While we are on the subject of universities, it’s worth noting the likely acquisition of the so-called University of Phoenix by the University of Arkansas System.
After a string of similar acquisitions, closures and conversion to non-profit status, this is pretty much the end of explicitly for-profit university education in the US. It’s a striking development given the strong support the sector got from Betsy de Vos in the Trump Administration, which turns out to have merely staved off the inevitable. The boom in online education during the lockdown phase of the pandemic seems only to have increased the marketability of for-profits to public universities looking to expand their options.
In retrospect, the whole for-profit boom was not an upsurge in enthusiasm for the free-market but a straightforward regulatory scam, exploiting public aid to low-income students. Australia had an almost identical experience with for-profit vocational education. As Richard Mulgan observed, this is a predictable outcome of introducing the profit motive into a system built largely on assumptions of professionalism and trust.
That’s true of contracting out of public services in general. Without tight regulation (which may or not be feasible) contracts will go to those who’ve worked out clever ways to rort the system[1], not those able to provide a better service at lower costs.
fn1. This Australianism roughly translates as “game the system”.
{ 15 comments }
Jake Gibson 02.07.23 at 1:23 pm
You mean profit can be a moral hazard?
I thought the markets could not fail.
Paul 02.07.23 at 1:28 pm
“ In retrospect, the whole for-profit boom was not an upsurge in enthusiasm for the free-market but a straightforward regulatory scam, exploiting public aid to low-income students. Australia had an almost identical experience with for-profit vocational education. As Richard Mulgan observed, this is a predictable outcome of introducing the profit motive into a system built largely on assumptions of professionalism and trust.”
Happens every day in our non-system of healthcare which has been converted into a revenue generating system that values income over outcomes.
Brett 02.07.23 at 6:06 pm
They were definitely being fueled by massive amounts of “cheap” student federal loan money, but it wasn’t totally a scam. They often filled a niche for older students who really need classes at more convenient times and locations – too much of college is still built around the idea that the student in question is a 22-year-old undergraduate who maybe has a part time job serving pizza on weekend nights.
Ebenezer Scrooge 02.07.23 at 7:59 pm
I certainly agree that some sectors of the economy do not do very well with the for-profit sector: education and health care are good examples. And I also agree that much of the distinction is with professionalism and trust.
But professionalism and trust have their own costs. They are both eroded by excessive competition. This implies that they require a kind of guild structure to support them. Guilds, of course, work as conspiracies against competition–and often even innovation. The American law school is a very good example of a degenerate guild structure–American “collegiate” athletics is another. So is American medicine, and especially dentistry. I can’t speak to Australia, although its joint-stock law firm is an interesting experiment.
There is no magic solution to this dilemma. The market can’t work by definition–guilds are designed to counteract the excesses of markets. Antitrust law is sometimes effective, as are other state interventions. But it’s all empirical, and much is debatable.
Ray Vinmad 02.08.23 at 7:15 am
This is wild. I grew up with people that went to University of Phoenix to get their degree. They were an enormous outfit at one point.
I realized at the time Clay Christensen was touting his disruptor theory that it was nonsense that an online university could approximate any stage of education, and MOOCs would never replace college. However, I expected them to have a higher reach and that it would be an ideological attempt to disrupt higher education much like charter schools has done so much damage to the K-12 systems.
This is America so somebody is always going to find a way to gut and privatize if they can siphon off money from the public coffers. It’s unbelievable they can rake in profits then put the profits back into paying politicians to expand their reach. There oughta be a law, etc. I wonder if this U of Arkansas thing will somehow become a boondoggle of some kind.
I sometimes look at what Pearson is up to after becoming a billion dollar company and getting in trouble with local pols in various places like LA, pouring cash into different systems, including S. Africa. It appears they are selling off some of their assets in other countries as well.
It’s one of the things that is rarely discussed about the Obama era—how much his administration enabled this process, and the damage it did. Biden has done a little bit to walk this back, or at least his campaign promised to end federal funding for for-profit charter schools.
It was good that Obama finally went after the for-profit universities though.
Ali k. Fakenamington 02.08.23 at 1:18 pm
Totally agree with the comment about it fulfilling a real need. I was looking to take some remedial math classes in preparation for a wildly different degree. The local community college doesn’t offer anything after Trig at night or online. It’s a shame because they have an associates degree in exactly what I want to study, with a link to a four year school.
Jonathan Monroe 02.08.23 at 3:40 pm
Re. “rort”, I think that “rort” and “wowser” make an interesting point about the relative isolation of different varieties of English. Both are AusE words with no short, accurate translation into BrE or AmE, but that would clearly be useful additions to the language – as a native BrE speaker, I have started using “wowser” in my own speech, and it must be onomatopoeiac or something because people get the meaning so easily.
I don’t think there are any BrE->AmE or AmE->BrE words that would be as useful as those two, because Americans and Brits pay sufficient attention to each other that if there was such a word it would cross the barrier.
J-D 02.09.23 at 12:49 am
Neither word has a one-word equivalent in British or American English, but for each the meaning can be explained in two or three words, although not at the same level of informality or with the same emotive freight.
John Q 02.09.23 at 11:00 am
“Wowser” has almost gone out, mainly because there aren’t many good examples left in Oz these days.
By contrast, “rort” in its current meaning is relatively new. I first encountered it as Labor party slang in the 1970s, and all the subsequent use of seen can be traced to that source.
engels 02.09.23 at 1:02 pm
I’m starting to think education isn’t a commodity and should be provided free of charge by the state to all who can benefit…
SamChevre 02.09.23 at 2:12 pm
Good news, but in my opinion not nearly enough. So far as I can tell, “a straightforward regulatory scam, exploiting [public policy]” applies equally well to the proliferation of terminal master’s degrees (exploiting financial aid and/or the US Visa system), low-ranked law schools, online Master’s programs, and so on.
engels 02.09.23 at 5:52 pm
You lose some you win some.
dilbert dogbert 02.10.23 at 4:12 am
#3
In California that niche is filled by the Community College system. My late wife taught night accounting classes at Mission College. Her classes were filled with adults. She filled in at another college for a friend for day classes. Wow! It was like night and day. Young people just out of high school did not stop chatting and looking at their phones and laptops. At night when she took the stage, all noise stopped and the class was ready hear her.
John Q 02.11.23 at 2:44 am
SamC. I agree that there are plenty of scams in the public system. But with the for-profits, the system was the scam. Anything useful they provided was by accident.
J-D 02.11.23 at 3:39 am
How many Americans now would understand a reference to ‘comstockery’?
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