this professor because they think he's boring and doesn't deliver, you'd see a completely different picture. It wouldn't be about grades and diplomas anymore. It would be about acquiring knowledge and skills that students can later apply. If they decide this professor cannot teach them, for whatever reason, they would stop paying. If they decide it takes too long - they would stop paying and find a better path or drop it.
What you currently have is a system in which professors feel superior for some reason. And they are not punished financially if some students fail. So the best way to incentivize this system in which professors actually serve their students is to apply market mechanisms to teaching.
The other side of students being customers is that they will see a passing grade as something they have paid for and should receive, not something based on merit. If you paid a lot of money for a course but didn't get a good grade are you more likely to blame yourself or blame the teacher? More likely to give good feedback to a lecturer that gave an A because the course was easy or to a lecturer that gave a C for a very challenging course? Are people more likely to pick courses that have a reputation for low marks, or pick one where they will get better 'value for money'?
The result is grade inflation and it has been well documented:
They then attribute the rapid rise in grade inflation in the last couple of decades to a more “consumer-based approach” to education, which they say “has created both external and internal incentives for the faculty to grade more generously.” More generous grading can produce better instructor reviews, for example, and can help students be more competitive candidates for graduate schools and the job market.
Abolish grades. Teachers are there to teach. Employers are there to assess and hire. You're just looking at it from the same old perspective.
Let me give you an example. I teach programming privately. People pay me $100/hr. Some of them found jobs thanks to my lessons. Some of them realized it's not for them and they didn't waste tons of money and time. And I've been doing this long enough to say there's a demand for my services and people generally like it. I don't grade them, I give them useful feedback on what should they improve and if they should continue. My primary goal is their success, not some stupid grade. Market works great if you apply it right.
As for how to get into the business... I posted a submission on a popular (Russian) programming site offering Ruby and RoR lessons. 2 years later my post is Google's search results first page. Then I started doing Ruby and RoR screencasts in Russian, they became #1 in Russian. That brings even more people. It's not a lot of money, mind you, but at some point I even quit my job completely and went to Thailand for 6 months. I'm thinking of stopping doing it, because frankly, I'm just tired of teaching. For now.
I wanted to make more money. So it was really selfish. And I wasn't good at teaching right away. What kept me on the way to improvement is also money. I knew that if I don't provide value to my student, he'll leave. If I act like a jerk (trust me, such a temptation sometimes), he'll also leave. So I just did the best I could to keep earning the money.
That seems pretty simple to solve - just decouple the courses from the grading process. Let the teacher specialize in teaching and let some other firm that specializes in testing rate/certify your resulting competence or lack thereof in the subject.
Universities are institutions of research, that also happen to teach. To many faculties, students are a necessary evil to fund research. In order to teach students about their research, they have to go through three years of basics, not-so-basics, and then maybe some - to the professor - dull, repetitive, been-there-a-hundred-times preliminaries to their work.
The teaching many of them enjoy is their departmental or faculty seminars. And as a senior undergrad, those were the sessions I enjoyed attending the most. No surprises there. They were talking about the subjects they enjoyed the most.
Now - I'd argue that a professor should be bringing in revenue - either by teaching a popular set of courses that are relevant for students - or by bringing in research dollars. But then that's somewhat missing the point - universities should be exploring areas that industry doesn't yet understand and therefore doesn't want to fund... it's a quandary for sure!
This would probably result in a lot of illiteracy, good education only for the rich, and very little fundamental research.
Market mechanisms are excellent at solving many problems, but they're not magic. They don't work well to provide public goods like high education standards or social mobility, and they generally have a hard time with intangible goods like knowledge.
The "superiority" that you're accusing professors of is actually a reaction to the power struggle brought on by students with the mindset of "I'm paying for x, therefore I get to make the rules." I adamantly disagree with this idea. Students should go to a university with a sense of humility -- they should go not because they're told to by the job market, parents, etc., but because they have the self-reflective ability to identify the gaps in their knowledge ("scio me nihil scire") and the drive to fill those gaps through rigorous study.
The problem? Young people are terrible at self-reflection. I know that there were many points in my youth when I said to myself, "I know all there is to know about life now." This leads to a kind of privileged arrogance that really can't be fully appreciated until one sees how lucky we are to be able to have the opportunity to learn in such safe, structured environment.
> The problem? Young people are terrible at self-reflection.
No. Some people, not just young, are terrible at it. And some are good at it. Universities don't change that because they continue to be nannies. If you want people to be able to assess themselves and know what they want in life, you better start asking them to do it earlier, not later.
So if it results in grade inflation, why not abolish grades? When graduates are hired, why don't you look at their actual skills and knowledge? Teacher's job should be to teach and give feedback, so that students can correct themselves. It is employer's job to assess them.
>So if it results in grade inflation, why not abolish grades?
Why not, indeed? I do think that a portfolio approach is much, much more effective in evaluating people's capacities to do stuff.
It's also costly. That's why we keep grade-based systems: those numbers are cheap to compose, cheap to evaluate, and provide just enough pseudo-objectivity to make bureaucrats feel all right about basing decisions on them without having to do any deeper thinking.
>When graduates are hired, why don't you look at their actual skills and knowledge?
Well they should!
>Teacher's job should be to teach and give feedback, so that students can correct themselves. It is employer's job to assess them.
Slight disagreement, here. You should not be allowed to gum up the works in Calculus 2 if you can't pass Calculus 1 to some set standard. Just saying.
Unfortunately, the following is the best my Google-fu can turn up right now. I'd like to give you a link to the blog entry I once read by a professor who was actually working at a UK university when they started imposing market discipline with students as customers.