> >At 03:52 PM 08/06/2000 -0400, you wrote: >>http://www.lewrockwell.com/north/north8.html >> >> The Coming Breakdown of the Academic Cartel >> >> by Gary North >> >> Higher education in the United States is a cartel. It is rarely >> discussed in these terms, but that is what it has been throughout most >> of the 20th century. >> >> A cartel is an association of producers that jointly establishes >> certain output criteria for membership. The goal of the cartel is for >> all of its members to obtain net revenues above what would be possible >> if there were open competition, especially price competition. Members >> restrict output in order to gain high revenues per unit sold. The >> cartel's members raise their prices. >> >> A cartel faces competition from members who cheat and from non-members >> who enter the market. This is why cartels that do not obtain >> protection from the State in restricting entry into a market >> eventually break down. Without State intervention, newcomers attract >> consumers by offering lower prices. Also, some cartel members cheat by >> secretly increasing their output, lowering prices, or both. The >> cartels' other members must then cut prices to retain customers. The >> cartel breaks down. >> >> Whenever you find a cartel that has existed for several decades, begin >> a search for State intervention: civil sanctions placed on non-members >> who seek to enter the market through price competition. In the field >> of higher education, look for laws against the unaccredited use of >> certain words: college, university, B.A., M.A., Ph.D. >> >>Accreditation >> >> I have yet to see a history of the collegiate academic accreditation >> system in the United States. It would make a great Ph.D. dissertation >> topic for some free market economist. (Perhaps it has been written, >> and I have missed it.) >> >> There is a Web site that lists the various collegiate accrediting >> associations: the Council for Higher Education Accreditation. The site >> also has a revealing page on Government Relations. The organization >> favors "voluntary enforcement," meaning self-policing by existing >> members, without additional regulations imposed by the U.S. Department >> of Education. >> >> Economists might say that "voluntary enforcement" really means >> "government enforcement of existing regulations, especially against >> non-member interlopers, but with no new rules imposed on existing >> cartel members." (Except when analyzing the Federal Reserve System, >> economists say things like this.) >> >> Recall that the chief goal of a cartel is to keep out >> price-competitive interlopers. In a document titled, HEA 98 - Summary >> of Accreditation Provisions, we read the following: >> >> The President today signed into law the Higher Education Amendments >> of 1998 (HEA 98), as Public Law 105-244. The new law reauthorizes >> for five years the Higher Education Act, the basic framework for >> federal policies in higher education that includes the massive >> federal programs of student financial assistance. The new law >> retains current programs, provides some modest new initiatives, >> lowers borrowing costs to our students and authorizes small >> improvements in program funding. >> >> With Federal money comes Federal regulation. This is nothing new. In >> every industry, those producers who are on the receiving end of this >> money can and do invoke a defense of cartel-defined standards in order >> to restrict entry by interlopers who might otherwise sell services to >> the public at lower prices. Restriction of entry through >> industry-policed "voluntary" standards, backed up by the threat of new >> civil laws if members do not obey the existing laws, is justified by >> the cartel's members in the name of both standards and the proper use >> of government money. >> >> In higher education, government-enforced accreditation restricts the >> spread of new ideas, new methodologies, and above all, new >> technologies that enable producers to lower prices. This is how higher >> education has become uniformly secular, liberal, and mediocre: raising >> the cost of entry. >> >> In this same report, there is a reference to something called >> "distance education." >> >> Distance education programs will be assessed in accreditation under >> the same quality assurance criteria as other programs, and will not >> be subject to new and separate criteria. The new distance education >> demonstration program recognizes the role of voluntary >> accreditation. >> >> What is distance education? Distance education is the Achilles heel of >> the education cartel's maintenance of control over higher education. >> It will be the battleground of higher education over the next two >> decades. >> >> If the cartel loses this battle, it will lose control over the content >> and pricing of higher education. >> >> The cartel is going to lose it. The reason: price competition beyond >> anything ever seen in higher education. A technological revolution is >> almost upon us. >> >>Plastic Disks and Fiber Optics >> >> Today, it is possible to put 50 hours of video lectures (small image), >> without compression technology, on a conventional CD-ROM. Use the new >> DVD technology, and you can put 400 hours of lectures on the disk >> without compression. A DVD player now costs under $200. >> >> The typical student's college year involves about 450 lectures, 45 >> minutes each: 10 courses, 15 weeks, three lectures per week. Core >> academic courses are mandatory for all students, so a college can put >> one year's worth of freshman core courses onto a DVD disk that costs >> $2.50 to produce and mail to the student. That's with no compression. >> With today's low-cost compression technology, any department (history, >> biology, etc.) can put all of its courses on one disk. >> >> With compression technology due out later this year, the typical >> college could put its entire curriculum on one disk - twenty or thirty >> different majors. The student's only expense then is textbooks, and a >> growing number of lower-division textbooks can be downloaded free of >> charge from the Web. >> >> Say that you are a college professor. You write your textbook, put it >> on your college's CD-ROM, and get paid, say, $5 per sale as a royalty. >> The college gets $1. Is that a good deal for you? No printing costs, >> no inventory costs, no nothing. Just cash your checks. Trust me: it's >> a good deal. The student pays $6 per textbook that he "unlocks" on the >> disk. Cost saving