The Washington Post Wonkblog is running a series “Why is Tuition so Damn High?” which I recommend. There are two basic economic theories that lead the discussion list when trying to understand why higher ed costs are skyrocketing relative to all other public costs (even healthcare), these are:
1) Baumol’s Cost Disease and
2) Bowen’s Revenue Theory of Costs
Baumol is the subject of today’s Wonkblog entry
Baumol’s Cost Disease suggests that certain labor certain institutions is not subject to efficiency/productivity gains and yet still must compete with other more production efficient industries for the scarce labor resource (professors). This argument is loved by School Administrators, because it means cost are beyond their control. I personally think this is hogwash perpetuated by established institutions that steadfastly are resisting efficiency improvements “at all cost”.
Bowen’s law will come tomorrow, but it basically holds that Education is one of those social cancer areas where the institution will spend 100% of the funds made available to it, regardless of the amount of benefit – as you might guess, I favor this “explanation” for the current malaise.
Highe Ed Crises continues to develop… when costs are high, and when an alternative is present that offers to control and reduce costs, such as MOOC, and other DLE… logically there’s going to be impetus for changes. When there’s an established “system” that involves a lot of jobs, as education does… these changes will be problematic.
Sometimes it takes quite a while to sort out how new technology will be used, and what the new “system” will look like, and what the job titles and roles will be, and who’s ox will be gored, and whose field will come up roses.
Personally, I’m not enamored of educational administrators, but I do tend to favor having a lot of highly educated intelligent professors “running around” in a town. This demographic brings a lot of positives to a community. OTOH, today’s higher ed costs, and effectiveness, are in need of great change.
Here’s hoping that the more enlightened of us play determining roles in how those changes come about, and what we end up with when the dust settles. There are some interests out there who would be happy to simply destroy higher ed, and put the $$ in their offshore accounts. There are some in the ed establishment who will resist changes and hang onto the status quo… and quash or limit or delay innovation.
The vision here is for some better result than either of those above would provide.