True fact: America once had thousands of auto manufacturers.

When the horseless carriage craze swept the nation, carriage makers in cities across the country shifted gears, as it were, to become automobile makers instead.  An ad for “The American Carriage Directory” in The Automotive Manufacturer (Vol. 43), published in 1902, boasted listings for 36,000 carriage and wagon manufacturers in the United States.  Even if no more than 10% of those manufacturers had decided to throw in their lot with the changing technology, that would still amount to 3,600 automakers in America at the dawn of the 20th century!

Then Henry Ford figured out how to mass produce cars cheaply.  A couple decades later under Harley Earl, the “Da Vinci of Detroit,” General Motors began making them longer, lower, wider.  Internal combustion engines won out over steam and electric.  And eventually America exchanged the infinite variety of its carriage-maker-in-every-city automakers for the too-big-to-fail Detroit Big Three, two of which wound up declaring bankruptcy and needing bailouts from the federal government after the 2008 economic crash.

The first time I ever thought about how many automakers America once had, and then lost, was about 15 years ago, when I read a wonderful book, Roadster: How, and Especially Why, a Mechanical Novice Built a Roadster from a Kit, by Chris Goodrich.

This is a book you will really, really like if:

• you’re a generalist/jack-of-all-trades
• OR you love cars
• OR you remember and love the 1960s cult-classic television show “The Prisoner”

Goodrich weaves together three very different threads—losing his job and trying to figure out his place in the employment world, building a Caterham 7 roadster from a kit, and reflecting on the themes of “The Prisoner”—to produce an insightful take on what it means to be a generalist in a world that increasingly demands that people pick their niche and stay there (i.e., “branding”).

What made me think of this book now, after so many years?

In skimming through my news feeds last week, I came across a blog/article in the March 25, 2013, New York Times, “Beware of the High Cost of ‘Free’ Online Courses,” by Steve Lohr.  Many universities, especially elite schools, are making courses available for free online.  These offerings do not carry university credit, but companies like Coursera are developing business models aimed at exploiting the gap and finding a way to profit by connecting students learning from open courseware with buying university certification.

In the article mentioned above, Michael A. Cusumano, a professor at M.I.T.’s Sloan School of Management, warns that the end result of a MOOC (Massive Online Open Course) onslaught may be a few huge winners and many, many educational institutions forced to close.  Here are some direct and partially paraphrased quotes from Cusumano in the article:

“My fear is that we’re plunging forward with these massively free online education resources and we’re not thinking much about the economics.”

MOOC champions . . . are well-intentioned people who “think it’s a social good to distribute education for free.”

“Free is actually very elitist.” . . .  The long-term future of university education along the MOOC path . . . could be a “few large, well-off survivors” and a wasteland of casualties.

Dr. Cusumano warns in an article of his own, “Are the Costs of ‘Free’ Too High in Online Education?” that the rush to “free” online courseware may spell doom for what is (in my opinion) the best higher-education system in the world:

I am mostly concerned about second- and third-tier universities and colleges, and community colleges, many of which play critical roles for education and economic development in their local regions and communities.

In addition, “free” in the long run may actually reduce variety and opportunities for learning as well as lessen our stocks of knowledge.

Will two-thirds of the education industry disappear?  Maybe not, but maybe!  It is hard to believe that we will be better off as a society with only a few remaining megawealthy universities.

If two-thirds of our nation’s colleges and universities disappear, what will this mean?  How will the short-term benefits of open courseware extend into a future where only a few (presumably privileged) students are granted personal interaction with actual professors, face to face?  For example, can a capacity for critical thought, a key 21st-century skill, be developed by merely watching lectures on video?

I don’t know.  But if and when such drastic change to the underlying infrastructure occurs, for better or worse, there will be no turning back.

Although I am a fan of free markets, I think that there is risk in believing that business principles can and should be applied to all problems.  The 2006 Spellings report on higher education (the salvo setting off a barrage of calls for reform since then) was particularly marred by this assumption:

What we have learned over the last year makes clear that American higher education has become what, in the business world, would be called a mature enterprise: increasingly risk-averse, at times self-satisfied, and unduly expensive.  It is an enterprise that has yet to address the fundamental issues of how academic programs and institutions must be transformed to serve the changing educational needs of a knowledge economy.  It has yet to confront the impact of globalization, rapidly evolving technologies, an increasingly diverse and aging population, and an evolving marketplace characterized by new needs and new paradigms.

History is littered with examples of industries that, at their peril, failed to respond to—or even to notice—changes in the world around them, from railroads to steel manufacturers.  Without serious self-examination and reform, institutions of higher education risk falling into the same trap, seeing their market share substantially reduced and their services increasingly characterized by obsolescence.

See what I mean about how the language itself reveals the way business blinders narrowed the Spellings Commission’s path of vision.  Enterprise?  Market share?  Obsolescence?

Yes, higher education needs reforms.  But viewing higher education as a product/industry similar to railroads and steel manufacturing is a mistake.  How can the quality of a liberal education be measured by the usual benchmarks of progress and productivity?  The nature of this problem can be better understood by considering a lesser-known principle of economics, Baumol’s cost disease, also called the Baumol Effect.