for the student: about $45 per textbook, and maybe >> more. >> >> We are talking marketing revolution here. >> >> Technologically speaking, as of today, a college education no longer >> requires classrooms, lawns, huge administration buildings, air >> conditioning, heating, dormitories, library buildings (rarely used by >> most students anyway), massive institutional debt, and all the rest of >> the barriers to entry in setting up a college. >> >> This means that small groups with odd-ball views are now able to set >> up their own colleges. Only the government-imposed licensing monopoly >> for issuing degrees will delay this process, but it won't succeed. >> Here's why. >> >> Existing degree-granting colleges have already begun to start cutting >> prices for "distance learning." The others will have to follow. I >> estimate that the lower limit for tuition is around $2,500 a year. It >> may be less. Education can be conducted by CD-ROM and e-mail. The >> technology for conducting discussion groups is here but not yet cheap >> enough. It will be cheap within five years. The cost barrier to >> starting a college is about to fall dramatically. >> >> I know of an accredited 80-year-old private college that charges >> $10,000 a year in tuition, and pays its full-time faculty members a >> pathetic $24,000 a year to teach 8 classes. It costs $15,000 to send a >> student there - room, board, tuition, books. >> >> With digital education, this college could charge $2,500 a year, and >> pay its faculty members $2,000 of this. Divided among 10 teachers (10 >> courses) per academic year, this is $200 per course. A teacher who >> teaches 8 classes (24 semester units) of 35 students each could earn >> $56,000 a year - more than twice what the school now pays. Most of >> today's tuition money is going for overhead. Cut the overhead, and the >> faculty wins. >> >> Could a teacher teach this way? Figure it out. He spends, at most, >> less than two hours in reading one midterm exam (10 minutes) and a >> final exam (20 minutes), plus two term papers (20 minutes each). In >> fact, very few teachers assign term papers these days. True-false and >> multiple choice exams can be corrected, with answers provided for >> missed questions, by existing e-mail programs: 100% electronic and >> instantaneous. >> >> Once the instructor records his lectures on video, and writes up his >> weekly digital-graded exams and answers (which most teachers do not >> give these days), all he has to do is answer students' questions by >> e-mail. He has 280 students (35 x 8), times 2 hours, or 560 hours of >> work per year - not 2,000, which is what most professionals work. He >> will make $100 an hour ($56,000 divided by 560). If he spends 2 hours >> in e-mail per student (he won't have to), he will still make $50 per >> hour - and he will not be working year-round. If he is willing to >> teach twice as many classes by adding summer school and extra classes >> during the year, he can make $110,000 a year. >> >> At $2,500 a year tuition, working adults will be pulled back into >> college because they do not have to move to the college. To rewrite >> the old slogan, "If Muhammed cannot go to the mountain, the mountain >> had better go to Muhammed. Soon." >> >> The possibilities for education through the Internet will change the >> way we learn. Any college that does not adjust to the Web, including >> discount pricing, will disappear. This will take less than two >> decades. >> >> The Web is where the future of higher education is. The more expensive >> today's college education is, the more vulnerable an institution is to >> price competition. When students can stay home, keep their part-time >> jobs, and learn everything they need to know in the majors that 80% of >> students select (social sciences and humanities), why pay $50,000 to >> $100,000 for a college education? Why not pay $10,000, with the money >> used mainly to pay the faculty? >> >>Setting the Precedent >> >> Some rich entrepreneur is going to assemble a bunch of famous >> professors, record their videos, get their reading lists, and hire an >> army of Ph.D-holding teaching assistants at $15 per hour. He can hire >> retired big-name professors, pay them huge salaries, and play the >> big-name professor game better than the Ivy League. >> >> He will own the finest university on earth, charge $7,000 a year, and >> make another fortune for himself. Will it get its accreditation? If it >> does, the precedent is set: 100% distance learning. If not, then the >> accrediting system will be seen as a cartel-operated sham. Besides, >> what student will care if it is accredited? Harvard University is not >> accredited and never has been. This Web-based university will have >> bigger names than Harvard. >> >> Once someone does this, the precedent will have been set: no >> accreditation needed. The dominoes will begin to fall. The price of a >> college education will fall with it. >> >> If the government blocks this inside the U.S., the entrepreneur has >> 180 (this week) other nations to choose from. Get accreditation there, >> if it is needed for marketing. If not, forget about it. Use the same >> faculty, the same textbooks, the same CD-ROM's, the same e-mail >> addresses. This is distance learning. >> >> When you think of "distance learning," think of an Olympics limited to >> 45-year-old athletes ("Skilled! Experienced!"), who one day must face >> 19-year-olds. The distance between the cartel's runners and the >> newcomers will be measurable in yards, meters, and seconds. The >> cartel's members will learn at a very great distance. >> >> This is where higher education is headed. The monopoly over higher >> education is going to be broken up, all over the world. >> >> July 31, 2000 >> >> Gary North is the author of Crossed Fingers: How the Liberals Captured >> the Presbyterian Church, which is available free of charge as a >> downloaded text at www.freebooks.com. >> >>--- >> >>This is a message from the Upstream mailing list. Visit the Upstream >>Website at http://cycad.com/cgi-bin/Upstream/ Visit the Upstream >>Mailing List archives at http://cycad.com/upstream-list-archive >> >>To subscribe to this list send email to the address >> [EMAIL PROTECTED] >>with just the subject >> subscribe >> >>To unsubscribe from this list send email to the address >> [EMAIL PROTECTED] >>with just the subject >> unsubscribe > >--- > >This is a message from the Upstream mailing list. 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