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:

  • Education
  • Health Care
  • Banking

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.

He continues…

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

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Discussion — 15 Responses

  • James Bowery January 30, 2014 on 6:57 pm

    And in a related story Iceland’s refusal to bail out its bankers has provided an inconvenient truth that the bureaucracies cannot deal with.

  • Bruno Behrend January 31, 2014 on 8:30 am

    K-12 is another sector that deserves and requires “the big haircut.”

    • Chris Bruno Behrend January 31, 2014 on 11:26 am

      K-12 will be the last to fall – because that is where the bureaucrats indoctrinate the next generation.

      • John Robb Chris February 4, 2014 on 10:37 am

        Unfortunately, in most cases, it’s glorified babysitting now.

        • Everette Hamilton John Robb February 5, 2014 on 5:40 pm

          You are correct and trying to give ideas as a taxpayer to school administrations and school boards on how to use Khan Academy and new ideas on how to save on healthcare for staff (such as telemedicine) is a very frustrating adventure. The administrations are scared to death of the future.

        • Joseph John Robb February 6, 2014 on 3:21 pm

          It’s worse. My mother works on the K end of the spectrum and I was shocked the first time I heard her talking about having to change soiled britches. This was not the last time. There is a cultural problem when parents haven’t trained their children not to routinely defecate on themselves by this age.

  • Big Jim January 31, 2014 on 10:47 pm

    A few years ago I spent a couple of days with a friend’s son who was attending a state university. His largest class, calculus, had 250 students; his smallest class had 70 students. Most of the classes were taught by graduate students, not professors. He didn’t know any of the instructors nor did they know him. He was just a line in the grade book.

    It is ironic that even though students are now in effect taught in large warehouses by other students, tuition has soared. Since the actual per student cost of education must be very low, I have to wonder where all the money is going. I certainly didn’t see it in the classroom.

    At the time I remember thinking that all of this instruction could just as easily be done remotely through TV, and instead of 250 students there would be 25,000 students, with local tutors helping students who needed additional assistance. In such a system students could get an equivalent education, but at a fraction of the cost. Not every class could be offered like that but certainly many could.

    • John Robb Big Jim February 4, 2014 on 10:35 am

      Big Jim, Well put. Online education can and often is much better than just video lectures nows. It can be interactive or put into a game, where you get to apply the knowledge to scenarios (which results in much higher retention rates). The bureaucrats running academia don’t want to admit it. They always point to the 1% of the student experience that involves some one on one with a teacher. Much easier to just to deliver that at 1% of the price, and put the rest online for free.

      • GoatGuy John Robb February 4, 2014 on 4:30 pm

        Ah… I think the real problem is that the bureaucracies that grow (like an unwanted league of ivy, ahem…) within institutions such as Universities have a tendency to create self-entitling reasons for their existence.

        Empire building, amongst the clerkocracy. Lilliput and Gulliver. Death by ten thousand gnat-bites.

        I invested a decade and a half on a private school board. Never ”took the cloth” or rose above just being there, providing quips, comments, humor and orneriness when necessary. Watched a school that knew its ”primal pitch” to parents was “Johnny can make it because we’re really good, really safe, and not very expensive, since we don’t offer underwater basket weaving” to “Jenji might be admitted because we’re really selective, locked down, super-personalized, and even offer courses such as aeronautic design, plasmid genetic transfer methods and first-year atom smashing”

        The expense wasn’t mentioned, but it doubled. In 13 years.

        Now all this is just fine at one level! Jenji would ostensibly get a richer education; he’d have a leg-up on his pedestrian public school uber-lunks. The teachers were all for it – more of ‘em, dividing up a smaller pie of kids. Wages didn’t advance much, but with double the teachers, it went up. Being private and Catholic, of course it couldn’t cost quite as much as college. But … buildings were built, and so on and so forth.

        Now here’s the Grand Kick in the Pants. Before all this upgrading and diversifying, there was ONE chemistry class, ONE physics, ONE biology, TWO algebra classes, ONE computer science. After the Great Fluffing, there are now THREE chem classes, TWO physics, FOUR biology, FOUR sub-algebra and algebra classes, etc. Seeing the setting? Different silverware for different kids, to maintain the simulacrum of focussed diversity and personalized sausage-stuffing.

        There’s AP Bio, Honors Bio, Bio, Intro Bio, and Poking Toads. Really?