Senator Daniel Patrick Moynihan, speaking in favor of appropriations for the National Endowment for the Arts in September 1997, brilliantly explained Baumol’s disease as it applies to productivity in the arts (which would include the practical arts of medicine and teaching as well as the fine arts):

The productivity of personal services does not grow, or grows very slowly compared to the productivity generally in the economy.  You could put it this way.  In 1797, if you wished to perform a Mozart quartet, you needed four persons, four stringed instruments, and 43 minutes.  Two centuries go by and to produce that stringed quartet you need four persons, four stringed instruments, and 43 minutes.

If the great Mormon Temple Choir undertook to do a Bach oratory when it was founded, I believe there are 350 members of that choir, so to do a Bach oratory in 1897, that would take 350 musicians an hour and a half.  A century goes by and it still takes 350 persons and an hour and a half.  That is called Baumol’s disease.  If you play the “Minute Waltz” in 50 seconds, you speed up productivity but you do not get quite the same product.

That is why teachers are relatively more expensive than farmers.  Farmers have quadrupled and quintupled and quintupled again their productivity, but a first-grade teacher can handle about 18 young 6- or 7-year-olds in 50-minute classes; you can put 190 kids in that class and it would not be the same.

That is why we always have friction in our economy between those activities where we depend very much on the personal services and those which involve the mechanized or the electronic services—think what we have seen in productivity in computation in the last twenty years.

What machines can do best, machines should do.  What people can do best, people should do.

One charge leveled at universities is that they are medieval institutions, like that is a really bad thing to be.  Well, yes and no.  Interestingly, mechanizing routine aspects of higher education may end up transporting us back to the Middle Ages anyway, but with a 21st-century twist.  An excellent article from 2011, “Back to the future for higher education: Medieval universities,” by Michael D. Byrd, posits that online learning, technology, “global” campuses, and superstar teachers will return today’s colleges to their original, centuries-ago form.  Maybe that will be a good thing.  Maybe it won’t.

Let me tell you two stories.  The first is true; the second is not.

Once there was a small town in America that had few locally-owned retail stores.  When the townspeople wanted to do big shopping, they had to visit the mall in a big city about an hour’s drive away.  However, the town did have a good craft-supply and fabric store, and because many local residents did crafts and sewed their own clothes, they were glad to have such a nice store conveniently located in their small town.

Then one day a big-box retail store opened on the outskirts of town.  Townspeople were excited to discover such variety at such low prices right there in their own backyard.

They still shopped at the local fabric store, perhaps out of habit, perhaps out of loyalty, or perhaps because the fabric store still had the best selection in town.  It wasn’t long, however, before the big-box retailer expanded its own fabric and crafts department.  The new store’s stock was bountiful, its prices incredibly low.  People could hardly believe their good fortune.  Such a bonanza!  All of this, right there in their small town!

Everyone flocked to the big-box store.  The original fabric and craft-supply store could not compete.  Eventually it closed.

Can you  guess what happened next?  That amazingly bountiful fabric and crafts department in the big-box retailer immediately shrank to almost nothing.  Prices rose.  The townspeople had even less selection than ever before, but now they paid more for it.

The second story is a fable by Aesop.  Although not true, it nonetheless contains a truth that transcends fact.

Once there was a man who owned a goose.  Every day the goose laid a golden egg.  The man reasoned that surely an enormous lump of gold must be concealed inside that goose.  Why should he wait for it to be laid, one inefficient egg at a time?  Much better to have the entire amount immediately.  So the man killed the goose.  But when he cut her open, he discovered to his dismay that she was no different on the inside than any other goose.  In his determination to gain a larger good in the short term, the man had deprived himself of the smaller good he could have depended on every day for the long term.  Now he had nothing but a dead goose.

Today’s post is a jumbled collection of idea snapshots, I realize.  But this is how my mind works.  It is my job as a liberal arts professor to put forth all these little pieces of trivia I’ve collected over the years and then ask questions in a way that brings a variety of viewpoints and voices together in conversation to reveal solutions to problems requiring insight.

Are MOOCs the answer to the high cost of live interaction in brick-and-mortar classrooms?  Are we as a society better off with the mass-produced, longer-lower-wider automobile from a too-big-to-fail manufacturer than with a locally-produced automobile from the shop of a carriage-maker craftsman?  How do we measure “productivity” in an educational setting?  (Hopefully not using a metric of cost-effectiveness like the University of Texas ratio of faculty salary to number of students taught!)

All these are questions in need of serious discussion.  I don’t know the answers.  But were I pressed to provide an Aesop-style “moral” for today’s post, it might be this: Caveat emptor.

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~ P.S. ~ If you are interested in this topic, you may also want to read the post I wrote last June about the forced resignation and subsequent reinstatement of University of Virginia president Teresa Sullivan.  Similar issues surfaced there from the disconnect in values between academic and business worldviews over how to approach higher-education reform.