Resistance is Futile — Unbundled, (nearly) Free Higher Ed is Inevitable
The buzz-saw of inexorable technological obsolescence hasn’t impacted every part of the economy… yet.
Large parts of it have been declared protected sectors. Sectors heavily subsidized by government funding and protected from competition by an increasingly dense thicket of rules, regulations, and laws. The best examples include:
- Health Care
In each of these zones, the economic costs have risen very, very quickly — many times the pace of inflation. If that wasn’t enough of a warning sign, we also see something going on that’s exactly the opposite of what we see in competitive sectors of the economy. When technological improvements are applied, it doesn’t reduce the costs of delivering these services in these sectors, it increases them!
Over the last couple of decades, the difference between what could have been achieved due to technological improvements and what has been delivered has increased incrementally. That difference is now a chasm. There is considerable evidence (for those willing to see it) that if these sectors fully exploited the available technology, they would be able to deliver their services for a tenth of the cost or less than they charge today and deliver them better…
However, in order to pull that off, it requires a rethinking of what is considered core assumptions, and that won’t happen as long as the subsidies and protection continues. Fortunately (or unfortunately if you are enjoying these protections), that protection isn’t going to last much longer. We’re simply running out of money to carry these sectors anymore. The costs of blocking the arrival of technological improvement is just too great to bear…
For an example of how this is going to happen, let’s dive into higher education.
For some insight into how things went wrong, here’s a narrative from Clay Shirky (a prof at NYU that I know from some DoD work we did), that’s probably as candid we’re going to get from someone inside the system:
The biggest threat those of us working in colleges and universities face is.. that we live in institutions perfectly adapted to an environment that no longer exists.
From this start he argues that the old system (liberal arts tradition – scientific R&D – education of elites) went through a rapid expansion after WW2 due to government subsidies, creating a “golden age of academia.” However, those government subsidies stalled in the 70′s. Despite that, the higher educational system continued to expand using the old formula, but it did so by increasing tuition. As a result, the cost of degree is now 1,000% more than it was in the 70′s.
Of course, that’s not the only failure. It’s not delivering what people need right now. Provide them the education needed to get a “better” job.
Of the twenty million or so students in the US, only about one in ten lives on a campus. The remaining eighteen million—the ones who don’t have the grades for Swarthmore, or tens of thousands of dollars in free cash flow, or four years free of adult responsibility—are relying on education after high school not as a voyage of self-discovery but as a way to acquire training and a certificate of hire-ability.
The number of high-school graduates underserved or unserved by higher education today dwarfs the number of people for whom that system works well.
Simply, it’s broken. Yet, the a lack of reality within the educational system abounds:
Many of my colleagues believe that if we just explain our plight clearly enough, legislators will come to their senses and give us enough money to save us from painful restructuring. I’ve never seen anyone explain why this argument will be persuasive, and we are nearing the 40th year in which similar pleas have failed, but “Someday the government will give us lots of money” remains in circulation, largely because contemplating our future without that faith is so bleak. If we can’t keep raising costs for students (we can’t) and if no one is coming to save us (they aren’t), then the only remaining way to help these students is to make a cheaper version of higher education for the new student majority.
Here’s where Clay and I part company. He believes that it’s possible for academia to manage this decline through incremental actions.
That’s wrong headed. It’s much worse than that. The wrong product is being delivered at an extortionate price. Technological change is enabling the creation of products that do 80-90% of what’s done in the best classes, far better than those that aren’t the best, at a tiny fraction of the cost. For example, here’s an introduction to coding class from Kahn Academy (it’s free).
The only thing that is lacking from this almost free solution is what the higher education system has based it’s monopoly on.
A credential. The baccalaureate degree. The masters degree. The doctorate.
For better or worse (better earlier, worse now), these bulky credentialing packages became an integral part of the meritocratic system of corporate and government bureaucracies that zoomed to dominance in the last century. People needed them to get ahead.
Of course, as job growth slowed, stopped, and then reversed, these credentials lost value. They don’t guarantee a better job at a rate the justifies the huge investment – time and lots and lots of money – people are making in them. Worse, as the number of “good jobs” decline (the bureaucracies can’t deliver them anymore), there’s been a scramble for the remaining jobs, where this credential is still being used as a bureaucratic gating factor. So, out of desperation, people are continue to get degrees, in the vain hope of securing a job at the end of the process.
As the decline in “good jobs” continues, this bureaucratic doom loop (going to a bureaucratic institution for a bureaucratic credential to get a bureaucratic job) will break down, as the value of this credential approaches zero. At that point, technologically superior alternatives (like the above example) at a fraction of the cost, will emerge to fill the void.
This alternative will almost inevitably feature an unbundled educational credential during the transition period. A credential that represents either a narrow academic competence or a specific skill set. This unbundled credential would allow the delivery of education at a small fraction of the current cost in packages that are easier to access and much more likely to yield positive outcomes from the investment. It would turn education into a just in time product, something you engage with whenever you need it, wherever you need it.
However, there will be a cost for this transition.
Wrenching change as technological innovation eliminates nearly every job in higher ed except those in the elite Universities (for scientific R&D and the Liberal Arts). Jobs in primary and secondary schools might follow as these new delivery systems gain traction.
Like the change in store for health care, banking, and other protected sectors, this wave of technological creative destruction is inevitable. We can either mitigate the descent by prototyping it early and finding how to do it best —> or suffer the effects of a sudden collapse of the system. Only Chinese Emperors have the ability to stop technological change in favor of social stability, and look how that turned out for them.
PS: The End of Higher Education’s Golden Age — Clay Shirky