        Third level of indirection – I actually attended this same High School, back when it was more austere. Guess what – bio was hard, chem was hard, physics was hard, algebra was hard. You were going to finish the entire textbook in the year of class that it was designed for. You took your SAT tests, which were hard, and got what you got. That score, combined with your school’s phoney-baloney state HS rating, combined with how many fellow floggers applied to each university, either got you in, or it didn’t. One did NOT study for SAT, nor did one take special tutoring or prep classes. The introductory essay was simple: “I love your school, and I’m willing to work hard to do well. Thank you.” … You didn’t have to show you fed one-eyed pygmies, walked platoons of elderly across foetid swamps, handed out condoms at rave parties, recycled bricks and paper bags for Mother Theresa. Just “do well, want to do well” … and get a nice form-letter of recommendation from the principal, your advisor, and a random priest.

        The idea that the near future will democratize education to the point where it becomes essentially ”free” online is a noble idea, but tens of millions of bureaucrats, educators, pollsters, civic narrators, pocketed politicians, pandering pooh-bahs, and worried parents believe otherwise. They so, so, so want their cute little only-children to blossom to equally phoney-baloney jobs that pay in the mid-six figures … that they’ll SPEND in the mid-six figures for a delightful broad education over now-nominally 5 or 6 years. A lot of baskets are woven, to protect the one egg.


        • LadyJ GoatGuy February 4, 2014 on 10:28 pm

          I think all comments here are succinct and interesting points of view on this well-written article. However, while you were on the hoity-toidy board, I spent 1,000 hours with 7 other high-energy parents creating a public elementary school -from scratch.

          Point is, I agree that most parents will go to great lengths to invest in their children’s futures; but I disagree with your premise that most will do so by shoveling barrels of money into private/semi-private ed.

          Not any more. As John points out, this behavior will stop once the rationale behind it is gone.

          My father shoveled out for my brother (a late baby) as recently as 5 years ago;; however, he did so not just because he had the means to. He did it b/c he knew he would secure my brother a job junior year at his company. Then, the related experience and degree would lead to a job offer (it did.)

          What you are suggesting is quite obsolete, I think. Not to mention, most parents can no longer afford to throw money away.

  • A Disillusioned Teacher February 5, 2014 on 7:13 pm

    I teach at both the high school and college level. The academic and social levels of students in the aggregate is so pathetically low that most people over the age of 35 would be shocked if they saw how intellectually feeble and devoid of coping skills most of our 14-18 year olds are. Schools across the country boast of their success and ‘hi-tech’ education but the reality is that most secondary education is a joke because all the students are doing is utilizing a computer program designed by someone else or participating in a ‘cooperative learning’ activity where several freeload off of one or two who really want a good grade. Meanwhile, most students cannot multiply or divide by ten without a calculator and they have no idea who the Founding Fathers of the USA were or why they created the government they did.

    My job within the public high school system has become more of an effort to foster self control and a sense of personal responsibility than to truly educate facts and concepts. This is because the average student is painfully unable to face academic challenges that would have been assumed to be standard only two generations ago. At the college that I teach, the most common classes for incoming freshmen are ‘zero level’ math classes which are just remedial courses in basic arithmetic and algebra in order to get the students able to take standard college level work. Many do not succeed because they have never learned to handle a challenge because they have always been able to pass in previous years either for ‘social promotion’ or because the touchy-feely philosophy that self esteem is the most important thing in life. We give trophies for participation and no longer keep score in youth soccer because it might hurt someone’s feelings. This bears no resemblance to anything in real life. The world has deadlines and performance standards and will not care if you have ADHD or ‘test anxiety’ – it will care if you can get the job done quickly and according to specified plans.

    There is, however, another issue that must be addressed. Not all of our children are failures, in fact far from it. Here is the point: the top (roughly) 5% are moving multiple standard deviations beyond the median and the gap continues to widen. Elite American high school students can compete and be successful but they are now a small percentage of the whole. The government can pass any law it wants to in an attempt to legislate that ‘every child is above average’ but that is just another way of saying that we will move to the lowest common denominator in most of our education so as to have high graduation rates combined with diplomas that mean nothing.

    I have no bias against online education because I have both taught and learned online, even at the graduate level. That said, mark my words that electronic education is going to be a huge part of the future because of its ability to cut costs. Just remember that not all learning experiences are equal and the future of many of our ‘new and cutting edge’ electronic ed. will be no more rigorous than online traffic school is now. I will conclude by congratulating Chris for his previous post which states that k-12 will be the last to go (translation: real standards will be avoided for as long as possible) because that is where the ‘bureaucrats indoctrinate the next generation’.

    Well, Mr. Robb, that is the end of my rant for the day. Who knows what you will inspire me with next…

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